October 10, 2023 An Ethics Class Presentation
As a healthcare systems analyst for 30 years, my expertise was in Medicare, Medicaid, and the Affordable Care Act (Obamacare). Most people don’t realize it, but Medicare doesn’t actually administer the Medicare program. The federal government contracts with private health insurance corporations to administer Medicare benefits.
I have worked for many insurance corporations on the business side of government programs. I helped develop and enforce administrative policies and procedures, much of which were aimed at ensuring organizational accountability and adherence to government regulations. It is my opinion that the federal government bakes in the incentive for insurance corporations to lavishly overspend, but they are ever willing partakers of the capitalist driven system which endlessly promotes corporate expansion. And non-profits are no different. They just call it “margin” instead of “profit”.
In 2016, I worked for Humana as a Medicare division manager. Humana’s corporate headquarters in Louisville is a massive 26-story building made of pink granite.[1] It’s an intimidating structure reminiscent of a stone castle surrounded by a moat where uniformed guards prevent all from entering but management and executive elites. There are x-ray machines and metal detectors at the entrance, just like at the airport. Currently, Humana is worth $61.7 billion. In 2022, Humana CEO compensation was $17.2 million.
For the four plus years I’ve been my mother’s caregiver, I’ve advocated for her on the patient side of Medicare. She is 85 years old, deaf (from birth), and has dementia. I’ve spent an enormous amount of time trying to get her prescription drugs covered. Many are non-formulary, which means they are not on her Medicare drug insurance company’s list of covered drugs. They require pre-authorizations, which involves coordinating with her physician. Pre-authorizations can be denied, which requires an appeal, which can be denied. Lots of paperwork for her physician, which drives up the cost of healthcare. Often, simply because time was a factor, her physician prescribed a formulary medication which may not have been optimal for her condition. Had my mother not had me to advocate, how might her health have been negatively impacted?
Drug insurance companies negotiate reduced rates with drug manufacturers. Since Medicare reimbursement is standard and is not adjusted based on how much the drug insurance company has negotiated to pay for a drug, companies can use that “savings” to offset costs and increase profits. In 2022, CVS, which includes the Medicare drug plan Silverscript, raked in $7.4 billion in profits.[2] The CVS CEO received $21.3 million.[3] Limiting their formulary is not what’s best for patients, it’s what’s best for the bottom line.
It takes 20 years for a patent to expire on a new drug, only after which generic drugs can be manufactured. My mother takes two very expensive brand name drugs. Year-to-date, my mother has paid an average of $355 per month for her prescription drugs. The average social security check is $1,706. That means for the average social security recipient, her out of pocket represents 21% of their income.
According to the Guardian, “The USA has the most expensive bureaucratic, wasteful, and ineffective healthcare system in the world.”[4] The ethical implications for having private corporations manage Medicare benefits is overwhelmingly negative. Not only is the system bloated, but the seemingly endless and ever-changing administrative requirements make it nearly impossible for the average person to navigate unless they have direct knowledge of how insurance corporations operate, like I do.
What does it say when companies have entire departments responsible for shepherding patients through the insurance enrollment process? Such administrative burden drives up costs which are passed on to us as increased taxes, insurance premiums, and deductibles and copays. The system is by its very nature an impediment to care.
Remember when we were talking about the earth, and I said when I have to throw something in the garbage instead of recycling, it bothers me, but I don’t lose sleep over it? Well, I lose sleep over this. A lot of sleep. I did when I was working in the industry, and I do now when I advocate for my mom. And myself.
Our current healthcare system is not only unsustainable, it’s obscene.
Questions:
It would take decades for the federal government to develop a national healthcare system like the United Kingdom or Canada. It would involve the dissolution of multi-billion-dollar corporations that currently employ over half a million people.[5] It would involve the integration of all private healthcare delivery systems under governmental control. All of this would have a tremendous impact on our economy and negatively impact Americans for decades. Given the massive complexity and astronomical cost of making this transition, is a national healthcare system the most ethical solution to our healthcare woes?
Do drug insurance companies have an ethical right to exclude drugs from their formulary?
The average Medicare executive makes $235K a year.[6] What is the government’s role in regulating executive compensation for the insurance corporations it contracts with to manage Medicare benefits?
Sources:
[3] https://www.modernhealthcare.com/executive-compensation/insurance-executive-compensation-2022-alignment-molina-aetna