Wednesday, June 06, 2007

Death of the Health Insurance Industry

(or death of the way things are currently done)

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Contributor Rebecca Stamm

With presidential elections looming, the debate on healthcare reform is once again in the headlines. Every candidate has their opinion and their ideas of how to reform the system.

American citizens want to be able to choose a doctor they can trust and respect; they also want coverage that is adequate and affordable. With premiums rising between 13-25 % per year, our current system is incapable of providing that. But to understand the debate about reform you need to have some knowledge of the terminology that is being used in these debates. There are a few different systems that are currently being discussed. The first, Private Insurance, is the system that we are on now. The second, Socialized Medicine, is a system where the doctors and the hospitals work directly for the government and are paid by the government. This system is similar to the VA. Another, National Health Insurance or Single Payer, is a system that is managed by the public and the services provided remains in the private sector.

Our current system of spending more for lower quality has left 46 million uninsured and 50 million more with insufficient coverage. Those 96 million people are hard working middle class citizens. Lower income citizens are cared for through Medicare/aid and the higher income citizens can afford to purchase a decent plan. Private insurance has proven itself to be an ineffective means of providing care. They waste money on outrageous executive salaries, they have to worry about profit margins for the stockholders, they maintain very expensive sales and marketing departments, and there is overhead to run the company. Private insurance knowingly drives up the cost for the consumer, while forcing the provider to lower the cost of their services, and pocketing the difference.

Hospitals are forced to maintain a costly administrative staff to deal with the bureaucracy created by the insurance industry. All of these problems (and many more) are eating up a third of the money we spend on healthcare. We spend two times as much on our healthcare (about $7,000 per capita) than other developed nations. In short, the insurance industry is responsible for using up a whopping 30% of our healthcare dollars.

Private insurance has also created much of the mess that is associated with Medicare/aid. Healthy people use very little of the premiums that they pay in and that helps to pay for the sick people. Insurance companies cherry pick the healthy patients and provide them with coverage. Once they become sick, the patients’ premiums sky rocket and they drop out of the plan. This leaves programs like Medicare/aid to cover only the sick people and creates huge deficits in their budgets.

Single payer national insurance will solve these problems. Representatives Kucinich (D-OH), Conyers (D-MI), and McDermott (D-WA) are working on a bill, HR 676, which provides America with an intelligent solution to our health care crisis. The proposal provides all American citizens with a comprehensive medical plan which includes primary and preventative care, inpatient/outpatient services, ER services, prescription drugs, long term care, mental health services, dental coverage (excepting cosmetic), hearing, and vision coverage. It even provides for substance abuse treatments and chiropractic services. There are no deductibles, co-pays or other out of pocket expenses. This plan is also portable and will allow you to see any doctor anywhere in the United States.

It sounds good so far but many will raise the question of how we will pay for such a plan. We all know that nothing is free. The good news is that the majority of the funding is already there. Right now we pay 64% of healthcare costs through our taxes. Those funds cover citizens that are on Medicare/aid, the VA, public employees, and teachers, elected officials, the military, and tax subsidies to employers for offering insurance to employees. The citizens are currently paying 17% for healthcare out of their pockets. Employers that offer insurance pay 19% of the cost out of their profits. In fact, 25% of their payroll is dedicated to the cost of health care.

Under a single payer system, we will be saving the $350 billion dollars wasted by the insurance industry per year. Along with those savings, the payroll taxes for employers will be reduced to about 7% saving them 12% of their profits. Citizens will contribute about 2% of their payroll taxes. The plan actually gives the average citizen a 10% raise. They will increase taxes on personal income for the top 5% of income earners, and place a small tax on stock and bond transactions to accommodate for any differences in funding.

The plan will not affect a doctor’s income. There will be reduced malpractice costs and overhead to run their offices. Licensed practitioners will be paid a fee based on the service that they provide. Some physicians will be paid a salary. Hospitals will be given a budget that will be determined by the regional, state, and national board. The plan will be managed by the National Board of Universal Quality and Access, and will be comprised of elected officials with extensive knowledge of the health care industry.

Private insurance will be allowed to cover anything that the national plan doesn’t. It will, under no circumstances, be allowed to compete with the national plan. Competition from private insurers will create a deficit of healthy people in the national plan. This deficit will cripple the plan and we’ll end up back at square one. The only thing that the current bill doesn’t provide for is the retraining and placement of those currently working in the private insurance sector. This is a serious flaw that will need to be considered before the bill is passed.

Whether we like it or not, the government is determined to overhaul our system of delivering healthcare in this country. There are a number of ideas being proposed that could be devastating to the average middle class family. You have to ask yourself if you want a system like Gov. Mitt Romney’s (R-MA) and Gov. Arnold Schwarzenegger’s (R-CA) that forces citizens into expensive policies that are written by insurance companies. These policies will cost a single person $4,000 per year with a $2,000 deductible including co-payments. This law will fine people a $1,000 and up for not purchasing a plan they’re unable to afford. When you consider that the median income is around $29,000 per year, the cost of a policy like this will be devastating to hard working Americans.

