Does Medicare Care?
Posted 10/07/2009 07:00 PM ET
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Reform: Throughout the health care debate, insurance companies have been cast as greedy villains that gleefully deny medical claims. But when it comes to rejecting claims, they can't hold a candle to the government.
Just days before Congress broke for its August recess, House Speaker Nancy Pelosi called the insurance industry's opposition to a government-run health plan "almost immoral" and accused carriers of profiting at the country's expense.
"Of course they've been immoral all along in how they have treated the people that they insure," said the San Francisco Democrat who has taken more than $200,000 in political contributions from the insurance industry in the last two election cycles. "They are the villains. They have been part of the problem in a major way."
The complaints lodged toward the industry from the Democratic side are focused primarily on premiums — too high, government health care supporters say — and horror stories about private insurers denying care. Neither criticism, however, is fair.
Premium rates are affected in no small way by government policy. Mandates handed down by lawmakers add significantly to costs.
The Congressional Budget Office believes mandates such as requiring insurers to sell policies to anyone who wants one and rules on what treatments must be covered increase premium costs by 15%. The Council for Affordable Health Insurance says the increase is higher — 20% in some states and as much as 50% in others.
As for denial of care, Medicare, which we've described as the government's public option for senior citizens, has the highest denial rate in the country, according to the American Medical Association's 2008 National Health Insurer Report Card.
From March 1, 2007, to March 10 of last year, Medicare rejected 475,566 of 6.94 million claims for a rate of 6.85%.
Aetna was the only private insurer that had a similar number, denying 43,317 of 637,239 claims for a rate of 6.8%. But the average of seven carriers was 4.05% including Aetna. Dropping Aetna as an outlier takes the denial rate down to 3.08%.
Medicare's biggest reason for rejection (27.8%) was claims lacking information "needed for adjudication," the AMA report says. More than one-fifth (20.9%) of the rejections were in response to procedures deemed not to be a medical necessity by Medicare.
Nearly 4% were rejected because they were noncovered services performed during a routine exam or screening. In 3.1% of the cases, Medicare said the expenses were incurred before the patient was covered — a pre-existing condition.
Other claims were denied because the patient wasn't covered by Medicare or couldn't be identified as a Medicare recipient, or there were paperwork problems.
Not surprisingly, the private insurers didn't deny a single claim due to corporate greed, Republican malevolence or any of the other criticisms the left uses to attack the insurance industry.
The lesson here is that a government program, even one as beloved as Medicare, is no more efficient, no more caring, no more morally superior than private coverage.
This isn't the only lesson that can help the public understand why government-run health care, even if it's just a camel's-nose-under-the-tent public option, would be a mistake.
But it is part of a larger package of reasons that coherently argue against more intervention from the state, which controls 45% of U.S. health care spending as it is.
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Does Medicare Care?
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