This sort of thing is outrageous enough to be exposed by local news, and remedied. A Florida-based insurance company, Ceridian Cobra Services, is the administrator of COBRA-based insurance for people who have lost their employment but are still allowed for a period of time thereafter to carry their insurance and pay their own premiums. From Forbes Rick Ungar:

Ronald Flanagan, a veteran suffering from Multiple Myeloma – a particularly deadly form of blood cancer which Ronald suspects may be the result of his exposure to Agent Orange when serving in Viet Nam – was in the doctor’s office getting ready for a bone marrow biopsy when his wife rushed into the room and announced, “Stop. We don’t have health insurance.”

While Ron had been preparing for the procedure, the office staff had informed Mrs. Flanagan that the family’s health care coverage had lapsed. Confused, Ron’s wife, Frances, got on the phone with an administrator at Florida based Ceridian Cobra Services to get an explanation.

It turns out that Mrs. Flanagan had made an error in her November premium payment, shorting the insurer two cents.

Not everyone who is mistreated by their insurance company has the benefit of a story that receives national attention and goes viral. Most just have to eat it. Remember that once they have a condition, it is a preexisting condition, so changing insurers is not an option. Without some worthy news reporting, Flanagan was totally hosed.

People will say “bad apple,” and that might be true.

People will say that they did the right thing in the end, and that is true as well, though only due to bad publicity that they determined would be costlier in the long run than paying the claims.

People will say that most insurers are good and try to do the right thing. Not true, or only partially true. While most people are good, and the army of bureaucrats that works for the insurance companies are just like the rest of us, bad behavior is incentivized within these companies because every claim denied is applied directly to the bottom line.

The problem with Ceridian is the problem with American private health insurance in general: The profit motive.

Making money and serving customers are adverse incentives, or two masters. It’s a classic conflict of interest, and the reason why no other industrialized country has our crazy health care system.
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Question: Why is Flanagan not eligible for VA coverage?

The twentieth century has been characterized by three developments of great political importance: the growth of democracy, the growth of corporate power, and the growth of corporate propaganda as a means of protecting corporate power against democracy. (Alex Carey, Taking the Risk out of Democracy: Propaganda in the U.S. and Australia, 1995) [This is the opening citation in Potter’s book.]

One of the nagging questions about health care “reform” is “Why now?” Health care reform has been one our primary concerns for decades. The problems we face now were minor when Clinton proposed his plan in the early 1990’s. It was a festering problem in 2004 when John Kerry avoided it. Why now?

We drove into Denver last night to hear Wendell Potter discuss the issues. Potter was a PR executive for CIGNA, but also a man with a conscience who, in the end, did the right thing, the costly thing. He walked away from CIGNA and turned against his former employers. He became an advocate for true reform.

He answered the question, though I did not like the answer. I paraphrase: Wall Street is making severe demands of health insurance companies. They have to deliver excellent returns to investors, or the investors flee. In 1993, when Clinton proposed his plan, the “medical loss ratio” (“MLR” – the amount that insurance companies pay out in actual medical expenses for clients) was around 95%. Most companies were not-for-profit.

Then the for-profits moved in.

Most of the not-for-profits are gone now, and the industry is driven by Wall Street. MLR now hovers around 80%. Insurers are looking for new and better ways to squeeze more profit out of this system. Their long-term plan is to force us all into crappy high-cost high-deductible policies, and sell junk insurance for the more destitute (these are plans that cover some in-system doctor bills, but not hospitalization). But they know that the fallout for this will be more pressure for true reform, even single payer (or at least a public option).

So they went to Obama and the Democrats for “reform.” That’s why it finally became a campaign issue. The lobby called “AHIP” (America’s Health Insurance Plans) wanted it.

AHIP went into the game knowing exactly what they needed, and got it. One, they want a private mandate – the ability for force us to buy their products. Second, they wanted no government competition, no public option. In the reform charade, the Kabuki theater that Obama, Baucus, Lieberman, Nelson and the other Democrats put us through in 2009, it had already been decided that there would be no public option and a private mandate. The insurers bought Obama, and Obama delivered.

That’s why we finally got reform. Wall Street decided it was time.

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Potter is at heart a journalist who lost his way, finding his way back after decades of public relations. He watched the health care debate unfold, and understood the forces at work. Phrases like “death panels,” “government takeover,” and “job killing” are professionally crafted, the specialty of the PR industry. They are planted in the dialogue, and then spread like viruses. They are short and memorable, and pack emotional punch. That is usually all that is needed to win a debate in our shill-infested environment. (Isn’t it interesting that the Democrats can never manage to come up with a good hard-hitting name for the things they supposedly favor? S-CHIP anyone?)

Potter is on a book tour now, which is why he was in Denver. Most of his talk was Q&A, and there were very good questions.

Here’s his take on what is unfolding right now: While the health insurers got most of what they wanted out of Obama’s bill, there were some unpleasant features that they want eliminated. One, they want the 80% cap on medical losses eliminated. (As outrageous as that number is, it merely froze them in time – that’s where they were already at.) There’s also a provision in the law that mandates basic benefits that must be covered, basically outlawing junk insurance. They have bought the companies that sell the junk, and so want that provision gone.

There is also a provision in the bill (coupled with the private mandate) that prohibits insurers from denying coverage for “preexisting conditions” starting in 2014. Right now these poor schmucks are being sent to state exchanges that are adversely selected and prohibitively expensive. (Potter did not talk about this, but surely the “reform” that now exists is useless – about 8,000 people nationwide have taken advantage of the exchanges.)

