Health Insurer Secrecy and Public Trust

Ten health insurers, including Aetna and United Healthcare, are suing the New York State Insurance Department to prevent publication of memos that present their rationales for rate increases. The companies argue that the memos reveal proprietary trade secrets and that making them public would cause “substantial and irreparable injury" in the competitive marketplace.

I've not seen the complaints the insurers have submitted to the court, but it's quite imaginable that the rate increase memos include company secrets that are protected by law. If this is the case, the companies may win the immediate battle. But they're sure to lose the long term war about transparency.

At the not-for-profit health plan where I direct the ethics program, rate increases reflect the cost of care delivered to members. There are no equity owners demanding dividends and improved stock prices. Approximately 90% of the health plan's revenues go out as claims payments. Among for-profit insurers the "medical loss ratio" (better thought of as the "medical care ratio," since the purpose of health insurance is to pay for medical care!) is lower - often less than 80%!

Patients and the public need to understand the drivers of health care costs. Without that knowledge we can't be part of the solution to the cost crisis. And, increasingly, consumers are demanding to know why health insurance premiums are so high compared to other countries whose health outcomes are as good or better. Transparency is inevitable, and that's a good thing.

But the kind of transparency about pricing being called for in New York and elsewhere isn't ordinarily part of the world of for-profit enterprises. Health care, however, is better thought of as a public good than as a commercial commodity. As patients, we want our doctors and hospitals to be mission-driven. Secrecy about costs isn't compatible with professionalism and public trust.

(For a New York Times article about the litigation, see here.)