Media Buys What The Health Insurance Industry Is Selling
Media Buys What The Health Insurance Industry Is Selling
During yesterday’s hearing before the Senate Finance Committee, America’s Health Insurance Plans President and CEO Karen Ignagni attempted to discourage Democrats from enacting a new public health care plan by reiterating the industry’s support for guaranteed issue — offering coverage to every applicant — and modified community rating — charging everyone the same premiums — (so long as both regulations are paired with an individual requirement to buy insurance).
Press coverage of the event centered around the insurance industry’s so-called “concessions”:
- AHIP Pleads Its Case: Regulate Us: “In a rare sight on Capitol Hill for any industry, health insurers practically begged senators Tuesday to regulate their livelihood rather than subject them to the fierce, and potentially lethal, competition that would ensue if lawmakers unleash a government-run public insurance option on them.” [National Journal, 5/06/2009]
- Insurers Offer Concession On Premiums: “Health insurers have offered to submit to a series of restrictions they contend would add up to a fairer marketplace and cut into the ranks of the 50 million uninsured.” [Boston Globe, 5/06/2009]
- Health Insurers Agree to End Higher Premiums for Women: “It was the latest concession by insurers as Congress drafts legislation to overhaul the $2.5 trillion health care industry.” [NY Times, 5/06/2009]
The industry had offered similar concessions in December 1992, before launching an all-out attack on President Clinton’s health care reform efforts. Of course, that’s not to say that insurers will adopt a similar strategy this time around. Ignagni and her team may run issue ads against certain provisions but are unlikely to oppose the entire effort.
Still, before we credit the industry for cooperating with progressive reformers, we should consider Ignagni’s proposal. The industry envisions a reformed marketplace in which everyone is required to purchase coverage. In return, insurers would no longer deny coverage to Americans with pre-existing conditions or charge sicker Americans higher premiums than healthier Americans. Women would not pay more than men and insurers would invest more in preventive care and care coordination.
But as Howard Dean pointed out in an interview with ThinkProgress, “if we only get community rating and guaranteed issue that’s great insurance reform, but that is not health care reform and nobody should mistake it.” Indeed, reforming the insurance industry is all about restoring competition. Already, “1 in 6 metropolitan areas in a 2008 study of more than 300 U.S. markets is dominated by a single health insurer that controls at least 70% of consumers enrolled in health maintenance organizations or preferred provider organizations.”
Such consolidation negates any real competition, preventing insurers from having to negotiate prices and lower premiums. In fact, while “there have been over 400 health care mergers in the last 10 years,” premiums have risen “nearly eight times faster than average U.S. incomes.” Insurers fear a public plan because it has the potential to work all too well, force private plans to lower prices and cause some enrollees to shift to public coverage. And it’s this fear that’s drawing insurers to the reform table.
A new public plan, after all, would complement the private market and offer Americans a real choice of coverage. It would also help pioneer new payment and quality-improvement methods that could set the standard for private plans and use its lower administrative costs and bargaining power to better control health care costs.
Ignangi points to the Federal Employees Health Benefits exchange — which does not include a public health option — as an example of a successfully regulated health care market. But as Jacob Hacker argues, “FEHBP’s annual growth rate of per enrollee spending averaged 7.3 percent from 1985 to 2002 (the most recent currently available data year) compared with 5.8 percent for Medicare. Indeed, the growth rate for FEHBP is virtually identical to that for private health insurance over this period.”
The industry’s so-called “concessions” are designed to protect their monopoly over the health insurance market, not lowering health care costs or offering Americans better quality care.
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Real Healthcare Reform: Changing the Incentives and the Rules of the Game; Creating an Electronic Health Record for Every Citizen Who Wants One.
If you have the financial resources of Bill Gates or Warren Buffett you needn’t pay money to a health plan each month, since if you get sick or injured – even very seriously – you have more than enough money to pay all your medical bills yourself.
