There is no health insurance mafia

In The Health Insurance Mafia, Jonathan Kellerman, an author of crime novels and psychology books in addition to his job as a clinical professor of pediatrics and psychology, has this nonsense to say about health insurance:

The health insurance model is closest to the parasitic relationship imposed by the Mafia and the like. Insurance companies provide nothing other than an ambiguous, shifty notion of "protection." But even the Mafia doesn't stick its nose into the process; once the monthly skim is set, Don Whoever stays out of the picture, but for occasional "cost of doing business" increases. When insurance companies insinuate themselves into the system, their first step is figuring out how to increase the skim by harming the people they are allegedly protecting through reduced service.

He continues in the same spirit for a few more paragraphs, but you get the idea.Kellerman thinks the answer to health care costs is to shift back to paying for physician fees and hospital stays out of pocket. But the example he offers from his own experience hints at the fallacy of his position.

Several years ago, I suffered a sports injury that necessitated an MRI. The "fee" for a 20-minute procedure was over $3,000. My insurance company refused to pay, so I informed the radiologist that I'd be footing the bill myself. Immediately, the "fee" was cut by two thirds. And the doctor was tickled to get it.

All we know about his encounter comes from those few sentences, but there are some things about it that don't smell right:

• If the MRI was really "necessitated" his insurance company probably would have paid for it. Certainly he or his physician could have appealed if they thought the denial was unreasonable. Maybe he didn't need the MRI at all, but the doctor wanted to boost his own income. Medical imaging is one of the most overused technologies and if anything we need more intervention from insurers and radiology benefits managers (like NIA) rather than less. Also, although Kellerman says insurance companies' "first step" is to harm members by reduced service, in imaging and diagnostic testing in general less can be more. An MRI probably won't hurt you but other popular modalities like CT very well may. (See Image gently, or when the diagnostic is worse than the disease.)
• The sudden reduction of the fee from $3000 to $1000 and the doctor being "tickled to get it" doesn't ring true either. Is Kellerman claiming (as he seems to imply elsewhere in his article) that a doctor would rather get $1000 from a retail patient than $3000 from an insurer? I doubt it. I don't know about you but I'm not keen to go back to the days of "usual and customary" fees or enter the world of the bazaar every time I go to the physician's office or hospital. Maybe Kellerman could have gotten the scan for free as a professional courtesy, but what about the rest of us? I wouldn't be surprised to find that certain groups end up paying more for the same services --and it won't necessarily be those with greater financial means.

Rather than this senseless vilification of the insurance industry, which leads to simplistic and incorrect conclusions, I'd like to see a discussion about how insurance companies can shift to meet the needs of consumers, beyond simply offering Consumer Directed Health Plans. As consumers assume more of the cost for their health insurance --either because they pay their own premiums or have to pay a greater share of what's offered by their employer-- I expect consumers will increasingly turn to managed care for help in figuring out what services really are necessary and which providers offer high quality care at a reasonable cost. In addition I expect there to be an opportunity for insurance companies or third-parties to help audit and negotiate bills for health care services. They could start with a close look at hospital bills, which consumers are essentially hopeless to decipher.