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"The horror, the horror" -- Health Insurance CEOs Testify in Congress

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Joanne98 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 10:40 AM
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"The horror, the horror" -- Health Insurance CEOs Testify in Congress

Theres a famous two-word phrase repeated twice, serially, by Marlon Brando, as the gone-over-the-edge Col. Walter E. Kurtz, condemned by the US Army to be terminated with extreme prejudice, in Francis Ford Coppolas 1979 movie, Apocalypse Now: The horror, the horror.

Tuesday, June 16, Bart Stupak, Chair of the House Commerce Subcommittee held a three-hour hearing, Termination of Individual Health Insurance Policies. ( )

The hearing was a follow-up to a lengthy investigation of health insurers that had recently been summarized in a compendious House report. Among the investigations discoveries was that the total compensation for one of the insurance CEOs (Identity not revealed in the hearing) was $1.2 BILLION, that rescissions of health insurance policies had netted insurance companies savings of $300 MILLION, and that, within the insurance industry claims investigation departments, insurance investigators were performance rated according to the sums they saved the company by rescinding policies. One such example cited was an employee who was heralded by the company for having saved the corporation $10,000,000 by canceling policies when healthcare claims were posted.

Rescission of an existing insurance contract is referred to in the industry as post claims underwriting. To clarify, post claims underwriting occurs in the individual policy market, not in the employer-sponsored group healthcare milieu.

Those whose employers do not offer health insurance and folks who operate mom & pop, business-for-self enterprises compose the bulk of the individual insurance market. The first step toward acquiring a health insurance policy is the completion of a lengthy health history questionnaire. Usually, the first health-related question asked is along the lines, Have you ever had a health insurance policy cancelled/rescinded? A positive response here will not only immediately disqualify the applicant for coverage by that insurer, but will for the remainder of that individuals life, prevent him or her from obtaining any level of coverage from any insurer for any sum.

How rescission works. The individual applicant has completed the application to the best of his or her ability and has tendered to the agent-representative the necessary premium. The agent then forwards the application to the companys underwriting department where the contained information is (supposed to be) thoroughly reviewed and investigated prior to actual issuance of the contract of policy. All such contracts fall into the legal classifications as guaranteed renewable and unilateral. That is, once issued, under HIPAA (Health Insurance Portability and Accountability Act of 1996) guidelines, not only may an insurer not refuse to offer to renew the contract under the same conditions as was the original contract, the insured applicant is the only party who may ever cancel the contract. That is accomplished most often by simply not paying a premium by the due date. If approved by the insurer, the applicant-now subscriber pays all required premiums in a timely manner, in return for which the insurance company is legally bound to pay all submitted legitimate claims that may be covered under the policy.

What the House report revealed, however, was that all the insurance companies have established claim flags that trigger an investigation of the claimants medical history, the sole purpose of which is to not only deny the immediate claim, but of rescinding the entire policy; usually all the way back to the original date of issue. That means, the insured, in addition to now having zero health insurance coverage, must also reimburse the company for any and all claims the company may have paid under the policy. One of the companies had 1,200 such flags, another had 2,000; all of which followed insurance policy verification requests from medical providers prior to dispensing therapies for expensive ailments. Not restricted to, but among, the flags were diagnoses of leukemia, all cancers, cardio-vascular diseases, endocrine anomalies, brain and nervous system disorders, etc. The types of information sought and secured that would premise rescission had no need whatsoever of a connection to the claim.

Nor must the applicant-subscriber have ever been aware of the existence of the condition upon which the rescission decision was made. For example, one of the witnesses at the hearing was 59-year-old Robin Beaton of Texas. She had purchased a plan from Blue Cross Blue Shield. A dermatologist had misdiagnosed acne as precancerous, but had also never informed Beaton of the diagnosis, thus making it impossible for her to include it in BCBS application for insurance. Yet when Beaton was later correctly diagnosed as suffering a virulent form of breast cancer, BCBS used the omission as grounds to deny coverage. That, the insurance did on the Friday that preceded the Monday she was scheduled to undergo a double mastectomy!

Another example was the late Otto Raddatz, of Illinois; represented on the panel by his surviving sister Peggy. Suffering from an aggressive non-Hodgkins lymphoma, Ottos best hope was the costly stem-cell transplant the team of oncologists prescribed. He had only a three-week window durng which the transplant would be effective. However, upon receiving the request for authorization from the health providers, the insurance company, Fortis, rescinded his insurance policy. On his application for insurance, Mr. Raddatz erroneously indicated he had at some distant time in the past suffered gall stones. Never had he actually suffered gall stone difficulty, regardless, as he had included it in his application, Fortis proceeded to issue the policy, and collect insurance premiums, on the supposition that in fact he had. But when Fortis anticipated paying the expensive claim for a stem-cell transplant, the company used a minor notation a long-ago doctor had made in Ottos chart that he had kidney stones a condition Otto was neither treated for or even informed of by the physician to rescind his policy, and to thereby damn the fellow to hopelessness and death.



