You hate your health insurance company for the same reason you hate your cable company

It’s not all their fault.

According to a recent Harris Poll, health and life insurance companies are among the least-trusted companies in the US. Just 7% of the surveyed 2,250 adults told Harris they trusted their health insurance company, while 10% said the same of life insurance companies…

…The health and life insurance sectors narrowly beat out telemarketing and social media companies, with a 6% approval rating; oil companies with 4%; and tobacco companies with an abysmal 3%.

Insurance Business America, June 16, 2015


I spent four years working at Anthem Blue Cross and Blue Shield, most of which was spent answering calls from members. As the face of the company, I felt that mistrust directed right at me. I was often the bearer of bad news, and people tend to shoot the messenger. And, in a way, that’s also what health insurance companies are: the messengers of bad news about our healthcare system.

(Side note: Please be kind to the people answering the phone. They are at the bottom of the totem pole, and they’re not the ones making the decisions. They have highly stressful jobs, and they’re really trying to help you as much as they possibly can.)

Is that mistrust of the health insurance industry justified? Yes and no.

Running a health insurance company is an endless series of tradeoffs and competing priorities. There’s no way to please all of the people all of the time, and that holds especially true in this industry.

So, here are a few things to consider that you might not have thought about.

1) Health insurance plans and premiums are tightly regulated. Each state has a department of insurance that must approve all health plan premiums based on their actuarial value and claims experience. Setting these amounts is really just a question of math, and that’s why actuaries are so valuable. Not only that, but insurers are required by law to keep a large amount of cash reserves on hand to pay claims. Different insurance companies offer different sets of plans, but the fundamental rules remain the same. And, with the Patient Protection and Affordable Care Act, insurers must pay out at least 80 percent of their premiums out in claims or send their customers a refund for the difference. So, that leaves the other 20 percent for shareholder profits, buildings, technology, marketing, employees, and everything else. Note that these ratios are based on the premiums and claims for an entire group and not just you as an individual.

2) You’re probably not the primary customer. If you have an employer-sponsored health plan, your employer chooses your plan. They have many health plans competing for their business, and one of the primary concerns (if not the primary concern) is price. Health insurers offer a variety of plans that are more and less comprehensive, but employers will understandably gravitate toward plans that cost less. The plans that cost less are going to be less generous with benefits because of what I mentioned before about actuarial value. So, if you are dissatisfied with your benefits, it’s not because the health plan didn’t offer a more generous plan; it’s that your employer didn’t want to pay for it. Even if you buy your own health insurance, you undoubtedly face these same cost pressures and need to strike the right balance between paying premiums and paying potential medical bills that the insurance doesn’t.

3) Your health insurance company is kind of like a TV provider. You have probably seen TV networks or local stations getting dropped from cable (or satellite or streaming) subscriptions or warning you that they are about to be dropped. Ultimately, the TV network is having a contract dispute with the cable provider. In order to keep carrying the channels you want to watch, your cable provider has to pay up to the networks. When contracts are up for renewal, there are often disputes about how much the provider has to pay. And it’s exactly the same thing with health insurance companies getting into contract disputes with physicians and hospitals over reimbursement rates. If the health insurance company has to pay higher reimbursement rates to physicians and hospitals in order to keep them in the network, they have to pass that increased cost along to its customers in terms of premiums. I had to answer a lot of questions about these network disputes with people worrying that their doctor or hospital was about to go out of network, and the only thing I could explain was that they’re having a dispute about money. As long as there are multiple sources of revenue, physicians and hospitals can play them off each other as they seek higher reimbursement rates.

At the top of this post, I said the mistrust wasn’t all their fault. With perhaps a few exceptions, they are following the law, and they have lawyers and compliance officers to make sure of it.

Yet some of the mistrust by consumers is well-deserved, and that mistrust should be directed at their political activities. Private health insurance companies simply can’t fix the medical arms race and skyrocketing reimbursements on their own, and that’s because there are multiple insurers. Health insurance companies spend large amounts of money on lobbying and advertising to resist regulations unfavorable to them or being legislated out of existence altogether.

There is one solution that really can help, and that’s a single-payer system. If the government were the sole source of revenue for healthcare providers, then that would be a monopsony. And monopsony power can drive down costs. They would have to accept what the government reimbursed or stop practicing altogether. (Yes, shortages are a real danger of monopsonies that we would have to consider.)

It’s already rare to hear about providers no longer accepting Medicare, even though the reimbursement is lower than from private insurance, because so many patients are on Medicare. If every patient of every age were on Medicare, then that would decrease physicians’ and hospitals’ leverage even more.

Only a single-payer system can truly address the exorbitant prices for medical services in the USA. Insurers have been unable to contain these costs for the reasons I described earlier, and the result is that even insured patients are paying higher and higher medical bills while their employers pay higher and higher premiums.

Although private insurers aren’t the primary cause of the cost problem, they need to get out of the way of a solution that could really contain costs.

Wait times are still a problem in Canada

Critics of the Canadian health system (particularly from the USA) tend to bring up rationing.

