Doctor’s Tip: How insurers resist improving health care

Dr. Greg Feinsinger

Dr. Greg Feinsinger
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Let’s set aside the politics of health-care reform and look at the facts. We have by far the most expensive health care system in the world, but we are way down the list of developed countries in health-care outcomes. Furthermore, mistakes in our health-care system result in more than 250,000 deaths annually.

To understand why it’s so hard to fix this broken system, it is necessary to understand what Robert Pearl M.D. calls the four legacy players in his just-published book “Mistreated, Why We think We’re Getting Good Health Care — And Why We’re Usually Wrong.” Pearl is the CEO of the not-for-profit Kaiser Permanente, the largest health care system in the U.S., is on the faculty of the Stanford Medical and Business Schools and has studied other health care systems throughout the world.

Pearl’s four legacy players all benefit financially from the status quo, and therefore resist change. They are: insurance companies; hospitals; pharmaceutical and medical device industries; and medical specialty societies. Today’s column will discuss Dr. Pearl’s insights on the medical insurance industry.

Government and employer-provided medical coverage came about during the 1960s, as part of President Lyndon Johnson’s Great Society agenda. At the time, many elderly people in America couldn’t afford adequate medical care, nor could younger poor people. Medicare was legislated to cover Americans over 65 and Medicaid to cover Americans with extremely low incomes. Tax breaks were instituted to encourage private businesses to provide medical coverage for their employees. I love my Medicare and don’t think I have ever talked to a patient or friend who wasn’t happy with their Medicare or Medicaid coverage, but people complain all the time about private insurance.

Why do we need private medical insurance companies? Many of us physicians believe that the only solution to our medical system’s woes is a universal, single-payer health care system or “Medicare for All.” Not only would every citizen of the U.S. be covered, but we feel that this is the only way to improve quality of care, prevent iatrogenic (doctor-caused) deaths and bring costs down.

Here are some other problems with private insurance:

Dealing with Medicare and Medicaid is relatively simple for medical offices, although Medicaid doesn’t pay very well. Dealing with multiple private insurance companies, all with different rules and forms, contributes significantly to office overhead.

Insurance companies see their job not as improving our health but as improving their bottom line, making CEOs rich and investors happy.

The medical loss ratio (MLR) is the ratio of an insurer’s premium spent on direct patient care and quality improvement, versus administrative overhead and profit. Insurance companies’ bottom line is better if the MLR is low, meaning spending as little as possible on direct patient care.

The Affordable Care Act addressed this problem by mandating that insurance companies had to spend at least 85 percent of money from premiums on direct medical care. Prior to the ACA insurers would cherry-pick enrollees, meaning that they would deny insurance to sick people with pre-existing conditions, but this was prohibited under the ACA.

To try to improve their bottom line after the ACA, health insurers started offering “narrow networks,” trading lower premiums for a reduced choice of providers. This strategy resulted in patients getting bills from, say, anesthesiologists and radiologists who weren’t in-network even though the hospital and surgeon were, and patients weren’t warned beforehand. Furthermore, under these narrow networks, insurance companies chose the least expensive providers rather than the best ones.

The latest insurance industry solution to financial concerns are mergers. The “big five” want to become the “big three.” This was prevented by the Obama administration, but nobody knows what will happen under the current administration.

The bottom line is this, according to Dr. Pearl: “When insurance companies earn huge profits and when executive take-home salaries exceed $15 million a year, they don’t see the current health-care system as broken. The same is true for the politicians who received $152 million in annual campaign contributions from the insurance industry during the most recent election cycle.”

This begs the question: Why do we need private medical insurance companies? Many of us physicians, although certainly not all (remember that physician specialty societies are one of the four legacy players benefiting from the status quo), believe that the only solution to our medical system’s woes is a universal, single-payer health care system or “Medicare for All.” Not only would every citizen of the U.S. be covered, but we feel that this is the only way to improve quality of care, prevent iatrogenic (doctor-caused) deaths and bring costs down.

Starting 50 years ago, countries in Europe, Canada and Australia developed universal health care systems. In some of these countries, such as England and Canada, the government controls both the financing and certain parts of health care delivery. In others, such as Australia, Sweden and Germany, medical care is publicly funded but mainly privately delivered.

Pearl spent six months in Canada working in a university hospital, and for a decade Kaiser Permanente has collaborated with the British National Health System on best practices for outpatient and hospital care. He has also spent time in Sweden and Australia, studying their systems. He notes that in each location, overwhelmingly the citizens “appreciated the financial security of government-provided health care coverage. In exchange, they were willing to tolerate limitations in their choice of doctors and frequent delays for routine care” — and I would add higher taxes. (Note that there are no delays in these countries for urgent care.)

The U.S. is the richest country in the world, but the only one that doesn’t perceive medical care as a basic human right. In the countries with universal health care, satisfaction with their national health systems is 85-90 percent, much higher than the satisfaction rate in the U.S. And their health-care outcomes are much better. Furthermore, why should we saddle business with provision of health care when it should be a societal obligation?

Next week’s column will discuss legacy player No. 2: hospitals.

Dr. Feinsinger, who retired from Glenwood Medical Associates after 42 years of family practice, now has a nonprofit Center For Prevention and Treatment of Disease Through Nutrition. Call 379-5718 for an appointment for a free consultation. He also does a free power point presentation at 7 p.m. the first Monday of every month at the Third Street Center in Carbondale, and is involved with a plant-based potluck at 6:30 p.m. at the TSC every fourth Monday.

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