Monday, August 03, 2009

Lies, damn lies, and statistics - health care rescission

Great article by Taunter Media about the damn lies behind the quote from insurance exec Don Hamm that "Rescission is rare. It affects less than one-half of one percent of people we cover. Yet, it is one of many protections supporting the affordability and viability of individual health insurance in the United States under our current system."

When you really do the math, it's clear that that small percentage is actually a very very large percentage of people who have expensive illnesses.  Here's Taunter telling us the disturbing facts around this number:
If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population). If you take the LA Times estimate that $300mm was saved by abrogating 20,000 policies in California ($15,000/policy), you are somewhere in the 15% zone, depending on the convexity of the top section of population. If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%, the folks with over $35,000 of annual claims who could never be profitable for the carrier – then the probability of having your policy torn up given a massively expensive condition is pushing 50%. One in two. You have three times better odds playing Russian Roulette.
If we suspect that the insurance industry targets rescission against those people who have expensive illnesses, then it's not an accident, it's very intentional, and basically tells you that you get to have insurance only until and when you really need it, then you're on your own. So we Mr. Hamm says health insurance is affordable, I can only assume he means for his company, not for those who are seriously sick.

But hey, let's let the free market decide who should be covered and how.  The government is only going to get in the way - of making money, that is... 

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