Big Health Insurance’s Ugly Secret

Big health insurance is hiding an ugly secret. As Medicare for All gains popularity, they and their allies in healthcare profiteering are launching another media blitzkrieg to hide that secret. Their secret is threefold: 1) for-profit insurance is far more expensive than Medicare for All. 2) We don’t need health insurance companies at all. 3)  The level of waste in for-profit insurance is staggering.  It’s much worse than you might think.

The insurance companies hope to scare us with hand wringing about the expense of a government-run system. They hope we won’t figure out that the money we all pay to these insurance companies supports a vast insurance bureaucracy that only incidentally buys us health care. Insurance companies are parasitic middlemen who siphon off vast sums of money that should be paying for our health care.

The proponents of for-profit health care admit that their system is a “little” inefficient. According to a report by the pro-insurance company Council for Affordable Health Insurance,* Medicare administrative costs are 5.2% (this report disputes the frequently-cited figure of 2%), while the insurance industry’s administrative costs are around 17%. This report goes on to make some rather dubious claims about the value the insurance companies provide for this extra money. Read them, if you like.

But it is oh so much worse than that.

EXPENSIVE REDUNDANCY
For starters, there is expensive redundancy of many insurance companies having their own competing bureaucracies.  That’s bad. But the ugliest part of this is that MOST of the functions of these insurance companies are utterly unnecessary to provide healthcare. They serve only to feed the insurance profit machine. These companies have outlived their usefulness and maintain their positions only by disinformation and sheer political power–that is, lots of thinly-veiled bribes that go by the euphemism “campaign contributions.”

For-profit health insurance companies can’t even begin to compete with government programs like Medicare and Medicaid which exist to provide health care, rather than to produce profits.

Let’s look at some of the players in the insurance companies.

STOCKHOLDERS
Our Founding Fathers distrusted corporations and said corporations should only exist to serve the public interest.

Portrait elderly man Happy to have money, white background
Milton Friedman told us that corporations exist solely to make money for stockholders.

Over the years, powerful business interests and their intellectual apologists like Milton Friedman have twisted that around. We’re now told that corporations exist solely to make money for stockholders. Not to provide great jobs. Not to provide outstanding goods and services. Not to be good community citizens. Just to make money for stockholders. They’re like plantation owners in the old South, sipping lemonade on the shaded porches of their mansions, while their slaves toiled in the hot sun.

Stockholders are doing quite well for their non-contributions. Companies like Humana and Anthem have A+ ratings on their stock; others like CIGNA, Aetna, and Magellan Health get A’s and B’s. This translates into a lot of cash flowing from our wallets into the pockets of shareholders–instead of buying health care.

Medicare For All: You don’t pay to support insurance co. stockholders 

EXECUTIVE COMPENSATION
Like little Jack Horner, top insurance executives say, “What a good boy am I,” as they stick in their thumbs and pull out fat plums from our health care pie. With the complicity of their corporate boards of directors, executives help themselves to many millions of dollars of our health care premiums.

Things are very good for insurance executives. According to Fierce Healthcare, CEOs at the nation’s largest insurance companies collectively earned $342.6 million in 2017, with the highest-paid executive bringing home $83.2 million.  In 2017, nearly every health insurance CEO got a pay raise. Most of them bring home more than 300 times the amount their average employee earned.

Things were REALLY good for the executives at Aetna. CVS acquired Aetna, in a move we were assured would benefit consumers. One of the great benefits for us consumers was they would save money by cutting duplicative senior roles. But of course, you can’t just send obscenely-overpaid executives packing without giving them a little something on the way out the door. Top execs were awarded severance packages totaling $400 to $600 million!  You could buy a lot of doctor visits with that kind of money.

abundance bank banking banknotes
Obscenely-overpaid executives at Aetna were paid between $400 and $600M in severance.

But it gets worse.

CEO’s “earn” these whopping compensation packages for making stockholders rich, not for giving us great health care. In fact, one way that they “earn” their money is by denying claims. In an article in the Huffington Post, Wendall Potter states there is a link between high executive pay and high rates of denying claims. Think about that. Executives are rewarded for putting you and me, their customers, through hell–and maybe into bankruptcy–by denying claims.

