We just got word of a 20 percent increase in our medical insurance premium - following a 25 percent increase last year. For Judy and me that makes it well over $500 per month for a $4,000 deductible major medical policy. If annual raises are that high - or even half that much - how long will it take before the cost of premiums catches up with wages that are increasing at two or three percent annually?
After September 11, insurance rumors rippled across the nation. Skyscrapers would be uninsurable and building insurance premiums everywhere would go up. Is my health insurance premium related to 911? Are companies using that event as an excuse to jack rates across the board?
Let's go back to health insurance, where the local hospital and doctors' offices employ many to deal with paperwork for insurance companies. And where my wife, a counselor in private practice, spends an incredible amount of time filing and re-filing claims and talking on phones with insurance companies.
Wallowa Memorial Hospital warns that there are "millions of plans." Well, maybe not millions, but there are several companies and dozens of plans, and the benefit packages of plan A and plan B are difficult to compare, and chances are that you and I don't understand the fine print of either. We stand by as the hospital bills our companies, which pay some amount according to the provisions of our plans. We accept this, and maybe we are right. Maybe not.
With luck, you are in a group plan, because group plans cover more. This is logical, because unions and school associations and large companies can employ experts who do read and know all of the fine print, and they do deliver a large membership over which to spread the risk. Years ago, a friend of mine in the insurance business was delighted when his wife took a job that got them into a group plan. "I sell the stuff, but I couldn't sell myself an individual policy because of my high blood pressure."
I talked with Larry Davy at the Hospital about insurance problems. He steered away from complaining about the amount of manpower expended tracking claims, and the amounts of deductible and "self-pay" never collected. I thought we might move to a discussion of how closing these loopholes could make Wallowa Memorial financially healthy. Davy wondered instead about how many people don't receive necessary health care - especially preventative care - because they don't have insurance or their plan doesn't cover.
As an example, surgeon Robert Berecz, who will begin practice here in July, told the local Rotary Club last Friday that colonoscopies should be routine preventative procedures for most people over 50. The procedure, which costs from $800-$3,000 depending on practitioners and facilities, is currently not covered under most plans without clear "risk factors."
Who does this serve? You would think that insurance companies would welcome such a measure as a means of paying out less later for colon cancer treatment. You would think that preventative medicine in general would work to the advantage of insurance companies. And you would also think that insurance companies would welcome any way of enrolling the 39 million Americans not currently covered under any insurance plan.
What's going on? The local insurance people I know are helpful and cheerful, if often a little perplexed by the complexities of their products. The concepts of "spreading risk" and "pre-paying" for services I might need later in life make sense. Why the huge raises in premiums and the millions who can't get into the system? Why not more attention to preventative medicine?
It's got to be money. Years ago my brother, now an academic economist, began a nine year executive training program with Hartford Insurance. He lasted nine months, and came away with one nugget of insurance company strategy: the object is to get as much money into the system as cheaply as possible and keep in it the system as long as possible so that it can be used in higher yield investments.
The strategy leads naturally to large bureaucracy, where more people keep turning more wheels that keep more money in the system longer so that other people can work real estate and stocks and bonds and other investment opportunities and thus show a greater return on investment to company executives and stockholders. If you multiply the hundreds of dollars in claims that Judy gets 30 days or 120 days late times thousands, and the thousands of dollars in claims from hospitals and doctors practices times thousands - you get real dollars.
If preventative medicine works, it might actually lower the total amount of money in the system, so the smart insurance company move is to drag heels until forced by government or the public to acknowledge the efficacy of a particular preventative measure like colonoscopy. Those 39 million of Americans without coverage? To an insurance company, they are low pay customers - maybe another government program that will mean some kind of price controls. For the insurance company, it is easier to get more out of existing clients than push in this direction.
When the economy takes a dip and company income from other investments falls, the quickest way to keep the bureaucratic wheels churning is to raise rates with existing customers. And then finance huge ad campaigns and hire major lobbyists who write Kafka-esque rules and regulations that become law, and thus protect the gears of the bureaucracy.
Ask Bill Clinton, who tried to extend coverage to millions and make the whole thing more rational. He could sneak women into the White House and stave off conflict in the Middle East, but the insurance companies chewed him like candy.