Famed crime novelist Mario Puzo’s books often depict violence and criminal lifestyles, but also offer a few ideas that may be transplanted to health insurance.
In one of them, the now immortalised phrase “The house always wins” was born. Spoken in reference to the casino and gambling industry the book is about, the quote alluded to the common observation that if well planned, gambling houses and casinos can never lose out.
At the very basic level, health insurance and casinos are similarly crafted though the former is more stringently controlled. Both are essentially a product of mathematics and statistics pitting risk and odds on one side and strategy on the other.
For those who read the book, the first observation is that casinos rarely lose money to everyday folks. It is the fraudsters and cheats that they are afraid of. One of the strategies employed is to identify such characters as soon as they walk into any gambling den.
This of course is impossible without sharing accurate and quality data across casinos because such people make it their habit to regularly attempt to pull off such schemes. According to the Association of Kenya Insurers website, the backbone of our mortality and morbidity reports is based on 2001-2003 data.
At best, this is outdated and may not be very beneficial in identifying potential loss areas. Secondly, unlike the motor vehicle sector where the association is trying to use the Integrated Motor Insurance Data System to cut fraud, there are no similar efforts to unify the health segment.
Many disgruntled insurers have won what appeared lucrative accounts that turned out toxic. Without breaking this down into individualised records, the “toxic accounts” tag will still persist.
Another missing element in the local health scene is lack of co-operation in sharing information among health insurers unlike in the casino business . Because it is unlikely that fraud perpetration occurs without a degree of in-house collusion or laxity, keeping tabs on both sides is essential.
However, casinos are not afraid of taking such random “hits” because they know if the gambler stays on the table long enough, the house will recover its money. For this reason, insurers need to ask themselves whether they can really make money from a one-year group policy or they need flexible contracts that lock in clients for longer periods.
For this reason, insurers need to streamline the rules of the game: the client is more important than the hospital in controlling fraud. This only works if it has a consequence on clients’ future premiums.
Everyone in the ecosystem needs to know that honest parties are needed for health insurance to continue: because when the “no win” situation persists, the easiest scenario is to close the casino for the insurer. In this case patients will be the big losers.