Medicare for all: No wasted health care dollars on obscene executive compensation packages 

LOBBYING

The insurance industry pays over 800 lobbyists and spends more than $78 million on lobbying for THEIR interests; not ours. With the effort to defeat Medicare for All heating up, the insurance industry will dig deep into our wallets to fund these lobbying efforts.

Medicare For All:  No money wasted to pay for lobbying against our interests

CAMPAIGN CONTRIBUTIONS
In the 2012 election cycle, the insurance industry (including health, life, property and car insurance companies, agents and brokers)  contributed a record $58.7 million to federal parties and candidates as well as outside spending groups. Of the nearly $55 million that went to parties and candidates, 68 percent went to Republicans, who have long been the recipients of most of this category’s giving. These Republicans are hell-bent on repealing the Affordable Care Act, leaving many millions of people without insurance.

Of course, Democrats get a good share of the loot. Recently, California’s legislature was moving toward enacting a state single payer system–until House Speaker Anthony Rendon stopped it in its tracks. The dirty deed is discussed in the article, “Corporate Democrats Sabotage Single Payer Bill in California for Wealthy Donors

In 2015, the Sacramento Bee reported that Rendon received over $36,000 from drug makers. In April 2017, IBTimes reported that House Speaker Anthony Rendon, Senate President Kevin De Leon and Gov. Jerry Brown—all Democrats—have received a combined $370,000 from groups opposing single-payer health care legislation. Since 2010, these lawmakers have received $3.4 million in campaign donations from the health insurance industry. While California voters and progressive groups demand single-payer health care in the state, the Democratic establishment in California has been bought and paid for by the pharmaceutical and health care industries to prevent it from becoming a reality.

Medicare for All:  our health care dollars won’t be used to corrupt the government. 

UNDERWRITING–Insurance underwriters determine whether insuring a given group (the place you work, for example) will be an acceptable risk so the insurance company will make money. They determine how much risk the insurance company would take on (the health of a given group), how much insurance the group should get, and how much to charge. They help decide whether the insurance company should offer a policy at all.

In Medicare for all, everyone is covered, so there is no need to scrutinize the groups for each policy.

Medicare for All:  No Need for Insurance Co. Underwriters 

Insurance companies spend a fortune to pull our heartstrings and assure us that Insurance Company X cares about us so much more than Insurance Companies Y and Z.  Advertising in the accident and health insurance industry totaled over $213M in 2018, down from $562M in 2011.

Nuff said. With a single payer system, there is no need for any of this nonsense.

Medicare for All Won’t Waste Your Health Care Dollars on Marketing and Advertising of Insurance Companies. 

DEVISING AND EXPLAINING PLANS
Armies of insurance bureaucrats busy themselves devising the many different plans these companies offer.  Each plan specifies which doctors we may visit, which treatments we may receive, and the deductibles and co-pays we’ll have to shoulder. Most of us have had to pore over these confusing descriptions to figure out which is the least of the evils. Then, other bureaucrats create brochures describing their offerings and still others are dispatched to workplaces to explain the various options employees may have.

Medicare for All: Eliminates the Need to Devise & Explain Plans

DOCTOR & HOSPITAL ADMINISTRATIVE COSTS–  Who can possibly count the waste from the unfathomable hours spent in administrative time by the offices of the people who actually provide health care. They must wade through the idiosyncrasies of each company with their own forms, regulations, plans, etc. etc. and spend hours fighting with insurance bureaucrats to get them to pay up.

Administrative Costs: Radically reduced in Medicare For All 

This just scratches the surface of the money we flush down the toilet to support health insurance companies, instead of getting health care.

How strange that a nation that worships efficiency would tolerate an industry that is so inefficient, ineffective and that so often rips off its customers. It’s time for a change.

THUNDERBOLT

* According to Sourcewatch.org, The Council for Affordable Health Coverage (CAHC) is a coalition of pro-corporate organizations, trade associations, front groups, and insurance companies that actively oppose legislation such as the Affordable Care Act, specifically the ACA’s employer mandate.

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