Health Insurance Articles

What Are The Deceptive Health Insurance Practices?

2009-10-27

Deceptive practices by health insurers are inspiring congressional investigation as Congress ponders healthcare reform. Chief among these are health insurance policies written in such a confusing way as to convince the consumer that he has catastrophic health insurance coverage when the policy actually caps, often at a low level such as $10,000 to $25,000. The policyholder usually does not discover this lack of coverage until he or a family member is in the hospital, or even until after hospital bill arrives when it is too late.

The House Energy and Commerce Committee Oversight and Investigations Subcommittee heard testimony from citizens in this situation in October 2009. A small businessman related that he bought a policy that he thought covered serious illness, but learned in the hospital that it maxed out at $25,000. He was forced into Medicaid for two years to cover $600,000 in medical bills for a liver transplant for his daughter. Senator Grassley (R- Iowa) wrote Aetna in July 2009 about the case of a Texas man who was left with $200,000 in medical bills. Both the man, and even the hospital where he was treated, understood that his Aetna policy covered up to $150,000 a year in hospital care. What they didn't see was that the fine print excluded nearly all of the healthcare he received. The man and his wife were forced into bankruptcy. These folks are not alone. An estimated 25 million Americans are underinsured, that is, they have health insurance, but the policies are insufficient to cover them in case of serious illness.

Another deceptive practice coming to light is insurance company calculation of the "usual and customary" reimbursement rate for medical bills. The attorney general of New York found that the insurance industry underestimates out-of-network reimbursement rates it's paying to its policyholders. This ultimately is costing consumers billions of dollars out-of-pocket for healthcare expenses. The Senate Committee on Commerce, Science and Transportation held hearings on this issue in March 2009.

In a variation on this theme, the attorney general of New York investigated Oxford Health Plans, one of New York's largest insurers, in 2006 for considering an entire procedure out of network, including those done at an in-network hospital, if the physician involved was out-of-network. This left the consumer with a huge balance to pay. The Healthcare Association of New York said that the policy was so confusingly written that no one could properly understand it and filed the complaint with the Attorney General.

When it comes to health insurance, it is imperative that policyholders read the fine print and know that the health insurance coverage they have is adequate for them. Not doing so could be extremely costly in the end.