“Where insurers excel is in restricting access to care, and in recent years they have ramped up those restrictions to assure levels of profitability suitable to Wall Street. Those barriers to care include more aggressive prior authorization requirements, ever-increasing out-of-pocket requirements of health plan enrollees, and the elimination of doctors, hospitals and other healthcare facilities from their provider networks. In many cases, the eliminated providers are being replaced by the companies’ own providers.”
FOR years, Australian doctors and patients have viewed the US health system from afar and considered ourselves grateful our own health system does not operate in the same way.
On 24 December 2020, while most of us were looking forward to a Christmas after a long year of learning about R0, personal protective equipment and the relative merits of public health interventions, an application was received by the Australian Competition and Consumer Commission (ACCC) from Honeysuckle Health (owned 50% by nib health funds limited and Cigna health insurance companies). This application should be of concern to all Australians as it is a deliberate step towards US-style managed care. What is at stake is the future of Australian health care.
Australia currently has better health care provision in terms of outcomes, provided at less cost than health care in the US. This is evident in the most recent data from the Organisation for Economic Cooperation and Development (OECD) and the Australian Institute of Health and Welfare:
- Life expectancy from birth in the US (78.7 years old) is approximately 4 years less than the Australian population (82.8 years old).
- Preventable premature mortality, as measured by “potential years of life lost” expressed in numbers per 100 000 population, in the US (6600) is almost double the Australian value (3500).
- Length of hospital stay for acute care is less in Australia (4.1 days) than in the US (5.5 days).
- 5-year colon cancer survival rates in Australia are 70.7% (ranked 3rd in the world) compared with 64.9% in the US (ranked 9th).
- Coronary heart disease mortality, expressed in deaths per 100 000 population, is higher in the US at 109.6 compared with Australia’s 76.6.
- Health spending in the US accounts for 16.96% of GDP compared with Australia’s 9.33%.
A report by David Himmelstein et al published in the American Journal of Public Health in 2019 showed that health care-related expenses were a leading cause of bankruptcy in the US, something that is unthinkable in Australia.
Who is involved?
Cigna is a US for-profit insurance company that delivered to their shareholders in 2020, an adjusted earnings per share of US$18.45 by growing their revenue by 14% to US$160 billion. It currently ranks 13th in the 2020 Fortune 500 list. Their CEO’s compensation for the year was nearly US$79 million. This is very impressive, but it is part of the reason why the US has the world’s most expensive health care. Cigna has clearly demonstrated in the US how they make profit for their shareholders from health care.
Nib was the first private health insurance fund to list on the Australian Securities Exchange (ASX), in 2017. Initially a health insurance fund for workers at BHP steelworks, nib has expanded overseas and within Australia with several partnerships and takeovers and now also delivers life and travel insurance. In 2020, nib health funds had AU$2.522 billion in revenue.
The ACCC filed a case against nib in the Federal Court in 2017 alleging nib had engaged in misleading or deceptive conduct, unconscionable conduct and made false or misleading representations by failing to inform policy holders of its decision to remove coverage for certain eye procedures from its “MediGap Scheme” in 2015. It was alleged that, as a result, nib members who had undergone certain eye procedures were likely to incur increased out-of-pocket expenses. Nib had not given its members advance notice of the changes. These proceedings against nib were discontinued this year, after nib committed to continue to provide advance notice to its members of unilateral policy changes which are likely to result in higher out-of- pocket expenses for patients.
The widely acknowledged value proposition of private health care in Australia is to provide access and choice to quality health care. While it has been suggested by the Honeysuckle Health proposal that there will be a reduction in administrative burden and more patient choice with the expansion of buying groups, this has not been demonstrated in the US. Small and large practices have had to increase their administrative staff to negotiate health insurance contracts and to ensure compliance with different insurers. Instead of one schedule of fees, which we predominantly have in Australia, there may be a different fee schedule for each insurance company.
