Home > Employee Benefits > Health insurance blame game: Instead of attacking each other, let’s attack the problem

Health insurance blame game: Instead of attacking each other, let’s attack the problem

Everyone seems to agree that health insurance premiums are too expensive and that the rate of increase is much too high. But who’s to blame for this? You might hear the buzz about the unhealthy state of the American population and our historic high levels of obesity and diabetes and other chronic health conditions. You might even see a little finger pointing at the drug companies for their huge marketing budgets and direct-to-consumer advertising. But by far, most of the blame is levied on the health insurance companies. But there’s a major piece of the healthcare equation that is missing in most of the dialog; that of the healthcare provider.

We saw this nationally with the recent passage of the PPACA (Patient Protection & Affordable Care Act and the Health Care and Education Affordability Reconciliation Act). Quite a bit of the legislation was geared towards overhauling the insurance industry. Much of this was good and well overdue, but there was very little direct impact to providers (with the possible exception of future diminished Medicare reimbursement levels). Now locally, we are experiencing the same phenomenon with most of the attention surrounding the high cost of healthcare in Massachusetts being cast on the health insurance companies.

There doesn’t seem to be much buzz around the proposed legislation recently approved by the Massachusetts Senate that looks to hospitals and other health care providers to help lower health insurance premiums for small employers. This one time contribution by providers would reduce health insurance premiums for small businesses struggling to keep their employees insured. Senate President Therese Murray filed the bill on May 14th that if approved by the House, would expect to raise $100 million from providers that would pass through health insurers down to small employers in a supposed 2.5% reduction to their health insurance premiums.

The public seems convinced that the business of insurance is inherently greedy, corrupt and downright unscrupulous. This feeling was underscored by the recent initiatives of the Governor to implement a cap on health insurance premiums for small employers. The intent is not in question; who isn’t for reducing premiums to all employers? What is in question is the governmental means and the public rationalization. On what basis can health premium increases be capped at 4.8% when annual medical trend is running closer to 9%? To attack increasing health premiums, you must look at all components of the equation: consumers, covered services, insurers and providers.

With this pending legislation, there is some attention to the part health care providers play in the overall cost of healthcare. But it’s interesting that more attention isn’t being paid to the provider’s part in this? It doesn’t appear that many folks outside the industry are looking at the results of the recently released Massachusetts Attorney Generals office report which investigated the trend and cost drivers of health care costs. It illustrated that costs by hospitals and physicians can vary by as much 200% with no direct correlation to quality.

There is a theory for why the blame of escalating health insurance premiums is placed predominately to the insurance industry. Doctors take an oath to protect us as their patients. We typically have a reverence for the work they do and an expectation that they do it in an almost altruistic manner. The face-to-face relationship we have with our doctors creates a certain type of bond and an expectation that they are looking out for our best interests. We aren’t comfortable with thinking that our doctors work for large companies that rival the “big business” of insurance. But make no mistake, large hospitals and provider groups, regardless of their not-for-profit or for-profit status, are in business to stay in business and to grow. This is certainly evidenced by the dramatic expansion of large hospital providers into the Boston suburbs. Further, the medical community, especially locally, is hyper-competitive. They seek to offer the most cutting-edge services and technologies to combat medical conditions – no one is going to complain about that if they are sick – but the cost of advanced science and the desire for hospital and other provider groups to be the “best in class” are undeniable factors in our spiraling healthcare costs. Other factors include waste in the hospital system and the cost of malpractice insurance. None of these factors get much press, but they are contributors to a nationwide problem. But what is our relationship to the health insurance company? We don’t have a face-to-face interaction with them. Our perception is that they are large, complex organizations that charge increasing amounts of money for what appears to be reduced coverage levels. In short, they are an easy scapegoat.

This phenomenon is enhanced by the fact that until the onset of recent “consumer directed” plans, individuals rarely saw what providers charged for services, while we readily saw the insurance premium contribution coming out of our paychecks each week. This has further removed people from an understanding of health providers as a business and steered our angst towards the insurance companies.

Most everyone seems to agree that we need a solution to increasing health insurance premiums. This potential payment by health providers and the attempt to cap small employer health premiums are short-term initiatives. Let’s hope that as long-term solutions to this problem are formulated, all components of the problem are reviewed and held accountable.

For more information about National Healthcare Reform, check out William Gallagher Associates’ Health Reform Advisory Corner.

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