The Question is Not a “Government Takeover” – But Rather -- Will Congress Allow Insurance Companies to Consolidate Their Stranglehold on Health Care?
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's recent book: Stand Up Straight: How Progressives Can Win, is available on Amazon.com.