The Health Care Question Should Be About the Insurance Industry Stranglehold, Not a "Government Takeover"

As Congress reconvenes, Republicans and insurance companies are trying their hardest to frame the health care debate as President Obama's attempt to engineer a "government takeover" of the nation's health care system.

In fact the real question is whether Congress will allow the big private health insurance companies to consolidate their current stranglehold over our health care.

If you are too young for Medicare, too old for the State Children's Health Insurance Program, and not poor enough for Medicaid, you are stuck -- completely relying on the whims, procedures and bureaucracy of private health insurance companies.

I can't count the number of times I have walked into a doctor's office to find her on the phone with a private insurance company bureaucrat in some far-away city -- most with no medical training -- debating whether she can provide a treatment that she, the physician, thinks is necessary to protect the health of a patient.

Sometimes these anonymous, unaccountable private bureaucrats make decisions that - in effect - determine that the life of the patient is simply not worth the cost to the insurance company.

Take the well-known case of Nataline Sarkisian. Doctors said a liver transplant could save her life. But Cigna, her insurance company, wouldn't pay for it. Nataline died just before Christmas in 2007. She was 17 years old.

At the end of this year when Cigna CEO Ed Hanway retires, he will get a $73 million retirement package. The average liver transplant costs $250,000. So Hanway's golden parachute would have paid for 292 liver transplants. Nataline only needed one.

I talk to dozens of people every week who have horror stories about the stranglehold of the insurance companies.

Like the fifty-year-old husband whose wife just got cancer. He is terrified he may be laid off from his job of 20 years because even if he gets another one, the next insurance company won't cover her cancer since it will be a "pre-existing" condition.

Or the small business owner who has always covered his employees and family with a health insurance policy and now is facing the choice of canceling the coverage or going out of business because next year's rates just went up 50%.

With private health insurance companies like these, average people have no recourse. They can't go to their Congressman and demand that rates be controlled as they can with Medicare. They can't throw insurance executives out of office, as they can if they don't like a politicians vote on a tax increase.

And let's not pretend that the "free market" forces these companies to compete for our business by providing the lowest prices and best service. In fact, the health insurance industry is anything but competitive.

An AMA survey, released in late January, gives a score gauging the concentration of the commercial market for 314 metropolitan statistical areas. The report showed 94% had commercial markets that were "highly concentrated" by standards set by the Federal Trade Commission and Justice Department.

In Maine, for instance, one company -- Wellpoint -- had 71% of the market. The second competitor was Aetna with only 12%.

Let's remember that insurance companies are exempt from the Federal Anti-Trust Laws.

Nor are they subject to market concentration limits like those imposed by the Federal Communications Commission to prevent the domination of one media company in a particular area. It is certainly important to prevent one company from controlling the messages that are broadcast into our homes. But isn't it equally important to prevent one or two companies from controlling our access to health care?

You can see the results of this concentration in the marketplace. In the second quarter, one of the largest insurers, United Health Care Group lost 410,000 customers -- largely because the recession caused massive layoffs. Unbelievably, its profits actually doubled to $860 million. The main reason: it simply raised its prices.

The law of supply and demand would lead us to expect that when demand drops, prices will drop too. But not if you're a big insurance company that has oligopolies in many of its markets -- and sells a product that is an absolute necessity.

Any wonder why big insurance companies don't want competition from the public insurance plan proposed by President Obama?

No, the private health insurance industry likes things just the way they are. They want to be free to continue raising prices almost four times faster than wages - so their profits can soar in good times and bad. They want to be free to pay their CEO's an average of $8.5 million per year - 21 times more than the CEO of the United States, the President.

They want to continue employing armies of people who do nothing but reject claims - not because that contributes one bit to the health care of their customers, but because it raises their bottom lines.

They want to keep spending hundreds of millions of dollars on marketing and administration because that also helps them make more money, though it is simply waste when it comes to overall spending on health care.

Remember health insurance companies don't deliver one iota of health care to patients. They are middlemen who skim off a chunk of every health care dollar that passes through their hands. They have no incentive whatsoever to improve the health of their clientele or control overall health care spending in our economy - only to increase their bottom line and the salaries and bonuses of the executives who are now empowered to - in essence - make life and death decisions.

The private health insurance companies would be happy to kill President Obama's health insurance reform plan dead in its tracks -- the same way they killed the Clinton plan fifteen years ago.

