The Waxman Book Report Continues

by David Dayen

Henry Waxman must be coming up with one hell of a document about the insurance companies. He's been researching them since at least July, and yesterday he requested even more information. This time, he's investigating the extension of the rescission process to the small business arena.

"I began looking into the practices of the health insurance industry in the last Congress and was deeply disturbed by what we uncovered," said Chairman Waxman. "As part of our ongoing investigation, we are now looking into the practice of health insurance companies terminating the coverage of small businesses when their employees become ill and their health insurance claims increase. We need to better understand how widespread this harmful and destructive practice has become, and how it is impacting small businesses and their employees across the country."

"As we continue our investigation into business practices in the health insurance industry, the treatment of small businesses remains a concern," said Chairman Stupak. "We have documented examples of insurance companies raising small business premiums by an unsustainable amount or canceling a policy once it is discovered a covered employee is sick. Much like rescissions in the individual market, this practice is alarming. To better understand how prevalent this practice is and precisely how many small businesses are impacted, we are asking some of the largest insurers to provide information on their small business policies."

The Committee is requesting information and documents for small group policies, including their renewal rates, factors used to determine premium rates, and the maximum premium rate increases.

Because insurers basically guarantee issue to the businesses with whom they deal, the only way they can punish - and hopefully force to drop - a business from continuing to work with them is by unsustainably raising the premiums. You cannot do this with a large company like a Wal-Mart, but small businesses are essentially just a step removed from the individual marketplace in terms of their leverage. So insurers can afford to price those businesses out of the market, if they have employees on their books who actually need to use their health insurance.

That's an incredible admission by the insurance companies that they simply cannot afford to maintain their profits and pay for anyone's health care. So they engage in terminating coverage whenever humanly possible, even when the individual gets it through an employer, to avoid that payment.

Waxman typically engages in slow, deliberate investigations that gradually extract a maximum of damaging information out of the opponent. In this case, he's asked for all of these materials in a rush, and some of the deadlines coincide with Congress' return to Washington. I think he's writing a book - the definitive study of how the health insurance business really works, to be delivered at precisely the moment when Congress reaches the final stages of debate on health insurance reform.