Can’t Afford to Live...........

“I Can’t Afford My Oxygen”: The Human Toll of For-Profit Insurance

A veteran physician explains how America’s health system leaves us sicker and poorer.

Mike Mechanic and Michael Mechanic

Amid the frenzied coverage of UnitedHealth CEO Brian Thompson‘s assassination and the public’s troubling reaction to it were references to various polls, including one conducted in 2016 by the Kaiser Family Foundation, whose results suggested that Americans were content with their private health plans.

Similar stats had crept into the debate over Medicare for All—a proposed national health insurance program to cover all Americans, and with which private insurers would have to compete. A few weeks before Thompson was murdered, AHIP, the primary trade group for commercial health insurers, published a new survey it had commissioned. About three-quarters of respondents, a “strong majority,” the group said, were satisfied with their employer-provided plans and preferred getting their coverage this way, as opposed to through any government program.

I found these numbers hard to square with the nonchalant—even celebratory—response to Thompson’s death. Until, that is, I spoke with Ed Weisbart. A veteran medical doctor, now retired, Weisbart serves as national board secretary for Physicians for a National Health Program (PNHP), a nonpartisan organization of some 25,000 doctors founded in 1987 to advocate for a public health insurance program. (Disclosure: My late mother was a member.)

So long as you’re healthy, he told me, it is in your insurer’s best interest to keep you happy by delivering on small claims. It’s only when it looks as though you’re going to cost them lots of money that the denials start coming—and maybe by then you’re too sick to fight. This interview was edited for length and clarity.

What compelled you to join PNHP?

I was a practicing physician for decades and got fed up with seeing patients unable to afford health care—not in the broad, abstract way, but in the very real, nitty-gritty way. The Type 1 diabetic who has uncontrolled disease, and I prescribe insulin for him, and it would make a huge difference in his life expectancy, but he comes back a month later and his blood sugars are no better. And I ask him why, and he would say, “Well, because I’m taking my insulin every other day. It’s all I can afford.” I know he’s barreling toward dialysis.

A patient with end-stage emphysema came into the office without her oxygen, huffing and puffing, unable to breathe. She’s had portable oxygen at home and we know this because she had it previous visits. And I said, “Where’s your oxygen? Why are you so short of breath?” She says, “Oh, I can’t afford my oxygen anymore.”

We’re living in a country where we have people who literally can’t afford to breathe. I’ve got hundreds if not thousands of stories like that. It just drives me crazy, realizing you have to advocate for patients outside of the exam room as well, and then understanding that the reason it’s like this is because of the profiteers just leeching the blood and soul of everyday human beings so they can have the best returns on Wall Street.

What did you make of the reaction to the Brian Thompson killing?

It’s obviously a tragedy and a very wrongheaded move. I was aghast. And yet it was also not hard to understand the dynamics, when there are tens of thousands of people dying because of the profiteering—people constantly running into having some bureaucrat say they can’t get the lifesaving care they need. So, I was not surprised, but I was surprised.

What do you consider the biggest flaws of our health system?

As a medical director at various places, I'd say the biggest problem is that the system is designed to return profits rather than to improve health. And the programs that you would want to design to improve health are contrary to the business model of the people that could put those programs in place.

Related to that is the fragmentation of the system. That's a consequence of the first problem. It means comprehensive solutions can't be put in place. It means people are thrust into gaps in between care. So it creates its own set of expenses and driving up the cost.

The third piece is our inability to negotiate prices on behalf of Americans, which other countries do. Those costs are borne all across the system in ways that are obvious, like the overhead of the insurance industry—13 percent to 18 percent depending on where you look. But then they hide more than that by transferring some of the overhead onto hospitals, hospital infrastructure, and medical practices. Milliman estimated the average physician pays $100,000 for office staff to deal with the insurance industry, and where does that money come from? It comes from jacking up prices. All the fee schedules have to be adjusted so physicians can afford to pay this overhead.

This is unique to America. In Canada, the overhead of running a practice to deal with the national health insurance they have there is more like $20,000 or $25,000 per doctor.

