Wednesday, January 18, 2012

This Is America Today, Part I

A true story: A fifty-ish woman I know was diagnosed with breast cancer. Dutifully, she and her husband contacted their insurance company to start the process of paying for her medical bills.

But lo and behold, the insurance company started dragging its feet—then tried to claim the woman’s breast cancer was a “pre-existing condition”.

That she had breasts in fact was a “pre-existing condition”—a “pre-existing condition” she had had since she was fourteen.

But the cancer? That was brand new.

The woman and her husband started the usual, insurance company-designated complaint process—which they quickly realized was a deliberate rigamarole, designed to get them spinning their wheels without receiving any money from the insurance company.

So they did the smart thing: They contacted lawyers. Not “a” lawyer, but a team of lawyers—four in fact, including a partner in a name law firm in her city.

This squad of lawyers had a morning meeting with the insurance company people.

In less than a single business day, the insurance company started paying up. In the two years since this little “episode”, as the cancer stricken woman calls it, she and her husband haven’t had a single problem with their insurance company.

This is America today.

The insurance company didn’t act im-morally so much as a-morally: They made the cold-hearted calculation that it wasn’t worth their while to pay off the woman’s justifiable claim—until she showed up with a squad of lawyers. Then the insurance company made another cold-hearted calculation: That it was cheaper to pay off her legitimate claim than to fight her lawyers.

So they paid: Not because they were contractually obliged to—as they were—or because it was the right thing to do—as it was. No: They paid off her claims because it was cheaper than trying to wriggle out of their obligation.

This is America today.

28 comments:

  1. Insurance isn't free. Every insurance policy has it's limits and exceptions and that is the contract we agree to. The preexisting condition thing appears to be unfair until you do the research. It is capable of bankrupting all insurance companies and thus denying insurance to everyone. I can't argue that this particular person was or was not being treated correctly, i.e. she had a pre-existing condition because I don't have the information. But I can argue that if insurance companies are routinely forced to pay for pre-existing conditions then insurance rates must necessarily double or triple. The immutable laws of nature will require much higher costs for a relatively small gain. So jump on the bandwagon if you must but get out your wallet...

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    1. Moral of the story--don't by any fucking insurance .And move to country that doesn't poison your food, air and water to make sure you get cancer to begin with. USA is a corrupt shit-hole that resulted from it's self inflicted disease called capitalism. Looks like Marx was right.

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    2. I don't believe that Marx was right. Capitalism is not the disease. GREED is..........

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  2. The lesson to learn from MF Global and the story above is: avoid any and all counter-party risk as much as possible. Contracts will not be honored, and political connections are infinitely more important than a legally binding contractual obligation.

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  3. Unfortunatelly, we have that in Europe as well.

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  4. A little sense of humor, please: I was being sarcastic when I said that her breasts were a “pre-existing condition she had had since she was fourteen”.

    Her cancer wasn’t pre-existing. Thus the insurance company had no right to try to renege on the insurance policy.

    GL

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  5. That was America yesterday too.

    AnonymousJan 18, 2012 06:32 AM: haha, read much?

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  6. Hello,

    Ask yourself, what service does a health insurance corporation provide? It sets up individual accounts, collects money, receives claims, and either pays the claims or denies them with some kind of appeal process. They're called administrative costs.

    For profit health insurance companies in America provide this service for anywhere between 15 to 30 or more cents on the dollar of all money collected. The American Medicare program provides these same administrative services for about 2 to 3 cents on the dollar. Why do Americans insist on paying 7 to 15 times as much for the same service?

    America spends now something over 17% of its GDP on medical services. Canada, your evil neighbor to the North, with its universal single payer system, spends something over 10% of GDP. Canadians are healthier, live longer, and Canadian businesses are more cost competitive because of it, etc etc. No system is perfect and the Canadian system could be improved, but well over 90% of Canadians, when polled, stated that they prefer the Canadian system over the American medical financing system.

    Also, Canadians generally don't complain about paying for the medical expenses of "other people's children". They see the health of their population as a kind of national infrastructure investment in themselves. That along with their superior primary and secondary educational systems. Some countries really are culturally different from America - and they like it that way. It's a reality Americans find very hard to understand or accept.

    The corporation in GL's post is not to be judged morally. What are essentially unregulated for profit corporations are there to maximize profits. Period. Wolves will fill up eating the village children if you let them.

    This is why Obama's "reform" plan is so pernicious. With 1500 corporate waivers already given, Americans are being forced to buy a product with no effective regulation as to contract performance or price. Thus, the sophisticated will have to pay the premiums and hire lawyers thereby further increasing the cost of medical care in America.

