Dems Get Religion on Health Care Antitrust Exemption
MY health insurer here in California is Anthem Blue Cross. So far, my group policy hasn’t been affected by Anthem’s planned rate increase of as much as 39 percent for its customers with individual policies — but the trend worries me, as it should everyone. Rates are soaring all over the country. Insurers have been seeking to raise premiums 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon and a wallet-popping 56 percent in Michigan. How can insurers raise prices as much as they want without fear of losing customers?
Astonishingly, the health insurance industry is exempt from federal antitrust laws, which is why a handful of insurers have become so dominant in their markets that their customers simply have nowhere else to go. But that protection could soon end: President Obama on Tuesday announced his support of a House bill that would repeal health insurers’ antitrust exemption, and Speaker Nancy Pelosi signaled that she would put it toward an immediate vote.
via Op-Ed Contributor – Bust the Health Care Trusts – NYTimes.com.
This is how politics is supposed to work. Well, not really — in reality, you’d like to see your leaders actually lead, i.e. do the right thing first, before being forced into it by circumstance. But we’ll take the latter.
The sequence: Obama and the Dems got whipped in Massachusetts and it suddenly occurred to them that they might want to start doing things that would be popular outside their Rolodex of campaign contributors. A bailout tax was one early idea. They started searching the landscape for outrages they could get on the other side of and found a good one: Anthem Blue Cross in California raising rates by 39 percent.
Suddenly the Obama administration decided to come out against the antitrust exemption for the insurance industry. Like they only just noticed the problem.
The insurance antitrust exemption has been an outrage for over fifty years. The original bill formalizing the industry’s exemption from the Sherman Antitrust Act, the McCarran-Ferguson Act, was dreamed up by two Hollywood villains. Nevada Senator Pat McCarran was the inspiration for the “Senator Pat Geary” character in Godfather Part II (“Senator… my final offer is this: nothing” — that guy), while Homer Ferguson was the inspiration for the Lloyd Bridges character in Tucker who whored himself out for the auto makers to get Tucker’s new car struck from the market. These two gigantic assholes teamed up to help the insurance industry avoid the albatross of competitive pricing.
McCarran-Ferguson was supposed to be temporary. Franklin Roosevelt clearly thought so when he signed it into law in 1944, saying that after “a moratorium period,” the antitrust laws “will be applicable in full force and effect to the business of insurance.” The law was supposed to expire in 1947. It didn’t.
As a result, all the evil shit that made for such high drama in Kurt Eichenwald’s book The Informant – about a bunch of agricultural firms who get together to fix prices for an additive called Lysine — that’s actually legal in the insurance business.
This is why insurers (especially insurers with large market shares in small states) are easily able to gouge customers and deny coverage. There’s really no legal mechanism for preventing the firms from getting together and arranging price-fixing and other outrages. In a normal market customers would be able to get better coverage and cheaper rates from a competitor, but insurance is really more like a series of competition-free fiefdoms where the customers can’t go elsewhere for a better deal. State Farm even denied coverage to Trent freaking Lott after Katrina and got away with it because State Farm has Misssissippi by the nads. It’s crazy.
This is, again, another reason Obamacare was such a joke from the start. The White House vision clearly called for “health care reform” without a repeal of McCarran-Ferguson. Which is technically almost impossible, but they tried it.
That didn’t work, naturally, so now they’re finally getting around to doing the obvious. They’ll fail — every attempt to repeal McCarran-Ferguson inevitably does, mysteriously — but at least they’re talking about it. But Jesus, why does this stuff take so long?
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it is pretty aggravating that any of their progressive actions/stances as of late seem to be an act of attrition, but at least it’s some kind of response (the last administration didn’t really seem to give a shit who they pissed off.)
hopefully they won’t fail, but you’re probably right cosidering that they’re still trying to bury the public option: http://www.huffingtonpost.com/2010/02/23/gibbs-the-public-plan-doe_n_473443.html
Matt,
I think you out to look into why there is no competition across state lines for health insurers. Why can’t a California resident buy health insurance from a low cost provider based in West Virginia?
The reason is that Federal law prohibits this. This is why there is no “competition” in the health insurance industry – and one of the reasons that we do not have lower cost alternatives. The Federal Government has actually made national competition illegal.
While I am fine with removing the anti-trust exemption, the real crime here is the monopoly on ineptitude (or worse) that the Feds have. First they make national competition illegal, and then they cry about how there is no competition. Sometimes I feel that like I live in an Orwell novel. Bad Craziness!
Love your work, by the way. Keep it up.
1. Because a low cost provider in W. Virginia would be setting their prices based on what would be lower costs of medical care in that state, and a different set of actuarial data for their market. By the way, while I don’t know what state you live in, W.Virginia is a pretty rural area which means costs may well be higher than where you live.
In response to another comment. See in context »2. Federal law does not bar insurance companies from selling across state lines. Each state has their own regulations that apply to health care insurance. Thus, it becomes difficult to sell across state lines because your plan which is built to qualify in one state likely won’t qualify in another. Indeed, both the senate and house health care reform bills create the opportunity for insurers to sell across state lines by creating a standard that, if met, would qualify a health care program to be listed on the exchanges of every state.
This is not entirely correct.
1. Health insurance companies are regulated by the states. The states have their own trust laws from which the insurance companies are not exempt. I have no love for the anti-trust exemption but it really obscures the real problem and the real point.
2. What’s happening in CA with Anthem has nothing to do with anti-trust. You could get rid of the exemption by close of business today and it wouldn’t make one bit of difference because no insurance company in their right mind and in pursuit of profit would enter the individual policy market in CA, unless they are on a suicide mission. Yes, Anthem is raising prices to protect their profit margin in the individual policy business – but doesn’t the fact that they are doing so by such an unbelievable percentages tell you something? It is actually true that health insurance companies work on a 2%-4% profit margin. So, how in the world do they need a 39% bump to make 4%? They need it because the individual health insurance market is death. The insurance pool is imbalanced due to all the people who have had to drop out due to not being able to afford these policies and the young people who have better things to do with their money than buy outrageously priced health insurance. The result is that pools are filled with too many sick people. That means the insurance company takes a bath.
In response to another comment. See in context »The group policy business is still highly profitable — but it won’t be for long.
The real problem here is that health insurance model is coming to an end as the preferred payment system for health care — certainly for the middle class. This is why it is actually important that there be a public insurance option to get people through until we figure out how its going to work when the private approach completely fails.
Anti-trust is merely a diversion to the real problem.
Well said. We really need the public option. Quite frankly, I don’t understand what the hang-up is — this is not that complicated. In fact, without a public option, I think that health care reform is doomed.
In response to another comment. See in context »Uh, if they run a 2-4% margin, then their aggregate profit rises with the tide of overall premiums. So, if they are earning, in theory, 4% on total premiums of $100 million ($4 million, which sounds pretty unbelievably low so I have to question that 2-4% figure), then boosting the total premiums by 40% means a total take of $140,000,000, of which 4% is around $6 million, that’s a 50% increase in profits, for basically the same amount of services they provided for $4,000,000. Two things. First, getting 50% more profit for providing the same or worse crap service means these assholes should be drawn quartered and beheaded regardless of anti-trust; second, what happens to the other $34 million taken in and not deemed “profit”? Paid to providers? Har dee har har. Not hardly. It may be me missing something (no surprise there) but this does not add up.
In response to another comment. See in context »I guess the missing part of the equation is the amount of premiums lost by people dropping out of the system due to unemployment and cost issues. But shouldn’t that amount be specifically quantified somewhere? I mean, are they losing 39% of their premium income? If those people are just contributing without taking services, still the outlays would not increase, rather the pool paying into covering the same outlays is smaller. But 39%?????
In response to another comment. See in context »Nope. If you look into the individual policy market, you will find that most insurance companies are losing money or making even less than the 2% profit spread. Their profits come from the group insurance business and even that is under attack.
In response to another comment. See in context »The increases are designed to make up the losses in the individual market due to the growing imbalance in the insurance pool. Healthy people are bailing because they can’t afford it, leaving more of the sick in the pool – who will give up almost everything else to maintain their health insurance.
As for the 2-4% profit margins, if you do a bit of homework, you will find that this is unquestionably correct. I understand why it doesn’t feel like it- its hard to understand how these companies can make so much money operating on such a small profit margin. But consider that they are providing products to a huge majority of Americans. You don’t need much of a profit margin to make billions when you have these manuy customers.
All of this is not to support the insurance business. If you have a moment to read my post today, you’ll see that it is not about supporting or hating the insurance companies – its about the reality that the private insurance model is failing – and more quickly than I would have anticipated. The question we should be asking is what do we do when it crashes – and it will crash.
I agree. The private insurance model is failing. And the answer is all around us. All we need to do is open our eyes to how the rest of the world has been handling this challenge, for many years. A simple coherent National Health Program. Single payer. Medicare for all. Everybody in, nobody out.
The actual bill for it, HR 676 (all of thirty pages long) has been languishing in congress for years now. Meanwhile, the rest of the world continues to outperform us in providing universal health care for their citizens, with better results and lower costs. It is time America woke up, got over its “socialism” phobia, and did the right thing for its people, rather than only the profiteers.
