How Insurance Companies Have Unfair Advantage

This op-ed article is a continuation of "Big Data and Lawful Threats to Privacy, " and this segment illustrates how insurance companies' unequal access to our personal heath information gives them an unfair advantage in the marketplace. The second and last segment will appear in next week's edition.
OPINION -- Bill Moyers introduced his recent guest Joseph Stiglitz, an economist and professor at Columbia University, saying,“(T)he situation in America is grave – that’s his exact word for it: grave. Inequality too great, unemployment too high, public investments too meager, corporations too greedy, and the tax code too biased toward the very rich.”
This situation has grave consequences: The haves are living longer lives than the have-nots.

Stiglitz won the 2001 Nobel Prize for his “analyses of markets with asymmetric information.” Quite simply, he told Bill Moyers, information asymmetry is an inequality that occurs when “some people know something that other people don’t know.” Unequal access to information distorts markets, leading to discrimination and monopolies. 

The health insurance industry in Oregon profits from information inequality:

  • Affordable Care Act reforms will not bend the costs of healthcare and will continue to exacerbate inequities.
  • Doctors face greater risks speaking out against inequities driven by the insurance industry.
  • All-Payer, All-Claims databases magnify information inequality through the insurance industry's control of big data.
  • All-Payer, All-Claims databases unfairly share our personal health information without consent to serve the insurance industry.
  • Insurance companies rig the healthcare industry to their profit.

Don’t mind the gap

The longevity gap reflects a 25-year trend that won’t change with Medicaid expansion and subsidized premiums purchased through the Affordable Care Act. While a Gallup poll shows a significant dip in uninsured Americans a fourth of low-income households are still uninsured.

Health outcomes won’t improve if subsidized Obamacare premiums threaten families with medical bankruptcy—especially if the bait of cheaper premiums is switched to unaffordable care through uncovered benefits, balance billing and undisclosed “cost-sharing” (deductibles, co-pays and co-insurance). These known unknowns, to borrow from Donald Rumsfeld, are tricks of the insurance trade.

Access to care is another story. It’s extremely challenging to find sufficient numbers of doctors willing to see Medicaid patients at Medicaid reimbursements, despite a 2-year pay hike for primary care services since 2013.

Perverse incentives and muzzled doctors

The Medicaid pay increase was delayed, complicated by the increasing numbers of primary care physicians who are employees and are therefore paid through their clinic, practice or other entity. Hospitals that hire the right mix of salaried primary care providers and specialists can be more cost-efficient and coordinate patient care better. But salaried doctors could also be rewarded with perverse incentives when offered bonuses tied to how much billing they generate.

More ominously, salaried doctors may be effectively muzzled as patient care advocates. Peace Health fired Dr. John Egar,a respected Florence doctor, without cause in May, unofficially because of his outspoken opinions on high deductible insurance rates, dwindling access to primary care, and price transparency.

Healthcare Data Asymmetry

2011 report from the U.S. Government Accountability Office acknowledged that meaningful price information isn’t available and urged the Department of Health and Human Services to make this information available to consumers.

The Oregon Health Authority asserts that Oregon’s All-Payer, All-Claims data collection programs benefits consumer in making more informed healthcare purchase decisions through “access to information on healthcare cost and quality.”  Yetrecent data released from private health insurance plans are criticized as “barely useful.

This was predictable.

In 1987, Oregon adopted the Uniform Trade Secrets Act. This Act protects corporate trade secrets, which includes cost data that “derives independent economic value, actual or potential, from not being generally known to the public.”

2009 legislation enabling the Oregon Health Authority’s All-Payer, All-Claims database explicitly states, “Information disclosed through the comprehensive health care information system… may not disclose trade secrets of reporting entities."

The Oregon Health Care Quality Corporation (aka Q-Corp) collects data in a separate database. Q-Corp describes itself as “an independent, nonprofit organization dedicated to improving the quality and affordability of health care in Oregon by leading community collaborations and producing unbiased information.“

The Robert Woods Johnson Foundation provides funding to Q-Corp. Their policy brief on price transparency offers state-policy solutions that “prohibit contractual gag clauses that bar insurers from disclosing providers’ prices and prohibit other anti-competitive practices.” Oregon insurance executives claim that “(p)ublicly disclosing private contract rates will drive rates higher” without any evidence to support this.

Dr. Kris Alman retired from healthcare to become a citizen activist for a healthier democracy. She advocates for fair taxation to invest in the common good--prioritizing education, renewable energy and healthcare policies and laws. She is also the Green Shadow Cabinet Assistant Secretary of Health for Data Privacy and is helping organize a new grassroots coalition, A2MC (Access to Medicines Coalition). She can be reached at [email protected].

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