But they feel that health insurance reform is going to pass, they and their Republican allies will do everything in their power to make sure that it actually consolidates their power instead of weakening it. AHIP, the association of private health insurance companies, has ads promoting "bipartisan" health care. They would be happy for the government to force individuals and companies to buy their product - only without any restrictions on their ability to raise prices, deny coverage to people with pre-existing conditions, rescind policies after someone gets sick, or refuse to pay for necessary procedures - and certainly without a requirement that they compete with a public health insurance plan. If they got their way, their power over our health care system would actually increase.

If, on the other hand, they are subject to new regulations such as those proposed by President Obama -- and forced to compete with a government health insurance plan that focuses on patient care and not the bottom line -- we will not only join the ranks of industrial nations that provides health care for all -- we will also break the stranglehold of health insurance companies on our nation's health care system.

The battle is on. Remind your Members of Congress that none of them took an oath to protect the profits of private insurance companies.

Robert Creamer is a longtime political organizer and strategist, and author of the recent book: Stand Up Straight: How Progressives Can Win, available on Amazon.com.

 

 

Comments

[tribalogical]

Reading the first paragraph of this article, I recalled a small, but important fact:

Although they have been louder, more vocal, been more vitriolic and uncivil, and are vastly outspending pro-reform on this "campaign", the people against health care/insurance reform are IN THE MINORITY, and by a wide margin.

The tactical delay that postponed a decision until after the summer recess, was designed to give that vocal minority opportunity to reframe the debate, and undermine any efforts at real reform.

Well, we're back. They are still the minority. The facts haven't changed.

Costs are too high, too many are uninsured or go untreated even when they are insured. Too many are forced into bankruptcy, even when they have insurance. Too many are dying needlessly.

Nobody is looking for a 'free ride'. Everyone I know is willing to pay into a system that provides complete coverage and high-quality, on-demand care from a doctor of our choice, with few additional out of pocket costs. Pie in the sky? No. This is reality in all the other G7 countries. All of them. Except ours.

Depending on the poll, between 60 and 80% of Americans want alternatives to for-profit health insurance. When asked, most people saying "I want a public option" actually describe a "universal, single-payer" system.

Let's remind our government that THE MAJORITY wants this. We won't accept less. Give us single-payer, universal health care.

Thank you, Mr. President. I am fired up! Ready to go!!

[Pyrum]

So, let's make the insurance companies subject to federal anti-trust laws. Every step toward bringing the free market system back to the medical industry is a step in the right direction.

[publicv]

Yet no one who should care about an american, seems to.

[xianred]

The question I keep asking: What exactly are we buying from the health insurance industry?

[ajwriter]

You've really finally got it with your second paragraph, but you have completely missed the lesson of it.

If the government has to struggle so hard just to get the ability to "compete" with insurers, how do you think they will SUSTAIN the effort to compete with insurers into the future? Especially since what insurance companies DO is come up with schemes to avoid paying their contracts. That's the main thrust of what they DO.

The vast majority of waste is not in the insurers profits -- obscene as they are -- they use paperwork to extract their obscene profits, but that paperwork foisted on the entire system is what is killing us, to the tune of $450 billion a year. That nearly equal to the entire budget of the Department of Defense!

A public option will not reduce costs nor help our system. The single most important reform, without which we cannot offer more care for less money, is to end profiteering by insurance. We could go forward with single payer, or we could go forward with non-profit insurance companies, but anything that leaves them at the table will ensure that they eat our lunch again.

The public option? They don't like change because they don't like having to work everything back around to their advantage since it takes time and money. But make no mistake, they have already figured out how.

[Peabodies]

A public option will give people a choice away from the predatory insurance companies. That's why most people will favor it. And that's why the "insurance" companies are working so hard to demonize it, and are buying off congress to defeat it.

[ajwriter]

In an ideal world, you are right. But this is naive (I say as someone who proposed something just like the public option to my own Member of Congress years ago).

Insurance companies are working so hard to defeat it because insurance companies do not like CHANGE. That's because they have a history of working out tricky contract language and testing it by denying claims and litigating to see what sticks. They litigate case law to their advantage, so that not only tricky contract language, but laws, rules, and regulations, will be interpreted in their favor and predictably. They work out whole legal theories and have legal teams put them into practice. They pay for elections that get subtle rule changes with major contractual consequences in their favor. They blacklist certain doctors who cost them too much money, taint the writing of guidelines for medical care that cost too much.

Such perfect advantage takes a lot of money and time, insurance companies never want to redo it, but they will if they have to.

