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Why insurers don't control costs

One of the oddities of the health-care reform debate is that we tend to despise insurers for two contradictory things. On the one hand, we hate them for saying no. No to procedures, no to people, no to reimbursements. On the other hand, we hate them for raising premiums and being expensive.

But saying no, of course, is what holds down costs. So when it comes to cost control, insurers are in a bit of a "damned-if-you-do, damned-if-you-don't" situation. And they've chosen "don't." Sharon Begley explains why:

Why do insurers pay for unnecessary care? Partly because they're battle-weary, having been successfully sued for refusing to cover, for instance, high-dose chemo plus bone-marrow transplants for breast cancer -- which turned out to be not just useless but, for thousands of patients, deadly. "The abrasion that would result from even more intervention by health-care plans becomes problematic," says Joe Singer, vice president for medical affairs at HealthCore, a subsidiary of the insurance giant WellPoint. Translation: insurers have had it with trying to refuse coverage for useless procedures, since they can simply raise premiums -- yours and mine -- to cover the cost.

But that gets to certain fundamental problems with the insurance industry. For one thing, they lack legitimacy to make decisions. Because they make more money when their customers get less care, it's hard to trust that their interventions on behalf of less care are based on solid evidence rather than a desire to make more money.

It's also the case that individuals don't care as much about their premiums as they normally would because their employers typically pay more than 70 percent of the cost, and employers don't care about the cost as much as they normally would because they just deduct it from worker wages. So no one, from insurers to employers to individuals, really feels the full cost of the system, and so no one is that interested in cutting costs. And this is not something we're going to fix in health-care reform.

By Ezra Klein  |  March 9, 2010; 10:33 AM ET
 
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Comments

People want as much health care as possible and want it free. And a smart politician will promise it to them.
Look at the polls on the individual provisions of the current HCR legislation. The only ones with losing numbers are the ones which pay for it.
As opposed to the Republican approach: "A policy so simple you can buy it on your I-Phone. And since it comes over the internet, it's going to be free. Everything on the internet is free!"

Pick the winner. Hint: There's one born every minute.

Posted by: hackett1 | March 9, 2010 10:52 AM | Report abuse

It is a bit of puzzle and I dont have all the answer either.

But perhaps you and Begley should do a little bit more research into the full range of reasons why insruance companies reimburse at higher rates (usually) then Medicare or Medicaid. Not just stenographic "reporting" of the self-serving reasons that and insurnace company flack gives you. Shame on you for doing this worst sort of

One reason is that it is part of the game whereby insurance companies get doctors on their list and keep those same doctors off Medicare and Madicaid.

Also, perhaps, their incentive to keep reimbursement down is lessened since the inter-locking connections of corporate boards, funds and holding companies is such that insurance companies have ties to hospitals, medical supply companies, drug companies, etc.

And yes, their ability to pass along the costs via both higher premiums and not actually paying those reimbursements (denial of service, copay, deduuctible, recission, etc.).

Any way: do some research and report on the full range of reasons.

Posted by: DrSteveB2 | March 9, 2010 10:56 AM | Report abuse

You have stated the argument against first-dollar coverage.

There are so many choices for reforming health care I don't understand why we go with the least innovative ones.

Why not have your panel prescribe the most effective care for whatever ails you, and your health coverage pays 100%? If you want the "kill and revive" treatment for breast cancer (or something similar) you can still get it but you pay X% up front. And if it really doesn't work that well you pay 100% out of pocket - like we can do now - or go to China or India to get it.

Posted by: luko | March 9, 2010 11:00 AM | Report abuse

HMOs were doing a decent job of controlling cost in many states in th 80s and early 90s until they were vilified - mostly by Democrats - much the same way Obama is going after insurers this week. A wave of laws and regulartions, "any-willing-provider" among them, capitalized on the populist anger Democrats help stoke.

Posted by: tbass1 | March 9, 2010 11:01 AM | Report abuse

"Because they make more money when their customers get less care, it's hard to trust that their interventions on behalf of less care are based on solid evidence rather than a desire to make more money."

Except that their costs would then be too high and I would have my company switch plans. The market at least puts a curb on that.

"...no one, from insurers to employers to individuals, really feels the full cost of the system, and so no one is that interested in cutting costs."

It almost sounds like you are coming around to advocating HSAs and percentage co-pays here!

Posted by: staticvars | March 9, 2010 11:04 AM | Report abuse

Insurance is useless for basic medical care, which everyone needs to some degree. It only makes sense for catastrophic care. It is like buying car insurance to cover your gas costs. Or ordinary periodic service costs. Insurance is for extraordinary expenses, when it makes sense to spread risk. But even there single-payer is more efficient.

This is why we need either a network of tax-supported, very low co-pay primary and basic care clinics and insurance for serious illnesses and accidents, plus Medicare starting at age 55, or just have Medicare for all (single-payer) and be done with it. Rich people can always pay for concierge or really high-end care if they want to feel better than everyone else. But for the rest of us, keeping for-profit insurance is just another form of feather-bedding.

Posted by: Mimikatz | March 9, 2010 11:20 AM | Report abuse

In the individual market insurance companies make more money when patients receive less care, this is true. But in the large group markets (50+ employees) insurance companies make more money when patients receive more care because the insurance company essentially receives cost-plus reimbursement on large group claims. Groups with 50 or more enrollees pay the full cost of coverage, either the same year as the claim (self-insured plans) or the following year (experience underwritten plans).

Posted by: danwhalen2 | March 9, 2010 11:22 AM | Report abuse

Ezra appearantly just made the argument for consumer-driven health plans (HSAs and the like...) because he offers no other real alternative. I suppose Wyden-Bennett, but that's a long-shot.

Posted by: truth5 | March 9, 2010 11:22 AM | Report abuse

"This is why we need either a network of tax-supported, very low co-pay primary and basic care clinics"

Why do they need to be taxpayer supported? Minute Clinic at CVS, and similar retail health clinics, are exactly what you're talking about. They're quick and pretty cheap.

Posted by: NoVAHockey | March 9, 2010 11:25 AM | Report abuse

...so lets give the problem of saying no to useless medical procedures to government officials...what could possibly go wrong?!?!

Something tells me that Zeke Emanuel doesn't think it benefits the community as a whole to be wasting precious medical resources providing cancer treatment to Representative Eric Massa....what do you think?


Now I know why Sarah Palin is scared about what will happen to Trig. Zealous Democratic operatives thought nothing about accessing the public data bases in an attempt to discredit Joe the Plumber....what will zealous Democrats be able to do to us Republicans when they own us?


Do any of you liberals fear this from a civil liberties point of view---or can your Messiahs Obama & Pelosi do no wrong?

Posted by: FastEddieO007 | March 9, 2010 11:26 AM | Report abuse

I don't buy this. It is true insurers have a lot of difficulty controlling costs, but this is a half truth. In fact, most payers are trying desperately to improve costs by paying for better treatments. The problem is that none have had much success in finding a way to tailor coverage in a way that pays for outcomes. On top of that, they run up against a number of barriers in even trying to figure out what they should pay for. Take prescription drugs for instance. The evidence base that exists for most coverage decisions is based on FDA labeling. However, most insurers would tell you that despite the poor applicability of such evidence to the real world, it's the best they've got. Moreover, a morass of state and federal regulations mandate coverage for a significant number of products. This ties their hands even if evidence suggests otherwise.

So, in reality, insurers cover everything because they simply lack the evidence to make informed decisions and are also bound by a number of legislative requirements. This surely has implications in terms of being sued- how could you make your case when there is no evidence to support it? But, to suggest payers are just taking the easy way out is somewhat misguided.

Posted by: wilburonium | March 9, 2010 11:28 AM | Report abuse

The current reigning champ in terms of blaoted healthcare bureacracy is Britain's NHS, though it would certainly be replaced by Obama & Pelosi's new insurance exchange bureacracy....look at how THEY deal with their critics:

Question a doctor and lose your child
http://www.timesonline.co.uk/tol/life_and_style/health/article6823345.ece


NHS is paying millions to gag whistleblowers
http://www.independent.co.uk/life-style/health-and-families/health-news/nhs-is-paying-millions-to-gag-whistleblowers-1812914.html

Posted by: FastEddieO007 | March 9, 2010 11:32 AM | Report abuse

Yeah, I think the argument Ezra was making is that the employer system that we've got means that nobody has an incentive to hold down costs because nobody understands how it really works and nobody is seeing the true cost. The solution is to get rid of the employer based system and go to single payer or something like Wyden-Bennett.

Posted by: MosBen | March 9, 2010 11:33 AM | Report abuse

Sorry Ezra, but while you're usually spot-on this post reflects a fundamental misunderstanding of the insurance market.

In the entire health care debate, insurers are the *only* party with a "value for money" incentive. MDs, patients, pharma companies - most actors have an incentive for volume, regardless of cost. Only insurers have both sides of the equation.

You state that insurers make more money when people don't get care - this is a major misconception. Insurers sell to employers, who want healthy, happy employees - insurers that don't grant coverage for key treatments lose contracts fast.

Both employers and insurers want the most cost effective solution to conditions like diabetes, so employees can reduce absenteeism and increase productivity.

In the entire health care debate, we often ignore that we are actually vilifying the only actor in the system with the right incentives.

Posted by: phantasypunk | March 9, 2010 11:34 AM | Report abuse

CAN I PLEASE EXCHANGE MY CURRENT INSURANCE COMPANY -- WHICH DELAYS AND DENIES POINTLESSLY ON ROUTINE PEDIATRICIAN VISITS -- FOR ONE THAT ONLY SAYS NO TO PROVEN USELESS INTERVENTIONS?!

Sorry for the caps, friends, but I am compiling a huge complaint to the NYS Insurance Dept. over fraud and misconduct over my benefits.

My company--rated "best in customer service in the state of NY"--has previously paid hefty fines for exactly the behavior they continue with me.

This is nickel and dime stuff that adds up: my family doesn't have major health issues, thank God.

THIS is the reality of private for-profit insurance. Even those of us who have "deluxe" insurance would be better off with Medicare, with the doctors forbidden from performing the dubious and useless interventions.

Posted by: neversaylie | March 9, 2010 11:37 AM | Report abuse

Why not have a minimum set of benefits based on CER, and let insurance companies compete, on an unsubsidized basis, with regard to additional benefits? This seems like a marriage of Paul Ryan's voucher system with Ezra's concern over defining basic coverage.

Posted by: jduptonma | March 9, 2010 11:38 AM | Report abuse

When a company is cruel and abusive to its consumers, it generally dies a quick death and is quickly replaced by a new entity that is more responsive to the consumer's needs.

What happens if ur government's healthcare bureacracy becomes unresponsive to the consumer's needs....will we have to try and replace it.

No one expects the private insurance companies to stick around once their made into federal finger puppets, as this legislation does. Jacob Hacker is succeeding in duping the public into your precious single-payer.

Viva revolution. Now your corrupt politician can tell you no, instead of the private insurance CEO....do you feel better?

