Why insurance companies suck

Here’s one of millions of examples.

The untimely disappearance of Sally Marrari’s medical coverage goes a long way toward explaining why insurance companies are cast as the villain in the health-care reform drama.

“They said I never mentioned I had a back problem,” said Marrari, 52, whose coverage with Blue Cross was abruptly canceled in 2006 after a thyroid disorder, fluid in the heart and lupus were diagnosed. That left the Los Angeles woman with $25,000 in medical bills and the stigma of the company’s claim that she had committed fraud by not listing on a health questionnaire “preexisting conditions” Marrari said she did not know she had.

By the time she filed a lawsuit in 2008, she also got a diagnosis of pancreatic cancer and her debts had swelled beyond $200,000. She was able to see a specialist by trading office visits for work on the doctor’s 1969 Porsche at the garage she owns with her husband.

This outrageous behavior by insurance companies happens way too often in this country. It’s an outrage and it’s why we need reform. Insurance companies want to increase profits, so they screw over patients by canceling their policies when they need it most.

In the past 18 months, California’s five largest insurers paid almost $19 million in fines for marooning policyholders who had fallen ill. That includes a $1 million fine against Health Net, which admitted offering bonuses to employees for finding reasons to cancel policies, according to company documents released in court.

If health care reform implodes this year, the administration could ratchet up the pressure by having the Justice Department investigate these companies for fraud and potential RICO charges. There was a clear conspiracy to screw over patients, and they ought to be held accountable.

This also highlights why it’s important to pass reform with or without the public option. Insurance reform would benefit millions of Americans by protecting them from these practices.

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Will liberals step up to the plate?

Many liberals are furious over the possibility of losing the public option, and they’re pissed at President Obama for hinting that he could support a bill without it. One problem, however, has been the simple fact that the angry right has been out-organizing the left when it comes to health care.

That may be changing, as the Huffington Post reports that liberals are starting to out-number the health care opponents and screamers at the town hall events.

This can help, but they need much more. If they want to sway wavering members of Congress, then they have to do a better job of mobilizing support for health care reform and the public option.

I support the public option, but I’m not willing to kill health care reform if we have to settle for co-ops instead.

The status of the health care debate

Ezra Klein has an excellent summary of the health care debate and where it currently stands. He does a great job of separating the actual policy debates going on in Congress from some of the silly issues being argued by the public.

Does health care really need to be for-profit?

Wouldn’t a not-for-profit system work better, at least with respect to hospitals?

Taking on the health insurance companies

Anyone wondering how the health insurance companies have been increasing their profits at such a rapid rate should read this recent article from BusinessWeek. It appears that large health insurers completely dominate the market in many states.

The insurance industry is up in arms over congressional proposals to create a publicly financed competitor in an effort to bring down health-care costs. That may be because it doesn’t have to face much in the way of competition now: Most regions of the U.S. are dominated by just one or two health insurers.

Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market.

Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same.

Ezra Klein makes a similar point in the Washington Post.

In the modern health-care system, there is no higher power than the insurance market. And the insurers who populate that market have grown all the stronger. The Justice Department judges an industry “highly concentrated” if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.

Economics textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period.

We have a system that is not sustainable. This isn’t capitalism – instead we have several large insurance companies practically stealing money from American taxpayers.

Right now, President Obama is trying hard to get a bill with the help of all the major players, including the insurance companies. Therefore we’ve seen him go after costs and premiums, but he has not taken on the insurance companies in a direct manner.

If the current effort at reform fails or stalls, expect to see a full-throttled attack against these companies that informs the American people just how much money they are making and the tactics they are using to deny coverage to pad profits.

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