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Why It Matters to Have Private Health Coverage

I should not be astonished, but I am.

In 1910, Dr. William J. Mayo wrote his view on making patients a central reason for his organization to exist: “The best interest of the patient is the only interest to be considered, and in order that the sick may have the benefit of advancing knowledge, union of forces is necessary.”

But 107 years later, the healthcare landscape has changed, running opposite to Dr. Mayo’s credo.

A March 15 article in the Star Tribune revealed a healthcare system truth that some have suspected for years – that it’s a tier-system of care dependent on the type of health insurance card you carry in your wallet or purse. If you are fortunate to have private insurance coverage through your employer or have personally purchased it through a commercial insurance company, you should feel somewhat privileged. However, if you have Medicaid or Medicare coverage, please step to the back of the line.

Dr. John Noseworthy, CEO at the famed Mayo Clinic, was videotaped speaking to his staff last fall about giving preference to patients with private insurance over lower-paying public coverage (e.g. Medicaid and Medicare). “We’re asking…if the patient has commercial insurance, or they’re Medicaid or Medicare patients and they’re equal, that we prioritize the commercial insured patients enough so…we can be financially strong at the end of the year to continue to advance, advance our mission…”.

It is important to note that, regardless of payer source, Mayo will always take patients when they’re unable to find medical expertise elsewhere. However, when given two patients who have equivalent medical conditions, the Mayo health system will “prioritize” the patient with private insurance – private plans pay Mayo (and all other providers) more than public coverages. Noseworthy continued, “If we don’t grow the commercially insured patients, we won’t have income at the end of the year to pay our staff, pay the pensions, and so on…so we’re looking for a really mild or modest change of a couple percentage points to shift that balance.”

Hospitals are not allowed to discriminate against patients seeking care in the emergency room. Outside the ER walls, however, providers can choose to accept (or decline) Medicaid and Medicare patients. Mayo recently indicated to Modern Healthcare that Medicare and Medicaid patients account for half of their services, but with more baby boomers becoming eligible for Medicare, coupled with Medicaid expansion, Mayo is looking to have higher-paying private insurance offset the shortfalls received from public health plans.

The ‘dirty little secret’ of establishing a pecking order of patients, based on payment sources, has not been widely known. In that sense, kudos to Mayo for their honesty, as it appears they are not attempting to sweep this fact under the rug. Yet, the Mayo acknowledgement that commercially-insured patients would get preferential consideration in certain situations should raise questions for those of us who are covered by private payers.

If the provider community establishes a pecking order between public and private payers, could special consideration also be given AMONG private payers? Think about it. If margins are so thin for world-reknown providers like Mayo, why wouldn’t other medical providers seek similarly-related practices with all sources of revenue?

For example, if insurer A reimburses hospitals at a higher rate over other private insurers within that particular market, would insurer A patients receive preferential consideration, much like what Mayo described? If so, are you better off purchasing health coverage at a higher premium from insurer A because their reimbursement rates will guarantee preferential service compared to other insurers within that market?

This raises questions about the potential practices initiated by the provider community. Having a particular insurance card provides a ticket of entry into our healthcare system. But does it also determine the level of care we ultimately receive?

What’s in your pocket or purse? In healthcare, it just might matter a great deal.

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