This segment will focus on the Insurance Companies including their captive HMO programs, to be followed next time with a brief evaluation of Medicare's problems.
Why do I consider the Insurance Companies the greatest villain in the Health Care Cost debacle' In part from years of experience from dealing with them as a physician, as a patent's parent, and for years as Medical Director of the Central Jersey Individual Physicians Association , several hundred doctors in all specialties. This cooperative group of physicians who used the hospitals in Union, Somerset, and Middlesex Counties in their practice, contracted fees for their services in the early HMO days, the late 70s and though the 80s with various insurance companies. Among the plans (many now defunct) were those operated by Cigna, Aetna, Sanus, New York Life and CoMed along with a few other smaller plans. That would be a book onto itself.
When I use the term Health Care Insurance I am not limiting it to individual policies but to a greater extent to include the HMOs, PPOs and other group plan products of the Industry.
There is little uniformity in the premium costs to the insured no matter what the plan is. Individual self insurers are charged excessively high premiums since they do not have the protection of a volume group sale. Rates rise rapidly for those over 50. It is a fact that the older you are the greater are the chances that there will be physician visits and hospital admissions.
Although risk related premiums are proper business practices as applicable for property or auto insurance. it can make protection prohibitive to the elderly who are not Medicare eligible. Even for those that are the cost of supplemental coverage exceeds their resources.
The rates for the captive plans (HMO etc.) varies greatly for different groups. The best deals are in large groups that can negotiate with different carriers. Plans provide through small employers are more costly because they do not have the leverage. There are many instances where a small employer must compromise on the plans offered to the employees where the later must pay an increased percentage of the premium in comparison to those belonging to large groups. In any case the costs must be passed on to the consumer in the item's price. This is a cost of health care that most of us do not consider.
I have previously alluded to the costs incur ed by the physician's office in complying with the third party's rules.
However to produce a supportive document not of my own imagination I am reproducing a portion of Nicholas D, Kristof OP-ED column in the 8/27/09 New York Times. Mr Potter was a former executive for Humana and later Cigna before retiring. I would urge you to read the whole column but what he is quoted as saying reflects all that I had to deal with. Read On;
Mr. Potter says he liked his colleagues and bosses in the insurance industry, and respected them. They are not evil. But he adds that they are removed from the consequences of their decisions, as he was, and are obsessed with sustaining the company’s stock price — which means paying fewer medical bills.
One way to do that is to deny requests for expensive procedures. A second is “rescission” — seizing upon a technicality to cancel the policy of someone who has been paying premiums and finally gets cancer or some other expensive disease. A Congressional investigation into rescission found that three insurers, including Blue Cross of California, used this technique to cancel more than 20,000 policies over five years, saving the companies $300 million in claims.
As The Los Angeles Times has reported, insurers encourage this approach through performance evaluations. One Blue Cross employee earned a perfect evaluation score after dropping thousands of policyholders who faced nearly $10 million in medical expenses.
Mr. Potter notes that a third tactic is for insurers to raise premiums for a small business astronomically after an employee is found to have an illness that will be very expensive to treat. That forces the business to drop coverage for all its employees or go elsewhere.
All this is monstrous, and it negates the entire point of insurance, which is to spread risk.The insurers are open to one kind of reform — universal coverage through mandates and subsidies, so as to give them more customers and more profits. But they don’t want the reforms that will most help patients, such as a public insurance option, enforced competition and tighter regulation.
Insurers are notorious for post facto denying procedures. Usually there was some minor failure in paperwork or approval procedure that was the excuse.
The insurance industry developed a guideline used by all for determining the reimbursement for hospital stay. This guide is disease or procedure oriented and is based on allowed days of hospital care. This guideline included the infamous one 'hospital day" stay for an uncomplicated obstetrical delivery. Since hospital days were calculated to be from midnight to midnight, if a baby was delivered at 12:01 AM the mother's hospital stay was over at midnight that day.
Popular outrage and legislative action made them change that one. But, prior to the legislation, either the mother was billed for at least two days or some hospital ate 24 hours. Of course the baby was billed separately and could stay extra days while the mother went home.
This has been a truncated overview why I consider this industry to be the greatest factor in the rapidly increased cost of health care in this country. Instead of applying the breaks to the rising health care costs, they have become the biggest contributors to that trend. No wonder they are the biggest proponents of the regional cooperatives and the biggest antagonists to any government run plan.
It was not without malice of forethought that the executives of the "Blues", which were originally formed as non-profits, transformed their units into renamed stock companies while awarding themselves large stock bonuses during the transformation.