Health Insurance for Profit:
If You Have a Medical Problem, You Won’t Be Covered

Oct 16, 2006

Insurance company Amerigroup is being sued by the state of Illinois. The company was hired by the state to sign up people who couldn’t afford insurance. The agreement with the state said it wouldn’t pick and choose whom it insured.

The lawsuit says the company systematically denied insurance to women in their last three months of pregnancy. In fact, a number of e-mails were submitted at the trial to show this company policy. The director of medical management told an employee in an e-mail,“... we do not sign up pregnant members. We have trained the marketing staff constantly to not even approach a pregnant female about joining the plan.” The company tracked how many women in late-term pregnancies were insured by them. Then they found out which employees had signed them up in order to intimidate other employees into denying coverage.

Illinois paid Amerigroup 243 million dollars from 2000 to 2004. The company in turn paid out 131 million dollars in health benefits. That is, the company skimmed off almost half, mainly for profit. The company said denying pregnant women insurance made “bottom line sense,” that is, it increased profit.

This company is not alone in denying health insurance to people likely to have claims. A common practice of health insurance companies is to only sign up the healthiest people.

Another method insurance companies use to deny coverage is to cancel the policy after the policy-holder files a claim. Blue Cross of California was recently fined $200,000 for canceling a woman’s policy because she didn’t disclose surgery that took place 23 years earlier. And it’s well known that the company has done this a lot. In fact, a special unit of the company investigated the history of their customers after they filed claims. This unit was trying to find any error in their application, no matter how small. If something was found, the insurance was cancelled from its first day, the premiums returned and nothing was paid for the medical procedure that had already taken place.

This denial of health insurance comes at the same time that many corporations have either eliminated or drastically cut back on their employee health insurance. In the private sector, companies employing half of all workers don’t offer health insurance.

So, more workers can’t get health care on the job. And they can’t get individual health coverage unless they are completely healthy and don’t need health care. This is why 47 million people were uninsured in 2005, with the number growing by over one million per year.

The message to us when we get sick is clear: go away and drop dead.