A health insurance CEO daydreams

Jim was at his desk, looking weary.

The last few weeks had been brutal.  Despite working twelve-hour days, he felt that he had little to show for.  His annual board meeting was to take place the next day, and he expected it to be tense.

With a replacement bill for the ACA about to be voted on, and with Trump in the White House, the situation seemed particularly precarious.  The board members had asked him to present a contingency plan, in case things in DC didn’t go well.

As CEO of a major health insurance company, Jim was well aware that business as usual had become unsustainable in his line of work.  No matter what insurers had tried to do in the last few years—imposing onerous rules, setting high deductibles, pushing for government subsidies—prices had been going up and up.

Premiums, of course, had had to do the same but, evidently, the limit had now been reached.  The horror stories being told at town hall meetings across the country were all too real.  People were fed up, and politicians were feeling the heat.

Something needed to be done to change course, but what?  He did not have any good plan to propose to the board.

Jim asked his assistant to block any non-urgent calls, indicating that he needed time alone.

He leaned back into his chair, put his feet up on his desk, and tried to relax for a few moments.  He launched his Twitter App and began to scan his feed.

He came a across a Twitter exchange that made him chuckle: a doctor suggesting that government insurance should cover “acts of God.”

@anish_koka @ASlavitt Define “acts of God”?

— John (@JohnTuckerPhD) March 26, 2017

A few moments later, he came across another tweet that seemed to argue along similar lines:

@ethanjweiss @anish_koka IMO, no one should die from MI because of low/ no income. But I’d be hard pushed to extend warranty to screening & anticipatory medicine — Saurabh Jha (@RogueRad) April 24, 2017

Was there any validity to these inchoate wishes?

Jim then recalled an Atlantic Monthly article he had read a few years before, in which the author contended that health care costs had gotten out of control because the US had adopted a model of comprehensive health insurance.

He hadn’t thought much about it at the time (he was too consumed with shaping the reforms that President Obama was trying to pass), but he remembered that the article raised a provocative point: Auto insurance doesn’t cover oil changes and regular checks up.  Home insurance doesn’t pay for minor plumbing issues and roof maintenance.  Why should health insurance cover routine doctor visits that are mostly about colds, muscle aches, indigestion, or acne?

Jim decided to ponder the question. He agreed that when health insurance covers routine stuff, people lose any incentive to shop for value.

He knew that from his own experience.  He was pretty healthy but, over the years, he and his doctor had had to deal with a few minor issues (a rotator cuff tear, for example) and not once did the question of costs ever come up.  Why be concerned with the price of the MRI if the insurance is taking care of it?

The same was true regarding the statin he was taking.  He had managed to convince his then new doctor to prescribe brand name Crestor by telling him that, in the past, he hadn’t tolerated any of the generic statins.

It wasn’t exactly a lie, but perhaps his intolerance to generic drugs was in part due to his unease at taking a medication that looked completely plain and had barely any distinctive markings on it.  He couldn’t shake the idea that generics might not work as well as brand name products.  And the fact that the pharmacy could switch to a different generic manufacturer at will, solely on the basis of cost considerations, added to his discomfort (especially when the manufacturing plant could be in India or Mexico).

At any rate, he wondered if the extra mental peace that he got from the brand name was worth the extra hundreds of dollars the insurance was paying for it. He knew himself to be rather calculating with his personal expenses (a habit instilled in him by his parents), and he wondered if he might not, after all, have set aside his arguably irrational feelings about generic drugs if the expense for the brand name medication came directly out of his own pocket.

Thinking about statins, Jim then recalled another recent interaction with his doctor. At one point during the previous year, he ran out of his Crestor and neglected to get it refilled.   By that time, his health habits and diet were much improved.  He was exercising regularly, had lost a good amount of weight, and hoped that the Crestor might no longer be necessary.

When the results of his annual labs came in, he saw that his LDL cholesterol level was well under what it had been at baseline a few years ago.  He was ecstatic and expected that his doctor would tell him that he could stay off the drug. Instead, the doctor told him that the guidelines had changed: what used to be considered a normal cholesterol level back then was now considered high cholesterol.  So, despite his best efforts to save the system money, he was back on Crestor!

That experience made Jim wonder if comprehensive health insurance didn’t give doctors an unhealthy incentive to expand the scope of health care. In fact, over the course of his 35 years in the insurance business, he had seen the emergence of a myriad of conditions that did not exist, or were not so common when he first started his career.

