House Democrats investigating whether insurers unfairly drop small business coverage

Rep. Henry Waxman sent letters Monday to insurers seeking information on how they decide coverage for small businesses after alleging that they drop coverage for smaller firms whose employees get ill.

The Associated Press: "The trade group representing the companies said the action amounted to a smear campaign designed to bolster support of a public health insurance option. Waxman is investigating an industry practice called 'purging,' in which insurers drop coverage for sick individuals once they become too expensive to insure. According to a statement from Waxman, health insurers will terminate coverage to small businesses by canceling their policies or raising premiums until they are unaffordable."

Waxman — who chairs the House Energy and Commerce Committee — said lawmakers need to understand how widespread the practice is. "Aetna Inc., UnitedHealth Group Inc., WellPoint Inc., Humana Inc., Medica and Wellmark Blue Cross Blue Shield received the letters" (Perrone, 8/31).

Reuters/The Boston Globe reports that Waxman wants the information by Sept. 14 (8/31).

The Hill: "Earlier this month, Waxman and [Rep. Bart] Stupak [D-Mich.] penned letters to 52 private health insurance companies demanding volumes of data related to executive compensation, profits, re-payments from Medicare and other government subsidized plans, and company spending on corporate retreats. … Robert Zirkelbach, a spokesman for the private health insurance industry called the new request 'just a continuation of a politically-motivated fishing expedition in an attempt to justify a new government-run insurance plan'" (Allen, 8/31).

CongressDaily reports that Energy and Commerce Oversight and Investigations Subcommittee Chairman Stupak "said the committee, which passed a healthcare overhaul bill in July, has documented examples of insurance companies raising small business premiums by an unsustainable amount or canceling a policy once it is discovered a covered employee is sick. … A National Small Business Association spokeswoman lauded the committee request. … According to the NSBA, the number of small businesses able to offer their employees health insurance has dropped from 67 percent in 1995 to 38 percent today" (Noyes, 8/31).

Roll Call: "The missives are the latest in an ongoing assault by House Democrats on the insurance industry as the party seeks to rally support for its struggling health care overhaul plans. … And last week, Rep. Dennis Kucinich (D-Ohio), chairman of the Oversight and Government Reform Subcommittee on Domestic Policy, requested that six top insurance executives — including those for Aetna, Humana, UnitedHealth and WellPoint — appear before his panel in September to testify on how they do business" (Newmyer, 8/31).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.