Monday, March 01, 2010

The Unasked Question

Once again, a columnist in the Business section of the Los Angeles Times has come through with an incisive column on health care reform. Michael Hiltzig watched the congressional testimony of Angela Braly, CEO of WellPoint, owner of Blue Cross, and parsed her testimony accurately in his column titled "What do we need health insurers for anyway?"

WellPoint didn't really want to jack up health premiums on its customers by as much as 39%, she said -- it had no choice. "We care deeply about our California customers," she said.

But what she was really telling the committee members was this: "Please put us out of our misery."

Braly explained that her company's premium increases on individual policies were based on several circumstances: One, people are getting older. Two, people are becoming unemployed, and if they're healthy they're dropping out of the insurance pool. Three, the cost of diagnostic testing is soaring.

Implicitly, she begged for the government to help -- put people back to work so they're eligible for cheaper group plans, and clamp down on costs. (Not even the government can stop people for growing older.) Without that help, she intimated, premiums are going to keep rising sharply and WellPoint's already meager profits are going to be hammered worse.

In delivering this appeal, Braly was forced to make an implicit admission that her industry almost never makes explicitly: The nation's health coverage system is so hopelessly broken that even the health insurance industry can't handle it anymore.

Now, I was a little annoyed at Mr. Hiltzig being so kind to Ms. Braly and her megacorp, but as I read further, I backed off.

Braly's words are a reminder of the most important unasked question in the entire healthcare debate: What do we need insurance companies for, anyway?

The only way insurers can remain profitable at all is by selling healthy people on policies that don't offer much coverage at all, while squeezing older, less healthy people remorselessly so they either pay for most of their care out of pocket or get priced out of the insurance market completely (thus becoming a burden for taxpayers).

In short, this is an industry that acts as if it will have trouble making money unless regulators allow it to cover only injuries suffered by a young single male hit by an asteroid.

Meanwhile, however, it fritters premium income away on expenses generated largely by corporate initiatives having nothing to do with healthcare. WellPoint spent $2.6 billion repurchasing its own shares last year. This was such a good deal for shareholders that its board recently authorized spending an additional $3.5 billion for the same purpose. None of those dollars, it should go without saying, will be available for delivering healthcare to customers.
[Emphasis added]


And zing, again!

And that's the point that neither the White House or Congress wants us to think about. Private industry health insurance "works" only if it is making a profit for the parent corporation, their executives, and their shareholders each and every quarter. Now that the economy is down and a lot of the healthier people have been laid off, that profit isn't as large as the elites would like. The fact that we oldsters have been paying for premiums for 30 or 40 years, the total of which far exceeds our use of the policy, doesn't matter to them.

Well, it certainly matters to us.

Hopefully it matters enough that we will start yelling enough to get Congress and the White House to pay attention. And if that doesn't work, maybe November, 2010 might.

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Blogger PurpleGirl said...

The Blues all once were non-profit organizations, then as other insurance companies and their executives began to make huge amounts of money, the Blues decided they had to join the party and they pushed for deregulation and a change of the rules. State by state, the Blues turned into for-profit companies. The system is beyond broken.

7:40 AM  

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