Stanley Feld M.D.,FACP,MACE
As the practice of medicine becomes increasingly technology based, bureaucratized, politicized, and commoditized, we move further away from the real issues facing our healthcare system.
The real issues that must be faced to repair the healthcare system are being ignored with President Obama’s healthcare reform act. The real issues are the maintenance of the physician- patient relationship, institution of real malpractice reform, and increasing patients’ responsibility for their health and their healthcare dollars. The development of systems of care must be incentivized to decrease the incidence of complications of chronic diseases.
There must be significant changes made to the accounting rules used by the healthcare insurance industry.
Patients own their diseases. They should be responsible for maintaining their health and managing their disease. It should not be the job of employers, government, or the healthcare insurance companies. The healthcare system must be consumer driven. It should not be driven by the government or insurance companies.
President Obama’s goal is to have complete government control of the healthcare system. He is trying to control the healthcare system using untested bureaucratic methods. The process will result in increasing the cost of healthcare, decreasing access to medical care and rationing care.
President Obama has not communicated effectively how the healthcare insurance industry is ripping off Medicare/Medicaid, the private insurance industry and taxpayers.
I was in a meeting with a group of primary care physicians and human resources officers from large self-insured corporations. The discussion was focused on the human resources officer increasing healthcare costs.
They did not understand how the healthcare insurance companies were ripping off their self-insured plans. All the human resource officers outsource their administrative services to the healthcare industry. They believe the healthcare insurance company was making only 3% profit while providing the administrative services to their company.
The human resource officers agreed that physicians were receiving 10% of their company’s healthcare expenditures. They all thought the hospital systems were getting 50% of their self-insured healthcare dollars.
I asked who was receiving the other 40% of the healthcare dollar.
Someone said we were getting into the weeds now. He was correct. The devil is in the details. As a society, we are focused on the sound bites and have no patience for detail.
The healthcare insurance industry has taken advantage of that fact.
Below is a consolidated statement of income for WellPoint. UnitedHealth and Aethna consolidated statements are similar.
Consolidated Statements of Income
Revenue from premiums are 57,101,000,000 billion dollars. WellPoint claims benefit expenses were 47,742,400,000 billion dollars. Therefore, WellPoint paid 83.6% of its premium revenue for medical care benefits.
This financial statement satisfies President Obama’s new regulations that demand the healthcare insurance industry pay 80-85% in medical care benefits. It satisfies the new medical loss ratio. Medical loss ratio is defined as incurred claims divided by earned premiums.
The question is what is included in benefit expenses. Are benefit expenses only payments for medical care? This place where we get into the weeds and meet the devil.
The human resource officers of major corporations felt physicians received 10% of the healthcare dollars and hospitals receive 50% of the healthcare dollars. WellPoint financial statement claim 83.6% each healthcare dollar are paid for medical care benefits.
Where is the remaining 23.6% in medical care benefit expenses? Many in congress believe the healthcare insurance industry receives 40% of the healthcare dollar.
The number is correct. 23.6% plus (100%-83.6%) 16.4% equals 40%.
I will explain where the missing 23.6% of benefit expenses go, shortly.
President Obama might be pulling another trick play on the taxpayer. Either that or the healthcare insurance industry is using a trick play on him. In either case the taxpayer loses.