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A Crisis of Legitimacy

In response to yesterday's post about the high levels of satisfaction people report for their personal insurance coverage, reader Akshai wrote in:

People with chronic illnesses will poll different (presumably) from people who have been healthy their entire insured lives. They should not be pooled together into one big poll, as healthy individuals haven't actually necessarily needed to "use" their insurance. Or put another way, their individual insurance has not been put to a stress test.

That's correct. Maybe not as a matter of politics -- the people who are satisfied when they're healthy don't necessarily know they'll be unsatisfied when they're sick -- but as a conceptual frame.

It's not, of course, the case that everyone who gets sick learns to loathe his or her insurers. Part of the reason health care is so expensive in this country is that, for all their unpopularity, insurers don't say no to all that much. But as yesterday's testimony from Wendell Potter demonstrated, when they do say no, they lack legitimacy for the decision. You don't trust a used-car salesman to accurately evaluate the quality of his automobiles for the same reason you don't trust an insurer to honestly consider the merits of your case. Their incentives and your incentives are not aligned. They make money by saying no. You get better, in theory, by them saying yes. And that makes private insurers particularly poorly placed to control costs in the system. They don't have the legitimacy to make hard decisions.

That's not to say the government is much trusted either. I'm of the opinion that only doctors have the moral authority to say no in a manner that patients trust, and so the key to cost control is giving them more incentives to do so.

By Ezra Klein  |  June 25, 2009; 7:01 AM ET
Categories:  Health Coverage  
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I think experience in other countries shows that if a program is run as well as Medicare (which still could be run better), people will trust it better because even it it makes some errors, the people in Medicare have no agenda to steal.

Posted by: lensch | June 25, 2009 8:40 AM | Report abuse

I was 'satisfied' with my Blue Cross/Blue Shield policy until they denied payment for an emergency room visit (which we were advised to make by my physician) after one on my children took a bad tumble down the stairs. Reason for denial? Nothing was found to be wrong, so the visit was unnecessary!

Posted by: exgovgirl | June 25, 2009 9:33 AM | Report abuse

So health care reform is really about changing the criteria by which one is told "no" or "yes."

Insurers make that decision on what gives them the best bottom line, denying expensive payouts where it makes financial sense to do so.

Doctors that own service delivery businesses (The McAllen "miracle") are the same way, but they tend to say "yes" too much because they make money off the often medically questionable service.

So you need either government or non-profit decision makers with no skin in the game, or doctors without skewed financial interest, that can say "yes" or "no" according to best practices and outcomes-based criteria.

Posted by: jeirvine | June 25, 2009 9:36 AM | Report abuse

If doctors start saying "no" more often, won't they become less trusted by the patients? This is almost certainly so in the short-term; the system will need a lot of time to undo the "ask your doctor about..." mentality.

Posted by: kgus123 | June 25, 2009 9:45 AM | Report abuse

Ezra: "I'm of the opinion that only doctors have the moral authority to say no in a manner that patients trust."

There is pretty firm evidence that even MD's can't say no: the dozens of TV commercials per day we see hawking prescription drugs "that you should discuss with your doctor to see if they are right for you".

I'm of the mushy opinion that only some pretty explicit, clear, and in-your-face advisories directly to the patient IN ADVANCE will reduce the anger somewhat when "the system" says no. This would be a big challenge, but is needed for patient education. It is pretty well known that some patients go "treatment shopping" if their provider isn't doing what the patient thinks is deserved and necessary. MD's fear losing patients, so they quite often do what the persistent patient demands.

Here's why comparative effectiveness data could pay off substantially. The patient should be directed by the provider's office visit scheduler to the appropriate section of some universal access website containing what is known about treatment options for their particular concerns. Then, the MD has a frame to discuss what he recommends that doesn't appear arbitrary.

Posted by: JimPortlandOR | June 25, 2009 9:57 AM | Report abuse

exgovgirl please remember one could say that one could also say: "I was happy with my Blue Cross/Blue Shield policy until they failed to deny payment for an emergency room visit for a friend after one of their children took a bad tumble down the stairs but nothing was wrong then. It made me realize that the insurer was covering useless things and thus pushing up my premium." BTW why is your deductible so low that your insurance would pay for a visit where they found nothing wrong? Middle class earners should not insure for expenses below 6 or 7 thousand dollars.


I wonder if we are in a grass is always greener on the other side situation or if people will, after a few years of Gov health insurance, still be accepting of a refusal of care if it comes the Government. Currently people seem to trust Government more on this but that could change.

Posted by: jwogdn | June 25, 2009 10:04 AM | Report abuse

I hate to be "that guy," but I see this grammatical error all the time (not in your blog, but in general). You say:

"You get better, in theory, by them saying yes."

What you mean is:
"by THEIR saying yes."

Think about it. It's like saying "I look forward to you return," rather than "I look forward to your return."

I really enjoy your blog.

Posted by: pdd1 | June 25, 2009 10:15 AM | Report abuse

I was completely healthy for the 5 years I was on blue cross. And I despised it. Each year I never quite spent up to the deductible -- they never put out a red cent; and each year the premium went up 15-20%. I watched as the premium outstripped my car payment, my house payment, my food budget... And all the time a sneaking suspicion that they would drop me the moment I might need them.

If everyone had to buy health insurance on the open market, they would be unsatisfied, healthy or otherwise.

