Health Insurance: A Billion-Dollar Middleman

Flickr - Health Insurance - 401(K) 2013

Whether you’re uninsured or the premiums of your private insurance policy have continually expanded over recent years, there’s a good chance your piggy bank’s vital signs aren’t looking so good when you’re forced to spend so much of your family’s income on healthcare or risk the dangerous effects of going without. Photo Credit: Flickr.

Richard Console, Contributor
Waking Times

With healthcare reform making the news almost every single day, the topic has politicians of all parties riled up, insurance companies crying panic, and the rest of us – well, mostly just confused. Are we supposed to dread the premiums that, the insurance companies tell us, will surely but inexplicably skyrocket? Should we be counting down to arbitrary dates when portions of a law that we frankly don’t understand will come into effect and either benefit us or rob our families of thousands of dollars? Or have we as a national audience gotten so caught up in the Democrat-vs.-Republican and liberal-vs.-conservative freak show of a political battle that we’re completely missing the point?

If I may humbly suggest – the real point is that health insurance never made any sense, anyway.

“Flawed Concept” Is an Understatement

Just think about the most basic concept of what health insurance is. Consider the very first person in the United States to pitch the idea of health insurance coverage to, well, anybody. What did they say?

“Hey, guys, I’ve got a great idea. Let’s create a multi-billion dollar industry of people who have no healthcare training and are employed solely to pay medical bills. Because after all, why shouldn’t we spend an obscene amount of money to establish an unnecessary middle-man instead of simply charging patients reasonable rates that they pay without help?”

  • Eloquent, no, but in a nutshell, that’s just what health insurance coverage is. Health insurance companies do not treat the sick. They don’t perform life-saving or even discomfort-reducing medical procedures. Simply put, they have no place inside any medical facility other than the artificially created role of bill-payer, a role in which their profits continue to soar even as (or especially when) patients forgo care for financial reasons. As a nation, we spend billions of dollars each year on an industry that serves the sole purpose of standing between us patients and our healthcare providers, raking in much more money than they pay out in the process.

    The goal of the insurance company is not to get you the best care, but to spend the least amount of money on your medical needs. It’s not coldhearted, necessarily, but it is the industry’s basic business model. Their contributions to society are miniscule, and their presence in the healthcare industry is more of a hindrance than a help. I don’t understand the whole prospect behind health insurance – other than, of course, the insurance company’s desire for profits. The principles defy logic, because they add layers of cost to an already expensive system without adding any real value.

    Flickr - Protest-sign

    Health insurance companies don’t make escalating profits by accident – they do it charging patients like you costly premiums, then paying as little of the money out for medical care as possible. Photo Credit: Flickr.

    The real kicker, the catch-22 (as in, you can’t afford medical care without insurance but can’t afford insurance because medical care is too expensive) is that these companies have us hopelessly entangled in their games. For one, the industry has become so established in our economy that the dissolution of insurance companies would cause a disastrous surge in unemployment. The costs of medical procedures has become so inflated (in no small part because medical providers and facilities have no need to compete economically, thanks to insurance companies), we can’t afford to go without insurance.

    Why I Care

    I bring this up because it is, actually, my business. Every day, accident victims who have suffered catastrophic injuries call or visit my office. Some of those clients have set up their auto insurance policies so that health insurance is the primary coverage for their injuries. Others hit their medical coverage limit with auto insurance and have to go through health insurance or, worse, have to start paying entirely out of pocket. Nothing makes me more outraged than seeing people taken advantage of during the worst moments of their lives – and believe me, it happens when the markups on medical care are an outrageous, say, 400 percent (according to Steven Brill’s TIME exposé “Bitter Pill: Why Medical Bills Are Killing Us,” also available here).

    Without adequate insurance, sure, accident victims are still treated in emergency rooms and stabilized – and then released with massive medical bills that can push them to the brink of financial ruin. That stabilization may be life-saving, but for many of the most horrifically injured victims, it’s nowhere near enough to regain functionality. I’ve known accident victims who needed repeated, invasive surgeries. My clients often can’t walk or even stand. They may suffer weakness or paralysis from neurological damage or experience muscle atrophy from extended hospital stays. That one stabilizing emergency room visit won’t help them here – they need physical and occupational therapy, often for months or even years. The ongoing recovery process alone is reason enough that having affordable access to healthcare matters.

    Flickr - physical-therapy

    Relearning how to stand, walk, and climb stairs after a traumatic injury takes a lot of work, time, and professional care. For the accident victims we know who have exhausted Personal Injury Protection auto insurance coverage or listed health insurance as primary coverage, the high cost of physical therapy can make it even harder to recover. Photo Credit: Flickr.

