2265 North Clybourn Avenue    Chicago, IL 60614    P: 773.296.6700     F: 773.296.1131

Best Financial/Health Advice Part 2: Understanding Insurance

For Part 1 in this series, click here.

A little history is required in order to grasp how we got here. Until the arrival of Medicare in 1965, the only health insurance available was Blue Cross/Blue Shield, a network of not-for-profit companies founded in 1929, Blue Cross covering hospital charges, Blue Shield physician fees.

Then, in 1973, President Nixon with the help of his friend and major donor Edgar Kaiser (later to receives buckets of federal funding for his Kaiser Permanente HMO), signed the Health Maintenance Organization Act of 1973. In this legislation, medical insurance companies, hospitals, and physician groups were encouraged to function as for-profit corporations. The AMA supported all this because the act would end any discussion of the much-feared “socialized medicine,” which we know today as single-payer health care or Medicare for all.

If you have a minute, click here for a page of the Nixon transcripts as he discusses with his Chief of Staff John Ehrlichman just what Kaiser had proposed (scroll toward the bottom of the page).

Ehrlichman: The less care they give them, the more money they make.

Nixon: Fine.

The law, known as HMOA73, encouraged the establishment of hundreds of health insurance companies, some as spin-offs of old insurers (like Aetna and Cigna), others as new players in the insurance game (Humana, United). But whether you were insured by Blue Cross/Blue Shield or one of the new players in the insurance game, either you paid the premium yourself or it was shared as part of the benefits of your job.

This was a massive conversion of health care from a service industry to a for-profit business model. It is the moment that triggers the devastating downstream effects we feel today. Highly inflated prices, steadily increasing at inflationary rates that vastly exceed those of any other goods or services, coupled with overutilization of everything. Too many tests, offices visits, surgical procedures, prescriptions, and the like. The mantra of health care became “Bill ‘em high. Bill ‘em often” (that’s an actual quote from an orthopedist to me).

With the exception of Blue Cross, all the insurers were publicly traded companies, many of them in the Fortune 500. Their loyalty is to the shareholder, not to the patient-enrollee. Later, in an attempt to level the corporate profits playing field, some of the Blue Cross companies dropped their not-for-profit status and are now publicly traded as well.

How well have these companies actually done over the years? If you’ve been holding UnitedHealth Group stock during the past decade, you’re sitting pretty. Take a peek at this link at the third-quarter highlights for 2017.

Here’s what Time Magazine reported on the compensation of UnitedHealth Group CEO Bill McGuire, MD:

During his 15-year tenure as CEO and chairman of UnitedHealth Group Inc., McGuire turned the regional health insurer into the second largest managed care company in the U.S. He received his thank yous in the form of stock options—$1.6 billion of them, to be exact—but he took some of them on the days the company’s stock price hit yearly lows, profiting when the stocks went up again.

I think of Dr. McGuire’s largess and then remember how for years we posted on our office bulletin board an uncashed check from UnitedHealth, the reimbursement for one patient’s office visit. It was made out for exactly five cents.

Enter Obamacare
Until Obamacare (also called the Affordable Care Act, or ACA) came along and shook up the health insurance industry, you didn’t need an MBA to figure out how health insurers became some of the most profitable companies in the US. Obamacare did trim their profits for a while, but fortunately for them (though not for us), they recovered and these days are doing just fine.

This is how it works: Money (yours, along with your employer’s) pours into insurance companies in the form of insurance premiums, to the tune of $18,764 per person in 2017. This money is held in enormous reserves, the amount determined by a variety of formulas so that the insurance company theoretically always has enough to cover the medical needs of its policyholders. It’s notable that our total healthcare costs per person in 2017 came to $10,348 (about 25% of which is spent on something called “insurance administrative fees”). To get a rough estimate of reserves, it’s $18,764 minus $10,348 times the US population.  Do the math and you come up with some serious money.

