As tens of millions of Americans struggle with workplace medical insurance that provides them with little benefit when they most need it, consumers may wonder just how naïve their employers may be in overlooking industry SPIFFs, SPIVs, and other little-discussed payments that jack up costs and may reduce benefits.
Before any confusion arises, don’t think about health insurance in high-minded terms, and, instead, as just another business transaction — maybe what occurs at the cheesy used car dealership in the neighborhood. There, customers have gotten savvy about bonuses (Sales Promotion Incentive Funds or Sales Promotion Incentives) ladled on salesmen to get them to move vehicles out of showrooms, asap.
Pro Publica, a Pulitzer Prize-winning investigative site, deserves credit for digging in to the medical insurance business to show how similar incentive programs proliferate in brokerages that purportedly help companies of all sizes figure how to cover their employees’ health needs.
But whose interests are these middlemen serving? Reporter Marshall Allen has found the question blurred by giant insurers’ offerings to brokers of luxury vacations, six-figure cash bonuses, and even a chance to bat against Mariano Rivera, a onetime New York Yankees’ pitching star. Cigna, Health Net of California, EmblemHealth of New York, and the Blues are among the insurers that are unabashed about paying hundreds of millions of dollars annually to brokers to bring them more business.
There’s the big catch in this “standard operating procedure” in insurance sales, of course: Patients foot the bill for the corporate tomfoolery — not only in higher premiums but also in less benefits. That’s because health insurance can be so complex and daunting that companies also rely on broker-middlemen not only to help them find insurers but also to monitor and decipher the costs and effectiveness of employee coverages.
Eric Campbell, director of research at the University of Colorado Center for Bioethics and Humanities, told Allen that the broker set-up, especially the sales incentives, amount to a “classic conflict of interest.” There’s “a large body of virtually irrefutable evidence,” he noted, showing that Big Pharma payments to doctors influence the way they prescribe. “Denying this effect is like denying that gravity exists.” And there’s no reason, he said, to think brokers are any different.
Allen also reported that:
Critics say the setup is akin to a single real estate agent representing both the buyer and seller in a home sale. A buyer would not expect the seller’s agent to negotiate the lowest price or highlight all the clauses and fine print that add unnecessary costs. ‘If you want to draw a straight conclusion: It has been in the best interest of a broker, from a financial point of view, to keep that premium moving up,’ said Jeffrey Hogan, a regional manager in Connecticut for a national insurance brokerage and one of a band of outliers in the industry pushing for changes in the way brokers are paid.
The Kaiser Family Foundation, separately, reported in October, 2018, that the typical American family saw its workplace-provided coverage increase in cost by 5 percent to just about $20,000 annually.
To afford ever-rising premiums, more workers also have been hit with rising deductibles — out of pocket costs they must fork over before they can begin to benefit from their medical insurance. They’re hovering around $1,500 on average. With premiums and deductibles hitting nose-bleed levels, too many Americans effectively are under insured or even almost uninsured, the Commonwealth Fund reported recently. This means they don’t get the medical services they need, or they forego care because of its cost.
In my practice, I see not only the harms that patients suffer while seeking medical services, but also their struggles to access and afford safe, effective, and excellent medical care. This has become more difficult than ever as the costs of treatments and prescription drugs go through the roof, with Americans in 2018 expending $3.6 trillion on health care. Patients also confront daunting complexity and uncertainty about the therapies they undergo and whether drugs they’re told to take may be dangerous.
More than half of Americans 65 or younger — 150 million-plus — get and rely on employer health insurance, so it is crucial that employers, lawmakers, and regulators keep their eye on all the ways it gets saddled with wasteful costs. Because companies carry the larger share of insurance costs, wouldn’t those gas-bag CEOs who boast about their business savvy want to avoid getting fleeced like rubes in a used car lot?
Allen reported that a slice of the insurance brokers in this country have banded together and pledged to offer greater transparency about their business, including disclosing and refusing insurer incentives that might compromise their best representation of clients. That’s a great step, and more organizations might want to investigate the benefits of dealing with such brokers. But regulators, too, need to wake up and ask why insurers’ rates keep rising and what role their sales incentivization programs might play in driving up costs?
It also would be helpful if the Trump Administration and the Republicans in Congress stopped bashing the Affordable Care Act and better served a larger segment of their constituents by homing in on employer coverages — yes, including actions of the companies that likely are big donors, already GOP-rewarded with a trillion-dollar tax cut. Voters need to keep in mind that, as partisans slash at Obamacare protections for pre-existing conditions and preventive and women’s health efforts, employers are watching and waiting. They would love to reduce further the coverage that most of us get to fatten CEO pay and shareholder returns. We need to keep this in mind and them in check.