But those of us with significantly less financial resources must find some other means of dealing with the thousands or even hundreds of thousands of dollars or more of medical expenses that we might incur should a serious illness or injury be our fate.
Enter the concept of “health insurance”.
Large numbers of individuals and/or their employers pay some money each month into one or another big pot called a “health plan”. Those individuals who remain essentially very healthy for many years and then suddenly die or perhaps leave a particular health plan for some other reason – if they have put more money into the pot than was taken out to pay all their medical expenses – wind up helping to pay the medical bills of those members of the health plan who become seriously ill or injured and incur a lot of medical expenses.
Many members of health plans don’t seem to fully understand or perhaps choose to ignore the fact that if they become seriously ill or injured, for the most part their medical bills will be paid by the members of their health plan who have remained healthy. Some Americans believe that healthcare should become a “right” of every American citizen. If a nationalized single payer health plan were enacted, every American citizen who became ill or injured – for whatever reason – and incurred significant medical expenses would for the most part have his or her medical bills paid by all U.S. taxpayers.
For any health plan to work which has a large number of people pooling their money to essentially pay the medical bills of whichever members of the plan become seriously ill or injured, rules must be established as to when and how much money may be taken out of the pot e.g. “legitimate” doctor bills and hospital bills. Equally important is keeping track of the amount of money that is being put into the pot each month in premiums paid by health plan members or their employers. If too much is being paid out in expenses as compared with the amount being received in premiums, the pot will soon become empty and the health plan will go broke.
As previously mentioned, the monthly premiums paid by individuals or their employers go into a health plan’s big pot from which “covered” healthcare expenses are paid. But also from this pot are paid all the health plan’s administrative expenses including what may be big salaries and golden parachutes for CEO’s and other “healthcare executives” – individuals who may be paid to find technicalities of one sort or another in the health plan’s agreements so the health plan can deny or reduce payments, raise premiums, cancel insurance, or in one way or another minimize or exclude “bad risks” from the health plan. All such questionable business practices are done to enable the health plan to make a profit and remain in business.
Currently we are experiencing continual increases in healthcare costs that are unsustainable and which, if unchecked, will soon seriously threaten the future of the entire American economy. Healthcare costs must be controlled, but how? If a healthcare system made up of health plans is going to have a chance of meeting the needs of its health plan members and simultaneously be able to keep costs under control, something very critically important must first occur.
It turns out that a lot of illnesses and many injuries are actually preventable.
Although health promotion and disease and injury prevention receive fashionable and socially acceptable lip service, the fact is that most of the participants in what should be more appropriately called our “sickness and injury care system” actually have no significant financial incentive whatsoever to spend any significant time and energy in genuinely promoting health and helping to prevent disease and injury.
Much to the contrary. Other than the actual members of a health plan – patients and potential patients – and their employers and perhaps the employees of some health plans, most participants in our sickness and injury care system – because of the way they are paid – have an enormous (if unspoken) financial incentive for massive amounts of disease and injury – much of which is preventable – to continue to occur in America. Strictly from a financial point of view, for those whose incomes come solely from the treatment – not the prevention – of illness and injury, the more illness and injury that occurs, the better. And if the illness or injury is serious and requires perhaps many expensive tests, multiple surgical procedures, and other very complicated prolonged treatment in an intensive care unit, so much the better; just as long as those unfortunate individuals who happen to be ill or injured are “covered” by “good insurance”, i.e. health plans that are reliable bill payers.
This is not to say that there are not some excellent very dedicated and hardworking doctors and other health professionals – although they are paid on a fee for service basis to care for illness and injury – who nevertheless attempt to essentially work themselves out of a job by making health promotion and disease and injury prevention a top priority with their patients.
It should also be recognized that some existing health plans – e.g. Kaiser and Group Health – combine insurance, doctors, and hospitals into a single entity in such a way that provides everyone – including all the health plan’s doctors – a real incentive to spend time and effort with patients on health promotion and disease and injury prevention as well as on early diagnosis and treatment.
