AMA Denounces Health Insurance "Purging"

Published: Wed 16 Jun 2010

Larry Roth

The American Medical Association claimed that it took a critical step today to safeguard patients' rights and ensure them access to medical care.

At its yearly policy-making meeting, the AMA voted to include a policy against "purging" in its health care agenda. Purging is a practice that involves charging some subscribers significantly more expensive premiums without any financial data to justify the increases in an effort to get the policyholders out of the risk pool.

"Health plans charge fees for health insurance above what the actuaries say they should be charging with the intent to discourage or price certain people out of the market," explained Dr. Steven Stack, a member on the board of trustees of the AMA.

The American Medical Association's policy on health insurance purging is only one part of what the organization calls a medical insurer code of conduct to preserve patients' and physicians' rights when they deal with health insurers. It is also only one of roughly 200 policy proposals that the group will consider at its annual meeting.

Varying Opinions on Purging

The AMA reported that it became aware of the practice of purging when former medical insurance company executives testified in front of Congress.

One of those ex-executives, Wendell Potter, the former vice-president of Cigna, reported to ABC News that pursing "absolutely" exists.

"It is widespread, although I know of no studies that have been undertaken to determine just how widespread it is," Potter explained.

A congressional committee led by Rep. Bart Stupak, D-Michigan, and Rep. Henry Waxman, R-California, is conducting an investigation of purging, a practice that Potter claims has saved health insurers a great deal of money.

"Purging accounts that have become less profitable because of higher-than-anticipated-medical-claim activity saves them millions of dollars," he reported.

America's Health Insurance Plans, a national group that represents over 1,300 health insurers, vehemently denied that purging happens.

"There isn't evidence to show it, because in every single state, health plans have to provide actuarial justification of increases in premiums," explained Robert Zirkelbach, a spokesperson for America's Health Insurance Plans.

But a health economist says that the size of purging lies somewhere between the two extremes.

"It's a serious problem for a relatively circumscribed group of people, and it happens far less often than people think," explained Gail Wilensky, economist and senior fellow at the international health foundation Project HOPE.