The health insurance industry in the United States is the primary reason behind rising healthcare costs and the increasing disenchantment of physicians and patients with the status quo. By inserting themselves between doctors and patients, health insurance companies restrict access to care and divert massive amounts of healthcare dollars into corporate profits. The above graph tells a great story and doesn’t need a lot of explanation. It compares the profits of the top 5 health insurance companies to the top 5 companies in the oil and gas equipment sector who have a very bad reputation in the public eye. Health insurance companies have much better profit margins. It’s important to note that the graph depicts pure profits. Total revenues are much higher. For example, in 2006 UnitedHealth Group had a revenue of $71,542 million and “the evil” Halliburton had a revenue of $22,576 million. This is the money health insurance companies are taking from patients and withholding from doctors, getting in the way of delivering proper care in the process. It’s no surprise that the technical term used by insurers for payments given to doctors is medical loss.

The American Medical Association (AMA), which has been lately criticized by many physicians for no longer genuinely representing their interests, may be finally showing signs of change. In an attempt to “reduce the substantial administrative burden of ensuring accurate insurance payments for physician services” and to counteract health insurers’ biased practice of rating physicians, the AMA has announced the Cure for Claims Campaign, releasing its first health insurance report card. The country’s most profitable health insurance company, UnitedHealth Group, had the lowest rating in the AMA report, paying only 62% of the claims at the contracted rate (i.e., the negotiated rate promised to physicians).

Stating that physicians spend about 14% of their total income to obtain accurate payment for their services, the AMA says that “if physicians and payers use electronic transactions instead of manual ones for the estimated 3 billion claims submitted annually, the health care system can save over $90 billion each year.” This may be true but wouldn’t it better to just take the greedy hands of third parties completely out of our routine healthcare transactions?

Filed under: Health Policy