Health Net insists February 2009 had 30 days!

This is a health insurance story that involves my adult son Tim― a PhD in biology and a self-employed standup comic  living in Los Angeles ―and his former health insurance company Health Net―perhaps more appropriately referred to as Health-threat―one of the largest health insurers in the country. Tim had been insured by them for several years; his premiums automatically paid with his credit card.

In January of this year his credit card was stolen, he cancelled it and was issued a new account.  This caused a missed payment to Health Net, for which he was mailed a notice “of continuing coverage” in February that said he would have to catch up on payments within 45 days after February 1 in order to continue his coverage. Because the notice wasn’t mailed until late February and because he had recently moved, he didn’t receive it until the first week of March. He immediately called Health Net informing them of the situation and asking them to resume the billing on his new card. They answered that he had to submit a written application before they could do that. They reiterated that he had 45 days from Feb. 1 to take care of everything. He promptly complied, thought no more of it and heard nothing more from Health Net, until he visited a doctor’s office in May and was informed that his insurance had been cancelled. 

He called Health Net, they said the paperwork had not cleared with the credit card company until March 16, which was a day longer than the 45 day grace period, so they cancelled his policy. He pointed out that, according to his calendar, February had only 28 days, so that the March 16 date actually was on the 44^th day. Health Net took the position that legally February has 30 days, they had lawyers on retainer to back up their position, and he could take it up with their lawyers if he chose.  To top it off: He has never received a notice of cancellation, in August he received a customer opinion survey asking him how they were doing in handling his insurance needs, he still receives Health Net newsletters every month and still has an operable customer account on their website!

Fortunately he is now covered by Anthem Blue Shield, after an excruciating and time consuming process, but for six months had no health insurance.

Health Net, like the other major insurers, has no real competition and so acts arrogantly and arbitrarily with impunity.  Insurers also have an incentive to drop clients without clear notification because if a former customer re-signs up quickly enough he/she must be reinstated without being reanalyzed for risk and rate.

Until there are real alternatives for everyone, like a public option, some painful class action suits and some effective legislation, this arrogance will get worse, not better.

The CEO of Health Net, headquartered in Woodland Hills California, is Jay Gellert whose total earnings for 2008 were $4,425,355. Although this is relatively modest compared to some of the other health insurance executives, it seems to me to be too much for managing such a poorly run company whose profits and stock price have sunk over the last several years and whose legal team and administrative staff think that February has 30 days!  As a former CEO myself, I suspect that his Board of Directors is part of the problem.