Health Care War!

What you’re witnessing in the U.S. today is not a health care debate. It’s a health care WAR.

But it’s too soon to take sides: Neither has defined its territory; both are escalating the battle with weapons of mass disgrace.

In the meantime, millions of Americans are potentially innocent victims of the collateral damage — both financially and physically.

But if you’re among those upset at the Obama administration for trying to ram through a health reform bill, wait till you see what most health insurance companies are doing — and have been doing for many years!

They routinely overcharge you on premiums when you’re healthy and deny your claims when you’re sick.
They welcome your policy when you don’t need it and shred it when you do.
Adding financial insult to personal injury, they take the savings you’ve worked so hard to earn and throw it into high-risk investments you’d never touch with a ten-foot pole.

My 20-Year Battle With
Insurance Companies

In a moment, I’ll show you exactly how egregious their abuses can be; name some of the worst and best; plus give you some simple tips on what you can do.

But first, let me tell you about my own battles with health insurers, starting in 1989 when Weiss Research began rating them.

At the time, several large life, health, and annuity companies had loaded up with junk bonds, including Executive Life, Fidelity Bankers Life, and especially First Capital Life.

That’s the main reason I gave First Capital Life a D– rating (“weak”), and I felt that was actually generous. It probably deserved an even lower grade.

But within days of my widely publicized warnings on the company, several of the company’s lawyers and executives flew down to the Weiss Research offices in Florida.

With their two Mercedes parked outside the door, they swore that if I didn’t give them a better rating, they’d slap me with a massive lawsuit and put me out of business. “All the established ratings agencies give us high grades,” they said. “Who the hell do you think you are?”

I politely explained that I never let personal threats affect my ratings. And unlike other rating agencies, we didn’t accept a dime from the companies. “I work for individuals,” I said, “not big corporations. Besides,” I continued, opening up the company’s most recent quarterly report, “your own financial statements prove your company is in trouble.”

That’s when one of them delivered the ultimate threat: “Weiss better shut the @!%# up,” he whispered to my associate, “or get a bodyguard.”

I did neither. To the contrary, I intensified my warnings. And within weeks, the company went belly-up, still boasting high ratings from established rating agencies on the very day it failed. In fact, A.M. Best, the nation’s leading insurance rating agency, didn’t downgrade First Capital Life to a warning level until five days after it failed. (Click here for the evidence.)

It was a grisly sight — not just for policyholders, but for shareholders as well: The company’s stock crashed 99 percent, crucifying millions of unwitting investors. Then the stock died, wiped off the face of the Earth. Two of the company’s closest competitors also bit the dust. Consequently, unwitting investors — who did not have access to Weiss Research’s ratings — lost $4 billion, $4.5 billion, and $13 billion, respectively.

Fortunately, those who had seen our ratings were ready. We warned them long before these companies went under. No one who heeded our warnings lost a cent.

In fact, the contrast between anyone who relied on Weiss Research and anyone who didn’t was so stark, even the U.S. Congress couldn’t help but notice. They asked: How was it possible for a small firm in Florida to identify companies that were about to fail, when Wall Street told us they were still “superior” or “excellent” right up to the day they failed?

To find an answer, Congress asked the executives of all the major agencies — Standard & Poor’s, Moody’s, A. M. Best, Duff & Phelps (now Fitch), and Weiss Research — to testify. But I was the only one among them who showed up at the hearings.

That’s when Congress asked its auditing arm, the U.S. Government Accountability Office (GAO), to conduct a detailed study on the major ratings agencies, including Weiss Research. And after extensive review, the GAO finally published its conclusions in 1994:

Weiss Research beat its leading competitor, A. M. Best, by a factor of three to one in forecasting future financial troubles at life and health insurers.
For the largest insurers that failed, Weiss Research beat the other rating agencies — including Moody’s and S&P — by a factor of five to one.

Click here for the entire GAO report. Plus, be sure to scroll down through the report to the paragraphs I have highlighted and to the comments I’ve made in the margins.

I Thought This Report Would Help End
My Battle With the Insurance Industry …

But I couldn’t have been more wrong.

The American Council of Life Insurers — the trade association and lobbying group representing the larger companies — had launched a nationwide campaign to try to discredit my research and my company.

One major health insurer sued me for giving them a bad grade, and it cost me close to $150,000 in legal fees to defend myself. And ironically, soon after the GAO issued its 1994 report, another did the same, this time costing me over $1 million in legal fees.

Worse, in both cases, they said they’d drop the suit immediately if I’d just give them a better grade or simply remove it from circulation. “That’s what Moody’s, S&P, and Best do. Why don’t you?” they asked.

I refused to accept their underhanded practices, intimidation, or threats. And today, I recommend you do the same.

How Americans Are Routinely Bullied, Cheated,
And Abused by Their Health Insurance Companies

The business battles I fought with insurers are inconsequential in comparison to the life-and-death struggles fought by millions of Americans with their insurance companies every day.

All I lost was time and money. In contrast, a young mother with bone cancer who fought against the same company that sued me lost a lot more: her life.

In a trial after her death, the jury read internal memos that revealed a sinister plot: To reduce their costs, not only did the company’s executives pursue extreme measures to deny her the treatments that could have saved her life … they also discussed the cost benefits of hastening her demise.

