AlterNet: Why are we keeping a hopeless, for-profit health insurance system alive?

[marmar]

Private Health Insurance Is Not the Answer

By Phil Mattera, Corporate Research Project. Posted February 23, 2007.



Why are we keeping a hopeless, for-profit health insurance system alive?

Healthcare reform is in the air.

Ideas for dealing with the 46 million Americans without medical insurance seem to be popping up faster than new cases of the winter flu. President Bush proposes to use tax deductions to help people buy individual plans. California Governor Arnold Schwarzenegger wants to make it mandatory for everyone in his state to obtain insurance and would force employers who don't provide coverage to pay into a fund.

Democratic Presidential candidate John Edwards would raise taxes on the affluent to pay for subsidies to help those with low incomes obtain policies. Some members of Congress are promoting insurance purchasing pools for small businesses. An odd bedfellows coalition including the Business Roundtable, AARP, the Service Employees International Union and Wal-Mart is pushing for some kind of expansion of coverage but is not saying what form it should take.

What these varied plans have in common is the assumption that, at least for the foreseeable future, most of the working population (and their dependents) will continue to receive coverage through private insurance carriers. Public officials across the political spectrum are, in effect, seeking to expand the customer base for a highly profitable industry.

Surely, it is a good thing to provide coverage to the uninsured, but it is remarkable that almost everyone assumes that coverage has to come from for-profit (or, in some cases, private non-profit) providers. Despite the overwhelming evidence from other industrial countries -- and even domestic programs such as Medicare -- that government-run health plans are much more efficient, the U.S. political class seems to be on a mission to save private insurance.

A Paternalistic Reform?

To understand the current debate, it is helpful to recall some of the tortured history of health insurance in the United States. In the late 19th Century European countries began adopting government-funded social insurance plans, but the U.S. failed to follow suit. When progressives made a push in the 1910s there was opposition not only from corporate interests but also from organized labor. AFL President Samuel Gompers denounced national health insurance as a paternalistic reform, fearing that its adoption would weaken the role of unions in improving the living conditions of workers. .....(more)

The complete piece is at: http://www.alternet.org/story/48371/

[Union Thug]

1. The answer is right there in the title... "for profit"..

Remember, greed is good - and if it fucks the sick and dying, even better!

[izzie]

2. Right on even if I would not have said it that way.

The real crazy part is that the people who buy ins. are really paying for every one else to get care in their ins. It is the stuff that sticks to the hands in the passing of the money that is hard for these people to give up. Now you and I could get together and start an old peoples home and become rich.

[Turbineguy]

3. How about this

The health care system as it exists (the for-profit system) has grown so much in relation to other economic activities that the economy would collapse without it even though over time it will strangle the economy.

It's obviously terribly inefficient (46 million cannot participate and are essentially like the homeless). But a few make huge sums off it (and I'm not talking about Doctors).

[papau]

4. No - ending for profit does not mean ending those jobs - Medicare uses

insurance companies to process claims on a cost plus basis - administrative services only - and it works great and only has a 3 to 5% overhead.

Those workers - other than the billionaire via stock options very senior management - will do just fine.

The justification for that extra 15 to 20% cost in our system is the need for health ins co's to get a good return on capital to compensate for their risk taking, innovation, and capital they must hold under the law.

All 3 of the above are not needed in a single payer universal health payment system - everyone insured eliminates the "risk" of picking up "sick" policyholders. There is no innovation - there are over 500 different claim forms out there with only a small fraction that can be filled out on the web and with multiple forms saying the same thing required for each patients health care event. And the government need not hold any capital as a reserve against a rush of claims from that poor choice of sick policyholders.

The economy will blossom when that capital is released to do good in other areas - it is not needed in Health insurance. And instead of 15% of the nations GDP going toward health costs we will get down to a more normal - albeit a bit higher than the rest of the world because we like high price gadgets and drugs - percent of the economy like 12% of GDP.

[antigop]

5. But doesn't Medicare now use HMOs -- Medicare Advantage? n/t

[papau]

9. For profit HMOs is a Bush option that increases Medicare cost to the gov by 10%- but most do not use

that option.

