Senate Democrats

Senate Health Insurance Reform: Putting People Over Profits

Right now, too many insurance companies put profits over people.  They retroactively remove your coverage after you become sick, consider C-sections a pre-existing condition, and use a lack of transparency to fleece consumers while they make record profits.  Senate health insurance reform reverses the insurance companies’ misplaced priorities and puts the consumer first.

Insurance Companies Experience Record Profits, but Health Insurance Costs Continue to Skyrocket

In Seven Years, Publicly-Traded Health Insurance Companies’ Profits ROSE 428 Percent.  From 2000 to 2007, profits at the 10 largest publicly-traded health insurance companies jumped 428 percent, from $2.4 billion to $12.9 billion. [Health Care for America Now, 5/2009]

CEOs Made Over $118 Million in 2007.  Chief Executive Officers at those same publicly-traded companies made a combined $118.6 million in 2007 alone – an average of $11.9 million each. [Health Care for America Now, 5/2009]

Health Insurance Premiums More Than Doubled in Nine Years; That’s a Rate Three Times Faster Than Wage Increases.  While insurance companies and their CEO’s made huge profits and multi-million dollar salaries, the cost of health insurance for American families continued to dramatically increase.  According to the Kaiser Family Foundation, in the past nine years employer-sponsored health insurance premiums have more than doubled.  That rate is three times faster than cumulative wage increases. ["Employer Health Benefits 2008 Annual Survey," Kaiser Family Foundation, 2008; HealthReform.gov, accessed 7/28/2009]

Health Care Companies Increased Lobbying Efforts to the Tune of $133 Million in the Second Quarter of 2009.  While the overall lobbying declined in the second quarter, the Wall Street Journal reported that the health care industry “boosted” their efforts.  “Overall, the health-care sector reported a five percent increase in lobbying expenditures to $133 million, making it the single largest spender on lobbying of the 10 major industry sectors tracked by the Center for Responsive Politics. Health-insurance companies increased lobbying activity by 11 percent to $7.8 million, according to the data.” [Wall Street Journal, 8/3/2009]

·         Top Health Insurance Lobbyist Makes $1.6 Million a Year.  According to the New York Times, Karen M. Ignagni “chief executive of the trade group America’s Health Insurance Plans” and “the industry’s chief lobbyist” made “$1.6 million in 2007…” [New York Times, 8/5/2009]

Insurance Companies Deny Americans Coverage Because of Pre-Existing Conditions

Common Diseases, Conditions Are Often Considered Pre-Existing Conditions.  Reporting on a woman who had been denied coverage because she “was using topical medication for acne, she had once sought emergency care for a migraine and she was on Paxil,” the Minneapolis-St. Paul Star Tribune reported that, “(E)ach year, one in six Minnesotan applicants for health insurance in the individual market is denied coverage because of a variety of pre-existing conditions…  In Minnesota, the most common reasons for denial are obesity, mental health conditions, hypertension, diabetes and cardiovascular disease.  But there are less well-known reasons insurers consider on a case-by-case basis: chemical dependency, allergies that require costly injectable drugs, a previous C-section, previous use of infertility medicine or something as simple as being pregnant.” Nine states still allow health insurance companies to deny coverage to victims of domestic violence, classifying the history of domestic violence as a pre-existing condition. [Star Tribune, 1/10/2009, HealthReform.gov, undated]

Senate Health Insurance Reform Stops Insurance Companies From Denying Care to Americans Who Need It.  A recent study of adults who don’t receive health insurance coverage through their employer found that 36 percent were turned down or charged a higher price when they applied for an individual insurance policy because of a preexisting condition.  Senate health insurance reform stops this practice.  Insurance companies will no longer be allowed to deny Americans coverage because of a pre-existing condition. [Commonwealth Fund 7/2009; Affordable Health Choices Act, Senate HELP Committee, accessed 9/22/2009; Chairman's Mark, Senate Finance Committee, 9/16/2009]

Insurance Companies Save Money by Retroactively Cancelling Coverage

When People Need it Most

Former Health Insurance Insider Testified that Insurance Industry “Dumps the Sick” to Increase Profits.  In testimony before the Senate Commerce Committee, Wendell Potter, a 20-year veteran of the insurance industry, described how health insurance companies “confuse their customers and dump the sick – all so they can satisfy their Wall Street investors.”  Mr. Potter went on to state, “In the 15 years since insurance companies killed the Clinton plan, the industry has consolidated to the point that it is now dominated by a cartel of large for-profit insurers.” [Wendell Potter testimony, Senate Committee on Commerce, Science, and Transportation, 6/24/2009

Health Insurers Pull the Plug on Coverage When Patients Need it Most. “According to a new report by congressional investigators, an insurance company practice of retroactively canceling health insurance is fairly common, and it saves insurers a lot of money…  But at the hearing, insurance executives told lawmakers they have no plans to stop rescinding policies.  The act of retroactively canceling insurance is called rescission.  It happens with individual health insurance policies, where people apply for insurance on their own, not through their employers.  Their application generally includes a questionnaire about their health.  The process begins after a policyholder has been diagnosed with an expensive condition such as cancer.  The insurer then reviews the health status information in the questionnaire, and if anything is missing, the policy may be rescinded.” [National Public Radio, 6/22/2009]

