Bad Faith by Insurers is Bad Health Care

By Margie Burns

Adrian Campbell was aboard a commuter train heading into D.C. on Sept. 26, exchanging anecdotes with another passenger, Alex Scott, about trying to get hospital care that the patient thinks health insurance will cover when the insurance company or hospital think otherwise. Scott, who formerly worked for Kaiser Permanente, and Campbell appeared in the Michael Moore film, SiCKO.

“I was the one who went to Canada,” Campbell says, for surgery for cervical cancer when her insurance carrier in the States refused to pay for the operation.

Campbell came to the nation’s capital, reuniting with other members of the SiCKO ensemble, to hold a candlelight vigil at the Lincoln Memorial on Sept. 28 for people who have died or lost loved ones in the health-care system. At a very poorly attended rally for Health Care Not Warfare at the Capitol the next day, Campbell filled in further details in an interview.

Blue Cross-Blue Shield declined to cover her surgery on grounds that Adrian was under 26 when her cervical cancer was diagnosed in November 2004. She was 23, and the company benefited from a Michigan law forbidding operations on a woman’s reproductive system before age 26. The law permits exceptions for a life-threatening condition. As Adrian sums up, the company position was, “You can have the surgery. You won’t get into trouble for it. We just won’t pay for it.” They saved $6,000, she said.

Opting not to risk delay, she traveled to Canada, where she had the surgery a few days after the diagnosis.

Adrian’s story has a prequel that did not make it into the movie. When Adrian was 19, her doctor noticed that some cervical cells were pre-cancerous and wanted her to participate in a drug trial — three shots of the HPV vaccine Guardisil, at that time not yet approved by the FDA. But even a human guinea pig still has to pay for some drug trials. The shots were $500 each, and as Adrian comments, “I’m a college student. I don’t have $1,500.” The same insurance company, the Blues through GM, declined to cover the procedure as experimental.

Health insurance, even for people who have it, does not necessarily lead to health care. Yet so far, most of the Democrats running for the White House, excepting John Edwards and Dennis Kucinich, are still debating not how to provide health care for all but how to provide health insurance for all.

Amid heightened emphasis on health care in a premature presidential campaign and the dispute over the State Children’s Health Insurance Program (SCHIP), public discourse and most of the presidential campaigners tend to interchange the phrases “health insurance,” “health coverage” and “health care” as though medical care and an insurance policy were the same thing, begging the underlying question of whether insurance actually constitutes coverage.

Insurance is actually a means to an end, protecting against risk, rather than an end in itself. While some 47 million US citizens are uninsured, the authentic national objective in health policy should be health care for all Americans, not health insurance for all.

Few locales have targeted the objective of health care directly. San Francisco recently initiated a city-financed program, called Healthy San Francisco, to provide free or subsidized health care to all San Francisco adults without insurance. As announced by the mayor’s office, “Healthy San Francisco provides uninsured residents with a medical home where they can receive access to primary and preventive care, such as emergency care, mental health care and pharmaceuticals.” In effect, it cuts out the insurance middleman.

Elsewhere in the US, proposals are far more likely to emulate former Massachusetts Gov. Mitt Romney’s benchmark of universal (statewide) health insurance.

The current presidential campaign might draw attention to the Massachusetts program, signed into law by Romney in 2006. The plan is mandatory health insurance, loosely parallel to state laws that universally require all drivers to have automobile insurance. By Dec. 31, 2007, Massachusetts residents must either buy private health insurance or pay a penalty. All indications so far show that the overwhelming majority of uninsured middle-class citizens in Massachusetts have not bought health insurance, opting to pay a few hundred dollars in state tax penalty rather than pay thousands more for insurance premiums.

The kicker is that, even with additional thousands of subsidized customers, Massachusetts insurance companies have again increased their premiums and have indicated that premiums will increase again by 8% to 12% next year. Massachusetts Senate President Therese Murray of Plymouth has proposed hearings at which insurers must justify any rate hike above 7%.

Although health care costs have increased 33% per year in Massachusetts for four years, and the new law reportedly has cost the state $147 million already, the mandatory coverage plan contains no cost controls with teeth, at least not regarding the insurance industry.

Making the distinction between health coverage and actual health care means raising the matter of bad faith by insurance companies. And as conservative commentator Kevin Phillips has remarked, through several election cycles, while the GOP in its current pro-corporate absolutism refuses to raise such issues, even Democrats tend to refrain from driving hard on them, for fear of offending their corporate donors.

Bad-faith acts include misrepresentations about claims handling, failing to handle claims promptly, systematically delaying settlement, denying claims without reasonable justification, requiring duplicative information, refusing to provide coverage, unjustified policy cancellations and retaliatory rate increases or premium increases to recoup payouts. While there is no uniform definition of bad faith, according to the Office of Legislative Research in Connecticut, where several major insurance companies have headquarters, “certain themes have emerged: arbitrary, reckless, intentional, malicious, fraudulent.”

The basis for insurance regulation in every state is the Model Unfair Claims Settlement Practices Act, compiled by the National Association of Insurance Commissioners (NAIC). Carriers are supposed to process claims promptly, and delaying an investigation or payment by requiring unnecessary or repetitive reports and forms is verboten. But in spite of state regulation, class actions and other lawsuits, broad consumer protection based on the Uniform Commercial Code, and even looming RICO prosecutions, bad-faith practices by carriers continue.

On insurance bad faith, there are two areas of consensus among industry critics, defenders and observers. First, it is impossible to gauge the exact extent of the problem because hard data on the national level are lacking; and second, whatever the extent, the problem could be ameliorated by good administrative processes in the companies. This broad consensus emerges among policyholder attorneys, insurance company spokespersons, and industry observers, not only about health coverage but also about other insurance with an impact on health, including disability, long-term care, and medical benefits under automobile insurance.

When every man on the street or female head of household knows that choosing to file a claim may mean getting a premium increase, that lack of exact information on insurance bad practices is somewhat thwarting.

Former first lady Hillary Clinton’s health-care task force might well have been a good source of information on insurance bad faith, but there is no public indication that the topic of bad faith ever arose. The Clinton campaign has not yet responded to emailed questions on this topic. Both Clintons have resisted making information from the task force public.

Meanwhile, Celia Wcislo, president of Service Employees International Union Local 2020 and a member of the Boston Public Health Commission, which had input on the Massachusetts plan, made an interesting point at a recent forum on health care coverage in New York State.

“It costs twice as much to insure people than paying for the sick ones who show up in hospitals,” Wcislo said.

Margie Burns is a Texas native who now writes from Washington, D.C. Email See her blog at

From The Progressive Populist, January 1-15, 2008

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