For-Profit Health Insurance Is Responsible for Large Cost-Shift to Consumers/Taxpayers

False assumptions that drive the current U.S. health care reform debate are often expressed as common buzzwords:

1) Choice - To free-market advocates, choice applies to "affordable" private insurances -- often, inadequate minimum benefit health insurances that render many at health and financial risk. Private insurances further limit choice of providers to in-plan doctors. By contrast, Single Payer permits full choice of health care providers.

2) Competition - Health care competition invoked by free marketers implies competition among for-profit insurances, whose primary goal is to maximize shareholder profits -- often by reducing coverage with low-value products, like minimum-benefit health insurance. Progressives assert that competition should be restored where it belongs -- among providers and hospitals, based on quality of care.

3) Government Bureaucracy - It is somewhat ironic that opponents of a single-payer financing system argue that a government bureaucracy will come between patients and doctors. There is nothing more obstructive to patient care than the $20 billion annual private health insurance bureaucracy that games the system for profit by frequently denying or delaying health care claims, fracturing both the patient-provider relationship and U.S. primary care infrastructure. Fully one-third of U.S. health insurance claims are initially denied -- compared to many European countries, where T.R. Reid reported (Sick Around the World) claims are paid within two weeks.

Perhaps the greatest distortion is the notion that the uninsured are primarily responsible for rising health costs -- the health care cost-shift to the insured and taxpayers. John Sheils, VP of the Lewin Group (a scheduled witness at the May 12 Senate Finance Committee hearing) previously headed the team that evaluated 5 Colorado health care reform proposals in 2007. Sheils told the Colorado Blue Ribbon Commission on Health Care Reform that fully half of the uninsured pay their own medical bills.

In fact, the numbers of underinsured are growing at a faster rate than the numbers of uninsured, and contribute as much if not more, to growing rates of uncompensated medical care and to U.S. personal medical bankruptcy rates. Underinsurance has increased since the '90s, when escalating health care premiums precipitated the move by employers and individuals toward catastrophic coverage (euphemistically branded 'consumer-directed' or HSA health plans by free-market advocates). Coincident with the expanding catastrophic health insurance market, out-of-pocket costs also soared.

As out-of-pocket health costs rose about 70% from 1995-2005, the American Hospital Association TrendWatch Reports simultaneously tracked an approximate 65% increase in uncompensated medical care - costs that are picked up by taxpayers and consumers. In other words, as private insurers pass on more and more of their costs, they are subsidized big-time by taxpayers.

A 2008 study by the University of Colorado Medical School demonstrated a growing rate of underinsured in Colorado -- 36.3% who delay or ignore recommended care due to inability to pay. Add the rising numbers of uninsured Coloradans, and a total of over 50% are uninsured and underinsured -- a very different picture than that painted by Colorado Republicans who assert that major health care reform is unnecessary because "80% are fully covered and content with their coverage."

Nationally, a study by the LWV reported that 25 million adults under age 65 were underinsured during 2007, despite having insurance all year. The study estimated that 42 percent of all U.S. adults (86.7 million) were either uninsured or underinsured during 2007.

The model of Massachusetts health care reform reportedly being advanced by some in Congress is the worst of all worlds for consumers and taxpayers. It creates a mandate to purchase taxpayer-subsidized private insurance -- often high out-of-pocket cost minimum benefit plans. Massachusetts-style health care reform grants a windfall (sort of a taxpayer-funded bailout) to private for-profit health insurances, while leaving people at financial and health risk.

Dr. David Himmelstein testified on April 23 in a hearing of the Health, Employment, Labor, and Pensions Subcommittee that the Massachusetts Plan costs have skyrocketed, rising 23% between 2005 and 2007. He reported that "one in five Massachusetts residents went without care last year because they couldn't afford it. Hundreds of thousands remain uninsured, and the state has drained money from safety net hospitals and clinics..." to fund the plan.

If the private health insurance industry prevails, as they did in writing Medicare prescription drug reform, Obama's parallel 'public option' for health care coverage would quickly turn into a public subsidy for the mandated purchase of private for-profit health insurance. By contrast to the U.S., most industrialized nations save administrative costs and cover all by utilizing not-for-profit insurances.

Comments

[Chaimirija]

Michele,

excellent analysis of the facts of the current hc situation. everyone nneds to cut thru the politics (aka bs) and recognize what is really going on...and anyone in hc would agree...except the players making obcene profits...

[lisamh]

There is not a test or procedure today that will prevent a disease or condition. A repair can be made but you will never be the same again; that's life. Costs rise because in health alone, we expect "insurance" to pay for absolutely everything. Do you ask your car insurer where to buy gas, and how much to pay? Is there a co-pay to fill your gas tank? How about car washes? Does your car insurer tell you how often to get your car washed in order to "prevent" exhaust leaks?? Insurance is meant to cover catastrophic events. It is not meant to cover or pay for day-to-day maintenance. If an electric circuit in your home needs repair, who pays for it? How many times have you heard that you should not file a home insurance claim for an event whose consequences would cost less than your deductible to repair? Let us take back our bodies and our minds, and once again think and act for ourselves. Let us choose who to see, when to see them, and what they may do or not do for us. Let us demand that health insurers back away from coddling us as if we were newborns unable to speak, think or act on our own. Let us demand that providers and organizations and pharma listen to us ... by showing them that we can, in fact, choose where to put our hard-earned dollars. It's about time, wouldn't you say?

[Chaimirija]

???

I am not sure what your point is

[foreffectivegovernment]

Who can we trust? Nobody!

Richard Nixon's explanation of HMOs. "… the less care they give them, the more money they make."
Transcript of taped conversation between President Richard Nixon and John D. Ehrlichman (1971) that led to the HMO act of 1973:
Ehrlichman: "Edgar Kaiser is running his Permanente deal for profit. And the reason that he can - the reason he can do it - I had Edgar Kaiser come in - talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because -"
President Nixon: [Unclear.]
Ehrlichman: " the less care they give them, the more money they make."
President Nixon: "Fine." [Unclear.]

This is how it was foisted on the American people.
In the Senate, (Ted) Kennedy, author of the HMO Act, also encouraged its passage: ``I have strongly advocated passage of legislation to assist the development of health maintenance organizations as a viable and competitive alternative to fee-for-service practice. This bill represents the first initiative by the Federal Government which attempts to come to grips directly with the problems of fragmentation and disorganization in the health care industry. I believe that the HMO is the best idea put forth so far for containing costs and improving the organization and the delivery of health-care services.''

[Chaimirija]

the combined two models for the worst --- less care, yes, has its points, especially since maybe half of modern medicine is based on evidence, even in 2009...but the for profit? really, they have made enough money---12000 a year to insure a family? isn't that more than most people pay in fed taxes?

I also agree with the thesis of another article in that we would be much more competative if we did n't have to worry about health care---i think that would be a huge stimulus for people to start their own businesses and i really don't want to hear about businesses 'paying ' for insurance since it gets expenced...at taxpayers expence