    The solution: either a well regulated and adequately funded public system, or a strictly regulated, as to contract performance, for profit private system with maximum competition. And I would be very interested in hearing the details of such a system. Unfortunately for America, it has neither.

    Regards,

    Unna

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  7. Cut the milligrams Unna. Snowbirds fly south when they want world-class care.

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    1. Espresso is my drug of choice.

      Unna

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    2. This is America? I guess so. Sounds more like this is ONE company in particular. I agree with others, companies do things that are wrong, and they should be punished, but it's pretty broad to call the whole fiasco "America". Having lived in South America I can attest that crappy things happen all over the globe... and that when it comes down to it America is a great place to live. The millions that flock here legally and illegally, and millions more that wish they could are testament to that... or is Chile the latest winner in the immigration category and I'm just not aware of it?

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  8. It's not America. It's that particular insurance company. What they did was illegal, and companies do illegal things all the time. That's why we have a system of laws and property rights and such to make right the things that are wrong.

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    1. Actually, that "system of laws and property rights and such to make right the things that are wrong" is called "Government regulation."

      And the problem is that both parties are committed in deed (but only the GOP in rhetoric) to DEregulation.

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  9. Those saying "this is not America" and calling this an isolated incident have not paid much attention to how corporate power in America operates. Poisonous food is promoted if it makes everything cheaper. Poisonous pharmaceuticals which make people more sick are promoted (and cures which grow naturally out of the ground are discouraged) because they make money for the politically well-connected. Sup-prime mortgages which are guaranteed to blow up will be promoted if they create profits for the next quarter. It all happens on a strictly monetary cost/benefit analysis.

    It is an inevitable result of capitalism with no conscience. What capitalism and communism have in common is that they are both entirely materialistic, i.e. they have no objective and realistic anchor and thus quickly spiral into decay without the influence of guiding principles. Of course, non-materialistic guiding principles are explicitly forbidden from consideration by corporate boards: their only legal responsibilities are to their shareholders. And here we all are reaping what they have sown.

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  10. That's why we have a system of laws and property rights and such to make right the things that are wrong.

    This is hilarious! What 12 year olds commenting now? How does such a good blog have such moronic comments? Oh yes and they have justice for all in America and no racism and a great legal system! The propagandists are in full force. Guess you can just go sue a major corporation and win what since everybody can afford $500.00 per hour lawyers. Wake up! You get the justice you can afford twit.

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    1. I am sorry to have offended you, Anonymous. Such fury. Too bad that you haven't figured out how to reply properly, so I could have responded to you more promptly as I'd receive an email update.

      Like it or not, the example in this post had legal recourse, and it worked. It usually does, and lawyers will often represent a client at no cost to them. Don't believe me? Just watch television commercials during the day, on a week day.

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  11. Nothing new Gonzalo. It is a business practice on the part of the insurance companies. The people who do not fight are worth the practice. And if they can delay some will give up trying, and some will die.
    I suspect the same thing happens in orthopedics. My wife has bad knees from a lifetime of working. But the doctors delay getting surgery. I suspect their is some insurance related reason. If they delay long enough she will be disabled, no longer work, and will not be a liability to the insurance company that covers workers! Isn't that sweet! Work all of your life, paying premiums through your employer who deducts those benefits from your wage potential and when you can't work, you become the governments problem. It is no wonder that the govt is a money losing insurer. They get all the claims!
    Preaching to the choir.....gh

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  12. Something along the same lines happened to me (in Australia). When I got hit by a car, my insurance company refused to pay since they said the car insurance company held liability. Of course, the car insurance company didn't admit liability for nearly a year, so I ended up having to the full fees myself after being chased by the hospital for payment. My insurance company eventually reimbursed me the money and took responsibility for upholding the cover that they offered, but only after some correspondence from my lawyer. And of course, once the car insurance company investigated and settled claims, the health insurance company got all of their money back.

    It seems that insurance can no longer be relied upon to help you out "just in case something bad happens".

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  13. Damned if you do...damned if you dont.
    Insurance is a necessity. Take it or leave it ..."AT YOUR OWN RISK".......!!!!

