Health insurance. I honestly have not heard anyone speak positively of any experience they have had with their insurer but maybe that is because I haven’t been looking hard enough. A huge part of the bad experience people have with their insurers is that it is never simple. Having a problem with your health can be a scary time; it is a moment when most of us feel incredibly vulnerable and need to be cared for. The one thing we shouldn’t be worried about is whether this is going to cost us an unaffordable amount of money.
According to a survey by Bend, 59% of survey respondents reported putting off medical appointments and 53% had put off filling a prescription because they were unclear about what their health plan would cover.
Take this in for a moment. People aren’t seeking care because they don’t know who is going to pay for it.
How did we get here?
1945: Truman’s miss
In 1945, Harry Truman spoke of a system of health insurance that could cover every person in America if they chose to be a part of it. This is possibly one of the most crucial moments in the history of healthcare as it presents a real fork in the road. Truman's vision was Government-run and sponsored insurance. But the labor unions at the time hated this idea, especially the AMA which lobbied hard for employer-sponsored health insurance. This was the start of the employer-funded health insurance system as we know it.
1960s: Medicare, Medicaid, and Communism
In the 1960s as civil rights burnt in the nation's heart, it became clear that fair and equal access to care was going to be a problem. The aging population was not covered by insurance and was left paying out of pocket. However the concept of “socialized medicine” was not popular given the smell of communism drifting over from the USSR. On July 30th 1965, LBJ signed the Social Security Amendments which entangled Medicare and Medicaid into the genetics of the healthcare system.
Ford, Carter, and Regan all dipped their toes in the healthcare fuckery but nothing noteworthy in this short blog.
1990s: Clinton's time to shine
The next time the political class weighed in on healthcare properly was during the Clinton administration when the 1993 Clinton healthcare plan saw its brief limelight moment. It essentially proposed mandatory enrolment, and government funding to ensure affordability and better-connected state healthcare. But it was dead on arrival. The 90s then saw the birth of Medicare Part C, known today as Medicare Advantage - and so began the era of value-based care.
2000s-today: Obamacare
Nothing really happened in the Bush administration, other than the proposal of the Patient’s Bill of Rights in 2003, which was drawn up by a group of organizations that resemble a healthcare cartel.
Now if you are still with me, we have arrived at some legislation you will probably recognize. Obamacare. President Obama got a bill through Congress that hugely expanded access to care. Here is a screenshot of what it did:
Ok, soooo what? The thread I want to pull on at the end of this insurance history lesson is one of tweaking bad ideas. Every major healthcare reform in the US since Truman started in the same way. A progressive president or legislator would start with a big bold idea. These ideas were usually centered around a big reform towards socialized medicine with a large private sector contingent. However political mediation meant that the proposed model was tweaked so it would be more palatable to political opponents. Administration after administration stacked legislation upon legislation to get the complex headache we have today. Healthcare is confusing because we have spent 75 years tweaking bad models in the hope we would somehow find the light, and we didn’t.
According to Gov Track, presidents have signed 1283 healthcare bills since 1973.
In comparison, in Australia, there are ~182 “Health” Acts being enforced and 33 that are no long enforced (from what I got off the Australian Government’s Register of Legislation).
Now some obvious caveats and nuances here are that there have been some nice steps forward. Obamacare gave millions more access to care, and Medicare and Medicaid are the foundational reimbursement models for those who would otherwise not get insured through the commercial system. My main problem here is that these were the wrong entities through which to make care more financially available in the first place because they were “tweaks” to an already entrenched system.
Where is the patient in all this?
As you move through your life, your healthcare landscape is permanently shifting. Changing jobs, new legislation, getting older, or the insurance company just changing the plan you are on: all of these things result in meaningful changes in your health insurance policy. In the UK, where I am from, throughout your entire life, you will receive free care. The landscape changes very little with new legislation and over time. The NHS has its own set of horrendous problems, but the complexity around payment isn’t one of them.
What is hard to understand?
It is easy to beat around the bush with insurance - but what specifically is hard to navigate about it?
1. Coverage is confusing
There are more than 20,000 drugs approved for marketing by the FDA, very roughly 10,000 diseases, and 1000s of surgeries (Jack’s estimate). As a patient, it is your job to pick a health plan that you feel provides you with the coverage you need. With that being said, coverage isn’t a coin toss - you will likely be covered for the things you need. However, there is enough of a difference between the drug and procedures covered by Medicaid, Medicare, and commercial plans that it is a source of anxiety for patients. In a survey conducted by Forbes in 2022, almost 1/3 of respondents reported that when paying a medical bill, they were confused about why it wasn’t covered by their plan.
2. Bad processes
As a patient, the process of interacting with your insurer is bad. Pre-authorization is likely one of the major sources of unhappiness in any physician's life given its administrative burden. For a patient, it is a huge source of anxiety too. You don’t know whether your health plan will say yes or no to covering the drug or procedure you need. If does get approved, the process of receiving and paying for medical bills is stressful. These bills contain words and terms we don’t understand as well as numbers that are unfathomably big. Sometimes there are billing mistakes that take place between the provider and insurer, which the patient might be left to deal with for months on end.
