Monday, July 26, 2010

HB Magazine Feature: Health Care - The Era of Unintended Consequences by Mike Grumet

Why is the cost of health care on the rise? Yes, there is profit motive. No question there is corporate greed. But there are unintended consequences as a result of actions by everyone in the system from consumers and lawyers, doctors and politicians to insurance and drug companies.

At the consumer level, we demand that drugs that not designed to treat serious illnesses or medical conditions (i.e. allergies) be covered. We request often unnecessary medical tests to eliminate our own fears about having a certain illness or condition and then ask that our physician help get our insurance company to pay for it - the unintended consequence of which is higher premiums and future difficulty in obtaining insurance.

The lawyer who sends you to a doctor, chiropractor or therapist with the goal of exaggerating your pain or injury in order to better position you for a higher insurance settlement not only affects both liability and health insurance costs, but also limits your ability to acquire insurance in the future due to pre-existing conditions.

Physicians who bill for services not performed raise the cost of insurance. A friend recently told me of a co-worker who paid $10 for an hour massage at a chiropractic office whose insurance was subsequently billed $3,000. So who really pays for that massage?

You have to wonder what the impact will be when politicians pass laws with far-reaching financial implications (like the California Legislature who passed a law after a major earthquake which required over 400 hospitals to be retrofitted to withstand bigger earthquakes. Don’t the hospitals have to get that cost reimbursed in the form of higher contracted amounts with insurance companies? Won’t the insurance companies in turn raise our rates?).

When insurance companies take their time in reimbursing healthcare practitioners for services rendered, the result is an increase in administrative costs, higher premiums and fewer doctors accepting insurance (my chiropractor tells me that it takes about $50 in administrative cost for every $100 visit he bills to an insurance company, so he’s opted to take cash only and charge less for his services).

Drug advertisements has been a double-edged sword. While informing consumers about drugs which might benefit them, the un-intended consequence is that an increasing number of patients ask or even demand “the new good stuff” from their physicians. Generally speaking, the newest brand-name pharmaceuticals on the market also come with a higher price tag, which … you guessed it, results in higher rates.

Then we have the intentionally un-insured. Many people say they can’t afford insurance, but what they really mean is that they aren’t currently sick and don’t want to have to pay for insurance now. Instead, they typically wait until the day they become sick or injured to try to acquire insurance and then want to cancel their policy after the benefit is no longer needed. Meanwhile, responsible consumers pay more because the pool of non-paying (mostly healthy) consumers aren’t contributing premiums.

There has been a veritable explosion of radio and billboard ads for “Lap Bands” to help you lose weight. The radio tag says something like, “maximize your PPO benefits now.” Our society encourages us to overeat, get fat, have surgery, lose weight and make the insurance pay for it. In contrast, I wonder how much diet and exercise would cost our healthcare system?

What about electric chairs for seniors? No politician will vote to reduce those benefits, but doesn’t asking insurance companies and Medicare to cover more benefits translate to having our premiums go up to help offset the cost?

As the system implodes due to over-use who will the politicians blame - the evil insurance companies? Of course! However, more regulations imposed on insurance companies which demand that they insure individuals with pre-existing conditions will simply result in the same skyrocketing insurance premiums.

So the next time you complain about the increasing cost of insurance premiums and the cost of health care, ask yourself this question: “How do I contribute to the increased cost or savings in the system?”

Don’t our collective choices really determine future cost of healthcare?

Mike Grumet Insurance has been serving the community with life, health, disability, long term care and Medicare supplement insurance since 1992. He is located at 16541 Gothard St., #202. Huntington Beach, CA 92647. For assistance, contact Mike at (714) 698-6453.

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