Ex-exec testifies against insurance giant for 'purging' customers
CNN reports on insurance industry whistle-blower Wendall Potter who, after working in the machine for 20 years, quit in order to right a few wrongs. Last week, Potter testified before the Senate about former employer Cigna's policy of "purging." In other words, Cigna would drive small businesses with expensive insurance claims to dump their Cigna policies.
"When that business comes up for renewal, the underwriters jack the rates up so much, the employer has no choice but to drop insurance," Potter said.
CNN obtained a transcript of a 2008 Cigna conference call with investors in which company executives use the term "purge."
Of course, Cigna spokesman Chris Curran denied that the company engages in purging.
"We do not practice that. We will offer rates that are reflective of the competitive group health insurance market. We always encourage our clients to compare our proposed rates to those available from other carriers," Curran wrote.
In other words, we purge, but we do it in a more delicately worded fashion than using the word "purge."
Potter's turnabout came in 2007, when he visited a medical charity event in Virginia and saw volunteer doctors seeing patients in barns, people in animal stalls. "It changed it for me," he told CNN. Potter is now blogging for the Center for Media and Democracy, the fine organization behind PR Watch.
Ex-executive accuses insurance giant of 'purging' customers [CNN] (Thanks, Cantras!)
Carrie McLaren & Jason Torchinsky are coeditors of Ad Nauseam: A Survivor's Guide to American Consumer Culture. In previous lives, they worked together on the hopelessly obscure and now defunct Stay Free! magazine .
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Comments:
We should switch to Brawndo-sponsored hospitals.
last time i had to use cigna they denied my first visit to the doctor because my poliday had expired.
i said 'wait, i just signed up two months ago'
and the rep said 'it shows right here it expired on october first of this year'
and i said 'THAT'S the date it started'
she looked a little more closely and said 'yes, your policy was activated october 1st of this year. it ended october 1st of this year.'
i just remained silent for a minute until she said 'OH!'
it still took two weeks to fix it.
It doesn't justify the health care reforms being proposed because they're being offered by Obama instead of McCain.
No, seriously. Haven't you figured out how politics work? It all boils down to Jets vs. Sharks.
i definitely think that some of the reform things they are talking WILL NOT WORK.....i work for an insurance company, and I for one am worried for my job - so i understand I am a bit biased....but the thing is, the insurance companies are not THAT bad like everyone says either....people fail to look at the amount of money is paid back out in claims.....just like how the news is biased on everything, the world is baised against the insurance companies. i can tell you that from every dollar paid in premiums, over 80 cents are paid back out in claims...
if you look at the "margin" insurance companies make, and you compare it to the margin in retail, you would be amazed at how little they really make - it is just on such a large scale it looks like a lot of money.
One of the other points that people fail to realize is that though the current system doesnt work for 1/6 of the population, it does work for 5/6.
I am sure i will start a flame war here - i do think there are changes that need to be made in the insurance industry....and i do think there are costs that need to be cut...however, i think people need to put things into perspective as well.
@Snarkysnake: Here's a shot at it from a 'free-marketer'. Government forces larger companies to provide health insurance to employees. Whether it makes sense in a big-picture economic sense, they have to do it. In order to compete with larger companies, small companies have to offer it to, but don't really have the mass necessary to hold their own against insurance companies, and therefore are susceptible to bullying like this. On a recent trip to Thailand, I had to get medicine for a lung infection. The diagnosis and medicine cost $5. No insurance, no waiting, and a fully licensed and trained doctor. I'd like more of that style and less government involvement.
The government can't even manage medicare and you want the government to manage all our healthcare. Despite all the flaws and the abuses what we have is still the best.
What government should do is fix the problems witht he current system not create a brand new system.
@Snarkysnake: How about this?
Government is already messing in health care, we don't have a free market system.
For example, the government MANDATES certain things which ALL POLICIES must have.
Like Drug/alcohol rehabilitation. Now, if I want to not have this as part of a plan, but cannot, the government forces me to have it. Do I drink? No. Do I do drugs? No. But I'm paying for people who do and a policy I will never use.
Take, for example, a homosexual male. They have to have maternity effects included in their insurance, because of health mandates. Are they EVER going to get a woman pregnant? No. But they have to pay for it.
This list goes on and on. And that's why insurance is so high.
The reason medical insurance is so crucial is because healthcare is costly. Until something is done to drive down that cost, people will perpetually be vulnerable to the insurance companies' machinations.
