Health insurance maze a major financial burden on hospitals, doctors, businesses
What about employers?
Most health insurance in the United States is provided through employers, who are involved in many aspects of the administration of insurance plans for their employees. Large businesses, where employees are frequently coming on and going off the insurance rolls, may employ several people simply to manage their health insurance plans. Many also pay consultants to advise them on what kinds of coverage to offer and how much to pay for it.
Small business owners are more likely to handle that administration themselves. According to several businesses and advocates, the simple act of choosing between the numerous types of insurance plans available represents a burden in time and resources. “Every small employer that provides health insurance is probably going to spend a lot of time one month of every year shopping around, comparing the plan you offer now to the others that are out there,” said Ben Geyerhahn, the director of special projects at the Small Business Majority, an advocacy group.
And if an employee actually has to use the insurance that has been paid for, an employer will have the burden and cost of staff time devoted to overcoming the hurdles to reimbursement (see bottom box).
An inherent friction?
In the last several decades, there has been a significant effort on the part of policy makers to make the existing system of health care financing work more effectively and efficiently, such as the 1996 Health Insurance Portability and Accountability Act (HIPAA), which was intended to standardize some transactions, saving providers time and money.
But several researchers pointed out that administrative costs have continued to rise, and expressed doubts that certain provisions of the 2009 Affordable Care Act — which were intended facilitate the switch to “paperless” billing and payment — will have much of an effect, either.
As Woolhandler explained, that is because many of those costs are “built into” the health care system as it is currently structured, and cannot be removed without changing it drastically.
Kahn agreed, and explained the intractability of those costs in terms of the “friction” that exists between providers and employers, on the one hand, and health insurance companies, on the other.
“The way we have structured our system pits these different groups against each other in terms of getting paid,” Kahn said. “Everybody has to fight to get paid for what they do. Doctors and hospitals have to fight for the insurance companies to pay them, and insurance companies have to make a profit, which means trying not to pay doctors and hospitals.”
“I never wanted to become an insurance expert”
Jan Naylor is the president of Naylor’s Hardware, which has operated stores in rural Maryland and West Virginia for 128 years. She currently employs about 90 people full-time, and provides health insurance for all of them.
“We employ one woman who was in a car accident and needed surgery on her right arm for nerve damage,” Naylor said. “Her doctor here sent her to a specialist in Pittsburgh, but the insurance company said that he wasn’t in our network. So she tried someone else. Not in the network. All the while, her doctor was saying, ‘You need to take care of this immediately, or the nerve damage is going to be permanent.’”
Naylor had to get involved by calling the insurance company and adjusting her employee’s coverage. “It took forever,” she said. “I was on the phone every day trying to take care of that.”
And that was hardly an isolated incident. “It seems like every couple months I have to call and wrangle with them about something, whether its them denying to pay for something or trying to charge us for something extra,” she said.
Naylor said that, at the same time that health insurance costs have been rising over the last several years, the administrative burden has increased, as well. “I took over the business 31 years ago, and I had to become an expert in all kinds of things that have nothing to do with hardware, like accounting and marketing,” she said. “I never wanted to become a health insurance expert, though, but that’s just part of being a business owner these days.”