ITIJ 208, May 2018
UK-based industry expert Andrew Isherwood serves up his reservations about writing retail travel business successfully for the US
They say that when you experience a bereavement you react by going through five different stages – denial, anger, bargaining, depression and, finally, acceptance. However, this process can be triggered by other situations and I have observed that this is prevalent among those who are exposed to the US healthcare system for the first time, particularly those writing travel insurance.
Insurers deal with loss on a daily basis, but the cost of healthcare in the US can be so difficult to accept that it can easily cause feelings of bereavement. It ruins loss ratios, puts fear into the hearts of reinsurers and still has the power to shock even those who are used to it. So here is your guide to achieving acceptance – or to identifying where you are stuck in the process.
How, you ask yourself, can such a system have evolved in what is supposedly the most developed country in the world, rewarding excess and vested interests? Why are there so many uninsured people? Why do US citizens have to pay for their treatment? Surely healthcare is more than a business? President Obama thought so, or so we are led to believe, but many of his reforms have been widely criticised, even by those who want change. His successor in the White House is committed to repealing much of his legislation, perhaps to remind everyone that healthcare is primarily a commercial concern. Long live market forces. Long live America.
You might believe that the overall quality of care is reasonable compensation for all the above. But there is little to suggest that healthcare is necessarily better in the US than in other first world countries; the World Health Organization (WHO), for instance, ranks the US in 37th position, between Costa Rica and Slovenia. Where the US is definitely
Insurers deal with loss on a daily basis, but the cost of healthcare in the US can be so difficult to accept that it can easily cause feelings of bereavement
superior, however, is in the availability of healthcare. In this regard, they knock everyone else into a cocked hat. In the same way that most people in the US seem to be lawyers, there is always a hospital just round the corner ready to remove your gall bladder or perform open-heart surgery on you – albeit at staggering cost.
At the end of the day, you only need to look at things like cars, buildings, the size of a portion of food and who knows what else – there is excess everywhere, so why not in healthcare? So use that dose of reality to progress from denial to anger.
There is so much to get angry about that you can remain stuck in the anger phase forever. Overall, it is probably better if you can move on (just ask a psychotherapist), but that is easier said than done – just have a look at the following.
Some US hospital administrators are on an annual salary exceeding $500,000.
The cost of heart bypass surgery in Europe is about £25,000. In the US it can be 10 times this amount. That cholecystectomy? Don’t expect any change out of $100,000. The same thing in the UK? About £6,000.
It has been known for people to be charged $70 for one paracetamol tablet, conveniently buried in a 100-page invoice.
The hospitals that charge the highest prices are often in states favoured by holidaymakers.
Not-for-profit hospitals? Yeah, right.
Despite the costs, US domestic healthcare insurers still make healthy profits. There is no concept of what constitutes a reasonable charge for a service.
There’s more, much more, but we won’t go there.
It is something of a self-perpetuating cycle. And it’s all legal. Despite what WHO thinks, the US assumes it has the best healthcare in the world and, with no regulation to worry about, hospitals feel entitled to charge sky-high rates. This means they can buy the most up-to-date medical equipment and the best facilities, but to sustain themselves in this cycle, as more and more technological advances are made, costs have to keep going up. Can the cycle ever be broken?
It is easy to get stuck in denial or anger – indeed some insurers have made a conscious decision to remain there and try to conduct their business accordingly. If you want to move to the next phase, then you need to resolve to join the conspiracy.
In other words, accepting the need for all the various parties involved, including those in intermediary roles in what is known as the cost containment industry. These organisations offer their services as go-betweens and use their dollar volumes and/or expertise to lessen the load and make their own profits. Through their negotiations and deals they allow foreign insurers to access some of the savings that US domestic insurers obtain. There are a variety of approaches, some perpetuating the old ways, others more enlightened.
To move on, you should prepare for depression. So try thinking about the following.
Go in to an ER with a simple headache, and you will be tested for everything ranging from migraine to a full-blown brain tumour. Protocols seem to require every test imaginable should be done for even the simplest of symptoms, to cover every eventuality and, by extension, to avoid the danger of a lawsuit. Imagine that – as an insurer, you have the pleasure of paying thousands of unnecessary dollars for a hospital to protect itself against the risk of litigation.
If you dwell on this fact alone, you will either revert to the anger phase (and probably stay there for ever) or be catapulted into depression.
If you have joined the conspiracy you will likely experience depression. Becoming inured to the way things are done, the stakeholders, the self-interest, the cost, the litigation, reinsurance, debt collectors, hospital administrators, mark-ups … oh dear, time for a lie down.
To get out of this, you’ll need to forget the questions that you posed while in denial or anger (or at least stop worrying about the answers). We are where we are and it is what it is. Deal with it – rise above your depression. Embrace it. Bad stuff happens all the time, throughout the world. There are worse healthcare systems in the world (153 of them, according to WHO), and even if nothing beats the US system for sheer bare-faced outrageousness, assuming you still want to write travel insurance, with foreign patients accounting for such a tiny proportion of this multi-trillion-dollar industry, you can’t do anything about it anyway. So wake up already, smell the coffee – and maybe hike your premiums.
Congratulations if you made it this far! If you have any sense, you will now move to the US and get yourself a job in hospital administration, cost containment or medical insurance. But if you don’t and you remain in travel insurance – well done, you are now part of it all. Put on the dark glasses and away you go.