Wednesday, January 25, 2012
“I will not go back to the days when health insurance companies had unchecked power to cancel your policy, deny you coverage, or charge women differently from men.”
While the President is correct that nobody likes when an insurance company cancels their policy, denies you coverage, or charges women differently from men, there are sometimes legitimate business reasons why this happens. I will use a personal example to explain this. Recently, I applied for a long-term disability policy. The insurance company paid the costs for me to have a physical exam and have routine blood tests. After a few weeks, they sent me a letter saying that they would give me the insurance, but that they would not pay me for any type of disability related to my back since I have a history of low back pain. On the one hand, I was disappointed because I would have preferred a policy without any conditions like this.
On the other hand, I understood the insurance company’s perspective. That is, the insurance company realized that I was at increased risk to claim disability per their statistics because I have a history of low back pain. Low back pain is one of the main reasons people claim disability in the U.S., and many of the cases are exaggerated or malingered. Insurance works when most people paying into the system can reasonably be expected to be healthy because those funds are needed to pay for those who become disabled. If the number of disabled patients outweighs those paying the insurance premium, then the insurance company will lose money. Thus, they seek to identify those at risk before granting coverage and add exceptions to the contract.
In my case, I decided not to accept the deal. It is a free market and I can shop around for different policies. I realize that if I find that an insurance company that is willing to give me a disability policy without any conditions attached that it will cost me more money for the insurance. The reason is because the extra costs helps partly cover the added potential cost that to the insurance company, which is taking a greater risk. Sure, I could demand the government pass a law preventing the insurance company from making such exclusions but if that happened, one needs to realize that the insurance company will likely go out of business one day and people will be left with government run healthcare (see statement three below). While some people think that this is good, it is important to remember that many doctors refuse to take patients with Medicare or Medicaid coverage because the reimbursement is so poor, the system is filled with beaurocracy, and they do not want to take the risk of making an innocent billing mistake yet find themselves charged with fraud. To be fair, many healthcare providers have also begun to refuse to take private insurance because of poor reimbursement, denials, and tedious paperwork, although this is less common.
While it may feel like insurance companies have unchecked power, they actually do not. For example, many people do not realize that when they have a dispute with an insurance company and feel that they have been treated unfairly, they can call their state insurance agency, file a complaint, and unfair decisions and practices can be penalized and/or reversed. The state’s Attorney General’s Office also has the power to investigate insurance companies and apply sanctions against them. On the federal level, The Health and Human Services Department and the Justice Department are another check and balance on insurance companies that can and has been used many times in the past.
The second healthcare statement is the State of the Union speech was:
“Today, the discoveries taking place in our federally-financed labs and universities could lead to new treatments that kill cancer cells but leave healthy ones untouched.”
While this is a true statement, it leaves out that privately financed labs and universities also lead to new treatments to fighting cancer in this manner and in many other ways.
The third statement on healthcare in the State of the Union address last night was:
“That’s why our health care law relies on a reformed private market, not a Government program.”
This was the statement that I found to be most controversial. While it is true that there would be reforms in the private market with Obamacare, these reforms are not unrelated to a government healthcare program. Specifically, under Obamacare millions of citizens would be placed on government-run healthcare. To pay for the system, people who are not insured but refuse to take government-run healthcare will be fined, as will companies who do not provide the government-run healthcare option to their employees. While privately funded healthcare insurances are focused on making a profit (which some see as a bad thing), government run healthcare has no such constraints (although this can also be a bad thing). At a certain point, if a privately run healthcare system runs out of funds to support its beneficiaries, it will need close. For any insurance company to work properly there simply must be more funds coming in than going out. Private insurances cannot continue to function by simply requesting more money from Congress, much like government run healthcare can. This can be viewed as an unfair advantage that government run healthcare has over private insurances. As a result, many private healthcare companies can shut down, resulting in most people being forced to go on government run healthcare.
No matter where you stand on healthcare, expect to see this topic debated significantly during the next election.
Posted by MedFriendly at 5:46 AM