But that brings us back to the problem of our Fascist State, where corporations control government (instead of the people). And that’s where we are currently stuck. That’s why our government — at a time when they were supposed to grapple with this enormous public policy issue affecting almost every citizen — wouldn’t even discuss the single payer idea. Wouldn’t even discuss it! And that’s where the greed comes in. We’ve got too many people in this country who think money, and the personal gain of it, is more important than the common good. And that’s called avarice, or greed. One of the deadly sins. It’s a problem.
So, back to reality, as bullshit as it is: Current health insurance model is unsustainable; Must change; Answer is all around, but overlords won’t allow it. So they came up with this idea of the Public Option, not as effective as single payer, but a step in the right direction. The greedy, and their easily manipulated minions, screamed. So they watered it down, and the screaming got louder, so they watered it down some more, more screaming, etc., etc. So now we have this timid little ineffective whisper of a shadow of a Public Option, and they say the screams are still too loud and horrific to even think of trying to push it through. Impasse. And that, my friends, is a failed government. You either serve the people, or you serve the money. Democrats can’t do both. (This is, incidentally, why Republicans often appear “stronger,” because they are not as internally conflicted about who they are serving.)
If there is any hope for this country, they’ll find a way to pass the Public Option, and it will blossom into Medicare for All, which was the answer all along, but they were just too frightened (and bought) to take the leap. The other possible route, perhaps more likely, is the states-first route, which is actually how Canada got there (provinces first). There are, in fact, single payer propositions cooking in many states right now. California actually passed it twice only to have Action Hero Governeggar veto it down both times. (Note to self: never elect actors to public office, never!)
One way or another we’ll get there. It’s a shame they won’t do it now. Many more people are going to suffer and die as a result. It’s a failing system we live in. Lots must change.
In response to another comment. See in context »“According to congressional investigators, Wellpoint dished out over $1 million in bonuses to each 39 executives, and spent at least $27 million on 103 lavish company trips, McClatchy reports.”
Hmmm, yeah, I can see your point. It is hard to make a buck in this industry. No wonder profits are down to such a tight margin.
In response to another comment. See in context »har dee har har har.
“[Wellpoint CEO] Braly herself was paid $4.01 million in total compensation in 2009. In 2007, however, her total payout was substantially more, at $14.9 million.”
Okay, I gotta take issue with your explanation here. A business model that nets this much cash to some sociopath asshole and her cohorts is not failing. It’s a smashing success. It’s only if you measure success by things like social utility, or internalize costs that these fucks externalize, like people who die from denied care and their suffering and that of their kin, that the model fails. Here’s a group of people that are filthy rich simply by inserting themselvs in between health care and human beings, extracting so much wealth that the care is inadequate on the one hand, and the actual health workers are cheated out of a large percentage of the “haul.”
I have a better model: line up these fuckers and shoot them.
In response to another comment. See in context »Of course, the millions in salary and bonus to insurance executives is where the 2-4% “profit” BS comes in. If Wellpoint increases premiums from $100 million to $140 million, and classifies the extra $40 million as operating expenses or whatever, then it’s not counted as “profit,” is it? Profit is what’s left after they’ve deducted salaries, jet leases, lobbying expenses, tax-evading attorney’s fees, and my personal favorite, “medical losses” (i.e., actual payments for health services provided).
In response to another comment. See in context »United Heath Care is the largest of the insurers so they probably can serve as a reasonable benchmark. In 2006 they they paid out 75 cents in claims for every dollar they took in. This would cause Wall Street to go nuts. In 2007 they paid out 88 cents in claims for every dollar in revenue and in 2009 they paid out 92 cents in revenue for every dollar they took in.
The fact is , the Health Insurance business model is badly broken. They need this bullshit reform more than anyone. In order to get back to the 2006 level they need the huge pool of customers that a mandate would create. If left alone, they have no where to go but out of business. It’s just no one wants to see their relatives die as they go through their death throes because the only way they stay alive is by denying claims, and policy rescissions.
Wellpoint made 4 Billion last year on sales of 61 Billion dollars give or take. UNH has been the subject of numerous law suits while Wellpoint has more or less drifted free , so they are showing about the same net profits with sales about `15% lower. But the trend says they are going under without this mandate.
Then the next question becomes, why do we need them in the first place? Expanding medicare for all or some other plan would drive a nail into their coffins. A Public Option with enough buying power would be the stake through the heart . The sick ( no pun) part about this is when you go over the financial’s and the stock performance of these companies, they exist almost for the sole benefit of the C-Suite. How can a company who eeks out a 3% net margin or 2.5 billion on 74 Billion in sales have a CEO sitting on 784 Million dollars worth of stock options( probably higher now)? That’s what Helmsley has with UNH.
Go down the line and look at the combined compensation of the C-Suites in the past few years then compare that to the rest of their staff and you see maybe 5 or 6 people are benefiting. Shareholders aren’t seeing new highs. No dividends to speak of. Employees are stuck with the same shit plans they sell to everyone else. But United Health Care generates massive M & A fees for Wall Street since it’s essentially a roll up company.
The existence of these companies are for Wall Street and a small select group in each company. They have no other purpose. They aren’t inside of the Health Care system, which most people don’t get, they are the bouncers outside who only let the right people in.
They add absolutely no value to the Health Care system. They cause costs to rise on the provider side ( who aren’t exactly innocent) as a claim turned down is probably a claim that won’t get paid.(A favorite trick for providers would be to hassle a patient so much they would put it on a credit card- whoops, there’s those damn banks again) So they raise their prices to cover the spread of claims submitted and the claims denied.
That’s why when you think you are doing your Doc a favor and paying Cash for a visit you find out he charges you 2x what he would have been reimbursed by the insurance companies, if they paid claims. The extra juice is for when they don’t pay.
With an average claim denial of 35% with all the major insurers, one can easily see why providers keep raising prices. But look at what would happen if they didn’t deny those claims. Assume they had a claim denial rate of 5%. That would a 20 Billion dollar loss of United Health Care ( shades of AIG). To be blunt, they have to kill people to keep their sky high salaries. There is a death sentence for murder in most places in the country yet these executives plan it and do it every single day. No arrests. No Trials.
Providers are the first group that knows that a claim is denied. They may fight for awhile but eventually they will turn to the patient and then the patient will fight with the insurance company. Then we understand why they need to spend 3 Billion a year in Overhead. They need an Army of Health Care Ration experts and death panels to keep the CEOs and their inner circle in the upper income stratosphere. Otherwise they would go out of business.
They have to have this mandate. This is one part of the bill that’s going through. The reason the fought the Public Option with everything they had and more ( This may be where part of the 39% price increases are coming from) is a competitive environment with comparatively low paid execs and no driving desire to seek profits to please the street, is arsenic to a Health Insurance CEO.
Providers would then get paid quicker and could afford to lower costs because they are headed into the same death spiral as the Health Insurance companies. If they keep raising prices to cover the gap the Health Insurance companies create. If the gap is closed the providers prices could easily fall back 35% or more and be back on the 2% a year inflation plan.
The only two sectors that make huge bucks is Pharma and the Device makers. Pfizer works on a 85% gross margin or put another way they mark up their product 7-8x . They all get paid enormous salaries as do the the generic company execs. They also show healthy profits , at least to their shareholders. In reality the insurance companies are the weakest right now.
If the Dem’s walk away with defeat now, the system will implode on itself. The CEOs and Wall Street are all on the short term greed flight pattern. They can’t see past next quarter. The Business itself will be gone in 5 years or less. The longer this “recovery” keeps losing jobs, people just won’t pay for insurance or pay the fines. The govt in effect will be driving a lot of income underground if they implement these fines. Why pay for a product that does nothing?
That’s why it may be better to pass nothing and let the insurance companies die on the vine. The problem with that is; 100s of thousands of sick people who thought they were protected will die with them. That’s what happen when govt has institutionalized corruption and companies know exactly which leavers to pull and for how much to get what they need which is 50 million new customers all forced to buy their crappy products.
That won’t do anything except provide short term relief for a few because there are no price caps. They will continue to raise prices but with a longer time frame to break greed records for the 30-40 people at the top of the industry and the idiots on Wall Street. They don’t care what happens next.
Meanwhile the staffers and the Congressional assholes get the best health Care in the world which we subsidize to the tune of 75%.
The cost for a family of four: $320 a month
One person: $80 a month. Low or no deductibles, co-pays or caps. No pre-existings, no age premiums. All with the same insurance companies that screw the hell out of the rest of us.
That’s what a group purchase of 2-3 Million looks like, Lower rates more benefits. It’s also why congress really doesn’t understand why people are pleading with them to do the right thing. They don’t have any problems. Fuck it, where’s the check?
Once the full impact of this bill hits, the Dems may have a 40 year walk in the woods. For some odd reason they think this bill is a huge accomplishment. Then again they handed trillions to the banks thinking they saved the free world.
We get what we pay for for 170 grand a year each for 535 people who spend 4 trillion a year and couldn’t pass a basic finance class or have any interest in the economics of the way businesses operate. The only thing they see is a bottomless cash machine they have access to if they win a rock throwing contest every few years.
What do they say to their constituents? “We just didn’t have the votes, but if you write a huge check will go right back after them again. Help me help you by changing Washington”.
Time for me to hurl chunks.
Thanks for the rant space.
