Saturday, July 11, 2009

Questions to ask executives of the health care industry

The more we know about the health care insurance industry the more we question how seriously they are committed to the task of servicing the people they take premiums from. There is reason for concern, not only because of what the executives themselves have said under oath but also what a former executive, Wendell Potter, says about the way the health insurance industry works. Here are questions I believe we should ask the executives of our insurance companies. RLC

Question: Do you hold the position, like other health insurance executives, that you can cancel policies for sick holders of an insurance policy? According to Wendell Potter:
• It is a common practice in the industry to purge accounts that become expensive because of health claims: “[W]hen that business is up for renewal, … they'll say, "We need to jack up the rates here …” [They’ll] [j]ack up the premiums. Often they'll do this, knowing that the employer will have no alternative but to leave. …” Or they will actually dump “employer groups from the rolls.”
• “They also dump small businesses whose employees’ medical claims exceed what insurance underwriters expected. All it takes is one illness or accident among employees at a small business to prompt an insurance company to hike the next year’s premiums so high that the employer has to cut benefits, shop for another carrier, or stop offering coverage altogether. . . . The purging of less profitable accounts through intentionally unrealistic rate increases helps explain why the number of small businesses offering coverage to their employees has fallen from 61 percent to 38 percent since 1993, according to the National Small Business Association.”
• “The Energy and Commerce Committee’s investigation into three insurers found that they canceled the coverage of roughly 20,000 people in a five-year period, allowing the companies to avoid paying $300 million in claims.”
• Moreover: In a congressional hearing several health insurance executives refused to renounce the practice of canceling policies for sick clients, people who have been faithfully paying premiums for coverage.
How, then, can anyone be sure that any health insurance company will fulfill its commitment to provide medical care for its clients when they need it?

Question: What is your position on the proposal to develop a universal health insurance policy similar to the Medicare program?
• According to a statement on Bill Moyers Journal, and acknowledged by Wendell Potter, the industry has a “game plan” to "Highlight horror stories of government-run systems" in order to kill it.”
• In fact Potter indicates that the health insurance industry has no interest in allowing a universal health care plan to come into existence.
o “[J]ust about every time there has been significant legislation before Congress, the industry has been able to kill it. Yeah, the status quo works for them. … They don't want to have any competition from the federal government, or any additional regulation from the federal government. They say they will accept it. But the behavior is that they will not …”.
o “Insurers make promises they have no intention of keeping, they flout regulations designed to protect consumers, and they make it nearly impossible to understand — or even to obtain — information we need.”
o “The satisfaction ratings are higher in our Medicare program, a government-run program, than in private insurance. But they don't want you to remember that or to know that, and they want to scare you into thinking that through the anecdotes they tell you, that any government-run system, particularly those in Canada, and UK, and France that the people are very unhappy.”

Question: Isn’t the health insurance industry hostage to the demands of Wall Street? That is, to make large profits for investors? Again, Mr Potter’s statement:
• “[W]hat they want to do is enhance their profits. Enhance shareholder value. That's number one.”
• “Wall Street investors and analysts look for two key figures: earnings per share and the medical-loss ratio, or medical "benefit ratio," as the industry now terms it. That is the ratio between what the company actually pays out in claims and what it has left over to cover sales, marketing, underwriting and other administrative expenses and, of course, profits.”
• “To win the favor of powerful analysts, for-profit insurers must prove that they made more money during the previous quarter than a year earlier and that the portion of the premium going to medical costs is falling.”
• “Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was spent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.”

Question: Doesn’t your dependence on Wall Street investors conflict with the interests of your insured clients?
• “[T]he more of my premium that goes to my health claims [and] pays for my medical coverage, the less money the company makes.” … [And so Wall Street thinks that] “this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls.”
• “They think that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that's what-- that is what happens, what these companies do, to make sure that they satisfy Wall Street's expectations with the medical loss ratio.”
• The profits: “a big chunk of it goes into shareholders' pockets. … It goes into the exorbitant salaries that a lot of the executives make. It goes into paying sales, marketing, and underwriting expenses.”

Question: Is your company paying large sums to lobbyists in Washington to ensure that there will be no serious consideration of a universal health care bill? I presume that you are: How much is your company paying? According to the Washington Post, insurance companies are spending $1.4m a day to defeat the public option.

Obviously, I am now doubting that the health insurance industry has the interest of me and my family at heart.

The more that is exposed about the industry, the more clear it is that the fundamental problem with American health care is the industry itself: it is committed to making money at the expense of those whom they charge for coverage. So they have every interest in ensuring that universal health coverage of any meaningful sort will never come into existence, because it would then become abundantly clear that the American people would prefer a universal care system. That public exposure would effectively put the industry out of business. I looked up the annual salary of the President of the company that provides insurance for me and my family: $1,135,538.00 [Forbes]. That money comes from the premiums of those who seek insurance from that company [including me]. And those premiums are providing the huge sums going into the lobbying effort to deprive the American people of a universal health care coverage system that they most obviously need. Those 47 million uninsured people could use some of that $1.4 million being spent every day by the insurance companies, and some of that executive salary. No wonder the insurance industry is frightened of universal health care. If there is no general public revulsion against the insurance companies the public are unlikely to ever have universal health care of any effective sort.


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