NationStates Jolt Archive

It seems the settlements weren't the problem. Bad investment by insurance companies was the source of the skyrocketing price of medical malpractice insurance. So, "reforming" the malpractice lawsuit system actually didn't help anyone but big business and bad doctors. The average medical patient got screwed.

www.boston.com/yourlife/health/other/articles/2005/06/01/rising_doctors_premiums_not_due_to_lawsuit_awards/

It's all a shell game with money. Or, organized gambling with money. Between investment and reserves, it's gambling.

I would, however, point out that litigation does present interesting opportunities for increasing the cost of insurance by increasing the reserves a company must hold.

Case in point: Allstate Canada.

In British Columbia, you can't sue for pain and suffering from an auto injury. You have to go to a mediator (not the court) for a formulaic setup for wage loss and medical compensation. You can still sue for more, but the system seems to work well enough.

In Quebec, you can sue for anything you like. And they do.

On a per accident basis, a Quebec accident victim is 10 times more likely to sue for soft tissue injury to the neck (neck strain/whiplash) than an accident victim in British Columbia. The typical accident victim in Quebec will also suffer from their injury for an average of 2 years, from what is ordinarily a 6 to 12 week recovery with everyone else in the world, including the people in British Columbia.

The difference is so stark that Allstate Canada actuaries refer to the people in Quebec as "noodle-necks".

You can also imagine the difference in insurance rates, and the amount of reserves the company must maintain in order to service such a population.

Not saying that the investment side isn't full of crap, either, but the industry as a whole needs a thorough review.

Insurance companies are always trying worm out of not paying out and finding lame excuses to increase rates.

Tsk...I posted this article earlier and it got but a whimper. I hope it does better with the new title.

Tsk...I posted this article earlier and it got but a whimper. I hope it does better with the new title.

**whimper** Yeah, I don't know why your thread died. Perhaps people just don't like medical insurance threads.

Insurance companies are always trying worm out of not paying out and finding lame excuses to increase rates.

Technically, insurance companies are not charities. Nor are they a form of socialism.

An insurance company has investors, and is in business to make money, according to a set of regulations and laws. They collect money from premiums, invest some of that money, and keep the majority of it in a "reserve". They offer their customers insurance against a strictly defined risk - and when the risk occurs, they pay according to contractual obligations. They must always maintain enough reserve to cover these risks, and so they must manage the pool of risk and try to reduce risk and payouts.

If the risk goes up, the LAW specifies that they must increase their reserve. There are only two ways to increase the reserve - reduce the amount of money being invested to make profit, or raise rates.

If the amount of money being invested to make a profit goes below a certain level, they won't even be able to cover their administrative costs (which are also kept to a minimum - most insurance companies pay their employees less than the typical average - whether it's lawyers or programmers).

Additionally, there ARE cases where 8 to 10 percent of doctors will explicitly buy software that enhances their ability to double-bill for services, or scatter a billing for a single date of service across multiple bills, or unbundle a specific service code into multiple service codes that cumulatively cost more - even though the service provided is IDENTICAL. There are also many doctors who are contractually in league with accident lawyers in order to boost the medical specials for an accident in order to increase the award for pain and suffering.

Yes, the investment strategy of some insurance companies is bad - and they lose money there - and then they hope to make it up some other way - which gives you a bad taste in your mouth.

But there's plenty of abuse on the other end. Insurance companies are not the only ones out to make a buck.

Technically, insurance companies are not charities. Nor are they a form of socialism.

An insurance company has investors, and is in business to make money, according to a set of regulations and laws. They collect money from premiums, invest some of that money, and keep the majority of it in a "reserve". They offer their customers insurance against a strictly defined risk - and when the risk occurs, they pay according to contractual obligations. They must always maintain enough reserve to cover these risks, and so they must manage the pool of risk and try to reduce risk and payouts.

If the risk goes up, the LAW specifies that they must increase their reserve. There are only two ways to increase the reserve - reduce the amount of money being invested to make profit, or raise rates.

If the amount of money being invested to make a profit goes below a certain level, they won't even be able to cover their administrative costs (which are also kept to a minimum - most insurance companies pay their employees less than the typical average - whether it's lawyers or programmers).

Additionally, there ARE cases where 8 to 10 percent of doctors will explicitly buy software that enhances their ability to double-bill for services, or scatter a billing for a single date of service across multiple bills, or unbundle a specific service code into multiple service codes that cumulatively cost more - even though the service provided is IDENTICAL. There are also many doctors who are contractually in league with accident lawyers in order to boost the medical specials for an accident in order to increase the award for pain and suffering.

Yes, the investment strategy of some insurance companies is bad - and they lose money there - and then they hope to make it up some other way - which gives you a bad taste in your mouth.

But there's plenty of abuse on the other end. Insurance companies are not the only ones out to make a buck.

And all of this greediness could be eliminated with a national health system.

Funny, eh?

And all of this greediness could be eliminated with a national health system.

Funny, eh?

Not all of it. You need to cap pain and suffering damages as well. Otherwise, you'll have a nation of noodle-necks just like Quebec.

And the national health system can be run poorly or well, just like any business.

I tend to think that Kaiser currently gets the balance right - I pay for Kaiser out of pocket because it's a better deal than others I can find. It gives better treatment than what my relatives in Canada experience, especially under speciality surgery situations.

You would have to design the national health system to motivate people to do their job well - something that is lacking from most national health care systems.

If you want to see what national health care would be like in the US, just go to a Veterans Administration hospital. The "care" at those facilities borders on abuse, and every step and decision is taken to make sure that they spend as little as possible and do as little as possible. The problem of "budgetary constraint" that any national health care system will run into.

It's all a shell game with money. Or, organized gambling with money. Between investment and reserves, it's gambling.

I would, however, point out that litigation does present interesting opportunities for increasing the cost of insurance by increasing the reserves a company must hold.

Case in point: Allstate Canada.

In British Columbia, you can't sue for pain and suffering from an auto injury. You have to go to a mediator (not the court) for a formulaic setup for wage loss and medical compensation. You can still sue for more, but the system seems to work well enough.

In Quebec, you can sue for anything you like. And they do.

On a per accident basis, a Quebec accident victim is 10 times more likely to sue for soft tissue injury to the neck (neck strain/whiplash) than an accident victim in British Columbia. The typical accident victim in Quebec will also suffer from their injury for an average of 2 years, from what is ordinarily a 6 to 12 week recovery with everyone else in the world, including the people in British Columbia.

The difference is so stark that Allstate Canada actuaries refer to the people in Quebec as "noodle-necks".

You can also imagine the difference in insurance rates, and the amount of reserves the company must maintain in order to service such a population.

Not saying that the investment side isn't full of crap, either, but the industry as a whole needs a thorough review.
May I have a source for these allegations, please?

May I have a source for these allegations, please?
Me. In the mid-1990s, I was a lawyer for a company that provided bill audit software to Allstate and Allstate Canada.

We had a really good look at the statistics - they had over a decade of hard facts to back this up. It's still unchanged.

Give the people an unlimited right to sue for pain and suffering, and you see the same effect.