PI Original Adam Doster Wednesday July 29th, 2009, 10:47am

Want To End Rescission? Pass Health Care Reform

With our economy in a devastating recession and the cost of our
inefficient health care system threatening to overload the nation's
long-term deficit, it's not surprising that the Obama administration
and congressional Democrats have used economic arguments in selling
...

With our economy in a devastating recession and the cost of our inefficient health care system threatening to overload the nation's long-term deficit, it's not surprising that the Obama administration and congressional Democrats have used economic arguments in selling their reform efforts.  But for all of the talk about "bending the curve," the Washington Post's Ezra Klein observes that a crucial component of the push for universal access has been largely ignored: "the moral case." And it's coming back to bite the party where it hurts:

The consensus Democratic health-care plan -- the basic approach that the Obama campaign committed itself to and that Democrats in Congress are pushing -- is primarily a coverage plan. It has some cost-saving features on the margins, but it's primarily a way of getting to universal coverage. You can argue for that plan in primarily moral terms, with some economic arguments around the margins. But the administration has been pushing it in primarily economic terms, with some moral arguments around the margins. And now they're caught in that dissonance.

Klein isn't alone: The Nation's Chris Hayes and The Treatment's Harold Pollack made similarly persuasive cases this week. Part of the "moral case" involves reminding Americans that without new regulations on the insurance industry, they will simply continue to make outrageous decisions about who receives coverage and who is shut out. A great example is the industry practice known as "rescission."

For obvious reasons, private health insurance companies don't like to pay for expensive procedures. In fact, they have a term for the ratio between what the company pays out in both claims and administrative expenses and what remains in profits. As for-profit entities, they try to keep that ratio low. So when folks insured on the individual market face debilitating illnesses, some insurance companies find innovative ways to kick their more expensive clients off the roles. One way is by canceling a policy because customers did not properly disclose key information about their condition. Most of the time, that is the result of an unintentional error. But as former Cigna executive Wendell Potter explained before a House subcommittee hearing in June, "[the insurance companies] 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."

According to an investigation by the subcommittee, almost 20,000 Americans previously insured by the nation's three largest insurance companies lost their coverage between 2003 and 2007 because of rescission. Some of these companies even included rescission activity on their employee's performance evaluations.

This past weekend, Chicago Public Radio's This American Life devoted a great segment to this issue. Host Ira Glass interviewed Rep. Jan Schakowsky, who sits on the subcommittee and wondered how the insurance flaks testifying in favor of the practice could "sleep at night, as people, as individuals" knowing their companies were responsible for this behavior:

SCHAKOWSKY: I hadn't even heard of it before, that you could actually be paying premiums, and then exactly when you really need the health insurance, they go back and deny it.

GLASS: And listening to this hearing, it seems like this was one of those cases were all of you really seemed really truly angry.

SCHAKOWSKY: Really truly angry, yes. And in a very emotional and personal way, yeah. This wasn't just another issue.

The entire episode is available for download here. Frontline's "Sick Around America" documentary (for all its flaws) also offered some personal stories of those effected by rescission.

Schakowsky was confident that the health care bills currently working through Congress would effectively end the practice. But that will require passage of a bill. Without it, Illinoisans could lose full coverage just when they need it the most.

Image used under a Creative Commons license by Flickr user seiuhealthcare775nw.

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