Over Regulating Health Insurance & The Law of Unintended Consequences

California's Regulators Abolished Legal Underwriting, So Insurers Outsource it to Doctors

I have written quite a few times about California's regulatory adventurism that has made it impossible for health insurers to assess and price health risks in the market for individual health insurance, despite the fact that it is legal to do so. (Although, the recently defeated California Health Care Deforminator, Model ABX1 1 would have outlawed risk-rating, thereby driving premiums up for everybody.)

California regulators recently forbad health plans from rescinding policies wherein applicants have misrepresented their health status or history, unless the plan can prove that an applicant willfully misrepresented himself. Say, for example, you suffered a head injury two months before applying, but did not disclose that on the application, and fooled the health insurer into selling you a policy with premiums set for a person in better health. When the truth comes out, you can just say that you did not realize it was important, or that you forgot about it, and the health plan is stuck with the policy in force. Obviously, this increases everybody's premiums, because health insurers become "gun shy" when they cannot carry out their legal right to underwrite individual health policies.

Because California is a pretty competitive market, one insurer that presumably did not want to jack up premiums has undertaken a different approach, according to an article in the Los Angeles Times. Blue Cross of California has sent a letter to doctors asking them to report any suspected pre-existing conditions to Blue Cross of California when they see a patient covered by an individual policy.

Doctors are appalled that the 3rd party-payer is asking them to "spy" on applicants. I don't blame them. But I find it hard to blame Blue Cross of California, either. After all, California's regulators have eliminated any other way for them to faithfully estimate and price the health risks of individually-written health insurance, despite the law's permitting it.

Many politicians would (mistakenly) abolish risk-writing in individual health insurance, but they have not achieved that yet. Until they do, regulators must allow California's health insurers to underwrite under the protection of current law, not force them to do it through the back door, and jeopardizing the doctor-patient relationship.

Source






New Zealand public hospital mistakes kill 40

For perspective, there's around 4 million people in New Zealand

Mistakes in New Zealand hospitals led to the deaths of 40 patients and left another 142 people seriously ill or injured in the 12 months through June 2007, according to an official report released today. The mistakes included significant overdoses of medicine, surgeons operating on the wrong part of the body or leaving instruments inside after surgery, patients falling and dangerous reactions to blood transfusions, the Health Ministry report said.

It was the first time such figures had been released, and Health Minister David Cunliffe said transparency was the best way for the health sector to improve. The report said that an average of 2.2 of every 10,000 patients treated in New Zealand hospitals were involved in a serious or fatal medical mishap. Cunliffe said that New Zealand hospitals, which admit 834,000 patients a year, were among the safest in the world and compared favourably to those in Australia and the United States, but could do a lot better.

New Zealand Health and Disability Commissioner Ron Paterson told Parliament this month that complaints to him had increased by 20 per cent in the last two years, and he dubbed New Zealand hospitals unsafe. He said that the main problem was an "unduly complicated" health system for a nation of 4.2 million people and lack of collaboration between the 21 district health boards, which had different standards and operations.

Source