Two related ideas come together in this Health Tip and I want to convey why this is all happening. First, a large part of our day at WholeHealth Chicago is spent dealing with insurance companies denying you benefits. Second, many patients have been telling me about the wave of anxiety they feel every time a letter arrives from their health insurer, especially when the envelope is marked “Important News About Your Insurance.”
This “news,” you learn, is virtually never good. There might be a dramatic increase in your monthly premium or an equally dramatic rise in your deductible. You might learn that the hospital system where you’ve been a patient for decades is no longer covered by your insurance. You might hear the same about your primary care physician or the specialist to whom she referred you. Because of this, you get word your scheduled appointment is cancelled. Now you need a different hospital and a new surgeon.
You scramble through your new “provider directory” and see a blur of names. In the back of your mind, you wonder what will happen to your medical records.
Then you get word that the medication you’ve been taking is no longer on your insurance company’s formulary. Whoever your new doctor turns out to be needs to make a change within 30 days or you’ll have to pay out of pocket for your meds. Oh, and don’t forget to take your new prescription to the approved pharmacy because your regular pharmacy, and the pharmacist you’ve known for years, is no longer in the network.
“Why is this happening?” you wonder. Is this a result of Obamacare/the Affordable Care Act (ACA)?
The answer is greed
The answer was predicted several years ago by investigative journalist Steven Brill when Time magazine devoted an entire issue to his report on the US healthcare crisis in a piece called Bitter Pill: Why Medical Bills Are Killing Us (click here for the short version), later turned into the excellent book America’s Bitter Pill. The heart of the matter was good old-fashioned greed, not so much from the health insurance industry, but rather from the healthcare industry itself.
Much of Brill’s wrath was aimed at hospitals with their bloated price gouging, egregiously overpaid executives, and architecturally overwrought buildings. Case in point: a visit to Northwestern’s emergency room for a bladder infection cost one of my patients more than $5,000. Brill was also incensed by physician fees, overuse of surgery, the cost of medical equipment, and runaway prescription drug price increases.
It doesn’t add up
What went wrong was this: when Obamacare/ACA went into effect and everyone could get insurance and nobody could be denied coverage for a pre-existing condition, the insurance industry braced itself for a lot of potentially expensive patients. They counted on these costs being offset by the premiums they’d receive from millions of healthy new enrollees who would rarely use the healthcare system.
They were correct with the first prediction. Suddenly there was a flood of chronically ill patients needing a lot of expensive care because they’d been kept out of the system for years. Call them Group A.
The second prediction misfired completely. Even though many of the premiums for healthy new enrollees (Group B) were federally subsidized under the ACA, there still wasn’t enough revenue coming in to the insurers. Group B wasn’t able to cover Group A, especially with price-gouging from hospitals and Big Pharma and over-utilization of medical services by physicians themselves.
For the first time in their history, health insurance companies began losing serious amounts of money. In 2016, small insurers like Land of Lincoln went bankrupt. Larger insurers, like Aetna and United, announced that they would no longer participate in the Obamacare/ACA insurance exchange in Illinois.
Then, when Blue Cross of Illinois announced that its 2015 losses selling individual health policies exceeded $1.5 billion, you could predict what would follow. The blowback isn’t surprising to anyone who follows health care economics, but it’s painful nonetheless:
- The super-expensive hospitals (Northwestern, Rush, U of C) are dropped from Blue Cross’s roster. They’re basically told “We get better rates and equal quality from your competitors. Sure, you guys are good, but not that good.”
- The overpriced specialists at these hospitals are dropped as well or choose to resign because they refuse to lower their fees.
- CVS is dropped because Walgreens offered a better deal.
- Big Pharma is told, “You can’t be serious about those prices. We’re dropping dozens of your overpriced ‘new and improved drugs’ from our formulary.”
- Last but not least, you with the Blue Cross card in your wallet receive a letter. Let us share some of our losses with you, it says. Here’s this year’s premium bump. Here’s your new deductible.
Yes, it’s all pretty grim and if Obamacare/ACA is repealed without a replacement, the situation could leave millions with no insurance at all. Just a few days ago President Obama weighed in on the implications of this in the New England Journal of Medicine.
For today, it’s useful to understand the why behind that unopened “Important News” envelope on your kitchen table. Next week I’ll offer some suggestions about how to deal with these changes.
David Edelberg, MD