The integrity of insurance coverage must be protected

San Diego Union Tribune

Individuals who sit down at their kitchen tables to pick their health insurance plan during the one open-enrollment month per year will find their carefully weighed choice meaningless if a new HMO industry policy of selling patients off like commodities is allowed.

Last week UnitedHealth group, the nation’s second largest health plan, announced the sale of hundreds of thousands of its California patients to Blue Shield. The unusual part of the deal is one company is not selling its operations to the other, there is no merger, and UnitedHealth is not declaring bankruptcy. These are the traditional reasons that patients might find themselves transferred to a different HMO with separate decision-making processes, covered benefits and co-payment policies.

Allowing HMOs to sell “covered lives,” as patients are called in the industry, without a fundamental change in the corporation’s ownership turns patients into no more than corporate chattel and threatens to make the continuity of individuals’ medical care as volatile as the stock market. If HMOs can freely trade in patients, like they were commodities, individuals’ relationships to the doctors, hospitals and the covered benefits they carefully chose will be as tenuous as the whim of company strategists.

If employers only allow individuals to change their HMOs during the annual open-enrollment period, why should an HMO be permitted to sell off its patients at any time simply because it believes it is a better deal for corporate profits to do so?

One small company’s interoffice memorandum faxed to the Foundation for Taxpayer and Consumer Rights shows UnitedHealth‘s retreat from some California patients will begin as early as July 31.

UnitedHealth‘s move is particularly egregious because the corporation announced only months ago its bureaucrats would no longer second-guess its doctors — a unique policy position in the HMO industry. Patients who signed up with the company because of that promise and other marketing that promotes free access at the company to specialists will face an entirely different structure at Blue Shield.

Such bait-and-switches will become increasingly frequent if state regulators sanction UnitedHealth‘s patient sale. HMOs will be able to promise the moon, then simply sell off their patients to another company after the patients are in the door.

UnitedHealth‘s move reflects a new licentiousness among HMOs that are attempting to rewrite the traditional rules of insurance so that concerns about corporate profitability can trump long-term obligations to individuals for the coverage of medical services. The company is selling its patients off not because it did not turn a profit on them, but because it believes there is not enough room for expansion in the market and growing profitability. The same licentiousness is driving Medicare HMOs to dump more than 700,000 patients in rural counties where the companies do not believe their profits are high enough.

The phenomenon is also behind the recent spate of health plan notices radically changing terms for long-time policyholders. Patients are forced to confront new benefit reductions, premium increases of as much as 80 percent, new deductibles and co-payments and elimination of maximum out-of-pocket payments by individuals.

Government must step in to protect the integrity of insurance coverage as a long-term duty of corporations to act in good faith by reasonably maintaining services in exchange for accepting premiums. This will be the first test of California’s new Department of Managed Care, which opened its doors July 1, and has the ability to stop UnitedHealth‘s at-will corporate sale of patients before industry-wide contagion results.

President Clinton also has an ability to stem the tide of Medicare HMOs fleeing certain markets. He could simply issue an executive order stating that Medicare HMOs must serve all markets they are able to serve or the companies will not have access to any Medicare patients. Medicare HMOs are not likely to forsake the rich reimbursements in urban counties, which can be as much as $800 per month.

Such an “all-or-nothing” policy ironically springs from the industry itself. For years, Aetna, the largest managed care company, required its doctors to accept all Aetna patients from all its types of plans or be unable to treat any Aetna patients. It’s high time the HMO industry receives a taste of its own medicine.

HMO benefit cuts and rising co-payments, deductibles and premiums present yet another challenge for society at large. Market-based medicine has proven that patients will always pay the price when HMO profits do not meet expectations. The vicissitudes of the market should not be allowed to dominate medical care delivery. Americans may yet have to rethink whether private corporations can be trusted with public health.

Court is co-author of “Making A Killing: HMOs and The Threat To Your Health (Common Courage Press, 1999). He can be reached via e-mail at [email protected].