Monday, September 7, 2009

Six Health Insurance Companies Investigated for "Purging" Small Businesses

House investigators target six health insurance companies for additional data

By Jared Allen

Go To Original

Two House committees asked six large health insurance companies for information about the “purging” of small businesses from their plans.


Energy and Commerce Chairman Henry Waxman (D-Calif.) and Rep. Bart Stupak (D-Mich.), who chairs the Energy and Commerce Oversight and Investigations subcommittee, asked the companies for data regarding the purging of small businesses when the employees of those businesses become ill and the companies’ health insurance claims increase.

The additional information was requested from Aetna, UnitedHealth Group, WellPoint, Humana, Medica, and Wellmark Blue Cross Blue Shield.

“I began looking into the practices of the health insurance industry in the last Congress and was deeply disturbed by what we uncovered,” Waxman said in a statement. “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,” Waxman said.

Earlier this month, Waxman and Stupak penned letters to 52 private health insurance companies demanding volumes of data related to executive compensation, profits, re-payments from Medicare and other government subsidized plans, and company spending on corporate retreats.

The two gave the companies until Sept. 4 to turn over documents related to how they compensate any employees — including executives and board members — who made more than $500,000 between 2003 and 2008, and until Sept. 14 to supply information going back to 2007 on how much they spent on any events held outside company grounds.

When the executive compensation letters were released, Waxman and Stupak said through statements that they were part of a broad, ongoing investigation into the practices of the private health insurance industry.

They painted the investigation into small business purging as part of that same effort.

“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,” Stupak said in a statement. “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 pair gave the six companies until Sept. 14 to turn over the relevant information, and until Sept. 8 to inform the committee if they intend to “provide the requested information voluntarily.”

Each company except for Medica was asked to turn over executive compensation and profitability documents by the Sept. 4 and Sept. 14 deadlines.

A committee spokeswoman was not immediately available to say how many of those documents have been turned over in advance of the first Sept. 4 deadline.

Robert Zirkelbach, a spokesman for the private health insurance industry called the new request “just a continuation of a politically-motivated fishing expedition in an attempt to justify a new government-run insurance plan.”

“Health plans are already highly regulated at both the federal and the state level, and the overwhelming majority of Americans are satisfied with their current health care coverage,” said Zirkelbach, the spokesman for America's Health Insurance Plans. “The inconvenient fact is that health plans strongly support health care reform and have been working collaboratively with the business community to advance reforms that meet the specific needs of small businesses.”

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