Class Warfare Blog

May 3, 2010

The Health Care Debate is Over . . . Not!

Filed under: Politics — Steve Ruis @ 9:37 am
Tags: , , , ,

Now that the health care initiative has been passed, many people think, “Well, that’s done!” Sorry, you are not even close.

Do the math, people! Regarding the so-called health care debate, the Republicans repeatedly offered the following plan: the health-care market can take care of itself, in fact, why not open up the entire country for health insurance competition, that should do the trick. Unfortunately we got a whole lot of that Republican reform, and it isn’t good for you and me! The reason why is simple—this is pretty much what we have had for the last 40 years.

If you go back to the late 1960’s, the health insurance industry paid out almost 95 cents of every dollar they took in to settle claims, that is to pay hospitals, doctors, nurses, etc. Their overhead and profit came out of the other 5 cents (2-3 cents for overhead, 2-3 cents for profit). In that business model they were like grocery stores in that they had a small margin, but a big volume. (This is the same strategy involved in many gambling casinos, just take a little off of the top of a major stream of cash, and viola, a healthy business, so healthy in fact that gambling licenses are often referred to as “licenses to steal.”) The 60’s health insurance companies were all quite sound financially.

Based on major reforms in the health insurance industry, undertaken by those self-same industries mind you, they now pay out only about 80 cents of every dollar they take in to settle claims! They are now a high volume, high return industry. And people are getting rich doing it, especially health insurance executives.

In the five years from 2002 to 2007, health insurance profits increased 438%. We were told this was due to rising costs, but rising costs tend to hurt profits, not raise them, so something is not quite right. Is there any way to check on medical costs during that period? There is! During the same period, the Veteran’s Administration’s health care arm (the VHA, whose patients are older and sicker than the average) reported cost increases of about 1% per year. And the poor Federal Government didn’t have the advantage of healthy competition to keep it’s costs down! (A recent Rand Corporation (hardly a liberal company) study identified the health care delivery system that shows the highest quality service and the highest customer/patient satisfaction is . . . wait for it . . . the VHA.)

I sincerely hope people wake up to the fact that a profit motive is the wrong motive for a health insurance company. Their profits are in no way linked to your health, just like Wall Street banker’s profits are not linked to your financial health. In an ordinary purchase, like of a car, the dealer/manufacturer wants you to be happy with your purchase because you may buy another car from them in the future. Does an employer-funded health care plan care about whether you are served well? Are you going to take your business and go elsewhere? Do you even have a say in which plan you have? Have you ever been asked whether your plan works for you?

Studies show quality ratings of health care services have no impact on whether employers continue to offer those plans. Only the prices of those plans has the major impact on whether your employer continues with a health insurance plan. (I’m shocked; I’m truly shocked!) So, the motive for insurers is to pretty much ignore quality of service but run costs up in concert with other health insurer providers, because the employers are going to pick the lowest cost plan available and if all of the plans increase their costs together, there will be no incentive for the employer to change plans (until they give up entirely and stop offer insurance to employees). By the way, it was legal, al least until lately, for health insurance companies to collude on costs. We thought that would help them control costs, silly us!

The health insurance industry, abetted by well-paid Senators and Congressmen, have stacked the deck in the reform effort in favor of “no substantive change” and no change means plenty of money in their pockets and lousy health care for you. If nothing else, ask yourself how this country’s health services, the best in the world after World War II, have fallen to mediocre levels (#19 in the world) while the costs have escalated to being twice those of any other country. (Hey, they are still the best in the world if you are rich or have a fantastic health care plan, but if you are poor or middle class, bend over, hold your ankles, and cough. We are talking about average service here. The “market forces” people with their “best health care in the world” claims are only talking about their plans, the high end plans.) We do not have the best health services available on average, just the most expensive, and the reasons are an out of control health insurance industry and the wrong motives for most of the players in the system.

The Republicans have no real ideas—they were against Medicare, they were against Social Security, and they were against Medicaid. All because they hurt the profits of their masters. Until we can rein in those profits, we will continue as we have.

We will have to go back to get a public option or die . . . poor.


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