In this edition of The Wired Practice video, originally published for MedPage Today, Vanguard CEO Ron Harman King discusses the prospect of health insurance reform following the murder of UHC’s CEO.
Watch the video on MedPage Today
By Ron Harman King, MS, JD, CEO
The murder of the UnitedHealthcare CEO could spur action on healthcare insurance reform
Now that the 2024 presidential election is over, we should not be so surprised about the outcome as much as the discovery that a number of former Bernie Sanders supporters went for Donald Trump this election year. What a stunner that quite a few Sanders sectarians threw in for Trump out of the same frustrations with the status-quo ruling class Sanders has assailed for years. Or not.
Just before the election, a New York Times/Siena College poll found that more than 3 of 5 likely voters believe “the government is mostly working to benefit itself and the elites” – whoever those ill-defined elites may be. Weeks later, this pent-up rage erupted most dramatically in response to the December 4th murder of UnitedHealthcare CEO Brian Thompson. The assassination – an act of cowardly terrorism, to be sure – is another reminder that no one seems to like insurance companies beyond their executives and stockholders.
Anger over healthcare commercial insurance boils over on social media
Patients despise commercial insurance for denials, delays and forever expanding deductibles and co-pays. Providers loathe it for bureaucratic oversight and administrative headaches. Within 48 hours of the killing, social media boiled over with venomous posts endorsing the slaying. By one account, UnitedHealthcare’s official Facebook statement about the murder received 46,000 reactions, of which 41,000 responded with the laughing emoji.
As for the healthcare profession, look no further than MedPage Today news stories, essays and reader comments to behold an ocean of virulent anti-insurance sentiment. The bitter outpouring raises the question of whether the nation is approaching an all-but-unthinkable prospect: the next episode of meaningful healthcare reform.
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Affordable Care Act was a healthcare insurance reform
Recall the last reform, the 2012 passage of the Affordable Care Act (ACA). Also known as Obamacare, the ACA was not so much healthcare reform as healthcare insurance reform aimed at making coverage more affordable. Flash forward more than a decade. For more sweeping reform of the insurance industry, either Congress must resolutely take sweeping action, or a high federal court would have to issue a landmark decision in a contentious lawsuit.
For inspiration, let us look to historical precedent. One instance might be the 1982 breakup of the Bell telephone system. (Anyone remember the telephone company?) An eight-year legal battle by the U.S. Department of Justice led the U.S. District Court for the District of Columbia to order the AT&T monopoly to divest into the so-called “Baby Bells,” seven regional Bell operating companies established to increase competition.
Health insurance controlled by a cartel
Granted, there is no commercial healthcare insurance monopoly. Nevertheless, just six insurers collectively have 60% of market share nationwide, while the remaining four of the top ten share just 8% total. Thus, healthcare insurance is largely controlled not by a monopoly but by a cartel, which is still problematic. For example, only an insurer on the scale of $371 billion UnitedHealthcare could afford the $13 billion acquisition of Change Healthcare.
Could this be grounds for some sort of anti-trust action similar to the Baby Bell case? Perhaps the Justice Department might sue to force the big companies to diversify so that no single player owns more than, say, the 8% shared by the smaller players. Another option is to open the black box. Under the ACA, healthcare insurance customers can appeal denials and delays to their state insurance commissions, which must apply 16 minimum consumer-protection standards.
Three hitches: First, not every state has such a review body. In that case, a consumer must take a complaint to the U.S. Department of Health and Human Services. And who wants to wander alone into either bureaucratic labyrinth? Second, appeals get bogged down. By the time a decision is reached, medical urgencies and emergencies may render it too late – postponed treatment can either severely worsen a patient’s health or, worse, kill him or her. Third, a consumer or an employer shopping for policies has nowhere to go to look up all insurers’ denial rates for comparison sake.
Other reform options
Yet another option would be a healthcare insurance version of the Hospital Price Transparency Act. Passed in 2021, the legislation requires hospitals “to provide clear, accessible pricing information online about the items and services they provide…”
Likewise, a new version of the law could force insurance companies to publish comprehensive and comprehensible information about rates of denials and delays on their websites.
The public option for healthcare insurance reform
For my money, however, I say we roll all efforts into one package by dusting off a relic from the past. Let’s re-examine a healthcare insurance public option. A public option would create a government-run healthcare insurance plan offered alongside commercial insurance. The alternative was initially proposed as part of the ACA but was jettisoned to win over a majority vote in Congress.
In its reincarnation, a 2025 public option could operate somewhere between Bernie Sanders’ famous advocacy for “Medicare for all” and the private insurance sector. For argument’s sake, I’ll call this plan Medicare Light – or better yet, MediFair.
A MediFair from Medicare for all?
Open to all ages, MediFair would offer competitive or better benefits than private insurance plans. It would also reimburse providers at a higher rate. Of course, the program would have to pay for itself. For this reason, premiums would likely cost enrollees more than Medicare but less than private insurance.
In addition, careful management of program costs is critical. Here again, we meet in the middle. For example, the ACA limits private insurers’ overhead expenses and profits to 20% of revenues. In contrast, less than 2% of Medicare funds go toward administration costs.
Like Medicare, MediFair would operate on a non-profit basis, and administrative costs could be limited to, say, 8% of total revenues – comparable to limits imposed on public utility companies. Administrators would still have the resources to fairly judge claims and appeals, providers would be reimbursed fairly, and private insurance would offer essential competition. Voila! A win-win.
To be sure, three states have tried their own versions of a public option with disappointing initial results. However, success is plausible if MediFair operated on a national level. Participation by millions of Americans could deliver economies of scale not possible under state administration.
Yes, let’s not hold our breath. Regardless of how the law might spawn MediFair, the process would stir the political pot to a boiling point. Resulting lawsuits could span the next decade. But what choice do we have? Must Americans rely on abhorrent vigilante violence to cure perhaps the most noxious disease in our healthcare system? I for one believe we’re a better country than that.