An industry built on restricting care

THIS SUMMER, UnitedHealth Group, one of the country's largest insurance companies, with 70 million customers, took its show on the road.

In July, its shiny black-and-blue 18-wheeler pulled up and parked a few blocks from Capitol Hill. On the side of the vehicle were photos of smiling doctors and patients, with the slogan "Connecting You to a World of Care." Inside was a state-of-the-art mobile medical clinic, which doctors use to diagnose and treat distant patients via high-definition video conferencing and satellite TV.

Executives from UnitedHealth were there to "connect" with members of Congress--and "welcome" them to the world of telemedicine. Judah Sommer, head of the company's Washington office, told Business Week reporters that the promotional semi-trailer full of high-tech medical equipment "puts a halo on us; it humanizes us."

On UnitedHealth's Web site, the company explained the concept: "Connected Care" would be the first national tele-health network, and it would connect patients to leading primary care physicians, specialists and hospitals, "regardless of location."

But not regardless of insurance status.

The millions of uninsured Americans won't be welcomed into the mobile medical clinic for treatment as it stops around the country.

That, of course, is the way it works with a health care system that remains dominated by private companies. Despite the clever public relations maneuvers to convince us otherwise, the basic reality is that pursuit of profit is the core mission of the private health insurance industry, not patient care, wellness or satisfaction.

That pursuit has been successful, too. From 2000 to 2007, annual earnings for America's top 15 health insurance companies increased from $3.5 billion to $15 billion. In 2007 alone, UnitedHealth Group raked in $4.7 billion, WellPoint got $3.3 billion, and Aetna took in $1.8 billion.

The insurance giants have a serious image problem though, especially with health care reform taking the national stage and the spotlight directed at their business practices. The fact is that the vast majority of Americans don't like or trust them.

Even President Barack Obama, while determined to keep the "stakeholders" on board with reform proposals, has said that insurance companies hold the American people "hostage" and must be "kept honest."

One recent poll asked people what the biggest problem was with the U.S. health care system. Nearly 60 percent of people said it is too profit-driven. Asked for the specific shortcomings of the system, 43.1 percent ranked dealing with insurance companies first, and 49.8 percent replied not having insurance.

THE HOSTILITY toward insurers wasn't always so pervasive and open. It has grown as corporations that purchase health care for workers have adapted to changes in the health care marketplace over decades--and as the number of uninsured in America climbed toward nearly 50 million.

Insurance premiums for family coverage have surged four times faster than the increase in wages (before inflation is accounted for) since 2001. The average premium for family coverage under an employer plan in 2007 was just over $12,000--with workers picking up about 30 percent of the cost on average. Workers contribute an average of $273 a month toward health insurance under these plans.

For those who aren't covered under an employer insurance plan, purchasing coverage on the individual market is literally impossible for millions--and an expensive, downwardly mobile lifestyle change for those who manage to scrape together the monthly premium.

For example, Regence Blue Shield raised premiums by an average of 17 percent in July for individual health-plan members. For Gail Petersen and her family, that meant another $300 a month--now, she and her husband pay $1,700 a month to cover their family of five, according to a Seattle Times report.

And that's for a policy that doesn't even meet all their needs. One of Petersen's sons takes a prescription drug that costs $1,300 a year--which by itself just barely fit under the Regeance cap on drug coverage. So Petersen and her husband had to buy a second policy to cover prescription drugs, at a cost of $350 a month.

And that's just the problems with the price tag. There's even more anger at the insurance industry toolkit of tricks to limit how much they're responsible for in paying for people's health care problems.

One tactic is called "medical underwriting." This is how insurers subdivide individuals and employee groups into different "risk pools," according to their health profile--and therefore, they're likelihood to use their insurance to pay for health care costs. By treating those more likely to need care differently from those who are less likely, the insurance companies can maximize the bottom lines.

This division of people into categories of eligible and ineligible to receive coverage has seeped into the current national debate on health care--and served to pit sick against healthy, old against young, women against men, employed against unemployed, insured against uninsured, undocumented immigrants against citizens.

How many times recently have we heard the following (and not just from right wingers but from liberals): the uninsured and undocumented are swamping emergency rooms and driving up costs because this is their source for primary care; the elderly are receiving too much costly and useless end-of-life care; the young and healthy just don't want to buy insurance, and when they do get sick or injured, "we" have to pay for it; the obese, smokers and diabetics make poor lifestyle choices, and taxpayers end up footing the bill.

All these divide-and-conquer arguments are present in medical underwriting. The practice is governed by a perverse law of inverse coverage: the more you need health insurance, the less you will receive, and the more you will have to pay.

Likewise, insurance companies are rightly despised for their record of screening applicants for "pre-existing" conditions. Beneath this industry scandal is one of the central contradictions of market-driven, for-profit health care: people who need treatment--for anything, from AIDS to a yeast infection--are avoided because insurers would have to pay out claims. The industry's focus is on what it calls the "medical loss ratio"--how much the company "loses" when it pays out medical benefits. As Mahar writes in Money-Driven Medicine:

A managed care plan can keep its medical loss ratio low in two ways: by raising premiums or by keeping a tight rein on benefits. Most try to do both, and in 2003, the HMO industry as whole succeeded, reporting total earnings of $5.5 billion, up 83 percent from $3 billion in 2002.