His son Jeremy, for example, was given the label of “ADHD” and placed on an expensive medication.  Granted, Jeremy’s concentration improved, and his grades at school also improved, but Jim had a nagging feeling that medical labels and treatments were now an easy way for society to deal with things that are outside the expected norm of the day.

Today, one can hardly leave a doctor’s office without being affixed with one diagnosis or another.  Many of these labels require work-ups, follow-ups and, often times, expensive medications—even though the effectiveness of these treatments is frequently controversial.  Undoubtedly, a large part of this activity is enabled by the fact that patients are rarely subjected to the entire expense that comes with receiving a medical label.

Perhaps the Atlantic piece was correct, Jim thought.  Perhaps his company should go back to doing what insurance was always meant to do: protect against unforeseen and catastrophic health events, and leave it at that.

If health insurance did that, health care prices would come down, allowing premiums to come down too.  With stable prices and premiums, health insurance might be more attractive as a market product, and less dependent on demand subsidies from the government.  Could that be the insight he had been waiting for?

Jim decided to give this idea a shot, at least as a thought experiment.  He wanted to have something to propose to his board, even if the proposal was just a sketch of an idea.

He got off his chair, picked up a notepad, and moved over to the reception area of his office suite.  He sank into a sofa and began to draw the outlines of a new catastrophic health insurance policy.

He started by making a list of conditions the plan should cover.  Right off the bat, he wrote down what seemed like an obvious item: heart attacks.  Surely, health insurance should cover those calamities.

But as he began to jot down “myocardial infarction” on his list,  he recalled his own experience when, a few years ago, he went to the emergency room in a panic because of an episode of severe chest pain.

As it turned out, it was only heart burn.  Nevertheless, the mere mention of chest pain at the front desk of the ED set off a huge commotion.  He was wired, scanned, poked, and probed, and he even spent the night in the ICU because the doctors couldn’t be sure that his symptoms were not the warning signs of something serious. The next day he had a stress test which he passed with flying colors and he was sent home with a prescription for Pepcid.

A few weeks later, he met a cardiologist on the golf course and had a chance to ask him questions about his care experience.  The cardiologist confirmed that making or excluding the diagnosis of a heart attack is not all that easy.  Even with the best technology, a significant amount of resources may need to be spent before the diagnosis and prognosis can be determined with reasonable confidence, whether the ultimate condition turns out to be a panic attack or MI.

How should Jim’s “catastrophic” insurance plan deal with a patient who has ominous symptoms but turns out to be fine? Obviously, the plan would have to cover the charges, Jim thought.  An insurance policy that, in effect, says “if you have severe chest pain, stay home unless you know it’s life threatening” would likely have few buyers and would probably invite ridicule, not to mention the scrutiny of the state insurance board.

But if the plan did cover all such cases, how should the policy be worded?  To say “the plan covers medical expenses incurred in the course of heart attacks, real or suspected” seemed like opening Pandora’s box.

He was a little troubled but decided that the problem might not be insurmountable.  He’d figure something out.  Deductibles could take care of that, he thought.

He went on to think about cancer care.

His best friend’s wife had been diagnosed with lung cancer a few months ago, out of the blue.  She had no family history of cancer and was not even a smoker.  It was a horrendous ordeal (they had two teenagers at home).

Covering cancer care was a no-brainer.  He assumed that fear of cancer was among the top reasons people want to have health insurance.  And as far as smokers are concerned, he could deal with their added risk the way life insurance does, i.e., with higher premiums.

But then, he remembered reading a medical article alleging that cancers can be “over-diagnosed.”  In the article, an oncologist was quoted as saying that certain cancers are so slow growing that the patients get unnecessary testing and treatment.  That means that not all cancers qualify as “catastrophe,” even if left untreated.

However, the article also went on to say that, in dealing with individual cases, doctors can’t tell the patient whose cancer should be left alone from the one who needs aggressive treatment. The phenomenon of overdiagnosis is only apparent in epidemiological studies after the fact, as it were.

So, Jim thought, his plan should cover cancer care for all cancer patients, even those for whom the cancer is not a catastrophe.  A compromise, to be sure, but at least that part of the policy would be easy to write.

But then, Jim remembered his own colonoscopy from five years before. He had just turned 50.  The doctor had discovered 2 polyps that turned out to be benign.  Jim wondered if the benign polyps should also fall under the category of health “catastrophe.”

On the one hand, they were clearly benign.  On the other, they were one molecular mutation or two from becoming malignant.  Wouldn’t it make good business sense to pay for the colonoscopy?

