Healing Health Care: History of insurance shows where we went wrong

Dr. Charles Barta

Fifth in a series

During the depression, high in the Sierra Nevada, Henry Kaiser was building the project that was to eventually turn Los Angeles into the second biggest city in the country, and an agricultural paradise.

But he had a problem. Getting care for his workers who were injured or sick in this remote location was causing the project to suffer marked delays.

In LA, Dr. Sidney Garfield had originated the concept of “preventive care.” The two met and developed a plan in which Dr. Garfield took care of all the workers on-site and showed them how to avoid injuries. He was paid 5 cents per day per employee. This worked so well that Kaiser used this on all his projects. After the war, Garfield established clinics in California to continue the concept of preventive care, and medical services on a pre-paid basis. This became the successful Kaiser Permanente system.

At the same time, a group of communities in Texas established insurance co-ops. These were altruistic in nature and non-profit. This became the Blue Cross system.

In New York City, the Health Insurance Plan of NY was established to provide basic, comprehensive care for the many union and low-income workers in that city. It started as self-contained clinics, but expanded over the years to include private doctors and hospitals.

These three systems worked beautifully until the 1960s, when technology made much of health care very expensive. First, open heart surgery. Then, in 1972, the EMI company of England (the parent of the Beatles labels) introduced the CAT scanner into the United States. This truly groundbreaking invention was recognized for both its amazing medical value as well as way for many to make a great deal of money.

By 1974, there were 7,700 CT scanners in the country, while Canada had 22. Manufacturers sold the devices to private neurologists, radiologists and neurosurgeons with the promise of a tremendous return on investment. Company lectures around the country focused as much on this aspect as the technical aspects.

Insurers had a problem. They had promised customers to pay for all the medical services they used. But costs were now skyrocketing. In came the HMO. These plans were developed in the late 1970s based on several concepts:

1. By making it very inexpensive to visit a doctor, patients would get care for problems before they became costly.

2. By requiring “gatekeeper” doctors, patients would need to see a less expensive general practitioner, who was capable of treating most of their problems.

3. By requiring referrals to specialists, these expensive visits could be reduced.

The one problem they had a hard time with was deciding what care they would pay for. If you read your health insurance policy, they now all put in a modifier for covered benefits: The simple phrase “medically necessary.” This became a main point of contention over the years.

The prevailing myths about how this is decided has created much rancor between HMOs, doctors and patients.

Contrary to what is publicized, “bean counters” don’t make the determination. The big insurers all have large committees of physicians who review, in detail, the available literature about a procedure or treatment. Often they contract with several private companies that prepare reports that specify the level of evidence for a procedure.

Denials of care are not made by nurses in a company center. The nurse gets the information from a doctor’s office and evaluates it against a “check list,” often from a national organization called Interqual. If the information meets the requirements, the nurse can approve it. If it doesn’t, the nurse cannot deny it. She must then present it to the local medical director, who reviews it. He always has the power to approve it if he feels it appropriate. If he denies it, he must provide the patient and the doctor the reasons and offer them the various methods of appeal.

This process has prevented unneeded, expensive procedures. But it has also created much anger. The reason for this is the evidence data the companies use is from a large population of patients. You, as an individual patient, may have a specific situation that would make a specific procedure the best choice.

In a future column, I hope to show how this conflict can be resolved, as well as attempt to help choose the best type of policy for your specific needs.

Charles Barta retired to Green Valley this summer after 10 years as a medical director for several health care insurers in Denver, including Colorado Access, the non-profit Medicaid HMO, Community HealthPlan of the Rockies, United Healthcare and Anthem Blue Cross. Before that, he was physician-in-charge of Kaiser Permanente of Colorado. He also was a private internist in Las Cruces, N.M. He had previously held a management position in the Medical Systems Division of Pfizer. He can be reached at Cbar52@aol.com.