At least it will end this from ever happening anymore:

http://www.torontosun.com/news/columnists/mark_bonokoski/2010/03/06/13138311.html

Posted by: FastEddieO007 | March 9, 2010 11:39 AM | Report abuse

There are some things in civilized society that should not be in thrall of the profit motive.

Health care is one of these. As long as there is a profit to be made, people will die.

Republicans generally want to privatize EVERYTHING. But at some point, social justice (scary! socialism!!) and empathy must take precedence.

Posted by: terraformer5 | March 9, 2010 11:39 AM | Report abuse

Ezra,
Please make sure that you send this Op ed to the Liar in Chief and by all means to Gibbs just to keep them Semi-Honest...

Posted by: redhawk2 | March 9, 2010 11:41 AM | Report abuse

Insurers also have no real incentive to try and bargain hard for better rates from providers because they can always raise premiums to cover their increased costs. Insurers and providers both benefit. Providers get more money. Insurers get more profit from taking the same % profit from a bigger premium. More expensive insurance tends to eliminate the poorer sicker people, also yielding more profits. A cap on insurance premiums would force insurers to force better deals from providers. Not as good as single payer or VA style health care, but a small start.

@FE007: whine all you want about the NHS, but poll after poll shows that the Brits like the NHS (even if they believe it is underfunded) and wouldn't trade for the for profit model we use in the US. In fact, there is not a modern democracy that would choose our broken system over what they have. Why do you think that is?

Posted by: srw3 | March 9, 2010 11:41 AM | Report abuse

Comments in here aside, Ezra is not, IMO making a case for HSAs and the like. Even with an HSA consumers do not feel the actual cost of treatment....yes, for the little stuff, but once the deductible is exceeded (which is easy to do) then we are all in the same boat here....

Going back to what I think your initial point was, I think a reason that insurance companies have had so much trouble in the past with denials is that those denials look arbitrary and insurance company specific.....Aetna denies this, Cigna denies that...one covers the bone marrow for breast cancer, the other does not. Going it alone was very painful for them and they did become battle weary.

An answer here might be comparative effectiveness research. If there was one huge ocean of data instead of many pools that insurers could rely on, the arbitrariness of decisions would be minimized. No one likes being told no, myself included....but if there was data that backed it up and not just "Aetna policy" that could be a start.

Posted by: scott1959 | March 9, 2010 11:52 AM | Report abuse

srw3,

I'll disagree with you (and Ezra) that insurers don't care about controlling costs because insurers do care if people go uninsured because they don't receive a single premium dollar for uninsured patients.

Also (and I'll say this AGAIN) that Ezra is right about people not "feeling" the cost but exactly how will they feel it with subsidies?

The only person to feel it then will be the "taxpayer". I'm not saying we shouldn't subsidize people that can't afford it and need it but don't forget to mention that fact Ezra.

Posted by: visionbrkr | March 9, 2010 12:00 PM | Report abuse


I sort of disagree too. Insurers do a great job of controlling 'their' cost; and, in fact, I think utilization management can be a really, really useful tool to encourage evidence based medicine when not used perniciously.

Using the Medicaid HMO world as an analog, they don't get the extra cut that Medicare Advantage plans get and I think the success of Medicaid HMO's is due to this utilization management; it's a more natural experiment of utilization management vs. no utilization management (depending on the state/circumstances, obviously). Americhoice, the Medicaid HMO, is UHC's most profitable line of business.

Posted by: ThomasEN | March 9, 2010 12:08 PM | Report abuse

scott1959,

as I expect you know the better way to handle an HSA or HRA is to make the employee's liability or OOP costs based on a percentage of their salary. THe more they make, the more they can afford for OOP costs. That's the most equitable way I've found and the way some very large employers do it.

Posted by: visionbrkr | March 9, 2010 12:11 PM | Report abuse

@FE007: The toronto sun story is a sad anecdote. No health care delivery is perfect in its execution. However, it is the case that orders of magnitude more medical bankruptcy cases in the US than in any other modern democracy and that Canadians are as healthy or healthier than US citizens while paying 50% less for health care with universal coverage. So while the Canadian system has a very few cases where denial of treatment causes individuals to seek treatment elsewhere, the US system has 1000s of cases like this, where people with insurance are nevertheless forced into medical bankruptcy and 1000s more where people without insurance are forced into bankruptcy. I know what system I want to be a part of and it isn’t the one where 10% of the population is uninsured and costs are 50% higher.

Posted by: srw3 | March 9, 2010 12:14 PM | Report abuse

@VB: insurers do care if people go uninsured because they don't receive a single premium dollar for uninsured patients.

Yes, but how much does a sick insured person cost vs. excluding that person from the pool through rescission or raising premiums on that person until they can't pay. It is the profitability of each person insured that companies are interested in. Once a person is less profitable, they want to drop him/her.

Look at individual premiums in CA. Raising premiums and having people drop out of their system is apparently making them money [at least over the short term] or they wouldn't do it. It does seem that CA insurers may be going into a death spiral where younger healthier people drop out and older sicker people that need insurance stay in, making the risk pool smaller and causing rates to go up.

Posted by: srw3 | March 9, 2010 12:25 PM | Report abuse

Ezra says:
"And this is not something we're going to fix in health-care reform."

Which is why this is stupid health care reform. Smart health care reform tackles that issue directly. In fact, this health care reform makes that problem much worse.

Steve

Posted by: FatTriplet3 | March 9, 2010 12:26 PM | Report abuse

srw3,

My God please stop it with the recision like it happens every day to everyone. Fearmongering at its best from the left. You're as bad as Grasserly and Sarah Palin.

Do you really think insurers have the time much less the inclination to follow every single persons' claims to say "Whoops, srw3 got to $X in claims let's kick em off". You really need to get a grip.

Explain to me exactly how Anthem in CA made money in the individual market? Costs were over 100% of premium meaning for every dollar in premium taken in more than a dollar was paid out. Sure they made money on the other market segments but how is it right that insurers should be FORCED to remain and lose money in a non-competitive market segment as they are in most every state.

As I've said before its like if the printed newspaper for WAPO lost money but the online blog sites like this one made a small amount. How long must Ezra subsidize the rest of the WAPO?

Posted by: visionbrkr | March 9, 2010 12:37 PM | Report abuse

The corrupt poorly written bribe ridden HC bill is losing more support:

"Tuesday, March 09, 2010
Fifty-seven percent (57%) of voters say the health care reform plan now working its way through Congress will hurt the U.S. economy.

A new Rasmussen Reports national telephone survey finds that just 25% think the plan will help the economy. But only seven percent (7%) say it will have no impact. Twelve percent (12%) aren’t sure.

Two-out-of-three voters (66%) also believe the health care plan proposed by President Obama and congressional Democrats is likely to increase the federal deficit. That’s up six points from late November and comparable to findings just after the contentious August congressional recess. Ten percent (10%) say the plan is more likely to reduce the deficit and 14% say it will have no impact on the deficit.

Underlying this concern is a lack of trust in the government numbers. Eighty-one percent (81%) believe it is at least somewhat likely that the health care reform plan will cost more than official estimates. That number includes 66% who say it is very likely that the official projections understate the true cost of the plan. "

......Looks like the American people don't trust our Big Democrat Government.......who knew?

Posted by: allenridge | March 9, 2010 1:09 PM | Report abuse

@VB: From Slate:
The committee found that during the previous five years, three health insurers—Assurant Health, WellPoint, and Golden Rule—had saved more than $300 million by rescinding nearly 20,000 policies based on omissions policyholders made in filling out enrollment forms. Asked (in this season of reform-minded industry concessions) whether they would pledge to stop rescissions except in cases of intentional fraud, the chief executives of all three companies said that they would not.
link: http://www.slate.com/id/2223680/

What was your point about insurance companies not taking the time to search out high cost patients for rescission? Who needs to get a grip?

Posted by: srw3 | March 9, 2010 1:11 PM | Report abuse

We do not need healthcare reform we need people reform. The US has the fattest unhealthiest people in the world. We're over loaded with id10t's that run to the doctor for a runny nose. As long as half the country pays for 100 %of the people the system is going to fail. Lowering costs by adding customers is the only way to make healthcare affordable. But we have too many useless people and to many people that chose not to carry coverage (YET THEY ALL MUST HAVE CELL PHONES) then run to the hospitals when their in need. Healthcare is a luxury that you must decide you need. Too many people don’t think about this. The same applies for life insurance and so on. Thankfully auto insurance is mandatory or these same people would refuse to pay for it.

Posted by: askgees | March 9, 2010 1:16 PM | Report abuse

Ezra is absolutely right about why the employment-based health insurance is so wasteful. We should change towards individual-based health insurance so each consumer can make the best decision for their own care.

When nobody feels the pain of higher health care costs, the insurance-medical industrial complex optimized their operations with maximal profits. But our economy cannot sustain this status quo any more.

Posted by: dummy4peace | March 9, 2010 1:16 PM | Report abuse

What I don't understand is why insurers are blamed for not holding down costs when they are only marginally to blame for rising costs. If health care costs go up 10% one year, then insurers are left with a choice--either raise rates by a proportional amount to cover the rising costs, or else cut coverage to deny more claims. Insurers are stuck. They cannot do either without Obama and the public demonizing them.

Meanwhile, in a tough economic climate, many people are dropping out of insurance plans, either because they cannot afford the expense right now or because they have lost their employer-based insurance. Those who make sure to keep their insurance are those who absolutely need it to cover existing conditions, while those who let insurance coverage lapse are those who are currently healthy. Insurance companies can do little to combat this, and a higher proportion of sick people in the risk pool means higher rates for everyone. Once again, it's simple economics for the insurance companies, and yet they get blamed for it.

This said, I do think that insurance has contributed to the rise in health care costs. Insurance insulates consumers from the cost of health care, and because people are insured, they end up consumer more health care, often with few actual gains in health. Doctors and hospitals know that insurance will pay costs, and so they offer more tests, prescribe more drugs, and charge higher rates, which draw no complaints from consumers because consumers simply submit claims to insurers. Comprehensive insurance, in principle, adds to health care costs, but it's not any evil practice by insurers that does this--it's simply human nature.