Health insurance companies invested these mind-boggling reserves and made so much money that for years they were pretty inattentive to how they spent it on your health care. A physician, hospital, or laboratory would sign a fairly generous contract with an insurance company (called “being in network”) and agree to accept the insurance company fee schedule. But no one was paying much attention to how the money was being spent.

You could get full diagnostic testing for your symptoms at Northwestern on a Monday, have all the tests repeated on Wednesday at Rush, and again on Friday at Loyola. Breast biopsies, prostate biopsies, and skin biopsies galore were ordered. I know of one young patient with irritable bowel syndrome who had four colonoscopies, all normal, before she turned 30 (see my earlier Health Tip “Pigs At A Trough”). Bill ‘em again and again.

At the same time, Big Pharma created mega-expensive meds, often out of recycled generics, hospitals charged $20 for a BAND-AID, and physical therapists saw six patients an hour and sold three of them overpriced “home equipment” billed to their insurance. I remember back in the 1980s when, working at the now-defunct Augustana Hospital, it was revealed that a physician had been removing non-existent lesions from a blind woman.

Before Obamacare, you could get easy access to care if you were a healthy specimen of a human being. The doors were locked if you were ill and/or had one of those poorly defined pre-existing conditions. Obamacare caused a major jolt. Suddenly everyone with any condition was allowed access and the industry began hemorrhaging cash. It even looked like some companies might have to tap into their precious reserves.

In an effort to stem the tide since Obamacare became law, the industry has resorted to the two tactics it knows best: deny benefits and raise prices.

Denial of benefits is now honed to a fine art. To rein in costs, you as a patient are limited to using certain hospitals. Blue Cross dropped super-expensive Northwestern Memorial (with its richly compensated $9-million-per-year CEO), Rush, and University of Chicago. You’re also limited as to which drugs you can take (access to brand-name pharmaceuticals is well nigh impossible) and even which pharmacies you can patronize. Have you noticed the long lines at Walgreens and the empty pharmacy counters at CVS?

Even more profitable than denying benefits is raising your premium and your deductible. For many, the annual deductibles are so high that (if they’re healthy) they never spend enough on health care to even use their insurance. Which, of course, is just peachy with their insurer.

This is where we are today
High premiums, high deductibles, super-expensive medical costs. After following healthcare economics for decades, I’m here to say there are ways to get the coverage you need and not go broke in the process.

So before next week’s Health Tip arrives, if you have questions about what kind of insurance is right for you, think carefully about what you need from the healthcare system. Do you want everything completely covered, from your office visit to the specialist of your choice to the option of going to Mayo Clinic for a fourth opinion?

Or are you big on self-care, avoiding the system except when you really need it, trusting that your body can generally take care of itself but having the brains to know that it’s not a good idea to perform your own appendectomy.

Give this some thought and I’ll be back next week.

Be well,
David Edelberg, MD

Leave a Comment

  1. Bob Wilson says:

    Dear Dr Edelberg,
    The grim facts that you have given about health insurance are a reminder that we need more health care reform, not less. I recently went for my annual physical with a Cleveland Clinic doc. She agreed to order a test for Vit D but said that I needed to be aware that Medicare may not cover this and that my cost could be $161. I agreed, of course, but checked later to see what Life Extensions would charge. It was $47. How can it be that a non-profit has to make 3 times what a for-profit lab charges ?!! I think we need more earthquakes in health care /insurance like Amazon threatening to get into the business.

Join our Newsletter

Get health recommendations, delicious and time-saving recipes, medical news, supplement reviews, birthday discounts, and more!


Health Tips

Dr. Edelberg’s Health Tips contain concise bits of advice, medical news, nutritional supplement and pharmaceutical updates, and stress relief ideas. With every Health Tip, you’ll also receive an easy, delicious, and healthful recipe.

When you sign up to receive Health Tips, you can look forward to Dr. Edelberg’s smart and very current observations arriving in your in-box weekly. They’re packed with helpful information and are often slightly irreverent. One of the most common responses to the tips is “I wish my doctor talked to me like this!”

