If voters knew the ugly truth about how “Big Health Insurance” really works, they would be horrified at the attempts of Congress to repeal the Affordable Care Act AKA Obamacare.
Before the Affordable Care Act (ACA), America’s healthcare delivery system was a gravy train, making every player rich and leaving the putative beneficiaries — patients — deeply unhappy. Pre-ACA healthcare delivery was a cash cow, a gravy train for all the health care providers, including doctors, hospitals, pharmaceutical companies, and device manufacturers. According to the 2011-2012 Physician Salary Survey, most doctors earned upwards of $200,000 a year. Not bad for a profession where nothing unique is invented and all the techniques are industry-standard practices.
Health insurance is a nasty business. There may be no more complex business on earth. Insurance needs to turn a profit, pay attention to federal and state laws, and stand as middleman between sick people and the bad guys: greedy doctors, hospitals, Big Pharma and medical-device manufacturers.
I worked my way through college at a large Midwestern teaching hospital. Then, in my profession as a software architect, I spent nine years working for a variety of health insurance companies programming claim systems. My unique experience taught me a lot about how health care is delivered in the United States. Under the old system, known as “fee for service,” the incentives were lined up to encourage doctors to perform as many procedures as possible. With few exceptions, the more procedures — CPT/HCPCS codes — a doctor performed, the more money they made. In fact, many doctors even figured out how they could get more money by breaking up their procedures into smaller sub-procedures so they could bill for them separately.
This practice, known as un-bundling — coupled with the steep increases in the number of procedures performed year over year — led to a situation where health care costs have been skyrocketing year after year. No wonder “Big Insurance” doesn’t like the Affordable Care Act.
The big health insurance gravy train is leaving the station
Before the Affordable Care Act, the gravy train did not stop with providers — the green gravy that is premium dollars was liberally spread over insurance companies too, leading to things like United Health Care’s Stephen Helmsley taking home nearly a $1 billion salary during one year that I worked for them. How could that be possible, you ask? Oh, quite simple. UHG simply cut a few costs, is all. But thanks to Obamacare, the gravy train is leaving the station.
When you buy insurance and start paying your monthly premiums, insurance companies are supposed to perform underwriting — which means they give your insurance application a hard look and ascertain what kind of risk you present. But, you know, that’s really expensive to do. Underwriters are paid a lot of money. So, insurance companies like UHG don’t bother to do it when you apply for insurance and start to pay years of premiums. They wait to do the underwriting when you submit a big claim. Right at that moment they give your application a hard look. Say you made a tiny mistake on that application. Well, it appears to them at that exact moment your application is invalid. They cancel your insurance on the spot. Your fault. That expensive procedure you had done at the doctor’s office? Your problem. Even if they had to refund all the premiums you had paid up until that point (which they don’t do), it would be cheaper than paying your claim. That sounds pretty nasty, huh? But oh so profitable. Couple that with the obvious exclusion of people with “pre-existing conditions” that are known to be expensive from the get-go and you see why health insurance was a gravy train for the insurance companies too.
Why the GOP wants to repeal the Affordable Care Act
Now, in case you’ve been asleep for the last 30 years, one of our political parties caters to rich people. The Republicans like nothing better than giving the wealthy a big wet kiss. So the relationship between the GOP and doctors, hospitals, Big Pharma, and medical-device manufacturers was love at first sight. Their kind of people. And, if you had not noticed, the Republicans like nothing better than enabling their rich pals to get richer, no matter what. For that reason — plus their ideological belief that government can’t do anything right– the Republicans want the gravy train “Good-Times Express” to keep on rolling.
Enter the Affordable Care Act. Instead of the old “fee for service” model — the one that converted procedures into dollar signs — the ACA is based on a “fee for wellness” model. Under that system, doctors and hospitals get paid a certain amount for keeping the patient well. Under the ACA, the incentives are all going the other way, encouraging your doctor to keep you well. If you get sick, your doctor does not get rewarded for that with extra dough. Instead, the best option for your hospital or doctor is keeping you well.
Before Obamacare, if a patient was discharged from a hospital on a Tuesday, only to be re-admitted on a Friday, the hospital got to bill for the second admission. So, again, the incentives are all going in the direction that favors the patient’s welfare, not towards paying for the doctor’s yacht.
One more ingenious aspect of the ACA is a stipulation that 80% of premium dollars must go toward patient care. Any premium dollars above that amount not spent on patient care must be returned to the person paying the premiums. That momentous event actually happened for the first time in August. No more $1 billion paydays for UHG executives.
The ACA is chock full of good ideas that help patients — the good guys. No wonder the Republicans have fought against it so desperately. The Republicans only seem to care for the welfare of the rich. Until recently, GOP members in Congress were prudent enough to hide that fact. Now, they seem to have forgotten what it looks like because now everybody knows it.
As the Affordable Care Act grows more popular, the GOP will rue the day
Starting in October, the tangible benefits to the vast majority of the ACA will become apparent. Lifetime maximums; denying coverage to people with pre-existing conditions; cancelling coverage to avoid costly payouts; spending premium dollars on CEO salaries and advertising instead of on patient care … all of that is gone. Thank you, President Obama, for pushing this through.
As this law grows in popularity, as people see how it makes them healthier at a cheaper cost, as they see their doctor actively mentoring them to eat better, exercise more and stop eating so much sugar, people will thank President Obama for the foresight he had in engineering this change.
The Republicans will rue the day they gave the president credit for this law in perpetuity by calling it “Obamacare.”
featured photo of Affordable Care Act supporters from the Victoria County (Texas) Democratic Party.