Insurance Companies Are Not "Scum of the Earth"

A response to yesterday's post - "Who Benefits from Billing in Healthcare?" - suggested that insurance companies are the scum of the earth. While most patients, providers and Commenters on prior posts feel that way, we need to aim our guns at the real culprit: the system, and single payer is not the cure.

Insurance companies' primary purpose is to make profit. When they avoid or delay paying for medical care, they make money. That money goes to the people who own the insurance companies (stockholders). Those ultimately responsible are the people who set up the rules under which insurance companies operate: you, me and our representatives. Until we change the system, all the complaints we have as patients and providers are signs the insurance agents are simply doing the job the way we asked them to!

A single payer system has been touted as the answer. Usually this means the government as the single payer. But please remember: governments have financial constraints just like private companies. Whether you call it profit or balancing the budget, making more money or spending less, either way a financial incentive in healthcare means the person who controls the dollar flow will try to keep more and release less.

It is not just the profit motive that we need to remove. It is the financial incentive per se, the rule of the dollar. Problem: that is impossible in a capitalist society, or really in any modern society. Since that is not possible, what can we do? Answer: reconnect the person who spends the dollar with the person whose dollar it is. Reconnect the patient with his or her money and let the patient decide how to spend his or her money. You will economize appropriately, or not. After all, it is your money. You will spend your money wisely or not, and you will bear the consequences. ANY other "cure" will not work.

Follow Deane Waldman on Twitter: www.twitter.com/dwaldman@thesys

Comments

[burnt]

As someone who listened to accounts of insurance policy and practices for decades (wife was a part of the "industry"), I would have to agree with your assessment that "Insurance Companies Are Not "Scum of the Earth"".

From everything I gathered, it sounded very much like insurance companies were creatures that lived in the caves where scum of the earth finally accumulated, and greedily lapped up every bit they could.

Glad to say that my wife finally quit and has lived happily ever after.

[altohone]

Too funny!

You write-
"the complaints we have as patients and providers are signs the insurance agents are simply doing the job the way we asked them to"

Um, no.
The insurance companies give huge donations so they get the rules they want from politicians.

What we want has nothing to do with it.

[Moose49]

As the poster who called insurance companies "the scum of the earth," I'm flattered you devoted another piece to this question and I'd like to respond.

First, the profit motive is different from "financial constraint­s." It adds to costs and the pressure to meet Wall Street quarterly earnings estimates creates incentives to stiff ratepayers that don't exist for government. My anecdotal experience is that people have an easier time dealing with Medicare, despite its bureaucracy, than with most private insurers. My insurer, for example, typically denies one in every five claims for bogus reasons -- ultimately, I get paid, but it takes a ridiculous amount of time and effort. I'm sure some people get frustrated and give up. That is one reason I am convinced many insurers set quotas for claims denials.

Second, Medicare's administrative costs are a fraction of private insurance companies' administrative costs -- if memory serves me correctly, it's something like 3 percent vs. 25 percent, though I may be off.

Third, another government-run health system, the VA, does everything electronically -- something the private sector rarely does -- saving huge amounts of time and money for everyone.

There are some things the private sector does better than government, but health care is not one of them. The profit motive belongs nowhere in our health system because the health of the American people should come first. Single payer will reduce costs, simplify matters and, if done right, improve the quality of care, too.

[SamThornton]

Not clear from the post what the alternative is to single-payer or the current system, unless it's a return to the kind of system we had before medical insurance or some form of Federal medical benefit. If so, given the ruinous cost of medical care, it doesn't sound like a carefully thought out option.

The way things are now, the only real alternative available is medical bankruptcy, if one can find a hospital or medical group willing to take non-insured or under-insured patients on spec. That's the only alternative a relative of mine currently faces, after an extended life-threatening illness toted up $1 million in medical bills. Her Medicare takes care of 80%, but the likelihood of her coming up with the additional $200,000 are between slim and none. This is a situation faced by huge numbers of Americans.

Time to bite the bullet. The only thing that makes sense is a single-payer solution, the insurance companies and medical corporations be damned.

[BadCompany]

Your cure won't work, either.
Very few of us have the cash to pay large medical bills.
Removing insurance company and middle man (leaches) profits will not reduce the cost enough to fit into very many budgets.

[momotaro]

I'm not sure where this guy is coming from.

Since he believes that government health insurance won't work (except that it does elsewhere, and heck, it even works for our own elected officials!), he suggests that instead, we remove all insurance companies and pay doctors directly?

Who, except for the wealthiest among us, could afford that?

[NABNYC]

The government should provide each American with complete medical and dental free of charge excluding, of course, things like cosmetic surgery. Other than that, all Americans should have cradle-to-grave healthcare with no charge.

