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Sunday, April 29, 2007

MEDIA MIX

The medical insurance game -- you always pay and they often play


On April 13, 12 different insurance companies apologized for failing to pay benefits for legitimate claims on life and supplemental medical insurance policies. It was the latest chapter in an industry-wide scandal that started with admissions about unpaid benefits for automobile and property insurance.

On TV, I watched the executives stand up and bow to the assembled reporters. Normally, these rituals are performed in conference rooms, but in each one I clearly saw people working at desks in the background. It seemed odd that every company was holding its press conference in the middle of a bustling office, until I realized it was all the same office.

I later inferred from newspaper accounts that the press conferences were held at the Financial Services Agency. Obviously, the FSA was making it easier for these companies to confess their sins publicly by setting up a blanket press conference in their own office. I imagined a line of executives standing in the hallway, waiting their turn to go through the motions.

This conga line of coerced contrition had the effect of spreading the guilt around, diluting any one company's liability in the eyes of the public. It also showed that the FSA was doing its job.

But that job, apparently, wasn't enough. A week later, the Ministry of Health, Labor and Welfare sent letters to private medical insurers warning them not to "inflame fear among consumers" with their advertising. Misleading ads are usually the bailiwick of the FSA or the Fair Trade Commission, but the MHLW oversees the public health insurance system, and many ads for supplemental medical insurance give the false impression that public insurance doesn't pay enough to cover major illnesses.

The MHLW singled out an ad by a "foreign-related insurance company" which claimed, on average, that a cancer patient "pays" 1 million yen, or about 30 percent of the total treatment. The wording implies that this 1 million yen comes out of the patient's pocket, but most of it will eventually be reimbursed through his or her public insurance. According to the MHLW, in such a case the average patient will actually end up paying only about 90,000 yen.

Last summer, the ministry asked private insurers to explain this system in their ads, and, according to an Asahi Shimbun article about the MHLW's directive, since then "a tendency to discuss the system has been spreading." The Asahi's vague assessment is difficult to prove since it's almost impossible to find an ad that does anything more than mention the system in very small print. However, in last Wednesday's Asahi, there was a special publicity article written by a "financial planner" explaining the system in line with the MHLW's directive. It anchored a two-page spread that included ads for medical insurance from various companies.

If you read the article carefully, you'll reach the conclusion that public health insurance covers everything you need, even treatment for cancer. Strictly speaking, private medical insurance does not cover treatment. It only gives you some extra money in the event you are hospitalized or, in some situations, receive a medical consultation. The financial planner says that such insurance can be used for a private hospital room, or to help allay costs for treatment not covered by public insurance.

There seems to be a contradiction here, but the companies that bought ads on the same page probably assume potential customers won't read the article. The FSA has asked insurers to also investigate cases in which payments were not made because customers did not file claims for benefits they could have received under the terms of their policies, presumably because they didn't understand the terms.

In a separate series, the Asahi related the tale of a 70-year-old man who underwent surgery for cancer that resulted in a one-month hospital stay. The man had supplemental medical insurance with two companies. He applied for benefits and both companies sent forms to be filled out by his physician. On company A's form, the doctor wrote "cancer" under "name of illness," while on company B's form, the doctor wrote "stomach tumor" under "reason for seeking medical care." The patient received 650,000 yen from company A and 330,000 yen from company B. Having expected more from B, the man called the company and was told that he was only paid for a "regular illness," not cancer. When he explained he had cancer, which the policy paid more for, the company gave him an extra 130,000 yen.

There are two ways to read this: One, some insurers avoid paying benefits through creative paperwork, or two, consumers need to be aggressive about understanding their policies. But in either case, the issue of not paying benefits is a smoke screen that hides the fact that people with public health insurance don't need private medical insurance. It's a racket, which is probably why a former insurance executive told online Ohmy News Service that he didn't think the 12 apologizing companies felt any remorse at all.

The potential to make money is huge. Shukan Kinyobi once reported that the U.S. government is pressuring Japan to change public health insurance regulations. As it stands, if any part of a patient's treatment involves procedures or medication not covered by public insurance, the entire treatment cannot be covered by public insurance. The U.S. wants to isolate types of treatment so that American insurance companies can sell private insurance to cover treatments not covered by public insurance.

This would help not only American insurance companies, but also American pharmaceutical companies, since only drugs for treatment allowed under public insurance need to be approved by the government. Of course, it would also benefit Japanese insurance and drug companies. There are plenty of sick people to go around.



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