Health Summit 2010
Sen. John Rockefeller on preexisting conditions, rescissions and lifetime annual limits at White House health summit
Thursday, February 25, 2010; 4:24 PM
OBAMA: What I'd like to do is to move on to the topic which I think underlies -- oh, I'm sorry. We've still got Jay. My apologies. Please go ahead.
ROCKEFELLER: Thanks, Mr. President.
One of the -- we really haven't discussed, I think, what is at the basis of the frustration about this whole business of preexisting conditions and lifetime limits, all the rest of it. And that is the way and the nature of the health insurance industry for the most part.
They are, among all industries I've ever encountered and on the Commerce Committee we have spent a year analyzing and bringing out some of their sins and ills. They're terrible. They're in it for the money. The nice lady who runs WellPoint said, "We will not sacrifice profitability for membership." Money first, people second.
They -- we had a fellow named Wendell Potter, who worked for Cigna for 20 years as a high executive. He came before us on his own, volunteered, and described the way health insurance companies operate. They are looking for reasons to kick you out. They are looking reasons, if you already have the health insurance, for doing the rescissions. Yes, we're going to ban those, but not unless we pass a bill.
And in fact, often employees are incentivized financially to find reasons to kick people off of the insurance which they are paying for. So you can be paying your premiums and then they discover -- they come up with something they found in your background they don't like and they just kick you off. They can do that now legally.
And so people say, "Well, you know, maybe the states ought to do this. They could do it better." Well, that's the situation we have now, but 44 of those -- 44 of the 50 states make it perfectly legal for health insurance companies to do this preexisting condition, to simply deny coverage for something which people just got sick, babies or as adults, whatever.
I got a letter from the CEO of Cigna written to me, and he said, "I want to apologize because we -- we had said that we spent $5 billion the small-group insurance market. Well, I checked a little bit more and in fact we hadn't." Now, why don't people know that? Because the health insurance industry is the shark that swims just below the water, and you don't see that shark until you feel the teeth of that shark.
Now, unless I'd be accused of trying to over-dramatize my statement, this is the way they operate. Nobody has particular oversight of them. They're not under any antitrust-type rules. They can do what they want. They so dominate the market, as the secretary point out, that there really isn't any real competition. They can do what they want and they do, and it's money. It's money.
And it makes me sick. It shouldn't happen in America. People say, "Well, government-run. You're going to do this or put that restriction on them." If you don't put the restriction on them, they're going to go on doing this. And so, you know, the public option was, I liked that a lot, but that's not going to probably be possible. So you have to go at them to clip their wings in every way that you can.
And that's why, and with this general agreement on preexisting conditions and rescissions and lifetime annual limits, I mean, you know, it's not a lot of fun to see an 8-year-old kid, which I have done -- I knew this kid -- Samuel Ford (ph), and he had leukemia. And -- and he had, like, you know, annual limits, and he ran out. And then he died because there was no insurance. Could they have cured his cancer? I don't know, but that's what insurance is for.
So this is a rapacious industry that does what it wants, unknown in their behavior to the people of America, except on an individual basis, and individuals can't shake up us the way they are now doing it, I think.
So when you -- when you talk about the individual mandate, that's not in there for some government-makes-that-decision purpose. It's there because you've got to have a big pool. Everybody's made that point. I've got a son who's old enough to have health insurance. He doesn't have it. And when my wife and I found out about it, we told him to get it the next day. He didn't think he needed to have it. He would live forever.
Well, of course, that's the premise among young people. That's why we have the requirement that people sign up for health insurance, and they don't know if they're going to need it, and he doesn't know that he's going to need it. So you make everybody participate, and then you have a bigger risk pool, you can do a better job.
I'm going to say one word about medical loss ratio, because it's sort of a crazy name, but it's a really good concept. What we say is that the health insurance industry says that they spend 87 percent of all of their revenues from premiums or any investment they might have on health care. That doesn't work out quite that way. For large businesses, they do a much better job. But for small businesses and the individual market, they're down in West Virginia in the high-60s and the low-70s.
So how do you stop that? You can't stop that by asking them to. You stop that by having a law, which is a good law, saying that you have to spend between 80 percent and 85 percent of everything you take in in revenue on medical for your patients, and if you don't we will know about it, because we'll be tracking it, and then you have to rebate that difference to the people.
So there's a reason for doing that. It's good public policy. It can't just happen on a voluntary basis. I mean, it's -- it's -- but it's a way to make sure you get your objective.
Let me just close on one -- one other issue: the rate review.
ROCKEFELLER: And I wish we could talk about the Medicare board, the advisory Medicare board, which is controversial, but which is...
OBAMA: Well, we will have a chance to talk about it next, so...
ROCKEFELLER: I know, but...
OBAMA: ... Jay, let's -- let's wrap it up, because I want to make sure...
ROCKEFELLER: I'm going to wrap it up.
The insurance rate review is important. And if Kathleen Sebelius is to be called an unelected person, and she's head of the group that does all of Medicaid and Medicare in Health and Human Services, and she's been an insurance commissioner, she's been a governor, she knows the whole thing, I don't call her down because she's not elected, but was appointed by you. And it was a brilliant choice.
People say the decisions can't all come from Washington. Sometimes decisions have to come from Washington. Because what we're about here is not trying to run by government; we're trying to protect consumers. And if you're going to protect consumers, you've got to have a way that they really do get protection, and that they know it and that they feel it in their lives.
So this is -- this is -- this insurance reform is important. It's a profoundly emotional subject out there. And we've got to do something about it.