There is little to no regulation written into these types of bills to stop the insurance companies from basing the cost of coverage on risk factors. So, future costs are guaranteed to skyrocket. Is this a plan that will help the citizens or is this a plan that will only serve to make the insurance company stock holders wealthier? With plans like this, we’re still forcing Americans to choose between their health and other basic necessities. A single payer program means death to the insurance industry and I’m grabbing my shovel.

They’ve had a nice run but all profitable things may end. Let's just hope they made enough money to retire gracefully. It’s time to seriously consider a single payer plan. It’s time to consider HR 676.

Physicians for a National Health Program
House of Representatives Bill 676
Who's Afraid of Corporate Medicine?


Tim said...

You should label your piece an opinion editorial. Whenever the government mettles in something, the costs go up. The premise that everyone will have a some nirvana health plan is a dream. There isn't resources.

In my opinion, money has to be drained from the system to make basic treatments more affordable. I make make health insurance premiums for business non-tax-deductible. When individuals receive things for free, they tend to use a lot of them. Hospitals under our current system have a license to mint money. Insurance companies merely take their percentage and pass the costs along. If you blame them for bloated insurance costs, you need to study the problem in depth.

Jeanene S said...

Something needs to be done, that's for sure. We are a middle income family that lost our health insurance....our meds and blood tests for high blood pressure and rheumatoid arthritis are astronomical. We can't afford health, utilities, and house, health suffers.

Anonymous said...

Profits? They're concerned with profits? They are not supposed to be making a proit--they are classified as non-profit agencies and enjoy non-profit status. Why are they allowed that and why are they also eligible for the state to bail them out when they are going under (i.e., Pilgrim Health in Massachusetts)?

Editor said...

To Tim, this site is all OpEd in case you didn't notice, except for the RSS feeds in the sidebar.

As for there NOT being resources in the US (the richest country in the world) if not here, where do they have such resources. Everywhere but here it appears.

Your theory pretend the US is terminally unique and despite this program working extremely well in every other industrialized nation you think it wouldn't work here.

Though it may not be "Nirvana" I will settle for "better than Poland or Cuba."

renosablast said...

The insurance industry has pretty much decimated the auto body repair business also. Combine this with their abdication of responsibility and accountability for claims following hurricane Katrina, and we see that this is an industry totally out of control. Time for a few of their executives to spend some quality time as wards of the state or feds for absolutely raping the American public and braggin about it through egregious record profits.

Anonymous said...

The Single Payer plan sounds good until they say private insurance is not allowed to compete. Competition keeps costs down. I hope this not just another government bureaucracy.

Anonymous said...

HR 646 provides the best option that has been proposed in years. People who continue to think that the current private insurance system can be redeemed don't live, work or mingle with the large number of Americans who do not have health insurance and whose incomes preclude what middle class Americans might consider "affordable."
The public clinics that can only provide minimal service are packed from the moment they open until they have to close at night. The doctors have very little time to spend with each of the people, and no way to easily provide follow up care. I have been with too many dying people who can only be comforted on their way out. It is shameful for a nation as wealthy as the US not to care for all of its citizens. Hurray for HR 646 and all who back it.

Stuart said...

This does sound like a pretty strong opinion and I question the facts. Does anyone know how much it costs per month to cover a senior on Medicare? I know the health insurance companies are compensated (handsomely) by the government to take them over.

Sure we are in trouble, and insurance companies have a lot to do with it; they pay claims when submitted, but I do not think a lot of auditing is involved. In fact when I went to an urgent care facility, I was charged the incorrect amount. On my plan it all went to deductible, so when I saw the bill I contacted the facility and discussed it. Sure enough they made an error and were charging me almost double of what they should have been. An insurance company would have just paid them.

I like the private system; however, there do need to be measures put in place to help prevent over charges, and inflated costs, like $100,000 hospital beds. That is right; I heard that a hospital was paying around $100,000 (or more) for specialized beds (ONE BED) that prevent bed sores. That is just ridiculous.

I think that the private system can work, but changes must be made, and mostly in the delivery of the care, not in the payment of claims.

For covering the poor, how about taking some of the GIGANTICALLY inflated military budget. NOW that is a real staggering figure. Don’t we spend roughly ten times more than China, the number two spender in the world?

Let us keep the private system, besides what would happen to the people working in the health insurance industry. I think putting them out of work would be devastating to our economy.

Lets us also work hard on getting our country more fit. EXERCISE and EAT RIGHT. I contacted my state governor and asked him about putting measures in place to help do this like using the State highway road signs to blink messages like EAT RIGHT when not in use. I mean they are not that useful anyway; the only tell people that there is an accident ahead anyway, and the slow traffic does a good job of that already.

Portland OR

zaph22 said...