In response to another comment. See in context »Hey Matt,
It just struck me–we’ve been at this shit for about a year now. I don’t know who exactly is to blame–maybe its Republicans for using the media as some kind of blunt instrument to stun the Democrats into some state of perpetual reevaluation. Maybe it was the Republicans being uncompromising or threatening every procedural roadblock to passage.
Or maybe its Democrats for being spineless slimeball marionettes of Wall Street and the health care industry who are more interested in the semblance of progress than legitimate progress. Both of these views are kinds of caricatures. Democrats (supposedly) would only tow the Goldman/Aetna line insofar as it doesn’t jeopardize their grip on power. But their reform-masquerade actually did the opposite: it incensed some vocal fringe of the Republican base that was given a bundle of microphones by Fox. And I think your post rightly points out that they are willing to double down against Wall Street and the Health Care industry only when they absolutely have to.
Which sort of explains why it has taken so long. The longer the whole drama is played out, the more congressional Democrats can play both sides–they can either be the populists or the faux-populists, and just wait to see what narrative gains traction. If you look back to FDR’s “New Deal” Congress, (the 73rd), they didn’t have a supermajority–in fact, they had 58/9 senators and 311 House Reps. That sounds a lot like the Democrats of today.
In a period of the first three months of 1933 they passed the Emergency Banking Act, the Agricultural Adjustment Act, and the Glass-Steagal Act, and establish the Tennessee Valley Authority–three major pieces of legislation that were the some of the hallmarks of liberal reform in the 20th century.
What the fuck is going on? Aren’t things like technology and increased communicability between legislators and constituents supposed to make this whole thing be more efficient. Instead we have some bloated, impotent monster that neither the Democrats nor the Republicans seem to be in control of.
This is great news.
What I like is that it is a single-issue vote. Congressmen won’t be able to waffle with, “While I liked some parts of the bill, others were so bad that I could not give my support.” If we had more such votes, citizens would be better represented.
It looks like there will be a debate and vote today, with a press conferenc scheduled for 4:30pm Eastern. I’ll catch some C-SPAN for sure.
I’m more optimistic than you and feel it will pass. Admittedly, I had not heard of this until reading your blog, but my gut reaction is to support it very strongly. At worst, the Democrats will force Republicans (and perhaps some Blue Dogs) to go on record as opposing it.
My private insurance plan premium increased 23 percent this year. It had gone up around 10 percent each of the prior two years.
The other thing that you might have seen today is Geithner backtracking on the Volcker rule. t’s a headline story at Bloomberg.
Personally, I never believed a “pure” Volcker rule would ever have been feasible, but you’d think they would at least use it as a bargaining chip and have the banksters cede their seats at some of the casino tables before exempting them for primary dealerships etc.
Another example of American-style fascism at play.
We live in a Corporate State, folks, where Big Money and Government take care of each other, at the expense of the citizens. They will continue squeezing us, up to that fine line of actual riot.
It’s just a game for these rich pigs. They’re fine, and getting finer by the moment. We will continue suffering until we overthrow the bastards. It’s a story as old as the hills.
One of the most telling things in health care reform’s second wind is how any piece of progressive legislation even being broached has been in spite of the White House and Senate majority. The only reason the public option has an (albeit slight) chance is because of the work of the DFA and PCCC, forcing certain Dems up for reelection to take a damn stand in the form of that letter (and even then we’re only talking about 20 signatures). But as Ezra Klein recently wrote, this momentum fucking terrifies Obama and Reid…because pushing through a program with some 60% public support by a simple majority might look bad?
Of course they also don’t want to come out definitively against it, so their cowering in the corner just hoping like hell it goes away on its own. Reid says I’ll put it up if the Administration applies pressure to the Senate, and an Obama aide says he’ll support the effort if Reid puts it up for a reconciliation vote. Truly pathetic stuff. I seem to remember, during the campaign, Obama echoing FDR’s mythical “make me do it” creed. Well they’re making him, and they still won’t do it.
Dems, aka, the blue puppets. Repubs, aka the red puppets. Two puppets, one puppeteer.
I think you’re not going to like me today. I am now 2 for 2 – having disagreed with 2 of your posts. Let’s see if free speech is alive and well here on True/Slant.
Since health insurers are generally regulated by the Government, including the rates they charge customers, there will not be an antitrust violation. When the Government enters the marketplace and regulates pricing, etc, it is an exemption to the Sherman Act as they act as a market participant. Remember most States have an antitrust law based upon the Sherman Act. With that said, I agree they should repeal the exemption. In fact, they should repeal exemptions for all industries, including baseball, just as a matter of fairness.
They also need to fix ERISA as this law (and how it was later interpreted) basically prevents employees from suing their insurer in Court for anything more than the value of the denied health services. This is one of the major problems confronting true health care reform. I know people don’t like lawyers but if people could challenge these denials in Court and win damages, like a car accident, then it might be a deterrent on the insurers from being such pricks. Let’s face it, the only things these corporate types understand is money and impact on EBITDA (a measure of profits).
Ps: Robert Reich is a little out of his comfort zone here but I get the point he’s trying to make.
Seems like more competition won’t help reduce health care costs (or insurance premiums). That’s because the insurers must negotiate with providers. A single large entity (such as, say Walmart or the federal government) can demand much greater concessions than a gaggle of smaller competitors. This fact also underscores the need to create an insurance mandate. Imagine what your auto insurance rates would be if you didn’t need to sign up for coverage until you had an accident.
Another excellent article, Matt. I trust you are feeling better?
After reading some of the comments it seems that there are layers of laws over the years that have contributed to the mess we are in. As a J6P I have tried to understand it all but it is next to impossible. What a convoluted pile of shit! I wish there was some way we could erase it all and start over.
[...] Dems Get Religion on Health Care Antitrust Exemption – Matt Taibbi … been-affected, but-the, california, cross-, group, group-policy, insurer-here, its-customers, [...]
I’ll believe it when it happens.
[...] on Trustbusting 2010 February 24 tags: Health Care by r.e.c. Matt Taibbi points out why health care reform was doomed to failure without a repeal of the McCarran-Gerguson Act: This [...]
feifdoms? interesting. as in reference to Jules?
How can Rick say the insurance industry is taking a bath when they themselves are reporting huge profits? They may be taking a bath in that one sector (individual health insurance market) but those losses are more than offset by the profits they receive from all their other sectors. There are many industries that lose money in one sector in order to make a profit in all their other markets. You can’t isolate one sector and use it as justification for a 39% rate hike and expect everyone to just go along with it. For the life of me I cannot understand anyone apologizing for the insurance industry. In any other industrialized nation in the world they would be out of business, and the jerks who were responsible for the profiteering and price gouging would be laughed out of the country or they would be in jail. The fact that we don’t have universal health care in America is our country’s and our government’s greatest failure. But the insurance companies are damn sure making enough money to buy off our corrupt politicians. Are you listening Max Baucaus, Joe Lieberman, and Ben Nelson?
I didn’t say they were taking a bath. They are still making lots of money. that is not my point. My point is that there business model is failing and will, eventually, completely fail leaving us in a very serious problem because we won’t be ready to replace it quckly. This will leave hospitals unable to operate because their largest source of revenue will no longer be flowing into their bank accounts.
In response to another comment. See in context »I also undestand that it seems odd to be talking about a business model failing when they are making bllions of dollars. But consider this – in 2006, AIG posted profits in excess of 14 billion dollrs. In 2007, theyre profits were in excess of 6 billion. In 2008, we had to bail them out to the tune of $150 billion to keep AIG from going down the drain and talking us with them. It happens much faster than we our brains can conceive it is possible. If this is of interest, take a look at my post today. It goes into more detail.
I wonder if they are takibng a bath on individual policies. Individuals buying policies have zero protections from most states and if they do, a few bucks usually but that off.
For example: It is totally permissible to raise rates on a individual to equalize usage. Example, I have a Open Heart Surgery that the insurance companies buys for 60 grand. I am now uninsurable since I have a prexisting condition so the existing insurance company can and do raise rates to cover the amount they put out in as short as time as possible.
Obviously they can lose if the policy holder decides to go naked. But they know much more about you than you think. They use Choiceplus data services to find out you picked your nose in third grade and couldn’t get to the black board in 9th grade becuiase of an erction that just put a hole in your pants.
That means they know what your income is and can come close to coming up with a figure that is payable. In one Open heart Surgey a local attorney’s rates went to $4900 a month He paid a about 6 months and then bought a high risk policy from the state that is only major medical for $1500/month. Even so, they got $30,000 from him plus all the premiums they collected prior to his surgery, so chances are they didn’t lose much.
If there is no money to be charged though abnormally higher increases then it is q
In response to another comment. See in context »I wonder if they are taking a bath on individual policies. Individuals buying policies have zero protections from most states and if they do, a few bucks usually buys that off.
For example: It is totally permissible to raise rates on a individual to equalize usage. Example, some has Open Heart Surgery that the insurance companies buys for 60 grand. That person is now uninsurable because of preexisting conditions so the existing insurance company can and do raise rates to cover the amount they put out in as short as time as possible.
Obviously they can lose if the policy holder decides to go naked. But they know much more about you than you think. They use Choiceplus data services to find out you picked your nose in third grade and couldn’t get to the black board in 9th grade because of an erection that just put a hole in your pants.
