Reprehensible Behavior a Cornerstone of its Business Model

Time for a rant.

Although I (and many others) have long been critics of Wall Street's incredibly sleazy, recklessly psychopathic, and relentlessly self-destructive underbelly, there is another corner of the financial services industry that seems to have made reprehensible behavior a cornerstone of its business model.

As the New York Times reports in, "Insurers Alter Cost Formula, and Patients Pay More," the insurance industry seems intent on making Congress look like a bastion of honesty and ethical behavior.

Despite a landmark settlement that was expected to increase coverage for out-of-network care, the nation’s largest health insurers have been switching to a new payment method that in most cases significantly increases the cost to the patient.

The settlement, reached in 2009, followed New York State’s accusation that the companies  manipulated data they used to price such care, shortchanging the nation’s patients by hundreds of millions of dollars.

The agreement required the companies to finance an objective database of doctors’ fees that patients and insurers nationally could rely on. Gov. Andrew M. Cuomo, then the attorney general, said it would increase reimbursements by as much as 28 percent.

It has not turned out that way. Though the settlement required the companies to underwrite the new database with $95 million, it did not obligate them to use it. So by the time the database was finally up and running last year, the same companies, across the country, were rapidly shifting to another calculation method, based on Medicare rates, that usually reduces reimbursement substantially.

“It’s deplorable,” said Chad Glaser, a sales manager for a seafood company near Buffalo, who learned that he was facing hundreds of dollars more in out-of-pocket costs for his son’s checkups with a specialist who had performed a lifesaving liver transplant. “I could get balance-billed hundreds of thousands of dollars, and I have no protection.”

That's not the end of it, of course. In fact, all it takes is about 10 minutes of Googling to come up with plenty of other stories about an industry that apparently feels really good about doing bad:

"MetLife Settles Suit Over Missed Beneficiary Payments"

"Insurers Probed by New York Over Force-Placed Coverage"

"Hartford in $24 Mln NY Insurance Settlement"

"Will Farmers Insurance Settlement Turn into a Good Deal For Customers?"

"A Class Action Lawsuit Alleges Wells Fargo Partnered With Insurers To Rip Off Homeowners"

"ANALYSIS: Health Insurers Try To Fool Congress With Fuzzy Math"

"Adjusters: Insurance Companies Preventing Policy Payouts"

"Insurance Company Ordered to Pay $34 Million For Kicking 90-Year-Old Arlene Hull Off Plan"

"As Weather Gets Biblical, Insurers Go Missing"

"Insurance Company Sued By Sewage Plant Owners: Binghamton, Johnson City Say Company Improperly Withheld Payment"

"Aetna Rate Hike Is Deemed 'Excessive' By California Regulator"

"Maryland Law Would Ban Insurers From Requiring Consumers ‘Bundle’"

"Class Action Lawsuit Filed Against Citizens Property Insurance Corp."

"MetLife Must Defend Lawsuit Over Retained Asset Checkbook"

Comments

[Anon]

Don't forget about this - slightly off point - but highly related story:

http://www.nytimes.com/2012/04/25/business/debt-collector-is-faulted-for-tough-tactics-in-hospitals.html?_r=1&hp

[Harrington Brooks]

How can they just change the calculation method at will and manipulate data - this will affect so many people.

[Tom]

As usual the corporations can stick it to the consumer any time they want with no accountability, no ethical dilemmas and law enforcement on their side (people have been put in jail for failure to pay even petty bills recently).

What i want to know is how the U.S. can house so many people in their prison system when the tax base that supports it all is eroding substantially? Where's the money come from?

Insurance companies in general are bad deals any more. Now, homeowners can be denied coverage or the company can just NOT PAY claims after tornado damage or floods because it would severely impact the bottom line! They're refusing to even offer coverage in some areas (because it would be too risky).

The entire financial sector is collapsing and it's now really ugly for everyone. State and local governments are going bankrupt or cutting police and fire services, post offices are closing, pensions are being cancelled after a lifetime of contributions, students are by and large graduating with no job prospects and a ton of debt that can't be dissolved under any circumstances (even death doesn't let you off - your family may have to pay, unless they spend the money to fight it legally), and it goes on and on. America is now a 3rd world country masquerading as a "super power."

[Casey Raskob, Esq.]

One point missing from all these health insurance debates, is that "insurance" is sold only to the employed, in a vast majority of cases. Lose your job, lose your insurance. This then drops you into the public pool of Medicaid...there is a whole industry devoted to spending down (giving away all your money and property) when you have to go this way. I've seen it here in the US.

