On Lizards: Legal and Far From Laudible

Illinois is proposing to tax businesses making over $2 million a year (who will pass this expense on to consumers) to support a sweeping health care and education funding plan. The 0.08-1.95% tax (called the Gross Receipts Tax or GRT) is in addition to our already high 8% sales tax. Businesses, understandably, are outraged. That is, everyone except businesses in the food industry and medical industries, which are exempt.

I wonder if the health insurance and pharmaeutical industries consider themselves "medical" industries?

But his question is a mute one, I suppose, because most of the Lizards in these industries are based outside our state anyway. UnitedHealth, the largest health care insurer in America for instance, is based in Minneapolis, MN and has been noted to practice many slithering techniques. Blue Cross and Blue Shield, Aetna and Cigna have been similarly implicated in slimy behaviours.

Remarkably, it seems likely that the health insurance industry and pharmaceutical industries will have to contribute nothing to the control of health care costs in our state while enjoying few restrictions to raising costs.

Why is this a problem? Because not only does small business have to get taxed more based on the Illinois plan, they also have to endure the threat of retribution of insurers like what UnitedHealth did to one small business in Ohio:

Despite the 40 percent ceiling (on annual health care premium rate increases) in Ohio, for instance, United Healthcare early this year levied an increase of more than 100 percent on the premiums of CBG Biotech, a 26-employee hospital supplies maker in Macedonia, near Akron. The insurer argued that the high increase was justified because CBG had violated its contract.

Ohio permits insurers to solicit advance medical information from employees. One CBG worker had failed to disclose his wife’s multiple illnesses — including cirrhosis, gout and an ulcer — when he signed up for coverage, according to a letter from United that became part of a court record.

When United learned of the omission after the woman was admitted to a hospital, where she died, “they decided to punish the entire company,” said CBG’s chairman, Gerald W. Camiener.

United raised CBG’s total premium for the duration of the contract to $18,000 a month, from $8,800, he said, and demanded $118,000 in back payments.

CBG sought a federal injunction against the increase. In February, Judge Ann Aldrich of the United States District Court in Cleveland denied the CBG request, saying that United Healthcare’s actions were permissible under its contract and “very likely legal, but also very far from laudable.”

Mr. Camiener, in an e-mail message, lamented that ruling. “In the past, the policy of health insurers was to disqualify the employee when wrong information was furnished to them,” he wrote.

“Now,” he continued, “the insurers will be coming to the employer and demanding exorbitant sums of money with the threat that the entire group will be cut off forthwith, even in the middle of a policy year.” Mr. Camiener changed his company’s health coverage to Aetna, paying about $15,400 a month in premiums, and he complained to senior executives at United.

If we think for even one moment that these practices couldn't happen here in Illinois, we're deluding ourselves. And it will be legal, but far from laudible indeed that the insurance industry won't have to contribute a dime to the health care costs in our state. Meanwhile, we've had to suck up another tax to feed those greedy lizards that prey on small business.

-Wes

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