No Matter What Side You're On, Admit It: You're Sick
Earlier today I became quite frustrated with the state of our social discussion on insurance, ACA, AHCA, and politics in general. Every day we read more articles, tweets, and social media posts that describe why Trumpcare, a.k.a. AHCA, is awful. On the flip side of the coin, many supporters are praising AHCA for the decreases they will see in their upcoming bills.
I'm not here to debate the essence of AHCA. I am here to tell you that American insurance, as a whole, is an opaque black box of controversial billing classifications, executive hierarchies, and political influence. Regardless of whether you are for AHCA or against it, we all lose in the end through the use of American insurance programs. Why? Insurance companies function as (surprise!) corporations!
Their first priority is profit, not benefiting the American people. And frankly that's fine. It's okay for a corporation to serve the community and profit. That's precisely what capitalism is all about! It's about the choice to use a service that helps you at your own cost. The problem in the United States of America isn't that we have for-profit corporations selling us health services, it's that this is our only reasonable model to acquire health assistance.
To reinforce this concept of for-profit on those that might presume companies are doing the best they can to help us, let's take a look at some financial records, shall we?
Anthem's CEO, Joseph R. Swedish, was compensated well in 2016 with a total of 16,455,697 USD. The previous year was gang-busters for Joe as well, with a total of just over 13 million USD in total compensation. This is only up around 100k from his previous year as Anthem chair. You can read the report here on the SEC website.
The CEO of Cigna, David M. Cordani, pulled in a total compensation package worth over 15 million dollars in 2016. This is actually down from over 17 million USD in 2015. View the SEC filings here.
Mark T. Bertolini, CEO of Aetna, raked in an excellent compensation package in 2016 worth over 18.6 million USD. This is an increase of over 3.5 million over his 2015 compensation package. Read the SEC filings here.
So Corporations Make Money, So What?
Yes, corporations are designed to make money. That's totally fine. I'm actually for this practice. I love capitalism and I love the U.S.A.! I even respect these men for climbing their respective ladders and joining the ranks of well-compensated executives that are working hard for their corporations. This is not a bad thing.
What is a bad thing is the way America's policies force us to choose programs that funnel into corporate interests with no alternative. This has resulted in major social volatility across every political and socioeconomic group. People on every side are angry, scared, and exhausted by the non-stop in-fighting, vicious hyperbole, and unabashed profiteering.
Americans need a new choice, and they need it now. Not in ~3 years when AHCA's flaws bankrupt families. Not in ~3 years when entire groups of persons afflicted with "pre-existing conditions" are forced to funnel their hard-earned cash into insurance company pockets rather than back into a diverse marketplace. If someone takes the initiative today it may actually be a viable alternative in 3 years when AHCA kicks in, if it passes the Senate.
"So what the hell is your point, Don? Get on with it."
The Issues As I See Them
As I see it, major issues with modern health insurance are as follows. Granted, I am a novice at this and most of this is based on empirical observations, so part of this blog post is a call to action from those who are more in the know than me.
- We pay high premiums
- We have no idea how this money is appropriated
- Individuals that need assistance are denied for absurd, often political/religious/etc reasons
- People without adequate health care will die without adequate assistance
- People are already dying and already going bankrupt because of American healthcare
- Insurance companies run on massively outdated and inefficient human and computing infrastructures
Now I'm no fool. I don't think we can save the world. All I know is we can solve a few of the above issues.
- Our money doesn't have to fund high executive salaries
- Our money doesn't have to fund absurd, archaic, over-engineered supporting infrastructure
- Our money doesn't have to be funneled into a black box for which we have no oversight and no right to influence, despite paying for it to exist
Now this requires a bit of imagination, but picture an American health care system that didn't require executive salaries. Now, we've learned in sections above that executive compensation can tier out around ~15 million per year. Let's guesstimate that for all the top 25 health insurance companies, an average compensation package for their CEO is around 10 million. We can extrapolate this from SEC filings for a few, then presume that the industry self-regulates and requires these companies to dole out similar packages to incentivize talented CEOs. Next, let's extrapolate an average non-CEO high-level executive compensation package at around 5 million per year. Let's then presume that each of these companies has 3 high paid executives at a compensation of 5 million per year.
So, total that all up as: ((25 * 10,000,000) + (25 * 3 * 5,000,000)) = ~625,000,000
The total amount of money we could recoup from a lack of high executive compensation is literally over a half a billion dollars per year. And that's just a reasonable estimate. In capitalist societies, we are supposed to be offered the option to pay for services, or alternatives that better suit us. Why are we choosing to pay for someone else to amass a fortune when our friends and neighbors are choosing medicine over food?
This number might not seem like a large amount when you juxtapose it against the various billions of dollars being strewn about in the news lately, but given the number of people using GoFundMe just to raise 10,000 USD for their family medical bills, this could at the least help ~62,500 families. That sounds like a good thing, right?
The dollars we stuff monthly into the insurance infrastructure is further distributed into a massive network of workers that have absolutely nothing to do with the actual medical professions imperative to the healthcare industry. Instead, their sole purpose is to log data, inspect databases, set up IT infrastructure, review coding practices, evaluate billing forms, input billing data, convert billing data, and the list goes on and on and on...
While many of these jobs are important and do ensure that the insurance machine itself works, it is the engineering of this machine that has failed us. Instead of designing a sleek, streamlined machine that performs one specific task - and performs it well - we've designed a contorted monstrosity that requires inefficient and mundane roles to maintain its cracking and withering facade. Without these jobs, the insurance industry would implode from the weight of its own inefficiency.
