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September 13, 2019

In Defense of Saying ‘No’

Reading a free-market economist extol the virtues of commercial health insurers is a bit like listening to a trusted old football coach explain why Tom Brady is the best QB ever.  Talk about your cognitive dissonance – I argue with the author, then I argue with myself, then I concede his point, but with a caveat.

Chris Pope, a senior fellow at The Manhattan Institute, a think tank that pushes for idea built on markets and personal choice, had an editorial in the Wall Street Journal yesterday making the case that the very thing that makes insurers unpopular with both their members and their providers – when they say ‘no’ – is a key feature that makes them valuable.

Here is a link to the piece on the MI website, but you hit the WSJ paywall if you want to read the whole thing.  Can we really can’t be disappointed when the leading bastion for capitalism charges for their content?

Pope argues that payers do a lot of things of value – they vet and organize provider networks, they experiment with new benefit plan designs to figure out a better system – but one of the most valuable things they do is say ‘no,’ as in, ‘No, we are not paying for that.’ They deny authorization, they deny claims.

Now, let’s point out the obvious source of my inner turmoil:  ALN is a physician revenue cycle management company…we fight the payers on behalf of our physician clients when this happens!  Sure, we do a lot of other things to get their claims processed and paid, but a huge part of our work is what we call ‘denials management.’  More important, for most of our clients this is the single most critical thing we do for them to earn our keep.

So, a free-market thinker (if you are new here, I am decidedly free-market and working on the ‘thinker’ part) is making the case that payers denying coverage is a good thing?

Directly, his case is that in the denial process payers reduce fraud, ferret out dubious or overly expensive care, thus allowing resources to instead flow to higher efficacy utilization.  Set aside for a moment your opinion of his thesis (or do as I did and have you own argument with him) and let’s get to his bigger point, which is why I ended up liking his piece.

He is making a case against the single-payer ideas percolating from the Democratic candidates.  He dispels the myth that there is a ton of savings to be had by taking the profits of health insurers.  He shows that commercial payers better perform the fraud and abuse function than does Medicare, and that all without the power of guns and badges.  He points to Medicare Advantage vs. traditional Medicare is a classic test/control group experiment that obliterates the fantasy assumptions of the crowd that believes the government can run one-fifth of the economy better than those greedy capitalists at UnitedHealth.

If you can get to the piece, you should.  Even if you disagree with him, it is thought provoking as we continue to ramp up this debate.

Tim Coan
Tim Coan

CEO and founder

Tim Coan, ALN’s CEO, writes an insightful and witty blog weekly about a variety of topics relevant to independent physician practices.