If there is a group of people more anxious about how the Supreme Court will rule on the health care reform law than President Obama and the millions of Americans who are already benefiting from it, it is health insurance executives.
Not only have their companies been spending millions of dollars implementing the parts of the law that pertains to them -- and most of them do -- but they also have been counting on the law as very possibly the only thing that can preserve the free market system of health insurance in this country. This is why it is so ironic that defenders of the free market are the most vocal critics of the law and the ones hoping most ardently that the Court will declare it unconstitutional.
Health insurers have known for years that their business practices of excluding growing numbers of Americans from coverage and shifting more and more of the cost of care to policyholders are not sustainable over the long haul. That's why their top priority during the health care reform debate was to make sure whatever bill Congress passed included the much-vilified individual mandate. And it's also why the big insurance companies have been working almost frantically to reinvent themselves lately.
Cigna and Aetna recently became the latest of the biggest national firms to rebrand themselves and roll out new logos and self-descriptions. Cigna is now "a global health service company" while Aetna is now "one of the nation's leading health care benefits companies." What this means is that these companies and their competitors have come to understand that the very policies that enabled them to make Wall Street-pleasing profits over several years has led to a health insurance marketplace that is shrinking. And as it continues to shrink, so will their profit margins.
Cigna and Aetna and a handful of other companies got to be the giants they are today largely by acquiring scores of their smaller competitors in the 1990s and 2000s. Their acquisition strategy now is very different because they know the glory days of being able to report profits every quarter that are greater than what they reported a year earlier, which shareholders demand, are over. So instead of acquiring other insurers, the big firms are now diversifying by buying data and care management businesses and, to the alarm of many consumer advocates, hospitals and physician groups.
They are doing this because they have failed miserably at expanding coverage and controlling skyrocketing medical costs, as they promised they could do as they were torpedoing Bill and Hillary Clinton's health care reform bill two decades ago. Even though they hated many of the Clintons' proposals, they recognized even then that government intervention in the health insurance business would be necessary, that we couldn't rely solely on them or the free market to fix our broken system.
Here's what Karen Igagni, who heads America's Health Insurance Plans, the industry's largest PR and lobbying group, told a Congressional panel in the fall of 1993:
The need for national health care reform has been well documented... Universal coverage at broadly affordable cost becomes possible only when insurance risks are spread across a large community. Currently, most health coverage is priced using "experience rating," where high premiums are set for high cost groups and low premiums are set for low cost groups. Experience rating financially discriminates against populations that experience high costs: the very young, the very old, the chronically ill, and those with pre-existing conditions, such as diabetes.
And here's what Larry English, the former president of Cigna HealthCare, told that same Congressional committee:
There are many specifics in the President's plan we believe should be supported enthusiastically. Among them are universal coverage, portability, the elimination of pre-existing condition limitations, the elimination of cream-skimming and cherry picking underwriting practices, the use of community rating, a standard benefit plan and malpractice reform.
When it became clear, however, that some of the regulations the Clintons were proposing might curtail profits, the insurers began to disown what they had told Congress. They embarked on a campaign to persuade the public that the "invisible hand of the market," as English said in a speech the next year, would do a much better job of controlling costs and expanding coverage than the Clinton plan.
When the Clinton bill died in Congress, that invisible hand went to work. But it proved to be so ham-fisted that physicians and patients soon rebelled. As it turned out, people didn't like being required to change doctors, as many of them had to do. And women didn't like being forced out of the hospital within hours of having a baby or undergoing a mastectomy. So insurers had to ditch many of the practices that presumably would bring down health care costs.
The free-market solution the insurers came up with after the failure of managed care was to herd people into high-deductible plans, just as they herded us into restrictive HMOs 20 years ago. The problem, of course, is that the insurers have to keep increasing both premiums and deductibles to keep meeting Wall Street's profit expectations. It doesn't take a rocket scientist to see how that is not a sustainable strategy -- unless, of course, the government requires all of us buy coverage and gives subsidies to people who can't afford the premiums on their own.
Without the individual mandate, so loathed by free market lovers, the pool of people willing and able to buy coverage will continue to shrink, as will insurers' profit margins. Over the coming years, that pool will become increasingly older and sicker, meaning premiums will soar. Insurers will begin to desert the marketplace. They will not go out of business, but, as their acquisition strategy shows, they will be very different companies.
Insurance executives know they will have to transform their companies even more rapidly -- and get out of the risk business sooner rather than later -- if the individual mandate is struck down. They have run out of silver bullets. As for those who believe the free market can work in health care just as well as any other sector of the economy, they will see, if the Court declares the law unconstitutional, that it simply does not.