Pre-authorisation is the process of confirming that a patient is eligible for a procedure or intervention based on their insurance policy, rather than clinical indication. Often it is sought from a non-medical person who ensures adherence to criteria set by the insurer. This may include defining the interval of cervical screening, referral for further investigations or eligibility for surgery.
This results in services being dictated remotely by insurance companies, or “managed care” rather than by qualified doctors who have assessed the patient in front of them.
Ultimately, it means that the insurance companies tightly control what the patient has access to and isn’t even a guarantee that the health insurance company will pay. In addition, there are many instances where insurance companies will provide obstacles to avoid paying out appropriate claims. This results in ongoing and repeat resubmission of pre-authorisation requests, subsequent delays to patient treatment and further administrative burdens for health professionals.
Perhaps the most infamous example is that of Cigna and Nataline Sarkisyan, a 17-year-old with recurrent leukaemia who died while awaiting liver transplant. Cigna refused the liver transplant on the grounds that the treatment was considered experimental, investigational, unproven to be safe or effective. This was overturned after protests, media attention, political support and legal action. Unfortunately, she deteriorated a few hours after the decision was reversed.
Aetna, the third largest US health insurer, recently advised pain physicians and anaesthetists of nerve blocks that are considered to be “experimental and investigational” and, therefore, not eligible for funding. The list comprises nearly 40 blocks used for the treatment of chronic pain and acute post-operative pain. If something similar had been applied in Australia for the past year up to June 2020, approximately 500 000 patient procedures would have potentially been affected and not covered.
Plenty of further examples can be found when talking with anyone who has practised in the US or a search of social media: patients having a laminectomy rather than the less invasive microdiscectomy, as the latter procedure is not covered by the insurer; a patient with an incidental finding of a lung nodule on imaging for chest pain and the request for a positron emission tomography (PET) scan taking 8 months to approve and then on follow-up imaging and biopsy the patient’s lung cancer was deemed inoperable; patients only being authorised to have a magnetic resonance imaging (MRI) scan after they have had an x-ray and computed tomography (CT) scan, when only the MRI was clinically indicated; patients only able to have three physiotherapy sessions for non-traumatic chronic lower back pain before a cortisone injection is required, even when there is not a structural problem amenable to corticosteroid treatment; a doctor spending time on the phone with a US-based health insurer trying to explain that a patient needs a medication because the other medication the health insurer wants to cover caused an allergic anaphylactic reaction. The list goes on.
It is easy to see why the cost of administration of health care balloons and the quality of health care does not.
While pre-authorisation serves to limit access, the establishment of networks of health providers limits patients’ choice of health professionals. In the US, clinical time is used ensuring that patients are referred for further investigation and treatment by other professionals in the same insurance network. This can be quite involved in a country with over 900 private health insurance providers. While a full blood count may be the same across Australia, this may not apply to more complex pathology, radiology, procedural or allied health services. There may be a health professional who is more suitable for the patient or their condition who is “out of network” and therefore their services are not covered by health insurance.
“Bundled payment” models for obstetric care and joint arthroplasty have increasingly been offered across Australia by health insurers. They may be initially attractive for consumers as they promise a “no-gap” experience. However, they have repercussions for after-hours rosters and those involved in providing emergency, complex or non-routine care. For this reason there has been variable, if not poor, uptake of these offers, along with health professionals opting out once experiencing these professional constraints.
Emergency care is one of the most common reasons to receive care that is “out of network” in the US. The Consolidated Appropriations Act 2021 – also known as the “No Surprise Act”, was introduced in January to deal with this issue. Unfortunately, it will not fully protect all patients, as is the case of UnitedHealthcare (the largest US health insurer) who can deny or reduce coverage retrospectively for care in the emergency department if it unilaterally determined it was not an emergency. This caused a strong condemnation by the American College of Emergency Physicians and calls from the American Hospital Association to stop restricting patients’ access to care and putting patients’ health outcomes at risk.
The fiduciary responsibility of a for-profit company is ultimately to its shareholders. Thus, neither nib, Cigna, nor their alliance is primarily about improving patient health care.
