Sheldon Jacobson: The American health care system benefits the insurance industry, not patients or doctors

Sheldon Jacobson: The American health care system benefits the insurance industry, not patients or doctors

Could this be the year that America begins to move away from the employer-sponsored health insurance model?

Truth be told, health care is an issue that affects most people. Whether it’s accessing treatment or paying for health services, few people are free from the anxiety that comes when they or a loved one must undergo treatment for a chronic debilitating or life-threatening condition.

Despite $4 trillion spent on health care in the United States in 2021, the highest per capita spending in the world, life expectancy in our nation continues to languish compared to other industrialized countries.

So what are the problems that require discussion and resolution?

For many people, health insurance is tied to their employment. When they take on a new job, their health insurance coverage also shifts. This creates an overlay patchwork that is susceptible to cracking during any transition. If there is a gap in employment, COBRA is available to provide coverage, at its own expense.

The Affordable Care Act also ensures that everyone has access to health insurance, without limitations for pre-existing conditions. The growth of the gig economy further highlights why health insurance shouldn’t be dependent on traditional employment. Separating health care from employment is not only a good idea, but also essential for expanding the footprint of people with health security.

One solution is to separate the provision of health care from the payment for these services. Such separation is critical to addressing the lack of access to health services and exposing those problems in our nations’ health care systems.

For most people, health services are covered by health insurance. Health insurance companies are very profitable. In 2020, they generated a profit of $31 billion, an increase of more than 40% from 2019. In 2021, they earned a measly $19 billion profit. The upward trend returned in 2022, with the six most profitable health insurers earning more than $41 billion in profits.

The question is, should a product that provides a public good such as health services be positioned to generate profits from such a public need?

An alternative is a single-payer system, very similar to Medicaid, Medicare and Veterans Affairs. This topic is a lightning rod for controversy. Some argue that the government is ill-equipped to deliver health services to the nation. However, a single-payer system does not mean that the government will provide services. It will just be the funnel through which health services are paid for. A single-payer system exists in 17 countries, providing models for how it can be done in the United States.

A second alternative is to create and grow a network of non-profit health insurance companies. If healthcare providers work to accept coverage only from these entities, for-profit companies will eventually be phased out. The advantage of nonprofit health insurance is that any excess income is used for the good of its constituents, not the shareholders.

Such a solution represents a long-term vision, as such a transition would meet resistance from the for-profit health insurance industry, which lobbies and provides campaign contributions to maintain the status quo. However, this direction requires attention and consideration given the current state of affairs.

The disconnect between health insurance, health care providers, and patients has created a balance that serves the best interests of health insurance companies, putting patients and health care providers at the mercy of these companies. As intermediaries, health insurance companies effectively control the flow of health services to patients through pre-authorisations. This means that healthcare professionals actually work for health insurance companies, as they pay for the services they provide.

There is some glimmer of hope for healthcare professionals and patients. UnitedHealthcares’ recent change to its pre-authorization process is an implicit acknowledgment of this problem and a step in the right direction.

The patient must be at the center of healthcare. For healthcare to work in the best interests of patients, doctors and other healthcare professionals must steer the ship. In the current environment, health insurance companies are in charge. This harms patients, as they may not get the care they need and deserve. It hurts doctors and other healthcare professionals, as they are forced to spend time and resources fighting for their patients and even getting paid for their services.

Plain and simple, the current system works in the best interest of the health insurance industry.

When it comes to healthcare in the US, the services provided must be separated from the finances to pay for them. The financial component is crushing the service component. Until this is resolved, the current situation will continue to the detriment of doctors, healthcare professionals and most critically, patients, which we will all be at some point.

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