Posted by: blert | March 9, 2010 1:18 PM | Report abuse

No Party Healthcare Reform

1. Serious tort reform (limits on awards and medical oversight/censure)
2. Mandatory coverage (if uninsured, at time of need, enrollment and premiums charged back to last time of coverage (debt is treated similar to student loans))
3. Transparency on pricing (all healthcare providers post prices by procedure code on their website, all patients pay same price (no discounts))
4. Insurance pays 70-95% of each claim, with maximum annual deductibles (tied to income)
5. Government subsidies for insurance premiums that are based on income, no provider can exceed set % of it’s clients receiving govt. funding
6. Insurance premiums are deductible in full for whoever pays them (employer or individual)
7. Insurance premiums go up for unhealthy behavior (BMI and drug/nicotine use) but can go down for (voluntary screening) cholesterol, blood pressure, aerobic capacity
8. No pre-existing conditions exclusions
9. No group plans, everything is available to anyone (nationwide)
10. Each plan has the right to define what it covers beyond emergency care and the most basic baseline of nationally required services
11. National healthcare records database established
12. Only patient can release key to who the record belongs to (until then, the file has encrypted codes for patient name and hospital/clinic/physician names)
13. Patient can be required to release key to obtain services

Posted by: johnpoole | March 9, 2010 1:22 PM | Report abuse

The problem started when during WWII employers gave fringe benefits like health coverage to circumvent the wage & price controls. Now, these tax distortions have caused the huge distortion in the way we pay for health care. Get rid of the employeer tax deduction for health coverage, the biggest distortion will disappear. People will know the cost of their care, the prices will adjust to the market, prices will become competitive. Get rid of the Medicare reimbursement distortion (have it adjust). McCain's ideals during the campaign were correct--he was merely implementing the best ideas of health care reform experts in suggesting getting rid of the tax deduction.

Posted by: MIMI13 | March 9, 2010 1:22 PM | Report abuse

The other reason the insurance companies do not try and reduce costs in general is that it is not in their best interests to reduce global costs, only their own costs. The more medical costs, the more insurance costs, the more the insurance companies make. The same goes for malpractice insurance. Its the basic insanity of our system that the we expect actors to act against their own capitalist best interests. Using a common billing system would save 10's of billions, but since there are 100's of insurance plans, each one can save money by using their own forms.

BTW if the polls on almost every aspect of the health care bill if done separately shows very strong support, though not as strong as the single payer or government option both of which have had higher than 60% support for at least a decade.

Posted by: Muddy_Buddy_2000 | March 9, 2010 1:24 PM | Report abuse

fyi this h/p is simply a 'HINDENBERG HEALTH PLAN' and the insurers,voters,gop,simpletons all know this except the prez.

Posted by: somers91 | March 9, 2010 1:27 PM | Report abuse

This is not a terrible article, and I wish liberals, like the author, started the debate here.

I say this because the key proposition in the article is easily shot down. Yes, insurance companies have an incentive to give (unecessary) care and raise premiums. The also have a countervailing incentive not to lose customers due to these rate increases. These two forces help maintain an equilibirum. Hence some 87% of people with insurance are satisfied with their plan. That's an extraordinary number.

And, yes, insurance companies have an incentive to deny care and thereby make more money. But the article fails to note the countervailing incentive. Deny too many and you lose business--maybe even your reputation in the market place. I say again, 87% of insured people are satisfied.

These countervailing forces are the essence of any market. They will be lost or warped if government should absorb/control the industry.

In the end, I say shame on WaPo. Not really a well thought out piece, leaving me to wonder why it's on the website's first page. Is this the best you've got, WaPo?

Posted by: ktp70 | March 9, 2010 1:27 PM | Report abuse

No, we hate insurance companies because they are profiteers, reaping huge mega-profits off everybody else's financial and medical hardship. They lack the legitimacy to make decisions not simply because they are bloody profiteers, but primarily because they are not doctors and they cannot practice medicine. So the insurance monkeys at the typewriter turned out to be right on some anecdote that happened, big whoop. These guys have no right to make medical decisions because they do not have M.D. degrees. I fail to understand why the lot of bloody bean-counters isn't hauled off to jail for practicing medicine without a license. They're supposed to be providing insurance, not second opinions.

As for unnecessary procedures, that's a different problem that should be fixed with some form of tort reform that shields doctors' good-faith medical decisions from being second-guessed by juries. The medical tort system is definitely a driver of unnecessary procedures, and this should be stopped. But insurance companies -- medical know-nothings who've never actually examined a patient and who profit from saying no -- aren't the right solution to that problem.

Posted by: jdsher00 | March 9, 2010 1:28 PM | Report abuse

for beginners this 'IS A HINDENBERG HEALTH PLAN' and spells of 'DISASTER' waiting to happen of financial loss and waste of EPIC PROPORTION by any govt.
But only would bene. the illeg.preparing to descend and the ones already here in America.

Posted by: somers91 | March 9, 2010 1:31 PM | Report abuse

CER best practices are flat wrong about 50% of the time, causing injury and death, and partially wrong in an estimated 23% more---------

and CER often untested for minority segments of the population and for genetic disparities.

It is very dangerous, therefore, to force or reward the patient's doctors (as Peter Orszag is planning for Obamacare) to use CER.

Orszag et al, using the $1.1B Federal Coordinating Council for Comparative Effectiveness Research (FECCER), should not be able to declare medical eminent domain over any citizen's body and treatment.

Instead, CER should be used CAREFULLY by the patient's doctor as a guideline that may be flawed or inaccurate for his/her patient.

The doctor should not be rewarded less, or blacklisted for putting his patient first.

Orszag uses CER as a stalking horse for cost controls----Obamacare-ers deny this but Ezra knows it's true, he wrote about the "CER savings" as though they were real---ignoring that, if CER is honestly done------it is AS likely that the most efficacious treatments cost more, not less

Posted by: johnowl | March 9, 2010 1:31 PM | Report abuse

We do care about Health care rising costs, as individuals. Not everyone get paid by their employer and not everyone is rich enough to not care about rising costs. Its just, we didn't had a choice so far. We cannot live without it, and its growing pain to live with rising Health Insurance costs. No my other insurances are not going up as drastically as Health Insurance.

Health insurance companies are so big and fat, they think they can lobby for rules that are not convenient for them. We need Federal system to control Health Insurance, and induce competition. We need these companies to move away from their expensive old systems, to newer billing systems and save millions. Instead they chose to push the costs of maintaining these legacy systems onto individuals. With more exclusions, more terms and conditions pages, its really impossible to buy a good health insurance.

Posted by: motiram | March 9, 2010 1:33 PM | Report abuse

This is exactly why health care reform needs to reform the tax code as well. The current bias in favor of employer-sponsored health care just makes this problem worse. Wyden's health bill does this -- so does your buddy Paul Ryan's. Unfortunately, McCain/Obama campaign politics made this real problem untouchable.

Posted by: circe9877 | March 9, 2010 1:37 PM | Report abuse

The article does not present a third way for the insurance companies, that is, to get directly involved with the delivery of health care, in the interests of its customers -- the insured. Instead, the only conceivable options to Mr. Klein and the rest of the media are that insurance companies serve the interests of their management and their investors, by maximizing profit at the expense of the insured.

Why don't insurance companies begin to get involved with inefficiencies, and even liability issues, in health care through direct control and political advocacy on behalf of patients *and* cost control? Insurance companies have the clout to come up with, and promote, novel delivery models that serve patients and make economic sense, but they do not seem to have the awareness that it is their mission to do so. Am I missing something?

This is the paradigm shift that is needed and reflects the fundamental difference in business ethics in the USA vs nearly everywhere else in the world. We have lost this spark that made our nation, and our companies great, a mission to serve our customers. Instead, customers are seen as an annoyance and a source of wasted expense. This is a fatal, self-destructive mentality that extracts a high price for the profits we generate.

Posted by: AgentG | March 9, 2010 1:38 PM | Report abuse

How much shopping around for healthcare are the people getting their claims denied doing? I mean, if you think you just might have to pay for something you'll shop for the best price, isn't that the reasoning? How much shopping are people like neversaylie doing? How much time do you get to shop for medical care other than routine stuff? In between coughing up blood are you going on Priceline?

Posted by: ronjaboy | March 9, 2010 1:42 PM | Report abuse

Guess if the right wing commenters prevail we will all have to get our health care by following Sarah Palin's example and going to Canada for it. We can vote with out feet for better health care just like she did.

Posted by: withersb | March 9, 2010 1:44 PM | Report abuse

The ability and believability of insurers controlling costs by simply controlling medical expenses is wrongheaded in every way. The insurance companies have no place trying to tell doctors, researchers or even pharmaceutical companies what to charge. It is the most immediate way to directly degrade the quality of care in this country: that's why everyone hates HMOs. It hands the keys to the hen house to the foxes.

What's very wrong here, Ezra, is the assumption that the rising cost of medical care is to blame. The top five earning insurance companies averaged profits of $1.56 billion in 2008 and reported spending an average of more than 18 percent of their revenues on marketing, administration, and profits.

It's not health care reform that's needed so much as draconian insurance company regulation or even privatization. Leave the doctors alone and get rid of the insurers.

Posted by: joebanks | March 9, 2010 1:49 PM | Report abuse

Insurance companies do not control costs because they do not need to be profitable. In fact, the more places for markup and the more complex to hide margin the better. Inefficiency is profit, bribing your congressman to punt health care merely an expense.

Capitalism is good, but un-regulated capitalism like the kind that almost sunk the financial markets is Barry Maddoff like bad.

Posted by: GarrisonLiberty | March 9, 2010 1:50 PM | Report abuse

"if it takes u one year-PLUS to peddle something isnt that a clue you are peddling what no one wants?"

Posted by: ChooseBestCandidate | March 9, 2010 1:51 PM | Report abuse

Now isn't it coincidental that this article is running on washpost.com, obama is talking about the evil insurance companies, and there is a major protest going on in downtown DC.

If this isn't collusion, tell me what it is?

Yellow-journalism, government run media is what it is. Shame on you Klein and washpost! You should be embarrassed for making the USA a banana-republic.

Posted by: jim000122 | March 9, 2010 1:54 PM | Report abuse

srw3,

while I will state that recision needs to not happen and pre-ex needs to end you're looking at statistics over 5 years. If we assume that there are 160 million people insured over the course of a year roughly and you're looking at a five year timetable there then you're basically saying that recision occurs in .0025% of the time. (20,000 / 800,000,000) You're right its wrong and I'M right you're blowing it completely out of proportion. Its still you that needs to get a grip.

I won't even bother to debate if any of those recisions are cases that are valid or not. Its kind of ironic that the left is out there SCREAMING for any possible instance of reicssion. Begging anyone to come up and be heard and all we're hearing are crickets. Well except for that .0025% of the time.

Posted by: visionbrkr | March 9, 2010 1:59 PM | Report abuse

Mimikatz wrote:

This is why we need either a network of tax-supported, very low co-pay primary and basic care clinics and insurance for serious illnesses and accidents, plus Medicare starting at age 55, or just have Medicare for all (single-payer) and be done with it. Rich people can always pay for concierge or really high-end care if they want to feel better than everyone else. But for the rest of us, keeping for-profit insurance is just another form of feather-bedding.

+++++++++++++++++++++++++++++++++++

Mimi, Mimi, Mimi is so right! Finally, we have a comment that addresses all the issues in one fell swoop.

I'm not sure what Mr. Pound is trying to say, except if Insurance Companies have given up on trying or have no ability to control costs, then the sooner we get on to a single payer system, the better.

