What do we need health insurers for anyway? (L.A. Times)

[heli]

http://www.latimes.com/business/la-fi-hiltzik28-2010feb28,0,1011707.column

What do we need health insurers for anyway?
Michael Hiltzik

Angela Braly can't kid me. When the chief executive of gargantuan health insurer WellPoint (parent of Blue Cross of California) went before a congressional subcommittee the other day, she displayed all the smile-through-the-tears pluck of Annie looking to a sunny tomorrow or Scarlett swearing to God she'll never be hungry again. WellPoint didn't really want to jack up health premiums on its customers by as much as 39%, she said -- it had no choice. "We care deeply about our California customers," she said.

But what she was really telling the committee members was this: "Please put us out of our misery." Braly explained that her company's premium increases on individual policies were based on several circumstances: One, people are getting older. Two, people are becoming unemployed, and if they're healthy they're dropping out of the insurance pool. Three, the cost of diagnostic testing is soaring.

Implicitly, she begged for the government to help -- put people back to work so they're eligible for cheaper group plans, and clamp down on costs. (Not even the government can stop people for growing older.) Without that help, she intimated, premiums are going to keep rising sharply and WellPoint's already meager profits are going to be hammered worse. In delivering this appeal, Braly was forced to make an implicit admission that her industry almost never makes explicitly: The nation's health coverage system is so hopelessly broken that even the health insurance industry can't handle it anymore.

Her testimony, and other statements she and other WellPoint executives have made, suggests that insurers can't profitably manage through periods of high unemployment. They can't price policies in a way that keeps healthy young people in the same pool as older people, producing a mockery of the very point of indemnity insurance. Despite a decade of unobstructed consolidation, which was sold to regulators as a way to control healthcare costs by creating mega-insurers like hers, her industry can't control healthcare costs. Braly's words are a reminder of the most important unasked question in the entire healthcare debate: What do we need insurance companies for, anyway?

The only way insurers can remain profitable at all is by selling healthy people on policies that don't offer much coverage at all, while squeezing older, less healthy people remorselessly so they either pay for most of their care out of pocket or get priced out of the insurance market completely (thus becoming a burden for taxpayers). In short, this is an industry that acts as if it will have trouble making money unless regulators allow it to cover only injuries suffered by a young single male hit by an asteroid...

[efhmc]

1. Darn, I was counting on that gov keeping me from getting older

thing.

[xchrom]

2. To tell our policians what to do? Nt

[stray cat]

3. Are people in favor of Medicare for all - but fully funding it - ie 10-13,000 per family

Right now Medicare reimbursement is too low to keep the health care system functioning as is - my insurance pays for Medicare patients. Many doctors will no longer take Medicare patients. To fully fund it - everyone would have to participate ie a mandate at the real rates of health care costs ie 10-13000 per family. I would rather pay in to Medicare than public insurance but it may mean paying similar amounts as for health insurance to be serious about making it work

[Donnachaidh]

6. of course you have a valid link to back up that ass-stat?

13K? WHO came up with this figure - or should I say who yanked this out of their rear end?

[glowing]

8. Obviously the rates that people pay into medicare would have to be increased.

I think every pay period its about $10.00. Our family's ins costs us $600.00/ mo. If the govt just closed the gap by the 30% overhead that the ins co's charge to make a profit, that would be quite a savings in itself... However, I would think structuring the pay costs for medicare/ single payer system would be % based on income. Let the billionaires finally pay for something. Social Security wouldn't even be an issue if income was taxed on a person's whole income and didn't stop at $100,000.00. It makes every middle class person's pay taxed and shields those who have enough from paying their fair share.

[d.gibbs]

4. WellPoint spent $6.1 billion repurchasing their own shares last year - With their extra cash on hand

[blueworld]

5. Mr. Hiltzik's column is spot-on accurate & canny

He also essentially explains why the "risk pools" offered in the Senate Bill can't work - because the whole insurance industry is already built on the concept of risk pools & they're at last admitting THEY don't work. Thus the individual mandate is simply a revenue generator for Big Insurance without a robust public option or Medicare buy-in or whatever.

I particularly enjoyed the info he provided about the stock buy back sucking up their revenue. And let's not forget all those warm fuzzy commercials. Wellpoint also forces Anthem premium holders to buy drugs mail-order from Wellpoint NextRX - another "cost saver".

Well, it's a great article.

[begin_within]

7. If we don't have health insurers, who will we have to deny care?

That's their job in a nutshell. To take our premiums then deny our care.