Monday, April 26, 2010

How insurers make their profits

The National Post has a disturbing story about the actions of US health insurer, WellPoint, and its policy of dumping anyone diagnosed with breast cancer:

The women paid their premiums on time. Before they fell ill, neither had any problems with their insurance. Initially, they believed their policies had been canceled by mistake.

They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators. Once the women were singled out, they say, the insurer then canceled their policies based on either erroneous or flimsy information.

This is how insurance companies make their money: by denying claims - or, less politely, cheating their customers out of the coverage they have paid for. And National wants to put these people in charge of welfare in New Zealand, through compulsory unemployment insurance? Its utter madness!

[Hat-tip: Kevin Drum]