Monday, October 19, 2009

The Republican Plan To Boost Health Insurance Profits

Business is looking at the Democrats and Republicans and saying, how can we make them one party? ... How can we create that? Well, we pay off everybody... What we're seeing in the United States is ... a takeover of the federal government by business ~ Thom Hartmann, on his radio program (10/19/2009).

The Democratic plan is to mandate coverage while putting in place zero regulations ensuring prices don't spiral out of control. Millions of new customers and hundreds of millions in subsidies sounded good to the health insurance cartels, and for a while it looked like they were on board. Then the Finance Committee scaled back the penalities for not buying and the health insurers got scared. Sure, their profits would still soar under the Baucus plan, but was this the MOST they could get?

They are already doing quite well gouging the American public on their own. Plus, if they can't deny coverage for pre-existing conditions anymore what will stop people from going without coverage, paying the fine, signing up for coverage when they needed it, and then dropping it when they no longer did? That is the argument I've heard. It may work for a lot of medical issues, although I doubt someone without insurance can wait for the paperwork to be processed if he has a "pre-existing" broken leg. It is a flaw nonetheless.

Clearly a threat was in order. So a report was commissioned a report to warn the Democrats by how much they'd jack up rates if they didn't get what they wanted. Which I'd assume would be the best aspects of the Democratic plan - which is all good except for the flaw I already mentioned, plus the best aspects of the Republican plan.

What is the Republican plan to raise the health insurance cartel's profits you may ask? Do they even have one? Business as usual is the answer you may have already guessed, but that is not all there is to it. There are two other methods I hear mentioned frequently that could boost profits. Not as much as if coverage were mandated, but mandates aren't consistent with the Republican Party's "individualist" image. Plus they certainly can't - even if their goal of boosting the health insurer's profits is the same - cooperate with Democrats.

Buying health insurance across state lines will increase competition and drive down prices. Or, more accurately, that's how they're selling deregulation this time around. Contrary to the Republican claim that deregulation will lead to lower prices and better service as companies compete to win our business, all it really does is allow participants to "come to an understanding" regarding a minimum amount of gouging. With deregulation also comes consolidation, which makes this all the easier.

This is known as a "race to the bottom", meaning that whichever state regulates the health insurers the LEAST will become their new base of operations. Which is why all the credit card companies are located in Deleware. And, don't forget that it was the deregulation of the banks that precipitated the sub prime mortgage crisis that crashed our economy. Do the Republicans really want to go down this road again? I don't know. But talking about it can't hurt. It gives the impression that they have good ideas - the Democrats just aren't listening.

The second "cost lowering" talking point Republicans continually push is tort reform, or limiting settlement in personal injury cases (this includes medical malpractice). According to trial lawyers tort reform is "a movement to tilt the playing field in the courts towards the defense so that big companies are more insulated from lawsuits by individual consumers". It makes sense that Republicans would want to protect their (real) constituents - corporations and the wealthy - by limiting the little guy's ability to sue. Call the lawsuits "frivolous" and mention the woman who sued McDonald's because she spilled hot coffee in her lap and you've got a sound argument.

Except that personal injury lawsuits only make up a small percentage of cases filed in a given year - 10 percent or less, according to Stephanie Mencimer, author of "Blocking the Courthouse Door: How the Republican Party and its Corporate Allies are Taking Away Your Right to Sue".

Medical bills, insurance companies who refuse to pay, living the rest of your life as a disabled person - these things cost a LOT of money. Not going for as large a dollar amount as you can get really wouldn't be wise, especially since many of these settlements are later reduced. These cases should be decided on an individual basis - juries shouldn't be straight-jacketed by arbitrary caps.

The 2009 CBO analysis reports that, even if "stringent" tort reform were adopted, total national health care spending would be reduced by a mere 0.5 percent.

In my opinion the potential harm that could come from limiting an individual's right to seek legal redress is not worth the savings. There are much more effective ways of saving money, such as allowing anyone to buy into Medicare or mandating that private health insurance companies operate on a not-for-profit basis (as they do in Switzerland).

SWTD #24