Why does it appear that numerous individuals harbor anger towards health insurance providers?
The public's response to the lethal shooting of UnitedHealthcare CEO Brian Thompson has been nothing less than startling. A post on X expressing hope that the assassin would never be captured garnered an impressive 95,000 likes. UnitedHealthcare's own consolation message online was met with sheer mockery by 77,000 chuckles.
What triggers such a response? Before delving into the flaws of the American healthcare insurance system, it's crucial to acknowledge its strengths.
Contrary to popular belief, a KFF (Kaiser Family Foundation) survey indicates that more than two-thirds of Americans rate their health insurance as "good" or "excellent." This sentiment holds true regardless of the type of insurance: employer-based plans, Obamacare marketplace plans, Medicare, and Medicaid.
Even individuals who claim to be unwell (and presumably require medical attention) typically hold positive views of their health plans.
The KFF survey offers two alternative assessments for health insurance: "fair" and "poor." Yet, an insignificant percentage of the public ranks their health insurance as "poor." This includes only 5% of individuals with health concerns.
Despite this, a considerable number of these individuals exhibit extraordinary enthusiasm towards the topic—as seen in the murder of Brian Thompson. Why is that?
The Strong Emotions
Generally, people view health insurance differently from other forms of insurance, and this belief is valid. Witness the advertisements that air on television and in print for a glimpse of this disparity.
In a free market, all providers of goods and services understand that the secret to a sale is to persuade potential customers that their products can address their needs. Frequently, meeting a customer's needs is more essential than the price.
Casualty insurers, for instance, promote their offerings by underscoring the risks associated with unfavorable situations and guaranteeing prospective customers that their insurance is ideal protection.
Allstate, for example, owns the phrase "You're in good hands." In a recent commercial, the spokesman stands before a town ravaged by a tornado. The Aflac duck traipses from crisis to crisis, concluding each time with the predictable conclusion: when disaster strikes, you need Aflac.
A classic print advertisement, sponsored by Chubb Insurance, depicts a man fishing in a small boat, preparing to reverse over a waterfall that appears to be the size of Niagara Falls. The caption: "Who insures you doesn't matter. Until it does."
In a free market, you generate revenue by identifying people with problems and addressing their needs. In that sense, the casualty insurance market operates like any other market.
By contrast, have you ever seen a health insurance ad that promises you will be "in good hands" if you develop cancer, heart disease, or if you require a hip or knee replacement? I doubt it.
There's a reason for this. Under federal law, health insurers are prohibited from making a profit by serving individuals with medical problems. In fact, they are obligated to charge the same premium to otherwise comparable enrollees—regardless of their medical issues.
The Harsh Truth
Here's the harsh truth: With one exception (detailed below), no insurer in our healthcare system wants a patient with serious health issues. No employer. No commercial insurer on the marketplace. No Medicaid managed care plan. And no safety net institution.
Every time someone with an expensive medical condition joins one of these plans, the organization incurs a loss. If the patient leaves the plan (for whatever reason), the plan makes a profit. If a plan gains a reputation for effectively handling serious medical issues, it will attract more sick patients and sustain more losses.
Given the terrible economic incentives created by government regulation, the shocking aspect is not that some patients encounter mistreatment. The surprising aspect is how few instances there are.
How could things be different? They already are, in the Medicare Advantage program.
More than half of Medicare enrollees are now in private health insurance plans. Like everyone else in the country, they pay premiums that are community-rated and independent of their health status. However, unlike everyone else, their premiums are topped up by Medicare, based on individual risk assessments.
As a result, the total premium that the plans receive makes the healthy and the sick equally appealing financially.
It gets better.
The Benefits of Medicare Advantage
The Medicare Advantage (MA) program is the only place in our healthcare system where a doctor who discovers a change in a patient's health status can send that information to an insurer (in this case, Medicare) and receive a higher premium payment—reflecting the new expected costs of care.
Accordingly, MA plans have financial incentives to detect patient issues early and resolve them. These plans earn money by ensuring patients receive necessary care and keep them away from the emergency room and out of the hospital.
Furthermore, unique in our healthcare system are MA plans that specialize in chronic conditions, such as diabetes, heart disease, cancer, etc. These MA plans actively seek to enroll patients that conventional health insurance would like to avoid.
Medicare Advantage is less expensive than traditional Medicare and offers higher quality of care. Additionally, as MA presence expands in an area, medical practices adapt—resulting in lower-cost, higher-quality care for other patients.
Although the system is impressive, it could be improved. For instance, UnitedHealthcare is reported to deny approximately one-third of its claims. But there are MA plans in Houston with denial rates as low as 3%.
There're numerous instances where claims get turned down, yet a significant number of these rejections aren't overturned. The length of time taken to settle these disputes also varies. Insurance providers should be at liberty to promote these statistics and strive to offer superior care to their insured once they fall ill.
Let's delve into methods of delivering tailored risk assessment to the broader healthcare sector. Economist John Cochrane posits that this would organically occur in a competitive market for health insurance. Perhaps it's worth considering implementing this concept.
(Paraphrased)
Brian Thompson, as the CEO of UnitedHealthcare, was a prominent figure in the healthcare industry. Despite the tragic incident, the Kaiser Family Foundation's survey shows that more than two-thirds of Americans continue to rate their health insurance positively, including Medicare Advantage plans like those offered by UnitedHealthcare.
The intense emotions surrounding health insurance, such those displayed in the response to Brian Thompson's death, are not typically seen in the response to other types of insurance ads. This could be due to the unique economic incentives in the healthcare system, where insurance providers do not usually profit from individuals with medical issues, as is the case with Medicare Advantage plans.
