What Froma Harrop Doesn’t Understand About Health Insurance
Ordinarily I don’t respond to a newspaper column. But this piece is touching and powerful. And the conclusions the writer draws from it are wrong.
Here’s the back story: The husband of Providence Journal columnist Froma Harrop died of liver cancer. After the diagnosis, the couple learned that the best place in the country for liver cancer treatment was in Boston. But since the facility was not in United Healthcare’s network, the insurer refused to pay for it. Eventually the insurer relented but not before a long, frustrating bureaucratic battle — the last thing in the world any family would want on the eve of the death of a loved one.
It’s hard not to sympathize. But Harrop uses the incident to argue for a government-run plan. Not because the government plan would have paid for an out-of-network treatment. It probably wouldn’t have. But because a government plan would have required less hassle:
The bureaucrat would have given a simple “yes” or “no” based on official guidelines. He or she would have had no personal stake in denying you care…… a government-run program doesn’t tell you what treatments you may or may not have. It tells you what the taxpayers will subsidize. You are free to go out with your own money and buy whatever you want.
Believe me, “death panels” already exist, and they have nothing to do with the government.
Here’s what Harrop doesn’t understand.
- All third-party payers are bureaucracies — whether public or private.
- All bureaucracies act like bureaucracies; it’s in their nature.
- If you want to go outside the system or the rules, however, private is almost always better than public.
I could give many examples, but here is Dr. Zane Pollard, a pediatric eye surgeon in Atlanta, describing his experiences with Medicaid:
Over the past 35 years I have cared for over 1000 children born with congenital cataracts. In older children and in adults the vision is rehabilitated with an intraocular lens. In newborns we use contact lenses which are very expensive. It takes Medicaid over one year to approve a contact lens post cataract surgery. By that time a successful anatomical operation is wasted as the child will be close to blind from a lack of focusing for so long a period of time.
Dr. Pollard gives many more examples. Here is one:
In the past 6 months I have cared for three young children on Medicaid who had corneal ulcers. This is a potentially blinding situation because if the cornea perforates from the infection, almost surely blindness will occur. In all three cases the antibiotic needed for the eradication of the infection was not on the approved Medicaid list.
Each time I was told to fax Medicaid for the approval forms, which I did. Within 48 hours the form came back to me which was sent in immediately via fax, and I was told that I would have my answer in 10 days. Of course by then each child would have been blind in the eye.
Don’t think these incidents are unique to the United States. For example, when a British breast cancer patient found that the National Health Service (NHS) would not pay for a cancer drug widely available in the United States and Europe, she decided to pay for the drug on her own. After raising $20,000 and preparing to sell her house, the NHS told her that if she purchased the drug, she would have to pay for all other health costs provided by the NHS as well. In other words, she had to be all in or all out, not part in and part out of the NHS. Eventually (in part due to negative publicity) the NHS relented.
The entire ordeal sounds very much like Ms. Harrop’s ordeal — unfortunately.
Is there a better way? Yes. It’s called casualty insurance — similar to the kind of insurance most people have on their homes and automobiles. In the case of a catastrophic illness, the insurer makes a lump sum available — ideally enough to cover all reasonable care. But when there are differences of opinion, patients can add their own funds to the insurer’s payment and buy any type of care from any provider. For Medicaid, additional funds could be provided by private charity (which is what is happening anyway for Dr. Pollard’s patients).
This is not a small change from the current system. It is a huge change. It would lead to a real market for catastrophic care in which patients and their families become real, empowered buyers. Providers would compete for patients based on price and, therefore, on quality. Doctors would be free to act as the agents of their patients rather than agents of third-party-payer bureaucracies.
Good post.
Thanks. A lot of people felt this was a column that needed answering.
we should all be terrified, but no one should be surprised. be careful what you wish for.
What Mr. Harrop also doesn’t reveal is that United probably did not forbid them to go to Boston; rather, they likely said: “If you go there, it is out of network, and the reimbursement formula changes…it will cost you more.”
If my loved one had cancer, and if I really believed that I could get superior treatment from an out-of-network provider, I’d just go, and figure the money out later.
Mr. Harrop traded valuable time for money…a conscious decision he was entitled to make. At least he could make the decision/had that choice.
Good point Chuck.
Thanks for clarifying and illuminating the way any bureaucracy works. It is tragic how much misunderstanding and ignorance there is about how healthcare decisions are made and how little “choice” consumer have in their care.
If we smash up our cars, our car insurer sends us a check in the mail which we can apply to any repair we choose/don’t choose to get. Car insurance is mandatory in most states. We should apply this same basic premise to health insurance. And, in connection with their health care premiums, people should be incentivized to stay well through healthy habits, exercise and well visits. Paying for well visits is nice, but the trade off is not.
[…] John Goodman points to a recent story and then offers an alternative. […]
Excellent piece. This further points out the unfortunate disconnect people (even writers who supposedly research their subject) have with regard to the basic danger of the democrat approach to healthcare reform. It is the third party involvment and the misunderstanding of the use of “insurance” in healthcare that is completely wrong headed, and that process is not a new one.
