Monday, October 12, 2009

Industry Hit Job Treated As Academic Work

Today the health insurance industry released a new "study" saying that the insurance reform bill moving through the Senate Finance Committee will end up raising premiums for people who already have insurance.

First of all, why do we even take seriously a "study," by an industry trade group, that is worded and timed for release specifically to block democratic reform of said industry? It's like the Mafia releasing a "study" saying that Americans are actually better off living with organized crime, so the FBI should just call of their dogs. It's like the tobacco industry publishing a "study" showing that cigarettes are good for you. In fact(!), the group that the insurance industry contracted to write the "study," PriceWaterhouseCoopers, did a similar faux study for the tobacco industry in the 90s. I don't know why we take this stuff seriously, but we do. This, apparently, is how we roll.

Moving on...

The headline of the Washington Post's article on this "study" says,
It would be more accurate to say,
"Pass Reform and We Will Raise Rates, Says Insurance Group"
The insurance industry is worried that a reform bill will force them to take on more unprofitable customers, i.e., people who need medical care. They are probably OK with some version of that as long as the bill also requires healthy Americans to buy insurance. The companies probably figure they can tweak the particulars (i.e., find subtle ways to deny care and crank up fees) to still come out on top. But Congress isn't doing enough, from the industry's perspective, to get young, healthy people to buy health insurance, so the deal is off. The health insurance industry is mad that people are not forced to buy their crappy products. So their plan is to either block reform or, failing that, accept the unprofitable customers and raise premiums for everybody. What's to stop them?

You might be thinking, "Isn't this exactly why we need a robust public health insurance option?" Well, yes. In fact, the Left in general, is saying that the "study," flawed as it is, actually makes a strong case for the public option. (Cheers to Rep. Anthony Weiner [D-NY] for making this point vocally today.) The point is, the insurance industry has complete power to raise rates, because the American people have nowhere else to go. So one way to get more people covered AND keep costs down is to create a public health insurance option that people can choose if they don't like what's offered by the companies. Why do market lovers oppose this? For months we've listened to the Right tell us how much everyone would hate public health insurance. I say, OK, prove it. Let's create a public option and see if people prefer it over for-profit care.

Finally, and although it has little to do with the current debate in Congress, I must ask once again:

Why do we need health insurance companies at all?

Obviously medical care has to be paid for somehow. An insurance company creates a pool of people who all pitch in money to a common fund. The company then sends money out for people whose medical bills it has to pay. And it keeps as profit any money left over. Like any business, the incentive is to increase revenue (premiums) and decrease expenditures (paying for medical care). And the model only works if the pool of people is big enough and healthy enough and the rates are high enough to pay for the sick people.

So why not make the "pool of people" the entire American population and make the "common fund" the government? No money would be lost to profit. Savings would mean lower costs and better care. No money or effort would be wasted on worrying about who's allowed in the pool and who's not. No more huge administrative costs for hospitals having to deal with so many different companies. No more worrying about pre-existing conditions. No money wasted on marketing and lobbying. No more worrying about getting screwed over when you need a medical procedure. And no 4-month-old infant would be ruled "too fat" for medical coverage.


Becky said...

Great post. The fact that that "study" was reported as news is hilarious. And scary.

Right now I'm watching the Ken Burns series on the National Parks on PBS. A quotation from John Muir really struck me--it applies to so much in American life: "Nothing dollarable is safe, however guarded."

Dave said...

Thanks Becky. I've heard good things about the National Parks series. It's on my must-see list.

Elizabeth said...

Stick it to them, BTM!!!

My latest revelation is that very few people talk about the costs of defending our country. Or how much defense adds to the deficit. Yet when it comes to protecting the HEALTH of our country, we're suddenly very money-aware. Correct me if I'm wrong, but more people die from medical problems than from terrorists, right?

Dave said...

Yes! And in many cases "defense" is a real stretch of the word. We're often talking about some futuristic weapon meant to counter a weapon system the Chinese might build in 30 years and might use to threaten the United States. So we often spend money on something that might, might kill us a long time from now instead of on the things that are killing us right now.

Sara said...

Poo. Lost my comment...

But good stuff! When I first heard that the insurance industry was kind enough to produce a "study" I had myself a good chuckle. Good grief.