The Problem Isn’t So Much Insurer Vertical Integration as it is the Use of Coding to Measure Risk for Payments

The recent New England Journal of Medicine article on the dangers of private health insurer vertical integration/consolidation raises critical issues for health policy. Ironically, a recent investigative Wall Street Journal article also raises concern about the dominance of the private health insurer United Healthcare. The NEJM article describes the issues well in their title: The Dangers of United Healthcare for All.

One of the critical points of both articles is the explosion of Medicare and Medicaid patients being converted into private insurers - and United Healthcare leads the conversion. This privatization of government insured patients was meant to encourage competition, improve quality and lower costs. Of course, none of these benefits have materialized. The evidence suggests that the government pays more for these patients' care in private insurance. The quality of care declines and importantly, the caregivers are paid less by private insurers than they were by the government. At the same time we are “placing a handful of insurance companies in control of the healthcare delivery system.” 

Sadly, the remedies offered in both articles will not work because they don’t understand the real causes of the poor results. 

Coding makes healthcare payments insanely complex and the cost of the coding is not worth the results. Coding complexity invites fraud. Private insurers use coding to make everything more complex - the denial claims, the denial of coverage and the level of payments. The private insurers use coding complexity to justify these activities and to optimize their profits. More coding changes, more fraud oversight and more antitrust oversight will not fundamentally fix the abuses of coding complexity - we have decades of experience to demonstrate these remedies do not work. 

Serious reform efforts need to focus on simplification and the reduction of coding to determine provider payments and insurer premiums. These adjustments will reduce insurers' abuse of the system, improve quality, and lower costs. Go to www.thejourneys-end.org for more details on these solutions.