The city attorney of Los Angeles is the most recent in a long list of lawmakers, patients and doctors to speak out against increasingly dubious practices of insurance agencies trying to wriggle out of their commitment to fund health care for their patients.
The case, filed against Health Net Inc. on Feb. 20, accuses the insurer in no uncertain terms of committing “a wide range of unlawful, unfair and fraudulent acts and practices” that “render coverage largely illusory,” according to a quote in an article by the Los Angeles Times.
It goes on to accuse the insurer of nefarious acts, such as offering illegal bonuses to agents who successfully canceled the most policies.
Both the city attorney and the Times should be commended for prioritizing this issue, not just as it relates to Health Net, but by similarly scrutinizing several other insurance agencies, including Blue Cross of California, the insurer that underwrites the student health insurance plan (SHIP) at UCLA.
Blue Cross has come under fire in recent weeks for having sent out a mass letter to doctors asking them to review insurance forms of their patients specifically for omissions that could be used to cancel insurance policies.
Doctors were outraged by the request, rightly asserting that it constituted a breach of doctor-patient confidentiality and that if patients believed they would be excluded from care, they would stop reporting pre-existing conditions. This, in turn, would reduce doctors’ ability to provide effective care.
Graduating students are one of the groups for whom the aggressive insurance cancellations could be the most damaging.
While some students may have been insured by their parents before coming to college and all have had the option of using SHIP while attending UCLA, many graduates will never have dealt directly with health insurance for themselves.
Graduates applying for insurance for the first time may have trouble accurately completing the requisite forms. One of the accusations in the lawsuit is that Health Net deliberately crafted forms so that they would be difficult to understand, thereby increasing the number of mistakes that could be used to justify cancellation.
First-time applicants would be the most vulnerable to these type of errors.
Whistle-blowing documentaries like Michael Moore’s “Sicko” have brought more attention to the problems of private health insurance by highlighting the plight of particular patients.
However, there are also more hidden costs to this type of corporate fraud.
Along with those who cannot afford or choose not to purchase insurance, patients who acquire insurance only to have it canceled constitute an even greater burden on public services.
They are more likely to over-use emergency room services for minor illnesses or to ignore minor illnesses until they develop into major illnesses that take more resources to treat (causing them to exhaust emergency room resources again), all of which costs taxpayers money.
If California taxpayers are already picking up the tab as private insurers continue to drop the ball on providing health care, it creates a persuasive argument for state-funded care. After all, as long as we’re paying for it either way, we might as well design a system that works.