Congress is trying to put together a health care reform bill that would move the United States closer to the efficient health care delivery found in most other countries, but it is clear from their efforts so far that they do not understand what is involved.
In theory, health coverage is supposed to provide peace of mind. A person covered under a health plan should, in theory, know that any necessary medical treatment will be paid for. But the current system does not provide that peace of mind to anyone. That’s because no one really knows what is and isn’t covered under a private health plan.
It is a problem of administration and conflict of interest. Health insurers write the documents that tell customers what is and is not covered. They also make the decisions to pay or not pay claims. They have a strong incentive to make their coverage documents appear expansive, to make it appear that they cover most ordinary medical expenses, so that people will buy the coverage. At the same time, they have an equally strong incentive to refuse claims, so that they can keep the money for themselves. The result is that the criteria under which claims are paid are significantly at odds with the coverage documents.
Here is just one way they accomplish this. A coverage document includes coverage for a category of diseases. It includes coverage for diagnostic tests. But for one test to determine whether a certain common disease is present, the insurer will pay only a maximum of $10 in some states and $12 in other states, even though the test costs $55–65, and only a maximum of once every three years for any one patient.
These claims payment rules are secret — there is no way for the patient to find any of this out in advance, and even after the fact, it is all but impossible to figure out. Rules such as these are not on the insurer’s web site and are not known to the insurer’s employees who answer telephone calls. They are certainly not in the coverage documents. The first the patient will hear anything about this rule is in the document the insurance company sends out to tell the patient that the claim was paid in the amount of $10 or $12. This is followed, a day or two later, by a bill from the provider for the remaining $50 or so.
There is, unfortunately, no effective administrative mechanism to keep insurers’ payment rules consistent with their coverage documents. If state insurance regulators cared about these things, all the health insurers would have lost their licenses years ago. Lawsuits often force insurers to pay specific claims to specific customers, but much of the money goes to the lawyers, and there is nothing in that process to stop the insurer from refusing to pay the claim of the very next customer.
Bob Cesca yesterday put it this way:
Even calling it “insurance” is a sick joke. Insurance implies a guarantee, and no matter what we pay, there are never any guarantees. I propose replacing the word “insurance” with the word “maybe?” — including the question mark — as in “health maybe?” Maybe they’ll pay when we get sick. Maybe they won’t randomly hike our monthly premium by 30 percent. Maybe they’ll cover our preexisting conditions without gouging us — that is if they agree to cover us at all. Maybe they won’t let our family members die after refusing coverage.
If we must rely on private health insurance, we need to take the “maybe?” out of the coverage. The biggest uncertainty arises in conflicts between the coverage documents and the claims payment rules, and those conflicts are inevitable if you let the insurance companies write those documents.
Instead, they should be written — with a minimal set of choices insurance companies can make — by a government agency, probably set up within the Department of Health and Human Services. The complete set of claims payment rules should be published so that everyone can see what is and is not covered. Yes, that is tens of thousands of pages, but since the same set of rules would apply to everyone, there wouldn’t be any place to hide any of the “gotcha” that insurance companies rely on now. In place of the vague and confusing language that insurance companies intentionally write for themselves, so that they can do whatever they want, the new rules could be perfectly clear and precise, and when there were problems, they could be fixed in the public arena. And then we can basically do away with the coverage documents, which were never much more than false advertising anyway.
And then, to make the insurers actually pay the claims, we need to put some teeth into the insurance fraud laws. The insurance industry would have you believe that insurance fraud is something done by shady people in bad neighborhoods, yet insurance fraud is committed every day by every health insurance company when they refuse to pay covered claims and when they misrepresent the coverage they sell. Insurance fraud happens mainly because insurers pay performance incentives to their employees who deny the most claims. Those performance incentive payments themselves probably constitute insurance fraud under current law, but it might as well be spelled out explicitly, and then enforced, putting the insurance company executives who are responsible for the most egregious fraud in jail.
I won’t pretend that this is enough to make private health insurance work, but without these reforms, there isn’t a chance — it will just get worse. In the meantime, any proposal that would force everyone to buy into the current broken system cannot be called “universal coverage.” That kind of bill, such as the one currently being considered in the Senate, is not a reform at all, but just a way to steer more money in the insurance companies’ direction.
