New Diabetes Technology: Should Insurance Companies Pay?

Recently, Kerri has chronicled her struggles to get insurance approval of a continuous glucose monitor. She is hardly alone in her battle with healthcare providers to get coverage; many people struggle with this very issue. In fact, late last year, cgmscentral.com went live on the web as the only site dedicated to helping people secure reimbursement for their continuous glucose monitoring systems.

Manny at TuDiabetes sent out a request yesterday asking if we would post his video on this subject. At first, I was resistant to the idea, not so much because I disagree with him, but more because I think the insurance companies have been demonized, I think unfairly.




To some extent, I think the technology does deliver improved management for certain people, but in my opinion, the frustration over coverage (or lack thereof) should not really be directed at the insurance companies, but to the manufacturers, who frankly, have done next to nothing to get their product covered. In fact, they have largely left the task of justifying coverage to the Juvenile Diabetes Research Foundation to conduct the studies, rather than doing it themselves.

I have found myself playing the role of devil's advocate, asking people to look at the situation from a business perspective. The insured patients are, 99% of the time, NOT the insurance company's customer, rather it's the employers who buy the policies, and they are under enormous pressure to keep costs under control or they risk losing their customers to rivals. It's no secret that the insurance companies have a fiduciary responsibility to make a profit for their shareholders (which, by the way, are what many of you're 401K's and/or pensions are invested in, incidentally), and frankly, they make money, but not on a ROI basis at a comparable level to the drug and medical device companies. The insurance companies are essentially forced to make their decisions from this business perspective. It's true that they would for the most part, rather us have complications, but its NOT because they haven't fully analyzed the economics.

Insurance is all about managing odds, and the simple fact is that by denying this coverage, the odds are in their favor, because chances are extremely high that you will not even be covered by them when complications actually do strike. First, many people are likely to have several insurance carriers over the years due to job changes, or simply because employers negotiate deals with new companies (see my post here for more on that). The simple fact is that in most cases, those costs will be soaked up and paid for by Medicare, so our tax dollars end up absorbing that cost, but few if any insurance companies will be saving much of anything by actually paying the cost of this costly technology. In other words, they have everything to lose by paying it and stand to gain little if anything by covering it.

In my opinion, the real crooks here aren't the insurance companies, but the manufacturers of this costly technology -- no one is trying to deny them the chance to earn a profit, but they don't need to rape, pillage and plunder us and our healthcare providers in the process! Let me also add that the only way to really effectively address this is to abandon the for-profit insurance system we now have ... something I'd LOVE to see happen, but I doubt we'll ever see that because of industry lobbyists in Washington! The odds are that we still also won't have any form of universal coverage by the end of 2009, regardless of who wins the White House, because we're now so far into debt for the Iraq war that whoever is in the White House or in Congress will really have their hands tied as to what they can realistically hope to accomplish given the budget situation. Who should we be thanking for that?

Others have justifiably argue that the U.S. tax code also should share some of the blame, and they have valid points. The U.S. government does not allow this medical expense to be tax deductible until it has reached 11% of your gross income. Think about what that means -- taxing my medical supplies that you might be forced to pay cash for is not sound policy under any circumstances, yet its done and no one is complaining to their Congressional reps about it while they have no problems blaming their insurance companies. Let's also remember that consumers pay anywhere from 35%-40% more than the list price of the sensors, so true cost of the sensors may be even more when considered at the after-tax cost.

To be sure, the insurance companies are hardly guilt-free; but I would argue they are being blamed unnecessarily for tax policies and poor healthcare policies that are really decided in Washington and in State Houses across the country.