Redesign the Paradigm

Large private health care insurance companies have a few things in common: they remain profitable despite economic conditions, they consistently increase their policy holders co-pays, deductibles and policy rates to keep pace with the rising costs of health care, and if a person experiences serious injury or prolonged illness they will look for any method available to decrease the coverage.  Are we as Americans really adequately covered by our for-profit health care insurance providers? Are these insurers our best option?

Health care insurance is considered a necessity in our society. Growing numbers of people look for employers that specifically offer health care coverage as part of the compensation package. Employer sponsored group plans generally provide better coverage at less cost less than those purchased privately.  There are approximately 160 million Americans who have health care insurance through their employer sponsored group plans and an est. 14 million who have purchased private plans.  The remainder of the insured utilizes Medicare or Medicaid if they qualify.

Among both the group and private plans, co-pays and deductibles continue to increase, rejection of claims for subjective pre-existing conditions are also increasing, and denials of claims for non-medically necessary and experimental procedures are also on the rise.

Most people believe they have great health care until a problem develops. Then those same individuals can be faced with insurmountable debt. The debt overload is usually due to: a prolonged sickness of a family member or an accident resulting in catastrophic injury. Although the person or family is insured, the insurance company has the option to deny claims  or previously approved treatment which will require out of pocket payments for continued care. This is more prevalent in expensive treatments.

There are numerous methods employed by the insurance companies to avoid paying for care: denial of claims for subjective interpretations of pre-existing conditions, policy holder’s failure to disclose a seemingly unrelated issue previously recorded in their medical history but not documented in the insurance application questionnaire, and policy cancellation due to a late monthly payment.

In addition, insurance companies tend to bonus their Medical review Doctors (Doctors with final approval / disapproval of claims) for their denial of claims rate.

As many have discovered, having good health care insurance is not a guarantee that the policy holder will be able to afford their medical expenses once the insurance company begins to decline payments. If denials are met with to much legal resistance the insurers still can increase future policy rates beyond the ability to pay.  Even if neither of these possibilities takes place, most insurance policies today max out at around one million dollars, and in today’s high costs of care , that limit can be quickly exceeded.

Sustained chronic illness or catastrophic accidents generally results in bankruptcy – almost 2/3 of bankruptcies in the U S are the result of medical bills.

It is increasingly difficult for policy holders to fight against claim denials, even with attorneys. The for-profit insurance companies have their own staffed attorney’s dedicated to defending  denials, and are prepared to bury cases in litigation if necessary.

To those of you who do not believe this is a reality I encourage you to do your own research and read about the multitudes of people who have suffered this very scenario. The reality is that the system is set up for those who do not need the coverage and rarely get sick. They are the preferred client. For those of you who actually need the coverage, you are left at the mercy of the insurance companies and the medical reviewers.

Consider what might happen if you or a family member has a serious illness or accident?  Not only will you have your illness to deal with but the very real possibility that your insurance company might reduce or drop your coverage because your coverage has become too expensive. What’s more, no one thinks that they will ever reach their $1 million or max coverage limit. But with the continuing rise of health care costs, how long do you think you can stay in the hospital before that limit is surpassed and large out of pocket expenses are incurred? Do you think the insurance company will even allow you to reach the maximum limits before employing the practices mentioned above? In order to protect their financial position, they place you, the individual, in a position to lose everything.

The goal of the for-profit insurance company is to maximize profits and shareholders wealth, their customers are the means to that end. They act in their own financial interest, not necessarily in the interest of their individual policy holders. If greater profits can be gain by denying  expensive claims or procedures or limiting long term care they will follow that course of action unless met by significant legal opposition or negative publicity. These measures have resulted in consistent profitability among the larger insurers and extremely lucrative pay for performance packages for their senior executives.

High profitability has also enabled a very strong health care insurance lobbying arm resulting in nearly 4x the number of lobbyists than congressman. This in turn has lead to quite a number of favorable laws and regulations.

