Authored by Sylvia Cochran in Insurance
Published on 10-15-2009
In the wake of recent attempts to reform the healthcare system in the United States, top US health insurance companies have come under close scrutiny. Held up by one side as paragons of a supply and demand economy and vilified by the other as money grabbing examples of capitalism gone wrong, it is not surprising that voters and those currently holding private or employer bought health insurance plans are wondering about the veracity of the statements. Lost in the rhetoric are a number of important facts.
Health insurance plans are predominantly the domain of the private sector. This requires the companies which offer the plans to be sufficiently profitable to entice current investors to keep their moneys with the company, while at the same time becoming enticing to investment portfolio managers for the sake of future business. It is this duality that makes top US health insurance companies susceptible to becoming political footballs.
Bankruptcies in America are soaring. Among the main reasons behind personal bankruptcies, medical debts rank highest. Perhaps surprisingly, many Americans incur medical debts even though they carry insurance. Copayments, deductibles, co-insurance and denials of claims due to preexisting conditions, experimental treatments or unapproved procedures add up quickly. Consumers attempting to reason with representatives of the insurance industry consistently report their frustrations with the inability to resolve the issues.
As insurers attempt to stay fiscally healthy, they cut services offered to insured customers while demanding higher premiums and higher out of pocket payments. At the same time, investors refuse to put their hard earned money with companies that are operating too close to the break even point, or may find themselves in a position where payouts may exceed intakes.
Physicians occasionally attempt to hedge their bets against patient lawsuits by ordering tests and duplicate procedures in an effort to document due diligence in a patient’s file. Of course, this costs the insurance companies more money. In some cases this may lead to a company’s cutting ties with physicians, who appear to order more tests than the average doctor. This leaves patients forced to choose between a well liked physician and a stranger, whom the insurance company will pay.
Media outlets in search of sensationalist headlines tend to grab a hold of snippets, press releases and also isolated incidents of company misbehavior. This is then used to paint a broad picture of the insurance industry in general, even if it is not technically the truth.
Those, who believe that President Obama’s healthcare reform legislation is the panacea for all that ails the United States, fail to recognize the mandate placed on top US health insurance companies by their investors. In some cases they themselves are at the forefront of demanding spending cuts so as to see a return on investment that is within acceptable ranges. Insurers gladly comply with the bottom line demands of their investors and know that consumers – ultimately – are at their mercy. Until the cycle of investor demands, insured demands and political demands is broken, top US health insurance companies will continue to grapple for the peak position in the American market – usually at the expense of the consumer.