In any other industry, auto repair for instance, you get an estimate in advance of what it'll cost you. Why isn’t that the case with health care?

Well, I would argue that's not the correct solution, anyway. Because in the auto repair industry, you can shop around and make an intelligent choice, and you know whether the car is going to work right afterward. In health care, it's the exact opposite.

You can shop for prices for [commodity services like LASIK], but that kind of thing is a tiny fraction. In health care, a very large percentage [of the total cost of care] is spent in the last six months of life by people who are desperately sick, and they are not in a position to start shopping around. And even if you had the prices, how do compare that to quality? If an insurance company with six floors full of actuaries can't do the price-versus-quality equation so that you they can direct you to the best quality care for the price, how is the person who works at the gas station on the corner supposed to make that determination?

I'm also curious about situations in which a patient gets a crazy bill, just totally unrealistic, and they kick up a fuss and the insurer suddenly reduces the cost or even wipes it out entirely. Is the whole system premised on people giving up and not fighting claim denials?

Yes. There's data about this for Medicare. If Medicare denies a claim, it's usually because the claim is for something that's legally not a covered benefit. It's extraordinary for it to be any reason other than that, and so when Medicare denies claims—which they almost never do—and someone appeals, there's about a 1 percent chance that appeal will get reversed.

Now, with Medicare Advantage, which is the for-profit, typically proprietary, insurance industry version of Medicare, its the exact opposite. If somebody appeals a denial, I think around 80 to 85 percent of those denials get reversed, because when Medicare Advantage does a denial it's because it wasn't in the company's business interest to pay for it. But nobody appeals it because they don't know that they can—or that it would work.

Fascinating. So it's actually easy—well, not easy, because it's a total headache—but you can get these things reversed if you persist.

I wouldn’t call it easy by any means. The patient has to spend significant time collecting things and going through the process. And you need a physician who's willing to help, and who's going to pay the physician for that? That's a chunk of the physician’s time that is not reimbursed. Plus, most people in a situation where they need to do that are sick. They're not at their best to begin with. It's really hard, really time-consuming. And there's a long delay from when you do the appeal to when you get a favorable decision.

Tell me more about the for-profit model, and how delaying and denying claims plays into it.

The commercial insurance industry collects a premium. So that's a prepayment. The Medicare Advantage industry is prepaid by the government. That's money in their pocket, and every time they pay a claim, that's money that they're spending.

They have this term, “medical loss ratio,” which is a carryover from the fire loss ratio and property loss ratio, but they call it a loss when they pay. So, they don't want to pay, and it manifests in a couple of ways. First, if they don't pay the claim, that's money they can retain. Secondly, even if they just delay the care, they have sophisticated systems managing how they invest the money they're not paying.

I once worked in a part of the insurance world where they did exactly that. They had contracts that required them to pay their bills within a certain timeframe, and if they paid long after they were contractually obliged to, there was a penalty, and they had sophisticated systems to analyze the return on their investments in the market vs. how big the penalties are for delaying the payment for care. And they would delay until they hit the right point on the curve where it was more sensible financially to pay the claim than to keep investing it in the market.

So basically you collect a big pile of money and invest it and then avoid paying claims so you can keep that money invested as long as possible to maximize your returns in the market?

That's exactly right.

What are the kinds of procedures insurers are most likely to deny or delay, and the most common reasons people fall into medical debt?

I can't give you a quantitative answer, but the more expensive a procedure is, the more likely they are to want to put in a barrier to payment. Insurers typically don't want to put barriers to things that low-expense patients get, like a blood pressure medication that's very inexpensive and that healthier populations use. It's to their advantage to get you to use the insurance a little bit because the people that are the most likely to disenroll from a specific company are the people who never use it. They want you to maybe get your eyeglasses or something.

But if you're sick and you need home oxygen, or you need a CT scan or an MRI, or something that's both expensive and predictive that you're probably a higher risk person—that you're going to be a more expensive patient to take care of—they don't want to spend that money. So if you call them and say, “I'm so mad at you. You got in the way of my CT scan. I'm thinking of going to different insurance company,” the company has a win! They don’t want you in their plan.

