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May 08, 2002
Insurance: You Pay, They Bait and Switch
Health-care plans are beginning to feel like scams in California.by Jamie Court
Jamie Court is executive director of the Santa Monica-based Foundation for Taxpayer and Consumer Rights. This column originally appeared in the Los Angeles Times on May 8, 2002.
The revelation that health insurers will be levying surcharges of as much as $400 per day for the best hospitals shows the degree to which insurance is fast becoming a bait-and-switch scam.
Individuals sign up for a health plan primarily because of the network of doctors and hospitals in it, but the new fine print restricts that choice by adding a hefty surcharge for using the best facilities.
Health maintenance organizations and insurers have similarly forced patients to pay extra for the most effective medications. Cancer patients who switched to Medicare HMOs with the promise of greater coverage have been charged hundreds of dollars as a co-payment for each radiation treatment, something traditional Medicare fully covers.
Insurance, an agreement that for a fixed sum a company will pay for ther costs if serious illness or injury strikes, has become a process of "disinsurance," turning the promise of protection into little more than a coupon book.
HMOs and managed-care insurers have been the beneficiaries. Wellpoint, the parent company of Blue Cross, announced a 46% jump in first-quarter profit compared with last year. Kaiser Permanente, a not-for-profit company, saw first-quarter net income increase 90%.
Most disconcerting is that disinsurance is the health plans' back door to avoid California's new patients' rights laws. Since the California Department of Managed Health Care can prevent HMOs from restricting necessary access to physicians and hospitals, the plans simply started charging hefty prices for it.
The department has no jurisdiction to deal with premium increases or cost-sharing requirements. Giving it that power should warrant the attention of legislators in Sacramento. However, campaign contributions appear to have blinded politicians to the bait-and-switch tactics. For example, the state
Assembly's Health Committee has announced that it would hold all legislation for new health coverage mandates until a new commission in 2003 "studied" them.
The committee members received a total of $400,000 from HMOs and insurers during the 2001-2002 election cycle.
Assembly Speaker Herb Wesson (D-Culver City), who received $194,683 from insurers during the same period, backed the committee decision and also has reneged on a commitment made last year to our foundation to work toward giving HMO patients the right to a court trial.
Gov. Gray Davis has said that he is finished with all major patients'
rights reforms, all the while taking more than $750,000 from insurers.
Managed care's bait-and-switch tactics are plain to see. The insurers promised to maintain quality, even as they acknowledged quality problems by supporting a patients' bill of rights (albeit a toothless one). They said they would lower premiums but have stuck the second-biggest purchaser in the nation, the California Public Employees' Retirement System, with a 25%
The final thread of its promise--choice--has unraveled too. Under
disinsurance, only the richest will have the choice of medical care they need.
A state-sponsored study found significant savings from a hypothetical private health care delivery system paid for by a single public entity--the poorly named "single payer"--which would function like Medicare for everyone.
The Lewin Group, a benefits consulting group, found that expanding health coverage to all 35.1million California residents through such a model would reduce average health expenditures per family by up to $813 in 2002.
Some activists are talking about placing a "Medicare for all" plan on the 2004 state ballot.
Disinsurance has the power to make what once seemed like radical solutions to the health care crisis appear to be common sense.
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