Posted by: rryder1 | March 9, 2010 2:00 PM | Report abuse

Ezra Klein is re-tarded. Insurance Companies, just like state universities, need a huge expensive bureaucracy to assure compliance with byzantine legal codes created by decades of bad legislation by moronic politicians. And so it goes. It also has the incidentally make some profit, but at the same time pay out jackpot awards to illegal aliens who choke on their own vomit in the back of a police cruiser or fall off a roof while hammering shingles or get the wrong dose of aspirin while getting free medical care in some overburdened emergency room.

Posted by: greg3 | March 9, 2010 2:00 PM | Report abuse

Ezra can't see the forrest for the trees. Because there are no limits in the legal system, providers also have to charge more to cover their malpractice insurance. Tort reform is the one of the most obvious ways that the govenment could control costs, but we all know the "sue them for all they're worth mantra" that Democrats live by.

Posted by: red4ever2 | March 9, 2010 2:00 PM | Report abuse

@ blert: Doctors and hospitals know that insurance will pay costs, and so they offer more tests, prescribe more drugs, and charge higher rates, which draw no complaints from consumers because consumers simply submit claims to insurers. Comprehensive insurance, in principle, adds to health care costs, but it's not any evil practice by insurers that does this--it's simply human nature.

The problem is that insurers have little motivation to bargain hard with providers because they can basically raise premiums to cover the increased cost and make more profit without increasing the % that they take out of the premium. If insurance premiums were capped, insurers would lose the rising premium gravy train and have to use their bargaining power to get providers to take less for services.

Posted by: srw3 | March 9, 2010 2:01 PM | Report abuse

Some of these larger insurance companies have up to 100,000 employees.

WHY???
Because of you are making 7% profit.
To justify more money increase cost and multiply 7%..more money volume.

Any other compamy would have to cut costs to earn more money.

I bet if they had to compete this would get cut to half. Including the fat cat owners.

Fei Hu

Posted by: Fei_Hu | March 9, 2010 2:05 PM | Report abuse

There are all sorts of contrary allegations floating around about this, but nobody seems to put data into the mainstream press. For example, at this page summarizing some data from the Heritage foundation, at least data is presented to argue that Medicare is not so efficient on a per-patient basis.

http://timerealclearpolitics.files.wordpress.com/2009/06/admincosts1.gif

Now of course, it probably costs more money to distribute more money. But it is not like you can cite a percentage and end the discussion.

Further, this does not take into account how much money is spent to obtain how much benefit. Both systems are subject to fraud, but which reigns it in better?

I would think that any statement about efficiency would address fixed costs, variable costs, fraud, and costs of unjustified denial. (Medicare won't sign off on just any old thing either)

Posted by: ChicagoConservative1 | March 9, 2010 2:08 PM | Report abuse

Although a number of the points regarding failure to say no and employer-paid premiums are correct, you should know that the single biggest driver of health care cost increases is the federal government's failure to fully pay for the care received by Medicare and Medicaid recipients.

Medicare/Medicaid reimbursements to doctors and hospitals run about 75% of the costs of delivery of care to patients. So, every single Medicare/Medicaid patient (of which there are about 100 million) receives care, tests, hospitalization, and all the rest at a significant financial loss to the provider.

So how do providers make up the difference so they don't go broke? They raise prices to private payers (those covered by private health care insurance) and those who self-pay. So, in effect, the publicly paid for health care plans of Medicare and Medicaid are steeply subsidized by those who pay for themselves or who are privately insured.

So, while President Obama disingenuously blasts health care insurers (who may indeed have some faults), he is far from truthful about what publicly funded health care systems are truly about.

The current health care bill(s) will make the financial cost spiral dilemma worse, not better, and no amount of spin, dissembling, and misleading can change this reality.

Real reform is not what is being unilaterally proposed by Democrats and the President. We will rue the day that such legislation passes, if it does.

Posted by: jshaver001 | March 9, 2010 2:10 PM | Report abuse

First of all the insurers should pay out close to 97% of the insurance premiums in claims as opposed to 80%. Not sure what their role is? Doctors and Hospitals treat patients. What is insurance doing in the middle keeping 20% of the payments. We need a fundamental change.

Posted by: ak1967 | March 9, 2010 2:10 PM | Report abuse

Typical spin -with a catch phrase like useless procedures - have yet to see validated real numbers for this health insurance claim. Not just estimated gazillion $. How can anybody explain their bloated profits and the bonuses of their CEOs. That is their real objective- not providing care and making money from human misery.

Posted by: bgreston | March 9, 2010 2:10 PM | Report abuse

Only 60% of the premium dollar goes to health-care.

Of the money spent, costs are not contained (for example, drugs in Canada are 1/3 what I would have to pay if I bought from a US pharmacy).

A public option (with the power to negotiate) would be preferable - but of course the Dems and GOP then would be for the taxpayer and not the insurance companies, the drug industry, the medical profession, and the medical supplier industry.

Guess who the present proposed health bill helps??

Posted by: artbab1 | March 9, 2010 2:16 PM | Report abuse

This argument makes two flawed assumptions:

1. that insurance companies are doing one or the other, "saying no" vs. "raising premiums". They are actually doing both.

2. That the current system is already 100% efficient and every dollar spent goes to care - the result being that "saying no" occurred because the dollars weren't there to pay for the care. Again, not the case.

Posted by: kevnet | March 9, 2010 2:16 PM | Report abuse

Control costs? Ha, ha, ha, ha, ha!

Health insurance isn't "insurance", just a pass through the insurance companies administer. So there really isn't anything in it for them to control costs. They get their cut of the action regardless.

And health has little to do with doctors and hospitals.

Any questions?

Posted by: oracle2world | March 9, 2010 2:17 PM | Report abuse

You gave the perfect reason to kill Obamacare. It just exacerbates the NO ONE CARES ABOUT CONTROLLING COSTS problem. It will be the Obama, Nancy Pelosi and Harry Reid types deciding what care we get and which taxes are increased to pay for it. NO THANKS

Posted by: bruce18 | March 9, 2010 2:18 PM | Report abuse

@ visionbrkr I suggest you read this post that debunks your very small percentage rescission claim. Since the vast majority of people make either small or no claims, insurers don't focus on them. they are the profitable ones and not candidates for examination for rescission...It is the 1-5% of people that make the majority of claims and it is those people that insurers focus on to get them out of the risk pool. In this group, between 10%-15% (using the top 5% of insured by claim amount as the pool)and 50% (using the top 1% of insured by claim amount as the pool) of policy holders who make expensive claims are targeted for rescission.

http://tauntermedia.com/2009/07/28/unconscionable-math/

"Half of the insured population uses virtually no health care at all. The 80th percentile uses only $3,000 (2002 dollars, adjust a bit up for today). You have to hit the 95th percentile to get anywhere interesting, and even there you have only $11,487 in costs. It’s the 99th percentile, the people with over $35,000 of medical costs, who represent fully 22% of the entire nation’s medical costs. These people have chronic, expensive conditions. They are, to use a technical term, sick....If the top 5% is the absolute largest population for whom rescission would make sense, the probability of having your policy cancelled given that you have filed a claim is fully 10% (0.5% rescission/5.0% of the population). If you take the LA Times estimate that $300mm was saved by abrogating 20,000 policies in California ($15,000/policy), you are somewhere in the 15% zone, depending on the convexity of the top section of population. If, as I suspect, rescission is targeted toward the truly bankrupting cases – the top 1%, the folks with over $35,000 of annual claims who could never be profitable for the carrier – then the probability of having your policy torn up given a massively expensive condition is pushing 50%. One in two. You have three times better odds playing Russian Roulette.

Posted by: srw3 | March 9, 2010 2:20 PM | Report abuse

Ezra then why are health care companies making more money than ever? Up 415% per quarter. You should get docked for your silly article. Compnaies are the main reason it costs so much not the care.
Profits for the fat cats-share holders.
Cut them and you have enough to go around. Gess the Interent, like library, are free due to it being considered "for public good" in Norway.

Posted by: crrobin | March 9, 2010 2:21 PM | Report abuse

Of course people have to see the results of higher medical costs come out of their own pocket in order to make choices to restrain growth. However, this doesn't necessarily point towards HSA's - which have the potential to restrict the use of preventive services (if not carefully structured). The thing to remember, though, is that we ARE paying for insurance, we simply do not have any control of how that money is spent, because the money is spent by others on our behalf, and we are effectively charged the average cost of coverage. We all earn less, we pay more taxes, but nobody benefits from cutting back, so we don't. Decisions about the nature of insurance coverage are almost always made by someone else (our employer, or Federal or state). But the choice of insurance is where price sensitivity should be - when we are NOT sick or in crisis - can collect information and make a rational choice. There is no reason why we should not be able to choose less generous/more managed coverage if that is what we want (assuming adequate quality controls - which means more information and more incentive to evaluate the information in choosing our coverage). And research shows that individuals are quite sensitive to variations in premiums in choosing coverage where they have to pay the difference themselves. The problem is that most people have little choice and even when they do, rarely pay enough more for more generous coverage to cover the added costs.

Posted by: cordeliav | March 9, 2010 2:24 PM | Report abuse

@ red4ever2 Health care costs have not gone down in states that have caps on punitive damage awards, so tort reform is a red herring. Texas caps punitive damages at 250K but they still have some of the most expensive health care in the US.

Posted by: srw3 | March 9, 2010 2:25 PM | Report abuse

So the problem is bad Government incentives and the solution is to create more of them? I don't get it.

So is there an ethical business model that will allow people to hedge against the risk of expensive healthcare? That's what insurance is supposed to do. Government regulations have morphed it into its current state. More Government regulations will make it even worse. Why can't Washington pass real reform that backs the Government out of the health insurance market and gives individuals the freedom to insure their own risks as they see fit.

Charities can help people that can't afford to pay for healthcare. The Government doesn't have to do it.

Posted by: fallsmeadjc | March 9, 2010 2:25 PM | Report abuse

More lies and obfuscation by the WaPo.

Posted by: mdsinc | March 9, 2010 2:31 PM | Report abuse

If a phone solicitor tried to sell you a service where you make a monthly payment for a product and then they refuse to deliver but keep your money you would call them nuts and probably call the police. Insurance companies make money by denying you coverage. Plain and simple.

Posted by: thomgr | March 9, 2010 2:31 PM | Report abuse

"No one cares" except the self-employed, who have NO bargaining power and pay the entire cost of their coverage, who are often only able to get insurance which goes thru "underwriting", where the insurer denies coverage for anything they deem is too risky and where the insurer can exercise a breach of contract, also known as "recision". For those who don't face these issues, why should they care, their health insurance is nearly free.

Posted by: Evan.Rosenberg@Gmail.Com | March 9, 2010 2:33 PM | Report abuse

I can never understand why so many cite insurance companies' huge profits, when they make a few percent (like 3 or 4) profit margins, and yet this assertion almost always goes unchallenged. We might solve some of our health problems by railing at the soda pop and beer industry, which makes more like 25% profits.

Posted by: jackl31 | March 9, 2010 2:34 PM | Report abuse


Doesn't this kind of make the argument
that no, we can't just cherry pick and
pass some of HCR? It all hangs together?

