An analysis of health insurance claims paid by selected publicly
traded U.S. carriers during the most recent full-year period for
which data is available (2003) shows that healthcare costs haven't
grown nearly as fast is widely claimed in the news media.
In fact, healthcare costs during 2003 grew
at the same rate as the
rest of the economy.
What was up sharply was healthcare spending — the amount consumers
paid for health insurance coverage. Health
insurance premiums collected by selected publicly traded U.S. carriers increased more than 7 percent
from 2002 to 2003.
Actual claims paid by these insurance companies shows that healthcare
costs were up by only about 4 percent. So where did the money
go? Straight to the bottom line. Profits generated
per insured were up
16 percent.
The way these insurance companies were able to boost their profits
so dramatically is simple, they charge people for coverage then they
deny or delay payment. The average family of four with health insurance
coverage during 2003 paid for $802 worth of coverage they did not
receive.
How do the insurance companies get away with this? Quite simply,
by denying claims. The insurance companies have some arcane methods,
of course, but in plain language they simply pocket some of the money
they should have paid to doctors and hospitals. They then say the
patients, who the doctors, in good faith treated, simply were not
covered. The insurers do this even when they know quite well that
the patients were covered. In many cases rejected claims eventually
will be accepted, after three or more resubmissions. The net result
is that the insurance companies accrue interest on money that should
have been paid out in claims while doctors and hospitals go unpaid.
Some of the tricks the insurance carriers use are to reject a claim
because it is not "clean" -- the diagnosis and treatment
may be proper and the patient may be covered -- but some part of
the claim form, perhaps the zip code of the patient's employer, has
been completed incorrectly so the claim is rejected. Insurance companies
also reject claims by requesting additional information, by requesting
letters of medical necessity and by disagreeing or not understanding
a physician's diagnosis.
Got some other tricks you want to see us write about? Give
us a brief description.
