OPINION: Killing a CEO won’t fix health insurance in the U.S.

Killing a health insurance company’s CEO won’t change the system or fix anything. All that does is change the subject so changing bad insurance practices is harder to get done.

We know little so far about why Brian Thompson, CEO of UnitedHealthcare, America’s largest and most profitable health insurance company, was murdered. But we do have lots of hints. We now see stories in the news about his and other companies that deny claims and or delay payments for no valid or apparent reason, and how high their prices soar.

In many states, Blue Cross-Blue Shield are now for-profit companies. Some just announced and then reversed themselves, saying they would no longer pay to keep a patient under anesthesia if a surgery ran long. Usually that whiplash only takes place when the relative of a governor or some other important politician is hurt or killed by a claim delay or denial. Change usually takes years and lots of public pressure. There are some really bad claims practices that are relatively new: preapproval and deliberate understaffing.

With preapproval, a company substitutes its judgment of what treatment you should have over that of your doctor. They say this saves money and gets you better treatment. But more often, it’s a gimmick to delay or just flat deny treatment.

During the 28 years I worked in insurance company home offices, I saw the start of this trick. I also got to know many insurance company doctors. Most had been general practitioners or internists, not specialists. Yet they told claims people to approve or deny surgeries for medical fields in which they had no experience. They even claim that some surgeries are experimental when many times they are common practice among board-certified specialists.

To fix this, there has to be a strong rule that any denial of treatment be done by a current, board-certified specialist or have actual science to justify what they propose. There has to be a maximum amount of time — three business days — to answer for preapproval or lose the requirement. If they need a second opinion, the company pays for it and it happens within one day and close by. Untreated patients die. They shouldn’t die because the insurer is too cheap, too slow or doesn’t have properly certified people on staff.

In the 1970s, there were almost 1,600 health insurance companies in the country. Most were small and did not have billionaire CEOs running them. But the CEOs knew how insurance worked. They also did not gamble their company reserves. (Company reserves are money set aside for financial catastrophe such as a year when there is a new pandemic with thousands of hugely expensive claims.) Back then, there was a financial wall between insurance companies and bankers. Banks could not own or run insurance companies. That kept insurance companies from making the risky investments bankers routinely made.

In the 1980s, the federal government decided to start dismantling this protection for insurance companies and their clients. Banks started buying insurance companies. Banks treated insurance reserves as casino gambling chips. Profits replaced fiduciary responsibilities. Serving customers was replaced by short-term profit goals. Companies failed or were bought out. Corners were cut unwisely.

Today, there are fewer than 100 health insurance companies left.

New medical practices save lives. But they also cost more, make people live longer and see doctors more often. This makes coverage more expensive and it creates a math problem for companies and customers. Generally, older people make more money than the young with no experience and they need more medical care, which also is more expensive. So insurance costs more for older folks.

Yet insurance only works if the risk of bad health and its costs are shared, so some of the premiums young people pay help for older people’s costs. The math problem is that older and sicker people stay insured and young people tend to gamble that they won’t get sick, at least for a while. So when rates go up, the young drop out of the system. And, when they do have a problem, they can’t buy insurance because the problem is a preexisting condition. A baby born with a problem also could not get insurance.

These problems were mostly fixed by the Affordable Care Act and some state insurance reform laws (such as those in Idaho) that took effect decades before the ACA. The ACA also helps the needy and poor afford insurance.

But it doesn’t fix the flaw that allows banks to own insurance companies and gamble with reserves.

It also does not fix the problem of companies that don’t pay claims or that delay claims to get higher short-term profits.

Claims processors are an expense that CEOs like to cut. Ethics and honesty at many companies no longer exist. Companies understaff to delay claims and they deny claims whenever they think they can get away it.

This new culture has to be changed. We now need rules that require companies:

To pay legitimate claims on time.

Have legitimate science and current medical practices to back up claim denials.

To back claims appeals with competent authority (specialty expertise) in the relevant field of medicine.

One last major insurance problem that needs reform involves companies owning hospitals and doctors’ practices and how that explodes insurance prices. Insurance holding companies and their affiliates have started to buy hospitals and medical practices. Their administrative expenses must count toward insurer expenses when our state approves rate changes. The same minimum benefit percentage ratios that apply to Medicare supplement insurance must be required for all medical care insurance. That means group insurance must pay out 75% of premiums and individual insurance must pay out 65% of all premiums.

Idaho already requires this of Medicare supplement insurance companies.

Sherry, of Lewiston, taught school and also worked for 30 years on Idaho state insurance laws.