Without Health-Care Reform, the Customer Is Always Wrong

by Anonymous Guest Contributor 10-21-2009

091021-cancer-survivor From my up-close-and-personal perspective as a cancer survivor, I couldn’t agree more with LaVonne Neff’s main point: it is the system, rather than insurance corporations, that is to blame for 18,000 unnecessary deaths a year in this country. Of course, it’s true that corporations and their management do commit evil, and sometimes illegal, acts, as Neff also points out. But, to riff on the words of Jessica Rabbit, health insurance corporations are bad because they are drawn up that way: their incentive structure is fundamentally broken, and any legal fix can only be partial. This is why I strongly support a “public option.”

Corporations mostly work exactly the way they are set up — to make money. A corporation would be flouting its fiduciary responsibility to its shareholders if it voluntarily sold a cancer survivor like me health insurance. I still need expensive tests twice a year to make sure that my cancer has not come back; if, God forbid, it did, I would need even more expensive treatment. This makes health care starkly different from other things you buy insurance for (if your house burns down, you are not guaranteed to have more fires every six months thereafter for five years, with an increased risk for an even bigger conflagration).

In today’s world, entirely private and lightly regulated insurance is a crazy way for our society to make decisions that can mean life and death. If I had lost my job and been uninsured or underinsured four years ago, it would have taken me a lot longer to see a doctor about the symptoms which turned out to be coming from cancer. If I’d been uninsured then, I’d probably be dead now.

Basically, health insurance is a market in which the customer is always wrong — as soon as anyone files a claim for anything significant, that person becomes a liability for the insurer. It has every motive to deny care if it can, or at the very least discourage the sick person from staying on the plan. Doing this may be morally wrong, but it’s literally the corporate executives’ job. Dead-wrong incentives are built into the system.

This is why I am an ardent supporter not only of health-care reform, but also of a public option. We should all be able to buy into a health-care system like that enjoyed by members of Congress. (And we should also stem the flow of corporate lobbying money to Congress, which distorts public debate.)

Dorothy Day’s quote hits the nail on the head again: “Our problems stem from our acceptance of this filthy, rotten system.”

By a cancer survivor praying for health-care reform.

Categories: Economics, Health

LibertarianChristian

You are absolutely correct. Regulations. For example, I am a healthy, 22-year-old, college grad who just entered the working world. I pay fr my own insurance, but what is covered in my plan?

In vitro fertilization, viagara, contact lenses, etc.

That is because my state mandates that those be covered (it is illegal for a company to not cover them). This drives up costs and drives out companies.

LibertarianChristian

I don't think there is any doubt that there are massive problems in those systems. To answer your question though, one big problem uniquely American is our legal system. Malpractice insurance is over $100,000 a year for most doctors; there is no MI for any of the countries you cited.

If you take statistics like 5-year cancer survival rates, America is number one in the world. Our doctors are paid the best, produce the best, and the rest of the world takes medicine developed here.

LibertarianChristian

Your basic point is flawed. You are correct that an insurance companies incentive is to make money...but you cannot do so by denying claims.

If a company denied all claims, they would lose all their customers who would then seek out another insurance company. This would cause them to lose profit. This is why nationwide, the average insurance company only denies 3% of their claims (meanwhile, the gov't run option in Mass denies 23% and Medicare denies 11%): http://www.mackinac.org/10987

Meanwhile, a politician's incentive is to get re-elected. This often means violating the rights of companies in order for his own gain. And when politicians run health care, their incentive will also be to control costs.

All humans are evil, and if you think a politician is less evil than a CEO, I believe you are mistaken.

kansasmennonite

thanks for the prayers! Our canadian mennonite pastors have wrote a letter to the states stating that they would like us to consider the beneifits of the canadian system.