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David Coates: Questions for Republicans on Health Care Reform
As usual when considering complex subjects, we do not have a 'FREE MARKET' for health insurance..We do not have any 'free markets'... There is quite simply no such thing as a 'free market' - it does not exist and is not real.
What we have, always, is a market manipulated by capital - sorry businessschlubs - believing in free market is like believing in other demonstrably fanciful things.
It's not with Obama care we kick the can down the road with out obama care the system will
Crumble under it's own wate sooner or later. When the GOP gets rid of the middle class voice
The rich will have there own privet care and the poor will have Obama care
So in the end it's a set up and we loose In bothe cases
Insurers see banking future
Many have found that managing customers' money is more profitable than underwriting medical coverage.
There are many interesting things in this article but I thought this about Wellpoint getting itself reclassified by the feds to a financial services company so it could open a bank was particularly interesting:
Federal banking regulators insisted on classifying WellPoint as a healthcare company. And that was interfering with its efforts to open a bank.
The Federal Reserve Board eventually agreed that the company's core insurance business could be considered financial services. But what about its mail-order pharmacy and its program for managing chronic diseases, which was overseen by WellPoint doctors and nurses? Wasn't that healthcare?
WellPoint finally convinced the Fed that those activities were merely "complementary" to its main business -- financial services. It pledged to limit them to less than 5% of total revenue.
That a medical insurer would agree to keep a lid on healthcare expenditures so it could get approval to open a bank illustrates a fundamental change in the industry: Insurers are moving away from their traditional role of pooling health risks and are reinventing themselves as money managers -- providers of financial vehicles through which consumers pay for their own healthcare.
http://www.pnhp.org/news/2011/april/insurers-see-banking-future
Now the neocon Supreme Court judges are in between a rock and a hard place...if they kill the ACA, big corporate health insurance companies will lose the sweet setup that Obama's "Socialist" plan gave them, where about 40% of money collected goes to "administrative costs", and only 60% that people wind up paying actually goes into treatment for the people they cover.
Another worrying thing for the insurance companies is that if Obama is reelected, he could just expand the Medicaid and Medicare plans to cover more poor people, thereby "Socializing" the majority of healthcare...leaving the wealthy to bear the burden of increasing premiums, and the insurance companies with a dwindled customer base.
Smart work, neocon politicians!
In this sense the ACA is bad news for insurance firms. But...the loss of the mandate is even worse. It means they will have to meet this minimum spend - and many more new and costly obligations - without millions of new customers to help them pay for it all. The poor old CEOs would have to scrape by on just a few millions a year - about the same as they're used to getting for lunch expenses.
I really don't know if the ACA will survive if the mandate is thrown out, and if it does, premiums will be even more unaffordable than they are now, since the insurance companies will be required to give people something for a change. the "poor old CEOs" are certainly not gonna be the ones to do without...they'll make the people pay for their cushey salaries.
I hope that, if just the mandate is thrown out, Obama is able to expand the Medicare and Medicaid programs to cover many more people, and that eventually, the rest will get tired of paying the high premiums and will accept a single-payer system.
As much as "disappointed Democrats" are complaining about Obama, they will have a whole lot more to complain about if Romney wins, and the Ryan plan replaces ACA. But if you want to "waste" your vote, go right ahead...just don't complain when you get a nasty suprise from the republican neocons!
With most personal bankruptcies (at least before the economic crisis) due to medical costs, and most by people with insurance, if this were truly a free market, such a poorly performing industry would have disappeared a long time ago. But it's not, and we need the power of government to do what the market cannot, not make us send more money down that hole.
Insurers need the bureaucracy in order to control the system to extract the most profit, as they are required to do for investors; we pay for the privilege. Denials come from the need for that control, not to make the system cheaper overall. It's an irreconcilable conflict.
Ironically, if for-profit insurance were ended, the marketplace for healthCARE would be less controlled for the benefit of insurance, and more free for doctors and patients.
While I am fundamentally for free medical choice - much more than now - I think we should just treat medical care as a necessary public investment, cover people for the care they need, and just get rid of big insurance, but I see healthcare as an important public investment that makes us competitive in the world. I think if everyone got the health they needed and we took profiteering insurers (and their corrupt incentives) out of the equation, AND if patients were given more power in the medical relationship to judge outcome versus remuneration, things would get initially more expensive, then progressively cheaper because more problems would be solved. Doctors do better when they get more "practice" - having more patients in the system means that many more opportunities to solve problems, IF the doctors aren't hogtied by insurance restrictions. After all, most people don't go into medicine to get rich, and getting free care isn't like getting free money -- if you told people they could choose between swallowing one pill and never being sick again or having to spend 200 hours in the next few years in the hospital being poked and prodded and operated on, no one would go to the doctor again.