In an effort to contain costs, health insurers regulate the availability of health services while maximising the income from premiums. A recent example in Australia is the AU$1.8 billion in deferred claims liability that was allocated during 2020 for a predicted increase in health needs arising from the pandemic. Only the not-for-profit HBF and insurer AIA have moved to rebate cash to their members. Rather than redistribute some of the deferred claim’s liability, the larger for-profit health insurers have increased premiums, nib having done so by an average of about 4.36%.
Managed care gives control of medical decision making to companies, not doctors, limiting the ability of patients to make independent health choices supported by their doctors. Alongside the lack of universal health care, this may be part of the reason why health outcomes are worse in the US.
If the ACCC authorises the proposal from Honeysuckle Health, then it will open the door for other for-profit US health insurance companies to enter the Australian health market and negatively affect patient access, choice and quality of health care.
In our opinion, the outcome of this ACCC determination will change the face of health care in this country and lead us down an US style health care model with:
- worse health and health care outcomes;
- higher costs;
- health insurance regulation and limitation to physician decision making;
- altered doctor–patient relationships by destroying the independence of patient-centred health care decision making;
- increased pressure on public hospitals as patients fail to see value in obtaining private health care;
- increased administrative burden on health providers; and
- increased burnout due to reduced autonomy and increased compliance requirements.
Private health insurers have proven public relations messaging, or “spin” that will support their cause. They will target doctors’ fees, despite the poor indexation of health funds reimbursements and Medicare over the last 35 years (consistently less than inflation) compared with practice costs, which increase with inflation each year. They will allege that the most common complaint from their customers is about doctors’ out-of-pocket fees, although these only make up a small proportion of complaints made to the private health ombudsman. They will make proposals to enter into agreements with medical specialists to not charge out-of-pocket costs, or “no-gap”, for health services which at first glance seems a reasonable goal, until it is realised that gaps arise due to poor indexation and reimbursements — nib’s indexation of anaesthesia items averaged over the past 9 years has been 0.92% per annum, according to the Australian Society of Anaesthetists’ Relative Value Guide (available to members), and in the past financial year, surgical items were indexed 1.5%. nib is the only insurance company to financially penalise patients with their no-gap policy, which offers particularly low patient rebates. This nib no-gap policy is the one that Honeysuckle Health will ask health providers to sign up to.
Ultimately, this really isn’t about medical specialists’ fees even if the health insurance companies’ large public relations teams make it appear that way. The Honeysuckle group is trying to use the ACCC to force medical specialists into accepting significantly discounted conditions and reduced clinical autonomy in order to maximise their profits.
The current Australian private health care system is world class in its ability to offer access, choice and quality. The Honeysuckle Health managed care proposal is about control, restricting choice to their networks and corporate financial gains.
Do we really want to have a US style for-profit system here, and is it in the patients’ best financial and health interests? We think not.
The ACCC has an opportunity to prevent the introduction of managed care into Australia rather than open the floodgates to the “for-profit insurance system” companies. The health care of all Australians is at risk and this decision has bigger ramifications than it initially appears. We implore Australian doctors and community members to consider the effects of this decision. We need to speak up against this proposal and seek legislative change that prevents managed care from taking over our health system in the future.
Managed care is not care; it is insurance-determined service provision.
Dr Pierre Bradley is an Adjunct Senior Lecturer in Anaesthesia and Perioperative Medicine at Monash University, Airway Lead for Tasmania and Victoria and sits on ANZCA’s Victorian Regional Council. The views expressed in this article are his own and may not reflect those of his employer.
Dr Suzi Nou is an anaesthetist in Melbourne and is President of the Australian Society of Anaesthetists and host of the Australian Anaesthesia podcast.
Dr Michelle Horne is a specialist anaesthetist with both a public appointment and private practice. She is trained in a wide variety of clinical areas and the delivery of anaesthesia.
The statements or opinions expressed in this article reflect the views of the authors and do not represent the official policy of the AMA, the MJA or InSight+ unless so stated.