White House redirects health reform spotlight to insurance abuses

An HHS report documents insurance discrimination against members and denials of coverage; insurers counter with report on high out-of-network physician fees.

By — Posted Aug. 24, 2009

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President Obama has been crisscrossing the nation to push health system reform this month, conducting his own town hall meetings and placing a new emphasis on overhauling the insurance industry in an attempt to wrest back control of the increasingly incendiary debate.

Lawmakers who support a public health insurance plan option are facing scores of vocal opponents at public events. Protesters accuse reform backers of supporting socialized medicine and government-mandated euthanasia, among other charges. In response to the flak, the Obama administration appears to have shifted gears by attempting to sell health system reform as "health insurance reform" -- a term White House officials began using consistently in early August.

Administration officials have started pointing more frequently to alleged insurance industry abuses as a major reason why it's in the average citizen's best interest to support the broader reform effort. Speaking at a town hall in Grand Junction, Colo., on Aug. 15, Obama immediately addressed insurance companies and discussed "the millions of people denied coverage because of preexisting conditions."

"Yesterday, I was in Montana talking about people who've had their insurance policies suddenly revoked, even though they were paying premiums, just because they got sick," Obama said. "And today we're talking about the folks ... who have insurance but are still stuck with huge bills because they've hit a cap on their benefits or are charged exorbitant out-of-pocket fees."

As part of the new strategy, the Dept. of Health and Human Services on Aug. 11 released a report examining the insurance industry's alleged discriminatory practices, including citing preexisting conditions as a reason for denying coverage.

The report highlights a research paper that examined 2007 health care data and concluded that, over a three-year period, 12.6 million nonelderly adults were denied coverage by an insurance company due to preexisting conditions. The paper was published in July by the Commonwealth Fund.

The HHS report also cited statistics on rescission. The term refers to a practice by which insurance companies review a member's application questionnaire after the insured is diagnosed with a costly condition such as cancer, and then retroactively cancel the policy if any preexisting condition was misrepresented. Critics say rescissions occur even if patients were not aware of their medical conditions at the time they applied.

"At least one insurance company has been found to evaluate employee performance based in part on the amount of money an employee saved the company through rescissions," HHS stated. Throughout the release for the report, the department referred to overall health reform as "health insurance reform."

Competing rhetoric

Administration officials are not the only ones turning up the heat on the insurance industry as they attempt to sustain a reform effort that is under stress.

House Speaker Nancy Pelosi (D, Calif.) recently stated publicly that insurers are "almost immoral" and have served as "the villains" in the health system reform debate. Other members of the administration and Congress have suggested that the industry is sponsoring some of the disruptive anti-reform protests that have gained so much publicity during the congressional August recess.

Insurance industry representatives said the new wave of criticism against them is a simple attempt to distract attention away from the declining support for a public plan option.

"An orchestrated, fabricated and irresponsible disinformation campaign is being waged against health plans and their employees," said Robert Zirkelbach, spokesman for America's Health Insurance Plans. AHIP denied that it was behind any of the organized protests.

AHIP also countered the HHS report with its own study looking at the high rates some out-of-network physicians are charging patients. The Aug. 12 report researched by Dyckman & Associates examined the 30 largest states and said some physicians who don't take insurance are charging patients "startling" fees for a variety of services. For example, a physician in one state billed a patient $6,791 for cataract surgery with the insertion of an artificial lens -- more than 11 times what Medicare pays for the same treatment, the AHIP report said.

"As policymakers pursue health care reform, we encourage them to look at how much is being charged for services, particularly since higher charges don't mean high quality of care," said Karen Ignagni, AHIP's president and CEO. She also dismissed charges that insurers are an enemy of reform, noting that AHIP first proposed health insurance reform last year. That proposal would have guaranteed no one is denied coverage because of a preexisting condition, provided the federal government required everyone to obtain insurance.

Physicians respond

The American Medical Association dismissed the AHIP report as a tactic to deflect attention away from insurers as Congress continues its drive to craft health system reform.

"To call this narrowly focused report representative of the physician community is flat-out wrong and insulting to dedicated physicians who provide medical care daily to their patients," said AMA President J. James Rohack, MD. "This is nothing more than an attempt to divert blame for inflated out-of-network charges from where it belongs -- on insurers. This is a grossly misleading report that focuses solely on finding extreme outliers in the billions of health insurance claims filed annually."

Dr. Rohack said the database insurers have used for nearly a decade to determine out-of-network pay rates is flawed, and that a Senate report released June 24 confirms that insurers "shortchange patients to increase their profits." Sen. John Rockefeller (D, W.Va.), chair of the Commerce, Science and Transportation Committee, said his panel's report revealed that "millions of Americans have been forced to pay unjustified extra charges for health insurance coverage when they go out of network."

On the AHIP study, Dr. Rohack went on to say that "the only thing this report proves is that health system reform must include insurance market reforms so that insurance better serves patients."

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A tactical strike on insurers

A new Dept. of Health and Human Services report aimed at changing the focus of the health reform debate cites statistics showing that more than 12 million adults with preexisting conditions were denied insurance coverage between 2004 and 2007. Other findings in the Aug. 11 report include:

  • 3 large insurers conducted nearly 20,000 rescissions over 5 years, saving them $300 million in medical claims.
  • Only 8% of the uninsurable population can afford the high premiums to enroll in high-risk coverage pools.
  • All high-risk pools exclude coverage of preexisting conditions for 6 months to a year.
  • 1 in 10 people with cancer reports not being able to obtain health coverage because of the diagnosis.
  • 9 states still allow insurers to cite a history of domestic violence as a preexisting condition and as grounds for rejecting a coverage application.

Source: HHS Office of Health Reform (link)

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