Thursday, August 13, 2009

The insurance we have

CNN has a story about a former insurance executive, Wendell Potter, who is now working for a health care advocacy group.

He describes some of the "heads we win, tails you lose" practices that the "just say no" mobs are defending.
Potter described how underwriters at his former company would drive small businesses with expensive insurance claims to dump their Cigna policies. Industry executives refer to the practice as "purging," Potter said.

"When that business comes up for renewal, the underwriters jack the rates up so much, the employer has no choice but to drop insurance," Potter had said.
In June, Potter testified on insurance practices before the Senate Commerce Committee.

To help meet Wall Street’s relentless profit expectations, insurers routinely dump policyholders who are less profitable or who get sick. Insurers have several ways to cull the sick from their rolls. One is policy rescission. They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment. ...

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–leaving workers uninsured.

The testimony describes other skeevy practices, such as selling essentially worthless "limited-benefit" insurance.

You can read more from Wendell Potter at his blog.