Group health insurance - the kind of plan you used to have through an employer or other organization - used to come from insurance companies. The insurance company didn't work for the health care system. It did not contract with the health care system. The insurance company audited medical bills, and negotiated with hospitals on behalf of the insured individual, as it had a stake in cost containment. Audits spotted double charges, overcharges, fraudulent charges, etc.
Group insurance plans used to be affordable, and covered almost everything that wasn't considered "experimental" in nature. You could afford a plan with a $100 deductible and 10% to 20% copayment. You could see your family doctor down the street, or see a specialist at Mayo Clinic, and your policy covered it. The insurance company had no interest in any health care facility or physician group or laboratory. They all got the same treatment.
Your policy was a contract between you and the insurance company. It was not designed to pay providers, but to indemnify you in case of a loss. You were the customer. You were the one they had a contractual interest in.
That was then. This is now.
Every day lately, I read and hear things about the evil insurance companies and how they are responsible for driving up health care costs. As someone who spent over sixteen years in the insurance industry - many of those years in the Group Health Insurance division of CNA Insurance and two other large, multiline carriers, from claims to contracts to sales to process reengineering - I wasn't buying this story of blame.
In the few discussions I've entered on this topic, I came to realize that since I'd left the insurance industry in 1997, something major had happened to health care insurance. Why is everyone blaming insurance for the rise of health care costs? What's this about profits? Profits?
Before I left the health division for process projects in casualty and commercial lines, the bug-a-boo was HIPAA and how to implement it. Before I left, all health insurers were struggling to underwrite plans that could keep up with medical inflation and increased utilization. It was becoming more difficult each year to underwrite a group plan that would be both affordable to the customer and employees and not make us lose money.
Toward the end, the idea was that even "break even" would be acceptable in order to allow the company to retain the life insurance business or other lines of business with the customer that were more stable and profitable. But year after year, health insurance was a loser. This led to a spiral of other problems such as renogotiation of reinsurance (stop-loss) coverage, major reengineering projects that automated claims and forms and laid off people, etc., in order for us to cut admin costs to minimum and be able to compete.
Back to today. So, tired of arguing with people and hearing myself come off as the great defender of big corporate insurance bad guys, I did a bit of research. I found out that all of the most competitive insurers of the 80's and 90's are out of the business altogether.
The company I worked for the longest? CNA?
Got out of the health insurance business.
http://www.answers.com/...
On January 1, 2004, CNA sold its Group Benefits division to The
Hartford, based in Hartford, Connecticut. The Hartford merged its
new purchase with its own Group Benefits Division. With the sale of
this division came the end of CNA's long history as a multi line
insurer.
Wow! I feel kind of sentimental about that. And more. So what happened to Hartford, then?
The only health product they offer appears to be a medicare supplement plan. They stopped selling reinsurance in 2007.
http://groupbenefits.thehartford.com/
Medical Stop Loss
On April 3, 2007, we completed the sale of our medical stop loss
insurance business to National Benefit Resources, Inc.
It goes on an on. Liberty Mutual and Traveler's were big competitors, and it appears that they got out of the business, too. Cigna and Aetna don't appear to be offering group health insurance anymore, but modified PPO kinds of contracts and claims processing services.
In short: Insurance is out of the group health insurance business. They bailed out. I know what happened to them. They simply couldn't afford to insure health care anymore. With up to double-digit inflation in health care each year and the technology boom and subsequent increased utilization, eventually group health insurance would have brought the house down. The insurance companies did what they needed to do to survive - they dumped the entire line of business.
What is left appear to be abominations of what started out as HMO's. These companies are out for profit, and they aren't insurance companies (except for the blues, arguably). They appear to be part of the health care industry itself. Kaiser and Humana are well known health care companies, and they are writing health care plans and selling them to employers?
I'm just starting to research how these companies are operating. The only way it makes sense to blame so-called "insurance companies" for an increase in health care costs (otherwise putting the cart before the horse) is to assume that some of them are in the business themselves. Insurance companies never were part of the health care industry.
We were much better off when insurance companies and the health care industry were separate entities in our financial lives. Now, essentially, some of the same people who sell you a box of Kleenex for $139 and call it "mucous recovery system" are the same people collecting your premiums and "insuring" your health. There is no push-back from insurance companies to health care providers anymore. That was a buffer against waste and fraud we used to have that is gone.
I think it's disgusting. But I suppose it's all there is until universal health care. I have discovered that over the past several years health care became even more privatized than it was before. McCain was fully prepared to take it to the next level - big profits for the health care industry (and its contractors) and most people over 40 unable to afford coverage. Rupublican plutocracy realized.
We should be angry. But not at "insurance companies". They are out of the picture. You don't have group health insurance anymore; it doesn't exist.
So can we stop blaming "insurance companies" and take a really good look at the critters who are masquerading as insurance companies. And can we call them what they are? Something more distinct? They are part of the health care industry, either outright or by contract. I believe that by mis-labeling these health care companies we draw attention away from one of the biggest problems with the US health care system as it is today.
Something must be done about medical inflation globally, or not only will medicare and medicaid be unsustainable, but also universal coverage that we want and need so badly.
Here's some wisdom:
http://healthcare.zdnet.com/...
The real ceiling on health care costs is, as with mortgages, whether they can be borne. Health care is a huge issue in the U.S.because our national health care mortgage is sub-prime. It's escalating and we don't have the money for it. - Dana Blankenhorn
I welcome any references to literature on what has happened over the past decade because I am finding very little in my Googling. From my current perspective, the health care industry has silently pushed the insurance industry out of the picture and has thus become even more powerful than I think most people realize.
Silently, hideously. While I was off having another career and not paying attention.