The Corpus Callosum

Another Health Insurance Lie

I support universal coverage in a single-payer system.
 I won’t belabor the point.  Today I just want to
point out another insurance industry lie, printed in the New York Times
today.

It’s in an article about Mrs. Clinton’s health care finance reform
proposal.  (Which I do not support.)  

Mrs. Clinton was href="http://nytimes.blogspace.com/genlink?q=http://www.nytimes.com/2007/09/16/us/politics/16clinton.html">quoted:

But she is prepared once again to do
battle with insurance companies, which she has said “spend
tens of billions of dollars a year figuring out how not to cover
people” and “how to cherry-pick the healthiest
persons, and leave everyone else out in the cold.”


The response from the industry:

Karen M. Ignagni, president of
America’s Health Insurance Plans, the chief lobby for
insurers, said they endorsed the goal of universal coverage. But Ms.
Ignagni said that insurers denied only 3 percent of claims, and that
many of those were for experimental procedures that employers did not
cover.


This may be true in a literal sense.  Perhaps it is true that
they only deny three percent of claims.  What this fails to
say is that, through a cute little mechanism called “pre-approval,”
they prevent many claims from being made in the first place.
 If the claims are never made, then they don’t have to deny
them.

It would be more revealing and informative if you added up the
following figures:

  1. Services that are requested, but for which
    pre-approval is not granted
  2. Services that would be requested, but are not
    requested, because of foreknowledge that they will not be pre-approved
  3. Services that would be requested, but are not
    requested, because the physician does not have the time or the
    frustration tolerance to go through the pre-approval process
  4. Services that are not performed due to delays in
    the approval process
  5. Services that are not requested because of plan
    limits (e.g. 20 physical therapy sessions per year)


Include prescriptions, and durable medical equipment, in the definition
of “services.”  Add those up, and you would get a denial rate
much greater than three percent.  Granted, not all of those
are active denials, some denials occur passively, are before the fact.
 But the effect on the patient is the same.  

This highlights another myth that is perpetuated in the health care
financing reform debate.  You will sometimes hear the argument
that if we have single-payer, universal coverage, that will lead to
rationing of health care.  Guess what?  Health care
is already being rationed.  We just don’t
call it that.  What do we call it?  We don’t call it
anything.  We just pretend it does not happen.  We
collude in this denial, because it conflicts with our desire to believe
that we, in the USA, have the best health care system in the world.

That is another myth.

Comments

  1. #1 Globle Warren Terrism
    September 16, 2007

    We should have a War on Healthcare. Within a year or two, affordable high-quality healthcare would be available across the country, not just the big cities but the small towns as well, on every street corner. We could pay for this by chucking the War on Terror and the War on Drugs, now that they’ve succeeded in scaring everybody and bringing high-purity drugs to everyone.

  2. #2 Joseph j7uy5
    September 16, 2007

    The world would be a better place if we did that.

  3. #3 natural cynic
    September 16, 2007

    Ms Ignagni didn’t even respond to Clinton’s assertion that insurance companies cherry pick clients. The response was about funding claims for clients they already have.

    Either bad reporting or a typical deflection by big insurance.

  4. #4 Michael Poole
    September 16, 2007

    By the same definition that you use to claim health care is being rationed, gasoline and prime steaks are also being rationed — we just don’t call it that.

    See the definitional problem? Rationing is generally used to mean artificial limits on a market, usually imposed by a sovereign, rather than the natural limits of production imposed by the structure of and participants in the market. The closest thing that the United States has to health care rationing is FDA rule-making on what drugs may be used to treat which disorders.

    Insurers are pretty up-front about the kinds of coverage they do and do not provide. The major problem is that the government gives a tax break to businesses for lumping all their employees together into a one-size-fits-all plan (or at least a limited number of plans). Risk pooling and the tax break reduce the cost of insurance significantly below what an individual could expect to pay for insurance they choose. If you want to give people more control over their health care, remove that tax incentive or give the same benefit to all people who buy their own health care.

    You can be sure, though, that if there is a single payer for all health care, that single payer will ration the supply to patients’ general detriment. Look to the United Kingdom for an example of what happens. Rationing is the only way for the provider to limit costs. In contrast, the French socialized system allows private payment for treatments that the government chooses not to cover. If you want to advocate a scheme for socialized medicine, use the French system as a model rather than the sophomoric “single-payer system”.

