Who Are the Real Bad Guys? Part 2

Stanley Feld MD,FACP,MACE

The beauty of Medicare is that patients are automatically insurable despite preexisting illness without a premium penalty.

I received this note today;

“ Did you know that diabetes is considered an “uninsurable diagnosis” as stated by the insurance industry. Unless a person is covered under an employer, or under someone else’s policy, as an individual seeking health care coverage, that individual has an “uninsurable diagnosis”….. that’s health care in this country.

M K, RN”

The answer is yes I do know. That is one of the great defects in the healthcare system.

The only premium penalty is a means testing penalty. I believe means adjusted premiums are an excellent idea. The slight defect is Medicare’s means adjustment formula. This defect could easily be repaired.

The big problem with Medicare and the private healthcare insurance industry is their payment structure. There are few incentives for patients to save premium dollars and disincentives for physicians to accept the endless reductions in reimbursements. All recent actions to improve the system such as P4P are punitive action. Punitive rules are impossible to enforce.

If the healthcare system has to mandate something it should mandate the prevention of complications of chronic disease. Ninety percent of Medicare’s healthcare dollar is spent on the complications of chronic disease. If this happens we could decrease the cost of care by at least 50%.

It should be every patient’s obligation to become the professor of his chronic disease. Financial incentives could help patients realize their obligation to themselves.

We are on the verge of a severe physician shortage because of overuse of the system despite the fact that 47 million people are uninsured. The payments for the treatment of the complications of chronic diseases are bankrupting the healthcare system even in the face of decreasing provider reimbursement.

The healthcare insurance industry is not interested in making any structural changes. It is doing just fine earning ever increasing profits and paying outrageous executive salaries. The insurance industry’s focus is to collect the highest premium from the least sick patients.

The exposure of abuses to the healthcare system by the healthcare insurance industry in California can lead the way to effective reform if the abuses are handled appropriately.

Wellpoint inc. with BC/BS of California and BC Life & Health and Health Net are not the only companies abusing the system.

“The lawsuit is the latest action by state regulators, lawmakers, doctors, patients and now law enforcement officials targeting insurance company practices — notably canceling policies when they become too expensive for the insurers.”

Surveys of the other plans — Kaiser, and PacifiCare — are ongoing.

This lame excuse given by a healthcare company should result suspension of its license to sell insurance in the state as opposed to a meager fine.

The healthcare insurance companies, however, maintain that they do this to keep costs down by weeding out people who may have failed to disclose preexisting conditions when they applied for coverage.”

There should be no exclusions for preexisting conditions. Preexisting condition exclusions lead to more uninsured and bigger strains on patients. The results would be increasing personal bankruptcies and bigger burdens on local charity hospitals.

The revelation that Health Net plans have cancellation goals and employee bonuses for rescinding the insurance coverage comes amid a storm of controversy over the industry-wide but long-hidden practice of rescinding coverage after expensive medical treatments have been authorized.

Most of the state’s major insurers have cancellation departments or individuals assigned to review coverage applications. They typically pull a policyholder’s records after major medical claims are made to ensure that the client qualified for coverage at the outset.

Anyone with any knowledge of healthcare insurance companies’ operations knows about their cancellations department. The State Boards of Insurance are our surrogate for fair insurance practices. They should review and act promptly and automatically on all unfair practices.

”Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.”
This is typical of bureaucratic systems. Usually intentions are good. The details and compromises with healthcare insurance companies’ lawyers decrease the bureaucratic systems ability to act.

“Eight months after pledging to put the brakes on retroactive cancellations of individual health insurance policies, the state agency that regulates HMOs said Tuesday that new rules were taking longer than anticipated because of the variety of health plans involved.”

Governor Schwarzenegger got the solution to the problem half right.

”The reforms sought by Gov. Arnold Schwarzenegger would require individuals to carry health insurance and would require insurers to sell it to everyone regardless of preexisting medical conditions.”

All California needs is to require insurers to sell it to everyone regardless of preexisting medical condition. They should not have the ability to rescind the insurance coverage. Governor Schwarzenegger caved into the healthcare insurance industry when he mandated insurance coverage. The insurance industry would love nothing better than to require everyone to buy healthcare insurance. They want the sick people to be paid for by the state and collect the premium from the young and healthy.

An industry trade group has long opposed new rules, saying they are unnecessary.

“Once proposed, new rescission rules could take as long as a year to be publicly aired and then revised and adopted or dropped. “

If the healthcare insurance industry did not have so much power and could not get away with all their abuses they would have to give people a good deal to be profitable. Everyone wants a good deal. Most of us understand the importance of health insurance. Some reject buying insurance because it is a bad deal for a low risk person paying with pretax dollars and healthcare insurance industry’s control over pricing, eligibility and rescissions.

“People Power” can solve the problem when public awareness of the healthcare industry’s abuse increases and the power of public opinion is activated.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.