I'm afraid some people here would rather die then give in to any "socialized" plan. How sad!!! THat's the state of our country now.

arachne646

How does the size of a country matter? And Britain started the NHS right after WWII--when they were almost as badly off as Iraq is now (without the oil). Developed nations of all sizes and politics have universal healthcare systems provided by private or public providers and they don't have people dying because they waited to see a doctor because they wanted their kids to have good, fresh food. In Canada, we don't have death panels, my mother-in-law with heart disease Alzheimer's was dragged through every medical treatment and ambulance trip to the Emergency Room for trouble breathing to the very end, all because my father-in-law wanted it that way. We have state-of-the-art medicine, and if you don't like it, the frills are available at private clinics, just like face-lifts. But no one here EVER worries about medical bills. There are much better ways to improve health care, and politics. We are praying for you.

sangerinde

I grant you that Denmark is a lot smaller, though I think you're confusing it with Norway if you're thinking oil wealth is paying for health care. But larger European countries--the UK, France, and Germany--also have effective, government-run and taxpayer-financed health systems of various kinds.

I'd be more able to discuss your "statistics" if you could reference some.

schroeder37

for one medicare is broke and is said to be dry within what 20-40 years. It is partly responsible for what we have now. Why ignore the fact that what congress has works great for them, which is what obama said he would give us. As for the european systems those countries are a lot smaller. denmark and those countries have a ton of money because of there OIL drilling. which i never hear. And in some countries the satistics say the people are not satisfied with it. IF obama wants reform then thats what he should do. stick to what he promised instead of lying.

Chris "Jesdisciple"

Good question. We need to get some research on that. Although before any sociologists went in we would have to set up opinions for how we're broken and they're not. I know how we're broken, but I don't know anything about their systems.

sgillesp

Then why is it that every other developed country can do it? What is so terrible about our government, that they can't pull off what other countries like Canada, England, Germany and France can do?

sangerinde

I'm not sure I buy the "we can't afford a single payer system" argument. A monstrous amount of money goes into the insurance business, and the health care system. Our businesses can't compete overseas or even domestically for the best workers because other industrialized nations (including where I live, Denmark) cover their citizens through taxes. I have a strong suspicion that everything would come out in the wash. If we paid for a nationalized government health care through taxes, then we would:

--not be paying any additional health insurance premiums (unless we chose to for extra special care, i.e. private rooms at hospital, etc.)
--receive higher wages as businesses no longer have to pay for insurance
--take care of the "free rider" system, where the young & healthy choose not to carry insurance (since all would contribute through taxes)
--have a more flexible, mobile workforce that could freely relocate to where the best wages & job growth are
--encourage entrepreneurs, who could cut loose and start businesses without worries for their families' health security
--reduce total health care costs since more conditions could be caught before they were catastrophic
etc etc etc.

I know this is a big leap for you, my American brothers and sisters. But I can promise you, for every one of you saying "God save us from European-style socialized health care," there are three Europeans saying "Thank God we don't have an American-style health care system"!

sangerinde

I'd have agreed with you until I heard last week's "This American Life" broadcast. Their journalists/researchers/storytellers suggested that it's only the big insurance companies that have the clout to negotiate prices with the hospitals. And so the hospital corporations have grown to increase their negotiating clout...and so on. The story seemed to suggest that Maryland's example might be instructive: all procedures cost ONE price in Maryland, no matter the hospital, no matter the insurer. Now, wouldn't that be an interesting idea? Talk about transparency.

JeannetteEileen

Elimination of lifetime benfits caps would affect a few people in each community, based on my 20 years of experience in health care. Some people with multiple complex conditions or who have had the misfortune of having a catastrophic condition more than once in their lifetimes do run into these caps, which are often set at $1 million. No one can predict who might need this extreme amount of health care; as often as not it can be a young person whose body is strong enough to stay alive during what must be an extended course of treatment. But when someone caps out their coverage, that's it. They end up with bills they can never hope to pay, and more often than not the care they receive is written off by the hospital providing the care.

Of course, the expenses written off on one hospital account are just shifted to the rest of the paying customers, and this cost-shifting is a significant contributor to the high cost of health care.

One positive effect of the public option already in place--Medicare--is that increased standardization of claim forms and other health records is occurring, driven by the clout of the Medicare program. Other insurers recognized that using CPT codes for reporting procedures and ICD codes for reporting diagnoses is a sytem that worked well and virtually all of them use this method now. They also recognize that the Medicare program draws from expertise in the various medical fields to determine best practices as well as procedures that are not yet proven effective. Often, insurers will cover the same procedures Medicare covers and refuse coverage for the same procedures Medicare denies.

