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Healthcare reform for the insured

Posted Oct 02 2009 1:05pm

We've now seen (or at least, heard about) the proposed healthcare reforms from Senator Baucus' finance committee, and all the other proposals from Congress. We've also heard our president's defense of the need for healthcare reform in an address to Congress, and on multiple television appearances.

Although polls indicate there is continued broad support for the need to fix our healthcare system, we've not seen much activism or heard loud support in favor of the proposed reforms. I've been thinking about why there is so little activism in support of healthcare reform, and thought I'd share why that might be in this post.

In previous posts at, I highlighted the three major problems with our healthcare system:

(1) lack of health insurance and limited access to care
(2) healthcare inflation and its impact on our global competitiveness
(3) unfairness and administrative inefficiency

For the purpose of this discussion, I'm going to ignore the serious problems of the uninsured, and also the problems we face if we don't figure out how to get healthcare inflation under control, so I can focus on the third problem. I make the argument that the currently enfranchised - those people with solid health insurance now - should be telling their politicians to fix the system and not give politicians any option to leave our healthcare system as it is.

The sad truth is that those who have health insurance now suffer unfairness and administrative inefficiencies that can have a profound and tragic effect. I believe that the majority of people who have health insurance now do not realize how much they stand to gain from fixes to the system. In fact, the consequences of keeping our current system unchanged are most dire for them. In my opinion, we should all be far more afraid of failure to fix our current system than we are of any of the proposed changes. That is especially true with the current set of reform proposals, because these proposals make the fewest changes possible while taking only partial steps toward solutions of the major problems.

Why those with insurance may fear healthcare reform

Healthcare reform is confusing, and involves changes to a system that many feel works well for them. People who are lucky to have good group coverage (including the majority of those who are employed or retired) are asking what effect the proposed reforms will have for them personally. Will they lose their current benefits? Will the government get between them and their doctor, or worse, dictate who gets care and who does not? Will they lose their ability to make their own choices? What they are hearing and responding to are powerful and frightening messages that play on these concerns and demonize the proposed healthcare reforms. It's no surprise we've seen considerable negative reactions in very public forums.

It's also no surprise that partisan politics drive opposition to proposed reforms, and that the opposition distorts facts to prey upon fears and highly emotional side issues (such as "pulling the plug on grandma", paying for illegal aliens, and allowing abortions). What is surprising is that the opponents of reform have not felt the need to provide alternative solutions to the serious problems we face. It's as if the opposition thinks the current system works well, there is no looming crisis, no threat to our global competitiveness, and it is within the realm of the reasonable to do nothing.

The concerns about proposed reforms are real, but I have to ask, why are people not clamoring loudly for fixes to our healthcare system, and forcing the politicians who oppose the current proposals to offer alternatives? Why are all the critical voices arguing about details and side issues, without any countering discussions and arguments for fixing the fundamental problems? How is it possible that the opponents of the reform proposals can be in opposition without proposing any realistic alternatives that address the problems? How can leaving our system unchanged be a politically viable position?

I suspect that the reason lies largely in the fact that most people do not understand how our healthcare system really works, and haven't experienced for themselves what unnecessary additional suffering our system can cause. The reality is that even if you are well insured, you have good reason to fear the physical, emotional, and financial tragedy that our system can add to your burden should you suffer a serious health problem.

Why you should support fixing our healthcare system

If you have third party private insurance coverage today, here are some real issues that should make you want to stand up and shout for healthcare reform:

You may not be covered now

If you fall ill or develop a chronic medical condition (for example, diabetes and hypertension, or cancer, or heart disease) you may not be covered or able to keep the coverage you have. The problem is that when you develop a significant illness or condition, your insurance company may look for ways to deny you coverage or to cancel or refuse to renew your policy. Did you fail to disclose you had acne in past on your application for insurance? Or did you not list that doctor office visit several years back that they found a record of in the medical insurance bureau files? Both are legitimate reasons to deny you coverage.

You may not be able to afford to continue your healthcare insurance

If you have a private policy and you have an "insured event", you may discover that at renewal time, your rate increases to an unaffordable level. Of course, if you don't pay it, your medical bills will be even more unaffordable. This isn't true for group insurance that you get through your employer, but if you are too sick to work and lose your job, your health insurance will eventually go with it. Health insurance through COBRA is quite expensive, but more important, when COBRA runs out, you end up in the same boat as others who want to continue their private insurance after developing a medical problem.

You may soon lose your employer-sponsored health plan

The current system is becoming so expensive that your current employer may be forced to drop or drastically reduce your health coverage in the future. Will your employer continue health insurance for you when premiums for a family of four, now at $13,000 per year, hit $25,000 in 2018? *

The current payment system is inefficient and unfair

If you haven't been sick, you may not know how much effort it takes to navigate the dozens of billings from the myriad of providers that you won't even know you are responsible to. For example, if you have an injury that requires an admission to the hospital and an operation to clean a wound or set a bone, you may receive separate bills from your primary doctor, the orthopedist, the emergency physician, the anesthesiologist, the radiologist, the pathologist, and the hospital (if you are lucky, the hospital bill not send separate bills for the Xrays or other radiology procedures, the clinical and pathology laboratory testing, and the EKG). And that doesn't even consider all the bills for the outpatient services you may need during recovery (physical therapy, office visits, outpatient Xrays and scans, follow-up lab tests, and so on).

For each and every bill you receive, your insurance company will send you an Explanation of Benefits statement that lists the billed amount, but has different numbers on it for the allowed, covered, paid, copay/deductible, and "patient responsibility" amounts, compared to the bills you receive. It is up to you to reconcile what the insurance company says is left to pay with what your healthcare providers are saying you owe for each and every bill. It is also sad to know that the bills are as high as they are in part because each provider and your insurance company have huge expenses in staff and systems to manage the complexity of the billing and adjudication processes.

We spend over 10% of every healthcare dollar on the administration of the spending of the dollars, and another 20-30% on inefficient, unnecessary or duplicative care. There is more than enough money being spent on healthcare now to provide high level coverage to every citizen, if we could only devise a system that works more efficiently. There are hazards in taking small steps to get across the chasm of major structural reform, but the current healthcare reform proposals are still a step in the right direction.

Tell the politicians they must fix the system

The proposed reforms address in some way all of the above concerns. If you want to fix these problems, you may want to tell your politicians that you are more fearful of leaving the system as it is than of beginning the process of reforming it.

* Congressional Budget Office, “Taxes and Health Insurance,” February 29, 2008.


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