Dr Rick

Health insurance companies, of which most I am not particularly fond, have taken some huge financial losses over the past few years.

"Managed care" was horribly mismanaged in the past ten years, and we are now all paying the price.

Apparently thinking that the healthcare industry could be run like any other consumer-orientd business such as Wal-Mart or Ford. insurance managers and CEOS thought that they could keep a lid on the upward-spiraling cost of healthcare through capitation and seemingly bargain puchases of many heathcare facilites and practices. Their swell cost-saving system in place, they then went into bidding wars, selling coverage in the mid to late 90's for too little, having calculated that their plans would reap big cost savings later as they captured ever larger shares of the market.

They tried to"incentivise" providers and hospitals with complex profit sharing schemes, thinking that doctors could be bribed into limiting care

It didn't happen that way. Doctors are shitty business managers, and sick people aren't interested in saving money on their care. Healthcare is not driven by typical market forces, and when you remover the consumer from direct purchase decisions and consequences, as employer-based coverage does, you remove the primary motivation for effeciency. Every American wants "the best" in healthcare, often confusing the best with the newest and most expensive. Ten years ago, a simple sprain was x-rayed and then wrapped; today the same sprain is often x-rayed, MRI'd, and then wrapped, a process that typically has the exact same outcome but at several times the cost. New drugs cost much more than their predeccesors, and attempts to restrict their access by the insurance companies through formularies and pre-authorizations have only increased administrative costs, not kept the lid on drug costs.

Attempts to limit the re-imbursement of providers and hospitals were similarly succesful; in the past 24 months, some 300 community-based hospitals have gone bankrupt and closed their doors forever, sometimes leaving entire communities with no in-patient facilities. Hundreds of medical practices have gone bankrupt, unable to pay their employees or electric bills after signing contracts that they didn't well-consider, leaving them practicing medicine at a loss or sometimes holding huge and worthless accounts-receivables from insurance companies that went under. The crisis is now so bad in California that fully one-third of MDs practicng there in a recent poll plan to leave the state or retire within 36 months for economic reasons.

While ther insurance companies were busy selling their wares to a gullible public and government, claiming they were saving money in a tide of red-ink, they were investing heavily in the great stock market bubble of the last decade, and when it burst, so did their financial solvency.

This is why some of you are now seeing insurance premium increases of up to 50% this year; after blowing it so badly with their mismanagement, insurance companies are having to make-up for heavy losses. While the cost of healthcare went-up 35% in the last three years, insurance premiums did not keep pace and now they are playing catch-up or going belly-up.

It's only going to get worse. With the economy sputtering and healthcare costs rising, employers are now dropping thousands of enrollees from health insurance each day. The number of uninsured in the US now stands at around 45 million, and rising each day. These people still get sick, and so their healthcare costs are shifted to the remaining insureds or the government.

Rick

auto-da-fe

Dr. Rick, I'm sorry but I need cites that are going to convince me that poorly managed health care companies contribute to more hospital and office closings, along with dr. retirements or moving to other states, than do the rising costs of malpractice insurance. MI is most commonly associated with dr.s refusing to take on new patients (especially ob's), and the rising cost of MI is directly linked to the increase in jackpot juries and false malpractice suits that aren't thrown out of court like they should be or given hugely obscene amounts of money instead of the amount that should have been giving.

Dr Rick

MegaDave, what percentage of this nation's healthcare costs do you figure goes to malpractice costs? Just how much do you think we would save with tort reform, such as the proposed 250K federal cap on pain and suffering?

"According to a California Medical Association survey a year ago, 43 percent of doctors said they planned to leave medicine within three years, citing low reimbursements, managed care hassles and government regulations."

Rick

twisted brother

You make it sound as if the entire insurance industry is about to go under.
I have seen financials and talked to the auditors. It is not so.
They were very poorly run and made some horrible business decisions, and have hurt healthcare as you point out,
but just as MegaDave pointed out, they have diversified. They may not be as filthy swimming in loot at they were during the bubble, but they are not ready to close up shop.
Why have things not changed? Because big money political donations speak much more loudly than grassroots action, and much faster.

I also disagree with the statement:
Many of those poor saps end up paying huge medical bills forthe rest of their miserable lives. MegaDave is obviously a corporate apologist, but have you never heard of people paying their bills?

MegaDave: If everyone were really tired of the exhorbitant awards, why do juries still award them? If you believe you are smacking me in the face and it hurts, and I don't say anything, is it possible I don't mind the pain? Maybe huge awards are a form of giving power back to the populace. Maybe huge awards are a message to the corporations, rather than a scheme by lawyers.

Dr Rick

It's not just the insurance companies; the entire healthcare field is going to collapse/implode/whatever without serious reform soon.

