KRUGMAN: Health insurance industry problem NOT solution

[yurbud]

OP-ED COLUMNIST

Passing the Buck

By PAUL KRUGMAN

Published: April 22, 2005

KEY EXCERPTS:

According to the World Health Organization, in the United States administrative expenses eat up about 15 percent of the money paid in premiums to private health insurance companies, but only 4 percent of the budgets of public insurance programs, which consist mainly of Medicare and Medicaid. The numbers for both public and private insurance are similar in other countries - but because we rely much more heavily than anyone else on private insurance, our total administrative costs are much higher.

According to the health organization, the higher costs of private insurers are "mainly due to the extensive bureaucracy required to assess risk, rate premiums, design benefit packages and review, pay or refuse claims." Public insurance plans have far less bureaucracy because they don't try to screen out high-risk clients or charge them higher fees.

And the costs directly incurred by insurers are only half the story. Doctors "must hire office personnel just to deal with the insurance companies," Dr. Atul Gawande, a practicing physician, wrote in The New Yorker. "A well-run office can get the insurer's rejection rate down from 30 percent to, say, 15 percent. That's how a doctor makes money. ... It's a war with insurance, every step of the way."

Isn't competition supposed to make the private sector more efficient than the public sector? Well, as the World Health Organization put it in a discussion of Western Europe, private insurers generally don't compete by delivering care at lower cost. Instead, they "compete on the basis of risk selection" - that is, by turning away people who are likely to have high medical bills and by refusing or delaying any payment they can.

FULL TEXT:

http://www.nytimes.com/2005/04/22/opinion/22krugman.html?ex=1271822400&en=c801ae54c0a01618&ei=5090&partner=rssuserland&emc=rss

[nadinbrzezinski]

1. An ammusing article

we spend as much as Germany and France, (in fact quite a bit more) but get far less....

But it is socialism you see to have a single payer system

[yurbud]

4. yep, socialism like public education, police, and parks...

[HereSince1628]

2. Great example of the free market myth

Reality just doesn't always fit the model.

I seem to remember a couple of less supported presidential primary candidates that argued a government single payer program would actually cost less to administer.

[iamjoy]

3. He Failed To Mention...

the obscenely high salaries for the insurance industry executives.

[AValdoux]

5. Medicare Cost Reports

I workkk for a company that prepares medicare cost reports for Home Health Agencies. I know from reviewing over financial information for over 50 agencies across the country exactly what he is talking about and it is actually worse than he describes. We have to fight this "government is corrupt let private companies do the work." I've seen their books and I don't see how the government could screw things up worse.

Medicare cost reports are filed yearly to declare their cost to provide home health care. The numbers they turn in help calculate future reimbursement rates. In most companies I see, the owner usually makes a 6-figure salary while the people actually giving the care usually make less than $7 for aides and below average for nurses. The law states that these agencies must be ran by a RN or PT. The owners quit practicing medical care because there is more money in running one of these agencies. There is one owner in south TX who from his two companies makes over 1 million on his w-2's. There is also one who tries to write off his armani suits and purchases at Victoria Secrets. These excesses are written off as increased medical cost and used to raise reimbursement rates.



AValdoux

[fencesitter]

6. He points out indirectly a reason we'll have such a hard time..

getting health care out of the private sector.

"Think about how crazy all of this is. At a rough guess, between two million and three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck for that care to someone else. And the result of all their exertions is to make the nation poorer and sicker."

That's a lot of people whose jobs would be in jeapordy if we went single payer. They won't go quietly into early retirement.

[kineneb]

7. the free market will not provide...

keep repeating this mantra. As a worker at a no-benefit job I agree. If there were single-payer there would only be One set of insurance drones not the gazillion duplicate paper shufflers. Talk about a non-productive (except for used paper) market sector.