Note: This is an archived post from 2009; many things have changed since I originally wrote this, including my place of employment.

Like many Americans, I have been paying very close attention to the news about the health reform debate happening on Capitol Hill and across America. As a WellPoint employee, I have also been paying very close attention to my company’s efforts to frame the debate. The Bill of Rights guarantees freedom of speech, and WellPoint has every right to make its case to Congress and to the American people (as do WellPoint’s opponents).

I must give the leadership at my company (WellPoint) its due credit for offering an alternative solution to what President Obama and congressional Democrats have proposed, although I am disappointed not many of these ideas surfaced during the previous administration, which was much friendlier to health insurance companies. I suppose a Democratic administration has lit a fire under private insurance companies to offer an alternative solution over the status quo.

From a sheer public policy perspective, WellPoint is correct to point out that sustainable health reform must include savings in the health care delivery system, not just a shift in who pays for health care. Regardless of who is paying for the waste and extravagance in our health care system, the root costs are spiraling out of control. Americans pay significantly more for our health care than do our counterparts in other industrialized nations, regardless of whether the cost is paid to private health insurers or to the government through taxes.

However, in my customer service role I have become acutely aware of Americans’ mistrust of insurance companies to reform the health system. According to a Gallup poll, Americans surveyed claimed they trusted President Obama (58 percent) and congressional Democrats (42 percent) more than insurance companies (35 percent) and congressional Republicans (34 percent) to reform the health care system. If the private health insurance companies are willing and able to really fix the problem for all Americans – not just the healthy ones – then more power to them. I just want the problems solved, and I am not that ideological as to who solves them.

Why do Americans mistrust insurance companies despite their proposals to reform the system? The market, after all, requires decision makers at private insurance companies like WellPoint to be accountable to shareholders first. Of course it can be argued that satisfying members will increase profits by preventing them from jumping ship, but since insurance companies are exempt from antitrust laws and many people get their health insurance at work, many patients find themselves without other options even when they are dissatisfied. So even though premiums are rising, policies are leaving patients with higher out-of-pocket costs and increased restrictions. For example, many medical policies don’t cover wisdom tooth extractions (and neither do many dental policies). Bariatric surgery is a common exclusion. Go to an in-network hospital and encounter an out-of-network doctor along the way, and you can end up with a huge unexpected bill.

When the real customer is the employer group, the insurance company is incented to make benefits leaner in order to bid down premiums. Insurance companies, by definition, profit by taking in more in premiums than they spend in claims and administrative costs. And if the insurance companies really want healthier people to purchase insurance in the individual market (instead of just the sickest people), it should be obvious that it’s difficult for a healthy family to justify paying premiums every month on a policy with a $10,000 deductible that offers little tangible benefit for them.

In large part because policies are becoming increasingly restrictive with higher out-of-pocket costs, medical bankruptcies are on the rise even among the insured. A recent study that appeared in the August 2009 edition of The American Journal of Medicine found that, among people who filed for bankruptcy due to medical bills (medical bills were involved in 62 percent of 2007 bankruptcy filings), three out of four had health insurance. That is, of all of the bankruptcies filed in the United States in 2007, 47 percent were the result of medical bills that people incurred even though they had health insurance. The fact that so many people who have been responsible and bought health insurance have gone bankrupt over medical bills is unacceptable.

People who have private health insurance are sometimes lulled into a false sense of security – blindsided by medical bills that they believed would be paid by their health insurance plan. On a daily basis, I speak with people who find themselves in just that predicament. To make matters worse, even when conscientious patients try to understand out-of-pocket costs before they have medical services performed, it is often difficult or impossible for them to find out due to complex contractual arrangements and the unpredictability inherent in health care.