The jurors were so outraged, they awarded her family the largest punitive damage award in the history of health insurers.

Think these are just isolated cases? Think again!

Here are just a few of the rampant abuses that continue to this day:

Abuse #1
Denial machines …

Most health insurers spend substantial sums in order to

develop computer programs and systems that automatically and repeatedly deny and delay claims payments;
hire doctors specialized in poking holes in legitimate claims; and
give extra bonuses to employees who can successfully deny the most claims.

In sum, health insurers build massive machines designed with the sole purpose of denying and delaying your claims.

They know that few policyholders will take legal action. Plus, even though policyholders do win judgments, the companies can earn a lot of extra income on the funds they hold back with delayed claims payments. The longer you or your doctor has to wait for reimbursement, the more income they can make on your money.

And unfortunately, this is not just about a few bad apples in the industry. According to the National Association of Insurance Commissioners (NAIC), in 2008 alone, policyholders filed 195,669 complaints against insurance companies. That excludes complaints in many states which do not compile comparable data and, needless to say, it also excludes the millions of Americans who do not file a formal complaint.

The two most common types of complaints of all: delays and denials.

“All too often,” says New York Attorney General Cuomo, “insurers play a game of deny, delay, and deceive.” And, I might add, all too often, people are bankrupted by the expenses or die waiting for the care.

But it gets worse …

Abuse #2
After-the-fact policy cancellations …

Just last Tuesday, the U.S. Department of Health and Human Services released a study demonstrating that, in most states:

Insurance companies can retroactively cancel individual policies if any condition was not disclosed when the policy was obtained. More to the point, insurers can cancel the policies even if the medical condition is unrelated and even if the person was not aware of the condition at the time. (Italics are mine.)
Coverage can also be revoked for all members of a family, even if only one family member failed to disclose a medical condition.

And again, companies institute sophisticated systems and procedures that maximize the savings with these underhanded tactics, including special compensations for employees who can deploy them most effectively.

Two major insurers have admitted to Congressional committees that they automatically investigate the medical records of every policyholder with certain conditions, including leukemia, ovarian cancer, brain cancer, and becoming pregnant with twins.

For example, in one case, after a Texas resident was found to have a lump in her breast, the insurance company investigated her medical history and concluded that she had been diagnosed previously with osteoporosis. Although that condition was unrelated to breast cancer, the company used it as an excuse to cancel her policy.

No, I don’t support the notion that underwriting — the process of denying coverage or charging higher premiums due to known risks — is somehow evil.

Quite the contrary, if insurers do NOT protect themselves from those risks, they may not be financially capable of fulfilling their promises to all other policyholders. But systematically leveraging contract loopholes to cancel policies after a condition is diagnosed fails to pass the most basic of smell tests.

The most insidious abuse of all:
Direct interference with medically
recommended procedures …

“One of our big frustrations with insurance companies,” says GOP Congressman Tim Murphy, “is they control the market place, they control what’s done,” and what doctors decide.

Indeed, in 50 out of 300 U.S. metropolitan areas, a single health insurer controls at least 70 percent of customers. And in many more areas, just two health insurance companies dominate the market.

That puts both you and your doctor at a great disadvantage.

End result: Your doctor’s decisions about what’s best for your health are frequently overruled by the insurer’s decisions about what’s best for its bottom line.

Most patients don’t realize how widespread this is and how deeply it can impact the quality of care. Most doctors, meanwhile, are so sick and tired of insurance company interference, they’ve given up complaining.

Which Companies Are the Worst Offenders?

For the most part, government officials are loathe to give you straight answers. But I do. Based on my review of customer complaint data compiled by key states, here’s my partial list:

Some Major Health Insurers and HMOs With
The MOST Frequent Customer Complaints
American International Group
Atlantis Health Plans, Inc.
Celtic Insurance Company
CIGNA Healthcare of NY, Inc.
Fortis Group
GHI HMO Select, Inc.
Mutual of Omaha Group
Oxford Health Plans of NY
UnitedHealth Group

Not all insurers routinely resort to bad business practices. In fact, some bend over backwards to pay claims promptly and avoid customer complaints …

Some Major Health Insurers and HMOs With
The LEAST Frequent Customer Complaints
CNA Insurance Group
Mass Mutual Life Ins. Co.
Northwestern Mutual
Sun Life Assurance Company of CN
Universal American Financial
UNUMProvident Corp. Group

My Recommendations
Are Very Straightforward …

First and foremost, do everything within reason to avoid the worst providers and stick with the best. My lists above are not complete, but I’m confident in my conclusions for each company cited.

Second, be sure to keep all your medical records and correspondence with insurers.

Third, if your insurer tries to stiff you for bills you feel should be covered, file a formal complaint. Some states let you file your complaint online. Others require you do it via mail. Either way, do not let insurance companies get away with behavior that you feel is unfair or abusive.

Fourth, if you can’t get satisfaction, seriously consider legal action. The good news: Most of the time, plaintiffs with good documentation do win.

Good luck and God bless!

Martin

P.S. If you missed the Weiss Global Forum or want to watch it again, it’s not too late to do so.

Click here to watch it now.

Or click here for viewer comments.

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Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Kristen Adams, Andrea Baumwald, John Burke, Amy Carlino, Selene Ceballo, Amber Dakar, Dinesh Kalera, Red Morgan, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

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