    The current spotlight on healthcare insurance and reform led me to seek out an expert on healthcare administration I could trust, one who has worked in the industry for nearly 40 years. John R. Strube is Vice President of Marketing & Development for the Choptank Community Health System, Inc., in Denton, Maryland, which accepts patients with and without health insurance.

    “Healthcare is a tricky business, and a risky business,” Strube told me. “The problem is, healthcare has never been a market. People try to apply market principles to something that has never been a market, and will never be a market.”

    Inflated Costs and “Legalized Extortion”

    It’s true. The medical field as a whole flies in the face of capitalism as we know it, charging astronomically high rates that have nothing to do with either supply or demand. Is there a shortage of scalpels I didn’t know about? Are we undergoing a secret gauze ration? It takes two minutes of time to find boxes of sanitary gauze pads on, and each pad costs just pennies, yet hospitals have been known to charge as much as $77 per box of the necessary medical product (that’s according to actual bills examined in Brill’s TIME exposé). Essentially, they charge what they charge simply because they can, and because their consumers can’t afford to go without.

    Total National Healthcare Expenditures (In Billions)


    When we talk about costs “skyrocketing,” this is what we’re talking about. Source: The United States Centers for Disease Control and Prevention.

    Unlike any other economic market you can imagine, the sellers keep their price tags hidden even at the moment the transaction takes place. Because medical care is necessary to life, the healthcare industry – in which health insurance plays a large, if overblown, role – has a captive audience. With excessive insurance premiums and inflated costs for procedures, tests, and even the most mundane of materials, the whole healthcare industry has insured and uninsured patients in a chokehold that no number of individual altruistic physicians can break – and in fact, many of these doctors don’t know themselves how much a given test or medication might cost.

    “The health care market is not a market at all. It’s a crapshoot,” asserted Brill in his TIME exposé. Patients “have little visibility into pricing, let alone control of it. They have little choice of hospitals or the services they are billed for, even if they somehow knew the prices before they got billed for the services. They have no idea what their bills mean.”

    With doctors in the position of authority, many patients feel that they have no say in their own health choices, becoming “powerless buyers in a sellers’ market where the only consistent fact is the profit of the sellers.” More and more, patients are facing a world in which medical providers have incentives to over-treat and insurance companies deny claims left and right, so that who really decides what kind of care a patient receives is about as reliable as a coin toss.

    Flickr - sign-200-insurance-policies

    When medical billing staff need to familiarize themselves with more than 200 insurance plans, it’s illogical to think that the insurance industry doesn’t burden healthcare providers with additional time and financial costs and undermine efficiency at least to some degree. Photo Credit: Flickr.

    The healthcare insurance industry is legally exempt from the antitrust laws that govern other industries across our so-called “free market.” The reason these companies seem to act as though they are above the law at times is because they really are above the law, or at least, above the kind of federal regulation that keeps our economy strong and makes sure that companies in other industries play fair.

    Capitalism at its finest.

    Spurred to Action?

    The good news is that inflated prices in of both medical procedures and insurance premiums have gone beyond the point of being a minor inconvenience. Patients, both insured and uninsured, are sick of the broken system with incomprehensible levels of bureaucracy that seems to put their health last. The situation has anyone with an Internet connection venting across news source sites and blogs, referring to health insurance companies as crooks, cartels, and – my favorite – “legalized extortion.”


    Fed up with the private insurance company profits, protesters have declared “corporate crime scenes,” making the statement, “It’s a crime to deny our care,” reported The Roosevelt Institute. Photo Credit:Flickr.

    For now, we individual patients simply don’t have the power to change a system that is so much bigger than us. Perhaps the best we can settle for at the moment is to educate ourselves. Is an empowered patient population a real possibility? If we get mad enough – maybe.

    “If I didn’t know any better, I’d say healthcare consumers are taking their gloves off and preparing for a bare-knuckle bout with hospitals, payers and the government,” wrote Porter Research. “The engagement movement is beginning to usher in a new class of consumers – a savvy group of patients and plan members that are not shy about demanding an honest bottom line from the healthcare market.”

    That may seem like an ambitious cry for a patient population that has historically been dismissed by insurance companies and complacent enough that the insurance industry has been able to seize so much power to begin with. But with healthcare costs growing unsustainably, patients across the nation are taking the crisis as a wakeup call that our big insurance companies might not be looking out for our best interests, after all. If we act on this frustration, it could mean moving in the right direction – and that equals less wasteful spending for all of us, and less of a financial hardship for the most vulnerable group of patients, those who suffer life-threatening illnesses or catastrophic accidents.

    About the Author

    Richard Console Jr. is the founding and managing partner of Console and Hollawell, one of the most highly regarded personal injury law firms in New Jersey and Pennsylvania. Since 1994, he has dedicated his professional life to protecting the rights of individuals that have been injured in motor vehicle accidents, medical malpractice, wrongful death, and other serious injury claims.

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