Murray Waas takes a look at health insurance companies’ practice of recission.
INSURERS’ ANATHEMA: BREAST CANCER AND PREGNANCY
The cancellation of her health insurance in June 2008 forced Robin Beaton to delay cancer surgery by five months. In that time, the tumor in her breast grew from 2 centimeters to 7 centimeters.
Two months before Beaton’s policy was dropped, Patricia Relling also was diagnosed with breast cancer. Anthem Blue Cross of Kentucky, a WellPoint subsidiary, paid the bills for a double mastectomy and reconstructive surgery.
But the following January, after Relling suffered a life-threatening staph infection requiring two emergency surgeries in three days, Anthem balked and refused to pay more. They soon canceled her insurance entirely.
Unable to afford additional necessary surgeries for nearly 16 months, Relling ended up severely disabled and largely confined to her home. As a result of her crushing medical bills, the once well-to-do businesswoman is now dependent on food stamps.
“It’s not like these companies don’t like women because they are women,” says Jeff Isaacs, the chief assistant Los Angeles City Attorney who runs the office’s 300-lawyer criminal division. “But there are two things that really scare them and they are breast cancer and pregnancy. Breast cancer can really be a costly thing for them. Pregnancy is right up there too. Their worst-case scenario is that a child will be born with some disability and they will have to pay for that child’s treatment over the course of a lifetime.”
There is supposed to be an art to setting rates for insurance. It’s called ‘underwriting.’
Underwriting may also refer to insurance; insurance underwriters evaluate the risk and exposures of potential clients. They decide how much coverage the client should receive, how much they should pay for it, or whether even to accept the risk and insure them. Underwriting involves measuring risk exposure and determining the premium that needs to be charged to insure that risk. The function of the underwriter is to acquire—or to “write”—business that will make the insurance company money, and to protect the company’s book of business from risks that they feel will make a loss. In simple terms, it is the process of issuing insurance policies.
Once an individual receives a proposal, agrees to it, and signs a contract, the insurance company bears the risk of a policy holder becoming pregnant or getting breast cancer. It’s true that the underwriter proposes a premium based in part on information obtained by the prospective policyholder, and that fraud is possible. The individual could hide the fact that they are already pregnant, for example. Or, they could fail to disclose that they’ve previously been diagnosed with cancer and that it is in remission. However, the insurance companies haven’t limited themselves to looking for such obvious fraud. Once they discover that a policyholder has been diagnosed with breast cancer they automatically look to cancel the policy on any pretext that can be found. It’s even computerized (and, thus, automated):
As part of his investigation, [Jeff] Isaacs, [the chief assistant Los Angeles City Attorney], has sought information from WellPoint about its use of algorithms to single out women with breast cancer or who are pregnant. The company has fought him vigorously and so far largely kept information from him, Isaacs said.
But in response to an inquiry last year from the House Energy and Commerce Committee, which was investigating rescission, WellPoint said that it initiates a claims review every time policyholders receive medical treatment for certain conditions. The company listed diagnostic codes that could trigger investigations. One was for breast tumors.
During an audit of Anthem Blue Cross by the California Department of Managed Health Care, company employees showed regulators internal records revealing that pregnant women also automatically had their medical histories examined.
Let’s think about this. If a policyholder failed to disclose some preexisting condition (like treatment for acne) that would have led the underwriter to offer a slightly higher premium, I can see making some adjustment in the premium. The insurance company would agree to honor their commitment to cover the cost of breast cancer treatment or pregnancy, but they’d ask for a little more money to more accurately reflect the risk they faced when they issued the policy. I think that’s fair. But that’s not what they do. They look for any minor flaw in the paperwork as an excuse to drop coverage. And they do it to women who are in the greatest need. They do it to unborn babies, for chrissakes. What does the anti-choice crowd think about that?
The company [WellPoint] prides itself on being one of the United States’ largest corporations with women at the helm. Besides Braly, two high-powered, politically connected women sit on WellPoint’s board: Susan Bayh, the wife of retiring Democratic Sen. Evan Bayh of Indiana, and Sheila Burke, who was chief of staff to former Senate Republican leader Bob Dole.
Is anyone going to miss Evan Bayh?
And, if you’re thinking there is too much big government regulation in the health care reforms, think again.
In his push for the health care bill, President Barack Obama said the legislation would end such industry practices. Making the case for reform in a September address to Congress, Obama specifically cited the cancellation of Robin Beaton’s health insurance. Aides to the president, who requested they not be identified, told Reuters that no one in the White House knew WellPoint was systematically singling out breast cancer patients like her.
Many critics worry the new law will not lead to an end of these practices. Some state and federal regulators — as well as investigators, congressional staffers and academic experts — say the health care legislation lacks teeth, at least in terms of enforcement or regulatory powers to either stop or even substantially reduce rescission.
“People have this idea that someone is going to flip a switch and rescission and other bad insurance practices are going to end,” says Peter Harbage, a former health care adviser to the Clinton administration. “Insurers will find ways to undermine the protections in the new law, just as they did with the old law. Enforcement is the key.”
Recissions are against the law now, but as we’ve seen many times since Bush v. Gore, it’s not a crime if no one will enforce the law.