Don't Let the Obama Administration Give Away the Store to the Insurance Industry
On Wednesday March 25, the New York Times ran a front page business section story announcing that the American insurance industry is proposing to make major concessions on health care in return for major concessions in the Obama health plan. The insurance industry promises that it will get rid of its “preexisting conditions’ limitations on private insurance if only the administration will not — that is not — propose a national public health plan that people could enroll in as an option to private insurance. As anyone who’s an American citizen or resident knows, private insurance plans have founded their business model on either excluding people with so-called “prior conditions” or charging much higher premiums if people are sick. This is called expereience rating in contrast to what other countries with national health plans do — which is called community rating. When people lose their health insurance because they change jobs, and get new insurance with a new job, their pre-existing condition (if they have one) is excluded and they are not insured for that illness. Which, of course, nullifies the very meaning of health insurance. It also makes Americans terrified to change their job even if its a terrible one.
Apparently the insurance industry is willing to give up this critical component of their business practice because they are more terrified of the financial consequences of the lynchpin of the Obama plan, which is the creation of a public health care plan that would be a federal, Medicare like plan available to anyone of any age (for those unfamiliar with the US system, Medicare is the tax supported health plan that is only available to people over 65). Why is the insurance industry so worried about this option? Because, the industry correctly understands that private insurance is beyond the means of most uninsured Americans and that a government plan would attract many more subscribers than private insurance. It also knows that the government has the power to negotiate lower fees with doctors and hospitals and that their plan would therefore eventually be more efficient than private insurance plans. This could attract people with private insurance who would disenroll from private plans and enroll in the public one.
Right now Medicare has much lower administrative costs than private insurance companies that spend almost 23 percent or more of their revenues on administration, huge executive salaries, and marketing. Medicare does not pay its administrators something like over $18,000 an hour — yes that’s an hour — like Aetna paid its former CEO John Rowe. Needless to say salaries like that have a way of driving up health care costs, which is why most citizens in other countries with national tax supported health care plans spend about $10 a day per capita and we spend $21, Imagine what kind of great system we could have if we could capture the money spent on those full page ads in the New York Times and other daily papers, the millions spent on advertising in baseball stadiums (a couple of years ago the Beth Israel-Deaconess Medical Center spent $1 million advertising in Fenway Park), and high salaries and channel them to nurses, primary care docs, public and community health workers and other people on the front-lines of care delivery?
In my view — as a supporter of some form of tax supported national health system — one of the only good things about the Obama plan is the fact that it is guaranteed to help us finally get some from of rational health system. What we need Medicare For All. But in exchange for eliminating the prior illness exclusion, the insurance industry wants the administration to force people to buy private insurance. The New York Times reported that “many in Congress were receptive to this idea.” That’s why we all need to hit the phones and call our Congressional representatives and tell them no, no way are we going to use tax dollars to fund an insurance industry that has — in the name of profit — already compromised the health and well-being of Americans for too long. People need to support some form of public national health program, even if it is only baby steps toward what every other industrialized country on earth provides its citizens — high quality health care at far less cost than we do. Which is why the World Health Organization ranks the US health system 37th in efficiency and effectivness.
When you’re thinking about health care reform, think AIG — do you want the same folks who have wrecked the global economy to have even more of a say in your health. I don’t.