President Obama cited several apparent instances of health insurance companies dropping the policies of sick people in his Wednesday address. It was powerful stuff. But what the president said was highly misleading, concerning both the specifics of the cases and practice itself (called recission).
Scott Harrington, a health care management specialist, explained:
Traditional practice, governed by decades of common law, statute and regulation is for insurers to rely in underwriting and pricing on the truthfulness of the information provided by applicants about their health, without conducting a costly investigation of each applicant’s health history. Instead, companies engage in a certain degree of ex post auditing—conducting more detailed and costly reviews of a subset of applications following policy issue—including when expensive treatment is sought soon after a policy is issued….
The president’s second example was a Texas woman “about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne.” He said that “By the time she had her insurance reinstated, her breast cancer more than doubled in size.”
The woman’s testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist’s chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.
These two cases are presumably among the most egregious identified by Congressional staffers’ analysis of 116,000 pages of documents from three large health insurers, which identified a total of about 20,000 rescissions from millions of policies issued by the insurers over a five-year period. Company representatives testified that less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).
Here’s a little tip: Don’t lie to your health insurance provider.
The second must-article on the health insurance front today is from today’s National Review online—it explains that the rules proposed by the president simply won’t work in a free society. If President Obama forces everybody to buy an insurance policy, whether they want to or not, it will be the first time in history that citizen ship has been predicted on buying a product:
If you think that you are likely to cost less than your share of the nation’s medical expenses, and you have freedom, you may reject this bad deal. But if only the people who expect they will have higher than average medical expenses take the deal, again, the system becomes untenable. The president wants insurance to be structured in a way that cannot arise in conditions of freedom. Hence those conditions must be revoked.
Obama drew an analogy between compulsory health insurance and compulsory auto insurance. But never before has the federal government required the purchase of a product as a condition for lawful residence in this country. (No state actually forces anyone to buy a car.) An individual mandate would be an extension of federal power that raises serious constitutional issues. It may even be said that while the “public option” — the proposal, that is, for a government-run insurance program — has caused the most controversy for its socialistic aspects, it is the mandate that most clearly exposes the coercive nature of the liberal version of health-care reform.
By the way, the president might enjoy demonizing the insurance companies as a rhetorical flourish. But are you kidding? Many health insurance executives are positively salivating over the prospect of Obamacare. Whether they ultimately can compete with a government option is another matter. But in the meantime, they’ll have the best marketing policy known to man: government coercion.