HMOs and managed care in general have been in play for more than forty years by both private and government plans, and their track record is abysmal in terms of acheiving cost containment without completely undermining the relationship between physician and patient. These managed care techniques are mostly responsible for creating the entitlement mentality that plagues the healthcare industry today, and have introduced the unintended consequences of increasing costs by encouraging the mentality of spending “other people’s money” as often as possible.
Of course, the big difference in what has gone on the past 40 years as opposed to what will happen with Obama type reform is that the bureaucrats in charge of one individual’s healthcare will not be answerable to anyone but other bureaucrats and politicians. I think even the most poorly informed of us should understand the inevitable corruption of that methodology.
Then again – maybe not.
A casualty insurance approach, or any other payment method which puts the puchasing power and decision-making responsibility in the hands of the consumer, is the way to go. I don’t want to have to argue with any bureacracy, whether it is private or public, about where I get my care.
Hi- love you articles..I am from RI and read the Providence Journal (then put it in my kitties litter box –what a rag) and the writer, Harrop, would argue for anything liberal…so her biased, emotional opinion is not unexpected.
Many of the cases we sometimes hear about, where an insurer refuses to pay for a cancer therapy, the treatment in question is actually a costly drug not approved (and not commonly used) for a particular type of cancer. (I don’t believe this was true in the case of Froma Harrop’s husband) The movie SiCKO embellished the story of a man with advanced kidney cancer, for whom the insurer refused to pay for a variety of therapies. No insurer (including Medicare and Medicaid) would have paid for the therapies mentioned. Nor was there any real chance that the therapies would have worked.
We are only required by law to carry liability insurance for our automobiles — not collision. Health insurance is analagous to collision insurance, but some 15% of drivers or more still don’t have the insurance they are required to carry. Why would health insurance requirements produce any different results?
Also note that when you’re having body work done on your car, the cost is much, much higher than it would be if we had to pay for it ourselves. (Next time, go to a body shop and tell them you’re paying for the repair yourself and see the difference in price.) Any time you interject a third party who pays the bills, the costs go up. Why do you think vets are so eager to sell health insurance for pets these days? They want to do expensive surgeries, which will only be done if the pet owner’s aren’t paying the bills. When I was a kid, if the dog got sick and didn’t look like he would recover, he got a bullet, not a trip to a pet hospital.
Anyhow, John’s answer to the mis-informed editorial is right on, in my opinion.
Consumers need to realize that when they qualify for Medicare, they should not exchange it for one of the other plans available in their location–no matter what. The HMOs invite Medicare enrollees to luncheons and convince many of the attendees that their plan is better, unfortunately.
My friend joined one of the HMOs,then needed to be in a skilled nursing home, was hospitalized but was sent to another skilled nursing home because they didn’t have a contract with the one she was in. She was devastated. She continued to pay for her room at her original skilled nursing home, and as soon as her rehab was finished and she was no longer covered under her HMO, she returned to her original skilled nursing home.
WARNING: If you or your loved one changes from the original Medicare for one of the HMOs being offered, you are not given the privilege of going to the doctors and to the nursing homes of your choice. When one is vulnerable, this can make a big difference.
Medicare, like every other system, needs to be evaluated and “tweeked” as the needs arise, but so far, it does a better job than the HMOs because it gives us more freedom to make choices.
It’s hard for me to be a fan of private health insurance. Before all the deregulation when they had to spend about 98% of your premium dollar on your health claims it was a good deal. However, now they get to snatch about 23% of your premium dollars and they actually put some of that into the pockets of people whose job it is to come up with ways to deny your claims! We’re paying them to rip us off. Apparently what doesn’t go to huge salaries, bonus, private jets, etc, etc, goes into the pockets of shareholders, and policy holders get stuck with ridiculously high premiums and deductibles. My money’s on the passing of HR676, which expands Medicare to include everyone with a legal right to be in this country. Will it force private health insurance companies out of business? Of course it will. But, they did it to themselves.
I and most of you will be very pleased with the health care plan developed by our Senators and Congressmen if they will be willing to obtain their medical services under the identical plan. I realize they will need to change the current law but that is very doable.
Private always better than public? Not clear.
Cost containment is going to happen someday in USA, now or later.
So, public section can not blindly pass money to private insurance companies for ever.
Thus, we must create something that looks like what other nations have created where costs are managed better. Anti government ideologies will not serve us well. Government is what makes society more civilized, even with all the weaknesses that public sector has.
Take a look at the Oregon priorities list, pre and post government control and the NHS decision to ignore the “rule of rescue” in its rationing decisions.
Then proceed to defend the assertion that government choices in rationing are more desirable than private ones.
Facts are even more stubborn than theory. In this case both of them militate against the “everything is the same” assertion.
Finally, government failed to make society more civilized in either the USSR or Nazi Germany so it is clearly not the case that government “is what makes society more civilized.”
