HJAR May/Jun 2025

WHAT’S WRONG WITH HEALTHCARE 22 MAY / JUN 2025 I  HEALTHCARE JOURNAL OF ARKANSAS   eight does rank second among all private in- surers, just ahead of UnitedHealth Group. A 50% improvement in any performance metric is usually enough to be rewarded with a bonus, but in this case would still only get them to negative four. Maybe a score of zero could be their stretch goal to help justify multi-million- dollar executive compensation? But seriously, put yourselves in their position for a moment as we return to the concept of moral hazard, thinking back to the patient I saw many years ago who demanded an MRI of his spine even though he had no valid clinical indication for it. How easy would it have been for me to blame it on the payer? I could have said some- thing like, and probably have in the past, “I’m sorry, but the payer will not cover that test.” That way, I could absolve myself from any responsibility for refusing the test and instead blame it on the payer, implying that necessary care is being denied or rationed. In that scenar- io, I, the doctor, am the would-be hero, trying to deliver the care that a patient needs, while the payer becomes the villain, denying said care. The truth is significantly more complicated. Having said that, one thing that we do a ter- rible job of in healthcare — both on the payer side and the provider side — is in measuring the outcomes that matter most to patient members. It is no surprise that Cigna wants to link executive compensation to NPS. More members mean more premiums collected and more dollars coming into their company. One of the well-intentioned mishaps of the ACA was that it also capped the medical ex- pense ratio at 85%. Medical expense ratio refers to the percentage of dollars paid out in claims out of the total premium dollars col- lected. Prior to the ACA, a payer might have only paid out 65% of dollars collected in pre- miums, leaving them a nice fat 35% profit margin. The ACA mandated that large insur- ers needed to pay out at least 85% of dol- lars collected in premium for medical expen- ditures, thus capping their margin at 15%. The problem with that math, of course, is that if healthcare expenditures keep going up year after year, then the absolute dollar amount of their remaining 15% profit margin keeps going up as well — because 15% of an ever-increasing pot of money is still a larger amount of dollars available for bonuses and distribution. Therefore, the payers truly have no meaningful financial incentive to decrease total cost of care. What would be really sur- prising as a metric from Cigna, or any private insurer for that matter, would be how success- ful they are at lowering premiums year after year for their members, thereby voluntarily taking in less revenue through premiums each year. Since healthy people consume less care, new metrics that attempt to better measure health outcomes would seem to be a logi- cal measure that matters but has often been challenged by both payers and providers as too difficult to measure. And for that fail- ure, there is blame to be had on both sides. Let’s once again return to the patient from many years ago who was demanding that I or- der an MRI. Earlier on in my career, I might have succumbed to that demand. Both because I was trying to grow a practice so that I could support my family financially — and therefore wanted to make patients happy so they would come back to me — and because I was less confident in my abilities diagnostically. Studies show that younger doctors fresh out of training tend to order more diagnostic tests than their older, wiser, more experienced counterparts. In this particular case though, I was 10 years into the practice of medicine, had more pa- tients than I could ever manage as effectively as I would have desired, and had also learned that in any given year, 44% of Medicare beneficia- ries were receiving tests or other interventions that are not supported by clinical evidence. 2 MRI of the spine — without any “red flag symp- toms” such as fever, history of intravenous drug use, weight loss, history of cancer, or neurologi- cal signs or symptoms — is one of those tests. I could have taken the easy way out, blaming the payer, thus abdicating myself from respon- sibility of being the bad guy, but I didn’t. In- stead, I simply explained to this patient that his neurological exam was normal, that he did not have any red flag symptoms, and that it was too early in his symptomatic course to order such an expensive study. I was trying to deliver the most effective, evidence-based care while also being fiscally responsible regarding resource utilization. An MRI was indicated only if some type of procedural or surgical intervention was warranted, which, at this point in his course, was most certainly not. At this point, one might tend to point blame at the patient for demand- ing the test in the first place, something that I never do. It is not the patient’s job to know what tests they need or when they need them. But it is my job to build rapport and earn their trust so that they are more inclined to take my advice. And, sadly, I was also trying to protect this patient from harm. There are doctors out there who often financially benefit from their owner- ship stake in the MRI machine who would be more than willing to order the MRI of the pa- tient’s spine without a good clinical indication. And since 50% of all MRIs of the spine show evidence of abnormalities such as bulg- ing disks, including in those individuals who are not experiencing any neck or back pain at all, the slippery slope of care delivery of- ten results in many of those patients rapidly escalating from conservative treatments to more aggressive — and potentially harmful — surgical intervention. The result is medi- cally unnecessary care due to clinically unwar- ranted practice variation, which sets the stage for our next article attempting to answer the question of what’s wrong with healthcare, this time looking at it from the provider side. Let’s conclude our look at the history and soul of health insurance by looking in the mir- ror ourselves as a society. We want the private markets to solve our healthcare woes, but we need to look back at the past and understand that it was a private market share growth strat- egy of actuarial fairness that led to the most vulnerable members of our society — poor and elderly — being uninsured in the first place. It was private market failure that led to government financing of healthcare for those vulnerable populations through Medicare and Medicaid. It was that same principle of ac- tuarial fairness that led to millions of people being uninsured because of preexisting con- ditions that still left 16% of our population, or 46 million people, in the richest country in the world without insurance as recently as 2010. But we clearly do not yet seem ready as a so- ciety to embrace the concept of the solidarity principle and that “we are all in this together.” So, at least to that end, some of the blame for what’s wrong with healthcare lies with all of us, as we examine not only the soul of health insurance, but also the soul of our country. n REFERENCES 1 Stone, D.A. “The Struggle for the Soul of Health Insurance.” Journal of Health Politics, Policy and Law vol. 18, issue 2 (Summer 1993): 287-317. DOI: 10.1215/03616878-18-2-287 2 Schwartz, A.L.; Landon, B.E.; Elshaug, A.G.; et al. “Measuring Low-Value Care in Medicare.” JAMA Internal Medicine vol. 174, no. 7 (July 2014): 1067- 1076. DOI: 10.1001/jamainternmed.2014.1541