Karl Grossman: “Local example” of the health insurance industry fleecing America

Wed, Aug 10, 2011

Opinions, Suffolk

Karl Grossman

The other day I noticed a small, six-paragraph article in the New York Times, tucked away next to a spread on the Murdoch phone-hacking scandal, a piece headlined: “Profit Up 13%, United Health Raises Outlook.” And I thought of the stand-off between United Healthcare/Oxford and the East End Health Alliance.

The contract between United Healthcare/Oxford and the alliance, which represents the three eastern Suffolk County hospitals, expired on July 15. This has meant 3,000 eastern Suffolk residents who use Oxford’s self-insured plans have to pay costlier, out-of-network rates or go up-Island for care. And if no settlement is reached by September 15, an additional 12,000—those enrolled in other Oxford plans such as Oxford Liberty and Oxford Freedom—will be in the same situation. United Healthcare/Oxford, after Empire Blue Cross Blue Shield, has the most health insurance subscribers in eastern Suffolk.

It’s playing hardball with the alliance which represents Southampton Hospital, Eastern Long Island Hospital in Greenport and the Peconic Medical Center in Riverhead.

“Our goal is to simply have the reimbursement rates reflect our costs,” says Paul Connor III, president and CEO of Eastern Long Island Hospital and spokesperson for the alliance.

In other words, the three hospitals, all non-profit entities, are seeing to be fairly reimbursed by United Healthcare/Oxford which, as the Times piece chronicles, is very much a for-profit entity. The “good news” for the private health insurance industry “appears likely to continue,” said the Times article. With its “double-digit increase in profits,” United Healthcare/ Oxford has “raised its estimates for 2011 earnings…Its net income rose 13 percent, to $1.27 billion.”

In addition to seeking fair reimbursement, the three eastern Suffolk hospitals are trying to achieve equivalency with what health insurers pay western Suffolk hospitals. “We know what the market rates are and we are looking to get parity,” said Connor.

Health insurers have given eastern Suffolk hospitals less because they regard this area as rural, similar to upstate New York where costs are lower. That, of course, isn’t the economic reality of eastern Suffolk County.

Dr. Martha Livingston is an expert on health care—indeed, she teaches about it as professor of health and society at the State University of New York/College at Old Westbury (where for 32 years I’ve taught journalism). She is also co-editor of the book, 10 Excellent Reasons for National Health Care; and she is on the board of the New York chapter of Physicians for a National Health Care Program.

Asked for her view on the United Healthcare/Oxford stand-off, she commented that there is “no reason for the East End hospitals to be put in this position.” United Healthcare/Oxford should, she said, be reimbursing the hospitals adequately. The problem, she said, is that “we’re the only country among all the world’s rich, capitalist nations that relies on a for-profit system for health care.” The United Healthcare/Oxford collision is a “local example” of this. The U.S. health insurers take “15 to 30 percent of every health care dollar” they get for overhead and as profit. This, she said, “while one successful piece of our health care system, [non-profit] Medicare, has an administrative cost of 3 percent.” The result: the U.S. having a far costlier health care system per-capita than other nations.

The private health-insurers “will always find a way for not paying” and “we need to get rid of them…If we stopped giving money to these guys to make profits and gave it instead to provide for health care, we would have the best health care system in the world hands-down,” said Dr. Livingston.

Moreover, she said, “it is crazy to say people on the East End will have to schlep to the Stony Brook University Medical Center to get their care when we have community hospitals on the East End that have done the job and want to continue.”

Of course, the “public option” in health care reform never happened, what reform came about is being blasted by conservatives who are now trying to undo it, and the “local example” of the insurance industry fleecing eastern Suffolk hospitals continues. Meanwhile, the prospect of East Enders who subscribe to United Healthcare/Oxford needing to go up-Island to receive their health care “in network” is before us.

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