·         Rescission Saved Three Largest Insurers $300 Million.  During a House hearing on rescissions, “Committee investigators found a total of 19,776 rescissions from three large insurers over five years.  The rescissions saved the insurers $300 million.” [National Public Radio, 6/22/2009]

California’s Largest For-Profit Health Insurer Targeted Ill Policyholders, Tried to Find Ways to Deny Coverage.  Blue Cross of California – “the state’s largest for-profit health insurer” – targeted sick policyholders in order to avoid paying for treatment.  A House Committee on Energy and Commerce “investigation uncovered several rescission practices that one lawmaker called egregious, including targeting every policyholder diagnosed with leukemia, breast cancer and 1,400 other serious illnesses.  Such investigations involve scouring the policyholder’s original application and years’ worth of medical and pharmacy records in search of any discrepancies.  ‘These practices reveal that when an insurance company receives a claim for an expensive, life-saving treatment, some of them will look for a way — any way — to avoid having to pay for it,’ said Stupak, chairman of the commerce committee’s Subcommittee on Oversight and Investigations.” [Los Angeles Times, 6/17/2009]

Senate Health Insurance Reform Stops Insurance Companies From Retroactively Cancelling Your Insurance When You Get Sick.  Currently, health insurance companies are allowed to cancel your policy retroactively, a common insurance industry practice called “rescission.”  Simply put, this is unfair and Senate health insurance reform outlaws this practices. [Commonwealth Fund, 7/17/08; Affordable Health Choices Act, Senate HELP Committee, accessed 9/22/2009; Chairman's Mark, Senate Finance Committee, 9/16/2009]

Certain Insurance Companies Engage in Fraudulent Activity

Health Insurance Industry Insider: Companies “Flout Regulations Designed to Protect Consumers.”  Wendell Potter, a former senior executive in the health insurance industry, testified: “I know from personal experience that members of Congress and the public have good reason to question the honesty and trustworthiness of the insurance industry.  Insurers make promises they have no intention of keeping, they flout regulations designed to protect consumers, and they make it nearly impossible to understand — or even to obtain — information we need.” [Wendell Potter testimony, Senate Committee on Commerce, Science, and Transportation, 6/24/2009

Some Health Care Insurers Delete, Defraud Claims.  “A company that operates two large health insurance plans in upstate New York has been fined $500,000 for violations that included deleting thousands of valid claims from its computer system and systematically underpaying claims in one category…  The fine was imposed on HealthNow New York Inc., a nonprofit company based in Buffalo that operates Blue Cross and Blue Shield of Western New York and Blue Shield of Northeastern New York. Together, the plans have about 750,000 subscribers.  The superintendent of insurance, Neil D. Levin, said the violations occurred from 1995 until early this year.  He said the underpayments involved outpatient psychiatric services, and added that the company had charged premiums for chiropractic coverage at rates that his agency had not approved.” [New York Times, 8/2/2000]

Health Insurance Companies Fined for Claims Processing Violations.  “California Insurance Commissioner Steve Poizner said yesterday that he will audit the eight largest health insurers in the state to see whether they have engaged in any of the same billing practices that resulted in state regulators fining PacifiCare $3.5 million and seeking up to $1.3 billion in additional penalties.  The Department of Managed Health Care announced the record-setting fine yesterday following a joint investigation with the Department of Insurance that uncovered more than 130,000 alleged claims-processing violations by PacifiCare in California between July 1, 2005, and May 31, 2007… Regulators charged that PacifiCare – the second-largest health maintenance organization, or HMO, in San Diego County – improperly denied 30 percent of the claims reviewed during the probe and often delayed payments to doctors and hospitals long past the 30-day window provided by state law.” [San Diego Union Tribune, 1/30/2008]

Insurance Companies Routinely Under Reimburse Customers.  A recent investigation by the Senate Commerce Committee found that insurers in every region of the country have been bilking Americans out of reimbursement for “out-of-network” health insurance claims.   The Committee reports that 100 million Americans pay extra premiums for “out-of-network” coverage, believing it provides them the flexibility to see a provider of their choice.   However, the investigation reveals that the largest insurance companies have been systematically under-reimbursing customers for out-of-network services, leaving those customers to pay a much larger share of the bill than they should have been required to pay. [Senate Commerce Committee, 6/24/2009]

Senate Health Insurance Reform Provides New Tools to Stop Fraud.  The Senate health insurance reform legislation cracks down on fraud in private health insurance by providing states and federal agencies new tools to prevent and stop fraud. [Affordable Health Choices Act, Senate HELP Committee, accessed 9/22/2009; Chairman's Mark, Senate Finance Committee, 9/16/2009]

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