During the Presidential debate October 16th President Obama listed some of his achievements including: “health-care reform to make sure insurance companies can’t jerk you around.”
I suppose the definition of “jerk you around” is open to interpretation. It may mean premium increases deemed too high, a denied claim, questioning medical necessity, limiting certain services, adjusting for pre-existing conditions, requiring alternative treatment or perhaps a limited network of participating providers.
Interestingly, by these standards Medicare could be considered to be jerking people around. Read a Medicare Handbook and you will find the requirement for medical necessity, no coverage for certain services, no limit on out of pocket expenses, financial incentives to use participating doctors, denied claims and even penalties to limit adverse selection from delayed enrollment.
The fact is all this “jerking around” is necessary to assure as much as possible reasonable premiums for all insured individuals. Remember, the bulk of health care costs are incurred by a minority of people.
Consider this from the Center for Financing, Access, and Cost Trends, Agency for Healthcare Research and Quality, January 2012
In 2008, 1 percent of the population accounted for 20.2 percent of total health care expenditures, and in 2009, the top 1 percent accounted for 21.8 percent of the total expenditures with an annual mean expenditure of $90,061. The lower 50 percent of the population ranked by their expenditures accounted for only 3.1 percent and 2.9 percent of the total for 2008 and 2009 respectively. Of those individuals ranked at the top 1 percent of the health care expenditure distribution in 2008, 20 percent maintained this ranking with respect to their 2009 health care expenditures.
In both 2008 and 2009, the top 5 percent of the population accounted for nearly 50 percent of health care expenditures. Similarly, the top 10 percent of the population accounted for 63.6 percent of overall health care expenditures in 2008 (with a mean expenditure of $23,992), and 44.8 percent of this subgroup retained this top decile ranking with respect to their 2009 health care expenditures.
In both 2008 and 2009, the top 30 percent of the population accounted for nearly 89 percent of health care expenditures.
Furthermore, individuals ranked in the top half of the health care expenditure distribution in 2008 accounted for 97 percent of all health care expenditures. Among this population subgroup, 75.0 percent maintained this ranking in 2009.
Alternatively, individuals ranked in the bottom half of the health care expenditure distribution accounted for only 3.1 percent of medical expenditures (with a mean expenditure of $232 in 2008)
No doubt we have all had some bad experience with customer service, received inaccurate information, dealt with an outright error or felt we were jerked around at one time another. I felt that way after spending two hours in a Social Security office trying to straighten out my Medicare premium only to get a denial letter based on inaccurate facts. On the other hand a call to the central office fixed the problem in a few minutes. Was I jerked around or the victim of simple error or individual incompetence?
The insurance industry has it’s faults as does any industry or any bureaucracy. However, operating insurance plans in a manner to manage costs for all the insured, to drive improvements in health care delivery while making a fair profit is not jerking you around. Much of the criticism of health insurance comes from a perspective that insurance should pay for any and all health care with no interference or questions asked. The trouble is such an approach is inconsistent with affordability or quality health care.
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