The Villians of Healthcare?

Health insurance companies have faired poorly in the recent healthcare reform discussion, maligned for this obscure policies, highly salaried CEO's, and money saving tactics like avoiding clients with pre-existing conditions or rescinding policies of sick clients. But now the health insurance companies are fighting back, using employees to argue that they're really not the "villians" here. Some quotes from a recent NY Times article (August 27, 2009):

“I’m certainly not villainous or immoral in any way, shape or form,” said Mr. Shireman, 40, a project manager for Humana, the country’s fourth-largest health insurer.

Lisa A. Toombs, 40, a technology project manager and mother of three, said she had been taken aback by the attacks. “The way I see it,” she said, “the people who work for the insurance companies are average people. We’re not crazy lunatics running around trying to get at people.”

“Our industry gets blame for virtually everything that goes on in health care that people don’t like,” said Humana’s president, Michael B. McCallister, over a cup of coffee in the corporate cafeteria. “I commonly get letters from people that say, ‘Your doctor did this with me or to me,’ so I don’t think people understand the system really well.”

Mr. McCallister, whose annual compensation amounts to $4.8 million, said he worried about the impact of the rhetoric on staff morale. But he acknowledged that the industry bore some responsibility for its reputation. “Our industry has not done a great job of improving clarity and transparency,” he said.

And then there's Wendell Potter, a former Humana and Cigna executive, who after working in the insurance industry for twenty years developed a different perspective:

Mr. Potter says he liked his colleagues and bosses in the insurance industry, and respected them. They are not evil. But he adds that they are removed from the consequences of their decisions, as he was, and are obsessed with sustaining the company’s stock price — which means paying fewer medical bills.

One way to do that is to deny requests for expensive procedures. A second is “rescission” — seizing upon a technicality to cancel the policy of someone who has been paying premiums and finally gets cancer or some other expensive disease. A Congressional investigation into rescission found that three insurers, including Blue Cross of California, used this technique to cancel more than 20,000 policies over five years, saving the companies $300 million in claims.

As The Los Angeles Times has reported, insurers encourage this approach through performance evaluations. One Blue Cross employee earned a perfect evaluation score after dropping thousands of policyholders who faced nearly $10 million in medical expenses.

Mr. Potter notes that a third tactic is for insurers to raise premiums for a small business astronomically after an employee is found to have an illness that will be very expensive to treat. That forces the business to drop coverage for all its employees or go elsewhere.

All this is monstrous, and it negates the entire point of insurance, which is to spread risk.

Two perspectives on an increasingly politically complicated issue. Though it seems that one things is clear, as Nicholas D. Kristof writes:

The insurers are open to one kind of reform — universal coverage through mandates and subsidies, so as to give them more customers and more profits. But they don’t want the reforms that will most help patients, such as a public insurance option, enforced competition and tighter regulation.

Michael Shusterman is the Editor in Chief of TuftScope (2009 - 2010).