  5. #5 Christopher Mims
    September 16, 2007

    I can’t believe there are folks who might still labor under the notion that a nation that refuses to insure as many folks as we do has the best healthcare system in the world. I know from researching the following article that it’s hard to quantify this sort of thing, but I’d be inclined to believe the folks who went on the record to say it:

    We’re Number Two: Canada Has as Good or Better Health Care than the U.S.

    http://www.sciam.com/article.cfm?chanID=sa011&articleID=53B61670-E7F2-99DF-3E9FD5664899BF24

  6. #6 stewart
    September 17, 2007

    Health care is rationed. Everywhere.
    Do more people want the service than can be provided? Yes. If it can’t be provided to everyone, as much as they want, it’s rationed. The rationing may occur at the patient level (I cant afford that), at the provider level (I won’t work more than 12 hours a day), at the funder level (public and private health insurers), or the educational level (there are only so many educational spots and examination positions).
    You don’t want to call rationing by the consumer due to cost rationing? Fine, call it spaghetti. Health care is still rationed, and will be under any conceivable system.

  7. #7 Joseph j7uy5
    September 17, 2007

    Frankly, to call universal-coverage, single-payer health coverage “socialized medicine” is no more informative than it would be to say it has “cooties.”

    I do not agree that insurance companies are straightforward in describing what they cover. They often are misleading.

    I am open to the notion of examining the health care financing systems in other countries, including France. Christopher Mims’ excellent SciAm article is a good illustration of why we should. We are free to design the system any way we want to. It would be foolish to not consider what others have done.

    If we go to a government financed single-payer system, then the payer is the government. In other words, us. If we decide to ration care, via some sort of democratic process, then that is what we decide. The key is to make sure the process is democratic. The current system is not.

  8. #8 Michael Poole
    September 17, 2007

    stewart- As I illustrated above, by your definition, every good and every service is rationed everywhere and in all situations. That makes it a useless definition of “to ration”. (One might say … calling it “rationed” is no more informative than saying it has “cooties”.)

    Joseph- The dictionaries I can find define “socialize(d)” as “place(d) under government or group ownership or control”, with an additional meaning as applied to individuals. When the government is the single payer for medical coverage, especially if no other medical services are available on the open market, the term fits under both the dictionary meaning and common usage.

    The current system is undemocratic only to the extent that the government makes it cheaper for an employer to impose a particular health care plan on their employees than for the employees to find coverage on the open market. Using insurance does not make it undemocratic. Practically speaking, having the Federal government make rules on universal coverage will make the system as undemocratic as is possible in the US. (Federal regulatory agencies end up hiring two kinds of people: domain experts with careers in the agency, who are thus not very responsive to democratic requests, and political hacks, who are responsive to what 51% of the people want but who usually have minimal clue about the subject they rule over.)

  9. #9 shano
    September 17, 2007

    well Mr. Poole,
    The insurance companies decide who they will insure with each and every application. What do you say to people who are turned down by insurance companies because of their medical history?
    I know my catastrophic ‘health insurance’ premium has gone up every year for the past 20, and the benefits have shrunk slowly but surely over time. There is nothing the consumer can do about this except shop around for other plans that all have the same tactic.

    I dont see anything Democratic about this. The ‘people’ have absolutely no say in whether or not an insurance company will take them, or if the price will increase, or if the benefits for that rapidly more expensive policy will stay in place.

    The people have been turned into ‘consumers’ , and the insurance companies are charging what they think the market can bear. Too bad this leaves 48 million people with no health insurance at all….and is causing a crisis in our hospitals, who are the ultimate end game for the uninsured. Then every single person must carry this cost.

    To say nothing of the fact that the majority of bankruptsies in this country are caused by overwhelming medical bills. Usually by people who could not afford insurance, or were turned down by insurance companies. How is this Democratic?

  10. #10 Michael Poole
    September 17, 2007

    Mr. shano,

    How runs one’s affairs should not be determined by Democratic process — and of course, not by Republican process either. No one is forcing insurance coverage down your throat. If you think that you (or 50%+1 of the population) should have the right to dictate to insurance companies how to spend their money, then you have confused democracy with totalitarianism.

    Your factual claims are misleading and/or wrong. 48 million people were uninsured at some point in a 12 month span, but 20% of those made $75,000 or more per year, 27% were not US citizens, some were just between coverage, and some others certainly chose not to pay for insurance. (It does not make economic sense for a lot of young people on starter jobs to pay for insurance.) The Harvard study claiming that a majority of bankruptcies were due to medical bills was deeply flawed in several of its methods: Google “medical bankruptcy myth” for a variety of analyses, such as Dranove and Millenson’s.

    If you want to control health care costs, which seems to be your major concern, a good place to start would be medical malpractice reform. The cost of malpractice insurance is the largest factor limiting the number (and distribution) of physicians. The government can only directly control health care costs through stringent rationing — or by driving even more physicians off the market by clamping their pay below than market rates.