But unfortunately the above examples represent only a small part of the sickness and injury care system that currently exists throughout America.
For the most part – because of the way they are compensated – the majority of doctors and other professional providers, acute care hospitals and long term care facilities, pharmaceutical manufactures and pharmacists, medical and surgical equipment manufacturers and personal injury and malpractice attorneys – among others – depend mightily on massive amounts of disease and injury occurring in America; and these participants in our sickness and injury care system would be significantly negatively impacted if a lot of the preventable illnesses and injuries were actually prevented. This must be changed.
Unless the incentives and rules are changed to give as many participants as possible a real financial stake in health promotion and disease and injury prevention, in early diagnosis and treatment, and in maximizing health and minimizing disease and injury, healthcare costs in America will never be brought under control. Making appropriate changes in the incentives and the rules of the game is the real task and challenge of “healthcare reform”.
What about financial incentives for individual health plan members? Should individuals receive a financial incentive to be healthy? It is well recognized that engaging in regular exercise, abstaining from tobacco, and eating moderately so as to maintain a reasonably normal body weight are all significant factors in helping to promote an individual’s health and wellness. These healthy behaviors can all be confirmed by simple tests performed or ordered in a doctor’s office. Why shouldn’t those individuals who practice these health promoting behaviors and comply with recommended immunization schedules and appropriate preventive screening examinations such as for colon cancer and breast cancer pay significantly less in premiums to their health plan each month than those who don’t?
To really reform healthcare we must find ways – through changes in incentives and the rules of the game – to actually prevent what is preventable, to maximize early diagnosis and treatment, and minimize disease and injury with all its associated cost. We must find ways for participants to be part of our “healthcare system” and not just a part of our “sickness and injury care system”.
Significant changes in the rules of the game for our legal system – tort reform – is also critically important so that the gaming of the system now being done by personal injury and malpractice attorneys and their clients can be ended and so that the exorbitant costs to physicians and other professionals for malpractice insurance can be dramatically reduced.
Truly transforming our “sickness and injury care system” into a “healthcare system” by making significant changes in the incentives and the rules of the game may seem to be a formidable task and one that probably has never really been done before on a large scale anywhere in the world. But it is a worthy task and a critically important task for the future of America and its people.
One significant part of this process is developing the capability of creating an electronic health record for every American citizen who wants one. We need a standardized framework that will allow every American citizen to have an individual electronic health record – a computerized medical record – that can be accessed by all the doctors who care for a particular individual, regardless of wherever on the planet the doctors or the patients happen to be. It would be like having your own personal online banking account that only you have the password to, but which you can share with the doctors who are caring for you, wherever you or they may be.
I applaud those who are using their energy and expertise to upgrade our deplorable current paper medical records system and bring medical records in America into the 21st century. Developing a standardized framework for an electronic health record – for every citizen who wants one – created by your doctor with your assistance, with proper security and safeguards – is something that our national government can and should do as a part of healthcare reform.
If done well, electronic health records will be transformational in helping doctors efficiently and effectively care for patients and will save an enormous amount of time, effort, and money which is currently wasted on needless and frequently inaccurate duplication. And having an accurate electronic health record for an individual will also facilitate appropriate health promotion and disease and injury prevention for that individual. Like the telephone and the computer, someday we will all wonder how we ever got along without individual electronic health records.
All this requires action, not just words. Now is the time for Americans and their leaders and doctors and other health professionals to step up to the plate and begin the process of transforming our “American Sickness and Injury Care System” into an “American Healthcare System” that is worthy of our great country.
Robert Westafer M.D.
May 6th, 2009 at 6:13 pm“reiterating the industry’s support for guaranteed issue — offering coverage to every applicant — and modified community rating — charging everyone the same premiums — (so long as both regulations are paired with an individual requirement to buy insurance).”