As many as 53.7 million Americans will be without health insurance by 2006 unless there is major, comprehensive reform of the nation’s health care system, according to a report by the National Coalition on Health Care (NCHC).... average annual premium for employer-sponsored family health coverage by 2006 will be $14,545.

It will double above that amount just a few years later if current trends continue.

If the average employee, who earns about $36k, has to have more than one-third of that again for medical benefits in just 3 years, and then over two-thirds of that amount again in a decade, how will the average employee or their employer afford it?

As a governing officer of our IPA, a member of the board of our county medical society, a former chief of medicine at a 400 bed hospital, and a former clinical professor, I've seen and talked to some people, too.

Tell me, do you know what percentage of medical care in this country goes directly unre-imbursed?

Rick

Loren Pechtel

MI is a *BIG* deal for those in the high risk areas (obstetrics and anethesia are the two biggies that come to mind.) but not that big a problem for the doctors who aren't in the lawyer's sights.

Locally, Medicaid slashed reimbursements for many pediatric surgical procedures--and now are busy denying that care will suffer with most of the relevant doctors not taking any new Medicaid patients. Medicaid can get away with more such unreasonableness (Tennessee? comes to mind: The reimbursement for a series of well-baby visits was only a few dollars over the cost of the vaccines the doctor would have to provide as part of those visits.) than the insurance companies but they do the same sort of thing.

BioBeing

Which would be enough for what, 45 days in hospital? Seem to recall my wifes hospital bills were about $2000 a day when she was having our children. Of course, that precludes any actual Doctors fees, anesthatists, medicine etc.

I would guess that the uncle mentioned in earlier posts did NOT have a wife and kids.

Loren Pechtel

Originally posted by twisted brother
but just as MegaDave pointed out, they have diversified. They may not be as filthy swimming in loot at they were during the bubble, but they are not ready to close up shop.

Hint: If they are ok because they have diversified then that means the original core is ripe for getting the axe because it's losing money.

Consider: What caused the extreme spike in malpractice premiums? The biggie in the business decided it wasn't economic and quit.

I also disagree with the statement:
Many of those poor saps end up paying huge medical bills forthe rest of their miserable lives. MegaDave is obviously a corporate apologist, but have you never heard of people paying their bills?

Ever hear of bankruptcy?

MegaDave: If everyone were really tired of the exhorbitant awards, why do juries still award them?

Because juries are generally made up of below-average people who don't realize the harm they are causing.

Maybe huge awards are a message to the corporations, rather than a scheme by lawyers.

Well, locally the number of cases started shooting up when California cracked down--and the lawyers moved here. That sounds lawyer driven, not act driven.

auto-da-fe

Dr. Rick, I was unaware of your qualifications. If you have the credentials above then I would most certainly say that I will defer to you on this. As a member of the insurance community, I have followed the MI debate and tort reform closely, and from the reports I have read, it may sometimes seem as if MI lawsuites are going to be the downfall of the medical industry.

I am pragmatic enough to say that you probably have much more hands-on experience than I do though, however, I had no idea it was such a problem as you state. I do however agree that insurance premiums (for major medical anyway) have been going up very quickly, however, there are alternatives to HMO's. I only mention this because the premiums for HMO's go up at a higher rate than say a PPO, but the tradeoff is that instead of just a co-payment, you may have to pay co-insurance of say 20% or more depending on your plan.

What are your opinions on how we can change this situation? If the insurance companies put a cap on premiums, then there is the chance that somewhere down the line (how far down the line depends on how high the cap is) they are going to start loosing money, and fast. If that happens companies will soon be going out of business, or like my company, stop selling major medical. Unlike other types of insurance, there generally aren't any long term contracts. Most major medical policies are only for one year, and there are no DOI regulations that prevents a company from just basically saying we don't feel like insuring you anymore.

Are you in favor of say Canada's health insurance policies? The government pretty much takes care of everything, although you can still generally buy supplemental policies. If we do go to Canada's way, how shall the government pay for it? I only ask because I am genuinly interested in your opinions on it, as it sounds as if you have given it a great deal of thought.

Godless Dave

Wow, great discussion! The OP was basically me complaining (I forgot my II rule: never post angry or sober). This really interests me, as I see health care costs being one of the biggest drags on our economy right now. Great to get Dr. Rick's and MegaDave's perspectives from inside the industry.

I already stated they decided to cover it. The fact that I had tried Claritin before and didn't like the results apparently was a good enough reason. I guess what cheesed me off about having to get a preauthorization is that the doctor who prescribed it works for a clinic that's owned by my insurance company. I wonder what would have happened if I had tried to fill it in their on-site pharmacy instead of the one I usually go to?

For the sake of clarification, I would like to state that my HMO is a non-profit. Under Minnesota law non-profits are the only health insurance companies allowed to operate here.