United Healthcare Versus St. Joseph's and Our Lady of Fatima

I’m not commenting on the veracity of either side’s claims, as reported by Karen Lee Ziner in today’s Projo. I’m just pointing out that if United Healthcare decides to drop St. Joseph’s and Our Lady of Fatima hospitals from its provider network, the average United customer has no recourse, because of the way that health insurance is tied to employment. In a more rational system, people who didn’t like United's decision could walk away from United and buy their insurance elsewhere. However, since employment-based health insurance places consumers in the position of taking the one choice that's offered or taking nothing at all, United is free to make this decision without considering what its customers want.

OK, I will comment on one claim mentioned in the news item. This ratio does seem a bit out of whack…

At a news conference at Our Lady of Fatima, [St. Joseph Health Services president and CEO John Keimig] , “[United Healthcare] is the same company that earned over $5 billion in profits nationally last year. It is the same company that paid its CEO the staggering total of $124 million in compensation last year — an amount that is approximately 150 percent of the total annual payroll for all of the 2,000 employees here at St. Joseph Health Services …”

If one insurance CEO getting paid the same amount as 2,000 hospital employees is a problem, the solution is to allow every individual Rhode Islander to seek insurance from companies that can provide the same coverage with less corporate overhead. Under the existing system, insurance companies can increase the price of their services far above their costs because consumers are not free to take their healthcare dollars to insurers who run their businesses more efficiently, i.e. to insurers able to charge lower rates for the same or better service and still make a profit. Break the link between insurance and employment, and you'll see insurers suddenly become a lot more accomodating towards individual consumers.

It should be noted, however, that if hospitals want to be less subject to the whims of insurers, they too need to become more friendly towards the individual consumer.