Wednesday, August 05, 2009

What if a bank told half their highest net worth clients ’sorry, you misspelled your address when you opened your account, we’re confiscating your balance’

As you probably already have learned, rescission is the insurance company practice of refusing to pay for health care because they found an (even unrelated) mistake on your original health insurance application.

But in claiming that this practice is rare, the insurance companies, whose very business depends on understanding statistics and probability, are betting that you don’t understand probability enough to catch the lie. Indeed, “Figures never lie, but liars always figure.”

For starters, even if you take the insurance company’s statement at face value — that it only affects one-half of one percent — this is a huge number of people. The population of the US is greater than 300 million people. One-half of one percent of that is 1.5 million people. They are depending on the fact that “one-half of one percent” sounds small.

But the much bigger lie is carefully documented in a brilliant article in Taunter Media, which points out that calling rescission rare is, shall we say, misleading at best. Yes, the insurance company may only cancel the policies of one-half of one percent of the total people they cover, but the more significant statistic would be what percentage of the people who have very expensive medical care claims do the insurance companies cancel? After all, the insurance companies only try to use rescission on people who have expensive claims. The insurance companies do not provide this data, of course, but based on other hard data, Taunter calculates it to be somewhat higher than fifty percent.

Would you put up with a bank that confiscated your life savings when you tried to withdraw it, because of a trivial mistake you made on your original application form? The insurance companies have even cancelled policies for omissions on application forms that the applicant had absolutely no knowledge of.

No wonder we have so many people in the US who don’t have health insurance. It is a ripoff. No wonder the health insurance industry is spending millions of dollars in misleading ads and campaign contributions to defeat a public option. Who wouldn’t choose a public option over such a ripoff?
Read it all at Political Irony

No comments:

Post a Comment