I see Healthnet, one of California’s largest health insurers, is working hard to reduce healthcare costs. From the LA Times:
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.
Of course Healthnet claims that is has been defrauded by people misrepresenting information on applications, and that its not unusual for anyone to try to get out of a contract when the other party has submitted false information. But here’s how health insurers work:
“They typically pull a policyholder’s records after major medical claims are made to ensure that the client qualified for coverage at the outset.”
So, you can see how this works. Insurance companies send out legions of commission based salespeople who write policies without caring one way or another if the person is a good risk. They just want a commission. The insurance company doesn’t want to go to the expense of reviewing every application—they just file it away and collect premiums—-until there’s a claim. Then they try to dump the claim on someone else—the individual, their family, the hospital, the physicians, the government, whoever. Its a hot potato.
People get caught in a nightmare. Here’s the story of Linda Bates, buried deep in the LA Times story:
“Bates, 51, said the first notice she had that something was awry with her coverage came while she was in the hospital preparing for lump-removal surgery.
She said an administrator came to her room and told her the surgery, scheduled for early the next day, had been canceled because the hospital learned she had insurance problems. Health Net allowed the surgery to go forward only after Bates’ daughter authorized the insurance company to charge three months of premiums in advance to her debit card, Bates alleged. Her coverage was canceled after she began post-surgical chemotherapy threatments.
“I’ve got cancer, and I could die,” she said in a recent interview. Health Net “walked away from the agreement. They don’t care.”
Health Net contended that Bates failed to disclose a heart problem and shaved about 35 pounds off her weight on her application. Had it known her true weight or that she had been screened for a heart condition related to her use of the diet drug combination known as fen-phen, it would not have covered her in the first place, the company said.”
Maybe Bates should have been more careful with the application, but what exactly is being accomplished here? Other than passing around the hot potato of health care costs–that will be paid by someone no matter what,–running up administrative costs, and destroying peoples lives, I can’t see that it accomplishes anything.
Well, there is one benefit to the current system, it feeds the fanatical ideology that private everything is always ALWAYS better.