The larger problem is that these jobs are extremely hard to quantify. It isn't as easy to identify the numbers of these roles, the salary compensation for these roles, or how tightly integrated their roles even are with the company (or companies) they support. Because of this, we can't jump to conclusions about the total dollars allocated to this space. All we know for sure is that it's a vortex in which money simply disappears. While I would love to wildly speculate that this portion of the insurance industry is the likely cause of billions of dollars in misappropriation, it would be a misdeed to do so. All I can say for sure is that we are indeed wasting, at the least, millions of dollars per month on trivial tasks that could be done through modern automation.
And that brings us to the last point: we have no visibility into how insurance companies are ran, how they invest our money, or how they allocate funds to end users. There is no ability for the public to identify patterns of misappropriation. There is no ability for the public to identify millions of dollars that are misspent, that could have saved lives. There is no ability for the public, who pays into these massive "public" funds, to vote or evaluate how the money should be distributed.
This, in my opinion, is the most damning red flag of all. We the people are legally forced to funnel money into a system that literally decides whether we live or die, yet we have less visibility into the inner workings of this system than we have into the political decisions made on The Hill. That lack of transparency is a national disgrace, and one that must be rectified. We literally pay for this creature to exist, this Frankenmonster of life support, yet we are denied the schematics out of a lack of privilege.
Yeah, Yeah... I Hate Blockchain, Too; But...
One way to solve the three problems described above is with technology. One technology comes to mind, the Blockchain. While I am not a fan of Bitcoin as a whole, Blockchain technology has several major benefits that I'll focus on here: transparency, security, and traceability.
First and foremost, the Blockchain was designed brilliantly, and is the most fascinating aspect of Bitcoin technology. Each transaction made in the Bitcoin (or any Blockchain based network) is securely written into the Blockchain ledger. While there are infrastructure security concerns with Bitcoin (and similar coin technologies), the Blockchain can indeed be used to guard against fraud, even at scale.
In fact, IBM is heavily invested in using Blockchain technology for almost everything, from financial services, to asset tracking, and even IoT. We at Lab Mouse Security have integrated Blockchain technology into our IoT Security Platform, to be released later this month (though we have zero plans to use it for medical or medical insurance purposes). Blockchain technology is no longer a toy, it is becoming a mainstream technology that can be used to secure some of the most critical transactions in commerce.
The Bitcoin Blockchain was designed to ensure that every transaction made in the system can be traced. The exact time the transaction was made, which party was the source, which party was the destination, the cost of the transaction, all of this data is stored globally. Everyone has access to it.
If health care providers used this technology for insurance purposes, we could easily see that a health care provider (say, a hospital) received a payment from N sources. We could even encode transaction details that identified the related case number associated with the transactions so analysis understood who benefited from the transaction.
This means that the insurance company is no longer a black box that slices away at each penny as quietly as it can. Each slice is loudly documented in the ledger for everyone to see. It would be possible to have almost absolute governance over the behavior of not only insurance companies, but their relationships to providers, and their relationships to individuals.
This brings us to transparency. Every relationship and transaction becomes public in the global ledger. This would allow The People to identify fund misappropriation, and even point out special treatment. Organizations that attempt to funnel money to specific providers in a suspicious or unethical way would be uncovered. Companies that inefficiently or unethically appropriate funds would not be able to hide their actions from the public ledger.
When put together, these features enable a completely different type of insurance company, one that no longer needs many of the technologies that are required to drive the antiquated behemoths we've grown to loathe. We can reduce corporate overhead by streamlining processes that are outdated, inefficient, and performed by workers who are unnecessary when technology replaces their repetitive or largely-unnecessary jobs.
We can make better decisions when the data is transparent. If all information about how insurance companies behave is open, there is less misappropriation, favoritism, and inefficient spending.
We can act faster when someone is in need. By making the financial network that supports end-users open and transparent, we can quickly evaluate where pools of money are idle, and whether that money can be redirected to someone who needs it immediately. We can also identify which parties are best suited for a particular transaction, giving the end-user more choice as to what insurance organization and what healthcare provider is involved in their actual care.
We can reduce the absurd costs of doing business, such as high-priced executive pay in an industry where many lives are lost for the cost of these compensation packages.
I'd like to introduce the concept of http://careful.is/. This is just an idea, but it is an idea that could save lives. Blockchain is just a technology. For Open Source Healthcare to work, it must be driven by intelligent, experienced individuals that are willing to offer their perspectives for free, for the purposes of creating a system (or even the concepts for a system) that will benefit all people. It should be driven by individuals who want to use technology to uplift and save lives, not profit on investment opportunities.
When Linux started, it was simply a few lines of code, and an angry idea that users had a right to control their hardware for free. While Careful probably isn't the Linux of health care, with the right minds working together it can influence the next group of people that do want to be the Linux of healthcare.
If you would like to get involved, please reach out to me through Lab Mouse's contact page. Help document what insurance companies do. How do they work? How do they waste funds? How can they be more efficient? How can healthcare be improved by transparent and free technologies? What does it cost to run and maintain such technologies? How would users pay into the system? How would they take money out? How would fraud be combated? How would administration of the ecosystem work without compensation packages? How could transparency be maintained at low cost?
While these questions seem almost impossible when posed here, and in all honesty we may never get real answers (the insurance companies are monoliths for a reason) if we don't try, we'll never find a path to a realistic alternative. If anything, this data could be used to improve existing insurance company processes, reducing waste and improving allocation to end-users. A licensing model that disallows the use of recouped funds for compensation packages/etc could be drafted that allows the exchange of information without it being used against the will of Careful.
Regardless, it would be exciting to disrupt the insurance world. Wouldn't it? :-)
Don A. Bailey
Founder and CEO
Lab Mouse Security