That means they know what your income is and can come close to coming up with a figure that is payable. In one Open heart Surgery a local attorney’s rates went to $4900 a month He paid a about 6 months and then bought a high risk policy from the state that is only major medical for $1500/month. Even so, they got $30,000 from him plus all the premiums they collected prior to his surgery, so chances are they didn’t lose much.
If there is no money to be charged though abnormally higher increases then it is quite possible claim denial will start and I mean for terminal diseases if they aren’t treated. Imagine getting turned down for 100G Chemo bill because the insurance company considered it experimental even though its been in use for years. How much fight do you after going through a round of Chemo?
The insurance commissioner is no help. Attorneys are expensive and most disputes have to be settled via arbitration which is put off if they think there is a good chance you’ll die.
In group plans there is all kinds of protections at the state level so insurance companies have to hop[e no one in the group comes down with the Cancer that require cocktails of multiple Chemo drugs that run 6 figures a year.
They don’t have those worries in the private insurance market. I would have to see a breakout of the numbers before I bought into the idea they are losing money. In private insurance, you really don’t have insurance , you have a very expensive wholesale card.
In response to another comment. See in context »Did you know that the Titanic had more than enough lifeboats? “More than enough” by the laws of the day, I mean.
Those rules are detailed in this admittedly dated NYT article (April 17, 1912):
http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9D04E2DF153CE633A25754C1A9629C946396D6CF
They involved the amount of cubic feet of lifeboat space per gross ton of ship, the number of boats that was divided by, where the boats had to be positioned…a complex formula.
After the Titanic, of course, there was this new rule: Enough Seats For Everybody Aboard.
That rule is much simpler.
Reading all these posts about different actuarial tables for different states, different state regulations, anti-trust acts and whether they should apply to industries “regulated” by the government (like steel foundries and slaughterhouses aren’t)…to a Canadian, it’s like listening in on those British Board of Trade meetings in 1910 and scratching our heads over all the complex formulas.
We just have this simple formula: enough basic medicine for everybody aboard.
I don’t think you’re going to get where you want to be by making the formula more complex.
Matt, glad you are feeling better after raiding your med cabinet. I thought I’d check out the hearing on cspan after reading your article and out of curiosity I checked their stock price and guess what wellpoint’s stock went up by $1.11 from close last night. I am no genius but my guess is that the good folks a wallstreet have bet money that not only will this rate hike stick but no meaningful changes are coming down the pipe on the reforms either. Pls some one tell me i am wrong about my assumptions and conclusion…
m
btw, the ceo just tried to explain the rate increase was to maintain their “low” margin and profit of ~$2.3bn last year. I guess it’s only fair they get to make as much or more this year…
PS: all hcare insurance stocks are up today, damn now that’s some balls on the betting side
The house dabbles at reform they know will only die in the senate. All while Obama, falling back on his recurring role as Pilate, will wash his hands of the whole thing. Same for the public option, same for bank reform, same for real economic stimulus, same for the repeal of Mc-Ferguson.
It doesn’t do the Dems any good to work on problems that aren’t high visibility. They’ve been working on thousands of problems in the past year but the Republican Blow Machine just covers them up. I don’t blame Obama for going after high-profile stuff. Next on the list would be to rip Ken Lay off his private island and behead the bastard.
“wholly-owned subsidiary” — anyone catch THAT exchange? Congressman from New York with some major cajones.
Going to be a interesting vote.
Matt: Glad you are feeling better– know what it’s like…
Couple things. First, seems to me the anti-trust exemption (which is, in effect, a trap that limits choice in the market place) is dwarfed as a trap by the entire set up being employer based. That’s what? 90% of the non-gov’t provided insurance, and who gets to pick their coverage outside of what their employer provides? I will never for the life of me figure out why US business allows itself to be saddled with this cost, other than as some general unstated conspiracy by the owning classes to recapture all due productivity based wage increases. It does this by converting what ought to be salary raises into increasing health care premiums (i.e. all your raises being spent by your boss to provide you the same crap service year after year) and shipping them to the insurers. Why would your boss agree to that? Why would he/she care if the money went to you or them? Well, maybe because the ownership of corporations is so restricted (what, 1-5% of the population owns like 90% of all the shares of all the corporations in the country) that the premium money and profits trickle up through the interlocking ownerships until it goes right back into the pockets of the officers and shareholders of the place that employs you. This may not apply to small businesses, but you can see how they are caught up into markets set by huge corporate customers. So, the system works like the old company store writ large– you gets paid w/ “health care” provided by the company store that looks like a separate entity but is for all intents and purposes owned by the same people that pay your salary.
Pravda?
doodahman-
It isn’t a dollar for dollar trade off. Insurance pools operate on the principle that 80% of the pool (the healthy ones) pay for the 20% of the pool who is ill. Thus, one person dropping out does not equate to one person staying in. That would work if it were a 50% healthy to 50% sick formula.
I don’t know that actual numbers of the lost patients on a state by state basis. But it certainly is not hard to buy that people are dropping out as they lose jobs or simply cannot afford the rate increases. Private health insurance also becomes less attractive to the young who would rather spend the money somewhere else as the price gets higher and higher.
So, while there is no doubt some profit protection in the 39%, it is nowhere near what you might think. We should be getting the numbers you are seeking during the hearings that are taking place in California. If I get them, I’ll send them along.
If this subject is interesting to you, you might want to take a moment to read my post here at True/Slant today as it goes into what is the real insurance problem.
Thanks!
In response to another comment. See in context »I was glad to see Rick Ungar’s response prior to submitting my own. My take on the anti-trust exemption for insurers was similar. I’m sure health care insurers have never wanted for a comfortable profit in their work, but this nation is wacko in its single minded mentality of laying the blame for our exorbitant health care expense at their feet.
My head spins with the hypocritical belly aching I hear and read from both liberals and conservatives. Who should I call out first?
I don’t feel like doing either right now, cause I’m in a foul mood and will write like I’m shouting. And the stupidity is so rife on both sides, it’s like shooting sitting ducks, anyhow.
-Robert
http://therleepost.blogspot.com
To be clear, I am laying the problem at the feet of the private insurance business model – rather than blaming the increases in premium costs on greed. This is about the private insurance business model no longer working and he crisis we are going to face when most Americans – and their health care providers – wake up one day to discover the insurance companies are broke. That will be the true crisis. Read my post today to better understand this as we are missing the point of the health care problem.
In response to another comment. See in context »Rick,
Quick question. Have you now or in the past worked FOR the health insurance industry? Your profile does not appear to indicate you have. I ask because I believe your percentages are suspect. Having said that, I believe you may believe they are accurate.
About Me
I am an attorney in Southern California, and a frequent writer, speaker and consultant on health care policy and politics. To that end, I am active member of the Association of Health Care Journalists. Based in beautiful Santa Monica, California, I’m very pleased to have the opportunity to be a contributing editor to True/Slant. I’ve recently finished a book designed to make the health care debate understandable to the average reader, and expect it to be out in the next five months or earlier. In my ’spare time’, I continue to write for television and, occasionally, for comic books.
My checkered past includes stints in creative writing and production for television where I did strange things like founding the long running show “Access Hollywood” and serving, for many years, as the president of the Marvel Character Group where I had the distinct pleasure of being one of Spider-man’s bosses.
In response to another comment. See in context »Ted-
I do not now or never have worked for a health insurance company nor anyone remotely connected to the health insurance industry. The closest I’ve come is having paid lots of money to buy it for many years – and given my pre-existing conditions, it’s pretty big money.
As for whether or not I am accurate on the insurance industry profit spreads, you need not take my word for it. You don’t have to be Dick Tracey to get online and find this out for yourself. As you might imagine, this has been pretty well researched to death as we see rates going higher and higher. While many questions surround the health insurance industry this is not one of them.
Beyond that, I’m not entirely clear on why you repeated my bio to me as I’m fairly familiar with it already. Or were you trying to make the point that I am somehow not qualified? If this is case, I’ll be sure to pass that word along to those government officials whom I consult on a regular basis. Contrary to popular opinion, our minds are capable of learning and understanding issues and areas that are not always consistent with other speciaties we might have to our credit. After studying health care policy for 14 years, and writing about it for quite a long time, I’m fairly comfortable with my level of information….but I’m always willing to learn more if you can show me where I’m wrong about something.
In response to another comment. See in context »Ted-
I don’t know what resource you deem credible, as in this day age people tend to believe reports based on their bias. If you’ll give me the flavor of what you prefer, I’ll be happy to use them as sources. In the meantime, most people find U.S. News & World Report credible so I grabbed the following for you from them-
“Overall, the profit margin for health insurance companies was a modest 3.4 percent over the past year, according to data provided by Morningstar. That ranks 87th out of 215 industries and slightly above the median of 2.2 percent”
In response to another comment. See in context »http://www.usnews.com/money/blogs/flowchart/2009/08/25/why-health-insurers-make-lousy-villains.html
I respect your intellect, Rick, as you obviously understand elements of this issue well. You see the risks, costs and revenue pieces of the health insurance business, and have spent time thinking on the subject.
I haven’t read all of your postings, so forgive me if I err in misinterpreting you in anyway.
For me the biggest elephant in the room, which is seemingly invisible to all, is the rise in the price of health care services and products. Now, here’s is the key: Insurance companies DO NOT provide health care. If we have evolved health insurance into the front man for delivering us those services and products, then we have made our own bed.
