This Week In "Insurance Company Rules:" Joys of the Market Edition

This week, the health insurance lobby continues it's "listening tour" by hosting a staged event in an undisclosed location [1] where it could hear nothing it didn't want to hear, and didn't want you to hear. On the flip side, Health Care For America Now [2] sought to amplify people's voices with the "Which Side Are You On?" call-in campaign [3], making it easy for people to contact their congressperson and find out if their representatives support the insurance companies, or us?

While the insurance companies seek to keep "Insurance Company Rules" [4] in place, so they can do whatever they want, whenever they want, a glimpse of the conservative fantasy -- in which "Insurance Company Rules" would be in even greater force -- was revealed.

This Tuesday, The Wall Street Journal [5] reported on the dangers individuals and small business owners are having trying to save money by purchasing insurance in the private market through group associations.

In short: with little watchdogging by our government, insurance companies are flat-out scamming consumers. WSJ reports:

The premiums can be cheaper and the benefits better than if you purchased coverage on your own because the associations' greater market clout may give them better negotiating power with insurers. But the cost and quality of coverage and the recourses available to consumers who feel they have been wronged can vary substantially, as insurance sold in this way tends to be more loosely regulated than individual health insurance or coverage offered by large employers.

Phony insurance is sometimes sold through real or bogus associations. From 2000 to 2002, 144 such scams left more than 200,000 policyholders with more than $252 million in medical bills, according to a 2004 report by congressional investigators. Illegal health plans flourish during periods of high premium increases. On Thursday the National Association of Insurance Commissioners issued an alert to consumers warning them about fraud.

Though one company actually was busted recently:

Last month HealthMarkets Inc.'s insurance subsidiaries -- MEGA Life and Health Insurance Co., Mid-West National Life Insurance Co. of Tennessee and Chesapeake Life Insurance Co. -- agreed to pay $20 million to settle violations found by regulators in 29 states relating to health coverage the companies sold to the self-employed through the National Association for the Self-Employed, Americans for Financial Security and the Alliance for Affordable Services. The companies' insurance agents didn't adequately explain what the policies covered, investigators found.

"Consumers thought they were buying major medical policies when in fact they were getting mini-meds," said Washington state Insurance Commissioner Mike Kreidler, an initiator of the three-year, multistate probe. (A so-called mini-med offers more limited coverage than a traditional plan.) "When they became hospitalized they discovered the plan covered virtually nothing," Mr. Kreidler said.

Of course, widely sharing risk helps lower costs and maximize bargaining power, which is why Health Care for America Now advocates the progressive vision of a public plan option [6] -- helping save money for millions of Americans and for the overall health care system. At the same time, strong standards for private insurers would be put into place, along with an active government watchdog, or else insurance companies will continue game the system and drive up costs for everyone.

The conservative fantasy, now enshrined in Sen. John McCain's health care plan [7], is to end employer-based insurance and throw us all into an unregulated market, where "Insurance Company Rules" are the only rules.

Are these the rules you want controlling your health care?