Wendell Potter Speaks About the Health Insurance Industry’s Lethal Bottom Line – The Algorithms
Posted Dec 07 2009 12:32am
Wendell Potter is now writing at the Huffington Post and write very clearly here and I agree whole heartedly, it’s the formulas as he calls them, in other words the complicated algorithms that cut you off and deny care when you or your group no longer provides profit. In the text he makes one point very clear and this has been said many time on the web and on this blog to, but the words about sum it up better than I have heard. He knows, he spent years working with those formulas and algorithms at Cigna.
Claims that fall into categories that show any indication of “fraud” as programmed by the algorithms that can be changed, can be denied. One of the strangest parodies about all of this is that that the exact same companies who have used corrupted data bases that have resulted in court cases with more to come, are some of the same companies that are being awarded contracts to prevent fraud, like in the state of Washington, does this make sense to hire the ones who were fraudulent to prevent fraud? I don’t understand this process and in addition the state is also trying to figure out whether or not to rebid their contracts for insurance carriers too.
Last, Wendell Potter speaks about the provision proposed by Al Franken which of course are not popular with the insurance carriers.
Is the health insurance business tightly tied to Wall Street, you bet and Wall Street makes all their money too from those algorithms, ask any broker, investor, etc. and they can all tell you “about the algos” and depending on how they are calculated, it requires pulling funds from somewhere, usually the dollar amounts actually going to healthcare which has been a major battle in California as well with court cases filed.
There was a time, in the early 1990s, when health insurance companies devoted more than 95 cents out of every premium dollar to paying doctors and hospitals for taking care of their members. No more. Since President Bill Clinton's health reform plan died 15 years ago, the health insurance industry has come to be dominated by a handful of insurance companies that answer to Wall Street investors, and they have changed that basic math. Today, insurers only pay about 81 cents of each premium dollar on actual medical care. The rest is consumed by rising profits, grotesque executive salaries, huge administrative expenses, the cost of weeding out people with pre-existing conditions and claims review designed to wear out patients with denials and disapprovals of the care they need the most.
Sen. Al Franken (D-Minn.) is now leading a group including Sens. Jay Rockefeller (D-W. Va.) and Blanche Lincoln (D-Ark.) to introduce an amendment that would go further by requiring that 90 percent of the money consumers spend on health insurance premiums go directly to health care costs.
Wall Street investors expect insurers to pay as little as possible for medical claims. As a result, the nation's health insurance industry has evolved into a cartel of huge for-profit companies that together reap billions of dollars a year at the expense of their policyholders. The seven largest firms -- UnitedHealth Group, WellPoint, Aetna, Humana, CIGNA, Health Net, and Coventry Health Care -- enroll nearly one in three Americans in their health insurance plans. This year the industry will take about $25 billion in profits for getting between American patients and their doctors, according to the industry's trade group.
And they do this by finding every excuse in the book not to pay a claim, even if it means canceling individual policies when people get sick or ridding their rolls of unprofitable small business group policies if an employee or family member falls seriously ill. They issue confusing benefit statements to members so only highly motivated and persistent challengers of their denials stand a chance of reversing an unfair decision. And in the final analysis, when an insurance company has decided it no longer can make enough profit on a particular person or employer-sponsored group, it drives them away in a process known as "purging." In this unconscionable profit-protection maneuver, an insurer will hike premiums so high that the policyholder has no choice but to pay outlandish rates for what may be a reduced benefit package, find another insurer, or simply go without coverage. The consequences of such decisions can be deadly -- but Wall Street always has the last word when profits are the main consideration.
Instead of being a formula to reward investors, a properly regulated medical loss ratio in combination with other cost containment measures in the legislation would be a reliable tool for keeping insurance company profits and administrative waste in check.