Inside the Insurers’ Bag of Tricks

Two newspapers take a hard look

Back in February we praised the Los Angeles Times and its reporter, Lisa Girion, for tailing California’s big health insurers and describing their tactics to avoid paying claims. The companies, she reported, like to cancel or rescind policies of people who get sick and try to get their insurance policies to pay the bills. (Hello? What else is insurance for?) How do they do it? The insurers look for any sliver of evidence that policyholders withheld information about their health when they applied for coverage. That would get them off the hook. We urged other media outlets to follow the Times’s lead and investigate such practices in their own states.

We don’t know if they read CJR, but we’re happy to see that The Arizona Republic and reporter Ken Alltucker have done just that. The Republic found that Arizona consumers had filed complaints with the state department of insurance, and examined court cases involving Health Net, one of the industry biggies, that does business in Arizona as well as in California. Health Net has been in serious trouble with California regulators, for among other things, paying bonuses

to employees who do a good job weeding insured folks from the books. The Republic focused on the cases of two women diagnosed with cancer who said that Health Net of Arizona dropped their coverage and demanded that their doctors, labs, and other medical providers refund payments the carrier had made, claiming they had not disclosed their full medical history. Both women sued; Health Net settled one suit and the other is pending.

The paper noted that Arizona insurance regulators are taking a more laissez faire approach to company shenanigans than their counterparts in California or New Mexico. The paper found that of the cases that the Arizona Department of Insurance reviewed over the past three years, the agency sided with the insurance company in every case but one. It pointed out that there had been no efforts in the state to strengthen existing laws or conduct any investigations into the practices of insurance companies. Pretty interesting stuff for residents to know.

This past Sunday The New York Times revealed another questionable insurance company practice—denying women insurance if they’ve had a previous Caesarean section. C-sections now fall into the bucket of pre-existing conditions that insurers will either deny coverage for or charge a much higher premium for. The Times told the story of a Colorado woman named Peggy Robertson whose application for coverage from Golden Rule Insurance was denied. Robertson, who says she’s in perfect health, told the Times that Golden Rule, notorious for cherry picking only the healthiest people, said it might have insured her if she were over forty, had given birth two or more years before applying, or had been sterilized. What a deal! Perhaps the most telling quote came from Susan Pisano who is a spokesperson for America’s Health Insurance Plans, the industry trade group. “In many respects it works a lot like other situations where someone has a condition that will foreshadow the potential for higher costs going forward”—which Pisano might have added, insurers don’t want to pay.

All this is significant because it foretells what Americans will be up against with health reform. Unless there is strict regulation of these kinds of insurance company practices, companies will be able to pick and choose who gets the magic ticket to health care. The press should look at how likely rigorous regulation would be under either McCain or Obama.

Some editors still resist stories about the nittty gritty of health insurance. They need to have a financial angle, a Reuters reporter told me; she said she had trouble interesting editors in the topic without one. While editors may consider policy rescissions boring, these tactics touch a lot of people now and will touch even more down the road as universal access to private coverage continues be the main thrust of reform. Instead of fewer stories, we need more stories that show exactly how insurance really works. More editors need to follow the lead of the Los Angeles Times and now The Arizona Republic.

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Trudy Lieberman is a longtime contributing editor to the Columbia Journalism Review. She is the lead writer for The Second Opinion, CJR's healthcare desk, which is part of our United States Project on the coverage of politics and policy. She also blogs for Health News Review. Follow her on Twitter @Trudy_Lieberman.