So if WellPoint’s goal is simply to have the government require everyone to purchase private health insurance, too many people will still go bankrupt from medical bills unless many other things change as well. Insuring everyone is a noble goal, but the insurance policies that everyone gets under any health reform plan must be worth the paper they are printed on. The Republican Party’s proposals that allow people to purchase insurance across state lines gloss over the concept that many of the state regulations were put in place to protect consumers from increasingly restrictive insurance policies. And my own Democratic Party’s efforts at reform are incomplete because they don’t do enough to deal with underlying costs (I am particularly disappointed in the Democrats’ unwillingness to pursue medical malpractice reform). To achieve meaningful reform, we should consider the following goals:

• Insist on universal coverage. Anything less than 100% coverage is unacceptable because providers will continue to have high levels of uncertainty about receiving payment. American providers must invest far more in administrative costs than their counterparts in other industrialized nations to collect compensation for their services, and these collection efforts increase costs. Because not everyone can afford to purchase health insurance, the government should either provide it or provide subsidies that enable them to purchase it for themselves. Coverage must be universal and not optional – and the penalties for not carrying it should be substantial (after all, if the government is subsidizing your health insurance, you have no excuse not to carry it).

• Account for the sick as well as the healthy. One of the key sticking points about health reform is what to do about people with pre-existing conditions. Insurance companies have been denying them coverage. Even less healthy people who are eligible for coverage are subject to dramatically higher premiums than their healthy counterparts. One proposed solution to this problem is to ban medical underwriting and treat people the same, regardless of health. Another solution may be to base government subsidies not only on income but also on premium rating status. Two people with similar incomes might have to pay very different premiums for health insurance.

• Pay for performance, not procedures. This includes medical malpractice reform, but it also includes some of the positive things WellPoint is doing to eliminate unnecessary procedures. In-network providers who bill for unnecessary procedures are required to write off the charges, and some often-abused tests such as MRIs and CT scans require precertification. This is a critically important step that the government should consider for its members as well (Medicare and Medicaid), but too often insured patients are still caught in the middle and find themselves with unexpected bills.

• Make health insurance coverage more meaningful. Regulations must eliminate many of the payment gaps that lead to bankruptcies and uncompensated care. Unfortunately WellPoint’s views are completely at odds with this – in order to keep premiums down, WellPoint wants to be able to sell policies with higher and higher deductibles, increased restrictions and larger loopholes that leave members more vulnerable to financial ruin. Combined with its opposition to guaranteed issue, this more or less allows private insurers to collect premiums and pay out virtually nothing for claims…which, of course, increases profits for private insurers but leaves patients susceptible to thousands of dollars in medical bills. Such free wheeling might be acceptable in an individual health insurance market where patients can choose an insurance company on the basis of what its plans pay for, but in the employer market, the only thing that seems to matter are the premiums.

• Expand the use of health information technology. Health IT can be used to not only improve recordkeeping but also improve price transparency. Of course the benefits of portable electronic medical records are many and obvious, but we cannot expect people to behave as good health care consumers if they don’t know how much procedures cost until after the fact. I take calls from people every day who want to know how exactly much they can expect to pay for services, but I am often unable to give that information.

• Encourage people to be smart health care consumers. Consumer-directed health plans are an idea whose time has come. When patients are exposed to the true cost of medical services, they will inevitably be more judicious about using them. However, there are often large gaps between the amount deposited in a reimbursement account or HSA (if any) and the member’s traditional health coverage, leaving members feeling as if they are essentially uninsured. This also leads to increased levels of uncompensated care. So for these plans to be truly valuable, the government should consider a requirement to keep the account funded at least at some minimal level so that providers do not go uncompensated for their services and members are prepared for out-of-pocket expenses. These plans can be very effective at reducing costs as long as they are not misused by employers as a way to give lip service to providing health coverage while leaving their employees vulnerable to devastating liabilities and pocketing the difference. A $5,000 deductible might not seem like a lot to a wealthy person, but that same amount of money may be the difference between making ends meet and filing for bankruptcy for low- and middle-income families.

If we want the private insurance industry to survive at all in this political environment, we as insurance carriers must do a better job of protecting the financial health of our patients, not just the financial health of our company. We must do a better job than we have done of earning our members’ trust and behaving every day with their interests at the forefront. Patients are voters too, and during the last two national elections (2006 and 2008), voters have voiced their frustration with the current system at the polls by electing candidates who promised radical changes. The more financial hardship patients face as a result of medical expenses, the more attractive other nations’ health care systems sound to the general populace.