Death by Profit Margin

Posted by Christy Hardin Smith, Firedoglake at 11:10 AM on December 25, 2007.

Let's start with a fundamental truth: Insurance companies are in the business of not paying claims.

By not paying your claim, they get to keep all those premiums you pay. Maximizing their benefit by minimizing their risk, by finding loopholes and other reason to deny claims unless and until they are either cornered into paying them or a claim is so clear-cut they can't avoid it under risk of bad faith. Welcome to the wonderful world of profit and to hell with the consequences.

From AP via the Insurance Times:

Many successful companies are known for taking risks. Cigna Corp. isn't one of them....

The lack of risky business, Wall Street analysts say, has helped Cigna avoid many problems associated with rising health costs, an issue plaguing competing health plans. And the company's low profile has made it less of a target for class action suits filed in recent years accusing HMOs of putting profits ahead of patient care. Cigna has been named in only two of six lawsuits, most of which are either pending or that have ended with rulings in the industry's favor. But Cigna officials say their quiet stance means the company's accomplishments aren't well known....

On Dec. 11, four leading physicians, including the surgical director of the Pediatric Liver Transplant Program at UCLA, wrote to CIGNA urging the company to reverse its denial. The physicians said that Nataline "currently meets criteria to be listed as Status 1A" for a transplant. They also challenged CIGNA's denial which the company said occurred because their benefit plan "does not cover experimental, investigational and unproven services," to which the doctors replied, "Nataline's case is in fact none of the above."

AP/AR is is business shorthand for "accounts payable / accounts receiveable". In theory, as long as AR > AP on the corporate ledger, a company is profitable and satisfies the needs of its stakeholders (business partners, customers, vendors, employees, and stockholders). So, most large companies employ teams of individuals who manage corporate risk. Guidelines and protocols are established to enable these teams to make decisions on when it makes economic sense to spend money, approve projects, and invest in research and development.

It's all about risk management. Keep this in mind as you read further -- because you are a risk, not a client -- to your healthcare, life, auto, and homeowners insurance providers....

Tagged as: health care, health insurance

Christy Hardin Smith is a former attorney, who earned her undergraduate degree at Smith College, in American Studies and Government, concentrating in American Foreign Policy. She then went on to graduate studies at the University of Pennsylvania in the field of political science and international relations/security studies, before attending law school at the College of Law at West Virginia University, where she was Associate Editor of the Law Review.