Melissa Gannon, vice president of Weiss Ratings, a firm that tracks insurance industry medical loss ratio, explained the consequences in cold business terms:

Profitability continues to improve as insurers raise premiums and restructure policies to reduce costs. While this bodes well for the industry's overall health, rising premiums have forced many consumers to select more restrictive health plans or opt not to purchase insurance entirely.

One sleazy industry practice that has gotten some needed exposure lately is called "rescission." Basically, this is when insurers go looking for excuses to get out of paying what they owe someone who makes an insurance claim.

A bloated bureaucracy of actuaries, physicians and MBAs is employed by the companies to analyze health data and trends, pore over patient's medical records, and come up with reasons for denying claims. One favorite is to review original applications for coverage to look for omissions or evidence of something that could be considered a "pre-existing condition."

Robin Beaton's story captures the human cost of rescission. As she related her story to television journalist Bill Moyers, in May, she saw a dermatologist for a skin condition. The doctor wrote in the chart a word that could be construed as "precancerous."

The next month, Beaton was diagnosed with invasive breast cancer. She was pre-certified for a double mastectomy by Blue Cross and Blue Shield, but a week before the surgery, her coverage was canceled because of "inadvertent omissions in her original application." That one word in the chart was used to cancel her coverage. The hospital demanded a $30,000 deposit to perform the surgery.

Such stories are hard to comprehend, but they are the natural outcome in a system where rejection of claims is a crucial part of accumulating profits. The House Energy and Commerce Committee recently investigated three insurance companies for canceling coverage of 20,000 people in a five-year period--at a savings to insurers of about $300 million in claims.

A new study by the Institute for Health and Socio-Economic Policy found that more than one of every five requests for medical claims for insured patients was rejected by California's largest private insurers--even when the claim was for treatment recommended by a patient's doctor. In the first six months of the year, according to the study, PacifiCare denied 40 percent of California claims and Cigna one-third.

As Deborah Berger, co-president of the California Nurses Association/National Nurses Organizing Committee, said:

With all the dishonest claims made by politicians about alleged "death panels" in proposed national legislation, the reality for patients today is a daily, cold-hearted rejection of desperately needed medical care by the nation's biggest and wealthiest insurance companies, simply because they don't want to pay for it.

Another insurance industry tool to increase profits is called "account purging"--it's aimed primarily at small businesses. Insurers track medical claims and red flag a company if workers are filing too many, by their standards. When a policy is up for annual renewal, the underwriters jack up rates so high that owners either have to shift the cost to employees or drop coverage completely.

Large businesses are also subject to purging--which is what's behind the regular switching of hundreds of thousands of employees from one group of HMOs and PPOs to another.

IN HIS speech to a joint session of Congress on health care earlier this month, President Obama correctly diagnosed the some of the problems in health care when he talked about pre-existing conditions, rescission, caps on coverage, denial of care and the enormous human suffering and financial strain millions have endured. As Obama explained:

Insurance executives don't do this because they are bad people. They do it because it's profitable. As one former insurance executive testified before Congress, insurance companies are not only encouraged to find reasons to drop the seriously ill; they are rewarded for it. All of this is in the service of meeting what this former executive called "Wall Street's relentless profit expectations."

Now, I have no interest in putting insurance companies out of business. They provide a legitimate service and employ a lot of our friends and neighbors. I just want to hold them accountable.

The former executive Obama is referring to is Wendell Potter. He was director of corporate communications for Cigna and became a whistleblower--an insider for 16 years who began to speak out about the industry's tricks and lies.

In a tell-all interview with Bill Moyers, Potter confessed how insurers care about profits not patients, use scare tactics to kill reform, and hire lobbyists to both buy and bully politicians to support legislation favorable to their bottom line. In a fascinating account, Potter exposed the political strategy developed by the insurance lobbying group America's Health Insurance Plans to discredit Michael Moore's documentary, Sicko.

Obama should listen more closely to Potter, because Potter argues convincingly that the industry will never agree to any reforms or regulations that reverse the medical loss ratio--any that have their support are sure to be sufficiently toothless to not affect profits.

In the case of Obama's proposals on health care reform, the industry is willing to accept some restrictions on their sleazy practices like rescission--as long as they get the individual mandate, under which people without coverage will be forced to buy a stripped-down, high-deductible plan from a private insurer, or be penalized.

"They want all the uninsured to have to be enrolled in a private insurance plan," Potter explained. "They see those 50 million people as potentially 50 million new customers. They see this as a way to essentially lock them into the system, and ensure their profitability in the future."

The health insurance industry will not be accountable to Barack Obama or to the patients they insure. They are accountable to Wall Street investors.

That's why the real solution to the health care crisis will ultimately mean putting the insurance industry out of business--and creating a health care system that is based on human need, and not investor greed.