Fixing Health Care Means Real Insurance Reform

There's a lot wrong with our health care system and the private insurance industry is responsible for a lot of it.

Some insurance companies pay employees a bonus for figuring out ways to deny or limit coverage for people making claims. In July, a House Energy and Commerce subcommittee found that health insurer Wellpoint actually rated a director on a scale of 1 to 5 based on the dollar amount she had managed to deny in claims after the insured person had contracted a serious illness, like cancer. That director had saved the company nearly $10 million, but only scored a 3.

The committee found that during the previous five years, three health insurers — Assurant Health, WellPoint and Golden Rule — had saved more than $300 million by canceling nearly 20,000 policies based on omissions, many of them minor, that policyholders made in filling out enrollment forms. Asked whether they would stop this practice except in cases of intentional fraud, the chief executives of all three companies said no.

A September 2009 study by the California Nurses Association found that more than 20 percent of medical claims are being denied by the state's six largest health insurers. CNA compiled the monthly reports that insurers file with the state and found that insurers are routinely denying claims, with PacifiCare denying the highest percentage, 39.6 percent.

A hearing by the House Oversight and Government Reform subcommittee in September heard extensive testimony from people who have been stonewalled by insurance companies and from former insurance company executives who support the charges of abuse.

A former review physician for Humana testified that her job was to justify Humana's coverage denials and that her employee evaluations depended on the number of denials she justified and the cost savings she generated. Wendell Potter, a former executive for Cigna, told the committee that insurers "make money by avoiding as much risk as possible and ducking people who are sick." (Read more about Potter in the story below.)

CWA's priorities for health care reform include these critical changes in the way insurance companies do business, as well as real reform that will level the playing field for employers, protect retirees, provide a public option and block taxation of health care plans and benefits.