Many Americans wonder why private health insurance works to guarantee people good affordable care in Europe but does not seem to work anywhere near as well in the United States. The answer is simple. Private health insurance in Europe works like traditional Medicare in the US, which is public health insurance. In Europe, the government sets all the rules of the road, and the insurers’ role is to administer claims.
To be more specific, in Europe, the government decides the cost of care–negotiating the hospital and doctors’ rates as well as prescription drug prices. The government decides the price people pay for their care. The government decides what care is covered and when. The private insurers are left only to receive the bills and pay them based on the government’s directives.
Private health insurers in Europe do not bear risk; they do not lose money every time they pay a claim, as private health insurers too often do in the United States. Medicare Advantage plans, private health plans that offer Medicare benefits, and health plans in the state health insurance exchanges, bear risk; they maximize their profits when they do not pay claims. They have no incentive to deliver high value care to people with costly conditions, because that’s a recipe for spending more money, for reducing their profit margins.
In Europe, private insurers have no incentive to delay or deny care inappropriately. The cost is not coming out of their pockets. The government is paying the bills.
To fix private health insurance in the United States, the federal government must stop allowing private health insurers to profit from denying and delaying people’s care. Rather, they should be paid a fee to administer claims and provide customer service to their subscribers. Believe it or not, that’s not a radical notion.
Private health insurers already act as claims processors for more than half of the US population. Private insurers process claims for the 38 million people in traditional Medicare. And, they process claims for another 141 million people who work for large employers and their families.
You do not need to do away with private insurers to improve our health care system dramatically. You simply cannot allow private insurers to profit from denying care.
If all the next Congress did was ensure that everyone in the US had access to a health plan that was paid based on the number of claims it processed–sometimes called an administrative services only arrangement–it would be a step towards improving access to care in the US for people with private health insurance. Private health insurance would work a bit more like private health insurance in other wealthy countries.
Here’s more from Just Care:
- Seven reasons commercial insurance cannot meet our health care needs
- Most people choose traditional Medicare over Medicare Advantage
- Coronavirus: Boosting support for Medicare for All
- Health insurers in Germany help prevent opioid crisis
- US health care system ranks last in meeting patients’ health care needs