Posted by: dukej | June 25, 2009 10:28 AM | Report abuse

I was 'satisfied' with my Blue Cross/Blue Shield policy until they denied payment for an emergency room visit (which we were advised to make by my physician) after one on my children took a bad tumble down the stairs. Reason for denial? Nothing was found to be wrong, so the visit was unnecessary!

Posted by: exgovgirl | June 25, 2009 9:33 AM | Report abuse

what that has to do with is HOW your ER billed it. Every procedure performed has codes attached to that procedure. Diagnosis and procedure codes. The codes they billed with must not have been emergent codes. if it was TRULY an emergency then they should have billed or then rebilled with the correct codes. That is not the insurers fault but the hospitals fault if it billed with the wrong codes or a patients if they went to the emergency room for non emergent care.

Again under a public plan the result would not have changed. you're just replacing BCBS with your lovely Federal bureaucracy.

Posted by: visionbrkr | June 25, 2009 10:58 AM | Report abuse

I suppose I could be considered sick since I was born with epilepsy. Though I never consider myself sick since it's well treated and I have not had a seizure 1999. I have had no problems with my employer provided coverage that I received through my parents, and currently have no problems with the coverage I now receive through my employer.

Though I still loathe the insurance industry's incentives because I understand had I not had employer provided coverage I would have not been insurable. I find there is a certain amount of fairness in higher premiums for a individual with a unhealthy lifestyle, since a higher premium would encourage healthy behavior, but denying coverage over something an individual has absolutely no control of is unfair.

I think it would be hard to find someone with a chronic illness or even someone with a friend or relative with a chronic illness who would approve of the current incentives given to the insurance industry.

Posted by: green21821 | June 25, 2009 11:00 AM | Report abuse

also why is little or no credence given to the fact that private insurance has been subsidizing medicare for years? Hospitals and large doctor groups get ridiculous medicare cutbacks in the form of lower reimbursements and then push that cost to private insurers to stay in business. Then private insurers push that cost to paying customers. That is why dukej your costs went up even though your didn't claim much or anything. Also you may not think you claimed much but most people don't realize that a simple sick visit nowadays costs hundreds of dollars while we all happily pay a low copay. What solves that? Well first off doctors and hospitals need to have TRUE TRANSPARENCY as far as their costs?

Why do we as Americans have no idea what healthcare costs on a per visit basis. Next time I go to the doctors office I'm going to ask how much he charges for ALL his procedures. After he gets done laughing in my face because he won't do that, I'll ask him then how much HIS prices have gone up over the years. Well I guess someone needs to pay for his Mercedes or BMW.

I realize this is a different story but onto the subject of Ingenix and how they're owned by United now instead of HIAA as an independent agency before I see little or no problem with it.

let's put it this way. If doctors inflate their costs (BUT NEVER TELL US THEY"RE DOING IT) by 20% why is it wrong for Ingenix to throw out claims that are deemed fraudulently trying to inflate UCR levels. Also these figures were used on UCR levels for out of network procedures which in my experience is less than 5-7% of all claims. A bigger deal is being made of this than is necessary to push the single payer agenda. I'd be fine with healthy debate on this subject once doctors and hospitals are taken to task for their practices but that will never happen.

For example, i had a client whose wife was pregnant and high risk some months back. She was bedridden in the hospital for 3 months prior to the delivery (BTW all claims were paid). The doctor who did not participate in any insurance plan came in daily to see her and similar patients on the high risk flook she was on and charged $3000 per visit to EACH PATIENT for a 5 minute visit with each and a check to see if her meds needed adjusting.

$3000 PER VISIT.

Now the insurance paid the UCR level of $600 which we had to fight tooth and nail to get the doctor to agree to so that the client didn't go into medical bankruptcy for hundreds of thousands of dollars but WHY isn't this doctor taken to task for inflating UCR???

You can't have your cake and eat it too.

Posted by: visionbrkr | June 25, 2009 11:09 AM | Report abuse

I live with (2) people who are considered to have chronic illnesses or diseases. Neither one has any complaints about their health care coverage under their insurance plans. I am also a R.N. and I worked in the field as R.N. Case Manager in Home Health. I cared for several patients with chronic conditions and very few complained about the services they were receiving under their insurance plans. I would love to know where you are getting your polls. What demographic area are you polling and how many people?

Posted by: Rhonda5 | June 25, 2009 11:19 AM | Report abuse

i would also be in favor of the government taking Ingenix AWAY from United as long as there was FAIR treatment of UCR based upon reasonable levels from insurers as well as corresponding reasonable levels from providers. Providers costs can't go up 10-20% per year and UCR just go up year after year after year to unsustainable levels.

Posted by: visionbrkr | June 25, 2009 11:22 AM | Report abuse

A question I would like to pose is where are the physicians? I have yet to see anyone on President Obama's administrative staff who works directly with patients and understands the patients health care needs better than anyone such as physician. I have been watching CSPAN, cable news, and reading articles on the internet and haven't seen or heard any physicians or other disciplines on any of these health care reform committees. Why are people such as Christina Romer who is an economic advisor on the panel or committee and no health care professionals? Doesn't it make sense to have physicians to have a strong and powerful voice in crafting a new health care regime? These are the individuals who actually care and know what the patient needs not some bureaucrat. Where is the AMA?

Posted by: Rhonda5 | June 25, 2009 11:42 AM | Report abuse

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