The government should take responsibility to set fees and rates to be paid to hospitals, doctors, and drug pushers. Let the big boys in D.C. negotiate a fair fee. The author's suggestion, as I understand it, is the Republican/McCain proposal to let people have the "freedom" to negotiate on their own in the medical marketplace. But that's absurd, since we as individuals have no power whatsoever. That's why people in this country die early and needlessly -- because they could not afford, for example, the $1000+ colonoscopy which would have easily detected the cancer while it was soon enough to treat. Doctors recommend that test at 50 and every 5 years thereafter, but people cannot afford that, and many insurance policies have dedicates higher than that so it's left to the individual. And people die.

Single payor just means it's the government's responsibility to work out the money side of it, just like the government provides fire protection for everyone, and does not let individuals burn to death in their own homes because they couldn't afford insurance. Medical billing is a con by which insurance companies re-write their rules to pay less, doctors create fictitious claims to earn more, and the patients just die waiting for it all to be solved.

[Moose49]

"let people have the 'freedom' to negotiate on their own in the medical marketplace. But that's absurd, since we as individuals have no power whatsoever­."

Exactly right. When was the last time anyone went to four different doctors, got competing bids to do a colonoscopy, played one against the other, and then negotiated the best deal? Getting medical services is not like buying a car or hiring a contractor for your home or anything like that.

Moreover, even if such a competitive bidding process somehow occurred, you would have a hard time being able to factor in the quality of the docs. And when it comes to our health care, quality should be more important than price. If a car isn't fixed properly, you take it back to the shop. If you're not fixed properly, you could die.

And of course, such a process is impossible to undertake if your appendix bursts or you have a heart attack or you're injured in a car accident.

[ianrey]

Ask any random group of Americans the following question: "Name the one entity that has screwed you or someone in your family harder than anyone else." I promise you a majority will say it is an insurance company. Workman's comp denied, pre-existing condition, auto totaled with no compensation, life benefits expired, wind/flood damage caused by non-covered flood/wind, etc. It's such a common tale (481,000 hits on google for "screwed by insurance company"). So, you say it's "the system" that's the problem? Fine, make insurance non-profit. We could do "credit union" style insurance, but the problem with any kind of grassroots restructuring is that insurance is best when it has the biggest pool. How, exactly, do you propose to let "me" decide what to do with my health care dollar? You offer platitudes, but no solutions. Single payer, while still fiscally guided, would eliminate the profit motive that every dollar paid out in benefits is a dollar stolen from the shareholders. Plus, it expands the pool to the largest population, distributing the risks as wide as possible. It may not be a flawless solution, but I have not seen you, or other critics, name one that's better.

[LCA]

I disagree with your last paragraph. One of the things that an administrator of insurance reimbursements (whether it is a corporation or a governmental entity, such as Medicare) has that individuals do not, is the leverage to control costs, negotiate discounts, and act as a brake on potential price gouging. Without some sort of intermediary representing consumers as a group, health care costs will not be reined in. Also, under your formulation, if a consumer has $100 available to pay for medical expenses, he or she can choose how to spend that $100. That looks like freedom, but there's a catch: what if the consumer need more than $100 of care? You seem to be saying that he or she either does without additional care or goes into debt to pay for it.

There has to be some sort of hybrid system (which I think both Clinton and Obama are proposing) that makes corporate profit less of a driver than the current system, but leaves the administrative benefits on the consumer's behalf in place.

[SeriousBlack]

Conclusion:

Fine. Let's do what you say and then when YOU find out you unexpectedly need something really serious like an organ transplant that costs a huge amount of money and can't afford it, YOU get to just lay down and die.

In YOUR words, "After all, it is your money. You will spend your money wisely or not, and you will bear the consequenc­es."

You forgot to add, "And if you don't have enough money, you are screwed."

[SeriousBlack]

Whoa Mr. Waldman.

If I read you correctly, if you could just wave YOUR magic wand, you would simply get rid of the health insurance company middleman, but then just leave it all up to the "free market capitalism" paradigm to... do what? That's where your arguments are either incomplete or break down.

What exactly is it that is supposed to happen then? Seems to me that picking up where you left off, if someone has the $$ to pay for health care (whatever those costs turn out to be according to what the providers directly charge per the free market), then they get health care.

ummm.... but if they DON'T have the $$ to pay for the health care that they need, THEN WHAT? Well, they're just S.O.L. Correct?

So if a poor single mother working a minimum wage job can't afford to pay for treatment for her child for some illness, that child just has to suffer, right? If someone like me even with a fairly decent job suddenly discovers that he/she has cancer, but can't afford to pay for treatment (that could likely save my life), then I just have to go lie down somewhere and die, right?

So you're in the crowd that thinks that health care is not something that every American (in what is supposedly the richest country in the world) deserves to have, in the same way that virtually every other civilized western society in the world has decided.