Before the 80’s there was virtually no price pressures placed on the health care industry of any kind. Only when the increases in their group health care insurance (pushed up by the increases in the price of health care) became a significant item in their budgets did employers start to act like consumers and began to price shop.
When employers began to price shop it forced insurers to begin to find ways to inhibit the high charges billed by health care providers. But now, so many people loudly decry insurers for many of these ‘price’ containment measures. They see them as ‘cost’ containment, only enriching the insurers. In fact those measures are the only thing which have acted as a competitive price check on further increases in the price of health care.
American consumers want to have their pie and eat it, too. They don’t want to make the critical decisions themselves, i.e. value judgments at the point of consumption, which is the key to implementing the essence of why we champion competition, that of getting value and efficiency in the use of our market dollars. They want the dollar value which competition should bring, but they don’t want to do the work of consumers to achieve it.
Instead they want to pay a third party to do that work, and then be able to bitch at that third party for not delivering more and better quality.
We can go to a system where there are very few insurers or only one (the government) who will dictate to the providers and force them to be more efficient, or we can go to a system of many health insurers competing only on the business of providing reimbursements for specified insured events, who are totally separated from the health care industry, not even allowed to be billed by them, and we as consumers will then act like grown ups and insist on prices of health care products and services up front so that we can make educated decisions and compare as we do any other services and products. If you’re screaming about competition, that is the only way to use competitive pressure to keep down health care prices.
So it’s either competition at the point of health care consumption or single payer. Dickering with anything in the middle is a fool’s game. The only way we will ever be able to afford to provide sufficient health care to all is to bring the price of it way down.
We pay TWICE as much for less, than any other country in the world. I would love to be paid just .000001% of the savings.
In response to another comment. See in context »-Robert
http://therleepost.blogspot.com
therleepost-
I agree with much of what you have to say – but a few corrections and comments are in order.
1. Clearly, the increase in health care costs play a major role in the issue. However, given how our payer system is constructed, it is not as large a part as you might imagine. Our payer system is built on insurance pooling where 80% are healthy and 20% are sick. The concept is that the healthy pay for the sick. When the pool becomes imbalanced, as it has due to (a) healthy people dropping out because they lose their jobs and/or (b) healthy people deciding that the costs are too high and will take their chances on the likelihood they will remain healthy, the pools stop working. To keep them in the necessary balance, the premium prices go up to (a) support the sick and (b) motivate the sick to leave because they can’t afford the higher premiums. Bad news for the sick to be sure.
This is a large part of the problem – and why I believe the private insurance system is heading for collapse for all but the wealthiest among us.
2. While you are correct that insurance companies do not provide health care, they have been an inescapable part of the system. This happened some 70 years ago. it’s a long answer to explain why pooling is essential, but suffice it say that the 20% among us who fall ill could never afford to be treated if it were not for pooling the risks. In the beginning, the risk pools were not for profit. Obviously, that has changed.
3. Not true that there were no price pressures prior to the ’80s. Indeed, it was the creeping prices that caused Richard Nixon to sign the HMO bill in the ’70s. I can give you examples of price pressures going back to the ’20s when Teddy Roosevelt was attempting, unsuccessfully, to address the issue.
4. Essentially, you are proposing the consumer driven formula for healthcare. It works great when Mrs. Smith has to determine whether or not to take little Johnny to the doctor when he gets the sniffles. If she’s paying the bill, she’s probably going to save the money and let the cold run its course. It doesn’t work at all when it comes to people who need chemotherapy for cancer, heart surgery or treatments for other such major illnesses. I care care how hard you work, how much you save your money, how much you shop, etc. Unless you are extremely rich, you will not be able to pay for. it.
I had to have chemotherapy. I have excellent insurance. Even with that insurance, I had a $50,000 bill to pay. I’m very fortunate and could afford that. What happens to most Americans who would be financially destroyed by such a debt?
5. The cost of health care is not only driven in the way you suggest. A huge chunk of it is the high cost of technology that saves lives. Is it overused? I think so and I’m sure you do too. But, I promise you that should someone in your family, particularly one of kids, fall ill, you will NOT say no to any expensive test the doctor might recommend. And you will not be worrying about the high costs- you will want anything and everything done for your child. And who could possibly blame you. Now, apply that same rule to every American who loves their children and you begin to see the reality of the high prices.
Health care is not a commodity like a TV. Accept it. You can live without a new TV. You may not be able to live without health care. Thus, it cannot be treated the same.
In response to another comment. See in context »Hi Rick.
First, thanks for your rational look at the subject and educating people. I always pick up insightful bits from well researched and articulated writing. And, I do understand much of what you lay out; we are in agreement more than not.
The pooling concept is well accepted, it is in theory the essence of the insurance business model. Insurance was not conceived as a payment plan for expected and routinely budgeted outlays, but as a financially viable group means to protect members of the group against large emergency and unexpected costs.
As we have, unfortunately, allowed our insurance plans to become both an insurance and a health care pre-payment plan we have eschewed our consumer role in the market place, much to the benefit of the health care industry.
The inordinate inflation in the price of health care has been going on long before our recent economic downturn. Thus, while you can use the recent risk shift in the ‘pool’ to explain part of (or most of) today’s insurance price hikes, it doesn’t support our decades old experience of sharp rises in health care costs.
No doubt some recognized the uninhibited inflation in health care prices much earlier than the ’80s. I’m not a senior yet, and my experiences with my own health care costs began about 1979. I knew then that health care expense had become a trying burden for the uninsured, and was going to be a ghastly burden for all by the year 2000 at the rate it was escalating.
What I recall though is that by and large prior to the late 80’s or early 90’s most businesses had absorbed the year or year advances in price and tried to stifle the rate of increase with pressure on the insurers. In the 90’s, employers began to shift those increases to their employees.
Your earlier point about Medicare taking a large portion of the riskiest part of the pool was informative. I hadn’t thought about when it came into existence. No doubt many seniors had been without medical insurance, as I’m not sure how frequent at that time retirees were continued on company plans.
There’s a little of the ‘chicken and the egg’ in the argument over putting the consumerism role back at the point of health care consumption. It might very well be of little impact to limit insurance to its original role, and have Americans pay for routine health care events, as they may only account for 10-20% of today’s health care expenses.
I would be quite curious to see how much rates would come down if health care providers had to compete to retain and attract vocal and informed consumers.
You mention having to pay a bill of $50,000 for chemotherapy even with excellent insurance, which means you likely paid $250,000 for the treatment. Please remember that the service was provided to you. That you or someone else have been paying premiums on an insurance policy that then reimbursed you 80% is your good fortune, and some would say prudent planning.
But, nevertheless, $250,000 had to be produced from somewhere because that WAS the bill. Looking at some 2006 numbers, it appears that 1 in 30 Americans have cancer at any given point. Eliminating children, that leaves about 25 people (assuming the rest are employed with insurance benefits) to pay for the treatment of 1 person, but that’s just cancer. No doubt someone else has heart disease, another leukemia, etc. Now you could say many of those are elderly and thus covered by Medicare, but we all pay for Medicare.
When it comes down to it, someone has to make a conscientious decision about what we are willing to do to push life past its natural limits. Who should make that decision? Or have we already made the collective decision that there is nothing we won’t spend to get another minute of life for each and everyone of us?
And if that is true, then we have NO LEVERAGE to keep the price of health care down. There is no price to high.
Either consumers will have to make that choice for themselves, which might be terribly inequitable, or else we will HAVE to accept a national health care system similar to that of Britain and others western countries. For it will be the ONLY way we can contain the drain on our wealth, to which we’ve been a hostage, and do right by our national conscience to take care of the least able among us.
-RLee
In response to another comment. See in context »http://therleepost.blogspot.com
Well Matt, I believe Harry Reid threatened to repeal the exemption some time late last year, and of course, nothing came of it. So yea, any conversation about this is good, but I wouldn’t get my hopes up. Once the smoke reaches our wheat thin majority leader, he’ll just crumble as usual.
chibhatt, what is good is that there is nothing for Reid to do other than submit it for vote. Right?
Then let the Senators go on the record. The House vote was completely one-sided, 406-19. (Even my right wing rep voted for it — I sent e-mail this morning, I’m sure that persuaded him…) No one wants to run as a protector of the insurance companies.
In and of itself, this bill doesn’t do much, I know. But the more bills we have like this one, the less backroom deals there are. Vote on everything this way and there are no Louisiana Purchases or Cornhusker Kickbacks or a million other things.
I get sick when we can’t get Congress to vote to repeal the tax loophole for hedge fund managers on “carried interest.” No one thinks that exemption is fair or logical. Something like 80 percent (I’m not certain of the number) of hedge fund/private equity fund managers admit, at least anonymously, that it is nonsense! It would pass in a day if the House and Senate presented it as a single-item bill. And we’d collect billions of tax dollars!
But they save it because they want it in an “onmibus” tax bill. They’ll give other breaks to the well-connected and trot out the repeal of the “carried interest” (I have to put it in quotese because it really isn’t carried interest) loophole to show it was a “win.”
