is that when you get sick, the insurance company can just drop you and refuse to pay.

The practice is known as “rescission,” and the Washington Post reported today on the experiences of several patients. This is my favorite:

For Teresa Dietrich, it was fibroids. The Northern California real estate agent was left to pay $19,000 after Blue Cross said she did not disclose a diagnosis of the benign uterine tumors. But Dietrich said the doctor who had written “fibroids” on her medical record never mentioned his suspicions to her. The bills destroyed her credit and cost her her home — and, in a comically cruel twist, the surgery proved the doctor was wrong. “They said I had a condition I didn’t even have,” Dietrich said. “And they canceled me.” (Emphasis mine)



How bad is the problem of insurance companies not wanting to pay? California Attorney general Jerry Brown is investigating incredibly high rates of denial by HMOs:

Los Angeles – Attorney General Edmund G. Brown Jr. today announced that deputies in his office are launching an independent inquiry into how Health Maintenance Organizations review and pay insurance claims submitted by doctors, hospitals and other medical providers. This investigation is prompted by reports that California’s five largest health-insurance providers are denying insurance claims at rates of up to 39.6 percent. “These high denial rates suggest a system that is dysfunctional, and the public is entitled to know whether wrongful business practices are involved,” Brown said.

If a number close to forty percent sounds too high, consider these statistics from the California Nurses Association:

Claims denial rates by leading California insurers, first six months of 2009: • PacifiCare — 39.6 percent

• Cigna — 32.7 percent

• HealthNet — 30 percent

• Kaiser Permanente — 28.3 percent

• Blue Cross — 27.9 percent

• Aetna — 6.4 percent

Health insurance companies are blaming everyone but themselves as they scramble to perform damage control over this story. Which reminds me: insurance companies are raising their rates.

In the past few days, 114,000 Michigan households have received bad-news letters from Blue Cross Blue Shield of Michigan, socking individual health insurance subscribers with premium increases averaging 22%, effective Oct. 1. Blue Cross could have said, “Hey, things could have been worse. We asked for a 56% rate hike first and dialed it back to 22%” — but that probably would have just made folks angrier. (Emphasis mine)

Blue Cross is what remains of an American experiment with so-called “co-ops” — an experiment that failed.

Remind me again: why is private insurance necessary?