Dealing with various insurance companies' guidelines and policies was a constant source of frustration for me and the staff in my department of the hospital, but we found Medicare to be straightforward and reasonable, and the patients got the treatment they needed. When was the last time you heard anyone say that about a health insurer?

A public option may come with some unintended consequences, so we need to move carefully. But if a Medicare-like option offers some real competition to the insurance companies, so be it. They have room for improvement.

The costs of a public option are a concern, but continuing to have 46 million citizens without adequate access to health care comes with enormous hidden costs of lost productivity, continued cost-shifting, a lowered standard of living and inefficient care delivery.

Ngchen

Basically, health insurance is a market in which the customer is always wrong — as soon as anyone files a claim for anything significant, that person becomes a liability for the insurer. It has every motive to deny care if it can, or at the very least discourage the sick person from staying on the plan. Doing this may be morally wrong, but it’s literally the corporate executives’ job. Dead-wrong incentives are built into the system.

AFAIK, laws are in place that forbid insurers from dropping people when they get sick, and rightfully so. Insurance is always a heavily regulated industry, and rightfully so because otherwise there are, as you note, all sorts of perverse incentives on all sides.

I know another popular proposal is to eliminate lifetime benefit caps - I wonder how often people actually run up against them. Of course, insurance is simply the spreading of pain; we need to seriously consider what needs to be done to reduce overall costs. No amount of insurance reform can make the unaffordable affordable, if "it" is unaffordable for everyone.

IMHO some serious standardization of claim forms and treatment protocols, as well as that of policies, can save a substantial amount of money.

Ngchen

Very interesting story. It raises again the thorny question of the fuzzy edge of "medical necessity." Sure, if the surgery were given in the first place, there'd probably be no lumps, but we'll never know. And there *is* such a thing as an elective, cosmetic procedure.

WaveTossed

Good news!

http://www.bloomberg.com/apps/news?pid=20601087...

Judiciary Committee voted 20-9 to repeal the health insurance anti-trust exemption. We can only hope that this measure gets onto the Senate and Congress floors, then to the President's desk -- and become law. It's not going to solve everything, but at least there might be some actions taken against the health insurance monopoly cartel --and we can have a true free market.

schroeder37

no the system can work it has before and it does now becasue not everyone is disatisfied with their insurance. you dont see those in congress and the government clamering about their insurance. Which by the way is what obama said he would give us. DONT be fooled by the retoric, we cant afford a single payer system, whcih is what obama wants dispite what he keeps spouting out. we need reform butg we need it done correctly.

Joe_Allen_Doty

I have a friend who has Klinefelter's Syndrome. His HMO and Medicare wouldn't pay for him to have a breast reduction because they considered it to be merely cosmetic surgery.

But, several years later, lumps were found in each of his breasts and they did operate.

If he had been given the surgery in the first place, he might not have had lumps removed at all.

natcoz

My understanding of the way gov't works will never allow me to support the Public Option. I wish more people would educate themselves. It is so naive to think a gov't run system will improve our predicament. Part of the problem we have now is that too few people understand the details of our current gov't involvement in health care. They think what we have now is capitalism...but it's not. The gov't is in bed with the monopolists, removing from the market place many of the information signals needed to make the system run well. We didn't get here over night. It's been a long journey. Here's a nicely written piece explaining the history of it:

http://mises.org/story/3613

natcoz

If insurance companies weren't so big, if they were more of a local entity, there would be more public accountability. The people making the decisions at the insurance companies may even be personal acquaintances with the insured, making it more difficult to be so heartless.

Why are insurance companies so big? I'd have to research it more, but I'd wager it's because numerous gov't regulations in the past have made it impossible for small companies to survive. That's how the system works. Big companies lobby congress to pass "regulations" which favor them at the expense of their competitors. Eventually the little companies die out and the whole system becomes so impersonal that it's actually possible for some insurance company employees to behave heartlessly at work and still sleep at night.

Anothernonymous

I see your point, although I'd be careful about saying "never." Personally, I'd love to see greedy insurance company executives get their feet held to the fire - even if they're liberals. :-)