Why insurance competition won’t work…

Actually, it can’t, if the CEOs abide by the law.

By Jack E. Lohman

This whole idea of letting insurance companies compete across state lines is kooky, though to the insurers it makes all the sense in the world.  

First, because it is a Trojan Horse and buys time, years in fact, for the industry to rack up even more profits. It lets politicians claim, and citizens believe, that given time they can compete with national insurance companies to drive down healthcare costs.

In fact, the insurers will take dollars from the caregivers while protecting their investors. Federal law requires corporations to put the best interest of the shareholders above all others, including customers (and patients).

If insurance companies must reduce costs, you can be assured that they’ll not start by restricting CEO salaries, bonuses or shareholder profits. They’ll instead restrict patient care, denying it wherever possible, and ultimately drive good doctors out of the business.

Shopping the states

And then you have this thing called state insurance regulations, and insurance companies will migrate to the states with the weakest regulations that protect patients, and states racing to the bottom to attract the companies. Just as Delaware did to attract corporations.

But that’s not the worst of it. The insurance bureaucracy should be eliminated because it is a wasteful middleman that adds nothing to patient care. It drains 31% of our total healthcare costs simply by being in the loop, and never laying hands on the patient.

And you can’t blame them. It’s a gold mine, but it’s our gold.

Insurance profits are only 2.2%???

Hogwash. The insurance industry is claiming profits of 2% to 6%, and that doesn’t sound unreasonable to the lay person. But this is only what they pay taxes on, after deducting the gobs of overhead like exorbitant salaries and bonuses for the CEOs and executives, actuarial costs (cherry picking), utilization review (denials, lemon drops), advertising, marketing, broker commissions, billing paperwork, and even their campaign contributions to politicians.

When boards ask: “We’ve got all of this excess cash, are we better off giving it to the CEO or the tax man?” You know the answer. 

And when premiums increase by 15% but medical costs only go up 5%, you instinctively know the public is getting the shaft.

Worse, all of these extra costs are passed on to the patients and represent 31% of our private healthcare bill.

How’s this for a well-scripted charade?

— Insurance industry pays off enough politicians to ensure that individual mandates are passed and public option is killed. If not killed, certainly crippled… limited to the unemployed.

— But they pay off both Democrats and Republicans so the issue becomes bipartisan.

— Voters find out about the money and politicians have egg on their face. People are mad back home.

— Wait, I’m thinking … hmmmm … hmmmm  … hmmmm.

— Got it! It worked for Big Tobacco and it’ll work for insurers…

— Industry reeeaally screams  that reform doesn’t go far enough (or goes too far) and takes a “public stance” AGAINST ObamaCare (wink, wink).

— Pols thumb their nose and vote against the industry’s fake opposition (heh heh, that’s in the playbook, don’cha know).

— Bill passes WITH individual mandates and WITHOUT the public option. Industry cries foul … whimper whimper … all the way to the bank.

— Pols go home pounding their chests that “they voted against the industry!” They didn’t cave, yet they followed them to the bank.

— Public is snookered, industry got what it wanted, politicians look like heroes, and the industry’s campaign contributions for 2010 are locked in.

What a perfect political cover.

Aren’t politicians great?

Too bad this isn’t simply a “pride” issue; like another country did single-payer first so we aren’t going there. That’s easily fixed, but political corruption isn’t and the industry knows it. Their most important job is to stay in the people’s pocket as long as possible, at whatever cost. That they have our politician’s help is a sign for us to change.

And incidentally, providing an opt-out to the states simply starts the campaign dollars rolling at the legislative level. Aren’t we lucky?

3 Responses to Why insurance competition won’t work…

  1. John says:

    I’m wondering if you saw the bogus “Fact Check” done by the AP. I posted it a few days ago. It deals with the small profit totals you mentioned above. It was insane.

    http://democurmudgeon.blogspot.com/2009/10/phony-ap-fact-check-equates-hershey.html

  2. Yea, that 2% is only what they pay taxes on, after the accountants are finished cleansing the records of every deduction they can possibly find.

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