Practices in Health Care & Disability

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Practices in Health Care and Disability Insurance: Delay, Diminish, Deny, and Blame By Peter Phillips and Bridget Thornton “I once tried to explain to a Norwegian woman why it was so hard for me to find health insurance. I'd had breast cancer, I told her, and she looked at me blankly. But then you really need insurance, right? Of course, and that's why I couldn't have it.” Barbara Ehrenreich, journalist and author Introduction This study examines the historical circumstances that brought abo
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   1 Practices in Health Care and Disability Insurance:Delay, Diminish, Deny, and BlameBy Peter Phillips and Bridget Thornton “I once tried to explain to a Norwegian woman why it was so hard for me to find health insurance.  I'd had breast cancer, I told her, and she looked at me blankly. But then you really need  insurance, right? Of course, and that's why I couldn't have it.”   Barbara Ehrenreich, journalist and author  Introduction This study examines the historical circumstances that brought about our private health anddisability insurance system in the US. We look at the organizational structures of private-for-  profit and ―non -  profit‖ insurance companies that dominate the health care industry and the strategies these firms use to delay, diminish, and deny payment for health care and disabilitybenefits for people across the country. We discuss the impact of delays and denials on patientsand disabled individuals and the ways insurance companies deliberately create psychologicaldoubt and self-blame among those who are legitimately entitled to benefits. We summarize theresults of twenty extensive interviews with people who have experienced major difficulties inreceiving payments of benefits and for heath care service they expected from their insuranceproviders. We further examine the general lack of regulation, enforcement of existing laws andgovernment motivation to meet the health and disability needs of all Americans, and the socio-economic power of the health insurance industry to dominate health care policy.Health and disability insurance is an extremely large and profitable businesses. Increasingly, thehealth and disability insurance industry has come under scrutiny for mismanagement and blatant abuse of its policyholders. Michael Moore‘s top -grossing movie Sicko is one example of thegrowing concern surrounding health care in the US.In 2002, the World Health Organization (WHO) put the cost of health care at 15.2 percent of US GDP (WHO 2006). WHO reports, ―The health -care industry, including biopharmaceutical andmedical device companies, now represents the third-largest sector among the 1,000 largest US firms, behind only energy and retailing.‖ (See Appendix A)  In order to understand how insurance companies strategize to maximize profits and limit payoutsfor benefits, we examined the evolution of the industry and the socio-economic power base of thetop health insurance companies in the US. The power of the companies to set national policiescontrasts with the personal difficulties of the individuals interviewed, demonstrating a system-wide process of profit taking at the expense of fulfilling promises and of diverting moneyintended to pay for necessary health care goods and services.The experiences of the people interviewed in this study are not necessarily representative of allencounters with health and disability companies in the US. We recognize that many people in thiscountry have doctors who fight alongside their patients to demand payment for promisedtreatment. Because of the conflict of interest between health insurance company profits andnecessary health care for all, millions of people in the US do not receive necessary health careand disability benefits, and suffer significant negative consequences. We believe that the twentyinterviewees are representative of the general problems faced by an increasing number of UScitizens.Our interviewees were individuals, insured by seven different companies, whose experientialcommonalities represent patterns of practices that should concern every American. Given the   2 upward trajectory of profits in the health and disability insurance industry, coupled with anhistorical lack of regulatory enforcement by federal and state government, we believe that theAmerican people do not receive the health care they deserve, despite the generous amount of money spent on health services by taxpayers and consumers. History of Health Insurance in the US The United States has been slow to implement national social welfare programs compared toEuropean countries. The creation of social welfare and rudimentary public health services withthe Social Security Act of 1935 set the US on a path similar to what European countries had inplace for several decades. With the Social Security Act, the US government instituted the Public Health Service to conduct, ―investigation of disease and problems of sanitation,‖ yet national health care for all people has remained an elusive goal. (Social Security Act-Section 