Americans need health care but are forced to deal with a convoluted system designed to fail them.
For the millions of Americans who do not receive medical coverage from their Employer Sponsored Insurance (ESI), finding something that works tends to be a nightmare. In spite of the Affordable Care Act (ACA), whose provisions went into effect in 2014, more than 28 million people were not insured in 2015. A study by Kaiser Family Foundation (KFF) will corroborate the fact that between 2013 and 2015, the number of uninsured people went down, while the number insured through a non-group coverage went up proportionately. During the period of study, the number of Americans receiving medical coverage through ESI stayed at around 50%, those receiving Medicare at 14% and Medicaid at 20%.
Everyone understands America’s health care system has issues. However, with the majority of Americans having little incentive to fix it, the plight of the 16% comprising the uninsured and those seeking non-group coverage has not changed much, even with ACA.
Affordable Care Act: Flawed, But Redeemable?
ACA (aka Obamacare) is flawed in many ways. Instead of providing health care, President Barack Obama focused on providing medical insurance for Americans. Since ACA went into effect in 2014, the choices available to consumers in terms of insurance have dwindled, with several companies refusing to participate in the marketplace. Each year, premiums have also shot up around 25%. Part of the funding needed to run ACA is actually a tax couched in the form of a penalty, specifically on the 16% of uninsured and individuals seeking non-group coverage.
This grim commentary does not mean Obamacare has failed summarily. A significant accomplishment of ACA is the provision that ensures insurance companies cannot turn down people with preexisting medical conditions.
With Medicare providing coverage for the elderly and Medicaid providing coverage for low-income families, ACA’s primary focus is on the 16% segment—a staggering 50 million Americans—by helping more of them come into the fold. But what Americans really need is health care, not a flawed system that mandates getting medical insurance with limited choices, high premiums and a tax couched as a penalty.
Medical Insurance: Complicated and designed to fail the consumers
Medical insurance today is way more complicated than necessary. Anyone shopping for insurance will minimally have to wade through and understand the following terms: bronze plan; coinsurance; copayment; deductible; gold plan; preferred provider organization (PPO) plan; exclusive provider organization (EPO) plan; health maintenance organization (HMO); in-network provider; out of network provider; point-of-service (POS) plan; maximum plan dollar limit; maximum out-of-pocket expense; platinum plan; premium; primary care physician (PCP); silver plan; and usual, customary and reasonable (UCR) charges. In fact, the complete terminology used by the National Compensation Survey runs eight pages long.
It is not uncommon for a provider to accept a plan from an insurance company when it is administered as part of ESI and reject a different plan from the same insurance company that is administered for individuals and families. Complicating matters further, toward the end of each calendar year, medical providers and insurance companies go through a prolonged negotiation process that can and frequently does leave several people no longer being able to see a doctor who they were able to before.
It would be easier to understand these points with a concrete example. Palo Alto Medical Foundation, part of the Sutter Health Organization, accepts a variety of insurance plans from Anthem Blue Cross, but only if they are part of an ESI. Any individual and family plan (IFP) from the same insurance company, Anthem Blue Cross, is not accepted by this provider. Each year, Sutter Health goes through a negotiation process with different insurance companies. On January 4, the organization agreed* a three-year renewal with Blue Shield.
Transparency of health care costs is the first casualty in this battle for control between health care providers and insurance companies. It is virtually impossible to find out exactly how much your insurance company would pay for a particular treatment beforehand. On the flipside, it is equally impossible to understand the real cost of a particular treatment from a medical provider. Every provider accepts differing amounts for the same treatment from different insurance companies. The discount each insurance company receives from the provider is the crux of the negotiations between these two entities. An individual seeking care from the provider directly is expected to pay the full amount.
Mental Health and Insurance
If navigating through the world of physical health care and insurance seems fraught with problems, the situation gets remarkably more complex when it comes to getting adequate and appropriate care for mental health issues. In a survey conducted by the American Psychological Association (APA) in 2004, more than half American households experienced some kind of mental health issue, but 87% pointed to a lack of insurance coverage as a reason for not getting appropriate treatment.
Significant problems remain even today with insurance and costs associated with mental health, resulting in 56% of American adults in need of mental health care not receiving it. This situation is not surprising and is unlikely to change with insurance companies acting in blatantly unethical fashion, knowing fully well their actions are protected in the eyes of the law.
Take the case of this family, insured by Blue Shield with a Gold PPO plan in 2016, costing them a fortune in premiums for the flexibility of getting the care they choose. Circumstances were such that they had limited choice when they were forced to enroll their teen in an Intensive Outpatient Treatment (IOP) with a provider not in Blue Shield’s network.
With the maximum out of pocket cost per individual at $9,200, the family thought they knew the cap on their expenses. The treatment cost $17,400, while Blue Shield determined that their UCR for that treatment was $1,320 and paid the family $660. It is bizarre that the provider bills the cost of the treatment at $17k; Blue Shield, a non-contracted insurance company, considers it to be $1.3k; and a different insurance company that is contracted with the provider places its worth at $9.5k. Having to pay the full amount, the family was further in surprise when they learnt that the maximum out of pocket cost computation is based on UCR, not the actual cost incurred by them.
The family filed a complaint with the Department of Managed Healthcare (DMHC). DMHC’s mission is to “protect consumers’ health care rights and ensure a stable health care delivery system.” DMHC’s investigation found Blue Shield to be in compliance with its obligations. Blue Shield’s allowed amount (UCR) for the services received was determined to be 3.8% of the total cost of the services provided.
The family had gone ahead with the treatment, knowing that Blue Shield was not a contracted insurance company with the provider. Still, a lack of transparency of the costs involved, unclear information on what the insurance would pay, and ambiguous information on how the maximum out of pocket cost would be computed all added up to flaws in a system designed to fail the consumer. And there was nothing DMHC could do to help this family or protect their health care rights.
With a majority in Congress and Senate, Republicans and Donald Trump can wreak havoc on an already flawed system in their politically misguided attempts to fix it. What America needs is universal health care, a socialist concept that would never come to pass. For the foreseeable future, Americans have no choice but to live with their broken health care system and hope they do not fall sick.
*Editor’s note: This article was updated on January 16, 2017, to provide clarification on latest developments. Sutter Health came to an agreement with Blue Shield of California on a three-year contract on January 4, 2017.
The views expressed in this article are the author’s own and do not necessarily reflect Fair Observer’s editorial policy.
Photo Credit: Leo Patrizi