Posted by: dcunning1 | March 9, 2010 2:35 PM | Report abuse

hackett1 wrote>>>>As opposed to the Republican approach: "A policy so simple you can buy it on your I-Phone. And since it comes over the internet, it's going to be free. Everything on the internet is free!"

LOL
Can you imagine all the people that would get screwed if the GOP plan of buying insurance "across state lines" went into effect? People would be conned by clever insurance salespeople into buying worthless policies in other states - and what happens when the insured have a complaint? Which state has jurisdiction? Or do the states have any involvement?

The Democrats' plan to buy "across state lines" is BETTER because we'll be able to purchase insurance via a list of companies in the Exchange where policies will be subsidized by the government.

That plan seems to provide more consumer protections versus people buying policies willy nilly harem scarem all over the country.
We know what happened in the housing market....

Posted by: angie12106 | March 9, 2010 2:36 PM | Report abuse

hackett1 wrote>>>>As opposed to the Republican approach: "A policy so simple you can buy it on your I-Phone. And since it comes over the internet, it's going to be free. Everything on the internet is free!"

LOL
Can you imagine all the people that would get screwed if the GOP plan of buying insurance "across state lines" went into effect? People would be conned by clever insurance salespeople into buying worthless policies in other states - and what happens when the insured have a complaint? Which state has jurisdiction? Or do the states have any involvement?

The Democrats' plan to buy "across state lines" is BETTER because we'll be able to purchase insurance via a list of companies in the Exchange where policies will be subsidized by the government.

That plan seems to provide more consumer protections versus people buying dubious policies willy nilly harem scarem all over the country.
Remember the mortgage cons that emerged during the homebuyer boom.....

Posted by: angie12106 | March 9, 2010 2:40 PM | Report abuse

OOOOOOOOOHHHHHHH,AIG IS LARGEST AN BIGGEST RIP OFF OF ALL TIME. THEY DO MATTER OF FACT CONTROL ALOT MORE THEN THEY COULD EVER DEFEND THEIR CASE. AMERICA KNOWS THIS TO BE TRUE.

Posted by: JWTX | March 9, 2010 2:42 PM | Report abuse

Insurers can certainly control costs. While they may say no they often say yes and pay out on unnecssary items. Very little cost control in the insurance business, since they can pass along higher expense to policy holders. And with no competition there is no incentive to hold costs down.

The government needs to control prices of policies. Once they do that costs will go down. If one cannot control prices then costs cannot be controled. Instead of inflation we'll have deflation.

Posted by: Maddogg | March 9, 2010 2:43 PM | Report abuse

@ fallsmeadjc "Why can't Washington pass real reform that backs the Government out of the health insurance market and gives individuals the freedom to insure their own risks as they see fit."

It is the lack of insurance regulations that got us 20,000 rescissions for unrelated, unintentional, mistakes on enrollment forms, denial of care for preexisting conditions, skyrocketing premium increases, and 45 million uninsured. It also encourages companies to write junk insurance that doesn't cover what the policy holder thinks it covers. When the policy holder actually needs insurance to pay, they can point to the fine print (in unintelligible legalese) to show that on days with a Y in them, the coverage is not in force or some such. Then it is too late to shop around for another company. I don't want more than that. There is no market for insurance. Something like 80% of people live in places where 1 or 2 insurance companies dominate the market, hence no competition.

Charities can help people that can't afford to pay for healthcare. The Government doesn't have to do it.

Thanks but no thanks. I don't believe in relying on "charities" to deliver necessary services, like health care or food assistance to the poor. It is the greater society's responsibility and to pawn it off on other organizations is an abdication of our responsibility.

Posted by: srw3 | March 9, 2010 2:45 PM | Report abuse

What they fail to mention is that most of the premium dollars do not go toward reimbursement. The "costs" they have are for huge ceo salaries and bonuses as well as a herd of claims adjusters whose main job is to forestall(if you pay every claim 90 days late you get to use that money for free), and out rights deny or argue against payment.

Say for instance, a rural hospital can't do a routine appendectomy and sends you to a hospital 20 miles away in an ambulance against your objections. Too dangerous for someone else to drive you--what if something happens on the way? But, because there were no lights or sirens, the insurance company refuses to pay for the ambulance because it wasn't an "emergency." Suddenly the patient is hit with a thousand dollar ambulance bill.

This sort of thing happens all the time and the bills can only get pain through sheer persistence and threats of legal action.

Posted by: wdague | March 9, 2010 2:49 PM | Report abuse

This is a thoughtful article. but it misses an essential point - the theory of "insurance" is to spread a risk across as broad a population as possible.

Our "insurance" companies are, as one commentatator wrote a "pass-through", and a costly one, NOT an insurance program. If the pool is large, including young and old, and not cherry-picked, the costs for each service will go down, and the insurer will make sufficent money to operate the fund. Hence the argument for a single-payer plan.

Posted by: sklingel | March 9, 2010 2:52 PM | Report abuse

Since Fox News is moving their HQs to Abu Dhabi, will Megyn Kelly wear a burka on air? Will Glenn Beck wear a turban?

Posted by: angie12106 | March 9, 2010 2:53 PM | Report abuse

My insurer cannot find a valid reason to rescind my policy, so they did the next best thing: stopped paying for anything. My doctor got verification that PPO1000 covered the treatment, but when the bill was submitted with MY name on it was told "not a covered procedure". The billing office was then told that regardless of what it says on my card, it's really Hospitalization Only with $3500 deductible ... not what I contracted for! I haven't been hospitalized in 40 years, so that policy is useless to me.

There were two possible causes for one symptom. An expensive test proved it wasn't the worse one, and instead of saying "hallelujah, not going to cost six figures for surgery", they decided not to pay for the test, or anything else ever again.

15 years of premiums, they'd turned quite a profit on me even if they had paid for that test. But now I'm just their favorite cash cow -- pay in every month and will never get anything back. Mooooooooo!

Posted by: KMC528 | March 9, 2010 2:55 PM | Report abuse

Perhaps this is the appropriate forum to point out the fundamental difference between Insurance and a Service such as Health Care which most of my fellow citizens don't seem to get.
Philosophically Insurance is for the unpredictable catastrophic event - the barn burning down or an unexpected medical procedure.
A Service is something most all of us need or use - like electric power or eye glasses. Services may be regulated as in a utility and perhaps (I think), Health Care.

We need to stop thinking of the Insurance Companies as providers of Health Services.
They may still function to cover potential threats to an individual - such as an avid skier might want coverage for broken bones or hip replacements just like we can insure our own car for additional items.

On the other hand, basic Health Care Services should be available to everyone at a reasonable cost - either privately as regulated "utility" or a government program, or both. It should be transportable and thus not employment based.

This approach would of course make a higher level of care more available to the affluent but that's OK, taxes could be added here. It is my understanding that this approach is close to the systems in some of the other "civilized industrial countries".

Thank you for reading this if yo got this far.

Posted by: uvachuckr | March 9, 2010 2:58 PM | Report abuse

Don't know what planet you're on, askgees, to think that health insurance premiums are the same or less than a cell phone contract. I know someone paying $1200 a month (that's $14,000 a year) for an individual policy for one person. That's a heckuva lot more than I pay for my cell phone.

Posted by: KMC528 | March 9, 2010 2:59 PM | Report abuse

It isn't a question of getting healthcare for free - it's paying a fair price for healthcare and when you do you shouldn't be denied. When an managed care company makes 29 billion in a quarter and the President of the company is making 3 million or more and people can't afford health care premiums there is something wrong and you wonder the outrage when they propose a 49 percent increase.

Posted by: randywa | March 9, 2010 3:02 PM | Report abuse

At what point does a policy debate morph into something much bigger, with enormous stakes?
At what point does a policy debate split a congress, and the country it represents?
At what point does a policy debate become a rhetorical war of words, full of half-truths and hate?
At what point does a policy debate turn into a political fix, with pay-offs and trade-offs at its base?
At what point does a policy debate offer no principles or morals, only escalating debt?
At what point does a policy debate become not worth it, and is better saved for another day?

Posted by: mtpeaks | March 9, 2010 3:07 PM | Report abuse

Insurance companies are there to make money. To make money they must collect more from individuals who are not going to use their services; and to pay less to people who utilize their services.

Insurance companies have investors just like other publicly traded companies. Investors want return on their money and companies do all they can to keep their investors keep reinvesting in them.

So they are there to make money. Raise premiums. Deny coverage. The coverage denial is rarely stated so. The commonest way to do this to make it inconvenient for all the parties stand to benefit from reimbursements.

The real solution to reducing cost of healthcare is to have the public pay the first dollar. And it should apply to care delivered in all settings including ER.

Posted by: NHTexas | March 9, 2010 3:15 PM | Report abuse

Everyone likes to demonize insurance companies but does anyone actually think that if the government ran the system like all the single payer supporters advocate for endlessly that the government wouldn't be just as hard nosed about approving "unnecessary" medical procedures as private insureres are now? Look at how its done in countries with government run systems where some type of health board determines whether or not a medical procedure will be covered or not. A lot of that consideration is cost believe it or not.

How about we treat health insurance as insurance to be used like every other insurance, to keep someone from getting wiped out financially in the unlikely event that they get a severe illness of some kind. As someone above said, you don't use your auto insurance to buy gas, or to pay for oil changes. HSA's should be expanded so that people could pay for their medical care tax free and the tax deduction to businesses for employee healthcare should be done away with and handed off to individuals to buy their own insurance and healthcare.

Posted by: RobT1 | March 9, 2010 3:16 PM | Report abuse

What uvachuckr said.

We rely on insurance to cover routine screenings, shots, etc. when those things could be done much more cheaply through a significantly beefed up system of community health centers. Insurance would be for the unexpected serious illness or accident or when the community health provider discovers something major through screenings. Again, there is no need for the insurance company to skim off 20% to administer the policy, a 95% loss ratio should be mandated for insurers. If they can't meet that standard, then maybe we should go to a single payer system.

Posted by: srw3 | March 9, 2010 3:18 PM | Report abuse

@ visionbrkr, I hear crickets in response to my post on why your 0.05% rescission rate is totally bogus.

Posted by: srw3 | March 9, 2010 3:19 PM | Report abuse

From Wikipedia ... "Health insurance like other forms of insurance is a form of collectivism by means of which people collectively pool their risk, in this case the risk of incurring medical expenses."

The pooling of medical expenses is a good idea. The problem with our insurance is that it is managed badly. Employers paying 70% of the cost is a bad idea. The risk must be shared for cost containment to work. Otherwise it is viewed as an entitlement that we deserve. I would prefer the private sector doing this, but we are saddled with Medicare now so fix it.

We do not deserve anything that we do not pay for. If we are going to use a single pay-or system then raise the tax for Medicare and bail it out. Begin to pre-pay Medicare instead of pay as you go. When we pay forward our medical expenses through a pay roll tax we will treat it differently.

