Chapter 2
How They Rig the System
We are getting to the root of the issue, but there’s a little more to the story. When I started Genesis Chiropractic Software, I partnered with people from the Wall Street financial technology world. One of my partners is the former CIO (chief information officer) of the top bank in the world. Another is a Princeton University grad with a computer science degree and extensive experience, specifically in building AI technology for hedge fund transactions. Why is that important?
It turns out that insurance claim transactions between the doctor and the insurance company are rather simple. When my partners first looked at the process, their first reaction was this: “Oh, we can just get them to pay these claims in real time. The transactions on Wall Street are way more complex, and they involve many people at the same time. The only difference is that everyone involved gets paid by the end of the day. It’s the law!”
Did you hear that? It’s the law!
Here’s where it starts to get interesting.
Far more complex transactions happen every day on Wall Street, right? So why wouldn’t insurance companies do the same? And the technology already exists to make that happen. Why isn’t there a law that says doctors get paid for a visit by the end of the day? That’s a great question. I’m glad you asked.
But remember, I already said they make money on interest, right? And you know there is no good reason you don’t get paid at the end of the day. I’m sure you’re probably starting to see what’s going on here. Insurance companies start collecting interest as soon as you’ve seen the patient.
But that doesn’t answer this question: Why isn’t there a law that makes them pay you by the end of the day?
Collusion and Consolidation
We have all heard a lot in the news about collusion when it comes to politics. Well, here is real collusion that is well known and even legal. Seventy percent of US citizens are covered by just three insurance companies. Why? The big companies have gobbled up the little ones. But why?
Not to be more profitable, but to be more powerful!
Gaining legal power by consolidation
- Oligopoly – An oligopoly is not a monopoly. It is an economic structure in which just a few companies affect but don’t technically control an industry. And they don’t prevent each other from having a major influence on the market. A monopoly is when one company has total control of an industry or product. An oligopoly has many of the same benefits as a monopoly, but the most important benefit is that an oligopoly is more legal, and a monopoly is illegal.
- Insurance companies make the rules – Since the insurance industry is an oligopoly, just a few insurance companies have all the money, they have all the lobbying power, and they make the laws and rules by default.
Did you notice that I said more legal above? I’m glad you caught that. What laws are in place to prevent this? That is another great question.
Antitrust exemption: This is amazing—don’t skip it!
Rigging a marketplace by working together—as an oligopoly—could still be considered a violation of antitrust laws. These laws prevent companies from having exclusive control and thus price fixing. You might remember the huge antitrust case against Microsoft—United States v. Microsoft. In a capitalist economy, monopolizing is taken very seriously.
Let’s say every chiropractor got together and said we would no longer accept less than $45—or maybe even $1,000—from insurance companies for an adjustment. Insurance companies would report it to the federal government. Those chiropractors would immediately be shut down. The insurance companies would be correct, because doctors cannot collude against insurance companies. Antitrust laws are important because they protect consumers.
The law applies to every industry, right? Nope! It turns out that there are a few exceptions. Guess which industry is one of those exceptions. You got it—the insurance industry. They are legally allowed to collude against all physicians, not just chiropractors. And they’ve used their massive resources to successfully lobby for laws that protect them even further.
Even if we could prove they were rigging the system, we have zero recourse!
If you want more information on this, read about the McCarran-Ferguson Act of 1945, a federal law that exempts insurance companies from most federal regulations, including some antitrust laws.
So there is your answer.
Why aren’t there laws that make insurance companies pay at the time of service?
Because they have all the power, and their power is actually enabled and protected
by the US government.
They get to make all the rules!
