Ethical Lowlands

Health insurer tied bonuses to dropping sick policyholders | LAT | 11.9.07

Woodland Hills-based Health Insurance Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.

The revelation that the health plan had cancellation goals and bonuses comes amid a storm of controversy over the industry-wide but long-hidden practice of rescinding coverage after expensive medical treatments have been authorized.

Great opportunity for the legislature to step-in and correct these ethical behavioral lapses… How much of healthcare delivery is financially incentivized by the denial of benefits or termination of coverage by payers and the over-utilization of reimbursable services by providers? Do insurers inhabit the ethical-lowlands alone?