Consumer Protection in Private Health Insurance: The Role of Consumer Complaints. C. Complaints Reports


In 1998 the Managed Health Care Improvement Task Force commissioned a one-off survey of insured Californians to assess the level and nature of their health insurance complaints and the processes used for dispute resolution (Attachment 4). While not strictly a “complaints report card”, it is examined here as it provides some background on the underlying level of complaints and to whom consumers turn.

The Department of Insurance does not currently produce complaints report card studies for indemnity health insurance. Its 1999 Consumer Complaint Study is only available for other lines of insurance business, namely, automobile, life, and homeowners' insurance. This study ranks insurers on the basis of closed justified complaints ratios related to the number of policyholders and includes data for 1996, 1997 and 1998. Staff at the Department suggested that health insurance complaints were not included in the 1999 Consumer Complaint Study because of the small size of the indemnity market, although as noted previously enrollment in indemnity and PPO plans comprises about 30% of the private insurance market. The Department of Insurance was required (but failed to meet the deadline) to include health insurance complaints in this report by 1 July 1999.

The Department of Insurance changed its protocols for handling and publicizing consumer complaints in the late 1980s, following legal challenges by several insurance companies as to the validity of complaints information in the public arena. As a result, the Department now establishes proof of justified complaints and notifies insurance plans by letter when a complaint is found to be justified.

Regulators at the Department of Insurance verbally advised that over the three year period from February 1997 to February 2000 there had been a total of only 7,356 phone calls (equivalent to 200 per month) concerning general health insurance issues (including general inquiries and complaints) and about 10,000 calls about long term care. The Department is not currently able to produce data on either company-specific or aggregate health insurance complaint indices.

The Department of Corporations is currently the only state government source of health insurance complaints reports, with their annual reports providing data on managed care plans, referred to as health care service plans (Attachment 5). In brief, the Department of Corporations annual reports provide information for each health care service plan on the total number of complaints and complaints index, with detailed information on 32 complaints category issues available for all health care service plans.

Finally, the Center for Health Care Rights produces annual reports detailing the experience of its Sacramento based Hot Line (Attachment 6).

For each of these reports this study describes the major features, analyzes the data, and assesses the usefulness of the report from both the perspective of consumer friendliness and its value in monitoring the implementation of patient protection legislation.