“This legislation will set into motion several key reforms. First, it will eliminate the possibility that individuals can be denied coverage because they have a preexisting medical condition. Second, it will require insurance companies to sell coverage to small employer groups and to individuals who lose group coverage without regard to their health risk status. Finally, it will require insurers to renew the policies they sell to groups and individuals.”

Those words are from Bill Clinton’s signing statement for HIPAA, the portability act passed in 1996. The insurers merely countered by making portable insurance unaffordable. I do not believe that there is a real fix in Obamacare for preexisting conditions because there were no cost controls. Nonetheless, expect that the preexisting condition mandate scheduled to take force in 2014 will disappear. Already the PR industry is hard at work – they are saying that we who have preexisting conditions are actually people who wait to buy insurance until we get sick. That’s how they are selling the repeal. It invokes the notion of freeloading, and so has emotional punch.

Anyway, Potter’s message was that current bill that passed the House, the title of which actually contains the PR-written catchphrase “jobs-killing”, is a smokescreen. Of course it won’t pass, but the real negotiating is going on elsewhere. AHIP is under incredible pressure to produce more profit for the investors. Expect that the few actual reforms that were included in reform will disappear.

And Obama will not stop them. He’s no friend of Jack.
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In the board game Monopoly, there comes a point late in the game when so much power has acceded to one player that he can easily overwhelm all the others. We are probably at that point in the health care game, when our best hope is that a tiny state might boot the for-profits. But it might be our green sprout, our lifeline, a sliver of light in our darkest hour before dawn.

Let’s hope so, as it is all we have right now.

Memo:

From: Lindsey Jackson, Blue Cross Blue Shield of Montana
To: Blue Cross Blue Shield Montana clients

In today’s world, planning health care expenses can seem like an overwhelming task. However, by proactively managing your health care and thoroughly understanding your insurance benefits, you can feel better about how you choose to spend your health care dollars.

Toward that end Blue Cross and Blue Shield of Montana is pleased to present Health Insurance Essentials education sessions through our Blue University℠ team; this is a select group of our staff dedicated to educating our members about how to most effectively use their benefits while navigating the sometimes confusing waters of the health insurance industry.

Beginning January 18, 2011, Blue University℠ will be hosting the Health Insurance Essentials program throughout Montana to help you learn how to:

Wisely use health insurance benefits
Access the right provider network
Proactively manage health care costs

Sign up today for one of the sessions below. If you have questions, call Lindsey Jackson at 406.437.5369 or send her an email at Lindsey_Jackson@bcbsmt.com.

Blue Cross and Blue Shield of Montana | 560 N. Park Avenue | Helena, MT 59604 | 1.800.447.7828 | http://www.bcbsmt.com

An independent licensee of the Blue Cross and Blue Shield Association, an association of independent Blue Cross and Blue Shield Plans. Registered and SM service marks of the Blue Cross and Blue Shield Association, a registered mark of BCBSMT, serving the residents and businesses of Montana.

To: Lindsey Jackson, Blue Cross Blue Shield of Montana
Re: Your offer to provide “Health Insurance Education”

Dear Ms. Jackson:

Thank you for your generous offer to provide me and former fellow Montanans with “education” regarding what you do for a living, which is screw us personally and mess up our health care in general.

I have another view of who is in need of education, and offer the following:

1. For-profit health insurance is bad public policy. Health insurance profit and quality patient care are at odds with one another.
2. Due to the profit motive, health insurers seek to avoid any client that might potentially be unprofitable.
3. Because of #2, health insurers created the term “preexisting condition.”
4. Because of #2, health insurers created “rescission.”
5. Because of #2, health insurers invest heavily in politicians so that laws contrary to public policy are passed. Hence, Obama’s health care “reform” package.
6. Because of #2, people with “preexisting conditions” (a term created by insurers) are forced into high-risk pools where generally they have to spend $12,000 or more before insurers pay $1.
7. Because of the high cost of adversely selected pools, people don’t buy in. Hence, millions of people who might get sick are uninsured, and you have conveniently avoided them. (That’s bad public policy.)
8. Because of #2, health insurers dumped senior citizens on government.
9. Because of #2, health insurers created the hugely profitable “Medicare Supplement”, where you pay 20% of approved Medicare expenses often at a higher price than Medicare charges for the other 80%!
10. Because of #2, health insurers created the hugely profitable Medicare “Advantage”, a subsidized programmed subtly designed to remove profitable clients from Medicare, leaving Medicare with the sick ones. (We spend our working days pining for the day we can get on Medicare and away from you. When finally we are able to join Medicare, there you are again. Weird!)
11. Because of health insurers reluctance to pay claims at all or in full, doctors and hospitals over-bill, hence driving health care costs upward and upward.
12. Because of greed and the profit motive, health insurers often skim 20% or more off the top of each health care dollar for their private use.
13. Because health insurers fear real competition, they convinced their in-pocket politicians to remove any kind of public option from health care “reform”, and want to force private citizens to buy their crappy products.

Hence, because of private health insurers, the United States has the worst health care system of the 34 industrialized democracies, with massive expenses, poor outcomes, and millions of uninsured.

You did this to us. You are leaches on our system. Your bosses are probably sociopaths. We can’t get rid of you because you are politically entrenched in our corrupt political system. You are part of the corruption.

So, how’s my education going, Lindsey? Want me to come lecture, or is the conference really for the purpose of blowing smoke up people’s asses?

Most sincerely,
Mark

PS: Lindsey, why don’ you write me?
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PS: It is true that BCBS of Montana is technically “not for profit”, meaning its overhead is 14% instead of 20%. However, its agents and executives are driven by the same motives and play in the same arena as the for-profits, and so are the same animal with a lighter coat.