I’m Sure the Market Would Have Sorted This Out
by matt at 6:00 am on March 26th, 2007 in 2008 Presidential, Health CareWhile Barack Obama is fumbling around for a consensus on national health care, those who don’t have the kind of insurance that comes with being a member of Congress face cancelled policies for the grave offense of simply filing a claim:
State regulators said they are fining Blue Cross of California $1 million for “routinely” canceling health insurance policies of individual members who filed claims.
The Department of Managed Health Care based the fine on a survey of 90 policies randomly selected from among 500 that Blue Cross rescinded in 2004 and 2005.
Investigators found in all 90 cases that Blue Cross failed to comply with a state law that allows rescission of coverage only if the insurer proves members intentionally withheld information on pre-existing conditions when they applied. State officials said Blue Cross did not prove the rescissions were warranted.
Those on the market-worshiping right will tell you that Blue Cross of California will pay a price for this behavior in the form of decreased demand for their products due to lower perceived value vis-à-vis their competitors who don’t cancel policies in violation of state law. But this assumes a lot, including that those consumers who lost coverage were able to find new coverage before thousands of dollars of additional bills accrued, and the fact that since Blue Cross of California was the first company audited, the other insurers may well be conducting business in exactly the same manner.
The Market is simply inadequate when it comes to many things, and health care delivery is chief among them. The current President has made it clear through his inaction in the face of the rise in uninsured Americans, and his recent counterproductive health care tax cut proposal (covered here, here, and here) that he doesn’t intend to fix the problem. The next President will inherit a situation worse than the one today. There is no time to waste, the American people need to be made aware of the nature of the change that is needed, and the sooner the better.
Terence Kelley wrote:
What message does Blue Cross send to those without insurance coverage? “DO NOT APPLY HERE FOR INSURANCE COVERAGE IF YOU PLAN TO LIE ABOUT YOUR HEALTH HISTORY”
It could work out that this million dollar fine will dissuade others from applying, and they will go find another company to lie to, in the hopes that they get some coverage.
The victims of Blue Cross will go on welfare to pay their bills–unless they get jobs with group health benefits. Did I say victims? If a young man went 5 years without insurance coverage, and only thought to by some when his child became ill and needed surgery, and then lied about the child’s health condition, should we call him a “VICTIM” ?
This was NOT the first company audited. The Dept of Insur audits over 40 companies a year on claims practices and compliance with the Ca Insur Code.
Blue Cross is unique–their rescission practices have been horrible–for over 15 years. And the Dept of Insur was aware, and choose to have a “hands-off” attitude towards these practices that destroy lives of patients. Not until Garamendi make a comment about one year ago did the Dept of Insur express any interest on the conduct of Blue Cross.
The report of claims activity is still “under consideration” according to my sources. Talks of a fine that exceeds the $1,000,000 levied by the Dept of Managed Health Care are being met with stiff resistance by some in the Department of Insurance.
Attempting to regulate this giant entity is like doing a traffic stop on the President—nearly impossible because of political consequences.
See http://www20.insurance.ca.gov/cyberdocs/Libraries/DOCS_WEB/Common/frameset.asp for the list of Market Conduct Examinations of the Ca Dept of Insurance. Check list often. When Blue Cross report is concluded, details of the $2.5 million fine will be available.
Posted 28 Mar 2007 at 8:09 am ¶
sarabeth wrote:
who is this guy and who is paying him to say this?
read the post, buddy? BCC cancelled policies even when there was no evidence claimants had lied on their applications. that’s why even regulators in the land of Bush found it necessary to fine them.
Posted 28 Mar 2007 at 8:45 am ¶
Terence wrote:
“BCC canceled policies even when there was no evidence claimants had lied on their applications. ”
They did? Show me–I will put them in touch with an attorney who can obtain $16 million dollars for them.
Blue Cross does not do a very good investigation–they rescind for any basis—they do not follow the rules –everyother insurance company knows the rules, but Blue Cross has been coddled over the years and they believe they are above the law.
A good professional claims examiner will make the case to prove that there was a LIE. If they can not make the case, they pay the claim. Blue Cross has no good professional claims examiners. I know–I reviewed consumer complaints for a State Agency
and I worked for Blue Cross in another State.
Did the original post imply that policies were rescinded without basis? Sometimes journalists get ahead of themselves in cranking out the stories.
The dispute begins when one party accuses the other of telling a lie. Then they argue and bring in all the facts. Then , if it gets that far, a jury decides.
Dick Cheney is paying me by the way—but that has nothing to do with the violations of the California Insurance Code. That is about his memos on the “cover story” for the weapons of mass destruction.
Posted 28 Mar 2007 at 3:44 pm ¶
matt wrote:
yeah, they did
this isn’t about journalists getting ahead of themselves, they are merely reporting the fines.
you’re pushing your luck at this point. if you can’t be bothered to read the post, don’t comment.
Posted 28 Mar 2007 at 3:52 pm ¶
terence kelley wrote:
The matter is now in the hands of the court. The class action suit by William Shernoff has caused Blue Cross to agree to review their rescissions.
Some actions will be reversed, and some will be upheld.
The question is DID THE APPLICANT TELL A LIE ?
The answer can be obtained only by reviewing all available medical information, the questions on the application and the responses by the applicant.
Each decision is handled on merits of evidence.
If it is established that the misrepresentation was deliberate, then the policy will be rescinded. The insurance industry has had this standard in place for decades—Blue Cross is the only entity that has a standard so loose that many unintended misstatements result in the rescinding of innocent policyholders. As long as people tell lies about their health history in recent months, there will be rescissions. The applicant is obligated to answer the questions truthfully—and if the disease process has already caused visits to the ER or Dr’s office, then the disease is obviously preexisting the effective date of the contract.
To measure the state of mind of the applicant, you assemble data on what he knew at the time he completed the application. You review the responses to the health history questions. If you find a glaring misrepresentation, the policy will be rescinded–no matter how sad the circumstances .
In 2009 the legislature will establish new statutes that make it a felony to attempt to defraud an insurance company by lying on a written application.
Posted 14 May 2007 at 5:14 am ¶
matt wrote:
only an insurance industry shill would try to spin this.
Insurer ready to settle lawsuit -
Blue Cross to stop dumping patients for inadvertent errors
Posted 14 May 2007 at 5:47 am ¶
sarabeth wrote:
if anyone comes up with a way to measure the state of mind of this commenter, please share.
the post said that BCC cancelled policies even when there was no evidence claimants had lied on their applications.
i repeated that to him once, and so did matt.
and he keeps harping about people lying on their applications.
maybe if all of us say it to him in chorus, it might penetrate?
Posted 14 May 2007 at 5:54 am ¶