603-1935)Findings by the Public Health Service in 1938 reported widespread incidences of sickness anddisability among the American people and closely linked these to poverty conditions. (Hirsh,1939)In 1965, President Johnson signed legislation for senior and low-income health care, Medicareand Medicaid, respectively. While the wealthy and upper middle classes have generally been ableto afford necessary health care in the US, the bottom one-third of American society (one hundredmillion people) face limited access to necessary health care. This bottom one hundred millionpeople, forty-seven million of whom have no health insurance whatsoever, are disproportionatelypeople of color and single women with children. These inequalities of race and gender have ledsome researchers to conclude that racism and sexism have historically played a major role in UShealth care policy. (Quadagno 1994)Throughout the 20 th century, there has been a discussion around building a national health caresystem in the US. The National Conference on Charities and Corrections in 1911 called for theestablishment of social insurance programs in the US including provisions against sickness anddisability. (Hirsh, 1939) The American Association of Labor Legislation (AALL), founded bypolitical economists of the American Economic Association in 1906, promoted state level laws for workmen‘s compensation insurance and achieved coverage for federal employees in 1916, Longshoremen in 1929, and private employers in the District of Columbia in 1928. AALL was ―largely responsible for  the first health insurance movement in America by drafting the firstAmerican health ins urance bills, but failed to secure passage in national or state legislatures.‖ (Domhoff, 1971, pp 175)During the first half of the 20 th century, the American Manufacturing Association and the USChamber of Commerce intensely opposed attempts for national and state-level health carelegislation. (Trattner 1989) Additionally, many physicians opposed national health insurance forfinancial and professional reasons, though this did not include all doctors. The American Collegeof Surgeons supported pre-paid health insurance for hospitalization in 1934, but leaders in theAmerican Medical Association generally opposed national health care efforts. (Thomasson, 2002)The beginning of employer-sponsored health insurance plans started in the 1920s. At BaylorUniversity Hospital in Dallas, local teachers paid six dollars per year for the guarantee of twenty-one days of hospitalization. In 1929, Blue Cross was the first organization to offer pre-paid healthinsurance. The American Hospital Association (AHA) supported similar plans around the countryand eventually hospitals joined together in inter-hospital associations at a state level. Variousstates passed legislation that authorized tax-exempt status to Blue Cross and later Blue Shield, aswell as freedom from the requirements of maintaining deep financial reserves that were legallyrequired of most insurance companies. (Thomasson 2002)   3 During the 1930s and 1940s, the demand for professional medical services rose rapidly in the USwith improvements in surgical techniques, anti-biotic sulfonamide drugs in 1935, and penicillin in1946. During World War II, a wage freeze in many industries encouraged the addition of medicalinsurance plans as a way of attracting new workers to competitive industries.Before World War II, only twenty private insurance companies offered health insurance plans inthe US. This changed rapidly after the war and as private insurance companies began to competewith Blue Cross and Blue Shield groups plans by offering health insurance at lower rates to pre-screened healthy individuals. By 1958, pre-paid health insurance plans covered seventy-fivepercent of Americans.   (Thomasson 2002)The insurance industry in the US remains severely under-regulated at the federal level. Instead,each state adopts laws and regulations that govern insurance companies in their states. A nationalinsurance company may adopt a business practice that one state deems legal while that samepractice may be illegal in another state.While countries around the world offer citizens necessary health care as a basic right, the US hasnot adopted the same philosophy. According to the Universal Declaration of Human Rights,health care is a vital right for every human being: ―Everyone has the right to a standard of living adequate for the health and well -being of himself and of his family, including food, clothing, housing, and medicalcare and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.‖ ( Adopted by the United Nations December10, 1948, Article 25)What is the best way to insure that all people in society have equal access to necessary health careregardless of income? Should Americans tie health care to employment or is it a basic right suchas freedom of speech or voting? The Institute of Medicine estimates that as many as eighteenthousand Americans die prematurely each year because they do not have health insurance.