Several years ago, due to some claim disputes I had with different health insurance companies, I became disillusioned with health insurance. I saw that health insurance companies had an inherent conflict of interest in their business model and concluded they could not be trusted to act honestly or in good faith to honor the policy contracts they entered into with clients. I concluded those policies were intentionally designed to be confusng, deceiving and unenforceable. The more complicated a claims process they could devise, the more they could drag out the claims process over time and the more claims they were able to deny, the more money they would make. All of these insurance practices serve to drive up the cost of health care in this country.
My experience also showed me that a beneficiary had no means of holding an insurer accountable except by a judge or jury and for smaller claims that avenue of arbitration was prohibitively expensive. If an insurance company was not honorable in the first place, their appeals process would certainly not be honorable.
State agencies, charged with regulating insurance, were generally not funded, staffed or provided authority to arbitrate on the behalf of individual beneficiaries focusing their efforts on licensing and elimination of widespread fraud and consumer abuse.
This lead me to become a proponent of a single payer insurance system that eliminated health insurance companies altogether. As the health care reform debate began to heat up, I concluded that single payer was not a politically viable option. I then consigned myself to seeking some improvement in the current system that could actually pass into law.
My interest in improving health care and mitigating its cost lead me to study the first and only detailed proposal for reform published so far, H. R. 3200 America's Affordable Health Choices Act of 2009, the bill working its way through the House of Representatives. Athough it will certainly undergo much change, and only certain features of it will acutally pass the House of Representatives, I believe it has structures and ideas within it that can enhance competition, drive down cost, and protect consumers of health care goods and services.
I also believe that the "Public Option" health insurance portion of the bill is unnecessary and politically too controversial to pass.
AISI - American Iron and Steel Institute
ASME - American Society of Mechanical Engineers
NACE - National Association of Corrosion Engineers
ASTM - American Society for Testing and Materials
ANSI - American National Standards Institute
SAE - Society of Automotive Engineers
NAS - National Aeronautical Standards
IEEE - Institute of Electrical and Electronics Engineers
ISO - International Organization for Standardization
NHCA - National Health Choices Administration
What the heck is this list and what does it have to do with health care insurance reform? Actually, only the NHCA has anything to do with health insurance reform and it doesn't exist yet. You may recognize that it is the agency proposed in H. R. 3200. This organization can save you money and protect your interests. Here is how.
All of the organizations listed above, among other activities, write standards for engineering design and manufacturing of products. They are financially supported by manufacturing and engineering firms because they save those companies money.
A typical engineering problem illustrates my point. Suppose you're an engineer working for U.S. Widgets. You are assigned to design a widget the company plans to manufacture and market. This widget happens to have a couple of components that must be fastened together by a bolt. If you wanted to design this bolt from scratch and manufacture it in house, there are a lot of variables to consider. From what material do you make it? How is that material formed? What mechanical charateristics must it have? What are the geometrical requirements? What is the environment to which it is exposed? What is the thread design? What is the design configuration of the head? What is the design requirements of the mating socket? What quality control standards must it meet. All of these variables not only have design considerations they also affect the cost to manufacture and assemble the widget.
Fortunately you probably don't have to design and manufacture this bolt from scratch because all of those questions have been addressed in an industry standard and there are vendors out there mass producing bolts with just the features you require at a cost much cheaper than you can produce them for your widgets because all they do is manufacture bolts.
All you have to do is specify the standards the bolt must meet and its size, which is also standardized, and all that engineering is done for you. You save hours of engineering time and save having to tool and set up to manufacture a bolt.
Now if you're a buyer for U. S. Widgets and you want to purchase 200,000 bolts to manufacture your widgets you can look in a catalog and see that Best Bolts and Bolts Unlimited manufacture bolts that meet the specifications you require and you know that bolts from either manufacturer are interchangeable. You can make your purchase decision based on price and terms alone. Again, you save money.
Those industry standards provide shelter from liability.
Suppose a consumer using your widget has an accident. Perhaps the bolt in question sheared off and a piece of the widget struck the consumer injuring them. They decide to sue you for any negligence they can dig up about how that widget was designed and manufactured. Lawyers subpeona U.S. Widget's records and poor over them looking for any evidence they can use against you.
The better documentation you have that proves you have followed all industry accepted standards for the design and manufacture of a widget, the easier it will be to defend your case and prove no negligence existed.
Now consider this. Health insurance is regulated at the state level. Every state has a different set of regulations. Some states are very detailed and specific about their regulations, others are not. How do you know if ABC Insurance has the financial resources to pay large claims? How do you know the company has the competence to process claims? How do you even know if they are licensed in your state? Its up to you or a manager at your company to verify all of this and you must trust the state has done due diligence in licensing the insurance company. To avoid the hassle, most purchasers of insurance stick with the big names in the business. This limits competition.
Consider the number of health insurance companies in a market. Each of those companies design their own policies and each have a very different set of standards. Most of us know the difference between an HMO and a PPO. But do we know the difference between the PPO policies sold by ABC Insurance and the PPO policeis sold by Safenet Insurance? We may easily be able to determine the general benefits offered, the price of a monthly premium and the amount of co-pay for a visit to a primary care physician or a specialist, but the implementation and execution of insurance policy benefits are way more complicated than that.