If people have a choice away from insurance companies, what do you think will happen? When they need coverage, insurers will redouble efforts to avoid paying -- sick people will switch into the public option, because it will pay. The public gets stuck paying while insurance companies continue making greater obscene profits without honoring their contracts, continuing to add >30% to every healthcare dollar.

I

[ajwriter]

f predatory insurers are so bad -- and giving us no benefit -- why "compete" with such deceitful and vicious entities? Why not just take the historic opportunity for change and end this nightmare? They offer no benefit whatsoever that is worth the cost -- arguably no benefit at all -- they are destroying our people and businesses, and we may not have another chance to rid ourselves of them before they finish off our country for good.

[ajwriter]

Peabodies, read your own comment again, and read my original comment that prompted your reply.

If insurance companies are working so hard right not against this proposal, what do you think they will be doing if it is enacted? Go along nicely with it? The fight will only escalate. We are in tough economic times. Do we end this deadly parasitic force now, or ensure its increasing virulence against our economy and people?

[ouroborous]

Great article! Except for this part:

"Any wonder why big insurance companies don't want competition from the public insurance plan proposed by President Obama?"

The public plan is far from proposed by the President. In fact, he and the Democratic party leadership has been increasingly shill in its language describing how we have to strike down the public insurance plan -- the "public option" -- from the bills circulating Congress. Since the public insurance is the one meaningful part of health care reform -- the only thing that could actually force a change -- this means that Obama has been part of the problem in this regard, not offering the "solution."

And please, don't fool yourself that "tough regulations" can in any way fix the problem. The Wall Street meltdown has made it abundantly clear that regulators and regulations are bought and sold just like any other commodity in Washington D.C.

Instead we should all get behind the progressives in Congress who are (so far!) standing firm behind their commitment that "no public option" means "no reform."

[Tim303]

My friend's niece, 21, just died because she aged out of her parents' plan and her diabetes meds cost $800 per month.

[paulfree17]

Last month I broke a rib and developed pneumonia. I was in the hospital for 4 nights during which time I received some paid medication, a cat scan and a couple of xrays as well as the usual blood tests. Not including the fees for the actual E/R doctors the hospital billed the insurance company close to $27,000. There was no surgery, no ICU 24 hour monitoring.

Now how much the insurance company is going to reimburse the hospital is anyone's guess but I would expect it to be maybe 50%. Of course to me it should look good since I have a $500 deductible.

What makes this interesting is that I am a business owner and I pay the premiums for my employees which have been through double digit increases each year for as long as I can remember. Now I care about health care reform because I pay 70% of the premiums for every employee. For those who have an employer paying their premiums they better just hope their employee can stay in business or they may need the "Public Option" sooner rather than later.

[Peabodies]

We are the only country, paulfree, that saddles employers with the administrative costs of health care for their employees, and the only country where workers are indentured to their employers for health care.

[jmpurser]

All undeniably true. Also undeniably true is the fact that Obama's one unyielding point for "health care reform" is that we save the insurance companies at all costs.

[ajwriter]

And that, I believe, is a huge reason for his dip in popularity.

If he separated out just this issue of whether we should have for-profit healthcare financing -- which no other advanced nation allows for primary healthcare financing -- it would be just a referendum on insurance companies. A tough battle, but at least a clearcut one and easier to fight fiery rhetoric with fiery rhetoric.

Ah, but Karen Ignani has him under her spell (and on a first-name basis).

[STILJON]

Great piece! All of the political discussion around healthcare reform has moved the conversation away from the realities of a failing healthcare system and all of the ways the current proposals on healthcare reform address this. So glad to see you digging deep to aggressively confront insurance companies that are largely responsible for our failing healthcare system. Right now private insurance decides management of care based on profit considerations so instead of this or government deciding healthcare management, the current health care reform proposals include independent advisory boards made up of impartial medical experts who will increase quality care while decreasing wasteful spending. Healthcare reform protects patients from interference in their care by stopping denial of coverage because of pre-existing conditions, ends the practice of cherry picking only healthy people and creates competition that will force private insurers to stop denying certain treatments in the interest of profit.

[Trevor A]

the following couldn't be added onto the original comment as it was too long;

So you know who you have to blame for this whole mess? Yes, it's the people who didn't want to pay for the basics, who wanted the insurance companies to pay for everything, who thought that they were getting it all for free. It's the peoples' fault as through laziness they perpetuated the high prices, resulting in people without insurance being unable to pay, resulting in the concept of universal healthcare and socialism. Oh yes, that's right, laziness made medical socialism.

