Health Care Solutions: Insurance Companies

The biggest issue in the health care debate is the effect of the insurance companies on delivering health care to the American public. The challenge is that the insurance companies are not interested in facilitating the delivery of quality health care.  They are interested in delivering profits to their stockholders and high compensation to their leaders.

I am a capitalist.  I believe that companies should make profits and distribute the earnings to their shareholders.  However, most companies have the requirement of competing in the marketplace.  If customers don’t like their product, sales will decline and so will profits.  There will always be a small upstart to provide the nudge to make products better, cost efficient or more universal.  Even in the supposedly “too difficult to break into” automobile manufacturing industry, we see upstarts like Hyundai and Tesla pushing the big guys to do better. Currently the insurance companies average around 30% of their sales in administrative, marketing and lobbying, commissions and profit.  With a clear competitor in this space we would see that 30% decrease pretty quickly.

Now, when is the last time you heard of a new insurance company?  The insurance business is all about aggregating the risks of many people to lower the overall risk to an individual.  It is impossible to start a new insurance company, because you need a sufficient base to spread the risk. So, we have a situation where there is no real competition in the insurance marketplace. This has led to insurance companies taking advantage of their customers. In fact, in some ways, it would be irresponsible for them to do otherwise.  By not allowing customers with pre-existing conditions, they are increasing profitability for their shareholders.

So what is high-risk? I’m sure that you would consider cancer, insulin dependent diabetes and severe heart disease high-risk and subject to increased premiums or denial under our current system.  But what about bunions or being an expectant father or a firefighter? These are all reasons taken from underwriting standards to deny coverage. Doesn’t make a whole lot of sense to me.

How about this situation? Person signs up for health insurance.  Insurance company accepts insured.  Insurance company takes premiums. Person gets diagnosed with aggressive breast cancer in June.  Insurance company is called and authorizes double mastectomy and hospital stay.  Then the insurance company starts to review her original application.  Oops.  She has a notation on an old medical record that talks about an acne issue that wasn’t mentioned on her insurance application.  Three days before surgery insurance company calls back and rescinds authorization. Hospital needs $30,000 deposit to do surgery. Person doesn’t have $30,000.  She requests review by insurance company. Denied.  She then went to her congressman who intervened with the president of the insurance company (talk about government intervention into health care) and in October, finally the company relented and approved the surgery.  The tumor had grown from 2-3 centimeters to 7 centimeters and moved into the lymph nodes. Yikes.

It doesn’t matter if you are penniless or a venture capitalist or a doctor. You can still get slammed by the insurance companies.

The real question is “Is this the type of policy that we want our country to support?” There are those on the right who believe that what we have right now is the best that we can do.  (Sarcastic Videos) There are those on the left who are looking for a solution that will help cover the uninsurable. I am with those that believe that health care (not health insurance) is a basic human right.  But I also believe that we as a nation have to stand up and take control of our health care needs.  Health insurance needs to be used as as insurance against large claims, just as we look at car insurance.  It should not be used for small things like checkups or doctor visits.  I favor a high deductible plan that is incorporated with a health care savings program that is tax advantaged.  These products are out there today. I favor the abolishment of pre-existing conditions clauses and recission (the cancelling of policies after a serious illness). I favor the moving of health insurance from the employer to the citizen to make it entirely portable. I favor the creation of a list of conditions, drugs and procedures that will be covered as a mandatory part of the contract, so that the consumer is clear as to their coverage. And I favor the creation of an entity that will provide competition to the existing health insurance industry to lower costs and to provide accountability.  It would have to be non-profit as to not be caught under the same standards as the for-profit companies, but it doesn’t have to be government run.

Look, we don’t have to reinvent the wheel here.  Most other industrialized nations have faced this problem and developed systems that work.  They provide universal coverage and have better medical outcomes than we in the US do.  It is time to solve this mess.

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