Issues in Health Insurance Caused by Private Health Insurers

With the implementation of the Patient Protection and Affordable Care Act, several issues inherent to the issue of private health insurance became known. While common issues such as, lack of insurance coverage for pre-existing conditions are common there are other issues as if lack of access to low cost health insurance for the self employed that are not so commonly known. These issues are encouraged by unethical health insurance companies whose only goal is to make a profit. This unethical practice not only serves to increase the cost of healthcare nationally but to prevent many people from receiving health insurance.

In order to understand how corporations can cause problems in relation to health insurance one must first understand the differences between private and public health insurance. Private insurers are usually companies owned by private corporations. They have few financial limits regarding who may or may not receive health insurance coverage however prior to the PPACA they could reject customers based on previously existing medical conditions or various risk factors for health problems such as, smoking, obesity, or genetic disorders. This group of insurers includes companies like Blue Cross Blue Shield and Kaiser Permanente.

The second type of insurance companies is the public insurer. These insurers are run by state, local, and federal government agencies and they are paid for by taxpayers. Typically, one must meet certain specific characteristics like being low income, physically or mentally disabled, or elderly in order to receive this type of insurance although some insurance coverage may be available for middle-income individuals who do not meet these requirements at a heavily discounted rate. This type of insurer typically includes organizations such as, Medicaid, or Medicare and in some states like Vermont or Massachusetts there will be state specific programs that fall into the category of public insurance coverage. These organizations typically do not discriminate based on genetic disease, or previously existing conditions and primarily exclude people based on income.

LITERATURE REVIEW

Private health insurance corporations can cause all kinds of problems. This has become increasingly complicated now the that PPACA has been implemented and signed into law since the healthcare marketplaces being implemented by each state (which people are now required to purchase health insurance through if it is not provided by their employers) often only offer insurance from one or two private health insurers. This is both a legal and an ethical issue in that these companies have a monopoly over private health insurance in these states since you must buy health insurance in these marketplaces. Calabresi (2013) argues that this particular clause of the PPACA is both illegal and unethical.

He argues that if a specific private insurer offers coverage in a specific state than the insured should be allowed to purchase that insurance regardless of whether it is part of the marketplace or not. Furthermore, Calabresi argues that if a customer already has a specific insurance company that they should be allowed to purchase that specific insurance even if they must purchase it at an out of state healthcare marketplace. This argument points out the idea that the Sherman Antitrust Act of 1890 made it illegal for any business to have a monopoly that the health insurance marketplaces in many states only one or two private corporations that provide health insurance participate in the healthcare marketplace.

This article also brings up critical issues related to the price paid for lower cost health insurance that is available to everyone. For example, Calabresi (2013) puts forth the argument that this has been problematic for those who do not receive insurance through their employers because they now have fewer choices due to the monopolistic nature of the health insurance marketplaces. This means that they cannot always find health insurance tailored to their healthcare needs and may be required to purchase either more coverage or much less coverage than they actually need.

Another central issue prior to the implementation of the PPACA was the fact that health insurance companies could reject customers based upon private information obtained from third party sources. For example, if they discovered via public information sources that a patient had cancer they could then choose to reject the patient for health insurance.

According to Hendren (2013) between 2007 and 2009, an estimated 12 to 23 % of all health insurance applicants were rejected due to private information given to insurance companies by outside informants. This private information ranged from information about genetic disease and disability within their family to previously existing conditions. Hendren (2013) argues that this was a serious issue because of the ethical considerations but because this served to increase healthcare costs for the uninsured and hence for state and federal government agencies.

While health insurance corporations can no longer reject individuals due to this particular loophole this personal and private information from third party sources can still be used to limit or restrict the availability of certain services. It may be used to determine coverage limits or what types of doctor's patients may see. This practice has had a negative influence on healthcare over the last several decades since many of the people who have been rejected for health insurance based on this private information are now amongst the ranks of the uninsured that the PPACA has been trying to address. If they had only been assessed based on the information given by the customer when they applied for health insurance the United States would not currently have the high rates of uninsured that it does.

