The Obama administration’s pugnacity toward the nation’s private health plans intensified with the release of a short but sharply worded U.S. Department of Health and Human Services (HHS) talking points memo detailing what federal officials say is the industry’s widespread discrimination against people with preexisting conditions.
The memo, Coverage Denied: How the Current Health Insurance System Leaves Millions Behind, is slightly longer than a typical press release, but it is striking for a confrontational tone that, for the most part, has not been seen in government advocacy reports since the heyday of Big Tobacco.
The report cites a 2007 Commonwealth Fund Biennial Health Insurance survey, which found that 12.6 million nonelderly adults—36% of those who tried to buy insurance on the private market—were discriminated against in the past three years because an insurance company said they had a preexisting condition, charged them a higher premium, or refused to cover their condition. Another Commonwealth Fund survey this year found that one in 10 people with cancer said they could not get health coverage, and 6% said they lost their coverage because of their diagnosis, the HHS memo stated.
“The insurance company practice of denying coverage because of preexisting conditions is not confined to serious diseases,” the HHS report stated. “Even minor problems such as hay fever could trigger prohibitive responses. An insurer could charge high premiums, deny coverage, or set a restriction such as denying any respiratory disease coverage to a person with hay fever.”
The biggest point of contention between the White House and the health insurance industry is the Obama administration’s call for a public plan to compete with private insurers, which the president has said is needed to keep private insurers honest. The industry says a public plan would have inherent cost advantages over the private sector in areas such as advertising, marketing, and physician reimbursement, and would drive private insurers out of business.
“Our concern is the government-run plan, which has been the subject of a lot of concern over the country in the last few weeks,” says Alissa Fox, senior vice president of policy and representation at the Blue Cross and Blue Shield Association in Washington, DC. “We think that is a huge diversion. We want Congress to drop the government-run plan. We want them to include insurance reforms and other actions to make sure everyone is covered and costs are reined in.”
The HHS talking points memo comes as the Obama administration steps up efforts to bolster sagging support for healthcare reform. White House officials reportedly fear that opponents of healthcare reform are controlling the message. In late July, President Obama began referring to insurance reform rather than healthcare reform to better tap into perceived widespread public resentment toward health insurance companies. Recently, House Speaker Nancy Pelosi (D-CA) told a room of reporters that the health insurance companies were the “villains” in the healthcare reform debate.
Karen Ignagni, president and CEO of America’s Health Insurance Plans, who last week complained of attempts to “demonize” her industry—took issue with the HHS report and insisted that her industry is leading reform efforts.
“Health plans last year proposed health insurance reform to make sure that no one is denied coverage because of a preexisting condition,” Ignagni says. “Our proposal includes new consumer protections and market rules to guarantee coverage for preexisting conditions, discontinue basing premiums on a person’s health status or gender, and get everyone covered through a personal coverage requirement.”
The HHS memo also accused the health insurance industry of rescission, which is the practice of reviewing patients’ health insurance applications for mistakes and omissions when the insurers are later presented with a bill for expensive conditions such as cancer. “If the company discovers that any medical condition, regardless of how minor, was not reported on the application, it could revoke coverage retroactively for the patient and possibly all members of the patient’s family,” the report stated, adding that insurers can do this even if the condition found is not related to the expensive condition or if the person wasn’t aware of the condition at the time.
The HHS memo added that health insurance reform would prohibit insurers from refusing coverage based on someone’s medical history or health risk. Companies also would be barred from watering down coverage or refusing renewal because someone becomes sick. Companies would have to renew any policy as long as the policyholder pays the premium in full, according to HHS. Fox says the HHS memo doesn’t tell the complete picture. “There is a lot of talk that insurers can drop you when you get sick. That generally is not true,” she says. “Insurers are now required by federal and state laws to issue coverage on a guaranteed renewable basis. The decision to renew coverage is the individual’s, not the insurer’s.”
Fox declines to comment on the aggressive tone of the HHS report. “I’d rather deal with the facts,” she says. “We want reform. We want to see it enacted this year. We had the same platform in 1993 and 1994.”