Contain costs by introducing more reciprocity into the health care delivery system. Open up choices for patients to consult with medical professionals and not just doctors. I even think that alternative medicine can provide more comfort at less money than our current system.

Get rid of defensive medical practices. Patients should be aware that all surgery and medical treatments have some risk. Assume the risk or refuse the treatment. Medical reporting and monitoring should become electronic to reduce mistakes and decrease administrative costs. Wireless devices make every home a hospital.

I am for any business that is profiting from health care paying an excise tax on profits. If a company is benefiting then they should share their profits with the recipients of health care to lower costs.

Posted by: pparris | March 9, 2010 3:30 PM | Report abuse

HSAs are all fine and dandy for people with extra cash to fund them (mostly people making above say 80-100K/yr). For the vast majority of folks (who can't fund their own retirement accounts or even save for a rainy day), there isn't extra money to dedicate to health care if they still need to pay premiums.

The big problems in health care.

70-90% of health care a person uses is in the last 6 months -2 years of life (and this is mostly covered by medicare).

There is little or no competition in the insurance market to keep prices down. Insurers are basically skimming off profits and adding very little of value to the system.

Shopping for health care providers is not like buying a car, where you have time to comparison shop. When you are sick or injured, you can't go from hospital to hospital to find the best deal. Providers mostly have a captive audience, so they don't have competition to keep costs down.

In short, market forces do not operate in the same way in health care as they do (however inefficiently) in other aspects of consumer behavior.

This is why we need government intervention; to make up for the distortions in the health care market, or significantly modify the market so it serves more people at a lower cost.

Posted by: srw3 | March 9, 2010 3:33 PM | Report abuse

So, tort reform. Limit suits, damages except in cases of criminal negligence.

Posted by: strobie | March 9, 2010 3:43 PM | Report abuse

srw3, that link you posted is the one that is totally bogus. He makes a glaring flaw in his "analysis", namely that he ignores the issues of correlation/causation. He is assuming that having a claim in and of itself is what leads to being rescinded, which misses the fact that the only people who have the possibility of being rescinded are those who submit a claim. This leads him to make the ridiculous assertion that if you submit a claim you have a 50% chance of being rescinded, when the reality the claim itself has no bearing at all on whether you'll be rescinded, only whether or not you were honest on your application. He is assuming uniformity among the sample of all people who have a claim, a very inaccurate assumption.

Think of it this way: imagine that only 1000 people submit a claim in a given year, 500 of which were totally honest on their application, and 500 of which lied about a knee injury and immediately went in for surgery immediately after getting coverage. Those 500 will be rescinded, and by taunter's math, you have a 50% probability of having your policy unfairly taken away, but really the chances of that happening are dependent on your behavior alone, not the exogenous factor of whether the insurer wants to rescind your policy.

To simplify it even further, if I approach you on the street selling magazines and you tell me to leave you alone, and someone else approaches you on the street and tries to mug you and you shoot him, it would be ridiculous to say that approaching srw3 on the street gives you a 50% chance of being shot. The more accurate description would be that trying to mug srw3 gives you a near 100% chance of being shot, while trying to sell him magazines presents no risk.

Posted by: ab13 | March 9, 2010 3:53 PM | Report abuse

Our El Presidente, the most mighty Barrack Obama can't answer one thing:

If the insurance companies are so evil, why is he trying to pass a law to force us to buy from them?

Posted by: Skeptic1 | March 9, 2010 4:13 PM | Report abuse

@ab13: This leads him to make the ridiculous assertion that if you submit a claim you have a 50% chance of being rescinded, when the reality the claim itself has no bearing at all on whether you'll be rescinded, only whether or not you were honest on your application. He is assuming uniformity among the sample of all people who have a claim, a very inaccurate assumption.

I think you don't understand the article. His point was that all claims are not equal and that insurers try to rid themselves of the top 1-5% of people with claims higher than say $35000 per year, using rescission or just jacking up their premiums until they can't afford them anymore. So it is 50% of the people that make claims of over $35,000 that are targets for rescission, not 50% of the policy holders who make claims. And rescission often has nothing to do with being honest in filling out the forms. The other point is that insurance enrollment forms are so complex and byzantine that there are errors on many if not most of them somewhere and that is used as a pretext to get rid of high cost people. This is something that insurance execs don't even bother to hide, as was shown in the testimony I described up thread.

Posted by: srw3 | March 9, 2010 4:24 PM | Report abuse

My wife participated in a National Cancer Institute Clinical trial for high dose chemo and bone marrow transplant. It is the widely accepted as the best treatment for Inflammatory Breast Cancer, a rare and invasive form of breast cancer. In the case of IBC, it is not only useful, but not deadly.

Posted by: univertel | March 9, 2010 4:41 PM | Report abuse

Just remember that Obama vilifies the health insurance providers for the same reason that Hugo Chavez villifies Columbia and the USA, that Kim Jong-Il villifies South Korea and the USA, and Hitler villified the Jews and the USA. They all need a scapegoat to draw attention away from their own villiany!

Posted by: rtatlow | March 9, 2010 4:43 PM | Report abuse

srw3

An insurer cannot rescind a policy except in cases of non-payment of premium or fraud. That they reward people for finding fraud on high claimants' apps may seem like dirty cricket, but it makes perfect sense. You cannot buy home insurance when your house is burning down. Why should you be able to buy health insurance when you know you'll need an operation? Blaming fraud on "Byzantine apps" is a bit of a stretch. Granted the questions are a little more involved then "what is your favorite color", but not by much. The language usually goes something like; "In the past ten years have you been treated for or diagnosed with any of the following conditions? If yes please explain" And then they have catch alls like "are you taking any medication?" "have you been hospitalized in the past ten years?" and again "if the answer is yes please provide details." Then when one of your answers raises a potential red flag someone calls you to get more details and then they either approve or deny your application. Plus you ought to be taking advantage of an agent who should be well versed in the system. Of course not everyone is, but hey there are bad mechanics too. Luckily in the private sector unlike the public, bad mechanics and insurance agents don't last very long.

Posted by: jmcdavisum | March 9, 2010 4:51 PM | Report abuse

-----"I think you don't understand the article."

I understand the article perfectly. I read it back when he initially wrote it, and posted the same comments on other blogs that were citing it.

-----"His point was that all claims are not equal and that insurers try to rid themselves of the top 1-5% of people with claims higher than say $35000 per year, "

Well his claim is incorrect. Insurers try to rid themselves of people who are dishonest and misrepresent their medical history on the app.

-----"using rescission or just jacking up their premiums until they can't afford them anymore. "

Bullsh*t. They cannot "jack up" the premiums on people who have claims. Everyone gets the same rate increase regardless of their claim experience.

-----"So it is 50% of the people that make claims of over $35,000 that are targets for rescission, not 50% of the policy holders who make claims."

No, those are not the targets of rescission. The targets of rescission are people who have claims that are highly unlikely to have just surfaced for the first time when they submit them. The example I typically use which is pretty representative of the average rescission is someone who goes in for knee surgery 2 weeks after getting a policy. The probability that they just happened to injure the knee in those two weeks is very low, so they investigate and rescind if necessary.

-----"And rescission often has nothing to do with being honest in filling out the forms. The other point is that insurance enrollment forms are so complex and byzantine that there are errors on many if not most of them somewhere and that is used as a pretext to get rid of high cost people. This is something that insurance execs don't even bother to hide, as was shown in the testimony I described up thread."

Insurance applications can appear "byzantine and complex" if you are not familiar with the conditions they ask about. But if you have one of those conditions that is not the case.

If so many people have had their policies wrongfully rescinded, where are the stories? Where is the outrage? People always trot out the same small handful of cherry-picked stories (and those cases are bad, I've never said we shouldn't have some chanegs to rescission practices), but if there was such widespread abuse as you claim you ought to able to find hundreds or thousands of examples. But every DOI investigation has failed to do so, they pretty much always find that the rescissions were justified.

Posted by: ab13 | March 9, 2010 5:04 PM | Report abuse

Hey, the good news is that the plan does allow for HSAs and high deductible care...

http://www.usatoday.com/money/industries/health/2010-03-08-youthhealth08_ST_N.htm

...but only for people under 30!

@srw3 Look at the Whole Foods health plan and the Indiana state employees plan. It's actually cheaper to give people some of the the money than to let them use insurance for "everyday" health care.

We can keep prices down in health care when we expose the providers directly to the consumer. Single payer is just another third party payer, where the consumer has no incentive to seek value.

Posted by: staticvars | March 9, 2010 5:04 PM | Report abuse

I've never heard anyone suggest lotteries to support health care cost. Those who run up an annual bill of more than $100K could apply to a state insurance fund supported by revenue from a lottery. Let insurance companies be responsible for the $25K-100K costs, and some kind of government/private combination take care of everything under $25K. That way individuals, the government/private entities and the insurance companies know the extent of their risk and will be able to price everything easily. And as for lotteries, why shouldn't we switch the beneficiary from education to health care? Which is more important?

Posted by: MrBethesda | March 9, 2010 5:08 PM | Report abuse

Health insurers administer health insurance CONTRACTS which specify what is and isn't covered; no more, no less....UNLESS

There are intrusive nanny state regulations like Maine's which force the companies to pay for routine health maintenance.

There is a growing body of studies which show that not only has the cost of these procedures, i.e colonoscopies, mammograms risen considerably, but their findings only lead to more costly examinations and a strong possibility that these preventive examinations may not be entirely necessary.

The other problem is that MEDICARE has broken down each health care service into its constituent components in a quest to decide exactly how much one can be reimbursed.

This analytic approach by the Federal government as embodied by the ICD9's and HCFA 1500's has only led to an increase in the cost of health care, as physicians discovered they weren't really charging fully what a service was worth..AND AGAIN, the federal regulatory effort to lower the cost of health care backfired.

And finally, it is a myth that all Health insurance companies are profit driven or that traditional capitalistic motives hold sway.

Most health insurance companies were originated as non-profits, as were hospitals. Take LUTHERAN BROTHERHOOD for example, a billion dollar holding. It operates like a religious non-profit should.

The other driving factor in health insurance corporate behavior is that billions are invested by pension funds in insurance companies; and in turn the insurance companies strive to be profitable to protect the pensions of so many tens of millions of people.

Causing them to fail or be less profitable will, like MEDICARE, only snap back and bite the American people in the arse.

Posted by: Common_Cents1 | March 9, 2010 5:15 PM | Report abuse

staticvars

I agree. Obama likes to preach that only the rich can afford to save money to fund a HSA. Well he is at least right that the working poor cannot, but hey lets give people a government HSA contribution. The premiums for a HDHP are somewhere around 70% the premium of the rich benefit policies that Obama wants everyone to have. Since we are going to heavily subsidize premiums anyway, lets give people the option. You have x number of subsidy dollars. You can have us pay all those dollars to an insurance company or you can deposit all or a portion of them in a HSA.