Hendren (2013) effectively argues that the PPACA has limited to the ability of the health insurance companies to participate in harmful and unethical (and financially foolish) actions such as this. This has helped in that fewer people are being rejected for health insurance by large private health insurance companies simply because they are no longer allowed to continue these practices. This also ties closely into another serious moral ethical and financial issue in relation to health insurance corporations, which is health insurance eligibility.

According to Somners and Rosenbaum, the main problem with PPACA is that it has created a shift in eligibility requirements for public and private health insurance. Some people have gone from being eligible for Medicaid, Medicare, and SCHIP to being ineligible but qualified for substantial monetary subsidies if they purchase private insurance. Somners and Rosenbaum argue that one of the critical issues with these changing eligibility requirements is that they keep changing.

This lack of stability is a problem in that it places a financial burden both on state and local public insurance agencies, and on customers of health insurance companies who are constantly having to switch between public and private insurance. This is a serious issue because this means that customers may face increased health insurance rates, loss of services, and that they may have to switch their primary healthcare providers. Somners and Rosenbaum (2011) state that this is one of the major deficits within the PPACA especially since it has served to increase rather than reduce healthcare costs in the United States.

Somners and Rosenbaum argue that a more effective method of addressing this issue would be to simply standardize eligibility requirements for public insurance at the national level. This would prevent issues with shifting eligibility since every state's public health insurers would be set to exactly the same standards as other states. The central problem with this idea is that the way that the PPACA is written allows each state to determine their own eligibility requirements for public insurance although private insurers are often very limited in what they are allowed to do.

According to Niles, private insurers have been at the center of many of the problems with the healthcare system in the United States. They were responsible for introducing many faulty policies such as, managed care, health maintenance organizations (HMO's), and spending caps on specific types of care. This has prevented many Americans from finding and keeping adequate health insurance in past decades.

Niles suggests that while the PPACA has attempted some reforms the private insurance corporations have a powerful hold over the healthcare system in the United States. Unlike many countries in Europe, American healthcare was never nationalized or universal and this has allowed private corporations to gain a great deal of power over who receives care and how much care they receive in relation to health insurance coverage. The PPACA is clearly a transitional plan however, it remains to be seen whether the public insurance and subsidy model fostered by Affordable Healthcare or the private insurance model prevails in relation to health insurance in the United States.

Conclusion

As can be seen the private health insurance corporations have had a powerful and often negative influence on access to health insurance and healthcare in the United States. They have placed rather extreme limitations and eligibility requirements in order to obtain health insurance. They have also monopolized the health insurance marketplaces since the implementation of the PPACA, which has limited the available options for individuals who are not eligible for public health insurance, and who do not have health insurance provided by employers. This reduces flexibility and has forced people into health insurance options that they may not need and still end paying health insurance corporations for.

The literature indicates that there are no clear and easy answers on how to limit the powers of private health insurance corporations while still allowing patients to have choices in relation to their healthcare. For every loophole such as, pre-existing care that is eliminated the insurance industry manages to find five or ten more loopholes that allow them to profit while continuing to deny Americans access to effective healthcare. This can be a significant problem in that this then increases healthcare costs for public health insurance organizations and costs for patients and taxpayers. Thus, it can be concluded that private insurance corporations are at least in part responsible for many of the problems and issues in the US healthcare system.

References

Calabresi, S. G. (2013). The Right to Buy Health Insurance Across State Lines: Crony Capitalism and the Supreme Court . University of Cincinnatti Law Review, 81 (4), 1453-1514.

Hendren, N. (2013). Private Information and Insurance Rejections. Econometrica, 81 (5), 1-44.

Niles, N. J. (2010). Basics of the U.S. Health Care System. Boston, MA: Jones and Bartlett Inc.

Somners Benjamin D and Rosenbaum Sara . (2011). Issues In Health Reform: How Changes In Eligibility May Move Millions Back And Forth Between Medicaid And Insurance Exchanges. Health Affairs, 30 (2), 228-236.