There are many nations around the world with high tech medicine, greater use of high tech medicine (in Japan, they get 2-3 times more MRI's than here), very strict government standards, but healthcare costs far less.
LASIK is a good example, but it's not a generalizable example as blanket support of an ideological approach. Plastic surgery is generally not covered by insurance either, and costs have not gone down there, even for outpatient plastic surgery. LASIK got cheaper because it became more common and more routine.
PART 1 of 2 of my post:
There is nothing free market about being forced to buy a flawed product from a poorly performing industry (I mean poorly performing at its intended purpose - the US being the only advanced nation with medical bankruptcies, and most of those people have insurance - not poorly performing for investors).
However, free market insurance and free market healthcare are two different animals. A free market in healthcare can function just fine with all NON-PROFIT (public or private) health insurance, in fact, better than with for-profit insurance.
The US is currently the only first-world nation still allowing insurers to profit for healthcare financing. But not all of those nations use government, many use PRIVATE NON-PROFIT insurance. And many of those nations, with both types of financing, continue to have free market CARE, where patients have more choice than here and doctors, hospitals, and labs can all profit, just not health insurance. Back when our system was functioning better, our major players in health insurance were non-profits, too.
Our most-expensive-system-in-the-world is also the only with such exorbitant healthcare bureaucracy costs, on the order of $450billion a year in 2006, largely because of private insurers. The costs permeate the system and dramatically increase the cost of all care.
I disagree that it's a government enforced monopoly. Insurance is regulated by states, which neither have the resources nor the will to fight big insurance.
Rightwing eviscerates government to solidify their power for concentrations of wealth, then gets to blame the costs and loss of freedom suffered by ordinary individuals on government. Rich. The right has been trying to drown our government in a bathtub (to paraphrase Newt), to the detriment of our national security and fiscal health. In case you hadn't noticed, this is the United States of America, we have a government formed by a model Constitution, a government we once held up as the greatest on earth. It is not the communist government of the former soviet union. Al Qaeda is trying to bring down our government, don't you do it for them.
Sorry, but I resent the straightjacket of this ideology. It's as restricting as the government bogeyman the right seems so focused on conjuring.
Sorry, but government enforcement of prescription laws is about safety and that is an important role of government and saves us money.
I think the other big beneficiaries of the health care law will be hospitals. For poor patients who won't be able to pay their hospital bills either way, with or without insurance, the hospital's losses will be capped at the amount of the deductible, probably a few thousand dollars per person per year.
The health care law is a big win for insurers and hospitals, and nearly a total loss for everybody else.
SHOCKINGLY, with a Democrat SUPERMAJORITY in which Democrats did not need ONE......not ONE Republican vote to pass the "Public Option" version of Obamacare, Obama could NOT, for nearly a YEAR, get the needed votes FROM HIS OWN PARTY to pass his signature legislation!!
Embarrassing isn't it? So embarrassing his media allies invent a "party of NO" narrative to convince the gullible Republicans, who were shut out of the law making process because Democrats did not need ONE Republican vote, were responsible for Obama's failure to pass a public option.
After Democrast lost their SUPERMAJORITY with Scott Brown's election in Jan 2-10 Obama took a page from his Saul Alinsky "Rules for Radicals" mentor by relabeling his "Public Option" "Healthcare Reform" as "Insurance Reform."
Obama's "Insurance Reform" is DESIGNED TO FAIL by making private insurance so expensive people will be dumped into the government insurance pool. Eventually their will be private insurance for unions and those who can afford the premiums and DMV style government health care for everyone else.
Insurance companies will eventually be ADMINISTRATORS of government health care for 300 million Americans... a sure money making bet.
"Bailed out, mandated coerced market" is more like it.
This health extortion legislation is garbage and indeed only offers "security" to the marauding industry that crafted it.
I want universal public alternatives- like the rest of the world- I hope it goes down in flames.
The government has been working diligently to destroy the health insurance model.
First, over the past generation, government has larded up health insurance with a myriad of non-catastrophic care madates until insurance now pays for nearly all care. This removes the individual from performing a cost benefit analysis to determine if treatment is necessary, has spiked demand for medical services and thus spiked the cost of health insurance.
Because costly health insurance makes no economic sense for the young and healthy, this cohort has dropped out of buying health insurance, leaving a sicker and more expensive pool of insured.
The government compounded this problem by allowing free riders to go to the emergency room and demand treatment with no insurance or ability to pay. These costs get passed onto insurance premiums.
Finally, Obamacare created the ultimate free rider program by allowing people to hop on and off of insurance when they get ill.
To pay for the economic crisis created by government health insurance mandates, Obamacare imposed a madate requiring that everyone buy its government designed insurance plans.
There is an alternative to this insanity - remove all government mandates and limit regulation to ensuring that insurers are not committing fraud.