The Market Made Me Do It: Health Insurance That Disappears When You Need It

Health Net, one of California's largest health insurers, saved $35.5 million in medical expenditures for people that needed life-saving care. They did it the easy way -- they just stopped paying, ejecting the sick from their health plans.

Health Net says that they are just catching fraud. The law allows insurers to deny covering people with pre-existing conditions and Health Net claims that those they cut off -- in some cases cancer patients in the middle of critical treatment - are simply those that failed to disclose their conditions when enrolling in their system. It almost makes you want to give them the benefit of the doubt, since of course it's really the competitive system they have to live within. It's not their fault that the rules and laws allow discrimination and segregation of the sick. You know, "the market made me do it."

Never mind that the health insurance industry has consistently fought to allow the pre-existing condition exclusion in the law. The insurers are well heeled and potent political players and have so-far succeeded. For example, California health insurers spent more than $1 million in lobbying in just the first 90 days of 2004. Health Net alone spent $2.7 million in Federal campaign contributions and Federal lobbying expenses between 1997 and 2004.

On one level, the insurers are right. The current system, regardless of their role in keeping it that way, allows for (and may even depend on) such criminal denial of care to those that need it most. It's straight-up American-style health rationing -- you don't get care if you can't afford to pay or if you're too sick and expensive to cover. It makes you wonder just how many more than the 47 million uninsured that currently have insurance are really under-insured (i.e. not covered for what they need most) or provisionally insured (i.e. insured until they need it.)

But the benefit of the doubt evaporates and becomes outraged blame with the discovery that Health Net set cancellation goals and was giving bonuses to staff based on the number of people whose policies were revoked. One Health Net analyst was given more than $20,000 in bonuses by revoking over 1600 insurance policies and saving millions for the insurer. Never mind the irony of a health care company that rewards the denial of needed medical services. That's the market working in health care: sell insurance plans and collect premiums until the policy holder gets cancer, has a heart attack, or any other expensive disease.

American economic ideology today is dominated by new kinds of religious fundamentalists. Not those that believe in a supreme being, but those that profess religious, almost fanatical, belief in the unregulated "market" as the ultimate provider of all things good. "Supply and demand" is the supreme directive. Profitability and stock prices are the alter that determines virtue or sin.

And they promote so-called "market mechanisms" as the only way to ensure high quality outcomes. "Market mechanism" is the benign-sounding term that implies that only financial gain and competition produce the outcomes we want. In this case, 'market mechanism' is just another term for the perverse financial incentives Health Net used to make sure their "cancellation department" was squeezing every unprofitable policy holder out of the system. And, in pure market terms the sick are just an unrecoverable cost for which there are only two responses -- heal the patient or eject the patient. The "market" says heal if it's cheap enough and eject if cuts into the bottom line.

This isn't an indictment of all markets -- they can bring new-fangled cell phones to consumers, give people choices about what kinds of clothing to buy and helps encourage producers to innovate and continually improve service and sometimes keep prices in check.

There are simply areas in which the market stunningly fails to live up to the pronouncements of the "market fundamentalists." The unregulated market is simply unable to provide public goods that require universal, equal access.

Health care presents the classic case where the market fails and where we need other mechanisms to meet our public needs. America's market based system of health care relies on people to have enough money (individually or through their job) to pay for insurance. Only Medicare, a primarily tax-financed system takes ability to pay out of the equation and gives every American over 65 equal access to medical care. The result for those under 65 years of age: 47 million uninsured, millions more underinsured and if Health Net's revocation bonuses become the norm, then millions more with health care that disappears when you need it.

Donald Cohen is the Executive Director of the Center on Policy Initiatives, a San Diego-based research and policy center.

Cohen has over 25 years of experience in campaigns and organizations dedicated to economic justice, healthcare reform, education reform, environmental protection, and international human rights.

He is the former Political Director of the San Diego-Imperial Counties Labor Council, AFL-CIO. He is a founding board member of the Partnership for Working Families, a national federation of metropolitan-based research, policy and action centers. He also has served on the Workforce Investment Board, the Mayor's Affordable Housing Task Force and other local boards and task forces. Currently, he is a member of the Planned Parenthood Action Fund Board in San Diego.

