Tied to the mast
…but orange now and black

Bill Moyers interviews a dissident 20y health insurance industry veteran

Check it out here.

Bill Moyers is the man.

One exchange:

BILL MOYERS: You told Congress that the industry has hijacked our health care system and turned it into a giant ATM for Wall Street. You said, “I saw how they confuse their customers and dump the sick, all so they can satisfy their Wall Street investors.” How do they satisfy their Wall Street investors?

WENDELL POTTER: Well, there’s a measure of profitability that investors look to, and it’s called a medical loss ratio. And it’s unique to the health insurance industry. And by medical loss ratio, I mean that it’s a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry’s been dominated by, or become dominated by for-profit insurance companies. Back in the early ’90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.

So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they’ll punish them. Investors will start leaving in droves.

I’ve seen a company stock price fall 20 percent in a single day, when it did not meet Wall Street’s expectations with this medical loss ratio.

For example, if one company’s medical loss ratio was 77.9 percent, for example, in one quarter, and the next quarter, it was 78.2 percent. It seems like a small movement. But investors will think that’s ridiculous. And it’s horrible.

BILL MOYERS: That they’re spending more money for medical claims.

WENDELL POTTER: Yeah.

BILL MOYERS: And less money on profits?

WENDELL POTTER: Exactly. And they think that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that’s what– that is what happens, what these companies do, to make sure that they satisfy Wall Street’s expectations with the medical loss ratio.

BILL MOYERS: And they do what to make sure that they keep diminishing the medical loss ratio?

WENDELL POTTER: Rescission is one thing. Denying claims is another. Being, you know, really careful as they review claims, particularly for things like liver transplants, to make sure, from their point of view, that it really is medically necessary and not experimental. That’s one thing. And that was that issue in the Nataline Sarkisyan case.

But another way is to purge employer accounts, that– if a small business has an employee, for example, who suddenly has have a lot of treatment, or is in an accident. And medical bills are piling up, and this employee is filing claims with the insurance company. That’ll be noticed by the insurance company.

And when that business is up for renewal, and it typically is up, once a year, up for renewal, the underwriters will look at that. And they’ll say, “We need to jack up the rates here, because the experience was,” when I say experience, the claim experience, the number of claims filed was more than we anticipated. So we need to jack up the price. Jack up the premiums. Often they’ll do this, knowing that the employer will have no alternative but to leave. And that happens all the time.

They’ll resort to things like the rescissions that we saw earlier. Or dumping, actually dumping employer groups from the rolls. So the more of my premium that goes to my health claims, pays for my medical coverage, the less money the company makes.

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2 Responses to “Bill Moyers interviews a dissident 20y health insurance industry veteran”

  1. wow. I actually thought the story from the beginning of the interview was even more stunning; you should add that.

  2. Which story? Here’s the transcript: http://www.pbs.org/moyers/journal/07102009/transcript2.html… plug the one you’re referring to into your next comment.

    PS – Let’s grab a coffee later. I’m eager to hear about Ireland.


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