I apologize in advance for this health insurance rant, but I felt the need to get a few things off my chest. It's also probably fair to note that while Health Net, our PPO insurance provider, bears the brunt of my frustration below, I recognize that its root is more with the overall health care system of which Health Net is only a small piece.
Last week, I received a nice letter from Health Net. We receive claims and explanations of benefits correspondence from Health Net in the mail all the time, but every time I receive an irregular piece of mail from them, I cringe — and this is exactly why.
The letter was from Mr. Sam Cole, Regional Vice President of Individual and Family Plans at Health Net. Mr. Cole wrote to inform us that our PPO insurance plan premiums will be increasing 35% this year. Yes, 35%. To me, this is simply appalling. The letter cited age, type of coverage, dependent status, address, and the cost of providing health care as contributing factors. I'll take a gigantic leap of faith and give them the benefit of the doubt that our ~ $1mm in health insurance policy claims last year were nowhere near the analysis when they made their determination. Regardless, this is ridiculous.
Health care costs are no doubt increasing for a myriad of reasons — although, I would argue that the shrewd insurance companies themselves and the inefficiencies created by their system is as much to blame for that as anything else. I understand full well that these increasing costs are putting pressure on the for-profit insurance companies bottom lines. I also understand the pressure created by Health Net's (NYSE: HNT) stock plummeting 70% in 2008, nearly $3,300,000,000 in shareholder value — gone, vanished. I understand that the health care providers are getting squeezed, pushing back. And yes, I also understand that all of this is really, really complicated; well beyond my full understanding.
Here are a few simple things I definitely don't understand:
For-profit health insurance companies. How much longer can we accept having our health insurance industry controlled by for-profit corporations. By definition these companies are…well, run for-profit. And to me for-profit and quality, unbiased health care don't mix, never should have mixed, and never will mix. Regardless of intentions or mission statements or feel good commercials or well scripted corporate slogans, over time the simple goal of these companies is to grow revenue, control operating costs, and provide shareholders attractive returns on their investments. Health Net's own quarterly SEC filing describes that their “profitability depends in large part on [their] ability to, among other things, effectively price [their] health care products; manage health care costs, including reserve estimates and pharmacy costs; contract with health care providers; attract and retain members; and manage our general and administrative (G&A) and selling expenses.” How management of these companies can accomplish this without negatively impacting their insured base from a financial and quality of health care standpoint, seems next to impossible to me.
Deny, deny, deny…okay, fine tactic. Regardless of what insurance companies say, this is normal operating procedure. And if you don't believe that this is true, from my first hand experience, it is. I can't tell you how many tens of thousands of dollars of our health insurance claims have been initially denied by Health Net, fought by us, and subsequently overturned and paid in full after a ton of confusing, mind boggling, time consuming back and forth between me, the health care provider, and Health Net. It's also very interesting to note that, in my experience, once I get the California Department of Insurance involved things are escalated and “handled” pretty quickly at Health Net. This deny, deny, deny…okay, fine tactic works pretty well for the insurance company as it is my opinion that most people, including me, just want it to go away, aren't interested in going to collections or facing tainted credit scores, or don't have the energy or aren't in the capacity to fight and fight and fight and fight. So, they pay, or don't and declare bankruptcy. And voila. The insurance company has just created instant shareholder value; must be one of the “among other things” items mentioned in Health Net's quarterly SEC filing.
Medical debt related bankruptcies. According to a Harvard University study conducted a few years ago, more than 50% of household bankruptcies are related to medical debt. And more than 75% of those HAD health insurance. That's scary.
35% premium increase reasoning. Health Net cited age, type of coverage, dependent status, address, and the cost of providing health care. I'm confused. Didn't they already take all of these factors into account when they issued our policy in the first place and isn't that how the insurance game used to work. Mathematical geniuses create unfathomably complex statistical models taking into account every factor known and unknown to man and come up with complex plans and premium amounts such that when run across millions of customers the insurance company generates a profit. They win some, they lose some, but on average they come out ahead, make those quarterly and annual earnings estimates, create shareholder value. Isn't that how it used to work? So, now that some of these factors are moving against them they decide to change the game? With that in mind, I'd like to write Health Net the following letter since we have had a few factors change over the past several years…
Dear Health Net — As a result of my 15-month-old daughter's terminal Spinal Muscular Atrophy (SMA) type 1 diagnosis, our health care costs are significantly higher than we had originally anticipated when we filled out our Health Net application several years ago. Therefore, effective immediately, we'll be decreasing our family deductible to $1k, increasing our lifetime policy cap to $10mm, and increasing our DME coverage to $25k per year. Thanks for understanding. As you know all too well, these things happen. Kind regards, Bill Strong.
By and large, through this journey I've been overwhelmed by the goodness that exists in this world and have been reminded on so many occasions that our planet really isn't as overwhelmingly evil and corrupt as depicted every day on the 5-o'clock news. Unfortunately, my eyes have also been opened to many injustices that exist as well. Although I thought I had a clear understanding of the need for health care reform in this country, now, having been thrown in the middle of the battlefield, I realize that I had no idea, on so many levels, how backwards, inefficient, and immoral our current system is. For now, I'm very fortunate to be in good health and able to continue to fight-the-good-fight on Gwendolyn's and our behalf. I can't fathom being unwell and trying to deal with the mountains of health care confusion that the current system creates. I think it would feel impossible, be impossible. It saddens me that, for many, I'm certain it is impossible.
These are no doubt extraordinary, challenging times on many fronts, but enough is enough with the state of our health care system. We can't afford to continue to be myopic about the health catastrophes that are occurring around us. Promises need to be fulfilled. Bandaids are no longer going to work. The time
for a complete overhaul is now.
In the meantime, I'll continue to fight…
And yes, the below is a picture of the actual Health Net letter we received from Mr. Cole. Just thought it was worth posting as well — that, or I may be losing my mind. Not sure yet 