The following letter was received from Michael Perrone, Jr. of Belcamp, MD:
I would like to offer an analogy that I believe accurately illustrates the current state of health care costs in this country. Think of our health insurance system as a house in the middle of a hurricane. Water is coming in through every conceivable place: through broken windows, attic vents, and cracks in the foundation. Water is also coming in through the front door, which is wide open.
In discussing our predicament, everyone is busily drawing up plans to repair the windows, seal the attic vents, and pump out the basement. Yet nobody has bothered to get up and close the front door!
The front door in this analogy is tort reform, or the idea of capping malpractice awards so that doctors don’t have to order so many unnecessary medical procedures to minimize their chances of being sued. Estimates of the annual cost savings of meaningful tort reform vary widely: from as low as $20 billion to over $200 billion. But even at the low end, this should be a no-brainer. Here is a way to reduce health care costs significantly at no cost to society, so why is this not the leading point in every health care-related debate?
The answer, of course, is because there are many lawyers who benefit from medical lawsuits, and close to half of the members of Congress are lawyers themselves (including seven of Maryland’s eight representatives and one of our senators). But We the People cannot allow ourselves to be misled by the appalling lack of debate on this matter into thinking that this is a trivial issue. I have attended TEA parties, and I also attended the Baltimore Rally for The Public Option at the Senator Theatre last week. Tort reform is the one and only issue for which I have sensed equal levels of public support from both sides of the debate. But instead of being the cornerstone of our dialogue, tort reform is at most an afterthought. We need to change that.
I would like to return to the house-in-a-hurricane analogy to illustrate another point. Imagine that someone is loudly criticizing the quality of the house’s construction and blaming much of the water damage on defective contract work. Now imagine that the individual doing the criticizing is the builder himself.
The builder in this analogy is the representative or senator who points to lack of competition between insurers as being a major factor in our health insurance affordability problem (which of course it is). But why is it never mentioned that the lack of interstate competition is the result of a 1945 federal law which protects insurers from just that? We have politicians blaming the insurance industry for not being competitive while those same politicians keep laws on the books which restrict competition!
This is absurd. We have two powerful, effective, no-cost means at our disposal in the fight against rising health care costs, and our politicians refuse to use them. Instead of considering tort reform or repeal of the McCarran-Ferguson Act, our elected officials are proposing “solutions” that are vastly more expensive, intrusive, and confusing. This is unacceptable. The only way our voices will be heard is if we yell louder than the lobbyists who represent the trial lawyers and the insurance companies. So let’s start yelling!
Michael Perrone, Jr.
Belcamp, MD
While I do agree with Mr. Perrone, I do not feel that this is the only answer. Insurance companies have far too much control over thier customers. I found in my years that they have one job, deny coverage! Pre-exisiting conditions or experimental procedures are a common denial basis, especially for cancer patients like myself. I also do feel that everyone deserves care regardless to employment status. To fine a person for not carrying coverage is crazy as well. The other issue is doctors offices constantly charge different rates. An example is that the insurance company pays one fee, lets say $75 for a procedure and then another patient that has no insurance or insurance that refuses to cover must pay over $125 for the same procedure. The level of care did not change so why the difference in charge. To me the doctor should charge less to the patient that has no coverage as they have to pay upfront and the insurance company usually takes over 30 days to pay, so in reality the doctors office saves money.
Obviously in larger, more costly procedures my example does not work. I still feel the doctor should work with the patient and not charge the full amount they billed but the “reasonable and customary” charges they usually get plus interest if they stretch the payment out.
We live in a society that punishes the middle class. I pay over 25% of my salary just ot premiums and that does not cover co-pays and deductibles and and and….
It needs to be fixed and like it or not regulation is the only answer since insurance companies are just too greedy to fix it.
Hi Jason –
I agree that my proposals are not the only answers. And I agree that more regulation may well be needed (particularly in terms of insurers’ cancellation/nonrenewal policies). But I think the idea that insurers are “greedy” is inaccurate. For one, the profits earned by those insurers that are for-profit cannot be too “excessive” because if they were, they wouldn’t be able to compete with the not-for-profits. More fundamentally, financial strength is the cornerstone of solvency – an insurer who goes under because it has to turn over “excessive profits” in a good year and eat its losses in a bad year benefits nobody.
The denial of coverage to individuals with pre-existing conditions isn’t a matter of profit for insurers – it’s a matter of the insurance industry’s existence. If insurers were forced to accept every applicant unconditionally, people would go without coverage as long as they don’t need it, buy a insurance policy whenever they get sick, and cancel it as soon as they get better. Insurers would collect a few months’ worth or years’ worth of premiums here and there to cover a lifetime of exposure, and they’d promptly go bankrupt.
All that having been said, it is also inexcusable in a society like ours to have people who cannot obtain health insurance. I would propose mandating that insurers accept all applicants under an age such as 24, and all other applicants who were insured within the past six months but lost their coverage for any reason other than fraud. After age 24, an insurer would be obligated to provide coverage if applied for during say a one month window every two or three years (i.e. “open enrollment” periods that revolve around a person’s birthday). This way, people who were previously without coverage and decide they want it can get it at some point, while insurers are far less exposed to adverse selection by individuals who are looking to carry coverage only while they intend to collect benefits.
I also agree with you that the pricing of services by doctors and hospitals is far too opaque. If hospitals were forced to publicize their pricing systems, we could all make more educated decisions regarding our care.
As always, a balance needs to be struck. Some regulation is needed to smooth out the “rough edges” of the free market, if you will. But too much regulation can ruin an industry and harm consumers in turn.
I don’t understand what you are saying. Your very confusing and I’m getting very frustrated. Well Mr. Perrone I wish you all the help and luck you need. Call me please. 410-469-8173 thanks
Bill Chaterton
Hi Bill –
Thank you for the well wishes, but I’m not sure what you mean about help and luck.
The McCarran-Ferguson Act essentially turned licensing and regulatory authority over the insurance industry over to the states, which means that you as a consumer can’t buy a policy written by an insurer from a different state if that insurer isn’t licensed in your state too.
I think the Swiss or Dutch systems need to be seriously considered. In Switzerland Doctors and Hospitals have to advertise their rates since they are in competition with each other. If Franklin Square and Upper Chesapeke offered the same service, they would be advertising out the wazzoo about their prices being lower then the others. This causes lower rates for services.
My wife and I both work and both of us have taken jobs with benefits, as opposed to taking higher paying jobs without benefits. Why should we have to pay for our insurance, and everyone else’s? If this thing is supposed to even things out and make life in the U.S. more fair, how is it going to help the working class who already have healthcare, but are also already struggling to pay taxes? Who is paying for health care for the unemployed? Wait, I know, the employed, right? The money is not going to come out of thin air. This IS Socialization. If you don’t like that word, how about WELFARE? Our insurance works, we work, how about leaving it alone!
Sorry for the rant.
Now, tort reform? YES! Lawyers are the only ones that stand to take a hit from that.
Repealing the McCarran-Ferguson Act? I really don’t think it will help. The rates that people pay on their policies are based on how many participants are in their group, not state lines.
Pre-existing conditions? I do see the need for them, or yes, their will be hoardes of people who will buy insurance only when their health fails. Can you imagine only buying car insurance after you total your car? How would that work? Insurance companies have put in place look back periods, and pre-x clauses to keep themselves in business; it is a sound business practice.
I do agree the system needs more accountability, but leave my benefits and taxes alone!