In 1988, a thirty-two-year-old woman whom we’ll call Claire came to my medical office in Shelburne, Vermont. She was one of the first employees in an early start-up company in Burlington and had had no previous unusual medical problems.
This time, however, she was worried. She felt restless and unusually thirsty much of the time and experienced frequent urination and weight loss. A series of tests ultimately concluded that she had become diabetic. Her disease was severe enough to require daily insulin injections.
She consulted routinely with an endocrinologist, who began the arduous task of teaching Claire all the things a diabetic needs to know. We agreed that I would remain her primary care doctor but that she would continue to see the endocrinologist on a frequent basis initially, and then less so as her condition stabilized.
Fortunately, Claire had less difficulty than most keeping her blood sugar under control, and, with adequate monitoring, good exercise, and terrific teaching from the nurse-practitioners and doctors at the endocrine clinic, she adapted well to her new disease. She was bright, willing to work, and well past the often tumultuous teenage years, which are so difficult for insulindependent diabetics.
Four months later, Claire was back in my office in tears, feeling the same restlessness that had first brought her in for a consultation. But this time, the anxiety was not medically induced. I had initially assumed her tears were a delayed reaction to a lifechanging illness. Although diabetes can be managed relatively easily, it’s nonetheless complicated, especially for someone who for thirty-two years had lived disease-free with the exception of the usual childhood illnesses.
I could not have been more wrong. Claire was in tears because her health insurance company had refused to renew her policy.
The start-up company Claire worked for was unable to afford health insurance, so its employees bought individual policies from a well-known firm in the Midwest. The company claimed that it provided individual health policies at a reasonably low premium, especially for younger people, and promised to provide adequate care, good benefits, and health security. Should something untoward to happen, Claire would be well taken care of. Or so she thought.
The fine print in her contract revealed otherwise.
Letters to the Vermont banking and insurance commissioner revealed that this was a frequent problem, not just with Claire’s company, but with many others that worked in the individual insurance market. In fact, this is not a Vermont problem; companies elsewhere have continued to refuse to insure people after they become ill, claiming that the conditions were preexisting, that they resulted from negligence, that the insurance was never meant to cover particular conditions.
While employers are guaranteed the right to purchase health insurance, the great majority of states—which govern the individual insurance marketplace—do not extend the same protections to Americans who buy individual insurance policies. In most states, “insurers can refuse to sell individuals policies based on their health, recreational activities, occupations, credit histories, and a variety of other factors”—and state governments do little to stop them. As a recent Families USA report observed, “[States] are doing very little to provide basic protections for health care consumers and many are turned down from coverage or are charged unaffordable premiums or have their health claims wrongfully denied.”
Claire’s insurance company earned enormous returns for its chairman and shareholders, becoming successful by insuring only healthy people while rescinding coverage once a person became ill.
I diagnosed Claire in January. By May, her renewal date had come up and she was informed that she would no longer be covered by the company, since she now had a chronic disease. Unfortunately, Claire’s story is all too common.
In the March 16, 2009, issue of Time magazine, health reporter Karen Tumulty wrote about the heartbreaking and infuriating story of her brother, Patrick, who in middle age suffered from kidney failure. Like Claire, Patrick had a high-deductible health insurance plan that he had purchased in the individual market. “He knew he would have to pay for a checkup himself,” so he “always put off going to the doctor until he had to.”
Since 2002, Pat had faithfully paid his health insurance premiums, “buying a series of six-month medical policies, one after the other, always hoping he would soon find a job that would include health coverage.” Pat’s insurer even advertised that its product would “safeguard your financial future” and provide “the peace of mind and health care access you need at a price you can afford.” But when the denial claims started coming in, he knew something was wrong.
His insurance company denied coverage for this very expensive illness by claiming it was a preexisting condition. The fine print of the insurance company’s policy declared that every six months, Pat would be treated “as a brand-new customer.” As a result, anything that went wrong within a few months of his renewal date could be labeled a preexisting condition and excluded from coverage.
More than 14 million Americans receive their health coverage on the individual market, but although these patients pay hefty premiums, only a fraction of the dollars are spent on providing actual care. According to the Congressional Budget Office (CBO), 29 percent of premium dollars in the individual insurance market go toward administrative costs; the average policyholder spends roughly $300 more on administrative costs each year than if he or she purchased coverage through a group policy.
Meanwhile, medical loss ratios, an indicator of how much revenue insurance companies spend on care versus how much they keep as profits, have dropped precipitously in the last decade. That is, as more and more people have become uninsured or discovered that they don’t have enough insurance to cover their medical expen]ses, insurers have grown richer. And they employ a series of tactics to protect their bottom lines.
One major insurance company signs up doctors to cover its patients and then reassigns the contract (which is almost always illegal) to a different company, which pays doctors only one- to two-thirds of what the first company agreed to pay. If a substantial number of employers in an area have bought healthcare insurance policies for their employees from this major insurer, then local doctors are essentially held captive by this dishonest practice, lest the health insurer refuse to renew its relationship with the doctors and large numbers of their patients are forced to go elsewhere. In the large group markets run by huge insurance companies that are often publicly owned, the insurers frequently refuse to reimburse patients for things that are clearly covered, counting on the fact that beleaguered insurance commissioners throughout the nation have too much on their plates to chase particular claims.
My wife, who is still a practicing physician, recently recounted to me the story of a man who’d had a physical that was required for his admission into an extended care facility. The insurance company was clearly supposed to pay for the physical, yet each of the nine times the bookkeeper sent in the claim, this insurer made a different excuse for why it wasn’t valid. The patient ended up giving up and paying for the physical out of his own pocket— an all-too-common scenario that often applies to more expensive medical procedures as well.
Much has been made of the 47 million Americans who don’t have health insurance. But the healthcare reform debate should also focus on the fact that an estimated 25 million working-aged Americans have health insurance but still can’t afford to see a doctor. According to the Commonwealth Fund, many go “without needed care, not filling prescriptions, and not following up on recommended tests or treatment.” Their stories are heartrending, and it’s a scandal that in the wealthiest nation on earth, we cannot adequately cover everybody.
The fact is, there is a huge debate about how much of our health insurance should be in government hands. But our real challenge is dealing with the extraordinary damage that the private health insurance system has done to countless Americans who thought they had health insurance, faithfully paying huge amounts of money into the system over many years, only to find that their insurance company refused to stand behind them when they needed it most.
The real issue in the debate over healthcare reform is not whether or not we should have “socialized medicine.” It’s whether we should continue with an extraordinarily inefficient system that today features a private insurance industry that takes large amounts of money out of the healthcare system for shareholders, administrators, and executives while denying people the basic coverage that they think they have paid for.
So, the real debate about healthcare reform is not a debate about how large a role government should play. The real issue is: Should we give Americans under the age of sixty-five the same choice we give Americans over sixty-five? Should we give all Americans a choice of opting out of the private health insurance system and benefiting from a public health insurance plan?
Americans ought to be able to decide for themselves: Is private health insurance really health insurance? Or is it simply an extension of the things that have been happening on Wall Street over the past five to ten years, in which private corporations find yet new and ingenious ways of taking money from ordinary citizens without giving them the services they’ve paid for?