Auros (auros) wrote,
Auros
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Progressives infiltrate the Wall Street Journal!

Somebody on the editorial board over at the WSJ has clearly dropped the ball. Usually, you can count on them to obfuscate any news that might be harmful to their long-term aims -- things like repealing all taxes on rich people's investment income or inheritance, and shifting the tax burden to those lucky duckies who make so little money that they don't pay income tax.

And yet, in today's Journal -- which was lying on the table in the lunchroom here at work, so I saw it when I went in to make myself my usual morning cup of hot chocolate -- there are two articles with a deeply progressive bent, given prominent placement.

First, there was an article that finally acknowledges the obvious -- the economy today is looking rather alarmingly similar to the economy just before the Great Depression: slight rises in GDP and other anemic "positive" indicators that are being spun by many analysts and gov't officials, accompanied by an atrophied job market, and (as I mentioned yesterday) a monetary contraction severe enough that people are resorting to alternative markets.

Second, there was an article on ERISA (the Employee Retirement Income Security Act), which I'd never heard of before. ERISA is a law that federalized court jurisdiction over most employer-sponsored insurance and pension programs. It was created in the wake of the collapse of the auto-maker Studebaker, which defaulted on its pension programs, and was not vigorously pursued by state authorities; by the time elderly retirees were able to push through their claims, Studebaker had already gone through bankruptcy and divvied up its assets to creditors. This class of "default risk" was half of ERISA; the other half was to protect against "administrative risk", i.e. the risk that an insurer will deny claims for invalid reasons, or that a pension administrator will embezzle or mismanage funds.

Unfortunately, SCOTUS has, either foolishly or maliciously, misinterpreted the "administrative risk" portion of ERISA. Classic example: You suffer an injury -- say, a spinal injury -- that requires lengthy treatment and prevents you from working for a while. After six months, your insurer, citing an evaluation by a doctor from their network, cuts off your benefits, ignoring a second-opinion from another doctor who thinks you could probably start back to work, but you still need treatment, or you may relapse. Six months later, in an attempt to forestall court problems related to your relapse, the insurer pays benefits retroactively, but does not offer to cover your legal fees, or to help with other damages (financial, physical, and emotional) resulting from having to leave work again (this time without benefits), and having been unable to afford proper medical care for six months.

On a case that basically followed this exact pattern, the Supreme Court ruled that for policies covered by ERISA, the plaintiff can only recover the guaranteed benefits, and may not request punitive damages, essentially extending the broadest possible "benefit of the doubt" to insurers, even when it seems obvious that the insurer is subjecting the insured to "administrative risk" as outlined in ERISA.

The Journal's article even cited a memo that has surfaced in which an executive discussed a collection of claims that totalled $7.8M, and suggested that, had they been subject to ERISA, as it currently functions, these claims would probably have only cost the company about $0.5M.

And this, it turns out, is the real reason why it has become more and more common for your employer to cut a deal with insurers where they offer several levels of coverage, with all but the minimal level requiring a contribution from your paycheck. These "voluntary benefit" plans are covered by ERISA, and they're a great deal for insurers, because they know they can get away with murder, and the courts will protect them instead of you.

There are two possible solutions. One is to have Congress amend the law to clarify the intent; the other is to have a case or two make it to SCOTUS and reverse their earlier rulings. Neither seems terribly likely while the Republicans are in control.

Shouldn't this be a campaign issue?

And in the meantime -- I'm still just shocked to find these articles... Who's getting fired?
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