Tuesday, September 15, 2009

Universal Coverage A Hardship for Health Insurers?

Earth provides enough to satisfy every man's need, but not every man's greed ~ Mahatma Gandhi (1869-1948) pre-eminent political and spiritual leader of India during the Indian independence movement.

If you didn't watch the coverage on MSNBC Wednesday night after the President's speech (9/9/2009) you probably missed what I think was the most important clarification of the evening. David Axelrod, appearing post-speech on the Rachel Maddow Show explained how there could be a mandate for everyone to buy insurance, yet what we would end up with would NOT be universal coverage. According to Axelrod, if you can't afford the not-for-profit health insurance, you will be granted a "hardship exemption". Which means, I suppose, that people who can't afford the reduced rate because they are too poor should be grateful they will be allowed to continue to not have access to health care.

Of course Republicans will approve, as we can not have more lazy lowlifes "suckling from the teat of big government". This explains why they're so upset about Obama's death panels - death panels fall under the purview of the for profit health insurers (Death panels are only bad when they are run by the government I guess). The Supreme Court has ruled that money is free speech - and it is the insurance companies who have spoken loudest. They are the ones who would suffer a "hardship" if the health insurance reform legislation included a true public-option (one which anyone could buy into). Think of the billions in lost profits!

I am not joking. These contract breaking death-panel running parasites actually DO have the temerity to argue that an overhead of up to 40 percent is reasonable while Medicare can do the same job for under 4%.

In an 8/25/2005 article from US News & World Report titled "Why Health Insurers Make Lousy Villains", author Rick Newman declares that, "blaming insurance firms for runaway healthcare costs is a weak argument, because the insurance industry isn't all that profitable to start with". As proof to back up this misleading claim that the health insurance racket "isn't all that profitable", Mr. Newman correctly points out that "the profit margin for health insurance companies was a modest 3.4 percent over the past year".

How can the profit margin stat be both correct AND misleading, you might ask? Mr. Newman reveals the fatal flaw in his own logic when he states that, "profit margins basically reflect the percentage of revenue left over after paying salaries, expenses, taxes and lots of other things. So it's possible for firms to pay their executives a lot and still have a low profit margin". They don't pay their executives "a lot", they pay their executives WAY TO DAMN MUCH. Even though he himself points out how looking at profit margins can be misleading, this fact goes completely unaddressed in Mr. Newman's article. Not even a quick dismissal.

I'm guessing he believes exorbitant Health Insurer CEO compensation to be justified, beyond reproach, and thus not even worth discussing (his article goes on to point a finger at the pharmaceutical industry, which, overall has higher profit margins). I agree that Big Pharma is another leaches draining the American health consumer, but that is a topic for a future blog post.

David O. Friedrichs of the Department of Sociology/Criminal Justice, University of Scranton PA asserts "some immense forms of social harm are not formally classified as crime" in a paper titled Exorbitant CEO compensation: just reward or grand theft? The article concludes that "such compensation is neither warranted nor necessary" and may very well jeopardize the "economy which produces their wealth in the first place".

The author's determination - which I happen to strongly agree with...

David O. Friedrichs: Walking into a bank with a gun and demanding money from a teller is one way to steal money. Walking into a corporate boardroom and securing from that board's compensation committee, made up of cronies, consultants, and even relatives, compensation of millions - sometimes tens of millions or hundreds of millions - is another way to steal money. ...exorbitant CEO compensation is, in a very real sense, a form of crime.

However, excessive CEO compensation is not the only way to dispose of dollars that would otherwise be profit. Former Vice President of corporate communications at CIGNA, Wendell Potter, knows all to well how policyholder money can be squandered on corporate jets, gold-plated silverware, country club memberships, security services and other "gilded excess".

Unlike Medicare, private insurance plan also have high administrative costs - which include sales, marketing, and underwriting expenses. Given these facts, can anyone explain why town hall protesters are falling for this "socialism" baloney? Government already provides public education, police and fire protection, not to mention health insurance for people over 65 (which the private health insurers love, by the way, since those individuals are the most costly to insure).

The solution, while it may be a "hardship" for the private health insurers, is a no-brainer. Expand Medicare to enable anyone to buy into it. Liberal talk show host Thom Hartman, in his article "Medicare Part E: Everybody", explains that if we used the rate "set by the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services (HHS) - which reflects the actual cost for us to buy into it ...Medicare Part E would be revenue neutral".

Revenue neutral means we wouldn't be adding to the national deficit, which is the primary Republican oppositional talking point. Or we can continue allowing health insurance execs to continue stealing billions because it would apparently be better than allowing lazy poor people to avoid dying.

Further Reading
[1] The Private Health Industry's Time is Up by Bernie Sanders, Christian Science Monitor 5/16/2009.
[2] The Health Care Racket by Paul Krugman, The New York Times 2/16/2007.

SWTD #21

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