The idea that "free markets" can drive down healthcare costs, however, is fallacious. Aside from some elective or optional procedures, healthcare is inelastic. If you need it, you need it, and you need to get it where you can get it. Market forces work only when the consumer has an opportunity to "shop around." That opportunity does not exist when (e.g.) you're in the throes of a heart attack. That opportunity also is restricted in cases of chronic illness requiring periodic checkups, e.g. hypertension requiring quarterly checks; it would not be wise to jump from doctor to doctor based on pricing, because care will be less consistent, not to mention you're leaving records in many different places.
As soon as we dispense with the idea that market forces can drive down healthcare costs, the sooner we can move on to solutions that will ... and once we've made healthcare affordable, we can free ourselves collectively of the shackles of the medical insurance industry.
@Jage:
Take, for example, a homosexual male. They have to have maternity effects included in their insurance, because of health mandates. Are they EVER going to get a woman pregnant? No.
Actually, yes, they could. It happens a lot more than you think. Also, some states allow them gays to adopt, so there's that.
Whether it should be government mandated can be debated. Whether the situation you presented happens cannot.
Hey I don't want to interrupt here but uhh.. if you guys have a moment there's this system we use in Canada that's worked pretty well. We don't have the barnyard feel to our offices but they're still pretty nice. They have aquariums.
And how do you propose to fix the current system? What will you force on the private insurers? How will you ensure they won't find a way around it and continue to screw people over? We can't just wave a finger at them and say "Stop it."
As long as there are things like "pre-existing conditions" and ways to refuse coverage, they will. They are not in this to help people, they are in it to profit. If they could deny every single claim, they would.
@The Dude:
So your solution is that we all move to Thailand?
No, seriously, how do we make that happen. Doctors come out of medical school hundreds of thousands in debt, and medical equipment is incredibly expensive. There are reasons medical care costs as much as it does. Part of that is the mess of insurance companies, but much of it is also the cost of doing their specific brand of business.
"Make it more like Thailand" is not enough of an answer.
@MattO: if you look at the "margin" insurance companies make, and you compare it to the margin in retail, you would be amazed at how little they really make
I think one of the key rationales for a single-payer system is the duplicative administrative costs associated with maintaining multiple payors. Administrative costs constitute a higher portion of health-care spending in the US than almost anywhere else in the world.
One of the other points that people fail to realize is that though the current system doesnt work for 1/6 of the population, it does work for 5/6.
Then why do we lag behind pretty much all industrialized nations in key indicators of health? And that uninsured 1/6 of the population includes many of the people who actually need serious payouts. Insurance company dumping means we the taxpayers are already footing the bill, so why not bite the bullet?
@Jage: The whole point of insurance is to spread the risks of high-cost medical care across as large a pool as you can get, therefore resulting in minimal costs to each person, but a guarantee of payment should they need expensive care. As a homosexual male, I'm happy to pay for maternity care, as long as I know that, for instance, HIV drugs are covered for my community. If you can start opting out wherever you personally don't feel at risk, then the whole system collapses.
And so the hearts and minds campaign for socialized medicine begins.
@MattO: "From every dollar paid in premiums, over 80 cents are paid out in claims..."
Errr... if Medicare had 20% overhead for payout of insurance claims, it would be a scandal. What value is private insurance providing that isn't provided, for much less money as overhead by Medicare already?
Commercials by "Conservatives for Patient's Rights" that I have seen playing while at the gym really cheese me off. In it, a patient is having an earnest conversation with their doctor, when a four-eyed geek with a clipboard from the govt. shows up and starts yammering about something, pesumably denying treatment. (The commercial isn't closed captioned...)
How is this different, or worse, than what my insurance company does already? The entire premise of the commercial is bogus.
What is so bad about "socialized medicine" anyway? The other developed countries that have it spend far less of the GDP on health care, live longer, and are healthier by pretty much any measure. Something must work pretty damn well...
@ShanghaiLil: We also have a more heterogenous population than most of the industrialized world. My wife used to work with a non-profit health organization. She tried to get women in the Latino and Native American population to get free mammograms (even brought the equipment, doctor, etc. to them) and they simply weren't interested or didn't want a white doctor performing them.
@ShanghaiLil: But if my risk level is less than average or you choose not to cover my malady, then I'm screwed by your system.
@PsiCop: I know. It's not like the free market has driven down the cost of generic drugs and simple procedures (aka Wal-Mart stores and my local pharmacy that has an inexpensive walk-in clinic).
