The Alan Katz Health Care Reform Blog

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Posts Tagged ‘Blue Cross’

Recissions, the LA City Attorney, and the Three Laws of Politics

Posted by Alan on March 6, 2008

The debate over health care plans cancelling policies for members who incur significant claims on the grounds that they omitted or misstated information on their original applications for coverage (a practice called “rescission”) is instructive. Few defend the right of consumers to lie on their applications. In addition, few maintain the carriers haven’t overreached in defending themselves from fraudulent applications. And no one claims the carriers have done a good job of presenting their case to the public on this issue.

In some of my speeches I talk about the three laws of politics I’ve developed over (too many) years dealing with campaigns, the press and politics in general:

  • Law #1: The Law of Political Reality: Political Reality trumps Real Reality for all political parties at all times.
  • Law #2: The Law of Political Activity: Politicians are paid to address perceptions and that’s what they do
  • Law #3: The Law of Political Reporting: The media is paid to report on what politicians do and that’s what they do

The application of these three laws can lead to an echo chamber of surreal proportions. It often begins with the press reporting on a study or action by a company — let’s say questionable rescission practices by a major carrier. That’s what the press is supposed to do. Politicians read the article, perceive a problem and hold a press conference promising to address the problem. That’s what politicians are supposed to do. The press then reports on the press conference held in response to the press’ earlier article. Other politicians see that story, hold their own press conference and so on and so forth. After awhile it doesn’t matter what the original problem was, how widespread it is, or how nuanced it might be. The Laws of Politics do not suffer nuances.

This is the way issues become a part of the public’s consciousness. When real problem (and the problems surrounding abusive rescissions are real) and addressed by sincere politicians (there are more of them than you’d think), the process works great.

Some politicians, however, are more adept at applying the laws than others. Few would suggest that Los Angeles City Attorney Rocky Delgadillo is in the running for most adroit politician of the decade. He’s had several self-inflicted political mishaps that have shaken his credibility and weakened his future electoral prospects.

The City Attorney is astute enough to know the rescission issue has hit a chord with the public. And he’s clever enough to get his office engaged in the battle. Let’s give him the benefit of the doubt: he’s seen a problem, is sincerely concerned, and is seeking to address it.

Last week he sued Health Net for “engaging in unlawful and deceptive business practices” according to his office’s press release announcing the civil action (He is also initiating a criminal investigation against certain individuals at Health Net). The suit alleges health Net engaged in “unlawful, unfair and fraudulent business practices and unfair, deceptive , untrue and misleading advertising.” City Attorney Delgadillo claims he brought this action against Health Net because “[c]ountless Californians who believe they have insurance actually have policies that aren’t worth the paper they’re printed on.” I’m not sure what the legal definition of countless is, but it’s a lot. Never mind that less than one percent of health insurance policies are ever rescinded.

Using the unfair advertising laws in this context is an interesting legal theory. It’s awfully broad and, taken to extremes, could be abused. But there’s nothing wrong with a prosecutor — elected or otherwise — testing out a theory like this.

And testing it he is. Now City Attorney Delgadillo is turning his attention to Blue Cross of California. This time it’s not for the carrier’s rescission practices, but because the company issued a press release describing changes to its rescission practices. The City Attorney doesn’t believe Blue Cross, apparently because press releases are tools for burnishing a company’s public image and because, well, Blue Cross is an insurance company.

“In all of our dealings with the health insurance industry, our experience would lead me to have little or no confidence that the claims made by Blue Cross … are accurate,” he’s quoted as saying in an interview with the Associated Press

Leave aside the irony of an elected official whose official home page is not much more than a listing of the numerous press releases put out by his office publicly criticizing a company for issuing a press release. What’s more disturbing is that in the City Attorney’s mind, insurance company’s are incapable of telling the truth. City Attorney Delgadillo doesn’t claim his office has received complaints about Blue Cross not living up to the promises it made in the press release. It’s that, as an insurance company, the presumption is they’re lying.

That’s a sad statement about both, the low public standing the insurance industry has brought upon itself and the standards of fairness in the City Attorney’s office.

None of this should be taken as a call for the City Attorney to stop investigating insurance companies. But it does underscore that by adhering too closely — and inartfully — to the Law of Politics, the Los Angeles City Attorney is undermining the credibility of the office’s legitimate legal undertakings.

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