  11. #11 shano
    September 17, 2007

    No Mr. Poole, my main concern is that people are able to get coverage. Some people cannot be covered at any cost if they lose their job because of pre-existing medical conditions. The free market is a cruel beast this way. If an insurance company likely cannot at least break even by covering you, they will not do so.

    My policy used to have a $500. per year ‘accident’ benefit covering a broken bone. And of course when I broke a bone in a accident last spring, discovered they discontinued this a few years ago. I have paid thousand and thousands of dollars through the years for ‘coverage’, and the only time I made a claim was last spring….denied. The only reason for this policy is I dont lose most of my assets if something happens that costs a fortune. And even that is not a sure thing, with the way insurance companies treat their customers.

    So, who pays for people who cant afford even this type of coverage? Or what happens when any person who has a job with no coverage has a catastrophic health problem? Or a job that does not pay enough to afford coverage? Society pays. We already have a form of socialized medicine, medicine that is rationed and absurd.

    Of course you read the terrible story of the young man in DC who could not get a dentist to see his infected tooth because of Medicare, ended up in an emergency room- they dont do dentistry-and as sometimes happens, the nerve in his tooth died so the pain finally stopped. Later he ends up in the emergency room again, with a brain infection.

    Cost of treating the tooth would have been $80. Cost of treating the brain infection, $250,000. And this young man died. Taxpayers footed the bill for this comedy of errors. It is considered that about 18,000 people in this United States die in this way each year from lack of basic health care.

    And the insurance companies are not much better. They deny care and treatment to their ‘clients’ all the time. Try talking to people who have ‘insurance’, and the incredible hassle it is to get the proper care in this country from private insurance companies, it is a disgrace.

    Let the government provide sensible basic care, then let the market decide who will pay for the upgrades, as they do in France. Then we can get rid of at least 20% of the overhead used to line CEO pockets. Because right now health insurance in America is a scam and a rip-off.
    You sound like an insurance company shill at this point. What is your solution? Because if you think the status quo is fine, then you have not looked hard enough at the real damage done to Americans by this inhumane system.

  12. #12 shano
    September 18, 2007

    Another question would be: have you ever seen a bill from an insurance company for medical bills?

    They are incomprehensible for the average person, because they are IN CODE. Each billing has a number or letter and only the medical office and insurance company have the the code definition.

    Insurance companies are FAR from forthright in their policies or their billing. Have you ever read the reams of paper they send you for the most basic of policies? It is mind numbingly boring, confusing and complicated. I get letters all the time about changes in this and that, sometimes in code, sometimes refering to lettered paragraphs. It is meant to be confusing and complicated, you have have some legal and medical training to read them with comprehension.

    My last bill had one charge for .89 cents. wtf? Am I going to spend my valuable time figuring out what could have possibly cost this amount during my very short visit to the er? hell no. And insurance companies count on that……they also do this for much bigger charges that cannot be understood by the average person because they are all in code.
    Yea, right, insurance companies are completely up-front and transparent.

  13. #13 Greg P
    September 18, 2007

    Most seem to think that as long as the “System” is the right one, then health care delivery then will simply happen.

    I think we need a bottom-up change. Start with the concept that basic health care should be delivered as simply as possible. Even if we don’t adopt some European- or Canadian-style system, we can begin with the structure that they have in place about what care is considered unquestionable and deliver that care. They all have restrictions on expensive new medicines, but we already have that too. They have restrictions on new, unproven therapies, but we have that too.

    Another start could be to open up the finances of health insurance companies, showing how many dollars are used up in bureaucracy, how many spent on bonuses for execs, how much to stockholders. Is health care supposed to ensure profit-taking in the stock market?

  14. #14 shano
    September 18, 2007

    good one Greg, I would also add: let more trained doctors immigrate to America.

    Have a few more medical schools with inclusive admission policies. Have low government school loans for medical training of all types, including nursing.

    And if private insurance has any role at all, have public oversight for denied insurance claims.

  15. #15 Michael Poole
    September 19, 2007

    shano,

    What is your proposed solution? You whine about pre-existing conditions, irregular coverage, and your example of why commercial health insurance is bad is a case where someone could not see a dentist and ended up costing taxpayers $250k because of Medicare, a government-run coverage system?

    If you think that the government is more efficient at managing things than corporations, you must have never worked with government agencies. I live and work in the DC suburbs, and frequently talk to Federal employees. The waste and abuse they report seeing put to shame anything I have seen in the private sector. The way government budgeting works gives them the incentive to spend as much money as possible, whereas private efforts ultimately reward efficiency.

  16. #16 sex shop
    December 22, 2007

    The major problem is that the government gives a tax break to businesses for lumping all their employees together into a one-size-fits-all plan (or at least a limited number of plans).