A Real Health Care Problem - Rescission

For all the overblown talk of “death panels” and government takeovers, American health care does have some real, and very serious problems. One of them is a nasty little practice of my corporate overlords called rescission.

Here’s my favorite snippet:

In a pending case, Blue Shield searched in vain for an inconsistency in the health records of the wife of a dairy farmer after she filed a claim for emergency gallbladder surgery, according to attorneys for the family. Turning to her husband’s questionnaire, the company discovered he had not mentioned his high cholesterol and dropped them both.

Grain of salt: that’s the version by the family’s attorney. Assuming the core facts are true, that’s a lovely story :o. The carrier can’t find an error on the sick woman’s application so they search her husband’s app and cancel him. Likely he is the “anchor policyholder” on an employer-provided plan so cancelling him boots her out of coverage also. Nice.

Emotion aside, the hard stats on rescission are hard to come by since there is little required record keeping and the carriers obviously don’t want to advertise this vicious little practice. But anecdotally, this seems to be a real practice that goes on, frequently enough to cause a bunch of public interest lawsuits, class actions and so on. A real problem with our health care system which the anti-reform screamers want to leave alone.

Yeah, the practice of “post-claims underwriting” which leads to the rescinding of policies is the sleaziest shit imaginable. A lot of times it’s not even something the customer did or didn’t report on the application that “justifies” it, but something a doctor wrote on the chart as a speculation on a condition the patient might have or a drug they might be able to take.

That’s the free market at work…ain’t it great?

Of course any reform package should outlaw this practice immediately, in the context of an individual coverage mandate (with necessary subsidies) + “take all comers” and no exclusion of pre-existing conditions. No one who’s covered should suddenly find herself not covered as soon as the poopoo hits the blower.
And if all that means that health insurance execs can’t make zillion-dollar bonuses and company profits can’t be at 20%, well, too bad. Those companies should be regulated like public utilities, as in Germany.


Well that’s…entirely unrelated to most of the other stuff. Retroactively invalidating policies is something that should be against the rules, yes, because insurance is basically gambling and the incentive to cheat and change your bet after the ball has dropped in incredibly large. Ideally, policies should be audited annually and checked for conformance with standards and not invalidated in response to claims. That basically forces the insurance company and the insured individual to put their money in the pot and take their chances for the term of the policy.

I don’t agree, however, that term exemption of coverage for preexisting conditions should be completely outside the scope of action, and I say that as an insulin-dependent diabetic. Every plan I’ve ever been on has a 90-day term where I’m on my own, after which all my prescriptions and any treatments I might need pick back up again, unless I have another insurer provide a certificate of prior coverage. So, in other words, I had to go ninety days once, about seven years ago. If you get everybody covered, that’s going to be the case for, well, everybody, so this can be achieved as a de facto sort of thing without creating an exploitable loophole where your grandma can get a job over at the Piggly Wiggly for a week just to put in for her foot amputation.

Mandating acceptance of all individuals applying for insurance is…a suspect idea. Private insurance companies are still businesses, and any losing case they’re forced to take on is going to have to be paid for out of somebody else’s pocket or they’re not going to be an insurance company for long. I would prefer to see something like the way automobile insurance works in Texas - you’re required to get it or you can’t get a license (so you require proof of insurance for certain government processes, like, for instance, getting a birth certificate, or filing your taxes). The standards for that insurance are pretty low, and there exist a number of companies offering stripped down policies specifically for getting you legal enough to drive. If we can settle on an absolute minimum standard for insurance (I would suggest that it should cover only critical care - not chronic conditions - with the primary goal of the insurance being to minimize how much money you can cost hospitals and doctors who have to stitch you back together after you fall off a freeway overpass or something), a number of providers would presumably pop up to fill that gap and we could at least get the big critical cases taken care of with a standard blanket. It doesn’t do much for ongoing care, but, and I hate to tell you this, neither does putting people on the insurance I’ve got. People don’t go to the doctor because people don’t want to go to the doctor. You’ll find out there’s something wrong with you. If your anus is bleeding or you’ve penetrated your own thigh with a power drill, you’re probably going to go to the doctor regardless - the emergency room, if not a regular provider. There exists a group of people of significant size for whom that will always be the case. Ensuring first that those people are fully covered for their practical use of the system is a good first step towards broader coverage.

