Archive for category Insurance practices
Insurance companies now have found a way to deny insurance because of pre-existing conditions, as a group. This is nearly insane. Any first year lawyer would realize the following:
- It is not legal to kill a person so it is not legal to kill a group of people.
- It is not legal to run a red light so it is not legal to run a group of red lights
- It is not legal to deny insurance because of pre-existing conditions so it is not legal to deny insurance to a group with pre-existing conditions.
It took a few years since the ACA was enacted for insurance companies to realize the subsidized insurance exchanges have poor people, disabled people, and people who can’t work because of illness — they have, surprise, surprise, PRE-EXISTING CONDITIONS.
Now, after years of huge windfall profits, several large insurance companies have decided not to sell insurance to the group of people who purchase on the insurance exchanges. Why do we need a Supreme Court decision when any cop knows it’s a crime. Where do large companies like health insurance companies and Volkswagen get the idea they are entitled to do business as they please?
The insurance companies who have decided not to participate in the health insurance exchanges are listed below with the financials as reported on Yahoo. They are not hurting, revenue last quarter is better than the same quarter last year.
|2015 Revenue (Billions)||$176.10||$61.65||$54.53|
|52 wk price change||$14.38||-$3.14||-$5.33|
|Quarterly revenue (yoy)||28.2%||5.4%||2.0%|
A surprising twist to this story was reported by David Belk: big insurance companies avoid risk by having the companies they serve “self-insure”. Meaning, the companies (like a cable company or a hospital or an RV company) take the risk, put up the money, and let the “insurance company” just do the paperwork. For the eight largest health insurance companies only about 30% of their business actually has financial risk — the rest is “self-insured”, otherwise called Administrative Service Contracts (ASC).
So now the picture is clear — insurance companies avoid risk. They want someone else to take the risk and they are very skilled at shifting the risk to others. The question is whether the U.S. really needs these paper shufflers skimming profits?
The simple answer is no. Congress needs to level the playing field for insurance companies — if they sell insurance they must sell insurance on the exchanges. Unless insurance companies can take the risk of health insurance exchanges they need to be replaced with a single payer system. Colorado will decide this question on a ballot in 2016 — they have the right question, hopefully the people will choose the single payer system.
Profits for insurance companies and drug companies are skyrocketing. Data from CMS (2013 and 2014) are tabulated below. The big finding is the cost of healthcare is going up much faster than inflation. And, the lack of regulation is allowing insurance companies and drug companies to gouge consumers in the US.
Between 2013 and 2014 prescription drugs increased by 9.8% and net insurance cost (i.e. profit) increased by 12.1%. If life expectancy was going up at the same rate it would be a good deal — but, that’s not happening.
Despite the complexity there are rather simple solutions.
- Limit insurance company profits (these are not healthcare providers — these are paper shufflers!).
- Inform prescribers which drugs are cost effective. That means expanding FDA oversight or starting a new agency less influenced by industry lobbying.
- Limit drug company profits to 7% like most other developed countries.
The table below lists the expenditures for various categories of health care. The figures are in millions of dollars. The total expenditures for US healthcare in 2014 were over 3 trillion dollars.
Spreadsheet: US Healthcare Costs 2014
June 3rd 2015 Kaiser Health News reported the ACA seemed to cause more provider visits for management of diabetes “More Patients, Not Fewer, Turn To Health Clinics After Obamacare”. This is both good and bad.
The “good”: more attention to a patient’s condition is likely to result in better diabetic management, fewer complications, fewer hospitalizations and longer life.
The “bad”: since clinic visits can be billed to insurance, clinics make appointments and make money for each visit. The payment for visits rather than outcome is expensive and a known problem in US healthcare (fee for service). Diabetes can be managed over the phone in many, if not most cases — but there is no money for the provider in that approach. Phone care has a much higher value for the healthcare system and the patient; but, low-cost high-quality (high value) care is not getting the incentive.
The care of diabetics is further compromised by the pharmacy. A key piece of equipment for a diabetic is a glucose meter. The manufacturer almost gives away the meter so they can make huge profits by selling the disposable test sticks. The sticks are not interchangeable, not generic, sold in small lots, each lot sold with a co-pay, each lot requiring a visit to the pharmacy, and the use of gasoline to make the trip. If you don’t have much money the speed-bump turns into a mountain.
The solution: every few years mandate a generic test stick that manufacturers of glucose meters must support. “Uncouple” the meter maker form the test stick maker. And, sell the sticks in lots that last for at least 90 days, and that are sent to the patient by mail. Adjust the payment to providers so that they must contact diabetics by phone to adjust medications at least 2 times per month in order to bill for a medium or high level clinic visit. Also, each provider must obtain patient satisfaction data to prove the adequacy of service.
Addendum: Here is a link to an interesting court case about glucose meters
Patients like a choice of healthcare providers but never are willing to pay much for that opportunity. Recently, insurance companies have taken advantage of shrinking the available panel of physicians to select those that are both less expensive and provide higher quality. The higher quality part is obviously secondary.
Electa Draper of the Denver Post reported 7/27/14 “Coloradans could lose medical choices, but save money”. The essence of the article was a report on the United Healthcare (UHC) plan to “narrow the panel” of available physicians. $100 per month is reported as the possible savings for subscribers to the plan.
UHC is the largest insurance carrier in the US. This national strategy to “narrow the panel” will save someone some money; but, the amount of leverage this gives to quality is nebulous. This huge insurance company could raise US healthcare quality to number 25 from number 26 in the world — sadly they don’t have much ambition for international competition.
The lack of transparency is striking:
- will all the cost savings be passed on to the consumer?
- will CEO Stephen Hemsley’s salary go higher than $106 milllion?
- physicians seem easy to squeeze for money; what about drug companies, device makers and hospitals?
- what quality measures cause physicians to be excluded?
- forcing patients to change doctors as employers change insurance plans is common practice — when will this stop?
- will UHC or any insurance company saying they intend to improve quality also reduce errors? Will they stand shoulder to shoulder with physicians who are named in medical error suits?
- will UHC reduce patient waiting times?
- will UHC drop Medicare patients and stick with younger healthier patients?