In the political health care debate, we hear a lot about the uninsured. We also hear about how premiums are skyrocketing, and that Americans pay more for for worse results than most other industrialized nations. Occasionally it is mentioned that half or so of personal bankruptcies are caused by health care debts.
What nobody in political power ever seems to mention though is how those of us dragging around chronic, lifelong conditions or disease are arguably having additional years taken off our already shortened lives by the stress and time-sink of dealing with insurance companies – caused directly by our not having a national health system. It’s probably fairly safe to assume that the reason for this is that politicians with piles of medical bills (such as John McCain or Ted Kennedy) have never had to personally open 41 envelopes from their insurance company arriving on a single day.
It is probably assumed by many that those who are driven into bankruptcy by health care costs are uninsured, but this is usually not true. The nature of the problem is summarized in a report from way back in 2005:
ABSTRACT: In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9–2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged $11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick.
That is: a full three-quarters of those who filed for bankruptcy due to medical bills did have health insurance.
The insurers get you many ways, above and beyond the premiums. First, they nickel-and-dime you to death with co-pays that they claim are an incentive to keep people from going to the doctor too often. Not only is this incredibly patronizing, it’s absurd to imagine that a significant number of people just love going to the doctor for fun even though they really don’t need to.
But premiums and co-pays aren’t enough, of course. Then come the deductible and co-insurance, which naturally are tallied separately for doctor visits and prescription drugs. The formulas used to determine what portion of what procedures and drugs apply to all these different bills would stymie Einstein. Finally, by conveniently delivering separate statements for each procedure in its own envelope (see above), the insurance companies make it nearly impossible for most people to even figure out if they are keeping their end of the bargain in the first place. Which, based anecdotally on the experiences of people with the time and energy to spend checking, they often are not.
It makes one wonder how many medical bankruptcies might have been avoided if someone had actually made the insurance companies just pay what they owe. But why are they screwing up the paperwork so much in the first place?
As with so many similar questions, the answer is that either they are incompetent, or actively and maliciously trying to pay as little as they can get away with. As in many situations, both answers seem to apply somewhat. The huge (yet rarely mentioned) benefit to having some type of single-payer system would be the enormous drop in overhead costs, which are significantly higher for private insurance companies than for Medicare (about 12% vs. 4%), and represented nearly a third of our nation’s medical costs ten years ago (Woolhandler et al., 2004). When medical centers have a dozen or more insurance companies to deal with, they have hundreds of complicated codes to label procedures with, which not only takes more time to process, but results inevitably in a high mistake rate. Then you get plenty of opportunities for more mistakes by low-level claims processors (who have no incentive for not screwing up) at the insurance companies. Either the mistakes get fixed, at a great cost of time and money to the system – i.e., all of us who pay for insurance – or they don’t, invariably at a great cost to the patient herself.
On top of this is an almost overt policy in many insurance companies to essentially deny coverage for most medical procedures, unless you get a doctor to appeal. Obviously this policy makes perfect economic sense because a certain percentage of people won’t appeal; either they’ll put off necessary care (perhaps with more expensive results in the future) or they do it anyway and face the financial consequences – most often because they won’t even know coverage was denied until the procedure is done. Some of these people will end up in bankruptcy because they don’t have the energy or inclination to fight; they are likely feeling a bit preoccupied by another fight with, say, cancer.
Everyone knows the system is broken. What’s troubling is that many of the proposed fixes focus merely on figuring out how to provide coverage to the uninsured. Of course this is an embarrassingly obvious first step, but it barely scratches the surface of the mess we have made of health care in America. Unless we fix the disaster that is the health insurance (and accompanying medical) bureaucracy, the newly “insured” will find out that their financial problems are not even close to being over.
Himmelstein, D, E. Warren, D. Thorne, and S. Woolhander, 2005. Illness and injury as contributors to bankruptcy. Health Affairs Web Exclusive W5-63.
Woolhandler, S. Campbell, T. and Himmelstein, D.U., 2004. Health care administration in the United States and Canada: micromanagement, macro costs. International Journal of Health Services 34:65-78.