    Insurance, as an example, is but one small fraction of the inner workings of corporates and of the mistreatment,lies, inequality and unfairness.
    GL...you can literally open up a can of worms with this.
    Where to start...The medical profession, The FDA, labelling on manufactured foods, fracking and poisoning of the water supplies, GM foods, The Govt and the soon to be failed medicare system, soon to be repealed Social Security....etc etc etc. Who do you believe...or better still what can you believe.
    The stated example borders on the ridiculous/absurd.
    This is not just AMERIKA..this is the western world.
    The great socialist plan is affecting everything.
    We as humans, acting for and on behalf of large corporated can and apparently have lost our morals and ethics for the sake of $$$$$$ and at the behest of our superiors. We lack judgement and the ability to question or to determine right from wrong. Corporates/Governments dont run themselves, they are but the people who are employed by them.
    Shame on them and the system. This does not get any better...in fact I see it getting worse by the day.
    The ones at greatest risk are those that do not have the power or influence or money to influence decision makers....which IMHO is a lot of f$#&in people.

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  14. You couldn't be more wrong. Public/government insurance has fraud rates of about 50%. Cost overruns and denial of claims. If you think private insurance is expensive wait until you see what government insurance costs you. Additionally the stats on the costs of government insurance doesn't count the cost of government employees. That is not part of the equation so when someone tells you the super efficient government insurance only has a 2% overhead you will know they are lying.

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  15. lots of cold hearted selfish libertarians will say it's the woman's fault, and her lawyers are examples of big government regulation, and what the insurance companies did is "free market".

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  16. Private insurance is bad, but I'm not convinced public insurance is much better.

    The truth is that health insurance, and perhaps more properly health "care" itself is a giant bubble, the developed world over.

    I'm not convinced ICUs and dialysis and organ transplantation and fifth line cancer drugs actually pay for themselves (as in, by private savings). If this is true, they are unsustainable and headed for extinction.

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  17. I explained to my wife how you always have to take your insurance company to court just to get them to meet their contractual obligations. It doesn't matter which inurance either, car, health, fire, etc. She was completely flabbergasted.

    You see, in Switzerland, where assurance is heavily regulated, someone will go to jail for that behavior, alonmg with the company being heavily fine and possibly losinbg their charter.

    In Switzerland, the government KNOWS that the insurance companies are a bunch of crooks. Contracts are contracts and if you don't meet the obligations then someone goes to jail.

    If you promise to provide a service and then systematically renig, that's called fraud.

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  18. Yeah! That selfish capitalism really sucks. Our poor have three TV, air conditioning, free healy care, two cars, $300 monthly cell phone plans, vacations... You gotta hate capitalism. Give me that old fashioned Marxist/socialism/communism anyday. They are living the good life in Russia and Cuba. Yeah, I hate capitalism and all our freedoms...

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  19. The problem with private health insurance is the hard cases. The general progression for sick people is first to lose their jobs, then their health insurance and finally go bankrupt at which point dept. of Human Svcs. pays for the care, housing, food stamps, etc. the progression varies of course, some don’t lose their jobs, and some can’t get insurance due to pre existing conditions, but the near absolute is after their broke the state pays for the care. If someone is truly sick going bankrupt usually isn’t a problem so eventually the state pays.

    The question I have is why do we let the insurance companies cherry pick the healthy people then have the state take care of the unprofitable ones? Healthy people would cost the government very little and the government already pays for the sick people, however the tax can be spread across the whole of the public for true risk pooling. Unless we are going to roll people out in the hall to die if they can’t afford the care, then private insurance makes no sense.

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  20. I might be wrong but I think most libertarians would support robust criminal penalties for fraud, rather than the petty fines which businesses simply factor in to the cost of doing business. Unna makes some good points, as well as some silly overgeneralizations. However, she/he is absolutely correct that a pure system, EITHER a well-run public OR a truly market-based system of healthcare would be superior to our frankenstein.

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  21. Economic realities is the answer. If you want to provide the health care for those "hard cases" then I encourage you to create a health insurance company and do your good work. The economic reality is that there is not enough money to pay for the best health care possible for everyone. simple as that. You are left with two choices: 1. A government run socialist health care that overtaxes everyone and provides mediocre health care. The "hard cases" still suffer but since everyone sufferes under the same equal system it must be fair.
    2. A free market system where people are free to choose what, exactly, they are willing to pay for nad thus reduce their health care costs while at the same time enjoying the best health care system possible. The downside to such a system is that those unwilling or unable to work have few choices and will either fall through the cracks or have their health care subsidized by the tax payers.

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  22. It's funny to see how entrenched all those "good" American beliefs of old still are in some of your blog's audience, GL.

    That selfish capitalism really sucks. Our poor have three TV, air conditioning, free healy care, two cars, $300 monthly cell phone plans, vacations... You gotta hate capitalism.

    Strange how disconnected from reality one can actually be... Feeding on the MSM network, I guess, the Great American Hologram... You might like this, I think. Or perhaps you might not, I don't know. Drop me a note.

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GL