From judy-doc@coollist.com Tue Jul 20 01:34:19 1999
Date: Mon, 19 Jul 1999 21:03:05 -0400
From: judy-doc List Owner 
To: judy-doc@coollist.com
Subject: Interesting analysis to put things in perspective

I'm not sure what this man's experiences are but based on my knowledge
and experience, this scenario sounds about right.  I have a friend who
was in private practice in the 70's when the HMO's started taking over
practices.  He said none of the doctors wanted to join them.  But they
acted like gangsters.  They basically said to these groups of doctors,
"If you don't sign up as one of our doctors, we'll just import doctors
from elsewhere. Then we'll get employers to sign up with our plans and
assign YOUR patients to these others doctors."  Once the first member
of the hospital staff caved in, the rest followed.  Once they had
doctors whose practices were largely dependent on HMO patients, the
HMO's started tightening the screws (making more rules) each time the
contracts came up for renewal (i.e. see more patients, confidentiality
agreement, more services requiring pre-approvals, etc.).  If the doctors
objected they risks being "delisted" and losing a good percentage of 
their patients (and income) in one fell swoop.

The main reason doctors didn't join together is  1)it's been said the
trying to organize doctors is like trying to herd cats, 2) due to anti-
trust laws, if two doctors from separate practices got together and said
"We're not accepting less than $30 for an office visit" they could be
charged with anti-trust violations, fined and jailed.

Anyway, here's Don's essay:

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HOW IT USED TO BE, AND HOW IT GOT WORSE (An Email Essay by Don Levy )

It's going to take some very honest, very smart and very persistent lawyers
to make serious headway on this issue, and it's going to also take some
young, energetic, smart and persistent folks whom the lawyers represent to
make things change.

I have seen some huge changes in the insurance industry in my life. I'm 62
and when I was a kid, it was obvious that when someone with a "good"
insurance company suffered a loss, the carrier fell all over itself to make
things right. My dad was a businessman, and from time to time over the
years, had insurance situations arise. Never did he have any problem: one
call did it all and the adjuster usually came out within hours. Once, when
our furniture, which was in storage at a Bekins warehouse, was badly damaged
by a fire there, they made a settlement the same day, and there was no
haggling over replacement value. My parents were able to immediately go out
and purchase new furniture for our move.

That all changed in the Eighties. It changed because insurance companies had
a long run of very profitable speculation on real estate and development of
properties for the previous decade or two. It SEEMED that such investments
could only go up, and they lost their conservatism and took much more
speculative gambles. Prior to that, insurance companies had been absolutely
conservative in how they handled their money, at least all the top ones did.

When the bottom fell out of the Savings and Loan industry and then Real
Estate spiraled down to leave many big investments devastated, this changed
the whole tenor of the insurance industry. Before, they had used the money
they made (and, even more importantly, the reserves they held for paying out
claims) to invest in rock-solid, very secure things like treasury bills,
blue chip stocks and bonds, high-rated municipal bonds, and the like. The
yield had been small, but very steady and reliable, and because of the huge
reserves they held, very, very profitable in total amounts (if not
percentages).

Now, with the bad investments, they were in deep doodoo. They had gambled
and lost, big time. In the past, they had had more than enough money to
cover claims. Now they had to really sweat to stay afloat. And they weren't
exactly happy to explain to their shareholders that the reason they were in
financial difficulty was bad money management on a colossal scale. So they
blamed the claimants.

The first place I noticed the change was in the health insurance field.
Prior to the mid-80s, what a doctor did for a patient was strictly up to the
two of them, and the insurance simply covered the expenses. Yes, there were
some greedy doctors who charged for too much and for too many unnecessary
services, but the vast majority were mostly just doing their jobs, with
their patient's benefit the highest consideration. Any abuses could easily
have been handled without overhauling the system.

But the insurance companies, faced with huge losses they needed to somehow
fix, began to nitpick claims. And they discovered that this intimidated both
doctors and patients, and that mostly they got away with it, even when the
charge was justified, appropriate and fair. The doctors were afraid to argue
for fear of being accused of insurance fraud and greed; they had licenses
that had taken years to acquire and families to protect. And patients were
afraid of authority: is there any doubt that to the average person huge
companies like Allstate are "authority"? There was also a common
misunderstanding by patients (which is still common today) that an insurance
company can cancel you for making a health care claim they consider
excessive, or making too many claims, period. And most patients are not
really up to fighting such huge entities. So together, the doctors and
patients mostly just caved in. The doctors especially blew it, since by
banding together they could have successfully fought off a lot of the
ridiculous arguments about their so-called excessive charges.

This accomplished two things: it slowed and then reversed the financial
bloodletting of the insurance companies' coffers, which had been due to
their own mismanagement of money, and then it made them greedy for more.
While it's true they had to hire an army of "gatekeepers" to make this
happen on a steady basis, it's also true that the gatekeepers worked for
THEM, so that they could adjust the "flow" simply by issuing administrative
rules. Believe me, in health insurance, they have honed it to an incredible
art.

When I was in my thirties, I was absolutely confident that with my health
insurance and my doctor, there would be no stone unturned should my health
take a turn for the worse. I treasured that insurance.

At 62, just when I probably need insurance the most in my life, I am now
uncovered (holding my breath for Medicare to kick in) because buying
insurance today is so outrageously expensive, ESPECIALLY when you realize
that you will have to fight the insurer tooth and nail on virtually every
expense, perhaps at a time when neither health nor time allows it. I get
sick to my stomach when I read about people facing life-threatening (or
crippling) illnesses that must be treated promptly encountering delay after
delay, threatening even survival. I'd frankly just as soon take my chances
at the county hospital, dismal though it is.

Well, once the big insurance companies saw what power the word "NO" had in
health claims adjustment, and how little opposition they actually
encountered, they immediately generalized this to their other types of
policies. Anyone who's my age and remembers dealing with a car accident
thirty years ago, versus today, can attest to how difficult it's become with
virtually all carriers. Making a claim today leaves one feeling dirty, as if
you intentionally got hit by the truck to make a buck, and that you are just
trying to rip off the carrier.  Every single repair is nitpicked. The
claimant often has to wait outrageous periods of time for settlement, and
finds the whole process exhausting. Many, many of them just let it go and
accept what they're given, or just walk away.

This process has now spread to virtually every kind of insurance, and it
appears to me that the only way it will now be reversed is through
legislation and judicial process, both tedious and expensive. I think the
only hope is through people joining forces. A lone claimant is in a terrible
position. Before the eighties, there was a bond of trust between insurance
companies and their insureds. Insurance was vital to business and individual
survival, and both sides treated each other with respect. Premiums were low
because insurance companies invested the premium income wisely (NOT because
of some other factor), and people would make paying premiums one of their
highest priorities.

The way, in my opinion, that Allstate got away with what they did in the
Northridge quake, was that we, the claimants, were isolated from each other
and could not compare notes, which would immediately have shown a pattern. I
wonder how many other owners of older homes, for example, received exactly
the same "the damaged happened before OR after the quake, but not DURING or
because of it because this house is old" response and just let it go.

So, my interest is to be one of those joiners and to give my moral support
to all legitimate, legal efforts to move the pendulum back to the center. If
I can help you or others in any way to make that happen, I will do whatever
I can. Please feel free to call on me.

Regards,

Don

TeddyToo@aol.com