“I’m 59. In either Canada or Great Britain, if I broke my hip, I couldn’t get it replaced.”

Rep. Roy Blunt (R-MO), 8/12/2009

Blunt was pants-on-fire wrong about the Canadian government explicitly denying hip replacements to 59-year-olds.

“At least 63 percent of hip replacements performed in Canada last year and two-thirds of those done in England were on patients age 65 or older. More than 1,200 in Canada were done on people older than 85.”

St. Louis Post-Dispatch, 8/16/2009

But the real problem is how long he would have to wait to get it. An editorial by The Toronto Sun spells out the problem.

One of the reports, by the Canadian Institute for Health Information, found that among other medical procedures, 30% of patients across Canada in 2018 requiring hip or knee replacement, or cataract surgery, did not have their procedures done within recommended wait times.

But that’s only half the story because the recommended wait times for hip and knee replacement are themselves excessive — 182 days or six months — and 112 days or almost four months for cataract surgery.

…In reality, Canada’s health care system could not function without excessive wait times for medically necessary care, as a way of rationing health care to Canadians.

The Toronto Sun, 3/30/2019

According to a Kaiser Family Foundation analysis of OECD data, Canadians spend less than half of what Americans spend per capita in total healthcare costs. And, yes, some of those savings come from reducing the overhead from multiple payers, but some of it is also from rationing.

The Canadian government places limits on the number of medical facilities built in a given area (sort of like certificate-of-need laws in some states), and their ratio of primary care physicians to specialists is much higher than it is in the USA. The Canadian government isn’t so much “pulling the plug on Grandma” (as Senator Chuck Grassley might say) or convening “death panels” (as former Alaska Governor Sarah Palin might say), but they are engaging in implicit rationing.

We Americans ration healthcare too, but we do it based on each individual’s ability to pay the out-of-pocket expenses for a given medical procedure. People with rich health insurance benefits and/or deep pockets get much better access to healthcare than people with fewer resources. So, Rep. Blunt with his excellent benefits could get a much faster hip replacement in the USA than in Canada, but an uninsured or underinsured person might never get it…or go bankrupt.

And affluent people get more medical facilities and physicians closer to them. Just as a real-world example, Exit 210 of Interstate 69 in Fishers, Indiana hosts two competing hospitals within sight of one another…0.9 miles apart. A little to the west in Carmel, those same two hospital chains built hospitals 2.6 miles apart along U.S. 31. Indiana has no certificate-of-need laws, so these two chains are building hospitals so close together — just like a CVS and a Walgreens — because Hamilton County is the richest county in Indiana, and they’re competing for those large private health insurance dollars. There are currently 10 hospitals in Hamilton County, and possibly two more on the way.

Meanwhile, Fayette Regional Health System in rural Connersville, Indiana found itself in bankruptcy in 2018 and nearly closed before being bought out by Reid Hospital, a larger system based in the next county over. It is the only hospital in Fayette County, Indiana. It simply wasn’t bringing in enough revenue from the area’s heavy Medicare and Medicaid populations to stay afloat on its own…something single-payer advocates need to consider.

(Fayette Regional Health System has since been renamed Reid Health Connersville.)

There is no perfect health system. There are always tradeoffs to make. At least in Canada, the misery is spread equally.

Is private health insurance as “beloved” as Trump says?


President Trump is known for bizarre tweets, but this one does Democrats a particularly big favor.

Polling data shows Americans clearly DON’T love private health insurance companies and prefer Medicare.

Only 8% of Medicare beneficiaries 65 or over rated their coverage “fair” or “poor,” the nonprofit Commonwealth Fund found.

By comparison, 20% of those with employer-based coverage gave their insurance plan low marks. And 33% of people who bought insurance on their own reported unhappiness with their coverage.

In fact, trust in private health insurance companies has reached an all-time low.

With premiums and deductibles “far too high” as President Trump said, who wouldn’t want to lose their private health insurance in favor of Medicare?

Indeed, 56 percent of Americans surveyed by the Kaiser Family Foundation would prefer to get their health insurance from the federal government…and government health care has become even more popular with the phrase “Medicare for All” — phrasing that Trump used in his tweet.

Republicans are terrified of the idea of Medicare for All because of the additional tax burden it would create, particularly for their wealthy donors and the damage to private insurance schemes.

But would that be such a big loss? Is Trump saying that the Democrats are threatening us with a good time?

Patently ridiculous: Pharma companies use gimmicks to extend patents almost indefinitely

It has been more than 20 years since Pfizer‘s blockbuster drug Viagra was approved by the Food and Drug Administration to introduce to the U.S. market and even longer since the original patent was granted, yet there are still no generic equivalents available for it.

The original U.S. patent was set to expire in 2012, but Pfizer added a “method-of-use” patent that extended its exclusivity on the drug through this year. (The Canadian government was not having it.)

This is one of many ways pharmaceutical companies game the system to keep generic competition off the market and keep their prices high. Another is with “citizen petitions,” which are, in theory, a way for citizens to raise concerns about pending drug approvals. In reality, 92 percent of citizen petitions are filed by corporations.

