Sunday, June 24, 2007

Why do we keep for-profit health insurance companies again?

Michael Moore raises the question in Sicko: why exactly are we tolerating for-profit health insurance companies that make money by denying us the health care that we've paid for?

What sense does that make?

I recall Luis Gutierrez (who, here's my prediction, will run again in 2008 for Congress) at a town hall meeting in 1993 or 1994 on public television called for abolishing the insurance companies and the crowd, previously passive and polite in that public television way, erupted in applause. The host (probably John Callaway) asked for calm and then asked the insurance company spokesperson to justify the industry's existence. "What do you do?" he asked.

"Spread risk" was the answer.

That's it.

The health insurance guy could have said "suck resources out of health care like a parasitic middleman to build skyscrapers, run commercials and make our investors rich" which would have been more honest, but the economic basis for the health insurance industry's existence is "to spread risk."

Well, you spread risk by getting a bunch of people in the same big pool. So if there are 5 people in a small business who are paying for their own health care and one of them gets cancer or gets hit by a bus, then those 5 people have a lot of money to pay. The goal is to get 10,000 people in a big pool so when someone gets cancer, the cost is absorbed and spread out among everyone.

I've got a big pool we should all get into: Americans.

The whole country should be one big pool. That's what we do with Americans over the age of 65. It's called Medicare. And there isn't any role for private health insurance companies to make money. That's why it's so cheap to administer.

I wish I had access to Medicare.

I pay Medicare taxes. Why can't I have Medicare coverage?

Because for people under 65, we have to make health insurance companies rich to get access to the doctors and hospitals.

The best thing we could do for our economy is expand Medicare for everybody to end medical bankruptcies and encourage small businesses to grow (who now have to make insurance companies rich).


So-Called Austin Mayor said...

"Michael Moore raises the question in Sicko: why exactly are we tolerating for-profit health insurance companies that make money by denying us the health care that we've paid for?"

Actually, Dan, it's worse than that -- because they are organized as for profit corporations, insurance companies are mandated to make as much money as possible. The law requires that the insurance corp's officers or board of directors maximize their profits.

Even if an insurance company got religion and decided to stop -- or even reduce -- the number of rejected claims, they would be both civilly and criminally liable for acting against their shareholders interests.

Not only does our for-profit health care system not work, it is bound by law to not work.


p.s. Please keep hammering away at this, just five years ago those of us warning about global warming were a fringe minority but by working together we have changed the playing field.

Dan Johnson-Weinberger said...

Hi Austin: I think the law you refer to is state law that organizes corporations. If it is, that's something we can change in Illinois. Do you happen to know whether there's any federal law that would preempt a state from amending its corporation code to require for-profit insurance companies to consider overall health (or something) in addition to maximizing profits?

Steve Bartin said...


It's odd that anyone from Illinois or Cook County would call for the abolition of private health insurance.Look who's behind on their Medicare and Medicaid bills:none other than the state of Illinois.Remember who doesn't have a budget on time? The New York Times estimated that 10% of New York State Medicaid expenditures are fraudulent.Doesn't government run fraud bother anyone? Is Cook County hospital the vision of the future? How ironic,that here in corrupt Illinois someone would be talking about problems with private health insurance.Are you happy with the post office?

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Mahan said...

I am a physician, and have looked at the insurance situation every way possible. I have worked as a military physician, a salaried physician, and now as the owner of a private practice.

My experience has led me to the conclusion that insurance companies cannot help themselves but to rip off the doctors, hospitals, and the public.

The Texas Medical Association researched the reimbursement issue, and found that a medical practice needs $75 per RVU (relative value unit) to run a practice. RVU's are how insurance companies base reimbursements. Every office visit or procedure is worth an RVU amount. For instance and office visit to my office for a well Woman visit is worth about 1.3 RVU's and I will get roughly $90 for it.

Here is the problem. The average insurance contract only pays about $65 per RVU. Honest. Check with TMA if you don't believe it. How do we make it? Cutting costs to the bone.

Don't think we can just fight back by not accepting an insurance companies contracted rate. They own the patients. When was the last time you went out of network to a provider? Not getting on an insurance plan is unfortunately a quick way to the poor house for most physicians. There are a few exceptions, such as a rural doctor, or a cash only business like plastic surgery. Wonder why all the interest in laser hair removal at your family practice office? Right, your doctor may be opening a med spa so he can afford to still take care of you when you get bronchitis. Real medicine is not profitable enough anymore.

Doctors all over are on the brink of going the way the farmers did in the 70's. Forced to take lower salaries, cut back benefits for their employers etc..

All so the insurance company can profit. By the way, have you paid less for health insurance lately? You should be, based on what doctors and hospitals are being paid. Oh, they aren't passing along the savings?

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