Health Insurers Are Shooting Themselves In The Foot

 

If the large health insurers are trying to improve the chances of nationalized health care, they’re doing a fine job.  Tesitfying before Congress, the heads of Wellpoint, United Health and Assurant when asked if they would stop rescinding policies unless they could determine the misrepresentation was intentional, replied ‘No.’

As a wealth manager, I spend more time than I care to calculate dealing with health insurance issues for my small business clients.  Premiums continue to increase while coverage is decreased and deductibles/co-pays rise.  Add to this the chance that , when the coverage is needed most, namely in the case of serious illness, the policy could be rescinded due to a simple oversight and it’s no wonder there’s animosity toward the carriers.

There are legitimate cases where an applicant fails to disclose health issues that would impact the pricing or acceptability of the policy.  Instead of looking for ways to avoid paying claims through use of recission, the insurers should limit their recissions to cases where:

  1. The applicant clearly knew about the condition and concealed it from the insurer.
  2. The insurer would not have issued the policy had they known the information.
  3. The unreported information is directly related to the illness the policyholder is currently being treated for.

In all other cases, the insurers should be allowed to deduct the additional premium they WOULD HAVE received had they known about the undisclosed condition but should be required to pay the claim as indicated in their contract.

By taking a short-term profit view and using technicalities to avoid paying claims, they simply shooting themselves in the foot.  This type of bad ‘corporate behavior’ is making it easier and easier for the public to decide that a government-run, single-payer system is preferable to the shenanigans of a for-profit system.