Sounds like a great idea, but I doubt if insurance company are going to publish their payment schedules. That would be “competitive information” and most likely proprietary. There exist now some dental insurance plans that reimburse by procedure. If it’s not possible to find out exactly how much they will pay for each procedure, it would be like buying blind. How would a person compare one plan to another unless they could compare reimbursements/payments?
The whole health care issue is overwhelming. It must be broken down in segments (Medicare, Medicaid, HMOs, doctors, dentists, etc., etc., etc.,) and studied and then put together to mesh. It IS doable.
In my opinion the biggest problem and concern for people is paying catastropic medical bills. Most people can pay for regular health services, such as annual exams, a broken bone, Xrays, etc. We have catastrophic health insurance. Why aren’t more people purchasing it and paying for their routine health services?
The government should only step in when the people can’t pay for catastrophic health insurance, and when this same group of people can’t pay for the routine health services they need. The government, so I recall from my civics class, should only step in when the people can’t do for themselves.
We pay to maintain our cars. Why don’t we pay to maintain our bodies? Then, perhaps, more people would be concerned about their health habits. We would all learn that if they don’t take care of ourselves, we’ll pay more in health care costs. What currently is being promoted is: “Since the other guy” is paying, why worry?
Boy…the brits are really getting tired of us Yanks continually blowing up a bad story or two about their NHS. Its astonishing at how the Brits have become the “New French” lately!
It’s a broad generalization to equate Obama’s “plan”, which to my knowledge doesn’t really exist yet, with the UK plan. As far as I can tell, its like equating apples to…well, nothing. We are debating as to how this will be paid for. The money to pay for the NHS comes directly from taxation. According to their site, “ The 2007/8 budget roughly equates to a contribution of £1,500 for every man, woman and child in the UK.”
That’s not a lot of tax out of one’s yearly paycheck for free healthcare.
Also, hasn’t there been an inherent LACK of funding in Medicaid, which is different than the more successful Medicare?
Even Ms Frost above agrees… “Medicare, like every other system, needs to be evaluated and “tweeked” as the needs arise, but so far, it does a better job than the HMOs because it gives us more freedom to make choices.” Telling us an under-funded program, (in this case “medicaid”) is going to have problems proving timely care, is nothing we don’t already know. With due respect, that’s why the nation is debating reform now!
The question is how to cover 40 million Americans that don’t have coverage, and how to ensure the “insured” are REALLY covered when push comes to shove.
Most of your article focused on “negating” the fact that any government health system could work… I don’t really feel you did a great job at that…your arguments against the NHS and Medicaid as it applies to Harrop’s argument really didn’t cut it at all.
But could you please elaborate on the casualty insurance solution? How much would something like that cost monthly, and how much would the “lump sum” made available by an insurer be? I’m sure there must be more information you have about the successes of the “catastrophic care market”. Could you do a better job at explaining what this is and how much it would cost an average Joe?
Thanks
John— one other point from her article: “You are free to go out with your own money and buy whatever you want.”
That is patently untrue, as Medicare beneficiaries already know…
Reminder for those who do not: Section 4507 of the 1997 Balanced Budget Act, and backed by the court ruling in United Seniors Assn v. Shalala (1999).
Their goal is control– and even the Ms. Harrop’s of the world might begin to question if they understood the facts of how the right to spend your own money for legal health care services is what is at stake in this debate.
I would love to read of John Goodman’s critique on the Alabama Health insurance market. Controlled by one carrier, BCBS.
The Alabama market, in essence, is socialized medicine. And, what are the results. Pre-screen on MRI’s. Denial of coverage for an infant at Tulane Hospital because it is outside its network. Hospitals who are in the top 100 for Cardiovascular disease being designated as a Tier 2 hospital (low quality), just because they would not agree to BCBS fee schedule.
John Goodman is, as usual correct, in his analysis. Death Panels already exist. The only way to relieve it of its duties is to give the premium dollar (in part) to the consumer (insured)…and relegate the insurance carrier to it original purpose….insure the unexpected. Insurance companies, in its present role, can be the enemy, but not as much as the government would be should they take over the role.
Keep the comments coming, John. Good Job!
Consumers need to realize that when they qualify for Medicare, they should not exchange it for one of the other plans available in their location–no matter what. The HMOs invite Medicare enrollees to luncheons and convince many of the attendees that their plan is better, unfortunately.
My friend joined one of the HMOs,then needed to be in a skilled nursing home, was hospitalized but was sent to another skilled nursing home because they didn’t have a contract with the one she was in. She was devastated. She continued to pay for her room at her original skilled nursing home, and as soon as her rehab was finished and she was no longer covered under her HMO, she returned to her original skilled nursing home.
WARNING: If you or your loved one changes from the original Medicare for one of the HMOs being offered, you are not given the privilege of going to the doctors and to the nursing homes of your choice. When one is vulnerable, this can make a big difference.
Medicare, like every other system, needs to be evaluated and “tweeked” as the needs arise, but so far, it does a better job than the HMOs because it gives us more freedom to make choices.