I know this is going to be a controversial post, but I wanted to illustrate how silly our health insurance system has gotten.
Back in the old days, people did not have health insurance. Most hospitals were run on donations, and medical visits to the doctor were not so prohibitively expensive that you couldn’t see the doctor without insurance. But the concept of health insurance evolved to be a benefit for employees, almost like a recruiting perk. It got to the point where employees were needed so badly that it became a standard fringe benefit to get health insurance. To help justify the matter was the fact that medical costs rose so that it was almost prohibitive to see a doctor, let alone get a procedure or go to the hospital, without causing a huge financial setback.
Enter insurance companies. Insurance companies came into the picture to help contain costs. They started making sure that doctors did not order unnecessary tests. They started making sure that patients paid some copayments in order to provide a disincentive for overutilization of healthcare. Basically, they didn’t want you going to the doctor frivolously and wasting money.
In order to be financially solvent and even profitable, insurance companies started raising premiums very high. Thus, health insurance costs so much now that it is a huge percentage of payroll expenditure in the United States. Health insurance companies also started playing both sides – they charged patients more and reimbursed doctors less. Thus, as middlemen, they have found a way to save a lot of money and put it into the pockets of their MBA administrators.
But the problem with the system is that health insurance companies are so profit-driven that they actually penalize you for having pre-existing conditions, even if those conditions are pretty benign. They go through your doctor’s record, and anything that your doctor writes in it they will use against you and charge you a much higher premium.
An example of this is a friend’s son who has mild asthma and rarely uses an inhaler. When applying for insurance on his own, the insurance company wanted to raise his premium 50% higher than someone of the same age without asthma! Similarly, someone who has a resolved condition such as a psychiatric diagnosis can have a higher premium even if his or her disease is in remission.
So what happens if you are currently healthy and you do not tell your doctor that you have had these health issues before? You guessed it – you pay a lower premium.
It’s a really messed up system, kind of like not reporting your car accident to the insurer so your premiums don’t go up. But the difference is that health premiums are expensive and can easily become prohibitively expensive for the average family. I’m not suggesting that you be dishonest in any way. I am just illustrating that the system has some serious flaws that need to be corrected.
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As a physician, you are right on. A practice has to employ numerous people just to collect the insurance due as well because the company uses every opportunity to try to keep your payment from the physician as well. As a result of this, many primary care physicians find it hard to stay afloat and are leaving altogether. Many are starting to look at retainer medicine and just leave insurance plans.
Totally agree that the health care system in the US needs to be fixed and “de-bureaucratized” as quickly as the Wall Street crisis is being handled.
From an economic standpoint, does it make sense, for example, that a physician would prescribe the most expensive diabetes supplies to a Medicare patient instead of a subbstantially less expensive, “generic brand?”
Of course it does, from a profit maximization standpoint.
But does it from a human and “satisfycing” standpoint?
Worse, why should these supplies (except insulin) be available only by prescription?
Probably it is the fear of a lawsuit, rather than a true medical reason that prompts such incomprehensible bahavior.
The nature of the AMA, a protected and virtually untouchable union, certainly believes in maximizing its members profits. It clearly restricts the supply (as all union do) in face of a steadily growing demand, forcing prices high and higher.
The federal government does nothing to combat this trend.
Insurance companies, on the other hand, actually perpetuate and sell on the strength of the principle of “moral hazard,” looking for continually higher profits.
The medical community clearly has a specific outlook on human nature … and profits!