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Former Health Exec Testifies: Insurers “confuse their customers and dump the sick”

This will come as a great shock to you, I’m sure, but private for-profit health insurance companies have bilked their customers out of billions of dollars in medical bills the insurance companies themselves should have paid. That’s “billions” with a “b.”

While saying they want reform, they’ve been fighting tooth-and-nail to kill a public option, because—and this is the argument they’re using as I understand it—in a capitalist, free market system, they shouldn’t have to compete for customers. That’s socialism! And the really scary thing is, the insurance companies are even richer and more powerful than they were the last time they killed a serious attempt at reform in 1993.

From the Washington Post:

Health insurers have forced consumers to pay billions of dollars in medical bills that the insurers themselves should have paid, according to a report released yesterday by the staff of the Senate Commerce Committee.

The report was part of a multi-pronged assault on the credibility of private insurers by Commerce Committee Chairman  John D. Rockefeller IV (D-W.Va.). It came at a time when Rockefeller, President Obama and others are seeking to offer a public alternative to private health plans as part of broad health-care reform legislation. Health insurers are doing everything they can to block the public option.

At a committee hearing yesterday, three health-care specialists testified that insurers go to great lengths to avoid responsibility for sick people, use deliberately incomprehensible documents to mislead consumers about their benefits, and sell “junk” policies that do not cover needed care. Rockefeller said he was exploring “why consumers get such a raw deal from their insurance companies.”

The star witness at the hearing was a former public relations executive for major health insurers whose testimony boiled down to this: Don’t trust the insurers.

“The industry and its backers are using fear tactics, as they did in 1994, to tar a transparent and accountable — publicly accountable — health-care option,” said Wendell Potter, who until early last year was vice president for corporate communications at the big insurer Cigna. […]

(Mr. Potter’s entire testimony to Congress can be downloaded here (h/t Jamie Court at the Huffington Post). I highly recommend it.)

Many Americans pay higher premiums for the freedom to go outside an insurer’s network of doctors and hospitals. When they do, insurers typically pay a percentage of what they call the “usual and customary” rates for the services. How insurers determine the usual rates had long been opaque to consumers and difficult if not impossible for them to challenge.

As it turns out, insurers typically used numbers from Ingenix, a wholly owned subsidiary of the big insurer UnitedHealth Group. Ingenix had an incentive to produce benchmarks that low-balled usual and customary rates and shifted costs from insurers to their customers, the report said.

Ingenix got its data from the same insurers that bought its benchmark information, the report said. Insurers that contributed information to Ingenix often “scrubbed” their data to remove high charges, and Ingenix further manipulated the numbers, removing valid high charges from its calculations, the report said.

Read the whole article here.

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