Ethical Health Partnerships

  Insurance: Ethical Challenge and Invitation

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Dawn Lipthrott, LCSW
Ethical Health Partnerships
1177 Louisiana Ave. #212
Winter Park, FL 32789


Ethical Challenges and Invitations to Health Insurance and Network Management Companies

We invite you to accept this challenge and invitation to co-create more ethical health partnerships with both physicians and patients. Throughout the history of your company and your industry, you have invested significant time, energy and financial resources in assessing risks, costs, and various factors that impact the cost of healthcare for your company, and ultimately for all of us who pay health insurance premiums. Therefore you are in a leadership position to address those factors which are increasingly driving up health care costs, and to do so in ways that address those problems at their roots while helping patients and our physicians by reducing premiums and increasing reimbursement regularly.

Challenge and Invitation:

Ethical Challenge 1 (addressing the causes of increase in your costs):
1. Within 6 months publish a plan to begin to address at least one of the following areas which drive up health costs for all of us: chronic disease management (especially diabetes), obesity, patient non-compliance (especially medication-related), patient safety, pharmaceutical costs and prevention of the most costly diseases. This would benefit nearly all healthcare partners -- patients, insurance companies, physicians, Medicare & Medicaid.

Ethical Challenge 2 (relationship with physicians):
1. Within 6 months from the date of this letter:
Create a committee of physicians and company executives to find negotiation procedures and methods that will increase fairness to physicians and patients, including areas of reimbursement rates, claims and payment processes, physician authority for treatment, other contractual issues and transparency of reimbursement rates. Recent court orders have mandated some of this for major companies, but all should take the intiative for ethical health partnership.

To make the changes meaningful and to encourage creative thinking, seek input from members, providers, and the public through mailings and website. As part of the input, create 2 small groups . . . 1 of physicians, 1 of patients, to LISTEN and take note of their needs and concerns . . . and then develop your plan to address those concerns. Develop a plan for addressing the issues, for implementation and a target date for accomplishment of goals. Publish your goals and reports of progress on your website. (Please notify us and we will provide a link for your site.)

Ethical Challenge 3 (relationship with patients):
1. Within 6 months from the date of this letter:
Create a committee of patients, physicians and company executives to find ways to reduce patient premiums. Continually increasing premiums for patients is often the answer used in the past, but a) only adds to the number of uninsured, which only increases costs in the long run, and b) does not address preventable causes of increasing costs.

Create a committee whose mission is to design, within one year, a plan to address one of the top 3 drivers of health costs at the core and most effective level. Use more creative thinking to address costs rather than the easiest, which is to cut physician payment and/or increase patient premiums. Develop a specific plan and target dates for implementation. Post topics of discussion and plans on company website open to the public for additional suggestions.

Although physician payment is a significant part of the overall costs of healthcare (as is insurance!), rate of physician reimbursement is not the primary driver of healthcare costs. In fact, in 2003 it remained the slowest growing category of spending in healthcare! ( Health Affairs Tracking Health Care Costs: Trends Turn Downward in 2003 Strunk, B. And Gindburg, P. June 2004) Reimbursement levels continue decreasing and this needs to be stopped to create more ethical health partnership. Part of the physician cost percentage is due to early detection of disease, and some is due to preventable chronic conditions in patients. It is more about frequency of service, rather than rates for service. Promoting prevention could be a more effective way to hold costs. Decreasing reimbursement impacts access to and quality of care.

c. Each year after, address at least one of those factors that increasingly add to costs unnecessarily (for example, preventable errors, pharmaceutical costs and increased promotion, chronic conditions, obesity, patient failure to comply with treatment or make lifestyle changes, etc.)

Studies indicate that defensive medicine, rising hospital costs, errors, ncreasing pharmaceutical expenditures, chronic disease, patient non-compliance and increasingly, effects of obesity significantly drive increases in health costs and thus, insurance expense. Another is increasing advances and use of developing medical technology. Addressing these larger contributors to health cost expense require more creative thinking, planning and a commitment to address the cause, instead of focusing on trying to pay for the resulting problem(s).
Trends and Indicators in the Changing Health Care Marketplace, 2004 Update April 2004 Kaiser Family Foundation.

Health Affairs Tracking Health Care Costs: Trends Turn Downward in 2003 Strunk, B. And Gindburg, P. June 2004)

Causes of and Potential Solutions to the High Cost of Health Care-- Chronic Conditions in the U.S.: Implications for Service Delivery and Financing, Horvath, J. 2003. Agency for Healthcare Research and Quality, Rockville, MD.

To Err is Human, Institute of Medicine (IOM) report, 1999 (on cost of errors).

Some of the areas you might consider in your commitment to more ethical health partnership are to:
* Reduce your administrative cost per patient. Over the past 4 years, administrative costs have doubled. (See Kaiser report and graph (Source: -------- Kaiser Permanente, 2005, page 11.)

Relationship with Physicians:

* Increase reimbursement and build in regular cost of living increases for physician services
* Increase reimbursement for physicians with more experience (perhaps by a series of brackets of 5 years)
* Find ways to provide prompt payment, reduce paperwork and time in claims processing (both for physician and for company)
* Make reimbursement processes more transparent for both physicians and patients.

Relationship with Patients:
* Provide patient education and incentives to control chronic illnesses and conditions (like obesity) that significantly impact healthcare costs. Reduce premiums for achieved goals created in partnership with member's physician.
* Find ways to reduce and hold steady health insurance premium rates in order to prevent more people from becoming uninsured (which ultimately drives up health costs)
* Create other insurance plans that provide for catastrophic coverage, that reduces 'frills' and increases patient responsibility in a reasonable and fair way. For example, providing unlimited drug benefits with little or no payment from patients, drives up costs for all, even those who have or want basic coverage.
* Create fair and more affordable policies or risk pools for individuals, especially for self-employed and very small businesses that have only a few employees.
* Create a committee of patients, physicians, hospital administration, and company representatives to think creatively about ways to address the problem of the large number of insured and how to prevent more people from becoming uninsured.

Ethical Challenges Page


As always, I welcome your constructive comments and suggestions about the material on this website and how we can all be most effective in co-creating the kind of healthcare system we all want. E-mail me at

© Dawn Lipthrott, Ethical Health Partnerships, 2004
May be copied and distributed as long as this identifying information is retained on copies.)