(Institute of Medicine 2004) This figure does not include those who die prematurely each yearbecause their insurers delay, diminish, or deny payment for promised benefits. Reports aboutpeople who die unnecessarily from services denied or delayed by insurance companies seldomreceive broad coverage in the corporate media. This has led to a nation of people uninformedabout how their ability to receive necessary health care and disability benefits is driven andcontrolled by the private insurance industry and how government regulations, regulators andinsurance company interlocks affect the level of care and benefits they receive.The number of Americans without health insurance is increasing  —  forty-seven millionat last count, or some sixteen percent of the population. The cost of health insurance isrising two to three times faster than inflation, and unpaid medical bills is the number onecause of personal bankruptcy in the country. (Walter 2007) How Health and Disability Insurance Companies Dominate State Health Policy Richard Ericson, Aaron Doyle, and Dean Barry conducted the most extensive analysis to date of the structure of the insurance industry. Their book,  Insurance as Governance , documents thehistorical interlocks between financial capital and government in setting the standards for aprofitable insurance industry in both Canada and the US. (Ericson 2003) Ericson‘s group conducted five years of research including extensive interviews with two hundred twenty-fourpeople and numerous observations of insurance conferences, meetings, and internal documents.Their research led to a comprehensive understanding of the socio-political underpinnings and   4 structural deficiencies of the insurance industry. Ericson, Barry, and Doyle examined how thestate (sociological term for government) operates in a partnership with insurance   corporations inmaintaining a profitable environment for capital growth and expansion. The state is dependent ontaxation for continued operation; therefore, the maintenance of a positive business atmosphere isvital to the self-preservation of state interests.Key determinations cited in  Insurance as Governance include the following:1. States betray their basic duty to serve the general public welfare by mobilizing privateinsurance   corporations to establish regimes to serve collective well being.2. States establish legal frameworks to minimize risk to capital/property holders, set standards foroperations, provide capital, and support the conveyance of particular aspects of the public domaininto private hands.3. States see people primarily as consumers in support of private capital. The state conditionallygrants rights for individuals based on their conduct in a variety of private, corporate, and quasi-public practices.4. States increasingly support risk control for private capital from natural disasters, technologicalcatastrophe, or civil unrest. States regulate individual behaviors to lower personal risks andprotect health insurance/disability investments. States lower their risk using increasedsurveillance and law enforcement. Additionally, states collect data to build risk assessmentinformation for private insurance companies.5. Private insurance companies interlock with the state in the desire for preventive security,increased surveillance, risk minimization (such as state mandated seatbelt use), and acceptableprofit producing regulations.In summary, the state works in conjunction with health and disability insurance companies tomaintain profitability first, encourage healthy behaviors by citizens second, and thirdly protectcitizens from gross abuses by private firms when absolutely needed.In order to understand the money and power connections of the health insurance industry, welook at the boards of directors of nine of the largest insurance companies and the affiliations of each member. (See appendix B) We found one hundred thirteen board members who held onehundred fifty past and/or present positions with major financial or investment institutionsincluding such major firms such as J.P. Morgan, Citigroup, Lord Abbett, Bank of America, andMerrill-Lynch. These men and women sit on the boards of financial corporations commanding$482.2 billion in annual revenues in the US. (Department of Commerce 2006)Additionally, these board members have connections to some of the largest corporations in theworld including General Motors, IBM, Ford, Microsoft, and Coca Cola. We found directcorporate affiliations among the one hundred thirteen health insurance directors to thirty-fourcorporations on the Fortune 500 list for 2007, which had a combined revenue of over 2.5 trilliondollars 2006.The board members also held or hold eighty-two governmental or government-related positions.These positions range from members of the US House and Senate to Cabinet positions,Ambassadors, Governors, State Insurance Commissioners, and Democrat and Republican Partiesposts that show a deeply embedded government-health insurance industry inter-connectedness.Three board members actually held positions in the Canadian government as well. Additionally,many board members were/are affiliated with influential policy organizations such as the
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