Comments

[bobpomeroy]

Why is it so difficult to understand or communicate that if the money paid for health services was paid as taxes for universal health care that everyone from General Motors on down would benefit from improved health care. How much money has to be funnelled into the coffers of the wealthy for this to become evident. Is it simply that too many people need health care, and if so, how does it feel to deny them that and how much better off would we be if people were healthier? Is it as simple as if a person needs a fish we should hand them a serpent? Why are we believing in the serpent handlers if we are a Christian nation? Is it all about maintaining an artificial level of "need" so that the high cost of medicine is protected? Really?

[LeftRight]

Yeah, I'm getting tired of hearing about the "market" fixing everything. Every time the right mentions "The Market" I remember the fact that I used to pay for electricity as regulated by the state. Now I pay for electricity on "The Market" and I pay more for the electricity, with a much greater likelihood that I'll lose power.... And then there's my phone... I pay more for worse service in every respect, except the cost of long distance, and I'm sure that'll start going up soon...

[Elias Maxwell]

Health care should be approached by society the same as fire prevention or public safety. They are things we all may need and are willing to tax ourselves to have it available when needed. It only makes sense that health care and education be approached in the same manner.

[querencia]

Snaggster- wake up! They were revoking policies for a clearly stated reason. To EARN THEIR BONUS. Sort of like sanctioned murder or assault as far as I can tell. How the hell do these people live with themselves?

[Desiderata]

Once upon a time, the Mob decided that drugs, gambling and prostitution were not profitable enough. So the Mob sent it's sons and daughters to ivy league colleges to study banking, insurance and political science.

And they all live happily ever after.

The End.

[holliwoodinc]

Thanks for a terrific, straight-forward post, Donald. I have worked in healthcare submittals and know firsthand the dogmatic callousness that representatives of insurance companies are capable of. Thanks for shedding some light on how these companies operate. It really is chilling to think that there are people being rewarded for taking away another person's hope.

[oldpotsmuggler]

My November 12 issue of Business Week magazine has some interesting statistics derived from polling 12,000 folks in the U.S., Britian, Canada, Australia, Germany, Netherlands, and New Zealand about health care. The other six countries all have universal health care, and all spend only slightly more than half the share of GDP that we do. One third of our people want a dramatic overhaul of our health care system, double the rate in those countries. We also have the highest reported rate of medical mistakes, and the second lowest per centage of patients able to see a doctor quickly.

We pay more, and get less. Lovely!

But at least we have more people getting rich at our expense.

[retarius]

There is a certain nuttiness rooted in America's market fetish that prevents any sensible debate about healthcare.
The debate is over as far as evicence is concerned.­..socializ­ed medicine won hands down...on all metrics, cost, efficiency, longevity, child mortality, and humanity.
We just have to wait for the market fetishists (who have health care) to open their eyes....
Methinks will be a cold day in hell before that happens!

[seawolf77]

Now that I am getting gray I see things clearly and this infuriates me. As soon as people get cancer the hounds are released to prove pre-existence. Tell the truth and your premiums are obscenely expensive. This country has gone to the dogs.

[luziannagirl]

The extraterrestrial species worshipful of greed above all other values is known to Star Trekkers as the "Feringi". Needless to say, Feringi are depicted in the TV and movie series as ugly, irritating, cowardly, self-serving, and repulsive creatures; exactly what comes to mind when I hear a NeoCon extoll the virtues of the "free market".

[hopeless277]

Using a profit driven market to determine health care costs and services is like trying to play football by baseball rules. It just doesn't provide adequate health care to those who need it. The problem in the U.S. is that those who run the companies that are supposed to provide that health care don't care about the product they provide. They are in the business of making money, not providing health care. They do not care about the people they are supposed to help. Why not discontinue government funded(socialized) health care for Congress and all the rest of government. Make them individually go out and purchase health care insurance. If they love the market so much, let them take it on.

[snaggster]

Health insurance companies are really awful, but you make them sound much worse than they could possibly be. You are right that they are party to maintaining the current system, but it is the system we have. Insurers must have healthy people enrolled, not just the sick.
They were just revoking policies for no reason? Were these individual or group policies? Were these individuals not eligible?