WOW!!!! The insurance industry supports the idea of:
Yearly premium per individual $7,000 per year
forcing about 50,000,000 people into “coverage”
That comes to about $350,000,000,000
Such noble sacrifice as that can only come from
May 7th, 2009 at 12:20 pmOut of the GOODNESS of their corporate hearts I’m sure!!!!!!
So if the insurance companies can essentially be guaranteed of NO Competition, the number of new patients will more than pay for any “new regulations”. Without competition, the insurance agencies will find mechanisms / loopholes to assure that people only receive minimal care while they are getting increased profits.
May 7th, 2009 at 2:29 pmCompetition is the only way to assure that everyone has a real choice and if the government backed plan is more cost effective and quality driven, that will force the private carriers to change or see a reduction in profits or both. The most recent data from AHRQ shows that quality is not on a strong positive trajectory and insurance companies want to be able to boast about improved quality of care only as long as they don’t have to pay for it.
It is time for a new player who will have sufficient means to both drive down costs and demand quality for all Americans. Private companies will never do anything to diminish its own bottom line unless they are facing competition. And they are afraid that the Obama Administration has the will…now we Americans must pressure our legislators to step up or face the negative consequences (of inaction or refusal) by your constituents.
Having been bent, broken and spindled by the insurance industry for over 30 years, I find it hard to believe at this time, THEY will provide adequate ANYTHING FOR ANYONE other than themselves!
The Insurance Industry, I.E. WALLSTREET, IS THE PROBLEM!
Just look who they are helping NOW, WITH ALL THE BAILOUTS?
FRONTLINE, a PBS program, “SICK AROUND THE WORLD,” in 2008, shows that people are not BANKRUPTED from medical needs anywhere else in the world!
I was made homeless, ignored as long as possible, my career as a union journeyman carpenter cut short at 27, I am now 57.
THEY withhold the OPEN MEDICAL AWARD, which allowed me some relief from this permanent injury, and have, for the last 25 of the 30+ years of BAD FAITH and MALFEASANCE, at the hands of those PAID to protect me.
I get no benefits paid to me for lost wages, no retraining, just the constant BATTLE with well paid lawyers who obviously “deserve” MY MONEY and MY LIFE, more than I do.
I am able to work from 0 to 20 hours per week maximum as a self employed furniture maker. NO SS, NO SSI, NO RETIREMENT SAVINGS and limited earnings, just lots of PAIN and limitations.
My PERSONAL BATTLES with KEMPER, BROADSPIRE, et el, has made me cynical of the for profit EXTORTION, that is proported as health care.
CUSTOM CREATIONS
May 7th, 2009 at 4:58 pmNEIL E. STECKER
49739 153RD PLACE
TAMARACK, MN 55787
218-426-4067
neile1@frontiernet.net
truenorthwoods.com
dovetailinc.org
Showroom @
MINNESTALGIA MARKET PLACE, McGregor, MN
Government funded health care is cruel, because it prolongs suffering to those who really need the care, like the elderly and very sick. It also raises health care cost so much that it makes health care unaffordable to everyone, including the government. This is why government health care often causes health care rationing, shortages, and diminished quality of care, when people can not pay any more taxes.
May 11th, 2009 at 6:42 pmThe insurance industry is trying to manage the huge cost of increased health care because of governmental policies while, at the same time, following insurance law that is written, dictated, and demanded by big government, even if it hurts consumers and raises premium
Government funded health care, leaves people lives in the hands of government bureaucrats, who will decide if people literally decide if one lives or die. After all, where do you go if the government denies your care because it is too expensive, as it often does with the elderly or to those who statistically are going to die? Seniors suffer so much under government run health care.
Where do you go if the government is incompetent or decides that you don’t need the surgery or pain medication?
What does the doctor do when he or she is not paid or told what kind of care the needs to be offered, in order to save money?
With private care, not only do health care costs become affordable to everyone, but you can hold a health care provider accountable for the quality of care, unlike government bureaucrats.
There is a reason why cures for sickness are found here and not in other places in the world. There is a reason why the really sick come here.