That solution, I think, creates a new market for insurance (so the insurance companies won’t fight it too hard), ensures that the biggest critical costs are at least backstopped, doesn’t entirely break the system, and, best of all, doesn’t require nearly as much funding, which is the problem that will absolutely kill the public option at this point (seriously? Medicare savings? You’re financing your plan by saving money from another plan that’s already dramatically over budget? I’d say it’s like robbing Peter to pay Paul, but in this case the only thing being stolen is debt). Couple that with some reforms to get the pricing model for health care under control (do not allow the current caps-plus-annually-shifting-pay-scale thing that all insurance providers do and has led directly to a simple blood test running you three figures when I could run it myself with a microscope and a needle - not sure how the specifics of that would work, but if we don’t do that we’re never going to get costs under control anyway, since the problem is a composite issue between providers trying to make up for the cost of rare procedures by inflating the cost of common procedures as much as possible and insurance companies trying to avoid paying more than a fraction of the stated cost of ANY procedure) and some rules about when you can cancel a policy (basically requiring full coverage for an entire term after the papers are signed by both sides) and I think you’ve got an approach that you could sell to everybody and it’s a good place to start. More stuff might be required later depending on performance, but I think it’s a good compromise that avoids spending metric tons of money and still expands insurance coverage while correcting the worst excesses of the current system. The only other option that I see as working in the long run is a full-on switch over to single payer, and I just don’t believe that there’s any way in hell that will make its way through the legislature, and possibly some militia nutjobs will end up blowing up Congress or some other ridiculousness because that amount of change is a little radical to do all at once.

This is an excellent reason why the for-profit insurance model is a very bad fit to deliver health care to the general public. Health insurance is how we deliver health care in this country: direct payment has been tried and people hate it (or love it right until it bankrupts them, at which point they either die hating it or live on to hate it). So when you exclude people from coverage, you make it very difficult (often impossible) for them to get all the care they need. The idea that “you can just go to the ER” is a sick joke, and heck thats socialistic government funded medicine anyhow.

Unless you do away with health insurance and go to a full on British model, then we are stuck with health insurance of one stripe or another (and I include government based single payer insurance as one type). The trick is making it work better than it currently does. Which IMO means either single payer, or massive reform and regulation of insurance plus a public option.

There are solutions for people not going to the doctor. Give discounts for yearly checkups/healthy behavior, and people will go to the doctor every year. I think that once the insurance company makes a contract, they shouldn’t be able to drop it/change the extent of coverage without the consent of the insured. The fact that companies can save scum against the insured is messed up.

Rescission is horrifying and should be illegal.

So should punishing people for not taking the doctors advice:

Come on, Brian, you must realize that among a sizable chunk of the American public, the reason people don’t want to go to the doctor has at least something to do with “why do I want to fork out 75 bucks to see a guy for 10 minutes if it’s something that might go away on its own?” Problem is, sometimes that rash or respiratory condition will go away on its own, sometimes it’s the beginnings of something serious.

And I insist that, if private health insurance companies want to remain in that business, they should be regulated like public utilities (which is how they should have been regulated all along). They serve a social function. They’re an essential part of the public health infrastructure, much as the electric utility and the water bureau are. It’s frankly bizarre that we haven’t collectively realized this yet. Of course, the only way that a “take all comers” approach works is if the many younger and healthier people who are currently taking their chances without insurance are also enrolled in the system and are paying something into it (or having some/all of it paid for them by the taxpayers if they can’t themselves). Otherwise, of course there wouldn’t be enough money to pay for the older/sicker people.

The regulation, as in Germany, will involve even making sure that health insurance companies don’t invest their money in things that are considered too risky.

Your 90-day waiting period is probably state law. That’s nice. In New York, we finally got an 11-month waiting period. That’s a long time to be without coverage for an insurance you are paying premiums for.

Everyone else it will be 12-months thanks to a limit finally passed in HIPAA preventing insurers from making it say, till the day you die (unless state law supercedes.)

By increasing the price of the services rendered to unaffordable, you remove health queues. This is why the US system is so superior to the Canadian, where you have waiting lists…

Like they said in Braveheart, the sick cost money…the dead…cost nothing.

Btw the budget deficits created by something totally unrelated is used as the main argument to stop it, is also great.

Just an extension of starve the beast. And it works great. That Grover Norquist was a smart guy.