@I Love New Jersey: We'll we've been trying it your way for a long time and look where it got us? Excellent (top notch, even) care for those who are wealthy. For the rest of us, either we get great care, and it bankrupts us so we can't get any more. Or, we get none at all.
Should only rich people get their fires put out? OK I admit, a lot of snark, but I think that basic medical care is a right, not a privilege. And people fail to see that we pay for these costs one way or another. They're just not on any single balance sheet, they're spread out in bankruptcies, obesity rates, people forgoing care until they can't wait anymore, lost productivity at work, etc.
@ARP: If it's a right, then someone has to be forced to provide it. Who are ou going to enslave to get this done? If you believe that it is vital to fill this need, how much of your personal wealth are you willing to give up today to provide this necessity to your neighbors?
@sirwired: It's a scam. No doctor under a socialized plan will deny you care. However, just like our current system, they may not pay out the full amount. But here's the question, who would you rather make that decision: A not for profit government agency or a for profit corporation who's primary means of profitability is denying claims.
@anthonyhasp: But the current system is often "choosing not to cover your malady." They're just doing it in a way that provides little accountability. And if the costs are spread over a wide enough pool, then you'll hardly be "screwed," and finally, being covered, say, in the case of a major car accident, or, say, get a severe case of Swine Flu (neither of which would be risks that could be easily predicted) you'd still be covered. But again, the whole rationale for insurance is that the healthy people pay for the sick people in exchange for a guarantee that, if they become sick, other healthy people will pay for their health care -- do you have a better definition?
@anthonyhasp: I've seen this problem in action, and agree that it needs to be addressed, but it hardly accounts for the vast disparities in major outcome measures that we see.
@sirwired: Precisely. I get cheesed off when I hear that government-sponsored healthcare will "ration care." As if industry-sponsored insurance doesn't ration care, both for the insured, based on the expense of their malady, and for the uninsured, based on their ability to pay. Jon Stewart recently summed it up nicely by playing a clip of some numbnut Republican Senator declaring that the Obama health plan would put government bureaucrats between you and your doctor. "Replacing," Stewart observed, "Those much-beloved insurance company bureaucrats that currently stand between you and your doctor."
@The Dude:
"Government forces larger companies to provide health insurance to employees. Whether it makes sense in a big-picture economic sense, they have to do it."
Factually incorrect. Companies provide health insurance because they receive a tax benefit for doing so. No government agency rquires employers to offer health insurance.They do it because they can raise (or lower) their packages to be competitive for new hires. (You will notice that companies that are not too choosy often offer no benefits at all).
Employer provided/subsidized health insurance only became widely available after WWII ,when unions demanded extra compansation to sidestep government wage and price controls. Wages were controlled ,benefits were not. Like a matastasized tumor , they have now become a major cost of doing business for most companies that offer them. (At one time ,Chrysler's largest vendor was not a steel or aluminum company , but Blue Cross). That is why you now see big business pushing to dump these costs on the taxpayers if possible.
@AldisCabango: And yet somehow we trust the government with the security of our nation...Should we outsource that as well?
@MattO:
Freemarket whatever, a better question is, should companys have that much power over the overall health and wellbeing of a person, or people in general? There is something wrong with making money off gambling with a persons health to make a profit.
I agree with your last paragraph the most, costs need to be cut, from insurance, and from clinics. There is something terribly wrong where I can get the same if not better care in a country such as China or Thailand and pay 1/10th the price without insurance.
@sirwired:
And just in case anyone is thinking that sounds high what with the commonly cited 30 percent administrative costs figure...much of those claims consist of administrative cost on the provider's side, too (a lot of which they wouldn't need if they weren't dealing with a dozen different recalcitrant insurers).
I have some comments for those who believe that the status quo is just fine. Firstly, the major reason why Medicare and Medicaid do not work as well as it could is because supply-siders in Congress take every opportunity to gut the programs, while increasing Pentagon budgets at the same time. Secondly, Time magazine published a great article not too long ago that examined the difference between US and european healthcare systems. Not only was the cost per capita lower than here in the US, but also life expectancy was higher, administrative costs much lower (around 3-5%--US is around 12-15%) and the quality of care was the same or better than here in the US. This drivel about the Canadian system being worse than here is pure myth, deliberately spread by pharma, health insurance, and doctors to create FUD. Finally, a couple reasons why "socialised medicine" works so well in Europe and Canada is not only that medical industry gets paid better for preventive treatment, but also that their societies view it that they're all in it together and that they don't mind paying for other people's healthcare--they all pay for each other and everyone is taken care of. I'll never forget when I saw an interview with a Canadian citizen (a member of the Conservative party, no less) where he answered the prevalent American question, "Why should I pay for someone else's care?" His reply was, "Because they'd do it for me."
