The Need for Health Reform - Root Causes
Although the chances for passage of a health reform bill have diminished with Scott Brown’s election to the senate, the need for reform is unchanged. Fifty seven million American citizens awake each morning praying that they and their family avoid illness because they do not have health insurance and have no way to pay for it. They know the catastrophe that will befall them if they are injured on the job or have to seek medical care.
There are three major reasons for this dilemma and why health care in America is needed: the conflict of interest in health insurance; the pricing of medicine; and the inverted scheme of physician reimbursement.
It will not possible to control the cost of health care until private insurance companies are controlled. They promote themselves as servicing their customers while disguising their primary allegiance to their Wall Street investors.
Private insurance companies, by definition, have a conflict of interest. Until it is unchallenged, cost containment will be an illusion. The explanation is simple. Private insurers pay out 75 to 80 cents on the dollar while Medicare pays out
95 -97 cents on the dollar to their respective subscribers. Private insurance companies provide 'care' to a pool of healthier and younger subscribers with a 20-25% overhead while Medicare provides care to older patients with more illness with an overhead of less than 5%. No other business could remain solvent if they opted for a 75-cent return in place of 95-cent return on each dollar invested.
The objective of private insurers is making money for Wall Street and their investors from the sale of health insurance policies. If their objective is to maximize profits for Wall Street, they must compromise their payment for service to their subscribers. They face a conflict of interest every time they decide if a claim will be covered. To continue to attract investors their priority must be their fiduciary responsibility. Payments for claims become a direct conflict to this goal - more payments to patients are fewer dividends to investors.
If too many payments are made, there will be less to return to investors. Wall Street will look upon them less favorably and fewer people will invest. Increasing the price of premiums compensate for these losses.
A graduate degree in economics is not required to understand this. Simply stated - if you owe Joe ten dollars and Jane ten dollars but only have twelve dollars in your pocket, you can only pay one in full.
As a primary care physician practicing for 35 years, I have never had Medicare, Medicaid, the Veterans' Administration or any other government organization contradicts my medical decisions, ask me to prescribe this medicine rather than that, or order this test and not that. However, private insurances daily question my judgment. Although the insurers claim these oversights are necessary to control costs, I don’t see patients receive more services. What I do see is regular increases in premiums.
Recently, a patient came to see me with the worst headache he had ever experienced. After obtaining a detailed history and performing a careful general and neurological exam, my primary concern was a cerebral hemorrhage. I asked my secretary to arrange for an emergency MRI scan to be done later that day and had the patient wait until we had a definite time. Fifteen minutes later my secretary interrupted me saying the scan required prior approval and was not sure how long that would take.
Immediately, I called the insurance company. A young voice came answered and began to ask me a series of questions. Had I had examined the patient? Had I taken the patient's blood pressure? I said that I had and that the first concern in my differential diagnosis was a cerebral hemorrhage and that the patients’ headache was the initial symptoms. She paused but still would not authorize.
I then said should the patient suffer the consequences of a cerebral bleed, I would hold her and the insurance company responsible. She transferred my call to the physician reviewer. After asking many of the questions I had already answered, he authorized the scan.
How much of my time did this take? How much risk to the patient was incurred by the delay? How long did my other patients have to wait? I don't know. But I do know that stories like this occur weekly. Less dramatic stories occur daily. The federal government does not control our health system, Wall Street does.
DrF Jan 25, 2010
Cost of Medicine and Physician Re-imbursements to follow later this week.