From: mpolen@gelato.mips.com (Michael Polen)
Newsgroups: talk.politics.misc,ca.politics
Subject: Re: Homeless
Date: 29 Jul 1992 23:31:23 GMT
Organization: MIPS Computer Systems, Inc.
Distribution: world
NNTP-Posting-Host: gelato.mips.com

John R. Moore) writes:
|> 
|> Nice try, but it doesn't really work this way. Because insurance companies
|> create small groups, and then bill them based on the risk of this
|> group (sigh... this is WRONG!), they can do the following scam
|> (which happened to a friend of mine who came down with MS):
|>   -To everyone in the group who is healthy, they offer a new
|>    policy that is more attractive (perhaps they even just transfer
|>    them to the new group).
|>   -The remaining group is now "high risk", so they jack the rates WAY
|>    up (my friend's rate went to $1500/month!). This is allowed because
|>    of the high costs of the remaining members of the group.
|>   -Now, when you run out of money and can't pay, they cancel the policy.
|> 
|> Those who have observed my generally conservative posts may be shocked
|> by this, but I believe that private health insurance, using current
|> rules, should be outlawed! It is a sophisticated scam. It has the
|> following abuses:
|>   -the trick I described above to get rid of expensive cases.
|>   -charging each member of a group by the group's risk, even though
|>    the company's risk is spread across a large number of groups. This
|>    causes employers to try to avoid hiring "high risk" people or to
|>    get rid of them. It makes it impossible or terribly expensive
|>    for some people to have health insurance - if they want to work
|>    as contractors or part timers, or for a small company.
|>   -"pre-existing conditions" - this is fair if a person has chosen
|>    not to get insurance until they get sick, but it is patently unfair
|>    if the person is just changing jobs.
|>   -Employment based insurance. This simply serves to get the employer
|>    involved in the very private medical affairs of its personnel. It
|>    causes job discrimination based on health insurance costs. It inhibits
|>    labor mobility.
|>   -delayed payment of claims. Insurance companies have many dodges
|>    to avoid paying claims for a long time. This results in some people
|>    dropping the claims, and it gives the insurance company the interest
|>    on the money.
|>   -greatly increased medical bureaucracy due to overlapping, inconsistent
|>    claims reviews. I had an insurer who routinely required paperwork
|>    which objectively had no value whatsoever, but which cost my
|>    doctor a fair amount of time.
|>   -denial of valid services via rigged preauthorization procedures.
|>    It is absurd for a clerk to be second guessing an MD specialist
|>    on every medical procedure.
|> 
Add  -insurance companies have an incentive to see insurance costs go up
      as they work of a percentage of costs and the companies are measured
      by their revenue (not profits)
     -insurance companies will not tell their insured what their
      "customary and resonable" charges are so that you can shop around
      for a doctor that will stay within their guidelines
     -in Texas, "customary and reasonable" are set on a statewide basis,
      lowering the benefits paid to persons living in more expensive
      urban areas (don't know about other states).

|> There is no free market in insurance. As a consumer, you
|> have some choices, but the companies severely discriminate among
|> consumers. If hardware stores or credit card companies did this,
|> they would be stopped by the government. We need to change the way
|> this is regulated to at least require community risk rating. Forcing
|> standardization of claims reviews would also be a good idea.

How about tax credits to insurance companies that lower rates without
lowering benefits.  They can do this through negotiation with doctors and
hospitals (which they do today, but with the conflicting incentive to
show higher revenues).

The insurance companies say their rates and practices are caused by the
rapidly rising cost of medical care.  But they are a major factor in that
increase.
Newsgroups: talk.politics.misc