11th Hour Bombshell: How Private Health Insurers Just Blew Their Cover -by Robert Reich

[kpete]

Monday, October 12, 2009
The Audacity of Greed: How Private Health Insurers Just Blew Their Cover

The health-insurance industry has finally revealed itself for what it is.

Background: The industry hates the idea that's emerged from the Senate Finance Committee of lowering penalties on younger and healthier people who don't buy insurance. Relying on an analysis by PricewaterhouseCoopers, insurers say this means new enrollees will be older and less healthy -- which will drive up costs. And, says the industry, these costs will be passed on to consumers in the form of higher premiums. Proposed taxes on high-priced "Cadillac" policies will also be passed on to consumers. As a result, premiums will rise faster and higher than the government projects.

It's an eleventh-hour bombshell.

But the bomb went off under the insurers. The only reason these costs can be passed on to consumers in the form of higher premiums is because there's not enough competition among private insurers to force them to absorb the costs by becoming more efficient. Get it? Health insurers have just made the best argument yet about why a public insurance option is necessary.

............

Now's the time for Congress and the White House to say to the insurance industry: You want to play hardball? Okay. We'll play it, too. You didn't want a public insurance option. That was one of your conditions for supporting the bill. You wanted gigantic profits from having thirty million new paying customers and the market to yourself. The Senate Finance Committee and the White House agreed because they wanted your support and were afraid of the negative ads and hurricane of opposition you could finance. But you're even greedier than we imagined. And now you've demonstrated that greed to the American people. They don't want to turn over even more of their hard-earned money to you. So, insurance companies, we've got news for you. We're going to make sure Americans have the freedom to choose a public insurance option that's cheaper and better, and you're going to have to work hard to keep them your customers.

more:
http://robertreich.blogspot.com/2009/10/audacity-of-greed-how-private-health.html

[valerief]

1. No, they made the best reason why SINGLE PAYER is the only real answer. nt

[debbierlus]

19. Thank you

[flyarm]

28. +1

[zoff]

32. It is the answer.

Rethuglicans are deathly afraid that the public option will evolve into single payer. And rightly so, because the PO is sure to whittle the ranks of for-profit health insurers. Then voila, we move closer to single payer!

[The Wizard]

48. Single payer

would cut into the income of many congress critters.

[zoff]

49. It would cut their supplemental income for sure.

There are many who deserve a pay cut, if not a pink slip, for allowing this travesty to go on for years.

[Ms. Toad]

33. Correct.

If everyone is not included, the premiums will be higher for those who have to purchase insurance because they cannot afford to be without - for the same reason that high risk pools have higher premiums than (large) employer based insurance.

In ball park numbers, it cost around $6000 per person for health care.

Assume, for simplicity, that there are 300,000 people who need insurance:

100,000 young, invincible, people whose real health care costs are only about $500 a year
150,000 of whom are "average" and whose real health care costs are $6000 a year, and
50,000 of them who are chronically/acutely ill and whose real health care costs are $17,000 a year.

With everyone in the system, the average real cost of providing health care is $6000, so everyone pays $6000 a year and the plan can pay the real health care costs and break even.

If you let the young, invincibles opt out, the money needed to provide health care for those in the plan is an average of $8750 per year - those purchasing the insurance would need to pay $2750 more per year just to break even. That difference has nothing to do with insurance company greed (and would be exactly the same even with the a public option) - it is simply the reality associated with not including everyone in the plan, and gets worse if some of the $6000 a year folks now look at $8750 a year, decide to gamble that their costs will remain at $6000 a year, and also opt out - driving the per person income needed to pay the real health care costs even higher.

If you have an insurance based system (public or private) you have to make insurance mandatory to keep the premiums within reach (with a subsidy for folks with lower income) - the outcry and new study was because the finance committee backed off on mandatory - it is nominally mandatory, but there is no penalty for the first year, and I believe set at $200 for the second year. If I believe myself to be invincible, and the only penalty I have to pay for not paying $6000 (ballpark) for insurance is $200 - why would I buy into the system? (Not to mention those at the upper end of the subsidy range/lower end of the unsubsidized range for whom the premiums are a real financial hardship.)

The other option is to move to single payer, which automatically includes everyone, and fund health care through taxes.

The average cost of health care must be spread out to make universal health care an option - meaning everyone has to be in - the only question is whether is is paid directly by each individual/family through insurance (which is a real hardship for far too many Americans) or is it paid by the government (with the funds to pay that bill coming from taxpayers at their usual rates of taxation - meaning theoretically the richer will pay more).