In the same Forbes survey “21% of people surveyed said they were confused about a medical bill they received” and over “One-fifth of respondents said they didn’t pay a medical bill until they reviewed it with their doctor’s office”.
3. Miscommunication and misinformation
As a patient, you might be left with questions about coverage, paying a bill, or rectifying a problem with your insurer. Where do you find answers to these questions? Are the processes the same for everyone? You are left in the insurance equivalent of a dark room with no flashlight. Many informational sources say similar but different enough things about insurance for it all to be confusing. When you have anxieties and stress around paying for your healthcare, what you want is clear and concise answers, and with insurance, you can’t get them.
How can patients help themselves?
1. Asking the right questions
Unfortunately, it is impossible to provide universal education to patients on the details of every insurance plan, but providers and insurers can help them how to find the right information. Questions like:
a) What is the maximum amount I am responsible for paying in a calendar year (i.e., my out-of-pocket maximum)?
b) Are there any restrictions on certain types of medical treatments or procedures?
c) What is the process for obtaining pre-authorization for medical treatments?
d) Are there any exclusions or limitations to my coverage, such as pre-existing conditions?
By asking these types of questions, patients can gain a better understanding of what is covered under their policy, how to use their benefits, and how to minimize out-of-pocket expenses.
2. Being a good custodian of their health
Patients are often passive players in their own care. But encouraging patients to be good custodians of their health and their health history is a powerful way to embolden patients in navigating their care. This means encouraging patients and members to keep good documentation of their past bills and interactions with their insurers. Keeping a record of their policy documents and how they have changed or been updated over time.
3. Find help
Patient advocates. These people are the saints of the health insurance industry. Patient advocates are individuals who help guide you through the complexity that comes with being a patient. This can include correcting billing errors with your insurer or helping you make a decision about whether to have surgery in two different locations. This Kiplinger article tells the story of Richard Crestani who is a Floridian that had eye surgery. The article goes on to say “An error in the medical billing code for the operation resulted in $18,500 in bills his insurance company refused to pay.” A patient advocate called Kenneth helped get the bill reduced by $15,000.
Wrapping up
The initial legislative direction as laid out by Truman was thwarted. Ever since then, we have piled up more legislation regulating 1000s of different entities such that the complexity of the laws has made the system even worst. Then the complexity of the system requires increasingly complex legislation to cover it.
This has left the patient navigating different insurance orgs, with 100s of different plans, premiums, and co-pays, covering varying volumes of conditions, drugs, and procedures. And whilst there are things the patients can do to make navigating this slurry of premiums and deductibles easier, at the end of the day they shouldn’t have to. There is a model for reimbursement out there that is simple and easy. We just have to dare to build it. I will leave you with some thoughts on where I think we could go (this will be its own blog at some point!):
Starting again
I don’t have the perfect vision for a different system of reimbursement but here are some options worth exploring if by some miracle someone does this.
1. The same payment model for most - Without going too deep, the highlights of the Australian and French systems of healthcare is that there are very few entities that are responsible for reimbursing your care. This means there is a consistent and simple patient experience, throughout the entirety of their life. Very few patients in these countries have any confusion around payment models because they are SIMPLE.
2. Primary and secondary models - the problem in the US is that there are two competing primary forms of paying for healthcare. Government-funded and commercial insurance. Commercial insurance is one of the primary reasons healthcare is so expensive. There should be one primary form of paying for healthcare available to everyone or what is commonly referred to as a single payor system: in Australia, it is the government-run Medicare program, in France people subscribe to a non-profit program called “mutuelle”, and in the US we should go back to Truman’s original vision of a government-run insurance program. Before I get accused of being a socialist, the US government spends ~5% of its GDP on Medicare and Medicaid compared to Australia at ~10%. The weary capitalistic readers among you will see Australia spends double and think “we don’t want to double government spending”. Well you would be wrong. The US already spends double the average per capita and as a weary capitalist you should hate inefficient spending more the government spending. There should be space for private insurance schemes that individuals can buy into or organizations can pay for as a benefit but these should be secondary to the single-payor system.
3. Standardization of the private sector - If a private insurance model is a way forward (and as outlined above, I am not sure it is) then it needs to be standardized. A lot of people cite Switzerland as the north star of private health insurance as they are providing high-quality care at a reasonable cost. However, there are some crucial differences worth highlighting that are part of the Swiss model. The first is total coverage, no one can be uninsured and if you can’t afford it you receive a cash subsidy from the government. Two, is that there are no profits to be made on the universal compulsory coverage. Three, is that the cost of compulsory insurance is the same for everyone with one organization. So whilst premiums can vary between insurers, everyone taking out a compulsory policy with one insurer will pay the same amount, irrelevant of age, gender etc. These rules make the system simple to navigate and patients aren’t left confused or worried about how they pay for care.
If you had the chance to redesign a nation's healthcare reimbursement system from the ground up, what would it look like?
