Commentary: Some health care claims must be denied

doctor explaining diagnosis to his female patient.
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(MoneyWatch) COMMENTARY Following my commentary yesterday on the need for a universal mandate for health care coverage, here's another reality on the topic that all of us -- particularly our politicians -- need to face: It's inevitable that some medical claims will be denied any time somebody else, such as a commercial or government insurance entity, is paying the cost. After all, companies most likely won't reimburse the cost of "snake oil" remedies, and they'll continue to deny claims for many procedures that haven't yet been proven to be effective.

It's also reasonable to assume that governmental insurance will deny claims for procedures by health care providers that charge much more than the standard or average rates for such procedures. These restrictions are common with private medical insurance policies now.

No medical insurance system, whether commercial or governmental, has an unlimited amount of money to spend paying for claims. Limits need to be set to control costs.

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As with any commercial medical insurance policy, those overseeing a government policy will need to use medical, scientific, and economic judgment to assess whether certain procedures will be denied reimbursement, either due to ineffectiveness or excessive costs. It's not only reasonable to assume that this process would go on with governmental insurance as well -- it's expected in order to control costs.

So it's hypocritical for presidential candidate Mitt Romney to state on the campaign trail that he wouldn't carve out $500 billion from Medicare, and then accuse President Obama of proposing to reduce Medicare costs by this amount. Romney endorsed Rep. Paul Ryan's program for containing Medicare's costs, which happens to reduce Medicare costs by $500 billion. President Obama has also come under fire by Democrats for the same proposals. No matter who's in charge, they're going to need to trim Medicare costs by reducing payments for ineffective or overly expensive treatments.

The point is that Medicare, like any medical insurance policy, needs to continually review the treatments and procedures that it considers to be effective and efficient. That's the goal of the Independent Payment Advisory Board (IPAB), the panel that will recommend how to contain Medicare's costs.

The Republican opposition to the IPAB -- and opposition by a few Democrats -- doesn't make any sense if you want to contain Medicare's costs. They're opposed to the government telling you what medical procedures and treatments will be covered, but private insurance companies do the same thing now. They say they're opposed to a non-elected board deciding what care we can receive. But insurance company review boards aren't elected either.

The Republicans say the use of the IPAB will lead to the rationing of medical care. In a sense, that's what insurance company review boards do when they deny claims. I've had several friends and relatives denied claims by medical insurance company boards. Was that rationing?

It's just a reality that any insurance program, whether commercial or governmental, will deny some claims. And this process will involve judgment by some actual human beings. We need to live with this reality, and our politicians certainly don't help matters when they oppose a process that commercial insurance programs already use to contain costs.

In case you want to accuse me of being a bleeding heart liberal or a heartless conservative, I'll put it out there now that I've never registered with any political party. When I was younger, it was because I couldn't figure out which party I wanted to join. But now it's a purposeful, conscious decision. I'm appalled that so many politicians in both major parties are more loyal to their parties than to solving the problems facing our country. We need leaders who will make solving our country's challenges their top priority, including reforming our current health care system.

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.