California Health Plans’ Success
Like other bloggers here, I’m no fan of employer-sponsored health care. I wish those who benefit from it would embrace real, consumer-driven reform. Nevertheless, I am always amazed at how the mainstream media covers stories of health insurers’ “denial of care”. It’s kind of like watching Michael Moore’s grotesquely misleading SiCKO on an endless loop.
The California media have been on a feeding frenzy since the state regulators went after health plans for rescinding policies of people in the individual market who misrepresented their health status on their applications.
That story seem to have fully played out, so now Victoria Colliver of the San Francisco Chronicle has written an article that describes California health plans’ not paying for prescribed treatments.
Ms. Colliver asks: “…what happens when that process breaks down and sick patients are left to fight for medical care? Each year, thousands of Californians find themselves at odds with their health insurers over whether they, as patients, should get the treatment their doctors prescribed.”
Well, not quite: no health plan can prevent a doctor from prescribing any treatment within his scope of practice. The health plan pays (or not) for the treatment, but it doesn’t practice medicine. Ms. Colliver’s article resulted in 138 comments on the newspaper’s website (at my last count), pretty much all of which were along the lines of: “…profit-hungry, blah, blah, blah, …single-payer better, blah, blah, blah…”.
According to Ms. Colliver (in whose figures I have full confidence), 7,000 Californians have taken advantage of the statutory Independent Medical Review (IMR) since 2001. In 2007, the state’s two regulators of health plans resolved just under 2,000 cases, of which 40% went in favor of patients and 60% went in favor of health plans.
That sounds pretty fair to me. If 100% went in one direction or the other, I’d conclude that the system was unbalanced. All claims processes have friction in them. Any reasonable person must accept this.
Let’s put the number of IMRs in perspective. There were 20 million privately insured people in California in 2006. Let’s assume the same for 2007. If California holds true to the standard model of health care costs, the incidence of expensive illness was very skewed. About one million of the 20 million would have incurred half the health care costs of all privately insured Californians that year, and only 200,000 would have accounted for fully one third of the costs.
Let’s figure that California’s private health plans paid $80 billion in claims in 2007: $4,000 per person. That implies that the 200,000 most expensive patients would have incurred claims of about $27 billion: $135,000 per person, on average.
Of those 200,000, only one percent (2,000) went to IMR, and less than half of that one percent got the coverage decision turned over.
Bluntly, the naive accusation that health plans “profit” from simply denying claims is clearly not accurate.