Quick Connect

Get One Click Access to our


The Knowledge Base

Patient education is an integral part of our practice. Here you will find a comprehensive collection of staff articles, descriptions of therapies and nutritional supplements, information addressing your health concerns, and the latest research on nutritional supplements and alternative therapies.

Join our Newsletter

Get health recommendations, delicious and time-saving recipes, medical news, supplement reviews, birthday discounts, and more!


Upcoming Workshops

**Finding Your Calm
Tuesday June 5, 6:00 – 7:30pm
Christine Savas, LPC & Renee Zambo, RYT
Fee: $65 (including take-home materials)

Are you looking for ways to wind down amidst a hectic schedule?  Do you want to learn how to deal with ongoing stress?  Do you need tools to help you relax, but aren’t sure how or where to start? Join WholeHealth Chicago’s Clinical Psychotherapist Christine Savas and Yoga Therapist Renee Zambo for an evening of education on the importance of slowing down.

Space is limited and registration is required.
Please register online or by calling (773) 296-6700


**Shamanic Healing Clinic
Monday, June 11, 2018
with Katie Oberlin, HTCP
30-Minute Sessions ~ $40.00 (regularly $55.00)

Summer is just around the corner with the Solstice approaching on June 21st. Shamanically speaking, this is a great time to harness the power of the Earth element to ground your intentions and welcome it as a container for taking action in positive ways.

Experience a shamanic healing session.
Have you been thinking about new ways to address your health? Or build new relationships? Or be more authentically present in your work?

Take this opportunity to support this time of transition from Spring into Summer with an individual 30-minute session.

By appointment only, June 11, 12 – 5 pm
Half-hour session for $40 (regular price $55)
Please call 773-296-6700 to register.


***Vaginal Rejuvenation Workshop
Thursday, June 14, 2018;  6:00 – 8:00 PM
Mari Stecker, LAc & Renee Zambo, RYT
Fee: $65

Are you experiencing vaginal dryness? Or pain with intercourse? Have you been told you have vaginal atrophy due to menopauseAre you frustrated because you believe your sex life is overWell, it doesn’t have to be!

Come learn easy, non-pharmaceutical, non-hormonal, low cost techniques that you can do at home to help alleviate vaginal dryness, atrophy, thinning of vaginal skin and/or painful intercourse.

Space is limited and registration is required.
Please register online or by calling (773) 296-6700


Recent Health Tips

  • Controversial Diagnosis #3: Candida Overgrowth Syndrome

    Patients come to WholeHealth Chicago regularly with this common refrain: “You’re the fourth (or seventh or tenth) doctor I’ve seen. I feel terrible but am always told that my tests are normal and there’s nothing wrong with me. Recently I read about Candida overgrowth and the symptoms seem to fit me exactly. But the doctors I’ve seen all tell me there’s no such illness.” These Read More

  • Controversial Diagnosis #2: Chronic Fatigue Syndrome

    In the mid-1980s, two outbreaks of what appeared to be infectious mononucleosis appeared in the US. Unlike typical mono, which caused exhaustion for a few weeks, people with this type were left in a permanent state of fatigue, with low-grade fevers, swollen lymph glands, muscle aches, and poor focus/concentration. In some cases, the fever and lymph gland swelling subsided, but the utter exhaustion persisted. Because Read More

  • Controversial Diagnosis #1: Fibromyalgia

    I encountered my first significant controversial diagnosis when we opened WholeHealth Chicago in the mid-1990s. The concept of combining conventional and alternative medicine was new to the Midwest and right away we began seeing patients who came to us with chronic symptoms but no solid diagnosis. One group that stood out was made up of primarily women who had longstanding and severe widespread muscle pain Read More

May Sale: 20% Off Metagenics Gut Health Formulas

In honor of World Digestive Health Day on May 29th, some of our favorite gut-supportive formulas are 20% off this month! You’ve asked us to put these on sale and we’ve listened, but please pace yourselves – you have all month to take advantage of this great deal! More>>