Reflections From A Chair

At some point this year, we are likely to see meaningful efforts by Congress and the President to reform healthcare.

The discussions so far, though, focus on cost. But that is not “a change we can believe in.” I don’t think so anyway.

The radical question would be: what is the best way to structure and fund health care in America, for all Americans? The chief focus now shifts to best medicine and best practices and best utilization.

Unfortunately, as the discussions now focus on prices, some of the chief causes of inflated health care have the loudest voices. These are the insurance companies and the bureaucracy around heath care.

In recent discussions, the health insurance lobby has made some concessions and bargaining points. According to the NY Times, “The health insurance industry said…it was willing to end the practice of charging higher premiums to sick people if Congress adopted a comprehensive plan requiring all Americans to carry insurance.” But, “insurers wanted to retain the right to charge different premiums based on the age, place of residence and family size of subscribers.”

Further, “Insurers remain staunchly opposed to creation of a government-run health insurance plan.”

They propose, instead, “more aggressive regulation not just of their premiums, but also of their benefits, underwriting practices and other activities. Such strict regulation, they said, would make it unnecessary to create a new public insurance program offered through the federal government.”

Very nice of them to make such generous offers. Look closely though and it is clear that they are making no concessions and that the overall price to the nation would be the same if not higher than at present. The winner, not surprisingly, is the insurance industry.

First, if the insurance companies are billing all Americans, then their gross income is all the larger. They can spread the cost of insuring significantly ill persons among all of the people being insured. Since the number of insured persons is so great, the added expense per insured person of treating the severely ill is barely noticeable. What the insurance companies aren’t saying is that this formula allows them to maintain their profit margins. The insurers give up nothing.

Moreover, the insurance companies still want to be able to fudge the numbers by charging higher costs based now on age, place of residence, etcetera, instead of history of prior illness. Need more profit? Just increase the premium on single females living in urban areas who are over 45 years of age. Or what ever other demographic they can devise where they think the rate can be increased without too much outrage.

Finally, the insurance companies do not want the federal government to offer an insurance plan to the citizens. Instead, they say “regulate us more.” Well, who is going to pay for the added layers of bureaucracy that will oversee all the various insurance companies in America and the lawsuits to get the insurance companies to comply? That would have to be the taxpayer. How does that save us any money?

Have you ever tried to question an insurance company about a denied payment or procedure? An onion has fewer layers and its center is easier to reach than getting through the insurance company’s decision-making hierarchy. They are designed this way to make it cost more for the provider or the insured to pursue the claim or the procedure than to just write it off.

Remember the lawsuit in California against the insurance companies who dropped people after they got ill? It took from January of 2004 to January of 2009 to address the matter. Along the way, lots of state money was spent pursuing the charges. The insurance companies also spent large sums of money defending their position. Money that was supposed to be providing coverage of medical expenses. Let’s not forget, that if you are critically ill, waiting five years for a final decision is no help at all. You are likely to be dead at that point.

A final note for this post. According to the Physicians for A National Health Program, “because private insurance bureaucracy and paperwork consume one-third (31 percent) of every health care dollar. Streamlining payment through a single nonprofit payer would save more than $350 billion per year…” And this bureaucracy diverts caregivers’ attention away from the patient and into the morass of insurance companies. Before managed care, social workers in hospitals had time for individual, group, family therapy and arranging quality aftercare for patients. Now, social workers spend the bulk of their time dealing with managed care personnel at your insurance company.

How the issue gets phrased, then, is almost as important as raising the issue at all. If you want cheap health insurance, the insurance companies will be happy to arrange that for you. Now, if you want the best system of healthcare, they are not so quick with a response, as we will see in later posts.