Thursday, June 25, 2009

The Lie That Private Health Insurers Can't Compete With A Public Option

The following is an excerpt from an article by Robert Creamer written for Huffington Post. In it Creamer takes on the lie that private health insurance companies can't compete with a public option. This lie is heavily backed by some blue dog democrats, the Republican party, the Chamber of Commerce, and most of the medical industry. Regular ole Americans support this option by a 76% majority (Wall Street Journal Poll) across all political lines.

But left to their own devices, private insurance companies have an ever-present incentive to minimize their own risk of paying out for health care to their policyholders. That's why they try to select only customers who are well and get rid of those who are sick. That's why it's in their interest to spend millions on armies of people whose only job is to deny claims -- a task that has no value in the broader scheme of the health care system, but makes perfect sense from the standpoint of a private insurance company. That's why they don't want to take people with pre-existing conditions -- because they are more likely to get sick. (This refusal to pay legitimate claims is killing hospitals and care givers and bankrupting Americans who can't pay these denied claims. This is placing profit above both care givers and recipients.)

And, private insurers are not in business to provide health care coverage for every American, or to slow the growth of health care costs. They are in business to maximize return for their investors and the pay of their top management. So when left to their own devices, private insurers generate huge profits and pay their CEO's tens of millions of dollars.

The entry of a public insurance option into the health insurance marketplace would change the rules of the game. If consumers had a public option, who in their right mind would sign up with a company that would discontinue your policy if you got cancer or had a heart attack? Who would join a plan where they had to pay for bloated executive salaries -- or had to regularly do battle with an insurance bureaucrat in order to get a claim paid? Why do seniors like Medicare? They don't have to contend with these kinds of problems. They have secure, reliable health insurance.

So to compete, private insurance companies would be forced to change the way they do business. They would have to end all of those practices that American consumers have grown to hate, cut administrative costs -- maybe even cut CEO pay. Of course since the CEO of Cigna makes $26 million -- 65 times the salary of the President of the United States -- he could afford several million dollars in belt-tightening.
They could compete - but they would have to change the way they compete. That's what they are fighting tooth and nail to avoid - and that's also the whole point of health care reform: to change the incentives that determine how the players in the health insurance market do business day to day.


Catholic bishops are supporting health care reform because they are both care providers through the Catholic medical system and their people are care consumers. The current health insurance system is an obstacle on both fronts. A heavily backed public option would deal with both issues. In this sense their interest is an economical interest. It is however, an issue which has much larger social justice implications. It also has serious implications for our own democracy.

I've known all along that it is the health care, energy, and banking reforms that will be the real test of the change Barack Obama promised. In both cases he has huge popular support that crosses political lines, but also in both cases he is facing the largest and best funded lobbying blocks. If Congress caves in to the lobbyists, which it seems they are doing, there will be no change and America will have to deal with the fact we have only an illusion of a democracy. On these core economic issues we are no better than Iran's illusion of democracy. We are not about all people, we are only about the wealth of some people. Maybe that's a truth the rest of the world sees far clearer than those of us in the United States.

Reforming health care is a no longer a political issue. Republicans, Independents, and Democrats all support it. No congressman stands to lose any political capital by supporting a public option. What they will lose is the economic capital of the health industry lobby. What scares me is that the talk coming from Washington is all internal and ignores the external reality of the population. When Dianne Feinstien says she is 'concerned' that the president doesn't have the votes in the Democratic caucus, she might just as well say, "I'm concerned we've been bought".

Of course that would be an admission that corporate money influences elected officials far more than popular vote. Can't be having that.

Hopefully the health care reform debate will let independent bloggers shine. It will give bloggers the chance to go over bills and look for the watering down which will make reform nothing more then the status quo in new clothes. They will be able to organize protests should that become necessary. If Americans can't hold their democratically elected representatives accountable to them over health care, a huge domestic issue, then we don't have a democracy. We have a corporate theocracy based in greed and we can expect no significant reform in banking, energy, or immigration.

