Health Care and Insurance and Government

2005 sees another drop in health insurance complaints: Regulators work to refine method for tracking problems

June 5, 2006

Complaint totals sank steeply last year for many Indiana health insurers, partly because the state insurance department continues to revamp its often-maligned method of tracking them.

Regulators recorded 1,232 signed complaints last year, a 30-percent drop from 2004, according to figures published on the consumer section of the Indiana Department of Insurance Web site.

The drop from earlier years is even steeper. The department recorded 3,133 complaints in 2002 and 1,848 the next year.

Many of Indiana's largest insurers also saw their individual totals shrink in 2005. Anthem Insurance Co. Inc., for instance, registered 261 complaints, a 52-percent decline. M-Plan Inc.'s total dropped 40 percent, to 45 complaints.

Those insurers say improved claims processing and better customer-service training help drive these steady decreases.

But better service doesn't completely explain the declines. The Insurance Department also has steadily refined the definition for what it tracks as a complaint.

After 2002, the department stopped counting complaints about the Employee Retirement Income Security Act, a federal law that sets minimum standards for employee health plans.

Last year, the department revised 2004 totals and stopped counting complaints for matters that fall outside its jurisdiction. That eliminated problems with selffunded insurance plans, which are regulated by the federal government.

More fine-tuning is on the way. The department wants to weed out unsubstantiated complaints and join a national push for uniformity among state complaint indexes.

"It's a great consumer tool, and we want it to accurately reflect information about a company," said Carol Mihalik, the Insurance Department's chief deputy commissioner for consumer protection.

Insurance watchdogs say the whole effort is of questionable value.

Joe Belth, professor emeritus of insurance at Indiana University's Kelley School of Business, thinks the publishing of complaint indexes amounts to a "misallocation of resources."

"This is probably a relatively simple thing [regulators] can tabulate and publish and go, 'Well, look at what we're doing for the public,'" he said.

Every year, the insurance department publishes a complaint index for all the major lines of insurance sold in Indiana. Outside health care coverage, that includes auto, home and life insurance.

It lists totals for the companies, along with the premium income they collect in Indiana and a figure called the complaint index. That compares a company's share of total complaints with its market share.

An index figure of one, for instance, means a company's complaint share equals its share of premiums.

Many Indiana health insurers notched an index figure near or below one in 2005. But some also shot way above it. With 42 complaints and a relatively small $7 million premium total, Conseco Senior Health Insurance Co. posted an index of 30.32 last year.

However, Belth and others view those figures cynically. He said consumers don't know enough about the companies to determine whether a high number of complaints signals a customer-service problem.

For instance, insurance plans with low deductibles generate more claims-and more chances for complaints-than large-deductible counterparts.

"This is why I take a rather dim view of trying to get anything out of these complaint ratios," he said.

Indiana's index doesn't rank companies, so it's hard to assess how one insurer stacks up against the field, said Jason Adkins, a Boston lawyer who founded the Massachusetts-based Center for Insurance Research.

Adkins said these indexes also suffer because states calculate them differently. That makes it difficult to judge the performance of a company that covers several states.

The National Association of Insurance Commissioners is trying to change that. The Kansas City, Mo.-based association is studying whether to devise uniform standards for the indexes.

Despite the blemishes, Adkins said these consumer complaint indexes are worth examining "because, as limited as they are, they give you a snapshot on some of the worst companies."

That's how Indiana regulators want consumers to view their complaint index.

"This isn't the only thing we want consumers to use," Mihalik said. "It's one thing they can use, but it's not the be all, end all."

In addition to reviewing the complaint index, Mihalik said consumers should question their insurance agent, question regulators and compare policies before they do business with a company.
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