Three Myths About Private Health Insurance Companies in America

There is a prevailing false belief that many Americans love their private health insurance and they have choice of doctors, get quality healthcare at affordable prices. Wrong! As a practicing neurosurgeon for 23 years, I can tell you, it can’t be farther from the truth.

First some facts!

The United States of America spends the highest amount of money in the world for healthcare; $3.5 trillion annually. That’s $10,224 per capita and more than $40,000 for a family of four. Whereas Organization for Economic Cooperation and Development (OECD) countries, committed to democracy and the market economy, average $5280 while also providing better universal healthcare with longer life spans.  USA has no universal healthcare, instead it has 30 million uninsured and 60 million underinsured citizens. 

Sadly, the number one reason for personal bankruptcy in America is medical illness in a family. One million Americans will go bankrupt each year, in spite of 70% of them having health insurance. 

The fundamental philosophical difference between USA and other western developed nations is that the later countries treat healthcare as a human right while America treats it as profit-oriented business with little or no government oversight. As a result, there are no price controls and many vendors charge exorbitant prices and get away with it as long as possibly allowed. 

One of the primary causes for unaffordable healthcare costs is that many sectors of healthcare delivery in America have unnecessary middlemen. Even worse, the middlemen have middlemen, the most important of them is health insurance companies themselves and their agents recruiting enrollees. This is the reason insurance premiums do not come down, instead they keep going up because they have to account for the administrative, publicity, marketing costs and profits, even in so called not-for-profit companies like BCBS. Some sectors even have 4-5 layers of middleman distributors as seen in medical device distributors. Additionally, there are Pharmacy Benefit Manager middlemen who profit from commission from the manufacturers as well as retailers. 

Then there are special interest lobbyists that wield undue control over healthcare legislation by influencing the lawmakers through financial contributions. On example being PhRMA (Pharmaceutical Manufacturer and Research Association) attempting to forbid Medicare bargaining for discounts on drugs when President George W. Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act into law in 2003. Medicare, the largest insurance company in the world with 50 million enrollees, is the only company forbidden from bargaining in spite of its economy of scale.  

Now, let’s talk about the myths of private insurance companies.

The Myth of Choice of Doctors:

The only citizens that have some choice of doctors in private insurance companies are the ones who have master medical or platinum plans, but they are a minority. The majority may have PPO plans, which are allowed to have some choice among the in-network doctors but leave no choice in the lesser plans. The insurance company will dictate which doctor you can see and some doctors may not even accept those lesser plans.

The Myth of Quality Healthcare:

Good luck with quality healthcare if you have lower tier health plans. First of all, the essential benefits may not be covered if one is enrolled in cheap plans. Secondly, even those will be either denied or delayed through the grueling and frustrating authorization process and denials. Meanwhile, the patient is suffering and his or her medical condition is getting worse. Simple necessary diagnostics and interventions will not be performed in timely fashion endangering the health and well-being of the enrollee. I see this in my practice, where an MRI or physical therapy is not approved for neck or back pain. As a result, many patients resort to narcotics for longer period of pain relief, become less functional, go on sick leave and may even become prescription pill addicts. That’s not quality healthcare!

The Myth of Affordable Premiums:

In my 23 years of practice, I have not come across a single patient that said, “I love my affordable private insurance.” On the other hand, it is routine for me to hear patients complaining they cannot afford their premiums, deductibles or co-pays. They are foregoing their health issues from getting diagnosed and treated in a timely and appropriate manner. I do not recall hearing the premiums coming down in recent years. In fact, many private insurance companies have pulled out of exchanges, leaving many uninsured or forcing them to choose even more expensive plans. Also, these companies are pushing much of the costs onto the enrollees or their employers, who in turn transfer them to the employees. As a result, the deductibles, co-pays and co-insurance costs keep going up in relation to inflation and normal cost of living, so do the premiums and the billions of profits of these companies and their CEOs.

Beware of Trump and his Republican politicians that want to repeal and replace Obamacare and some of its benefits. When they do that, the insurance companies will underinsure by providing skimpy plans with less essential benefits for more expensive premiums. There will not be free preventive healthcare. Children may not be able to continue on their parents’ plans till they are 26 years old. There will be a ceiling on how much care will be covered forcing many more to go bankrupt if there is a catastrophic medical illness in the family. Worst of all they will use the excuse of pre-existing conditions denying insurance outright, increasing the number of uninsured in the country by many more millions.

That will be, to quote Trump, “SAD, VERY SAD!”.