Insurance companies may be using fear to sway public opinion against healthcare reform, but everyone seems to forget: As managed care middlemen, they’ve used fear over the past 25 years to take as hostages two key components of the healthcare equation: Medical providers and employers.
Here’s how they did it: As managed care companies began to dominate the delivery of medical care through their HMO and PPO networks, physicians and hospitals who contracted with those companies reduced or eliminated all other means of doing business with employers. While HMO/PPO membership swelled, medical providers’ access to patients became increasingly limited to patients who were members of those HMOs and PPOs. So doctors and hospitals who wanted the business (patients) were forced to contract with the managed care companies. Once under contract, these providers were “held hostage’ by overwhelming fear that quitting the network meant losing the patient revenue.
As hostages, medical providers have been mercilessly hammered by declining reimbursements and administrative hassles. Yet few doctors or hospitals have ever been able to quit their managed care contracts and recoup the same patient revenue on their own. What’s more, while they rake in ungodly profits, managed care companies have somehow convinced medical providers that dwindling reimbursements are due to push-back from employer health plans. Ironically, those plans are also largely controlled by the managed care companies.
Through their agreements with employers, managed care companies control the “buyer” side of the health care equation. Beginning with the HMO Act of 1973, the managed care industry has grown to dominate employer health plans. From design to funding to administration to actual provider access, managed care’s “package” of services under the guise of saving employers money, has evolved into another hostage situation. In it, insurance companies control access to medical care through their HMO /PPO agreements with providers. To gain access to those providers and the “supposed” discounts they offer via the networks, employers must do business through the middleman.
With the growing monopolization of the health insurance industry among a handful of managed care behemouths, like Blue Cross, United Healthcare, Cigna, and Aetna, employer choice of health plans and, therefore, medical networks is severely limited. What’s worse, most employers blindly believe the only way to access affordable medical care is through a health plan completely controlled by a managed care company. The notion that employers could, if they want, contract directly with doctors and hospitals for the same services (a free-market approach) has been brainwashed away by insurance company representatives. Consequently, conventional wisdom among human resource executives is that, “if Blue Cross (Cigna, United, etc.) can’t give us what we need, nobody can.”
Unfortunately, the health insurance industry has been built upon the fear they created among the buyers (employers) and sellers (docs/hospitals) of medical care for years. With both sides willingly brainwashed by the middleman, there’s no way doctors or employers will be able to help mitigate the new fears being spread among their respective patients and employees. Both sides need to step up with courage to eliminate the managed care middleman and do business directly with each other.
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