Senate Testimony – Insurers Confuse Consumers and Dump Those Who are Sick, a Wall Street Run System

I am guessing this is probably a day that Mr. Potter didn’t particularly enjoy since he made a living through health insurance for years, but now that he is no longer an employee, he’s one like the rest of us, but has some good insight that perhaps we never get to see or hear. We had these words from the president of Blue Cross this week, but again from the same angle, no change in business plans and no compassion for health care as it should be, still healthcare by the numbers. I see more health insurance money going toward venture capital efforts these days too.

In one area he somewhat confirms what I have been saying for years, those who invest and use technology take all the money and benefits away from those who don’t, Wall Street and Health Insurance invested heavily over the years with business intelligence software for decision making processes.

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One item that I didn’t quite understand either was the X-Box competition to solve healthcare. As you can see it’s taking a lot more than a 10 million dollar prize to solve this issue, so in my estimation this was perhaps a bone thrown out to offer money whereby the full answer can’t be realized from Blue Cross. This doctor has a 65 million dollar prize for the solution to sterilizing cats and dogs without surgery and he said he offered 75 million as 10 was not enough to generate any serious interest. Interesting note though, the doctor is an animal person who spent many years in orthopedic surgery and probably had some real good insurance battles under his belt helping patients, so thus he knew the dollar amount needed for his project and oddly enough his announcement came the day after the Blue Cross 10 million dollar news. This post too was run through Fox News on the topic.

I mention this as a reflection of the lack of sincerity and reality of the organizations we are dealing with. How could a company think that by hanging a 10 million dollar carrot out there progress would be made, not to mention I think it somewhat insults the intelligence of others who want a serious and solid solution, with transparency and honesty.

I like and use technology to the hilt, but when it comes to a choice of having one of these in an office to fill in your medical information or getting people the healthcare they need with paying claims, someone else can foot the bill for the tablets and not require a health insurance venture capital organization investment, there are many more VCs out there. If claims are paid and people are taken care of, then no problem if there are profits left over, but not the other way around.

Below are a few excerpts from the testimony today. BD

A guy who spent his career working for health-insurance companies went up to Capitol Hill today and unloaded on his former industry.

Here’s how he kicked off his testimony (online here) to the Senate Committee on Commerce, Science and Transportation:

My name is Wendell Potter and for 20 years, I worked as a senior executive at health insurance companies, and I saw how they confuse their customers and dump the sick –- all so they can satisfy their Wall Street investors.

But what we have today, Mr. Chairman, is a Wall Street-run system that has proven itself an untrustworthy partner to its customers, to the doctors and hospitals who deliver care, and to the state and federal governments that attempt to regulate it.

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Those goals included covering all Americans; eliminating underwriting practices like pre-existing condition exclusions and cherry-picking; the use of community rating; and the creation of a standard benefit plan. Had the industry followed through on its commitment to those goals, I wouldn’t be here today.

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Because dumping a small number of enrollees can have a big effect on the bottom line. Ten percent of the population accounts for two-thirds of all health care spending.1 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.

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.

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An account purge so eye-popping that it caught the attention of reporters occurred in October 2006 when CIGNA notified the Entertainment Industry Group Insurance Trust that many of the Trust’s members in California and New Jersey would have to pay more than some of them earned in a year if they wanted to continue their coverage. The rate increase CIGNA planned to implement, according to USA Today, would have meant that some family-plan premiums would exceed $44,000 a year. CIGNA gave the enrollees less than three months to pay the new premiums or go elsewhere.

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There are many ways insurers keep their customers in the dark and purposely mislead them – especially now that insurers have started to aggressively market health plans that charge relatively low premiums for a new brand of policies that often offer only the illusion of comprehensive coverage.

Will Greed lead to Meltdown of the Health System?

The lack of candor and transparency is not limited to sales and marketing. Notices that insurers are required to send to policyholders—those explanation-of-benefit documents that are supposed to explain how the insurance company calculated its payments to providers and how much is left for the policyholder to pay—are notoriously incomprehensible. Insurers know that policyholders are so baffled by those notices they usually just ignore them or throw them away. And that’s exactly the point. If they were more understandable, more consumers might realize that they are being ripped off.