I would prefer the latter, but since we seem to be stuck with the former - in this case - it is not just insurance company whining about eliminating the penalty for not making insurance mandatory. It has to be mandatory, with real teeth to prevent "opting out," (and real assistance for those who cannot afford the premiums).

[Uncle Joe]

37. +5

[Roland99]

42. +Infinity! (But Obama calls it "too radical")

[theFrankFactor]

46. Precisely - This Should Have Been the Choice From Day One!

The fact that we have been lead around by the nose by the corporate coupe is bad enough but on top of that Democrats have shown that they don't want to bite the hand that shoves cash in their pathetic pockets either.

The expansion of Medicare is so obviously the logical, sensible and most efficient choice that the only reason it has been ignored and hidden is damning evidence of the complacency and treason of the corporate bribery of our "government" and its representatives of the People.

[babylonsister]

2. And there it is! nt

[Hannah Bell]

16. keep telling yourself so.

[msongs]

3. reich doesnt get bribes...err...campaign contributions from AHIP members nt

[proud patriot]

4. health insurance for profit should be outlawed

:)

[lumberjack_jeff]

5. A work-safe alternative to the Rude Pundit's rant.

The PWC report was an admission of the degree to which, absent meaningful reform, the insurers will rape consumers.

[csziggy]

6. I think you left two words out of your message

"The PWC report was an admission of the degree to which, absent meaningful reform, the insurers will continue to rape consumers."

:thumbsup:

[slay]

7. K&R - Argh!

Argh why can't we just have something like England or Canada or some other country with actual HEALTH CARE for their citizens?!?! :mad: :grr:

[StreetKnowledge]

9. The Health Insurance Pigs.

Plain and Simple. The sooner the Government tells them to screw off, the sooner we'll get single payer.

[kath]

18. Or France, or Germany, or the Netherlands, or Belgium, or Sweden, or Denmark, or Greece, or Spain,

or Norway, or Finland or Austria, or ...???

The ONLY freakin' developed nation without universal healthcare.
Absolutely shameful.

[sasquuatch55]

43. Or Cuba!

nt

[kath]

44. or Taiwan - which got a good universal healthcare system up and running quite quickly.

[redqueen]

20. Because voters here are lazy.

They'd rather just check a box every few years... it's too hard to get involved early, and help fund and work for primary challengers.

[TheWebHead]

8. they can't absorb costs

because their pre-tax margins are under 6%, low relative to other industries. There's a lot of pieces to the pie that contribute to health care costs that exceed inflation >2x ... but insurer and hospital profit margins are a small percentage of that.

[pokercat999]

10. Don't be mislead, what is their GROSS profit. The insurance

companies want you to believe the only way for them to control cost is to limit/deny coverage. They do nothing to control spending on executive pay and perks, and other expenses.

[FlaGranny]

11. $57,000 an hour executive pay would cover

a lot of it.

[pundaint]

41. and the bullsh*t flag flies!

Yes the replay did show the blogger said insurer profit was a small part. That one is getting called back for silliness. Yes in that obscene executive salaries, lobbing, congressional payoffs are written off as expenses the profit might be small, but the markup for not adding any value to the process is huge. The effect of sucking that 30% out of the system and pricing some out of the preventative care market makes the impact of the Insurance Thieves the biggest of all the harmful forces.

[annabanana]

12. That report was nothing more than a Notice of Intent to Extort.

If corporations are "persons".. there should surely be legal consequences.

[Jeff In Milwaukee]

25. It's a gun to the head of the American people...

If you pass this legislation, the hostage gets it.

If there a SWAT Team around, there would be more than just legal consequences.

[Go2Peace]

13. Nothing really new here. We, and a majority of the public, already know that we are being taken.

[underpants]

14. This was the purpose of the tea bagging marches and public fits

to get them cover so they can pour money into DC (How much has Baucus and the "Group of 6" pulled in?). We all know it happens and in this case that it was going to happen but people don't like having it thrown in their faces, especially the 60-75% who clearly wanted reform.

Classic Edward Bernays/CIA fake marches stuff to make the coup seem more reasonable.

[northernlights]

15. too little, too late

I have news for Robert Reich, whom I usually adore.

We already knew how greedy the insurance industry is. People like me who were effectively told our life isn't worth a $10 CBC have long been fully aware of the total uselessness of the health insurance industry.

Sorry it took so long for those of you in your ivory towers with your rolls royce health care to learn how the rest of us survive.

If public option will lead to single payer, I can support it. We had no problem letting the auto manufacturers bite the dust. What, pray tell, is this love affair with the financial and insurance thugs?