In response to another comment. See in context »my foggy memory of history says that part of the problem is that post WWII employer provided health care plans came into vogue for tax reasons — so employers could attract workers and for both parties there were tax advantages (I can’t find the documentation for this now). Britain, on the other hand, bit the bullet, and while it was difficult, passed the NHS. Our tax code has so many complexities and corporations have so many ways to avoid taxes now and our system has created the unsustainable dilemma that we find ourselves in now, we ae in a pickle. Everyone loves to hate the IRS, but the IRS doesn’t write the tax code, they just try to enforce. Congress writes the code (well, really their staffs and lobbyists write the code–many in congress don’t really understand what they have written will do) I’ve gotten off topic, but the recent Supreme Court decisions making corporations “persons” for first amendment purposes will affect everything but quantitatively more, no need for subtlety now. Why do you think that the antitrust exemption for health insurers has continued? Why do you think that the rate hikes that have already gone into effect in many states (for multiple years) went unnoticed except for those who had to pay? Tax breaks for life insurance companies? the SEC not having the cojones to go after Madoff? NHSTA not going after problems with cars (not just Toyota–do you really think US based automakers would have reacted that much differently until Toyota got caught with their emails cackling with glee about how much they saved, etc)? Remember the exploding Pintos, automaker refusals to put in safety measures, CAFE standards? I could go on and on. Free markets are only truly free if there is true transparency–the same information is available to all. I couldn’t get a straight answer from anyone how much my teenager’s tonsillectomy would cost even with insurance, how can I be expected to navigate the health system if I cannot get accurate information? If my daughter is dying and there is only one doctor available, what am I to do? How should I price compare to be that smart responsible consumer that the Repubs insist I be? I guess I could pay $10,000/year above all other costs and get concierge service from a doctor (a friend’s MD in CA recently informed patients that they would only care for their concierge patients and if they didn’t want that service to find another doctor)
We can only hope Obama and the Dem’s are so scared they will actually take on big business to try and stay in power rather than just sitting back and allowing the big business lobby to pay them to sit on their hands.
fleetlee,
In response to another comment. See in context »If Dems are scared, why would they act against big business? In what nightmare are voters more frightening than corporations?
Just wanted to say that when reading the Vanity Fair article about your Exile newspaper, the following passage made me laugh out loud:
Of course, a pig is probably not the farm animal that comes to Wines’s mind first when he’s reminded of The Exile. It was Wines, then the Times’s Moscow-bureau chief, who, having won The Exile’s coveted Worst Journalist in Russia March Madness contest in 2001, was typing in his office when Ames and Taibbi rushed in unannounced and, by way of congratulations, slammed a pie in his face. The pie was made with fresh vanilla cream, hand-puréed strawberry, and five ounces of horse semen.
http://www.indyagenda.com
I would ask everyone to look at what your paid for your insurance and what was paid out in benefits. If you have visited a physician more than once AND had to take a PRESCRIPTION medication (there’s your cost) you will agree, your benefits out weigh your costs. Now consider that 20% or more of your neighbors are doing the same thing. Doesn’t take a rocket scientist to figure it out. The majority of your health care costs are going to prescription drugs!!
charmed1, it is frustrating that we never hear discussions about true cost reduction. It’s okay to talk about “eliminating inefficient paperwork and bureaucracy,” but never talk about eliminating unneeded medical care. Remember when, during the health care bill creation, an unrelated organization stated that mammagrams were not needed until age 50 rather than 40? People acted like they had recommended forced euthanasia! And tried to use that to attack the entire idea of health care reform.
My view is that single-payer, or even private sector insurance, or any health care system, should differentiate between life-saving medical care, disease-curing medical care — and everything else. We are letting the “god of preventive care” wag the dog just like we let the “god of liquidity” do so in the financial sector.
Why cover things like smoking cessation clinics, weight loss clinics? Statins do not reduce mortality, for crying out loud, so why pay for them? (See Business Week, January, 2008.) Psychotrophic drugs, kids on ritalin: are those WAY overprescribed or what? And of course, Viagra.
But the people who like taking those drugs cheaply and the companies that like selling them claim they are required for life itself — or at least from causing a dramatically-shortend one.
This whole lifestyle in America where people feel they can go around semi-stoned on legal prescription drugs is problematic. Some called the dotcom mania the “Prozac Bubble” and I think there is some truth to that. Sometimes being nervous and agitated is good for humans. I know many people think such comments as mine are barbaric and cold-hearted, but they are hardly new ones. Think back to “Mother’s Little Helper,” written nearly 50 years ago.
One thing you will NOT hear today is that statins have an NNT of 100. You will NOT hear disucssion about schoolchildren and ritalin. The phrase “mother’s little helper” will not be used. And if someone mentions sex addiction clinics, no one will laugh.
Sometimes difficult and unpopular decisions are necessary. Others may have different “hit lists” than me, but I hope everyone realizes we are throwing a sickening amount of wasted money into the medical care system and it is far deeper than “inefficient paperwork.”
In response to another comment. See in context »Out here in california all state employees get free health care for life when they retire at age 50…..
CALPERS, the mafia of state pension funds, runs a separate wall street based fund for health care…..all health dollars for state employees comes from big profits from big evil corporate profits which feed the CALPERS system
Calpers was also ENRON’s cash cow…no calpers…no enron meltdown
Rick, the profit margins are after the insurance executives take their ridiculous salaries. I actually remember reading a business newspaper headline that stated that United CEO’s $55 million per year salary was “worth it” compared to two other CEOs.
As I am sure you know, administrative costs are 20 to 30% for private health insurers and 2 to 4% for Medicare.
And I googled Anthem Health care layoffs and salary cuts and came up empty. It looks like Anthem is putting all of this on the chin of the consumer.
The best and cheapest way to insure everyone is to do what we do with auto insurance, make it mandatory but do so on a sliding scale depending on coverage. Catastrophic insurance is still pretty cheap, and transparent pricing would be huge in reigning in expenses.
The reason that the current system got so expensive is that there were so few out of pocket costs, but that has been changing even for people with good insurance.
I like people paying out of pocket for the small stuff and having insurance for catastrophes, but that is much more difficult to achieve politically. People think paying for health care is someone else’s job.
What we basically have is a socialist health care system with capitalist expectations. We need to go all socialist or all capitalist. I prefer the latter but would even prefer the former to what we have now.
jz-
In response to another comment. See in context »You’re facts are absolutely correct. Most of us are offended (and maybe a little jealous!) over the amount of money some of these executives are earning on the backs of their customers. We also know that the overhead charges are far higher than they need to be.
However– in trying to understand where this is all going,we need to be careful not to allow the bigger issue to be obscured by the elements that tick us off.
My position is that even if we were to take the salaries down to what we might consider reasonable, cut elements of overhead that are unnecessary, do all the things that we like to see an insurance company do, the system is still destined to come to an end.
In some ways, Medicare gives us an example to see this. As you correctly note, Medicare’s overhead is dramatically lower. Further, Medicare has no obligation to make a profit. We know that government employees who operate the program aren’t earning these big sums of money.
And yet, as we know, Medicare faces some dramatic challenges in its own ability to continue in existence for the long run.
The difference is that the country is far more reliant on the private system as the ‘payer in chief’ in the health care system. The other difference is that we are more comfortable that the deep pockets (even with deficits)of the U.S. government will find a way to continue Medicare. There are no such deep pockets in private insurance ultimately when the profits go, the share values begin to dip on Wall Street etc.
The reality is that we have a vicious cycle at work that cannot have a happy ending. The insurance pool continues be destabilized by healthier people being forced to drop out due to cost increases or because they have lost their job and have to spend their money on food-not insurance. As this happens, the private insurers have to react to even out the pool and that can only be done by further rate increases to (a) ‘push’ sicker people out to gain stability in the pool and (b) pick up more money to cover the higher costs of the sick.
This is a cycle that ends in collapse. If you get a moment, take a look at my post from yesterday as I go deeper into this.
I think you’ve said enough to convince us you’re full of shit. Does it really matter in any sense whether the rip off is gained by the execs or the shareholders? Private insurance turns health care into a zero sum game. They extract all they can out of people– charging what the market will bear– and then parse out a share to providers for actual care. Every dollar they deny, is one in their pockets or the pockets of their shareholders. They are not bound by any moral or ethical consideration of social utility or basic humanity. How many cancer patients were denied “experimental treatments” Har dee the fuck har in order to give that asshole a $4M salary and a $1M bonus?
As for Medicare, you are again full of it. Medicare doesn’t work? Shit man, what is the pool for Medicare? Old people and disabled people. It still functions to the point where even the fucking teabaggers would riot if it were touched. Yet, private insurance, which is not burdened by the old and the disabled, takes 16% of the GNP and provides the worst care in the industrialized world. And that compares favorably to Medicare?
I dunno man. Sounds like you brainwashed yourself into normalizing what otherwise normal people would consider, at the very least, manslaughter.
In response to another comment. See in context »And I think you’ve said enough to reveal that you aren’t particularly bright. If you want to vent, knock yourself out. I really have no reason whatsoever to care whether you get it or not. For those who do – and only for that reason – I’ll respond to your comment – but this will be the last one.
1. I really couldn’t care less about the health insurance companies. If you ever read my hundreds of posts here at True/Slant on the subjec that would be more than clear. I do, however, care about what happens to Americans on the day they wake up and find themselves with insurance policies that aren’t worth the paper they are written on. I am concerned about a hospital system that, on that day, will find itself frozen in its tracks because the money they rely upon to operate will no longer be showing up in their bank accounts.