Posted by: jmcdavisum | March 9, 2010 5:17 PM | Report abuse

srw3,

anyone can make stats dance if you put in the right forumulas. sorry if i actually had some work to do. All i know is that I have several clients that have major carriers (Aetna, BCBS, Cigna) that have major, serious ongoing claims each over one million dollars and haven't had their claims denied.

I love your arguments. If insurers are denying every large claim (as you seemingly say) then why are we paying the highest amount for healthcare in the world by far? It can't all be profit, no? I love how you want both sides of the cost argument.

You can cherry pick all you like but the facts are that the recision statistics are a small fraction of the total. And actually it was .0025%, get your numbers right.


And I love your argument about "jacking up premiums" THE PREMIUMS INCREASE DUE TO THE INCREASED CLAIMS COSTS. Or maybe you think insurers should increase claims on the healthy people that don't use their claims and spare those that do? Would you prefer that?

Posted by: visionbrkr | March 9, 2010 5:25 PM | Report abuse

Shopping for health care providers is not like buying a car, where you have time to comparison shop. When you are sick or injured, you can't go from hospital to hospital to find the best deal. Providers mostly have a captive audience, so they don't have competition to keep costs down.

Posted by: srw3 | March 9, 2010 3:33 PM | Report abuse

So I'm guessing if we believe srw3 the only care anyone ever receives is emergency care?

WRONG AGAIN.

Posted by: visionbrkr | March 9, 2010 5:30 PM | Report abuse

Wow! This is by far the best "Post a Comment" page that I have read on Health Care Reform, and I have read a lot of them. There are so many great, thoughtful, contributors, it makes one wonder why this whole process has been so difficult and has come up so short on real reform. But when I look at the Senate and see a lot of old farts with dead chicken necks and their hands in the cookie jar, and I begin to think about how Wyoming has as much say on the subject as New York, let's say, the fact that we have gotten this far is a miracle. But then I also start to think that maybe something is quite askew in terms of us having, or pretending to have, a representative system. It's not really even a scientific sample, but, of course, the smaller the number of people, the easier and cheaper it is to control. The fact that a public option is still not presented as part of the legislation is due to the Senate, and the Senate alone. There are only a hand full of Senators worth keeping. The rest should be thrown out, so that it can find it's way in to the 21st century and begin to address the health care needs of the people, along with a host of other problems that have been so sorely neglected. As it stands today, this country is dead in the water. Where it will be, come Easter, remains to be seen.

Posted by: rryder1 | March 9, 2010 5:35 PM | Report abuse

Insurers Are Many Things:

Real cost of providing medical services is based upon recovery of of cost. Like it or not, the federal government and states have
mandated that hospitals and outpatient services treat a growing
population that is unable to pay and resulting an assembly
machine of fatigue in which recovery of cost is a paper chase. If
you visit an outpatient service office the physician is relegated
to 15 minutes for patient service. Insurance companies have a people cost, and are opting to become for-profit, and having an
an independent company, like Hewitt, monitor and reduce
patient services. Health Care is no longer a charity, and if you
middle-class, and more particularly retired, you cannot
afford out-of-pocket. Unfortunately,physician insurance and open
borders must be passed on.

Posted by: 3rd-PartyAdovcate | March 9, 2010 5:40 PM | Report abuse

@VB: All i know is that I have several clients that have major carriers (Aetna, BCBS, Cigna) that have major, serious ongoing claims each over one million dollars and haven't had their claims denied.

Anecdotal evidence when arguments fail, so typical.

The money quote here "The committee found that during the previous five years, three health insurers—Assurant Health, WellPoint, and Golden Rule—had saved more than $300 million by rescinding nearly 20,000 policies based on omissions policyholders made in filling out enrollment forms. Asked (in this season of reform-minded industry concessions) whether they would pledge to stop rescissions except in cases of intentional fraud, the chief executives of all three companies said that they would not."


VB:If insurers are denying every large claim (as you seemingly say)

The article didn't claim that all high cost people are purged. It said that the chances of rescission were dramatically higher if you are a high cost individual in the plan. The facts are that lots of high cost people end up losing their insurance because of unrelated errors in their insurance enrollment forms.

then why are we paying the highest amount for healthcare in the world by far? It can't all be profit, no? I love how you want both sides of the cost argument.

This is a simple one. Because for profit insurers and providers are basically unregulated on how much they can charge. The $300,000,000 saved didn't go into reducing premiums, I would bet. I am guessing it went to executive bonuses (counted as part of administrative costs, probably.)

You can cherry pick all you like but the facts are that the recision statistics are a small fraction of the total. And actually it was .0025%, get your numbers right.

I guess it all depends on what you use as the total. The article was using individuals in the 95th percentile ranked by cost. among that group, a 10% rescission rate was calculated. In the 99th percentile, it was a 50% chance of rescission. I am sorry if the article was too high level for you to understand.

"Or maybe you think insurers should increase claims on the healthy people that don't use their claims and spare those that do? Would you prefer that?"
Aside from the fact that this sentence doesn't actually make sense, I would like to see a single payer system to provide universal coverage without the billions in administrivia and profits that insurers take while providing almost nothing of value in return.

Posted by: srw3 | March 9, 2010 6:04 PM | Report abuse

@VB: So I'm guessing if we believe srw3 the only care anyone ever receives is emergency care?

Buying health care is qualitatively different from buying other products. If you don't agree, fine. You are wrong, but apparently the force of argument has no effect on you.

When you are healthy, you don't know what kind of care to comparison shop for because you don't know what you will need.
When you are sick or injured, you often don't have time, energy, or money to comparison shop for doctors and hospitals. Having providers close by is also important if there are follow up visits or continuing treatment, which also restricts the pool of providers. Also, unlike supermarkets, doctor and hospital prices are not often advertised or even displayed to make comparison shopping convenient. The choice of doctors and hospitals often depends on which doctors and hospitals accept what brand of insurance, a problem that goes away with single payer.

In all these ways, health care purchases are different from other kinds of purchases. If you can't see this, oh well.

Posted by: srw3 | March 9, 2010 6:15 PM | Report abuse

-----"It said that the chances of rescission were dramatically higher if you are a high cost individual in the plan."

srw3, you're not understanding the math here, and you're making serious errors of correlation/causation. Being a high-cost individual in and of itself has no bearing on your likelihood of being rescinded. But the only way you have the possibility of getting rescinded is by submitting a claim. The implication you're making is that by the simple act of having a claim it makes you highly likely to get rescinded, but this is completely untrue. Being dishonest on your application is what gets you rescinded, and the correlation between people who lie on an app and people who submit a claim is the issue you are missing.

Posted by: ab13 | March 9, 2010 6:25 PM | Report abuse

With all do respect to all the other commentators, this person srw3 knows what he or she is talking about, pure and simple. When thought corrects thought and we find the objection to our own thinking, there is efficacy of mind and we will begin to emulate what apparently comes so easily to srw3. I think that if we sat in a room, face to face, together, maybe 30 people or so, 15 of whom do not have health care and 15 or so that do, and the question was asked whether or not everyone should have health care insurance, the answer would be 30 yes and 0 no. We hide behind the digital thumb, where it is so easy to turn it down. Can't we do better than that?

Posted by: rryder1 | March 9, 2010 6:42 PM | Report abuse

srw3,

my apologies as I was working and couldn't read what I wrote.

You know your stats are right. Did you know that 100% of those whose claims were recinded were victim of recision? Maybe you can get that math.

If by your math a large segment never submits a claim (factually correct) then how can you legitimately extrapolate their claims (or lack thereof) from statistical data? Misleading at the very least. But i guess you don't need to be honest.

Posted by: visionbrkr | March 9, 2010 6:46 PM | Report abuse

@ab13 The implication you're making is that by the simple act of having a claim it makes you highly likely to get rescinded, but this is completely untrue.

No the implication the article makes is that if you make claims that put you in the 95 percentile or higher, you chances of your enrollment form being scrutinized for rescission are dramatically increased.

"Being dishonest on your application is what gets you rescinded, and the correlation between people who lie on an app and people who submit a claim is the issue you are missing."

As I pointed out before, the insurance enrollment form is so long, complicated, byzantine, and filled with unfamiliar medical terminology that almost every form as some kind of mistake on it. Omitting something or misidentifying a condition does not constitute lying or any kind of fraudulent activity. Often, rescission happens to people who make errors on the enrollment form that have nothing to do with the claim they are submitting, but as the insurance execs testified, insurers will use this unrelated innocent mistake to cancel your policy and save the money they would have paid on your claim.

Posted by: srw3 | March 9, 2010 6:48 PM | Report abuse

@VB: This is pretty simple. I guess you are being intentionally ignorant. There are 100 people. 95 of them pay more in premiums than they get in benefits over time. No point in looking for innocuous errors on their forms as the insurer wants them to stay in the plan. There are 5 people in the plan that are getting more out in benefits than they will likely pay in premiums. These are the people that insurers go after, trying to find a reason (say an unrelated, innocuous error or omission on their enrollment form) to cancel their insurance because they are eating up the profits. "Asked whether they (insurers) would pledge to stop rescissions except in cases of intentional fraud, the chief executives of all three companies said that they would not." This quote says it all. Rescissions are used to cancel policies, even when there is no evidence of intentional fraud.

Posted by: srw3 | March 9, 2010 6:56 PM | Report abuse

and like i said recision needs to stop just like lying on enrollment forms needs to stop because I see it happen every single day even in a state like mine that has virtually no pre-ex. But I guess in your eyes its OK for people to drop their insurance one day and then pick it up the next (once they get sick) and expect us all to pay for it. Someone needs to teach you how math works and how the "death spiral" in California and other states occurs because people opt out of coverage.

And as to your argument about insurance applications being intentionally long and cumbersome is ridiculous. most enrollment forms are one or two pages. In instances where its more than that it is due to federal regulation that requires it.

See attached.

CLAIM FORM:

one page of form, one page explaining how to fill out form. Could it be any simpler?

http://www.horizon-bcbsnj.com/SiteGen/Uploads/Public/horizon_bcbsnj/pdf/MANAGED_CARE_CLAIM_FORM_0834.pdf

most insurers will and do accept a detailed receipt stapled to one of these with nothing filled out.

http://www.aetna.com/employer-plans/document-library/forms/nj_ee_form.pdf


The above application that's used for all employees in NJ small groups for Aetna is basically 2 pages and its only that long because of state requirements as it covers employers terminating employees coverage as well as COBRA and State continuation requirements.

But again in your narrow view its done to try to get out of paying claims.


You do realize that about 70% of insurers claims are auto-ajudicated, right? Oh forget it, everyone's out to get you.

Posted by: visionbrkr | March 9, 2010 7:37 PM | Report abuse

srw3,


please explain to me what is "byzantine" about:

During the past 6 months have you or any dependent to be covered been diagnosed with:

A, B or C.

During the past 6 months have you or any dependent to be covered been admitted to a hospital or other healthcare facility as an inpatient.


Do people not know the answer to this? Is this some sort of "trick question"???


Sounds like you like to make excuses.

