Flaws with Universal Health Insurance Access

Harvard professor and author Louis Menand wrote a very insightful article in the March 1, 2010, issue of The New Yorker entitled “Head Case: Can Psychiatry be a Science?” In it, he describes the complexity of defining, diagnosing, and treating psychiatric disorders. He quotes many experts in the field of mental and behavioral health disorders who, as he put it, in referring to the work done Professors Jerome Wakefield and Allan Horwitz

“…the increase in the number of people who are given a diagnosis of depression suggests that what has changed is not the number of people who are clinically depressed but the definition of depression, which has been defined in a way that includes normal sadness.”

He later points out that the traditional disease model with which we diagnose physiological disorders is of no help. In cases in which we present a fever to a doctor, the doctor can conduct a test to determine whether the condition is a bacterial infection treatable with antibiotics, or a virus, which is not treatable. With psychiatric disorders, particularly a mild case of depression, there are many false positives, because no one has found a test that, with any degree of confidence, demonstrates that someone has a biologically treated case of clinical depression.

Why is this important? It is an example of why the traditional insurance model does not work for health care, and why giving everyone access to affordable “insurance” is doomed to failure. Insurance covers known or definable risks that do not increase through being radically redefined over time. If they do, premiums go way up. For example, life insurance policies are typically not issued to people living in a war zone in which the risk of death has exponentially increased and shows no signs of being predictable or controllable. Insurance companies can feel comfortable insuring against death, injuries, or property damage to cars and homes because these risks do not jump out of control in a short period of time.

Health insurance has become more like life insurance in war zones, with one big difference. In the war zone example, an external set of circumstances, the beginning of a war, has increased the risk. In the case of health insurance, not only can external circumstances raise the risk and cost, but both the consumer and the providers of treatments can redefine the risks and increase the costs.

Think about a life insurance policy. The risk against which to be insured is “death.” Imagine if a life insurance policy were suddenly converted into a policy that insured against “death,” being diagnosed with a terminal disease, and losing one’s home. None of us would expect the insurance company to pay for these other events, because the policy has a well-defined risk it covers.

However, the definition of “health” keeps changing, sometimes through patient behavior, sometimes through physician behavior, sometimes through the marketing done by pharmaceutical companies, and sometimes by operation of laws and regulations. In the last 20 years, we have seen the expansion of “mental health” coverage to include mild depression that was not deemed worthy of insurance coverage. While we expanded mental health coverage at Pitney Bowes because we believe treatment for mental conditions like clinical depression is foundational for getting people able to adhere to treatment plans for diabetes, heart disease, and hypertension, we also were able to put in controls that prevented runaway health care cost increases.

Similarly, drug companies have defined erectile dysfunction as a medical condition requiring treatment by a physician and a drug treatment like Viagra. I have no problem with this process of creating new medical conditions that lend themselves to drug treatments, but we should not be surprised that health care costs keep going up. Similarly, 20 years ago we felt sad for people who could not have children and glad for them if they were able to access fertility treatments to be able to fulfill their dreams of being parents. However, to require that multiple-egg fertility treatments be included in every insurance policy issued in a state, as is the case in Connecticut, drives up health care costs for everyone.

There are many other examples of marginally effective or even ineffective treatments that patients and physicians, and eventually lawmakers, believe they have to make a requirement in every health care insurance policy, so the cost keeps going up. The notion that, by having government control everything, we will see cost reductions over time, is not credible: government mandates which drive up costs have been part of the problem in the first place. If anything, government control of health care will accelerate the process of adding more “requirements” to health care.

There are three cost drivers in health insurance:

  • What gets covered and paid for;
  • What is paid for each transaction in which there is a diagnosis consistent with a covered item; and
  • The frequency with which transactions occur.

Government can be very effective in mandating what gets paid per transaction, and, indeed, through Medicare and Medicaid, for very low administrative costs and with high reliability, government, through its contracted third-party administrator relationships, does a very good job paying doctors, hospitals, drug companies, labs, and other care centers for services rendered. In fact, although it is not clear whether a majority of physicians feel this way, a significant number of physicians would prefer the simplicity and predictability of payment of a single-payer system operated on behalf of the government over the confusing, complex, and resource-consuming challenges of submitting and defending private insurance claims.

What government does poorly is keeping control of what gets covered and paid for, and, because of its low administrative overhead and its payment on a transaction-by-transaction basis in what we call a “fee-for-service” system, controlling the frequency of transactions. If I have a chronic disease like coronary artery disease, no payer can monitor whether it is appropriate for a cardiologist to see me 3 versus 5 times a year. That decision has to be left to the physician, and I am certain that an attempt by government to regulate it would be met with extreme anger and resistance by patients. Yet, a 20% reduction in payments to the cardiologists could be easily offset by increasing the frequency with which cardiologists see patients.

What would also happen is that physicians would spend less time with each patient, which would reduce the effectiveness of each visit, and the treatment paths would more often be more tests and more drugs, which will add cost to the system. I remember having a problem with staph infections on my face in the late 1980’s and early 1990’s. The private practice physicians whom I consulted had 5-10 minute visits, which only gave them the ability to diagnose the problem and prescribe a medication. Dr. Jack Mahoney, the Pitney Bowes Medical Director, whom I first consulted in 1996 and who had the luxury of a 20-minute visit, determined that I needed to change how I shaved, and was able to give me advice that not only eliminated the problem at the time, but prevented it from ever coming back. He was not rewarded for having encounters with me, but for making me healthy.

We need health promotion reform first, and health care payment reform next. If we solve these problems and give physicians the ability to practice medicine well and to be rewarded handsomely for helping prevent disease, the insurance problem will take care of itself. Focusing primarily on insurance is a deeply flawed approach.