You're missing a big point here Atlas, more than "what is the nanny state going to do for me" for many, myself included who never could get a private plan as much as we wanted too, and considering that I am a financial conservative, the question once you'd had a serious illness becomes for very many "how can I get the nanny state let me get back to work" Because once they have you in the system that they make you give up anything you ever had, they will not let you out of the system. Many get locked in, as I have, to a situation there is little chance of getting out of. So I'll ask you how you'd do what many of us would need to, first I'll explain a bit about the situation many find themselves in, and would love to be out of.... A person is born with a health defect, such as a heart condidtion, insurance companies will insure that person, if the person can afford the extremely high premiums, which for most people are financially impossible...

then that person gets ill, with something other than the condition they were born with, like a liver problem, which no doctor they ever saw thought to check for because the person didn't drink, didn't use drugs, and didn't ever have hepatitis. Then the person ends up needing a liver transplant because no one ever paid attention for the one symptom of a liver problem, but could have also had a few other causes, because the person didn't have the risk factors I mentioned a moment ago. And because it went undiagnosed it caused the heart to become infected, so now they also need open heart surgery to replace an very badly infected valve... and all this results in the need to forever take anti-rejection medication that has a real cost if the person was to pay for it themself of over $1200.00 a month, but since they used all their savings, hundreds of thousands of dollars for medical costs before ever asking for any help, and now the cost of meds as I said is over $1200 a month....

and now the person would be willing to pay the cost themself if they could, but since they got some government aid, the government says "if you have over $1500.00 in assets, or make over $1037.00 a month, you'll be on your own, cut off from any aid. Now the person has a choice, go back to work, and die because before you can make even enough to pay for the meds for ONE month, you're cut off, and then even if they could get the meds somehow, that leaves how much to buy food, for housing, for untilities a month?

Now multiply that one situation, or one very similar to it, by the thousands of people it happens to every year. Now you have people stuck in a system they don't want to be in, but their choice is.. do you want to work, or would you like to live, but if you want to live, you're a slave to the state, here is how much you can make, and it isn't enough to even buy your meds for one month, and the person has a number of degrees in computer networking/computer science...

and like most people would be, is miseaable not working, feels like a burden to society, but you tell me, without national healthcare, that would have kept a situation like this from happening, meaning the person would still be working, paying taxes, contributing to the economy, tell me how this is a good thing? And I know it happens, because I'm talking about myself, but I know there are thousands, very likely over a million like me, what is the cost of that to taxpayers?

And there is a way to have national healthcare, and at the same time reduce the size of government, cut some "entitlement " programs. And being a conservative I find the term "entitlement" very irritating, no one is entitled to YOUR money, it should be called what it really is, forced charitable contribution payouts. But what I envision is a two tier system, where those most able to pay, do pay, and those making under say 75,000 have full coverage ...

at 75,000 and up to 150,000 for an individual, they pay on a sliding scale up to 100% at the 150,000 level. And at any point anyone that chooses can purchase private insurance if they want to. To do this you expand Medicare to cover everyone, that way you no longer need Medicaid in any state. At the same time real immigration reform is needed, not this current amnesty plan congress, and the president, are trying to shove down our throats. Go after employers that hire illegals, fine them heavily, and use that money to fund national healthcare, it would cover a good part of the cost of this type of play, while at the same time reduce the number of people using emergency rooms for normal care. The fines to such an employer should be, say 10 to 20 times the annual earnings the illegal was making. Their is one big requirement I left out, to keep this insurance, each person receiving any portion of their healthcare under this plan would be required to have a conplete physical annually...

this way, with this preventitive measure, we would have people staying healthier, being able to continue to work, less sick time, so more productivity, more people paying taxes, less taking from you and other taxpayers.... and best, less government if it was done right and we eliminated the redundant programs that would no longer be needed, and less government, and less tax dollar waste, along with increased productivity seems iike a good thing to me

One thing I forgot to mention Atlas, the situation I describe does happen to many people, I know that for a fact, since the one I described above, wanting to work and being put in a position where the choice is work for a while, and die without the medication you can't beat that earning restriction threshold fast enough to stay alive, or be miserable and dependent on the taxpayers of the US because the government has set up these programs to "aid" people to keep people down, thinking that way voters will have to vote for those that want to continue these programs since their life depends on it. And I know this happens, because it is my life at the moment I described...

And although that is true, I WILL find a way to have my life back. To get out of this situation, and part of that is fighting for it not to happen to others, and to do something to help those already in this type of situation get out of it. And I like this plan talked about in the story, it need some adjustment I believe, but it is very similar to what I've been talking about to anyone that will listen, including my congressional representatives for the last four years, expanding Medicare to cover everyone, and using that to let us put an end to some social programs we will no longer need them, and at the same time increase productivity and lower medical costs in the US by concentrating on preventive measures.

And yes, I am a financial conservative, very much a conservative, and this kind of common sense plan, that I'm surprised to see come from any politician, could stop much of the waste of YOUR tax dollars

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