You mention CT scans. I know imaging is among the things medical practices tend to overprescribe because it’s a cash cow, and you get a fair bit excessive testing and overtreatment. Can certain denials then be to a patient's benefit?

There is obviously a significant percentage of what we do in medicine that is not evidence-based and could probably be avoided. But if you compare the United States to other modern nations, our utilization of those kinds of services is roughly average. The problem with the high cost of care in the US is not overutilization. Is there overutilization? Absolutely. Is that the driver of health care costs? No, it's not.

The driver of health care costs is two things: It's the overhead, the managing, the cost of the complexity of administering this. Most estimates are that we spend roughly a third of the health care dollar propping up the bloated, Byzantine insurance industry. The second piece is the failure to negotiate prices effectively because we're so fragmented. That's where the money is.

How big a cost is the failure to negotiate prices?

I can’t tell you overall, but the average prescription drug in the United States is about twice as expensive as it is in the rest of the modern world.

How does the cost of a public insurance bureaucracy compare with the cost of a private one?

The commercial insurance industry has a roughly 15 percent overhead. Traditional Medicare, parts A and B, operates with a roughly 2 percent overhead.

Wendell Potter, a former Cigna PR guy, just wrote a Bloomberg piece on the role of Wall Street, and how executives at giants like UnitedHealthcare and Cigna go to these investor conferences where there’s no mention at all of patient care. It's all about the returns, and that's what's driving a lot of the misery we're seeing.

Oh, that's exactly right. I mean, the root issue is greed.

But don't public systems also have their drawbacks? The Veterans Administration has weathered scandals. And I saw a CTV News piece from last fall about how Canadians fed up with long wait times for surgeries in their public system were turning to private providers.

If you go down the street in Canada and ask people, they all have a story like that. But then they'll say, “But there's no way I would change to the United States system where I have to have a bake sale to have my knee replaced.” They don't want this system.

More importantly, US life expectancies were the same as Canadian life expectancies within a few months up until the early 1970s. That's when we passed the HMO Act, creating managed care, and Canada finally finished implementing their national health insurance plan, and then there was a fork in the road. Our costs continued to go up along the same curve. Their costs started to really flatten out, and our life expectancy did not begin to keep pace with the improvements in life expectancy in Canada. Fifty-some years later, they live three to five years longer than we do and spend half as much.

Have you seen any notable pivot points for the United States in terms of the cost of care and deterioration of quality?

They've been on a steady, relentless curve. There's a whole list of things that we have tried, and none have really bent the curve. There's one obvious solution.

You mean single-payer?

Correct. But I'm not stupid enough to say that sometime in the next four years or six years that's going to magically pass. One of the things PNHP has been really good about the last three or four years is thinking about a strategy of how do we pave the road to that? What has to happen? Our strategy to get the bills passed is far more robust than just pass the bill. The single-payer community five years ago, 10 years ago, would literally say you can only cross a chasm in a single leap. You know, I've looked at the bottom of chasms and there's dead people who couldn't make the jump. You cross the chasm by building a bridge slowly.

Do you think for-profit insurers play any positive role in our system, or would you like to see them go away entirely?

I would like to see them go away entirely.

I mean, it's probably never going to happen here.

Everything looks impossible until it's already happened.

My skepticism comes from watching Obama try to implement single-payer and having it demonized as socialism—and "death panels" and so forth.

I don't think people care whether it's single payer or quadruple payer. Those words mean nothing to people. You know, Medicare for All. That's not what they care about. People want health care. They don't care about health insurance. They're angry at the profiteering, the outrageous prices. They're angry they can't afford their care. They're much more focused on solve this problem than they are on which exact tool or mechanism you go to.

That's what I think, too. What I care about is that everybody in the country has unfettered access to high-quality health care that they control the decisions for. I think single-payer is the smartest way to do it. But if we went to an "all payer" or some other model that accomplished that, I'm fine. I just don't want people dying like they are today.