COMMENTARY

The Ponzi Scheme That Is Health Insurance

Nancy R. Terry

Disclosures

March 12, 2009

"Healthcare reform cannot wait, it must not wait, and it will not wait another year." With those words, President Barack Obama, in his first address to a joint session of Congress, rallied Congress and the American people to tackle the "crushing cost of healthcare." Yet, it remains to be seen whether the President's reform efforts will target one of the most wasteful sectors of healthcare -- the health insurance industry.

Recent postings on Medscape's Physician Connect (MPC), an all-physician discussion board, deride the excesses of health insurance companies and exhort the need to restructure, if not eliminate, the for-profit health insurance industry.

"Commercial, for-profit health insurance is one of the greatest Ponzi schemes ever foisted on the public," says a family medicine physician. "The executives are the ones that benefit to the detriment of everyone else. How else does the president of one of the largest insurance companies get to be a billionaire? By being at the top of the pyramid of companies' and individuals' premium payments."

"The single most important factor in the atrociously high cost of healthcare in the United States is the rapacious, money-hungry insurance companies and their fat cat CEOs," comments an MPC contributor.

"The damage that the insurance companies do is not limited to the salaries of the CEOs," says another contributor. "They waste the time and resources of healthcare workers, institutions, and patients. They are clearly a negative, wasteful element in healthcare today that needs to be heavily regulated, changed, or eliminated."

Physicians point to a number of supposedly routine practices of the health insurance companies that cry out for oversight. One MPC participant remarks that health insurance companies increase their premiums even as they decrease coverage. Another discussant notes that insurers typically burden physicians and patients with filing requirements as part of a strategy to delay or deny legitimate claims. According to one contributor, some companies frequently change their coding schemas to avoid paying legitimate claims. "The insurance companies make billions of dollars in profit each year," says one MPC commentator, "and they do it by limiting care, denying claims, limiting contracts, and limiting reimbursements."

The practice of systematically denying legitimate reimbursement claims by insurance companies has been the focus of an ongoing investigation by New York Attorney General Andrew Cuomo. In January 2009, Cuomo reached an agreement with UnitedHealth Group, Inc. that the insurer would shut down its controversial Ingenix database and pay $50 million to fund a nonprofit, independent database for the purpose of establishing fair compensation rates. The Ingenix database, which was owned by UnitedHealth, served all the major insurers and, according to The Wall Street Journal, skewed downward the "usual and customary" rates of out-of-network insurance reimbursements through "faulty data collection, poor pooling procedures, and lack of audits, thus forcing customers to pay more out of their own pockets for healthcare." In February, WellPoint, Inc., the nation's largest health insurer, agreed to Cuomo's request to pay $10 million to help fund the new database. WellPoint is the sixth insurance company to make such an agreement with Cuomo's office. As quoted by New York Daily News, Cuomo commented on the insurers' use of the Ingenix database, saying, "This is as egregious a situation as I've seen, of a virtual monopoly."

Is health insurance a scam? The 100 MPC postings in response to that question are unanimous in their assertion that the health insurance industry needs reform. Yet, MPC contributors are divided as to the extent and nature of that reform.

"The health insurance system is so profoundly flawed," says one MPC contributor, "that the only solution is a nonprofit, single-payer healthcare system." Other MPC contributors contend that a single-payer system would harbor its own set of problems. Comments a psychiatrist, "I would rather have evil insurance companies than absolute power concentrated in a single agency. If you have a complaint about an insurance company, you can complain to the regulators and drop the insurance. If you have a complaint about the government, you are screwed."

Advocates of a single-payer system singled out Physicians for a National Health Program as a resource outlining the salient features of a single-payer system. Similarly, several advocates for reorganization of the for-profit insurance system directed readers to Real Health Reform, which proposes, among other healthcare reforms, the restructuring of private health insurance into a regulated utility.

Other contributors less concerned about the overall structure of the industry advocate that health insurance coverage should more closely resemble other types of insurance. "When we protect our house and car, the purpose has traditionally been to provide a safety net if the unforeseen happens to us," points out an endocrinologist. "Health insurance is not that way. We have come to expect medical insurance to subsidize ordinary expenses, like our prescriptions and our office visits and any number of interventions that are not in themselves financially devastating, the way an auto collision or a home fire would be." A family medicine physician comments, "Health insurance needs to be made into real insurance that only covers catastrophic events. Then it will be cheaper for everyone."

Evident throughout the postings is a sense of frustration. One participant comments, "The people are not happy with health insurance, the physicians and allied personnel are not happy with health insurance. What is the government waiting for?"

Some MPC contributors refuse to take a wait-and-see attitude. They advocate that physicians who are disgruntled with the health insurance industry should effectively boycott health insurance.

"We need to immediately stop taking all third-party payments," says an MPC contributor.

"Bill patients at the time of service," advises another contributor. "Provide them with the invoice and tell them the truth, the larger truth -- that you, the doctor, are not in the business of bandying about with insurance clerks and petty tyrants whose motivation is nothing but to frustrate payment and cost you valuable time and energy, which is duly relegated to patient care."

"Stop making contracts with HMOs, hospitals, and health insurance," recommends a neurologist. "Return to cash payment. When other doctors see it works for them the way it has for many, guess what? The yoyos who keep your insurance clerk and billing staff on hold for 2 hours asking for notes and records will be collecting pink slips."

But the question remains: will the President's health reform initiative take on the health insurance industry? MPC contributors hope the answer to that question is yes. "Our healthcare system is broken largely due to the insurance companies," comments an MPC contributor. A urologist agrees, "Only through insurance reform can we begin the process of real healthcare reform."

View these and other discussions in Physician Connect (physicians only; click here to learn more).

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