A Tough Medical Ethics Problem for Health Insurance

WellPoint, the company that operates California Blue Cross, is in a battle with California physicians over the pre-existing conditions clauses in insurance policies. An informative Los Angeles Times article shows how our dysfunctional health care “system” creates a three-way game of chicken in which insurees' rational self interests, physicians' ethics, and insurance company responsibility for cost containment, inevitably collide. Everybody loses.

Health insurance is so expensive that individuals are tempted to gamble that they won’t need it. Rational self-interest points to forgoing insurance when we are healthy and getting it when we are sick.

But our “system” asks insurers, whether for-profit, like WellPoint, or not-for-profit, like Kaiser Permanente, to control costs, in addition to paying for necessary care. Part of controlling costs is discouraging “free-ridership” – taking out insurance only when the need arises. The noxious exclusions for pre-existing medical conditions exclusions are necessary for playing the insurer role in our health “system.”

Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose "material medical history," including "pre-existing pregnancies." The peremptory-sounding letter tells physicians that "any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately."

For physicians, caring for individual patients is their primary commitment. The president of the California Medical Association says "we're outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality,"

Anthony Wright, executive director of HealthAccess California, a healthcare advocacy organization, says WellPoint is “playing a game of 'gotcha' where they are trying to use their doctors against their patients' health interests…That's about as ugly as it gets."

So WellPoint is the bad guy. Right?

No - wrong.

Our “system” asks insurers to control costs. They can’t do that if we are allowed to eschew insurance when we are well and buy it when we become ill. We shouldn’t blame insurers when they do what we ask them to do.

Of course, insurers can game the system in unethical ways. It is one thing to block free-ridership by not allowing individuals to (a) choose not to buy insurance, (b) apply for it when ill, and (c) fraudulently choose not to reveal the fact of illness. But California companies have gone beyond disenrolling individuals who knowingly commit fraud (technically called “rescission”) http://attorneypages.com/hot/trigger-health-insurance-rescission.htm and appear to have used technicalities in a “gotcha” manner to avoid paying claims. http://www.latimes.com/business/la-fi-rescind25dec25,1,1624594.story?ctrack=5&cset=true

The moral of the California story is that we can’t control costs in our current system. As insurance gets more expensive, more individuals will choose to go bare. Insurers will continue to monitor for fraud, but will also be tempted to disqualify non-fraudulent applications for technical errors. Physicians will resist blocking their patient’s access to coverage, even when the coverage was obtained by fraud.

Our current approach to the California conundrum is to mandate that individuals obtain coverage. We are in the early stage of experimenting with that approach. If the mandate system doesn't work, some form of Medicare for all is the logical next step.