UnitedHealthcare CEO Brian Thompson was gunned down in New York City while heading to an investor conference. By all accounts, he was a competent, affable man well-liked by subordinates and colleagues. Bullet casings found nearby had the words “Delay, Deny, Defend” the title of a 2010 book critical of questionable insurance industry tactics. The assassin planned meticulously, putting a considerable amount of effort into planning the attack. This must have been personal!
After the news, the Internet was filled with people professing pleasure at Thompson’s death. Many had little sympathy for the victim or met the news with indifference to the suffering of his friends and family. Vox Media wrote:
A man was killed. That’s the kind of thing people normally get upset about. But not this week. This week, when UnitedHealthcare CEO Brian Thompson was shot dead in Manhattan, the internet erupted in cheers.Many people, including many progressives and liberals, said they would refuse to mourn the UnitedHealthcare executive because of the habitual unfairness of health insurance providers like the one Thompson oversaw.
Why are Americans unsympathetic of insurance companies? Many people, me included, have stories about a health or dental plan that denied a legitimate claim for a bogus reason. I had oral surgery 30 years ago and Humana denied a claim, saying it had a policy against reimbursing more than one surgical procedure a day. There was only one surgery, but the tactic saved them $850. I planned to appeal but didn’t know where to begin and never got around to it.
The U.S. American health care system is dysfunctional. It’s Econ 101. The consumers of medicine are not the ones who pay for it, which leads to a type of market failure. When the marginal cost of a service is low, demand can become insatiable. When a customer, or their family member is sick, they are willing to bankrupt their health plan in return for the slightest chance something may work. When the payers are not the customers, prices can skyrocket.
A physician writing in the New York Times told the story of a man who came into the emergency room very sick. When told he needed to be admitted the patient became concerned about whether his health plan would cover his hospital stay. That’s a common concern the doctor reported:
I said what I could to get him to stay, but I understood why he wanted to be certain. The average cost of a three-day hospital stay is $30,000. He had heard the health-insurance horror stories. Maybe he had lived through one himself.
Hospitals charge outrageous prices and fight price transparency because they’re not competing on price. When hospitals charge $10,000 a day for inpatient care or 10 times that amount for a routine surgery like a hip replacement, patients want to make sure their health plan covers it. They should also question why routine services cost that much. The news is full of stories about hospital price gouging and questionable medical bills. Yet, patients want the expensive care, they just don’t want the bills. That’s why people have health insurance. For their part health insurers are accused of denying claims just to make it a hassle for consumers, in hopes patients will eat the cost of a denied service claim.
Here’s the thing: health insurers like United Healthcare are just one player in our dysfunctional health care system. They’re not the cause of the dysfunction, just one guilty party. Health insurers hope to retain more income by devising ways to shift more cost to consumers (or underpay providers). Providers are looking for ways to boost prices and shift more costs to insurers (or patients). For their part, patients don’t care about the financial health of providers or insurers. Of the Three Ps (patients, providers and payers), the group that gets the least sympathy are payers. That’s slightly unfair. The party that suffers the most are patients. That’s hugely unfair.
Patients by nature are sympathetic because they’re sick. Providers are providing services to patients in the hope of making them well or at least feel better. It’s hard to hate the people trying to help you. You may hate their prices, but not their services. The last group – payers – get no sympathy of all. They’re the mean people refusing to cover a costly experimental treatment that has no chance to work. Insurers are the profiteers refusing to cover an overpriced drug that barely works when cheaper ones work equally well. They’re the ones requiring prior authorization to ensure they don’t pay for unnecessary services of little or no value. They’re also the ones trying to make a few extra bucks denying claims they will later pay if pressed hard enough by a knowledgeable patient.
Insurers are blamed for strategies to avoid paying too much for health care, while the providers of health care don’t suffer as much hate. The reality is: we’re all guilty. We all have perverse incentives to overconsume, price gouge or refuse to pay. The goal of health reform should be to align all three party’s incentives to better work together.
Good points. In health care, anyone who says “no” gets hated.
When the patient is our friend or relative, we want the doctors to try absolutely anything.
Cost is no object at that point.
Believe me, if America ever did have single payer, we would have the same anger directed at the claims department that we now see directed at the insurers.
My own preference is for price controls on the most expensive drugs and surgeries. A drug which is priced at $84,000 can surely be produced more cheaply — in fact many drugs are produced more cheaply in places like India,