Wigged Out

Insurance-company evil comes in all sizes

This is just a little matter, a pebble on the vast toxic-waste site that is the American insurance industry.

But I think it says a lot about the way things are.
A good friend of mine, a wonderful young woman named Ann Smith, is battling breast cancer. She is undergoing chemotherapy treatment, which, as I'm sure you know, causes hair loss.

Smith's oncologist wrote her a prescription for a wig -- as a prosthesis -- but told her that sometimes insurance companies pay for them and sometimes they don't. Smith called United HealthCare, through which she's insured on her husband's policy, to verify that it would honor the prescription.

It didn't.
"They said, 'We don't cover wigs,' and they were rather nasty about it, at that," Smith told me. "They told me they didn't cover wigs because they were 'cosmetic.'

"I was shocked, and really very hurt. Here you are, going through maybe the toughest time in your life -- the whole thing is more of an emotional battle than a physical one -- and you have to go out and buy something that you really don't want anyway, and they're saying it's cosmetic.

"What am I supposed to do, run around bald?"
No, not in the view of the insurance industry. You're simply supposed to buy your own wig so that struggling companies like United HealthCare can scrape together the resources to provide good coverage for more serious problems, for the rest of us.

Mary Nowotny, United's spokesperson here, expressed sympathy for Smith but defended the company's position.

"Our dilemma is trying to provide health coverage for a lot of people, and it simply isn't possible to pay off cosmetic items without sacrificing someone else's medical coverage," Nowotny said. "Wouldn't you, as an employer, want to be sure that we'll be able to afford to cover the chemotherapy itself?"

Well, sure. But my friend and others like her are hardly being vain when they choose not to "run around bald," and it certainly seems that purchasing a wig is an essential part of the chemotherapy treatment. Doesn't it?

"The policy is that wigs are considered to be cosmetic and not covered benefits because they don't affect bodily functions," Nowotny responded. "It's not related to medical treatment."

Then what about breast reconstruction and prostheses, both of which are covered routinely by insurance companies (including United HealthCare)?

"I can't answer that," Nowotny said. "I'm not a medical person."
What Nowotny could answer were my questions challenging the notion that United HealthCare and other insurance companies can't afford to cover "cosmetic" items like wigs for chemotherapy patients. She claims the industry's earnings are merely in the 5 percent range, much less than other corporate giants', and that budgets are getting tighter.

"Every time health-care premiums go up 1 percent, about 200,000 Americans lose coverage for vital services because their employers can't afford them," Nowotny said. "How in the world are we going to meet the health-care needs of so many Americans without making difficult choices about where to draw the line?"

Here's where we draw the line: Right across the balance sheets of the overgrown corporate rodents we call insurance companies. Take a look at what has happened for the insurance companies in this decade of runaway health costs, and you'll see why we need solutions ranging from the tiny (mandated coverage for wigs) to the titanic (national health insurance).

This industry is accumulating obscene wealth on the backs of little people like Ann Smith.

Just this month, the Fortune 500 is out, and guess who has skyrocketed, out of nowhere to 84th place, ahead of the likes of Ameritech, Archer Daniels Midland, Federal Express and Time Warner? That would be "struggling" United HealthCare.

United's revenues in 1998 were $17.36 billion -- nearly five times what they were just four years earlier -- and now represent an amount roughly double the size of a little local company called Monsanto. According to its annual report, it had more than $4 billion in shareholders' equity at year's end.

If this Minneapolis-based giant were headquartered in St. Louis, it would be our largest company by a margin of almost 30 percent over Emerson Electric. United HealthCare has more revenue than the entire Missouri state government.

I think United can afford wigs for chemotherapy patients.
As to those tight net earnings, the company has reported more than $2.5 billion in profits over the past five years. It continues to receive strong "buy" recommendations from a wide range of market analysts, and its top executives seem bullish as well.

Last week, the Minneapolis Star-Tribune reported that United HealthCare CEO William W. McGuire received $20.6 million in total compensation in 1998, almost all of it in stock options. And that was in a tough year, one in which the company took a $900 million "restructuring" write-off that has prompted a class-action shareholder suit alleging, among other things, that McGuire and other officers and directors overstated profitability from Medicare operations (before the write-off) and benefited to the tune of $36.8 million in the process.

But that's another story, with much bigger numbers. This is just a little story about wigs.

I wondered how many chemotherapy-patient wigs McGuire earned.
Judy Ramirez, owner of Image Choices in South County, the area's largest wig retailer, told me the average wig, with accessories, costs roughly $200. By my calculation, then, the CEO of United HealthCare raked in about 100,000 wigs last year.

Ramirez, a registered nurse who worked for 10 years in medical management at Blue Cross/Blue Shield, has seen this issue from both sides of the fence. She doesn't have any doubt that the wigs should be covered.

"This is a small-ticket item, but these insurance companies don't have any idea about the emotional and physical effects of chemotherapy," Ramirez says. "Or if they have an idea, they don't care."

My friend Ann Smith, who bought a wig for $150, cares.
"This isn't a monetary thing," she said. "I can afford the wig, although lots of other women can't, but what this really comes down to is just another emotional blow. And it couldn't come at a harder time."

By the way, my friend's name isn't Ann Smith. Courageous as she is in her struggle, she insisted that I protect her identity out of fear that United would try to cut off her coverage -- or otherwise try to hurt her -- if I used her real name.

My first reaction was that she was being overly cautious, that a giant enterprise like United would hardly concern itself with such a little matter as this. Then I thought about her wig, and about the denial of coverage, and I realized she had a point.

These people make a lot of money off the little matters. And they don't make it by being nice.

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