Is there any way for families like the Larivees to compare insurers before
signing on? “There’s no easy way,” according to the June 24 cover story of
Newsweek magazine. Consumers are mostly in the dark, Newsweek reporter Ellyn Spragins writes, because managed-care groups like HMOs “didn’t
take off until the 1980s, when employers began relying on them to slash costs.
Now HMOs — and their cousins, preferred provider organizations (PPOs, such as
the Larivee’s Prudential Plus) and point-of-service plans — are scrambling to
dominate markets so they can wring more costs out of doctors and hospitals.”
Consumer expert David Lansky told Spragins: “What’s really scary is that
there’s no system in place to detect harm to people while the shakeout is
occurring.”
The Larivees could have accessed consumer complaint reports from the Texas
Department of Insurance (TDI). And they would have found Prudential rated
relatively highly. In 1994, the last year for which figures are available,
Prudential ranked 40th among the state’s 50 largest accident/health insurers in
the number of consumer complaints to TDI. That year, The Prudential Insurance
Company of America held over 676,000 policies, and TDI investigated just 89
complaints. Even PruCare, its HMO, fared well; it boasted over 1.2 million
enrollees, and TDI investigated just 13 complaints. By contrast, The Travelers
Insurance Company ranked last on both lists. TDI investigated 89 complaints
against Travelers out of just 109,000 accident/health policies, and 15
complaints against the company’s HMO out of only about 47,000 enrollees.
But these figures may not be that meaningful — Prudential is lumped in with
companies that primarily provide disability insurance, not major medical
coverage. And its gargantuan HMO is ranked against very modest companies that
have fewer than 300 enrollees. In light of all this, Vickie Benitez, a
spokesperson for United Policyholders of Texas, a new branch of a
California-based, non-profit, consumer education and information organization,
says that TDI’s consumer complaint reports are not that useful a tool in
comparing companies’ records.
Most people receive insurance benefits through their employer, so what’s a
company looking to buy major medical coverage for its workers to do? Hire a
consultant, of course. AISD renews its health insurance agreements every two
years. Earlier this year the district contracted with Towers Perrin, an
international management consulting firm, to review the district’s health
benefits package. Upon reviewing the results of a survey submitted to several
area health insurance providers, Towers Perrin will look at how the quality of
service to employees compares with costs to the district; the firm will also
take into account how well insurance companies work with AISD’s personnel
department.
The Larivees, whose three children are insured through Sheri’s job with AISD,
hope that the board won’t renew the district’s contract with Prudential, but
it’s unlikely that their story alone will have much influence on the board’s
decision. AISD benefits manager Sharon Graswich said that out of 8,500
employees, she has few documented complaints. Julie Bowman, president of the
Allied Education Workers, said she thought fewer employees have complained than
ever before about the quality of the health insurance offered to them. In the
past, Bowman said, workers were dissatisfied because the district changed
companies too frequently.
Towers Perrin’s recommendations will be presented for approval to the AISD
Board of Trustees on June 24. The firm declined to discuss what its findings
might be. Besides Prudential, the district also offers SANUS and PCA Health
Plans of Texas to its workers. — R.A.
This article appears in June 21 • 1996 and June 21 • 1996 (Cover).