2. Do me a favor and skip the lecture on experimental cancer treatments. I’ve been subjected to such treatments, have a fairly decent understanding how the process works, and really don’t need to hear about this from someone who writes like they haven’t finished high school.
3. Where did I say that I believe Medicare doesn’t work? I used Medicare as an example of how, when even lower administrative costs are available, it is a challenge. By the way, Medicare does not operate on the same insurance pool concept that private insurance does. As you correctly point out – in the only intelligent thing you managed to spit out – the pool is comprised of older people who are undesirable to the private market insurance pool. If you ever get around to getting your head out of your ass and doing some homework, you will discover that this, in no small part, is the reason LBJ was able to convince Congress to go along with Medicare, the argument being it was helpful to the private market.
Finally, if you manage to read anything I write, you would discover that I was one of the earliest writers in the country to push the idea of dropping the age of Medicare to 55. I have suggested this because (a) it will actually help extend the Medicare pool by bringing in more people who can pay in a bit more while benifiting the pool and (b) it will provide more people with better health care and (c) my long held and often published belief that a single-payer system is an inevitability in this country.
To be honest with you, I really don’t have much time who like to get into the whole ‘line ‘em up and kill ‘em ‘ thing. It’s typically a sure sign that the person who reverts to such talk is incapable of following the issues. If you were capable of doing so, I think you would find that you agree with me more than you think.
You go ahead and spend your time planning your jihad on the insurance industry. I’ll continue to spend mine working on how to protect Americans from the health care disaster I see coming. You may now have the last word and call me lots of bad names never realizing that you actually agree with me. We’re done.
In response to another comment. See in context »The main reason Medicare/Medicaid works at such a low margin is because they operate out of government owned buildings. They do not pay the overhead (electric, gas, water, phone etc.) that private sectors pay. The actuality of Medicare is such that private insurance companies lure these people to their plans because THEY make money off them. When a private company signs up 100 ‘elderly’ they know that only 10-15% of them will make claims, the other 85-90% will foot the bill & pay in enough that the owners of these private insurances covering the elderly will make millions.
In response to another comment. See in context »Waiting until you have an illness (MS, cancer etc) to get insurance is no different than getting into a car accident and THEN buying insurance to cover the damages. To many Americans don’t want to pay the monthly rates waiting to get sick. As a result they have not put any money into the system to build it up over the years but now they want to join in and use what others have put in during their healthy years. Without checks and balances you will have those who put a hundred rocks on one side of the scale (not paying) and only a few (say 20) put rocks on the other side. Eventually it will become so unbalanced that you will never have enough people putting rock (paying) on the other side to balance it out. It is just common sense!
We pay $2,400 a year for our insurance, my husbands employer pays about $9600. We had a choice of which insurance to use out of several they had negotiated with. We even had a choice of declining the insurance if we could show we had other coverage and my husband would have been paid more per hour.
The last thing we need is something crammed down our throats that the government workers have exempted themselves from. WE pay for their insurance but they don’t want what they’re offering us!
That’s exactly the last thing you want is to increase costs for routine care. The other term for “routine care” is preventative care. It’s going to the doctor to find out what, if anything, is wrong while it’s still cheap to fix or to change via lifestyle.
This obsession, this fetish, with “private enterprise” is a mental disease, buddy. It’s a system designed to promote the worst and drive 99% of us down so 1% can soar.
In response to another comment. See in context »Doodahman- one final point -
You wrote-
“[Wellpoint CEO] Braly herself was paid $4.01 million in total compensation in 2009. In 2007, however, her total payout was substantially more, at $14.9 million.”
Okay, I gotta take issue with your explanation here. A business model that nets this much cash to some sociopath asshole and her cohorts is not failing.”
Really? In 2006, AIG posted profits in excess of $14 billion. In 2007, they posted profits in excess of $6 billion. In 2008, the US taxpayer bailed out the company to the tune of $150 billion to keep them from collapsing. I suspect the CEO of AIG was paid far more than the CEO of Wellpoint and, yet, their business model certainly was failing wasn’t it?
Now I’m not with you.
What’s your point rick….pelosi, obama, reid waste $14 million in a heart beat….how many millions have they wasted writing and promoting, and buying votes for this stupid health care nonsense…..?
This is america, anyone from any background can be a millionaire ceo…..until obama and his anti-business politburo came along
BY the time obama is kicked out of the white house we probably won’t have a private corporation left to have a ceo
In response to another comment. See in context »[...] this article: Dems Get Religion on Health Care Antitrust Exemption – Matt Taibbi … Category: Health & Lifestyle Tags: been-affected, california, group, group-policy, [...]
Interesting article concerning our favorite blogger Matt and The eXile on the Vanity Fair site…
Yeah it’s already a minor internet sensation. I’ve been following Matt’s writing for several years now, so the article didn’t reveal anything new to me – but the final few paragraphs did genuinely depress me – and the realization depressed me even more – why should I care if a guy I don’t know and who I’ll never meet is acting like a horse’s ass.
I read all of Matt’s books and didn’t think much of the first one either. Now, Matt, put down that cup, you might ruin your laptop that way! You need to loosen up a bit, read something funny. Here’s a few amusing comments http://nymag.com/daily/intel/2010/02/this_is_what_happens_if_you_te.html#comment-list
Seriously, man – take some time off, your’re not that young anymore. Otherwise, sooner than you think people might start flinging horse-sperm pies at you for being a self-important prick.
In response to another comment. See in context »Like millions of hard working Americans, I am now a recently uninsured statistic. I will spare you the tear jerking story of my health problems and just comment on what I believe the endgame of the insurer’s is…
like the financial sector, health care wants to get their paws on public money fresh of the printing press. if the arseholes in washington pass ‘reform’ that mandates insurance, they will likely include subsidies to help us poor people to pay for it. this will allow the industry to make more money and keep the wall street analysts positive on the sector at the same time. all publicly traded corps live quarter to quarter, and earnings per share expectations need to be good. my analysis is over simplified… i am just venting frustration.
Truly repealing health insurer’s anti-trust exemption would be a great start but I have to agree, there will be no repeal or else it will be toothless and part of the con.
The reason it is near impossible to beat into submission the insurance and finance ‘industries’ is because they are filled with some of the smartest people(actuaries and such) from what are considered the top schools. They may not have morals and may even be sociopaths yet they will outsmart the general populace every time.
The only thing that can slow them down if not stop them are tough regulations enforced by tough no bullshit regulators. Which is why the inertia in congress and lack of regulatory zeal by successive presidential administrations is their dream world. They even get the marks/suckers/teabaggers to support the idea of less government(for them) while taking their money and generally screwing them over.
And The Wellpoint Rate Increase con is so beautiful in its perfection it brings tears to my eyes. As clearly pointed out in the comments, the health insurance companies are in a death spiral, the present system isn’t sustainable, even for them. And a single payer system would put them out of business as well. The solution: the health insurance companies themselves went to the Whitehouse and congress and suggested they would agree to cover people with pre-existing conditions and not drop people when they get sick if the Whitehouse and congress would mandate and subsidize private health insurance while eliminating any chance of a government run public option(or a weak ineffectual public option).
The health insurers got what they wanted but the bill stalled. Voila! Wellpoint makes the colossal ‘blunder’ of raising their rates, causing outrage, and helping revive the health reform bill which when passed will not only keep their ‘industry’ alive but will help put any chance of single-payer far off into the future and entrenching the corporate state(the IRS will enforce a law that will make you give your hard-earned money for private corporate profits). The Republican opposition is pro forma and even most of the progressive media is behind the health bill(I’m not sure if they are suckers for supporting the corporate statism of this sham health reform or if they are in on the con?).
Now how do you beat that?
The only quibble I might have with Rick Ungar’s accurate portrayal of the insurance business is that he a bit selective with his statistics. From my point of view, the attributed 3.4% profit for the average insurer is a bullshit number derived mostly from goofy accounting and set at that level to maximize the tax benefits. If they could get away with posting no profits, they would. The 29% increase to insured customers, however, is actual, real, money-out-of-your pocket expense. Big difference and the crux of the problem but you can’t compare the apples to the oranges.
Thanks for saying that, djwilbur. I just finished a stretch of 16 hours of work but I couldn’t get what you articulated out of my mind onto the screen.
In response to another comment. See in context »It takes so long in the States because every citizen knows deep in their hearts that when the shit really hits the fan they will metamorphose into Brad Pitt, Bruce Willis or Angelina Jolie instantly develop a 7th dan black belt in kung fu, overcome incredible odds and get/save the hot girl/guy/country/world.
Cue Seppo drawl;
“This country’s been goin’ to hell in a handbasket for a long time but I got me a backup plan.”
Only commies and terrorists collaborate and act collectively.
Scientific fact.
In the end, to make this viable it will require:
(a) starting at the root of the problem. Prevention. The rest of the un-industrialized world sells produce at the cheapest of prices and don’t have the money to have corn fed meat. Something needs to be done whereby healthy food is affordable. Produce and healthy meat is freaking expensive. So, until diets and lifestyles improve, the system will be stressed. It is astonishing that obesity and smoking along with their attendant comorbidies account for 25% of our entire health care budget. Some even say 400 billion of our 2.25 Trillion dollar health care budget. The regulators that be need to fish eye the food industry long and hard.
(b) simplify the paper work. You need an army of people to process this crap. From billers, to file clerks to data entry people to computer storage to everything. Anything medical requires bundles of paper work. Hospital overheads for paper can run upto 15%. Simplify this and then return those savings to the consumers.
