PERSPECTIVE ON MEDICAL INSURANCE : Insurers Put Our Health at Risk : Dangerous abuses by companies get little scrutiny from the state. Every Californian should have health coverage.
The health-insurance industry is a multibillion-dollar business making life-and-death decisions based on profit.
In the past, insurers used “community rating” to balance the cost of treating the ill against the profits from premiums paid by the healthy. In recent years, insurers have adopted a policy of “risk aversion.” This means discouraging or eliminating coverage for sick people while engaging in questionable practices that enhance revenue: raising premiums by 50% to 500% a year, delaying reimbursements for months and years, under-settling claims and refusing to insure people with “pre-existing conditions.” These practices effectively deny adequate health care to more than 6 million uninsured Californians and threaten to wipe millions more off the books. Clean ledgers, bloody hands.
“Pre-existing condition” can be interpreted very broadly. Dr. Paul Billings, a genetics researcher in San Francisco, testified at an Assembly subcommittee hearing last month that insurers have begun to deny health coverage to babies who in the womb show genetic traits without symptoms of disease. The consequences of this trend are frightening: One-third of the population of California has hereditary traits that could one day be used to deny insurance if underwriters aren’t forbidden to practice genetic red-lining. “We are creating a new underclass of the medically uninsurable, the asymptomatically ill,” Billings said.
The panel heard from numerous victims of insurance abuse. Among them:
--Z. Zimmerman of Los Angeles said that after an accident necessitating four surgeries, her monthly premium rocketed from $134 to $1,493. On New Year’s Day, she will join the ranks of the uninsurable.
--Rose Hughes of Petaluma described how, when her son got leukemia, the insurance company delayed payments for so long that the doctor refused to treat her son any longer and she lost her credit rating. She sued the company and got a substantial settlement, but how many ill people can wage court battles while fighting for their lives?
--Stan Long of Los Angeles testified that his health-insurance carrier cancelled 14,000 policyholders last May, dumping ill clients before turning around and signing up healthy new applicants. They “took away my right to die with the respect I paid for,” said Long, who has tested positive for HIV, the AIDS virus.
--Nancy Washburn of Los Angeles has been a diabetic for 25 years. Unable to find affordable insurance, she accepted a policy with a $15,000 deductible. But when she had nearly paid the deductible premium, and was about to get her first reimbursement, the insurer turned her multiple-organ disease into five separate conditions, each with a $15,000 deductible.
Who watches over this industry?
The Department of Insurance’s oversight is a grim joke. When an insurer threatened to find out the results of a confidential HIV test, Robert Low of Big Bear called the department. He was told that there was nothing wrong with the insurance company finding out the status of his health. In fact, it’s a crime to divulge information about confidential HIV tests.
Ignorance seems to be a hallmark of the department. Last year, consumer lawyer Ray Bourhis successfully sued the department to force it to prosecute insurance-code violations. He said that the state’s top official in charge of underwriting and claims had scant knowledge of the code sections he was responsible for enforcing. The befuddled official once worked in insurance, all right, but as head of the company’s building department, supervising maintenance, Bourhis said.
In 1988, the department received 53,000 complaints from consumers, a majority of them alleging health-insurance abuse. Not a single penalty has been successfully levied against a major health-insurance company in 30 years, consumer activists testified.
The maximum fine (which has never been levied) for willfully violating the insurance code is $10,000, a joke for carriers with corporate surpluses in the billions.
Heavier fines are necessary, but they won’t prevent the greatest abuse: the systematic denial of insurance to millions of people who simply can’t afford the premiums. How many average wage-earners could pay $1,400 a month?
Anger against insurance abuse in California is provoking a groundswell of support for universal health coverage. Assemblyman Burt Margolin (D-Los Angeles), who chaired the hearings, is drafting a universal coverage bill. Health Access and other groups are preparing an initiative for the 1992 ballot.
The whole country is watching. If California becomes the first state to adopt universal coverage, it would be a major step toward the creation of a national health insurance system. A 1988 Harris poll for the Harvard School of Public Health concluded that 89% of Americans believe the U.S. system requires fundamental change in direction and structure.
The chilling irony of creating a state-mandated system is that ignorant bureaucrats in the Department of Insurance might be asked to play a larger role in making life-and-death choices for us.
Given the experience of California’s 1989 auto insurance initiative, which is still tied up in the courts, health-insurance reform will take time.
“I will be dead in three years, and the health insurance system will speed my death.” said Stan Long.
The insurance industry is getting away with murder.
