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The Insurance Industry And The Bailout: We Gotcha Covered!

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AIG Chief Executive Officer Edward M. Liddy attempted to quell outrage over the $440,000 "executive retreat" recently held for top-producers. Just day after this news broke and within a month of the $85 billion dollar bailout, we find out that AIG is going to receive another $37 billion cash infusion to boost liquidity. This egregious display of hubris might be shocking to the everyday "Joe Six-Packs" of the country, but excess and disdain for moral values are how insurance companies do business everyday.

After the seizure of Fannie Mae and Feddie Mac the government barred them from lobbying. However, this rule did not extend to AIG. after receiving the federal bailout, AIG has begun to use taxpayer dollars to hire lobbyists in order to push for softer controls on the mortgage industry. In other words, AIG turns to the taxpayers to socialize their bad debt, and then uses taxpayer cash to hire lobbyists to ensure that the profit system that caused the financial crisis remains in effect.

This behavior is just the latest in a trend of unethical practices that insurance companies engage in, and end up being sanctioned by the government. A prime example of this is in the health care industry.

Some practices that insurance companies engage in denying coverage to people with pre-existing conditions, refusing to pay for services, and rescinding policies. Families USA conducted a survey of state regulatory over-sight of individual health insurance providers.

Some of the survey findings include:

  1. In 35 states and the District of Columbia, there are no limits on how much insurers can raise premiums based on an individual’s health status.
  2. In 21 states and D.C., insurers can exclude coverage for pre-existing conditions, such as cancer and heart ailments, for more than one year.
  3. In 44 states and D.C., insurers can revoke an individual’s health insurance policy without advance review by the state.

What does all of this mean when you put all of these pieces of the puzzle together? AIG and other insurance companies deny us the health care coverage that we pay for, take the cash and provide golden parachutes and luxurious retreats for their executives. When the companies go belly-up due to their bad investments, "we the people" cover them in their time of need. If we are expected to cover the insurance industry when they are injured, can some one tell me why they won’t cover our injuries?