[Grinchie]

21. The Love Affair is between Cargill, Monsanto, ADM, Bayer Crops Sciences et al...

In the movie "Who Killed the Electric Car" thay presented a little understood factoid regarding Cross Investment and research directed at preserving a particular profit stream. For example, say CALPERS owns both Shell Oil and GM Investments. Also Shell Oil owns GM Investments, and GM owns Shell Investments. It's pretty clear that GM and Shell are Symbiotic organisms, with GM driving a lot of business demand to Shell, and Shell providing Capital to GM, which also had it's hooks in Consumer Credit, Mortgage, and aboout a million other subcontractors.

It would make no sense to kill the Golden Goose, so they killed the Electric Car and promoted the Hummer instead. Short term gain, long term suicide.

Now with the Healthcare Industry, we have the same sick Symbiotic relationship between the manufacturers of unhealthy Synthefood, and the Healthcare Industry that maintains the diseased product it generates, namely, sick people.

It's not a matter of healthcare, but the preservation of the last "Growth" industry available to investment houses, pension funds, and Symbiotic organisms that reinforce the Illness business model. It's pretty clear that this one industry is the last card holding up the facade that conceals the intensity of the Global economic fraud, and the Politicians are licking the boots of the industry in order to buy time, regardless of the fact that the collapse is getting closer every day.

The reality is that Universal Health Care is the natural solution, considering that is what every organism on the planet is given at birth. Just imagine if our own immune system operated like a typical HMO.. With the cells obtaining permission to heal a cut, or the stomach gaining the ability to expell a poisonous morsel of food, and then being billed for it by taking 80% of the available nutrition. It wouldn't work.

Yet, Americans are so enamored with the immediate, quick fix of taking a pill that they waive any right they were born with to deal with illness on the body's own terms. There is a reason we have aches and pains. It's the body's way of signalling that we need to pay attention and focus energy on healing. It's as simple as that. Chronic pain is another issue, and I don't want to confuse the issue with it here.

The Healthcare industries collapse is seen as the last stand of Capitalism, but they have proven that it is nothing more than another bubble industry with very little clear benefit to the growth and evolution of Society as a whole. The Mayans were doing brain surgery 5000 years ago, and Hippocrates developed medicine.

[dmr]

45. Good post n/t

[midnight]

17. Check Mate..... Now bring on the competition!

[onethatcares]

39. the only competition I've seen lately is the insurance giants

competing with themselves to see who could gouge the public more. Any compay, organization, group, or individual that threatens to do more harm just because a bill is passed has to be put out of business. Jeez, it's that simple. As someone in another post said, "this is holding a gun to the head of a hostage and laughing about it".

It's also time to end the gravy train our so called leaders are on.

[Vattel]

22. Is this true?

"You didn't want a public insurance option. That was one of your conditions for supporting the bill. You wanted gigantic profits from having thirty million new paying customers and the market to yourself. The Senate Finance Committee and the White House agreed because they wanted your support and were afraid of the negative ads and hurricane of opposition you could finance."

This implies that the WH agreed to no public option. I could be wrong, but I doubt that the WH agreed to that.

[mackerel]

23. Reich is my hero!

(Still I'm being realistic about the public option...I think it's dead in the water.)

[Vattel]

24. Why do you think that?

[vinylsolution]

26. The game's over....

.... Now get busy and serve We The People, blue dogs!

and you might even get re-elected in 2010...

[Kablooie]

27. But many of our 'representatives' will share in those profits. That's the problem.

[flyarm]

29. ding ding ding ding ding..and even get big $$ bucks for white house!! woo hoo!! n/t

[DireStrike]

30. This is what we have been saying from day one.

The public option is CHEAPER.

Single payer would be EVEN BETTER.

The insurance companies will do anything to protect their worthless existence.

[Barack_America]

31. Greed always reveals itself.

K&R.

[truedelphi]

34. When I die, my will is now instructing my survivors to ship my

Body off to the WH.

We need a new Emancipation Proclamation! One that states that as of January 1st 2010, all Americans willing to provide their name, address and Social Security number will immeidately be provided with coverage under the

Universal Single Payer Health Care For All Agency

And whose financial costs wil be paid on the same line of the Fedral Budget that covers health care for the sold-out Corporate-Affiliated Members of the Congress.

[bertman]

35. Once again, Robert Reich is right on target!! Recommend. nt

[closeupready]

36. This is fantasy.

His presumption that any of these crooks in Congress are dealing honestly with us and looking our for the interests of constituents is laughable.

[avaistheone1]

38. It's time

for single-payer health insurance folks~

[cascadiance]

40. It's time to BURN these blood-sucking leeches off of our bodies!

[earth mom]

47. K & R & Bookmarked. nt