One of my favorite health blogs is written by a retired cardiologist who calls himself Dr Rich. Cardiologists have a thing about that. One of the cardiologists in Irvine, a few years ago as stent and angioplasty technology took off, said his life’s ambition was to drive a Mercedes and to see cardiac surgeons driving Chevys. Anyway, Dr Rich has many excellent insights into health care reform, although he expresses them in a facetious way many times. Here is what he has to say about the current state of health reform.
DrRich is pleased to note that events have so quickly confirmed the explanation he gave, in his last post, regarding what the health insurance companies are up to by choosing to massively increase insurance premiums at this critical juncture. The insurance companies, to repeat, are willfully embracing their assigned role as “villain,” in order to get apparently stalled healthcare reforms back on track.
A mere few hours after DrRich had posted, Kathleen Sibelius issued a press release angrily documenting several additional requests for large rate increases by health insurance companies all across the land, and pointedly reminding us regular folks that healthcare reform would prevent these greedy companies from committing such abusive and harmful acts. And thus has the administration now officially established runaway health insurance premiums as the crisis of the moment.
The health insurance companies are firmly behind the Obama “reform” bill as the mandate and the administration’s plan to make them public utilities, is their own ambition.
So, dear readers, once again the health insurance industry has handed reformers a fine new crisis, just when they needed it, in order to get faltering healthcare reform back on track.
He doesn’t think much of Republicans but then I have my doubts, as well.
Republicans (who are certifiably clueless) must be wondering why their stalwart allies in the health insurance industry are once again stabbing them in the back. Of course, Republicans have not understood the health insurance industry for several years now. They certainly don’t understand that the insurance industry absolutely relies on healthcare reform to bail them out of their failed business model.
In fact, DrRich suspects that (despite this latest evidence) these unfortunate Republicans are heading into President Obama’s Health Care Summit on Thursday with the very same plan they’ve had all along – to set things up so that health insurance companies can compete with each other more robustly (across state lines, &c.), since, don’t you know, such competition will create the efficiencies we need to bring down the cost of healthcare.
This is truly a crazy idea.
Competition is the last thing health insurance companies want. Now comes a story that I had not heard before.
Consider, for those who have forgotten, the sad experience of Mr. Jim Clark, one of the founders of WebMD. Clark, widely acknowledged in the 1990s as one of the first Internet visionaries (having started – and sold – both Silicon Graphics and Netscape), originally envisioned WebMD as an electronic clearing house that would streamline various complex transactions within the healthcare system. Companies would sign up for WebMD’s transactional processing services and save millions; WebMD would take their cut; everybody would be happy.
The first big target for WebMD was to be health insurance claims processing.
Clark’s proposition to the health insurance companies seemed solid. In fact, it was obviously too good to pass up. Whereas processing a typical claim costs an insurance company $7.00, WebMD offered to do it for only $0.70 – a savings of 90%. Since the big insurers process multiple millions of claims each month, their potential savings would be colossal. This business model seemed compelling, and indeed, it was this very proposition that attracted most of the original investment capital that got WebMD started in the late 1990s.
But by early 2000, it became obvious that the insurance companies simply refused to play with WebMD, despite the astounding savings they stood to gain. WebMD – which for a long time refused to believe that actual businesspersons would act in a way so obviously counterproductive to their own interests – was eventually compelled to move on to different (far less lucrative) pastures. And to this day, the handling of insurance claims transactions remains, well, inefficient.
I have known for a long time that health insurance companies prefer the role of “administrative service organizations.” That means they process claims for self funding employers. They would be happy to play that role for a government funded health plan. The insurance model for health care, meaning collecting premiums and paying claims out of premium investment earnings, has not worked for years. What we have evolved in this country is a prepaid model for health care, not an insurance model. The only way the insurance model can work is to go back to insurable events, like heart attacks and strokes and cancer, as the basis of claims and pay routine care costs out of pocket. That is the HSA model. It suffers right now from the inflation of fees that are then discounted by insurance companies and Medicare. The cash purchaser of health care is at a tremendous disadvantage and doctors and hospitals can be punished, or even prosecuted, for giving cash discounts.
Read the rest of Dr Rich’s essay. I don’t know that I agree with him on delay in paying claims as a major part of the business model but he is correct about much of the story.
Tags: health care, politics
Michael Moore is right in terms of what he is saying. Obama needs to get his actions through, he is the boss, and his ideas WILL work. Health Care like Obama’s works well most places in the world where similar legislation is performed. People need to stop bashing on Obama, he is an intelligent man and will be great for this country if bipartisanship is reached.
I have left your comments although I have suspected they might be spam. There is no health care like Obama’s anywhere in the world and if you are in the business, you should know that. You do make one point, though. The insurance companies are NOT opposed to the Obamacare bill. The riff he is on about health insurance companies is BS and you help to show that.