Outrage: Man's Health Insurance Is Holding His Liver Transplant Hostage

[velotresvite]

7. Perverse Financial Incentives Drive Perverse Decisions

As a former US physician who has now moved to Canada (where they have a more rational single payer health care system), I can see how the perverse incentives drive this. Everyone is doing what's rational and reasonable from their own perspective:

1. The county in OR wants to pay as little as they can for health insurance for their employees, so they buy inexpensive insurance.

2. The insurance company, to offer low premiums and still make money for shareholders, has to limit benefits and hires EBMS to limit pay-outs.

3. Because of reduced payments by insurance companies and government payers, the hospitals actually lose money on most patients they see. They need to make this up by charging a high price on the few procedures they perform that few others can do (known as carve outs).

4. The hospitals do need to make money because they have to build new buildings so they can compete for more patients with good insurance - the only way they can stay afloat. They also need to make money to hire the army of insurance relations people who can fight the army of people that the insurance companies hire to deny payments and not pay what is expected.

Most of these issues are solved by a single payer system. In Canada, everyone is covered for health-care so employers are not expected to provide coverage. Benefits and payments from the province are clear and reliable. Hospitals don't compete for patients because there isn't excess capacity - there are plenty of patients for the number of beds. So they don't waste money competing with each other.

But so many people make so much out of the current system in the US, I'm afraid there is little hope for change.