These aren’t mere unintended consequences. Rather, they are deliberate measures by the pharmaceutical industry and their extensive campaign finance and lobbying arms to control how the system works. These lobbying efforts are not partisan in nature — they take aim at whichever legislators are expected to assume power after the next election.

Yes, research and development for prescription drugs is very costly, and FDA approvals take years, but Pfizer alone brought in $53 billion in profits in 2018…so I think they are more than recouping their R&D costs.



Democrats hammer Republicans on lawsuit seeking to void Obamacare (without mentioning it by name)

Senators Joe Manchin (D-WV) and Joe Donnelly (D-IN) are in close re-election dogfights in red states, and Republicans recently filed a lawsuit that just might help them keep their jobs.

Manchin’s and Donnelly’s opponents (Patrick Morrisey and Mike Braun, respectively) have voiced their support for a lawsuit filed by 20 Republican state attorneys general seeking to void the entire Patient Protection and Affordable Care Act. The patient protections in the name include prohibiting health insurance companies from discriminating against patients with pre-existing health conditions.

Donnelly and Manchin are calling them out on it without explicitly mentioning PPACA: a law whose actual provisions are popular with voters even though its name and especially its nickname (Obamacare) are not.



GoFundMe CEO: 1/3 of crowdsourcing campaigns are for medical bills

The U.S. healthcare system is so broken and so unaffordable that Americans are turning to crowdsourcing campaigns on websites like GoFundMe to get help paying their medical bills.

GoFundMe CEO Rob Solomon recently told Minnesota Public Radio that 1 out of 3 GoFundMe campaigns are started by people asking for help paying their medical bills and that those campaigns raise more money than any other type of campaign on GoFundMe.




The GOP’s “solution” to the high cost of health insurance is to make health insurance worthless.

Short-term plans can turn away people with preexisting conditions, including asthma and acne. They can charge older or sicker people prohibitively expensive premiums.

Or they can enroll such people at what looks like a bargain-basement price and then refuse to pay for any care related to preexisting illnesses — including illnesses that enrollees didn’t even know they had when they enrolled, such as cancer or heart disease. Some plans have dropped consumers as soon as they got an expensive diagnosis, sticking them with hundreds of thousands of dollars in unexpected medical bills.

Unlike Obamacare plans, short-term plans also are not required to cover any particular benefits, even for the relatively healthy.

A Kaiser Family Foundation review of short-term plans offered around the country found that most did not cover prescription drugs, and none covered maternity care. Preventive and mental-health care are also frequently excluded.

Catherine Rampell, The Washington Post, 8/3/2018

Worse yet, they can throw the markets for real health insurance into chaos.

This parallel system of insurance will siphon off healthier, younger, less expensive people from the exchanges. That will leave behind a pool of sicker, older, more expensive people, which will drive up premiums on the exchanges.

Between this and repealing the individual mandate, Republicans are actively sabotaging Obamacare to make it seem like a failure.

Women are dying needlessly during childbirth in U.S. hospitals

The vast majority of women in America give birth without incident. But each year, more than 50,000 are severely injured. About 700 mothers die. The best estimates say that half of these deaths could be prevented and half the injuries reduced or eliminated with better care.

Instead, the U.S. continues to watch other countries improve as it falls behind. Today, this is the most dangerous place in the developed world to give birth.

USA Today, 7/27/2018

The methods to prevent these deaths are not mysterious, complicated or expensive. They just aren’t being practiced.

Freestanding ERs confuse patients — especially when they get the bill

So, when you think of an emergency room, you probably picture the part of a hospital where ambulances bring people who need immediate, life-saving measures.

You probably don’t picture a small facility in a strip mall “next to a nail place.” That’s something altogether different, isn’t it? Like an urgent care, perhaps.

Not according to the bill.

Freestanding emergency rooms are popping up all over the country. While many of them are operated by hospitals, some are operated by independent companies, including the largest provider, Adeptus Health. Some sticker-shocked patients complained in a lawsuit.

The suit targets Adeptus Health, the largest provider of freestanding ERs in the country, claiming that Adeptus “actively conceals its billing practices” and operates a business model meant to “trick patients into believing that its centers are appropriate for non-emergent care for the purpose of extracting extravagant fees.”

NBC News, 4/25/2017

The lawsuit might be a moot point. According to The Dallas Morning News, Adeptus Health filed for bankruptcy in April. Even without Adeptus Health in the picture, many freestanding emergency rooms will continue to operate.

What about EMTALA?

There’s another significant way in which freestanding emergency rooms can differ from hospital emergency rooms. The federal Emergency Medical Treatment and Labor Act (EMTALA) does not apply to them, meaning federal law doesn’t require them to accept all patients regardless of ability to pay. Some states have passed EMTALA-like laws for freestanding emergency rooms, but some have not.

So, are these facilities really emergency rooms, or are they merely urgent care facilities gouging non-emergent patients with ER-like prices? It’s an important reminder to be really sure about the level of care you are seeking before you receive it…or else you could pay a hefty price.