All of Medicare Part B (doctor's bills) is paid via insurance company workers doing the claims work under cost plus contracts that are bid for on a state by state basis for a few years duration contract to be awarded to the winning insurance company.

[antigop]

12. Yes, Medicare HMO's are a Bush option

I'm assuming that you are proposing that these would go away?

(I think they should.)

[papau]

13. Yes - for profit "risk taking" charges to the Government make no sense n/t

n/t

[TreasonousBastard]

7. OK, having spent 20 years as an insurance underwriter...

I ultimately came to the conclusion that most insurance is simply a commodity and there is far too much overhead in having so many companies "compete" with each other.

Insurance is simply a pool of money collected and paid out as needed. Someone has to properly collect the money, settle the claims, and make sure no one steals it on either side. All of this can get complicated, and a lot of expertise is needed in claims adjustment and premium setting, but mutual pools have been around for years and been doing a great job of it with much less overhead and foolishness.

In my end of the business, as much as 25% of the premium paid went to various brokerage and reinsurance commissions alone. Add another 10-25% for profit and other overhead and there's not much left to pay claims with. I doubt health insurance suffers that much of premium drain, but it suffers a lot.

There is no ideal solution, and single-payer in just one pool has a lot of potential problems itself, but reducing the complexity and cost of so many companies "competing" will be necessary if we're going to see any progress.

[papau]

10. The only single payer universal potential problem is overuse as a social

relationship outlet - and we have that in Medicare already. The other "overuse" problems are dealt with by being harsh as to what procedures are being covered.

Oregon has written into law a list of about 650 procedures/problems that their State paid health care will cover - if it is not on the list, the person goes without or buys insurance or pays out of pocket - and rules like no heart transplants for 90 year olds are unpopular but necessary to hold down the cost.

I agree that on individual health insurance it was always a challenge to prove to the states that at least 45% or 55% of the premium would be paid out in claims - because commissions and expenses and the take away for stockholder return on investment left - in the old days - just about 65% in normal years and of late premiums have been set for really good profit margins which was pushing that ration down.

[TreasonousBastard]

14. That wasn't exactly the problem I was thinking about...

I would be more concerned with the typical problems that all monopolies have-- essentially diminishing returns through inefficiencies and just general torpor.

And, we can look to specific problems, mostly political, with the three major government providers we now have-- Medicare, Medicaid, and the VA. Costs and overhead are low, but often at the expense of treatment and service. Try to find a doctor who accepts Medicaid reimbursement in some areas.

And, no one is talking about hospitals for profit, or about how "inflation" in medical costs is really progress in new diagnostics and treatments, all of which will cost more to keep people alve longer. Not only can we treat some cancers, heart disease, etc. now that would have simply killed people even 20 years ago, but those people will live to get even more, and more costly, diseases.

[Turbineguy]

8. Correct.

But that's not a republican utopia, where many are poor and few are rich.

[GreenPartyVoter]

6. Ins co.s give money to political candidates, candidate gets elected and

helps kill off moves to universal healthcare, ins co gives pol more money at re-election time, pol returns favor by again working on legislation that favors big insurance.

We see this in all of our policy making, which is why I want mandatory public financing and ZERO outside money in elections.

[papau]

11. Amen to your mandatory public financing and ZERO outside money in elections idea! n/t

n/t

[NadiaDK2008]

15. dupe

oops

[NadiaDK2008]

16. Why don't all the candidates help?

The Conyers-Kucinich Medicare for all bill is in congress right now!

If the 2008 candidates cared, they would bring this up and support it NOW! Health care doesn't have to be an election issue if they really cared, it could happen now with enough public pressure.

Why doesn't Obama introduce this in the Senate NOW ???

http://dk2008.us/

[reprobate]

17. Currently, the top candidates are fighting for campaign money.

A large chunk of that money will come from the insurance industry. Poking your potential contributers in the eye with a stick will lose you the primary, because they will contribute to your opponent not you.

That's why I, and many others have been saying for years that the only way out of our political and economic straight jackets is public funding of all elections. We MUST remove the profit motive from politics.

An alternative would be to elect all politicians for a lifetime. Then hold an election each year to determine if we'll let them live another year.

Both will work. The first is just less messy.