That's an issue all the bishops should be able to rally around. It strikes me that their real task is not to put the Catholic version of God back in American culture, but to take on the god of greed which underpins our corporate/political culture. That would be a real and meaningful battle which would impact not just the lives of all Americans, but of the greater global community. They'd have a lot of popular support but just like elected representatives, it would cost them a lot of money. The question is will they fight for health care reform with same urgency they took on Notre Dame? Since they are vested players in American health care the answer to this question will speak volumes.


  1. This issue of Health Care Reform is so important. The current way things are done either bankrupts people when they need care the most or leaves them without any health care. This country is headed down the tubes in so many ways if we don't take a stand and put in the reforms needed.

    "If Americans can't hold their democratically elected representatives accountable to them over health care, a huge domestic issue, then we don't have a democracy. We have a corporate theocracy based in greed and we can expect no significant reform in banking, energy, or immigration."

    I agree with that. We don't have a democracy if the banks, insurance companies, energy companies are performing against the will of the people. It's high time they got a performance appraisal.

    What's it going to take for people to change it? It unfortunately may take younger folks watching their aging parents go broke to pay for health care to get everyone on board to making the needed changes. Unfortunately, if we wait too long, only the banks and insurance companies will win and everyone else loses.

    Actually, we don't need the insurance companies at all. They are a middle man that is unnecessary and are the reason for the high cost of medical care. They like to blame the high cost on the new high tech equipment and the cost to keep people on ventilators. Those type of cases are a small minority of claims.

    The high cost is due to the fact that doctors have to hire people to submit claims to the insurance companies and haggle with them so that they are paid. This contributes to the high cost. A lot of the cost goes to pay staff that has nothing to do with the medical care and everything to do with the insurance claim.

    The health insurance industry should be put out of business, as it currently exists, for the fact that they have nothing to do with medical care at all and everything to do with just making them money.

  2. As per the Catholic Bishops......they are part of the system, thus part of the problem. In all seriousness, if you think for one moment that the US bishops give a damn about health care for the poor, much less for the working class (or anybody else)....

    ....then I have some swamp land in Florida you might be interested in:)

    1. The Bishops are out of touch with reality, as they do not work. Seriously - they have no real accountability. As long as they tow the company line, they & all clergy have a guaranteed job for life.

    With free & virtually unlimited health care, courtesy of the idiots putting $$ in the plate. Thus for them, as they have no conception of working a job or budgeting on a salary, this is all something which they cannot relate to. It is not their reality.

    2. Every diocese operates a plethora of NFP, social service, & public charities/charitiable trusts. Sometimes literally hundreds of these 'front' or 'backdoor corporations'. This includes hospitals, related clinics, and nursing homes.

    3. All of the items described in #2 are designed to operate 'in the black'. And they do. They get vast amounts of private donations, grants from charitable trusts & corporations, as well as an incredible amount of State & Federal tax dollars.

    There is a word for this: a money machine.

    If you think that hospitals do not make $$...or that nursing homes do not.....that swampland in FL awaits:p They make $$ beyond your wildest dreams. It is carefully hidden & laundered behind corporate fronts.

    IN the past, hospitals were literal charities, which provided free or virtually free care to the poor - courtesy of affluent benefactors.

    That was BEFORE the advent of Catholic Charities as a regional & national uber-entity. It is a vast black hole for greed & money laundering. And incredible amounts of Medicaid/Insurance fraud. Catholic hospitals have a foul record of viciously suing those who cannot afford to pay their bills!

    Charity my a**!!!

    If you do not wish to believe the above, then ponder this:

    A hospital buys its various supplies (from meds to bandages to anything you can imagine) NOT directly from a supplier. Instead, they establish a dummy corporation, which buys for them at wholesale (or below). The dummy corp.then acts as the vendor to the hospital/nursing home. It jacks up the prices far beyond normal resale. THEN the hospital/nursing home bills Medicaid/Insurance or the poor patient often 200% to 500% OR MORE of the original price of the item. Sometimes the dummy corp. is regional, serving multiple institutions.

    This is a common practice - in addition to overcharging for services, or fraudulent charges for non-delivered services. Or billing for long dead or discharged patients.

    In short, the bishops have much to gain from the present system.

    These men - most of them - do not believe in God. They just pretend to. So this should come as no surprise....from men who view the laity as "the simple".