The Trigon Blue Cross/Blue Shield copayment issue
The Trigon Blue Cross/Blue Shield copayment issue is the basis for the ethical review case study, which centres around the topic of price transparency and price discrimination. Gerald Haeckel, a retiree from Richmond, Virginia, raises the matter after discovering evidences of pricing transparency and price discrimination in the insurers' reimbursement for his wife's lumpectomy procedure under the 80/20 health insurance policy he uses. Via bargaining with the service provider, the insurer earns a significant discount on his 80 percent premium. the insurer pays approximately 40% of the total bill only instead of 80% because of the “contractual adjustment” with the service provider has awarded it a 50% discount over its due amount whereas Haeckel’s bill remained the same—20% of the total bill. Evidently, Haeckel is paying more of the copayment percentages than what his insurance policy says. An equal copayment policy should offer similar discount benefits to both of the co-payers—Haeckel and his insurer. This brings the necessity to reinvestigate the healthcare insurance policy in the USA from ethical and financial perspectives into light.
Few terms are essential to examine
Few terms are essential to examine before proceeding into the case because the definition of the terms would define the limit of the right each of the stakeholders are likely to enjoy. Coinsurance is the amount of money that each insurance policy holder requires to pay under fee-for-service plan or under Preferred Provider Organization (PPO) plan after all deductibles have been subtracted (Health Insurance Health Insurance, 2003). Under this policy, the insurer pays the largest percentage whereas the client has to bear the rest. For the case under consideration, the insurer is bound to pay 80% of the total billed charge, which amounts $760. From ethical point of view, it is quite unethical for the health care provider to allow waiver on coinsurance to the insurer alone without considering the client’s side. The client might need the waiver more than the insurer due to financial hardship and the healthcare provider may consider offering its available waiver to the neediest party—the insured person in this case. A breach of contract followed by a “bad-faith” is evident from the part of the insurer as the insurer took the discounts by itself and did not offered it to the patient, who is oblige to the pay only 20% of the total amount billed.
From the price transparency matter of finance
From the price transparency matter of finance, it is quite unethical both for the insurer and the health care provider to keep the total price paid as the cost of healthcare. In case the provider should pay any discount to the insurer it should equally inform the patient about the gross amount of price of the health care it is going to receive. In this way, it would have ensured the price transparency and the insured would have been enjoying its right to equally get the discount over its percentage. On the other hand, the insurer did not keep its part of the bargain by not remaining transparent about the price. The insurer should let the patient know about the overall payment it is going to give the health care provider in order to remain transparent about the price. This would allow the insurer receive the proportionate discount and keep the insurance policy fair. The insured is losing here because of the unethical conduct made by the health care provider and the insurer. The client has taken the policy and has been paying the deductibles in order to enjoy cost benefits over health care, which is not happening in this case due to the lack of price transparency.
Another ethical factor worth considering
Another ethical factor worth considering from the financial point view, which is price discrimination. Despite the obligation of keeping health care equally accessible to all patients, the health care provider is seemingly exercising price discrimination on the insurer and the insured by charging different amounts for the same service. It is offering discounts to the insurer and taking the full charge from the insured while it is aware about the coinsurance and the terms of the insurance policies. It should have keep the health care cost fairly equal for both of them and offer discount, if any, to both of them equally. Price discrimination is an unfair policy that exists in monopoly market condition, which is not the case in health care service.
From the above discussion
From the above discussion, it is obvious that from the price transparency and price discrimination point of viewpoints, the case of copayment presents an unethical ground for the stakeholders involved.
Non-Ethical Side
Non-Ethical Side
This case of copayment does not involve any ethical issues. The insurer deserves the discounts solely because of “buying in bulk”. A large and regular customer is eligible to enjoy reasonable discounts from its providers because of loyalty and commitment shown to the provider. It is a marketing policy that a provider exercises in order to reward returning customers and keep them satisfied with the price. Since the insurer is a loyal customer to the health care provider, it has the right to enjoy any discount available. The discount is applied not because of the insurance policy bought by Haeckel nor because of any of his actions. It is applied because of all the insurance policy that the insurer has bought from the provider on behalf of its clients and the money it provides to cover their expenses. So, there is no ethical concern involved here that can claim equal discount for the patient, Haeckel. If any ethical concern ever raises that should advocate for the insurer not the insured because insurer is paying the most and it has to cover expenses of many while remaining profitable in the business to ensure proper benefits for its employees and other clients.
From the business point of view
From the business point of view, in USA, there is no legal ground to oblige a provider share its discounts with its clients. The insurer here is in no position to share its discounts with Haeckel. The insurer has to bear the expense of the negotiation that rewarded it the discounts. There is no credit of the client, Haeckel in this case, in earning the discount in favor of the insurer. According to the contract, the client is obliged to bear 20% of the total bill charged, not the 20% of the total bill actually paid. The discount is the reward of the negotiation that the insurer revoked with the risk of having nothing. The negotiation might wrong, which is the case in many other insurance cases, and the insurer might need to bear the expense of the negotiation; the customer never pays nor he/ she will to share the expenses incurs in the course of negotiation. Evidently, he or she has no right to share the reward of the negotiation that he/ she wills to share until the success comes.
During the time of entering the contract
During the time of entering the contract, the customer was agreed to pay the 20% of the total bill charged and never implied any discount or waiver. Hence, he or she has to carry what the amount is charged against the health care service. For the insurance policy becomes valid, he needs to comply with his or her part and cannot complain about something he or she does not have right according to the signed policy. It is not ethical to claim for a discount, which is given to the insurer solely rather it is more ethical to help the insurer enjoy the discount to encourage it bear health care service cost of many. With an obligation to ensure financial benefits of the insured, the insurer may choose to offer an equal discount to the client, which will be the best in resolving the conflict that may arise between them. Otherwise, the reputation and credibility of the company might be affected and the conflict may cause harm to both of them.
Finally, to put simply
Finally, to put simply, it is not illegal for the Trigon Blue Cross/Blue Shield to enjoy the discount that it could earn through negotiation and being a large customer of the health care provider. But from numerous ethical point of view, such as price transparency and price discrimination, as required by the policy, it would not be ethical for the company to deprive the customer from its benefits. The insurer is committed to keep the financial interest of the insured above its benefits, which it is not respecting by devoicing the customer. On the other hand, the company does not owe the client for any discount received because the discount may have been given for the company’s bulk purchase from the provider or because of the negotiation it has invested in. In both cases, the above ethical viewpoints become illogical. Therefore, we can expect the insurer to allow the client enjoy a certain amount of discount especially in cases where the copayments might become a financial burden on the client.
References
Health Insurance Health Insurance. (2003, August 10). Health Insurance for 2017 - Find Affordable Health Insurance Plans and Buy Medical Coverage Online. Retrieved from https://www.ehealthinsurance.com/