I have also seen first hand Canada and Germany health systems, with relatives. The fact that your job and your health insurance are not related is a HUGE difference. We recently saw in Canada a young man (50's) with early onset Alzheimer's. He was directly comparable to a friend's father here in the US. No fighting with nursing homes. No Medicaid "spend down". His daughter was put through hell to get him help. This did not occur to the relative in Canada, whose family remains in the "family residence" and they were not bankrupted.

I have no idea why folks rush to the "tender mercy" of private health "insurance". I've seen three systems at work, and as someone who has to buy in the private market, I would love to be covered by either Germany or Canada's systems....

[Don Levit]

Insurers are primarily wholesalers passing on increasing costs to the retailers.
I believe a lot of these reactions by insurers result from the health care cost bubble of the providers.
Just think about the cost of insurance itself to be too pricey?
What if someone could afford the car, but not the insurance to cover it?
Don Levit

[Walter Wit Man]

This industry has enjoyed "tort reform" like protections since the 70s when ERISA was passed. It is really hard to sue a health insurance company and Congress took most people's bad faith insurance tort claims away from them! So whereas a person could sue an insurance company for failing to pay on an auto liability claim where it was obvious they had to pay, a person can not sue under the same theory on a health care insurance tort claim. In other words, insurance companies are allowed to commit bad faith torts! It's the business model our government created!

Also, this industry enjoys exemption from antitrust laws.

Also, Obamacare expands this predatory industry! What a travesty.

Health care is the area where it is most obvious capitalism doesn't work. Socialism is much better for this sector of the economy.

The evidence is clear: only single payer or socialized medicine will solve our health care problems. It's the only way. Which is why both parties are acting like it's crazy and there is no way in hell America can do this.

Of course it's possible. People love Medicare, the single payer system. It's more efficient too! This is why it's under attack from both Obama and Romney and why predatory health insurance companies are raping the body politic.

When the revolution occurs the "health care" executives should be the first ones to hang from lamp poles (well, maybe after the bankers and politicians).

[All we get is song and dance from our leadership...it's sickening]

Tavakoli: Another Financial Crisis Looming, And You're On Your Own

It's all about fraud and the subsequent cover up and ongoing bailouts. Its the credibility trap, and it continues to undermine the recovery and the real economy today.

The cover story is that these are just well meaning and extremely bright people who did their best, but a few people got carried away, and well, you know, things just happen.

It's just like MF Global, right?

The dollar based financial system is insolvent, hopelessly so, and paper claims will be arbitrarily cut in half and moreso when the time comes, much more for the many, much less for the powerful few.

It will not be pretty or fair, and the people running it simply don't care what you say or think. At this point they are beyond shame and outrage.

Members of Congress are enabling the lack of punishment and covering up great misdeeds in our financial system — and they’re doing it with no fear of consequences — i.e., being voted out of office, in which case they could find themselves the subject of investigation.

What do you mean: “covering up”?

Many people are covering up for cronies who have a lot of money sloshing around. We threw money into the financial system with no accountability and thus made the problem worse. Our system has been completely infiltrated and bought off. Things aren’t changing because Big Money doesn’t want it to change.
http://jessescrossroadscafe.blogspot.com/2012/04/tavakoli-another-financial-crisis.html

[lambert strether]

But ObamaCare's going to set up a website where all these guys can sell stuff.

Problem solved!

[ugly american]

I'm curious as to how "lambert strether" has gone from being a champion of ObamaCare to an apparent critic of it.

Or maybe there's just a whole mess of people using a Henry James character for a handle?

[Healthcare, the other debtor's prison]

The New York Times reports on a new model of emergency care—debt collectors posing as medical staff:

Hospital patients waiting in an emergency room or convalescing after surgery are being confronted by an unexpected visitor: a debt collector at bedside.

This and other aggressive tactics by one of the nation’s largest collectors of medical debts, Accretive Health, were revealed on Tuesday by the Minnesota attorney general, raising concerns that such practices have become common at hospitals across the country.

To patients, the debt collectors may look indistinguishable from hospital employees, may demand they pay outstanding bills and may discourage them from seeking emergency care at all. The attorney general, Lori Swanson, also said that Accretive employees may have broken the law by not clearly identifying themselves as debt collectors…

http://www.nytimes.com/2012/04/25/business/debt-collector-is-faulted-for-tough-tactics-in-hospitals.html

[yan]

This is why Obama-care must fail. To make it mandatory to pay these Insurance bastards is a crime.