@Megladon:
RE: companies having power over health:
Not just the insurance companies, people's employers.
Labor is less mobile...people are less free to attempt to change jobs (or to try and start businesses) because it could mean losing their health insurance.
Naturally, Capital is in favor of this.
Now as much as I enjoy seeing Canadians debunk the Republican & Libertarian myths about the Canadian health care system, by interjecting yourself into this debate, you keep the focus on the demonized Canadian system.
I'd much rather hear from Germans or Japanese or French or Koreans than from the English-speaking countries that the right has devoted its attention to portraying as nightmare dystopias.
Less than is being given up for the current system, eventually.
US PUBLIC spending on health care is already higher than TOTAL spending for many countries with UHC.
There is absolutely no logical reason that we don't have universal health care in this country. Every other 1st world nation in the the world has it (and quit a few of the 3rd world ones too), along with a higher standard of treatment, a healthier population, and a longer life expectancy.
It's just so sad that there are people in 3rd world hell holes who get better medical coverage than us, and for free. All the while we can't have it here because people are so stupid that they'll believe and parrot anything the right wing tells them.
The ones I hear a lot are "Duuuur, it'll be like da DMV! You really want da govenments runnin' da doctor's office like dey run that, duuurrrrr!" and "Heyuk, Rush sez that if ya need a surgery, they'll make ya wait like 3 whole months!"
Hey retard, hate to tell you but we have one of the longest wait times for medical care in the devolped world. It's already like the damn DMV, and because of the archaic system we already have in place.
Stop believing their lies! They have stakes in the insurance industry and/or they're watching out for their rich buddies. All the politicians already have free health care paid for by our taxes. If it's good for them, then why not us?
We don't have the best health care in the world. We don't even have adequate health care. At the most, we're just barely hovering over "The Absolute Worst" health care system on the planet.
But I don't have to tell you. If you haven't found out already, then you will. Everyone gets sick, and eventually the people that defend the defunct system will get sick too. And when they do, and their insurance company comes up with some random reason to drop them, and they can't get the care they need, then they'll know I was right. Or if their insurance company will only clear them for the most basic sub-standard care after they've paid into it for a life time, then they'll know I was right. It's inevitable...
People's health should not be a business...
Looks like the Swiss got a fairly decent system in the 90s. Granted, that's only 8 million people or so.
@sirwired: What is so bad about "socialized medicine" anyway? Becoming dead before your treatment is approved by some government bureaucrat who has better things to do than their job.
@anthonyhasp: Drugs are more elastic than other kinds of healthcare. There is competition (i.e. generics vs. brand names) as well as ... in some cases ... more than one drug that treats an illness. Both of these things introduce the possibility of markets working.
The only way you might have a point, is if you can show how market forces apply to ALL kinds of healthcare. Explain how it's possible for someone suffering a heart attack to shop around and thus take advantage of market forces.
If you cannot do it, then you must concede that at least some parts of healthcare are inelastic and therefore cannot respond to market forces. Which was my point.
@I Love New Jersey: Again: As opposed to being dead before your treatment is approved by some insurance company bureaucrat who has a vested interest in denying your claim?
@ShanghaiLil: Or his kid has a geyser of blood erupting from its cracked skull.
"Hold on, hon, I'm on hold with the 4th hospital to see if they'll match the 2nd one while still matching the 3rd one's amazing rate on IV drips. Then we'll tackle the cheapest ambulance to get us there!"
@Mackinstyle: But you guys are so different than us because you're... You're... You're...
OK, I give up. Why wouldn't it be better to ape your admirably better, cheaper and more civil health care system again?
@TechnoDestructo: Korean system comparisons are inapt, since they lack the cool Polar Bear As Housepet factor. Keep up, huh?
To all you "free market" types, please tell me just exactly how this is better than the health care reforms being proposed ? I mean , don't just write something that you heard Rush Limbaugh say - really explain how the market has not failed your favorite economic group, small business .These are not homeless crack babies being screwed over,but working ,productive Americans that create jobs and real wealth.
Anyone ?