This is a comment from a Southern Baptist blogger who apparently spent 50 years in the health insurance biz.
Brace for it.
IF there’s a problem with health care, it’s not with insurance companies…
Quote of the Day from the Baptist Blogosphere
August 19, 2009
The only problem with insurance companies is trying to get your money.
Otherwise Mr. Cleveland may be correct that the primary cost of health care in on the medical side, not on the insurance side. His 1% to 3% percent profit margin sounded a little thin to me, so I looked it up. For Aetna check out
http://finance.yahoo.com/q/ks?s=AET
Revenue was 36.37 billion (money they collected from you and me). Income was 1.26 billion (what was left after administrative expenses and paying hospitals and doctors). That’s 3.67% profit margin. Yahoo’s tables lists 3.85%. I would say Mr. Cleveland was substantially correct.
He’s right. The insurance companies are doing well. It’s the sick who are suffering. In our society profits are more important than people.
I didn’t say insurance companies weren’t doing well. When revenues are so large and predictable, a modest profit margin makes for a very good business. It’s no secret Warren Buffet likes investing in insurance companies.
I don’t think, however, a government agency administering insurance payments is going to be more efficient than private companies. Cost saving have to come from elsewhere.
Are government agencies more compassionate than insurance companies? Not when it comes to money. Try talking to the IRS, Social Security or Medicare.
Note that Cleveland’s quote begins with IF
IF there’s a problem with health care….
IF?!?!
Absurd, indeed.
Cleveland seems like a fair and thoughtful guy on most days. One would think that a fair and thoughtful individual from the insurance biz would have the ability to recognize reality. Insurance companies are definitely not beyond critique….
Here’s Steve Waldman in The American Prospect.
Yeah, the “if” was the most interesting part to me, too. I can’t figure out how there are so many people in this country who 1) don’t work for the health insurance industry, and 2) seem to be under the impression that our system works well.
Steve Waldman in The American Prospect concludes that insurance companies are “malevolent” based on 4 arguments:
- health care premiums rising
- insurance company profits
- examples of bureaucratic claim
denials
- suspicion that insurers have cut
a deal with the White House
All true. Taking them one by one:
1. The Congressional Budget Office, citing peer-reviewed, published studies, concludes that oaur increasing health care costs are due largely to 1) advances in medical treatment more widely available to more people and 2) aging of the population (increasing percentage of older, retired folks compared to healthy young workforce). This will not change. Lawsuits, waste and fraud — factors which can change — are mere runners-up. So, health care costs inevitably go up. As do premiums.
2. Have health insurers’ profit margins increased? If so, this may be a good point. Perhaps insurers should cut their profit margins. But even nonprofits must keep and use cash. Nonprofit hospitals are required to keep a 90-day supply of operating cash in some cases; surplus income (profit) goes into upgrades, additions, new technology and equipment, and so forth. It can’t all go to expanded coverage, as some pundits seem to imagine.
In for-profit hospital systems, the profitable hospitals subsidize the nonprofitable ones, primarily inner city Medicaid ones (which tend to lose money).
3. Absolutely. One could cite horror stories from Medicare as well. Ask any doctor: would you rather deal with insurers or Medicaid? Most won’t do Medicaid. Why? Medicaid is way too much red tape, second-guessing doctors, late pay-no pay-delayed pay, re-submitting, bureaucratic ever-changing micro-rules with scary penalties if you write down the wrong code, non-explained by government employees who can’t be fired, and NO recourse (could a patient sue Medicaid? could a doctor? One part of the House bill says “no judicial review” for certain bureaucratic decisions).
My GP friend tried diligently to take Medicaid and reluctantly had to stop b/c cashflow (for payroll, insurance and a modest, undecorated office) was insufficient/too erratic to keep his practice going. The choice was drop Medicaid or close. This is one of the “good guys” — lives modestly, does favors like free physicals, squeezes in extra patients, allows payment plans for even $40 — and he couldn’t make it work.
Perhaps bureaucracy is just the price to be paid for democratizing insurance. But the possibility that government insurance is worse overall or has counterproductive side effects (doctor shortage, hospitals closing, “breaking the bank”) is not automatically scornworthy. It’s worth dialogue.
4. This was the White House’s method – to approach stakeholders such as Pharma, insurers, the AMA, ARP and (it seems) make deals in return for support. Not a bad approach, but it tends to leave out patients and “the little people.”
This is not an apologia for insurance companies. But IMO the finger-pointing from our political class and pundits (who have they NOT made villian? so far the villians include greedy limb-chopping doctors, death panels, insurers, CEO’s, Obama, Sarah Palin, Nancy Pelosi, talk radio, town hallers, unions, socialism, liberals) is unhelpful and alienating.