That sounded reasonable.  If his plan didn’t cover the procedure, many people would probably skip having it done, and some would end up with advanced disease that would require expensive surgery and chemotherapy.  And if mortality rates from colon cancer among plan beneficiaries ended up rising, that would be terrible publicity!

But if the plan did pay for colonoscopies, then there would be no rationale to deny other types of routine care, including routine office visits. After all, that’s how things like high blood pressure are detected.  It would be back to square one: a comprehensive health plan!

His mood became more somber.  Was there any healthcare category that could unambiguously be considered catastrophic?

What about trauma?  Surely, trauma is clear-cut.  You either have a broken bone or you don’t.  And people don’t typically go around looking for ways to dislocate their shoulders, do they?

But Jim remembered coming across a Twitter conversation among doctors regarding a blog post written by the late mountain biking champion Steve Tilford.

Tilford had written the post after being treated for a skull fracture that resulted from a bicycle fall.  He was not wearing a helmet at the time of the fall, as was his habit for non-race riding.  In fact, he was notorious for his dislike of bicycle helmets and his opposition to helmet laws.

In that blog post, Tilford claimed that, despite his accident, he might someday go back to riding without a helmet.  One of the doctors on Twitter commented that if Tilford were to fall again and have another skull injury, his health insurance company should have the prerogative to refuse to pay the medical expenses.

Superficially, that made some sense.  Insurance companies can—and frequently do—require beneficiaries to avoid risky behaviors and reduce “moral hazard.” But could one realistically avoid paying for a head injury for someone who doesn’t wear a helmet?  What if he had fractured a hip at the same time?  How could one meaningfully separate the expenses for the skull fracture from those for the hip?

Jim then started to think more broadly about the spectacular rise in sports injury of the last few decades.  There was literally an epidemic of concussions, stress fractures, tendon ruptures, dislocations, all incurred by people allegedly engaged in a “healthy lifestyle.”

And Jim thought about his parents.  Neither had practiced any sport of any kind of intensity.  Walking and gardening seemed enough to keep them healthy, and both lived well into their nineties.  So the claim that practicing sports necessarily brings a health and longevity pay-off seemed dubious to him.

How much of the epidemic of sports injury had been created by the widespread availability of health insurance, Jim wondered? Should his plan exclude people who engage in sports?  Should he charge them more?  Only if he wanted to invite a PR disaster, that’s for sure!

Jim’s frown was now fixed and he began to feel irritable. Was a high deductible plan the only option left that could qualify as “catastrophic” health insurance?

He was bothered by the idea of high deductible plans.  After all, once the deductible is met, the plan is, in effect, a comprehensive care plan.  Offering high deductible insurance, he thought, is like asking people to fast but rewarding those who fail with an all-you-can-eat buffet.

And at what level should the deductible be set?  If it is set high enough to really discourage utilization—and some think that level should be $50,000 or more—the plan provides no real security, so why would people bother to pay for premiums? If the deductible is set it too low, the plan remains essentially a comprehensive care plan.  Would Jim’s plan be able to find the sweet spot?  He wasn’t so sure.

Besides, high deductible plans change nothing of the business structure of healthcare.  The same onerous procedures of coding and billing would have to stay in place, since routine care expenses would need to be applied against deductibles.  And if that structure stayed in place, the same “gaming” of the system would likely remain.

Jim was really feeling dejected and sensed an impending headache. He set his notepad on the coffee table, took two Tylenols, lied down the sofa, and tried to take a nap.

His sleep was restless and was soon invaded by a confused dream.  He was at the board meeting.  He was trying to explain his plan but the sentences wouldn’t come out right.  He wasn’t making sense, and the board members were looking at him in puzzlement. He’d try again and get more flustered.  All eyes were fixed on him and no one was saying a word.  The scene repeated itself absurdly.

Then, all of a sudden, he saw that the man at the head of the table was none other than Trump, looking at him with contempt.  He gasped for air only to hear Trump blurt out: “Is that all you got? That’s not a plan!  That’s a disaster!  Your company is going to explode!”

Jim woke up disoriented and with his heart pounding, but gradually came back to his senses.  He reached for the remote, turned on the TV, and started flipping nervously through the channels.

He stopped at Fox News where Paul Ryan was shown giving a press conference.  Jim braced himself for the worst and turned up the volume.  What he heard shocked him.  “Obamacare,” Ryan announced, “remains the law of the land.”

Jim then turned off the TV, leaned back into the sofa, held his breath for a moment, and finally exhaled a huge sigh of relief.