While the American people were enduring a deep economic turndown, health insurance companies increased their profit margins by 56% in 2009. According to a report by the advocacy group Health Care for America Now (HCAN), the five largest for-profit insurers enjoyed combined profits of $12.2 billion in 2009. These large profits made by insurance companies come at the expense of consumers. Insurance companies used unethical tactics to increase their profits including, denying valid claims, delaying payments until consumers give up or die, confusing consumers with contracts that are almost impossible to decipher, and discriminating against consumers with poor credit.
Many insurance companies will deny valid claims. In order to increase profits, companies go as far as to reward employees for successfully denying claims and firing employees who refuse to deny claims. Many insurance companies delay paying out claims for as long as possible in the hopes that the policyholder will eventually give up, or even die. In addition to delaying claims, some insurance companies will simply cancel, or rescind, policies once they learn that the policyholder has a medical condition that is expensive to treat. Insurance companies also drop people for technicalities, honest mistakes, and unintentional omissions. For example, a Texas nurse had her policy dropped after she was diagnosed with breast cancer. The reason given for dropping her policy was that she failed to disclose a visit to the dermatologist for acne.
Another way insurance companies try to avoid paying claims is to make their insurance contracts incomprehensible. These contracts contain terms that are difficult to understand, even for an experienced attorney. According to the South Carolina Supreme Court, “insurers generally are attempting to convince the customer when selling the policy that everything is covered and convince the court when a claim is made that nothing is covered.”
People who are facing financial crisis are suffering further because insurance companies are using their credit reports, which are often unreliable, to determine the premiums that they will pay, or whether they can get insurance at all. Insurance companies are punishing people for both poor credit, and lack of a credit history. Through this practice, the poor and elderly are being discriminated against. Even people who have fallen on difficult financial times through no fault of their own are being punished.
Since insurance companies will use a variety of unethical tactics to deny claims in pursuit of higher profits, consumers need to do whatever they can to protect themselves. Consumers buying insurance should always:
- Read your policy carefully.
- Make sure that you know exactly what is covered and what is not.
- Know how to appeal a denial by your insurance company, if you should need to do so in the future.
- Be very careful to fill out forms completely and accurately.
- Know that, if your insurance company rescinds your insurance, they may send you a premium refund check. By cashing the check, you may be inadvertently accepting their decision to rescind your policy.
- Do not give up when you feel that your rights are being violated. The insurance companies are hoping that you do give up, so it is critical that you stand up for yourself.