Currently, there is an argument on the airwaves about a potential US public health care insurance program becoming available. Many fear this will result in the government deciding what type of care you will receive. While I do not believe a public insurance policy in the United States will work, due to aggressive lobbying pressures, I also no longer believe that the decision should remain with our current health care insurance providers.

If executive compensation is tied largely to bottom line profits and stock prices, it seems inevitable that in addition to generating revenue through acquiring additional policy holders, insurance executives will attempt to elimate expenses as much as possible.  Here is the crux, the best way to curve expenses is to be selective of who is insured, reducing coverage for individuals that become high risk, and finally to deny claims. These are simply good business practices to ensure continued profitability, raising the stock’s price, and increasing executive compensation via pay for performance packages and stock option plans. Read more…

Why can’t I, as a consumer and a tax payer, have access to quality health care that hasn’t over the past seven years consistently increased in price, required higher co-pays and deductibles, and provided diminishing levels of care? I consider myself fortunate that my family has been under an employer’s group plan during this time and that we have not experienced a serious accident or chronic illness. Otherwise I am fairly confident that my insurance costs would have increased substantially while benefits would have been decreased.

In the past seven years I have noticed:

• My health care costs have increased
• Insurance company profits have increased
• Insurance company Executive Level pay and incentive packages have increased.
• Administrative (billing / payments) inefficiencies have increased.
• Doctors and Hospitals are increasingly capped by the insurance companies as to reimbursement for services but expected to provide the same level of care.

I have no issue with for profit insurance companies. If some segment of the population wants them, they should have that choice. I am also not convinced our US Government could run a public program as efficiently as Germany or Switzerland’s Governments.

I do have concerns about the increased number of mergers resulting in a few, very powerful insurance companies setting industry standards and pricing. Competitive pricing is limited since the smaller insurance company’s appear to be following the lead of the larger companies relying on being more exclusive in their selection of the insured to make a profit.

The national debate on healthcare seems to be largely consumed with whether we are going down the road of socialism. It is my perspective that our current system of health care insurance disproportionately benefits the health care industry, its senior executives and shareholders. All of which, do not represent me or the vast majority of Americans. There seems to be considerable misinformation that from a strategic sense seems to be geared towards maintaining the status quo.

If there are other systems out there such as: privatized non-profit health care insurance options, why can’t we seriously consider these? I’ve read many of the arguments for how it is really a public program in disguise, it requires funding by the government and therefore there are strings attached, how the private, non-profits and /or co-ops could never compete against the top for-profit companies, etc….

There are other countries around the world that have non-profit, private companies. The first thing that happened once the programs were in place was a considerable decrease in administrative costs and executive compensation.  These companies within months ran more efficiently, provided transparency to their insured regarding prices and availability of service and lowered the overall cost paid by the consumer for coverage and services. I think that this is our most viable plan.

As a tax payer I would like to see my dollars pay for something that will benefit the majority of insured American’s by providing funding for the startup of non-profit, private insurers which in turn will generate strong competition within the health care insurance industry. My tax dollars are already subsidizing and financing major industries, such as: banking, oil, and agriculture, perhaps we should pull some of the dollars from these already profitable industries and put it towards something as vitally important as health care.  What I believe is needed at this time is management  focused on providing paying customers with the most efficient, cost effective plans not the most profitable. I would also like to see no strings attached from any federal financing, low interest loans or subsidization.

I am not advocating the removal of for-profit insurance companies. I am looking for the best option that I, as a consumer, can have. I now believe that the priorities of the for-profit insurance companies have shifted so far into profit maximization that they no longer provide myself or our American society the value they once did. Perhaps its time to consider an alternative that is focused more on the care than on generating shareholder wealth and stock option plans for executives.

I have read many of the reasons for why this type of plan or any plan outside of our current system will not work, and they were not convincing. The purpose of this blog is to generate ideas or discuss the viability of options; let’s make that happen by providing your constructive comments.