Do we compare the drugs offered on each company's formulary list? Do we know what a policy really covers based on diagnosis and procedure? Just because the policy states they pay for diagnostic imaging, does that guarantee they will cover your MRI? Perhaps not. It might depend on the other tests done up to that point. It might depend on the symptoms you are presenting. Doctors and Hospitals base their recommendations on their training and personal preferences. They have choice and their choice affects the cost to you. Your MRI might not be covered because test A has to be done first under your insurance company's standard. The doctor might know that test A will not be sufficient and they really need the MRI but they want to get paid, so they order both tests. Or, they might not know your particular insurance company's policies, order the MRI without test A and your claim gets denied. You wind up paying for the MRI. These types of issues drive up health care cost.
One of the biggest cost producers in the health care industry is the fact that doctors and hospitals have mulitple insurance companies to deal with, each with its own requirements for submission and payment of claims and each paying different amounts for the same procedures. Do you think that insurance companies make the submission of a claim as efficient s they can? Do you think they are motivated to process claims quickly? They profit from delay of payment. The longer they can draw out the payment process the better off they are. How much time typically passes between a doctor visit and the claim statement you receive in the mail? Do you think this is good for the provider? Why do you think that all doctors make you sign an agreement that they will file a claim for you but you are still responsible for the bill.
The health care industry has some standards. The American Medical Association publishes the Current Procedure Terminology Codes that most insurance companies use to quickly and easily identify a specific medical procedure. The Center for Disease Control publishes ICD-9 the International Statistical Classification of Diseases and Related Health Problems a list of codes that simply and easily identify diseases. ICD-9 is also typically used by insurance companies in their own standards.
HIPPA, the Health Insurance Portability And Accountability Act Of 1996 began requiring certain standards for health insurance companies and policies but it is not nearly thorough enough or does it have enough authority to affect health insurance cost.
One of the major cost cutting features of the current bill proposed in the House of Representatives H.R. 3200 which no one seems to understand is the establishment of the National Health Choices Administration and the National Health Insurance Exchange. Key to the responsibilities of the NHCA will be to write standards for health insurance companies and the policies they offer that will make them consistent and clearly defined to all who purchase the policies and submit claims to the insurers on the exchange. NHCA is also charged to provide clear information to purchasers of insurance enabling them to compare policies and make their purchasing decisions based on consistent benefit packages across all insurers. This doesn't limit the benefits offered. The exchange has mulitple levels of benefit packages from the basic plan to super premium plans.
By making it easy to compare insurance plans and insurance companies the exchange enhances competition and should lead to more health insurance participants in the industry.
Purchasing an insurance plan on the exchange means that insurance policy meets all the standards of the exchange and will provide considerable consumer protections from unscupulous insurance company policies and procedures.
The NHCA has the authority to define claims arbitration standards as well. They could set up local independent binding arbitration panels to provide a means of enforcing claim disputes short of a lawsuit.
Standardization and regulation of health insurance companies and policies at a national level effectively eliminates the need for the "Public Option" health insurance plan. It reduces the decision to purchase health insurance to one of price and terms.
Health insurance standards do the same thing for insurance companies that engineering and manufacturing standards do for manufacturers. They clearly define the requirements they must meet, eliminating the work they do to maintain their own independent standards and it shelters them from liability.
Suppose all insurance companies used the a standard online claim form and were required to pay claims that are correctly submitted within a week of receiving them. Do you think that would save cost to a health care provider? I think it would be extremely valuable to them.
Suppose the procedural stipulations within a benfit package were clearly specified in a standard. It would shelther a physician from liability and make malpractice lawsuits for negligence more difficult to prove.
There is no reason the proposed sliding scale of premium credits proposed in H.R. 3200 could not be applied for any insurance provider marketing policies on the exchange. For people at various income levels the NHCA could stipulate federal credits to support income based insurance premiums enabling low income households to afford insurance.
Suppose someone games the system and avoids purchasing an insurance plan. They then show up at a hospital emergency room needing health care. There is no reason they can't be automatically assigned to a health insurance policy on the spot. This would initiate an audit of their IRS and Employment records to determine what insurance they can afford and immediately institute wage or income garnishment to cover the cost of their insurance policy. Hospitals would get paid, and insurance providers would get clients they ordinarily would never have.
Under this type of health insurance system management, eventually, Medicare and Medicaid could be eliminated in favor of private health insurance policies. That would save a lot in terms of the federal budget. The government would still have to pay for the policies but their adminstrative requirements would effectively be farmed out to exchange quilified insurance companies. Specific policies could be designed and standardized expressly for seniors.
Regardless of what the final health care reform package contains, there is a great need for this type of standardization to control escalating costs in the insurance market and lower cost to health care providers as well as consumers.
The administration has used the example of standardizing electronic medical records as a cost saving feature of the proposed plan, however, I believe standardization of the health insurance market has much greater cost saving potential.