[wayne64]

It's just capitalism taking advantage of poorly regulated (designed by the capitalists) ...as you call it socialism.

[Trevor A]

What I don't think a lot of you understand is that the entire Insurance industry is a sham. Public option, medicaid, medicare, private, it's all BS.

Insurance was supposed to be for the things that were very unlikely to happen; a boating accident, a train wreck, having a roof collapse on you. Nowadays we use it for everything, we the people do not pay, some bureaucrat sitting at his desk sifts out money from the controlling corporation -or, for the government run systems, the controlling government. We just pay the insurance premiums. The introduction of the HMO and its expansion into mainstream health, which are the 50 dollar checkups and whatnot that you used to get, changed the way Doctors would charge because of who they were charging.

It used to be that Doctors would charge decent amounts of money for the mainstream services like checkups and vaccinations and all of the standard things. Why? Because they were charging the patient, they couldn't leech money from us and still go to sleep at night. Now, with a bureaucrat giving out money, they can charge insane amounts and for the most part feel fine. Which, as a result, drives up insurance premiums. It's a sick, twisted cycle which, ever since insurance became something that covered every aspect of the medical system, just keeps on going and going.

[wayne64]

My uncle who was a practicing GP from the late 40's till about 1980 told me years ago how doctors were able to charge multiple times more for a blood test right after medicare went into effect. He said the most asked question at medical conventions was....How much are you getting for a blood test now?

[wayne64]

let's organize a boycott your health insurance or drop your health insurance day.
Ever healthy person between18 and 50 stop paying your premiums in protest of unfair business practices by the health insurance companies. Sound crazy? What would it do to the Insurance companies if 25% dropped? Not much is going to happen as long as we keep paying those inflated premiums.

[Libbyland]

Dropping my health insurance is exactly what I am planning to do.
My husband and I pay $5,000 per year for "health insurance" with a $10,000 (each) deductible through United Healthcare. Every penny we pay is pure profit to the most overpaid CEO in the industry, and no matter what happened to us, I am certain these b*%^stards would find some excuse to deny the charges even after "reducing the charges on our behalf" with the participating doctors and hospitals.
I'm just sick to death of the entire discussion. My health care is prevention, prayer and common sense. Screw the CEO's.

[Peabodies]

Libby -- I think more and more people are rethinking why they are paying premiums for soon to be denied care. If you're going to be screwed, might as well stop paying into the scheme.

[CTtransplant]

NO trigger!!! And NO waiting five years !!!

Never ever ever give up!!! Folks, do not forget the marches on September 13th!!!
If not now, when? If not us, who?

Kennedy was one of our greatest champions of health care reform. He carried the torch for a long time...and now it is up to us to continue to carry it!

Our elected officials in Congress receive health care mostly paid for by us tax payers, yet many are trying to make it impossible for us to purchase an affordable plan of our own :

While many of us are struggling to afford medical insurance/medical bills.
While Congress people try to stop healthcare reform.
While Congress people accept large contributions from lobbyists to prevent health care reform.

Please sign these petitions - and by all means, spread the word! Thank you!

http://www.petitiononline.com/PubOp676/petition.html
http://www.democrats.com/honor-ted-kennedy?cid=ZGVtczQ0MTA5OGRlbXM=
http://salsa.wiredforchange.com/o/5649/t/4922/content.jsp?content_KEY=2763&tag=hk1_typ-e1

[ljkcan]

Yesterday I was watching a round table discussion about health care on a US station.
William Frist you remember the man that pushed for an emergency bill to keep a brain dead woman alive,
saying you cannot change the current health care.

An insurance spokesperson- People need live like Asians smaller homes, eat less. I can see how that one will work out after years of big cars, super sized food and homes that people have lost.
The answer is small dwelling ,well that is all some can afford after the last 8 years of unregulated spending.
so small home, with a rice cooker, I suppose a rickshaw for the exercise.

Drug company- Nope reform cannot be done

the only person that said yes it can was Gov Jennifer Granholm well they all jumped on her and said we cannot do what other countries do we are different , She was born in Canada she said of course it can be done.

The they all had arguments against that. By the time they were finished it was a slam dunk against anyone that needs help and a display of corporate greed. I hope and Pray that Obama has a dream tonight and it is to bury the for profit insurance stranglehold.