Three insurance company CEOs followed the victims of insurance company abuses as witnesses: Don Hamm, of Assurant Health; Richard Collins, of Golden Rule; and Brian Sassi, of Wellpoint health Networks. Before the subcommittee members, all of whom expressed outrage over the industrys loathsome post-claims underwriting practices, the CEO-witnesses attempted to defend what is to most wholly indefensible. All posited post-claims underwriting was an essential and legitimate tool for rooting out fraudulent health insurance applicants. All went so far as to defend using preexisting conditions the applicant may never have been aware of, or informed of, or of application questions that definitely seemed to be designed to be confusing to the applicant, and preexisting conditions that were (unknown to the insured and therefore not disclosed by the insured) completely irrelevant to the specific treatments being sought, as grounds for rescission.

Chairman Stupak read a question from Assurants application to CEO Hamm, then asked the executive to tell the committee what that Have you ever had _____? was referring to, What is that, can you tell us? The CEO of the company did not know the answer, and replied that he did not know.

The evidence here so strongly suggests that at least one of the purposes of the insurance application is to provide a basis for later rescission of the contract that it deserves reiteration. The insurance company president, under oath, asserted that he had no idea how he could have answered one of the questions on his own companys application for insurance!

The CEOs also testified that rescission was relatively rare. That of course depends on how one defines relatively rare. The House report that studied thousands and thousands of cases where claimants claims had been denied and experienced their policies cancelled paints a different picture altogether.

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lindisfarne Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 10:47 AM
Response to Original message
1. Rescissions are only relatively rare if you include all the people who don't have major medical
problems. If you look at the individual insurance market and include only those people who end up developing expensive medical needs, rescission becomes far too common. (It's pointless to include the groups where preexisting conditions cannot disqualify a person).
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Dr.Phool Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 11:47 AM
Response to Reply #1
2. Their policy standards are ridiculous.
A good friend of mine (John Russell, who is featured in a lot of DU videos) is a certified emergency and critical care Nurse Practitioner. He is a healthy, health care professional. We play golf together on occasion.

At just over 50 years of age, he was repeatedly turned down by health insurance companies, because of bone density tests, that showed he might be susceptible to arthritis later in life.

The insurance companies only want to insure cash cows. God forbid that they have to actually pay for claims..
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unblock Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:00 PM
Response to Original message
3. i'm confused by the otto example.
- he never had gall stones
- he indicated (erroneously) on the application that he HAD had gall stones
- a physician (erroneously) indicated on his chart that he HAD had gall stones (making the same mistake otto made)
- fortis issued the policy believing he HAD had gall stones

and then

- fortis canceled the policy when they found the physician's notes matched the application.

that makes no sense.

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Hepburn Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:33 PM
Response to Reply #3
5. Obscene and immoral....
... :grr:

Single payer ~~ the only way to go because we MUST get rid of the insurance companies.

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Bennyboy Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 12:02 PM
Response to Original message
Both had Non-Hodgkin's Lymphoma. Both over ten years ago. It is a pre existing condition. FOR THE REST OF THEIR LIFE.

Neither one is the type of person that can work in a group situation (Nut doesn't fall far from the tree), so they will never have health insurance. EVER.

That might be okay while they re in their late 20 and early thirties but when they get to be 50, that is will be a real problem for them. Of course by then, they will make a determination that my grandkids, by way of their parents, also have the same pre existing condition.

It is stories like mine and the one above that we need to get out there so that the insurance companies are shown to be the what they really are instead of letting them call the shots.
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wolfgangmo Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 02:00 PM
Response to Reply #4
6. If the US keeps private insurance
then this is how we will get them.

Every person in the US takes out term life insurance and then kills themselves after they become sick, but after the 2 year suicide exclusion clause.

Bam. And then they pay off and your family can at least go on with their lives and not have to lose their house, etc.

Or we could take to the streets and threaten to string some executives and politicians up.

Neither will happen. The most likely outcome is that we will once again bend over and let them bury themselves deep in our bowels.
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unblock Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 04:55 PM
Response to Reply #6
10. even that wouldn't work.
they would find a way to weasel out of paying. they've got many outs in the fine print, acts of war as just an example. they would probably have a judge declare that mass protest as an act of war or something and deny all claims. i'm sure they could find a sympathetic judge somewhere.
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Uncle Joe Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 03:16 PM
Response to Original message
7. Referring to these as Health Insurance Corporations is,
Edited on Sun Jun-21-09 03:18 PM by Uncle Joe
false advertising, they do no such thing.

I wonder if the FTC will go after them and the corporate media owners which run their commercials?

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truedelphi Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 03:40 PM
Response to Original message
8. I was just thinking if people were shot and killed out right here
Edited on Sun Jun-21-09 03:41 PM by truedelphi
Rather than denied care and allowed to live out a non-dramatic, but pain filled slow decline,the reactions of the many against the few might be played out in the streets of the USA, just as they are being played out in Iran.

Hundreds of people die and/or are wasting away in the USA -- On account of our not having the same Health Care provisions every other industrialized country has (Including Iraq before we took over, and probably even Iran) maybe then we could get folks out in the streets to knock out the Corrupt Health Insurers.

Unfortuantely, as we are seeing in Iran, an overthrow of the Powers that Be usually involves the youthful getting up and protesting, and since most people under thirty don't care that much about Health Care, we are at this big disadvantage.

A People's Union, any one?

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quidam56 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Jun-21-09 04:35 PM
Response to Original message
9. In East Tennessee, according to the facility licensure board, horrifying care
Edited on Sun Jun-21-09 04:38 PM by quidam56
is perfectly within the parameters of what is deemed, defended and supported as the acceptable standards of care in their state. As a former health care giver, it is sad to see what has become of our health care system we trust to keep us healthy.
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