Less Care + Higher Costs = Big Profits For Insurers

BCBSRI On May 14th Lt. Governor Elizabeth Roberts (Chairwoman of the Rhode Island Healthcare Reform Commission) wrote a column for the Providence Journal trying to explain how millions of dollars in federal grants resulting from the Affordable Care Act (ACA) of 2010 has benefited Rhode Islanders so far. Four days later the Journal ran the column Roberts should have written “Health-insurance firms raking it in” by Barbara Shelley of the Kansas City Star editorial board.

Shelley finds it interesting that America’s highest paid Chief Executive Officer is “Stephen J. Hemsley, 58, CEO of UnitedHealth Group, whose one-year compensation package is almost $102 million, Forbes reports, plus $111 million in company stock.” She turns to the excellent Wendell Potter, a former insurance-industry executive turned critic and watchdog, for further analysis of the situation (quite familiar to the unrepresented direct payers in the individual insurance market).

“To make this kind of money, insurance companies have to spend far less paying their policyholders’ medical claims than anyone thought possible,” he wrote. “They’ve been able to do that so far this year, despite the new health-care-reform law, by shifting many policyholders into plans that force them to spend more from their own pockets before coverage kicks in. Insurance firms also fatten their bottom lines by denying more claims.”

I know this routine well. I got shifted into a new plan (not a rate hike, mind you) by Blue Cross Blue Shield, and my premiums jumped, along with all my out-of-pocket expenses. Their reimbursement to labs and imaging companies has clearly plummeted. Meanwhile Roberts is excited about using $530,000 to “help educate Rhode Islanders about their insurance options” (what options). Further, we have “$1 million to plan a health-benefit exchange” — an exchange that doesn’t come online until 2014 — so, lots of money for lots of planners. But the out-of-pocket cap promised for 2014 looks pretty far away to Rhode Islanders whose expenses are skyrocketing now.

So while everyone in the pool can expect three more years of this shakedown, as an individual payer, I thank you Barbara Shelley and Wendell Potter for speaking out on our behalf. We are currently the rented mules in the health insurance equation, with no representation and no bargaining power. (And an additional note to the Blue Cross marketing department; please stop running those egregious and expensive TV spots about how some agent or other helped grandpa with his diet. We all know the insurance industry trots out these “wellness” initiatives to make it look like we’re all in this together and they are complete horseshit.)

1 thought on “Less Care + Higher Costs = Big Profits For Insurers”

  1. I’ve a few thoughts on this:

    – A couple years ago, I spent some time in one of our city’s several fine hospitals. On paper, I bought a house. (Maybe two.) Most of that was covered, but I was still in for thousands, and I the paperwork alone is very impressive. Many, many times, I’ve thought, “There’s got to be a better way.” And of course we all know there is, because every other modern country in the world is doing it better, for a lot less cost per capita.

    – During one of my follow-ups, I was waiting in Lifespan’s Ambulatory Patient Care facility, and had to sit through Fox News on the waiting area TV. It had a sign saying not to change the channel, so I didn’t, but I did ask who decided what was on it. No one seemed to know, which to me suggested that the decision was made higher up. Everyone agreed that it was always on Fox News, though.

    – It took me forever to realise that ‘community health’ coverage is actually Medicare, in the guise of various local and state administrations. I’ve come to also understand that this seeming (and actually) asinine arrangement — which adds enormous cost and inefficiency to an otherwise very efficient federal programme — began as a political compromise between FDR and state governments who feared losing their precious sense of sovereignty: Basically, the States demanded that they, and not federal officers, be in charge of Medicare, so that they could pretend it was something they were doing instead for their citizens in need. That’s why Medicare is so confusing, because of the huge added unnecessary state-level bureaucracy bolted onto it decades ago. Despite this, however, they still remain more efficient than every private insurer in the country, who are supposedly much better at it: administrative costs for Medicare are around 4%, about half that of companies like Lifespan.

    U.S. insurers have spent untold hundreds of millions to make sure that they never have to accept the balance of cost and care that would provide fairly priced and fairly delivered healthcare to Americans. But we’ve only ourselves to blame for letting this go on. Hemsley’s pay has been printed before, including on the cover of the Phoenix a few years ago — all to little avail, as Americans continue to ignore the facts and accept the claims pushed on them by various people with a financial stake in the outcome. People like Sen. Joe Lieberman, who infamously said that the people of Connecticut didn’t want healthcare reform. (He probably just forgot to include “filthy rich and politically connected,” which would have made it an accurate claim.)

    Americans just can’t accept that they CAN regulate these creeps. Switzerland does: they’ve got no national healthcare, but tightly regulate private healthcare like a public utility, to ensure that everyone is taken care of.

    Americans seem to think that we don’t have to pay for indigent care, but that’s false. We do it all the time, at enormous cost. Until we become so callous that we decide we’ll tolerate dead people in the streets, that will remain true. Instead, we tolerate a system that provides minimal preventive and curative care for our weakest, while keeping them alive — surely the cruelest, costliest way to deal with a problem that’s never going away.

    A universal system would distribute cost so that both overall and per capita costs would be much lower — especially once the incentive for gobs and gobs of profit are removed. I’m not an anti-capitalist, but it should be sickening to any decent person that anyone profits so handsomely off the suffering of others.

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