Posted by: visionbrkr | March 9, 2010 7:43 PM | Report abuse

VB, you can defend insurers all you want, but it won't change their heinous behavior.
From the slate article:
link: http://www.slate.com/id/2223680/

In one job evaluation, the health insurer WellPoint actually scored a director of group underwriting on a scale of 1 to 5 based on the dollar amount she had managed to deny through rescission. (The director had saved the company nearly $10 million, earning a score of 3.

Don Hamm, the chief executive of Assurant Health, was unable to define lymphadenopathy and other terms that appeared on his company's own enrollment questionnaire.

Robin Beaton, a retired nurse in Texas, was rescinded last year by Blue Cross and Blue Shield after she was diagnosed with an aggressive form of breast cancer. Blue Cross said this was because she had neglected to state on her forms that she had been treated previously … for acne.

Otto Raddatz, a restaurant owner in Illinois, was rescinded in 2004 by Fortis Insurance Co. after he was diagnosed with non-Hodgkins lymphoma. Fortis said this was because Raddatz had failed to disclose that a CT scan four years earlier had revealed that he had an aneurism and gall stones. Raddatz replied—and his doctor confirmed—that he had never been told about these conditions (the doctor said they were "very minor" and didn't require treatment), but Fortis nonetheless refused a payout until the state attorney general intervened.*

It is clear that policies are rescinded for errors that have nothing to do with the claims being made. The insurance execs said as much in their testimony.

As for the enrollment forms, a simple omission of a drug you once took or a medical procedure you had done as a child and forgot to include makes you a candidate for your claim for cancer or some other unrelated malady to be denied and your coverage cancelled.

It would be entirely different if these errors were caught and corrected before an expensive claim is made or if all enrollment forms were scrutinized with equal precision to eliminate these errors and/or cancel policies, but the insurers say that it would cost too much to check all enrollment forms for errors. The only people that get their enrollment forms scrutinized for unrelated errors and policies rescinded are those who are making (typically expensive) claims. Why do you think that is?

Posted by: srw3 | March 9, 2010 8:07 PM | Report abuse

@VB:
In terms of forms, the last one I did for Anthem was 6 pages of small type that asked me to list every medicine and every procedure I have had over my life not the last 6 months, along with a long list of conditions many of which I had never heard of, that I had to say I did or didn't at one time have. I think you are doing the cherry picking with the forms.

Posted by: srw3 | March 9, 2010 8:19 PM | Report abuse

-----"No the implication the article makes is that if you make claims that put you in the 95 percentile or higher, you chances of your enrollment form being scrutinized for rescission are dramatically increased."

That's not true. Claims that get flagged for investigation are claims that are unlikely to have just surfaced for the first time when they were submitted. And even if it were true, it does not matter because as long as you have been forthcoming about your medical history you're not going to be subject to rescission. Have some carriers occasionally abused the process? Of course, but those are the extreme exceptions. But like I said before, where is the evidence of widespread abuse? You're trotting out the same tiny list of cases as every single other left-wing article about rescission, when if it were really as big a problem as you're saying we ought to have hundreds or thousands of cases of people being unfairly rescinded. Instead we've got a handful. Why haven't those "20,000" people you cited come forward with clear evidence of how they were unfairly rescinded rather than just this tiny number of examples you have? The answer is because the overwhelming majority of rescissions are completely warranted.

------"Don Hamm, the chief executive of Assurant Health, was unable to define lymphadenopathy and other terms that appeared on his company's own enrollment questionnaire."

And this is the dumbest "evidence" of all. I don't know what lymphadenopathy is either, but guess what: if I had it I'd sure as he1l know what it was. I wouldn't expect an insurance CEO to be able to identify every medical condition any more than I'd expect the CEO of Toyota to be able to fix my brakes.

-----"There are 5 people in the plan that are getting more out in benefits than they will likely pay in premiums. These are the people that insurers go after, trying to find a reason (say an unrelated, innocuous error or omission on their enrollment form) to cancel their insurance because they are eating up the profits."

This is just complete BS. You have absolutely zero first-hand knowledge of how this works, and are just fabricating this disaster scenario in your head. I've been doing this for a long time, your description is completely inaccurate. Why you think you actually know something about this from reading a couple of news stories is beyond me. You're wrong, plan and simple.

Posted by: ab13 | March 9, 2010 8:36 PM | Report abuse

Ab13 All I can say is below.

The committee found that during the previous five years, three health insurers—Assurant Health, WellPoint, and Golden Rule—had saved more than $300 million by rescinding nearly 20,000 policies based on omissions policyholders made in filling out enrollment forms. Asked (in this season of reform-minded industry concessions) whether they would pledge to stop rescissions except in cases of intentional fraud, the chief executives of all three companies said that they would not.

Posted by: srw3 | March 9, 2010 8:48 PM | Report abuse

srw3,

so wait, let me get this straight. I can't bring up clients that I've had millions of dollars in claims paid without ever an issue but you can bring up your form that's 6 pages and "byzantine" in your eyes?

So I'm cherry picking?

here goes me wasting more of my time:

Horizon BCBS enrollment form (2 pages)

http://www.horizon-bcbsnj.com/pdf/6803_Chg_Rqst.pdf

Aetna's previous one (2 pages)

Cigna's enrollment form (1 page)

http://www.cigna.ca/customer_care/broker/in_your_state/pdf/newjersey/membership_application.pdf


Oxford/United enrollment form: (1 page).


http://www.insuranceplusny.com/Insurance_Appl/OxfordUSA2.pdf


Any other lame excuses for you?

Posted by: visionbrkr | March 9, 2010 8:54 PM | Report abuse

srw3, so what? How many of those 20,000 people were wrongfully rescinded? You've cited 4-5 cases out 20,000. If those rescissions were wrong it should be very easy to find hundreds or thousands of other people to use as examples. Where are they? Yes, the insurers will not agree to limit to "intentional fraud" because in many cases it is basically impossible to prove beyond a doubt that there was intentional fraud. I know you love tossing around big numbers, but that does nothing to change the fact that most rescissions are completely justified. And even if they weren't, that $300M saved is just going to tacked onto premiums for everyone else, making them even more unaffordable. This has nothing to do with the major problem of cost growth.

Posted by: ab13 | March 9, 2010 9:07 PM | Report abuse

why don't the doctors have to contribute maybe they might be over paid, maybe the gov. can help lower malpractice insurance along with med, maybe the government health care should be major medical only. regional health centers specializing and bidding for specialized services, heart centers,cancer centers,and others. private insurance would cover emergency and prevention.

Posted by: carhodesr | March 10, 2010 12:18 AM | Report abuse

"Their employers typically pay more than 70 percent of the cost", a technically true, widely-held, misconception - in that those dollars are considered part of workers' compensation. Those dollars spent by employers exert downward pressure on workers' pay - sometimes having more effect, sometimes less, on that pay than is actually spent on healthcare. Workers take home less money because their employers act as their agent in purchasing healthcare. My view is that the workers supply every penny of the healthcare premium.

Posted by: jfryan05 | March 10, 2010 6:54 AM | Report abuse

It all comes right back to what we have been saying all along. There is no way you can cut costs with for-profit insurance companies in charge. Paint it any color you want to as long as people are trying to make a profit off of healthcare, the cost will continue to rise and the care to decline.

If we actually had a single payer system such as medicare that everyone paid from taxes, I think you would see a great improvement in both cost cutting and care.

Posted by: MaggiePi | March 10, 2010 9:36 AM | Report abuse

Most of you have this wrong and Ezra has it right. Health insurers are not the villains here. The makers and sellers of expensive and unnecessary medical technology are to blame for skyrocketing health insurance premiums. Medical device manufacturers, pharmaceuticals, hospitals and specialist physicians have been overselling technology that does not add to our health, and they have been doing this for decades. They have been dipping into our wallets without our permission and it is time we figured out how to make them stop. Ezra points out correctly, that insurers tried to make them stop in the 1990s, and they got killed in the courts over it. We will have to get used to someone saying no to insurance coverage for unnecessary medical care.

Health insurance premiums are by definition equal to health spending plus health insurance overhead. While overhead might be too high, the real reason that premiums are going up is that spending is going up. While spending is going up, our nation's health is arguably getting worse.

Medical care seems to get less value from the technology it uses than other industries do. The reason for this is that overpaid physician specialists (cardiologist median salary= $340K, Radiology=$298K, Urology=$320K etc) are overselling unnecessary procedures at an astounding rate. A recent article in the Journal of the American College of Radiology showed that 1/4 of all radiology referrals in a large medical system were unnecessary. See www.bit.ly/a6zmev

In the US, we currently have no solution to this growing problem. It is going to continue unless some mechanism is put in place that can challenge the coverage of unnecessary procedures. We must find a way to stop the sellers of unnecessary medical technology from killing our wallets and our budgets. Until we do, health insurance premiums will continue to grow at alarming and unsustainable rates.

Posted by: tconcannon | March 10, 2010 10:56 AM | Report abuse

You are getting closer to getting to the root of the problem with health care costs. There is a lack of consumerism, not consumption. Until people really have skin in the game (less first $ coverage) they do not practice consumerism (e.g. smart shopping and buying). Costs are driven upward by higher consumption because of low co-pays and low deductibles. When people have to pay more out of their own pocket and are only covered for the catastrophic illness, consumption will go down and so will costs. There will be more competition among providers and consumers will take ownership of their own health care instead of leaving it all to their doctors by shopping. Again it all gets back to personal responsibility and creating an atmosphere of competition among providers and insurers - something they do not want. I am sick and tired of hearing stories about bankruptcies caused by illness. We typically hear only one side of the story from politicians trying to make their "health care reform" case (Mr. Obama). It is probably because the consumer didn't have the right advice or health plan for their needs but did have a beach house, or new HD big screen TV or fancy car. Bankruptcy is serious, but I do not personally know one person who has declared bankruptcy because of health issues and I am in a position to know in my area so it is overblown. We can't protect everyone from themselves and the government should quit trying.

Posted by: rbloomer2 | March 10, 2010 11:37 AM | Report abuse

rbloomer: in theory, more "consumerism" should work to bring costs down, but it doesn't in health care. The reason? The sellers of health care know much more about the products they sell than we consumers do. They can always outgame patients and oversell products because we just can't tell where 64-slice tomography adds value over 16-slice tomography. If our government could say it doesn't help, say for for colorectal screening (as they did recently), perhaps insurers could stand up to GE, which is quickly selling higher resolution CTs to every hospital in the US. Radiologists at those hospitals are re-selling those machines to us, one screen at a time. How is one consumer working alone able to stop this freight train? Government is needed to provide a basis for saying no to the proliferation of unnecessary medical technology.

Posted by: tconcannon | March 10, 2010 1:36 PM | Report abuse

Lookit, Ezra, the problem, pure and simple, is this: For Profit health insurers have to pad premiums by about 40% to account for profit margins and lobbying costs. This is a business model that's unsustainable.

Posted by: billvaughn | March 11, 2010 1:10 PM | Report abuse

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