(c) Tort reform. Shockingly, the Prez set this off limits. I can tell you seeing friends who are docs, once you or a friend gets sued, then nobody takes ANY chances. It is insane. Price-Waterhouse-Coopers estimated that this cost a cool 200 billion. Disclosure, PWC lumped this in with doctors who intentionally do unnecessary procedures to make profits. So, if we split the difference, it still would reduce costs by 5%.
(d) make insurance not for profit. Remove the for-profit and shareholders clamoring for profits. It inherently is a conflict of interest for those companies to succeed. To do so, they have to make money. To do that, they need to pay less than they take in. Higher premiums, delays in approvals or outright denials. As someone said earlier, the “profits” they declare usually come with tons of “expenses” written off. The GAO noted that 65% of ALL corporations in the US pay 0% taxes. 25% of those “non tax payers” were large corporations. So, the 3-4% profit margin is probably significantly understated.
(e) drug companies gotta play ball a little more with the country. I understand to recoup meds for diseases that afflict a few people is not profitable unless they are VERY expensive. I find THAT reasonable. But medications which significant parts of the population use should be reconsidered in a gentler ligth.
(f) doctors: gotta trim a little on the tree here. Not so much an across the board cut, but take a little from the super well reimbursed specialties and give more back to PCP’s. Afterall, they are really the primary managers of care.
(g) patients/citizens: have to be responsible people for their own care. That means lifestyle choices. There has to be some onus placed on individuals to take charge of their bodies. I understand genetics may totally trump those lifestyle choices. Should that happen, you are not at fault. Catastrophic things happen which we can not control. BUT, we should do our best to control what we can.
Omar for president! I think you nailed it.
In response to another comment. See in context »Wow. On to the Senate….
http://www2.dailyprogress.com/cdp/news/local/local_govtpolitics/article/house_approves_antitrust_exemption_for_health_industry._perriello_co-author/52729/
Off-topic, but this article made me think of Matt.
http://www.theonion.com/content/news/senator_dikembe_mutombo_blocks
RLee-
Nothing in your latest comment with which I can disagree. It’s a pretty good statement of where we are at – particularly your point that health insurance – unlike most other insurances-is really a pre-paid care program versus most insurance policies where we don’t expect to ever have to collect.
The questions you ask are at the heart of the moral issues we face in health care. Nobody knows when enough life is enough although most people never feel that they’ve had enough just as, while many complain that too much is spent in the last year of life, we often don’t know when the clock has begun ticking on that last year.
You seem to have a good grasp on the problems..now, the hard part…the solutions! I took a look at your blog. I’d love to see you write even more on this topic.
By the way, what does the “R” stand for in “RLee”?
Russell Hammond: [Russell grabs phone away from William] Hey, mom! It’s Russell Hammond. I play guitar in Stillwater. Hey, how does it feel to be the mother of the greatest rock journalist we’ve met? Hello? Hello…? Look, you’ve got a really great kid here. There’s nothing to worry about. We’re taking good care of him, and you should come to the show sometime – join the circus…
Elaine Miller: Hey, hey, listen to me, mister. You’re charm doen’t work on me – I’m on to you. Of course you like him…
Russell Hammond: Well, yeah…
Elaine Miller: He worships you people. And that’s fine by you as long as he helps make you rich.
Russell Hammond: Rich? I don’t think so…
Elaine Miller: Listen to me. He’s a smart, good-hearted fifteen year old kid with infinite potential.
Russell Hammond: [Russell is stunned]
Elaine Miller: This is not some apron-wearing mother you’re speaking with – I know all about your valhalla of decadence and I shouldn’t have let him go. He’s not ready for your world of compromised values and diminished brain cells that you throw away like confetti. Am I speaking to you clearly?
Russell Hammond: Yes – yes, ma’am…
Elaine Miller: If you break his spirit, harm him in any way, keep him from his chosen profession which is law – something you may not value, but I do – you will meet the voice on the other end of this telephone and it will not be pretty. Do we understand each other?
Russell Hammond: Uh, yes, ma’am…
Elaine Miller: I didn’t ask for this role, but I’ll play it. Now go do your best. Be bold, and mighty forces will come to your aid. Goethe said that. It’s not too late for you to become a person of substance, Russell. Please get my son home safely. You know, I’m glad we spoke.
[Elaine hangs up]
Russell Hammond: [Russell stands holding phone in stunned silence]
It should be repealed, there isn’t a tremendous point to having it, but at the same time, it won’t make much of a difference.
I think you meant Jeff Bridges Not Lloyd. And Rick, WTF, don’t you have your own blog? Maybe try some decaf, too.
Well gee, Irishace, it turns out I do have my own blog and right here at True/Slant. You should try reading it sometime, along with some of the other terrific writers here at True/Slant.
In response to another comment. See in context »As for the decaf, never gonna happen. I’m devoted to the real thing.
I forgot to put the satire notice in there, Rick. I do, I do. This is my favorite site after chatroulette.
In response to another comment. See in context »Ah! Very glad to hear it!!
In response to another comment. See in context »the only way to get a called out comment is to suck up to rick, zaid or matt. WTF other blogs are questioning matt’s journalism in regards to the eXile article in vanity fair and his reaction. matt you are personally my hero the next gonzo, they got us by the bottles.
Hey doubtfire- if you comment on my page I’ll gladly call it out if it contributes. We all only have call out control over our own page. Matt doesn’t do it much because I think he works on a pretty tight schedule and likely finds it hard to grab the time. And I agree with what you said. I don’t get why anyone is calling Matt’s journalism into question. Maybe his restaurant manners aren’t to everyone’s taste, but that has nothing to do with the quality of his writing which is so damned good the rest of us remain in awe.
In response to another comment. See in context »Doubtfie, you can get called out on ungars page if you don’t stray from the obamacare propaganda he preaches…if you think outside the democratic box, he will ban you from his page….this is what you get when you have a chain smoking president,who hides his birth certificate, promising health insurance for all in 2014…..which is the reason why health insurance cost too much, the government is already involved in it with medicare, medicaid, and providing free or very low cost health care to millions of government employee at federal, state, and local level
The state of califonria hands out free health care to every state employee when he retires at age 55
And federal retires start drawing social security at age 55 in what they call a “supplement”
In response to another comment. See in context »thanks rick i like your UNbiased comment. no kiddin long live matt taibbi. my arse was awoken by his journalism last summer via RS. now that i have your attention i lived in the same ‘hood as HST gonzo and i know for a fact young mr. taibbi could be our next journalist anti-christ. thanks for listening, long live a healthy MT†
Did you get to know HST? Get to hear shotguns going off at 3AM or see a whacked out of his mind Dr. Gonzo storming the neighborhood fireplug?
In response to another comment. See in context »again i respect people, especially my neighbor of over 3 decades. hunter had some balls, same as matt. ed bradley lived on my same road, twining flats rd. woody creek CO. he was another mighty conrad. we need to keep MT alive and healthy and continue his journalist crusade of truth and exposure for We the People. PS he was a whacked mind but i like them feisty
In response to another comment. See in context »‘A tremendous loss’ | AspenTimes.com
http://www.aspentimes.com/article/20061110/NEWS/111100058
“It has been a tremendous loss to the community, and especially to Woody Creek,” said Pitkin County Sheriff Bob Braudis, who was close to both Bradley and one of Bradley’s other closest friends, the late Gonzo journalist Hunter S. Thompson.
MT should ask bob braudis about ken (crooked E) lay about his untimely heart attack ‘06, after renting a house on twining flats rd, woody creek, CO.
In response to another comment. See in context »HST saved more americans with two atomic blasts…probably as many as obamacare will kill in its first ten years
In response to another comment. See in context »How many comments is rick going to make here…is he going to hijack matt’s page?
In response to another comment. See in context »The “Matt Coffee Incident” illustrates the sad reality of journalism these days. This particular cafe tale really shouldn’t be national “news,” at least, not outside the gossip circuit. I mean, I could see this story getting some print in People magazine or the National Inquirer, but beyond that, it is merely something that happened between two people, with absolutely no repercussions in the wider world. Like what transpired between me and Joe yesterday.
On the other hand, the story that Matt just ran in RS is what should be getting national (and international) attention, as it has repercussions that affect nearly everyone on this planet. Same goes with the little essay that Ralph Nader just reeled off in his blog, or Rick Ungar’s last entry about the unsustainable nature of America’s Health Insurance Industry. These are the important stories that have great bearing on all our futures, but these are also stories that are antithetical to the primary mission of the Corporate State, who now owns our media, thus they don’t really get picked up.
Instead, we continue getting a steady diet of Lohan/Hilton/Kutcher updates, growing dumber and more uninformed by the second. It’s a ploy to distract, and we must all learn to resist it.
it’s obviously a hatchet job. and it was likely provoked.
In response to another comment. See in context »matt has been critical of vanity fair and their ilk on numerous well-deserved occasions.
Okay, the bill passed 406-19. A landslide. Now, how come the Senate isn’t voting on it? It’s two pages. They have time to read it.
What can we do at this point to light a fire under our senators to put this to a floor vote. If they want to vote it down, fine, but let’s get them on record. This should be a 15-minute thing.
Harry Reid controls the votes, right? What’s the delay?