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Running Scared: The Insurance Industry’s Disingenuous “Concession” |
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If you were reading the headlines in the mainstream media yesterday, you probably thought the insurance industry made a huge concession. “Key Health Care Development, Insurance Industry Concession” writes Politico. “Health insurers offer shift on premiums” says the Los Angeles Times. “Insurers Ease Stance on Pre-Existing Conditions” says the New York Times.
Actually, the Associated Press got it closest, saying “Insurers offer to stop charging sick people more.”
Here’s what the insurance industry, as represented by Karen Ignagni of AHIP and Scott P. Serota of the Blue Cross and Blue Shield Association, actually offered, in a letter they sent to the Senate health care committees [pdf], in their own words:
Specifically, by enacting an effective, enforceable requirement that all Americans assume responsibility to obtain and maintain health insurance, we believe that we could guarantee issue coverage with no pre-existing condition exclusions and phase out the practice of varying premiums based on health status in the individual market.
While we support transitioning to a reformed system in which health-status-based rating is no longer used, rating flexibility based on age, geography, family size, and benefit design is needed to maintain affordability.
I’m not sure the insurance industry should get a lot of credit for this “concession.” They are offering to end the shameful practice of denying people coverage or charging them more if they have a pre-existing condition. This is something they should have been doing from the beginning. The fact that they are only now changing this awful practice is hardly cause for kudos.
And, as they admit, they will still discriminate in their premiums, charging more if you’re older, live in the wrong part of the country, have a large or small family, or are a woman. And the proposal only covers the 11 million in the individual private health insurance market. It doesn’t touch group or employer plans, and as such, does nothing for small business.
They spend the first half of their letter arguing against the competition of a public health insurance option:
Creating a new government-run plan would thwart the ability of the health care sector to
implement meaningful delivery system reforms, exacerbate the cost-shift from public programs to consumers and employers in the private market, and destabilize the employer-based system. In fact, studies show that more than 100 million people who currently have private coverage would move to the new government-run plan.
In effect, the private insurance industry is arguing that a public health insurance option would work so well, people would drop their private coverage, as if that were some great tragedy.
And in return for this huuuuuge, voluntary concession, they want an individual mandate, so everyone in America would be forced to by their poor-quality products.
This is not to say that increased regulation on the insurance industry isn’t needed or important. But the key here is cost. The insurance industry has made no proposal for reigning in their costs, because that would mean lower profits. The only way to reign in costs, of course, is to introduce competition in the form of a public health insurance option, to hold all health insurance plans accountable and increase efficiency.
Instead, the insurance industry attempts to solve the cost issue by proposing the government subsidize people who can’t pay the insurance industry’s sky-high premiums. They want you to buy their sub-prime product, and when you can’t pay the rates, they want the government to pay them for you. Do they care if you go bankrupt because of health care costs? Nope, that’s not their problem. Do they care that they dictate to doctors what will and won’t be covered, and therefore, what care you get? No, again, not their problem. It’s all about protecting profits.
Though regulation is important, these “concessions” are nothing but a bailout for the insurance industry. They are laughable, nothing more than a smokescreen, and should be treated as such.
The fact, however, that the industry is making these meaningless gestures shows how genuinely scared they are of reform. They know the public is against them. They know they make a shoddy product. And they know reform is coming. They want desperately to stay at the table, and they think - wrongly - that offering meaningless concessions like this will ensure their voices are still heard.
And they should be scared, because the public hates them. And I mean real hatred. I’ve been out there, I’ve seen it. I work with our field organizers in 40 states and they feel it every day. I just don’t think Karen Ignagni here in Washington, DC really appreciates that anger.
Now, I’m sure President Obama will listen to everybody in this debate, but as Richard Kirsch, our National Campaign Director, said, “We shouldn’t confuse President Obama’s having an open door with his being a doormat.”
(also posted at the NOW! blog)
Sooo if you have a DUI or a history of speeding you should also pay the same car insurance premiums?
And if your car needs an oil change vs. an engine overhaul…you should pay the same?
And when you buy life indurance a 20 year old should pay the same as a 80 year old?
When you buy the $1 lottery ticket with an equal chance at the huge prize, it is only a huge prize if lots of people plunk in thier dollar too. If mostly sick people buy insurance which happens more and more as the economy turns then there is no big prize money, they spend it faster than it gets into the system. Insurance is really more like a lottery…lots of people have to take a loss to pay off for someone else. And yes the big bad company takes a cut…just like in the lotteries, legal or otherwise.
I think you have confused insurance with something else and I am not really sure what.
Not all insurance is equal. With health insurance, you’re dealing with lives, not cars or end-of-life payouts, and so the rules can and should be different.
However, your example of the DUI and history of speeding is instructive. These things involve choice. You can choose not to speed or drive drunk, and if you choose to do these things, then you should pay more for it in insurance. Same thing with health care. If you adopt healthy habits (exercise, not smoking), you should get a break on your health insurance.
But everyone gets sick, often through no fault of their own, and they shouldn’t be penalized for that.
If all medicare had a pool of even half of the US, all ages, all conditions, you would end up with a good pool of healthy, young people as well as the old and sick. Premiums would be far more reasonable and pay outs to health care providers could be increased. Let the private insurance companies whine if they must but if they cannot compete, they’re out.
Jason -
You need to do more research before publishing something like this. It really makes you look foolish.
If health insurance premium for a 22-year-old non-smoking male is $100 per month, but he’s taking $200 per month in acne medication, where’s the money going to come from?
Health care is expensive. Americans need to do research to find out what is driving the costs. Demonizing insurance companies is easy but does not solve the problem.
I find it ironic that you tell me to do my research, but give none of your own to back up your assertion that insurance companies aren’t the main driver behind health care costs. I’ll admit they’re not the only problems here, but they do play a huge role, mostly because they have no real competition to lower their overhead, which is 10 times more than programs like Medicare.
yes, health insurance is expensive, but it is insurance. Don’t buy it and pay the doctor and hospital out of your pocket. That is where the expense is. Control costs for hospitals($300 aspirins i.e.)and the doctors billing should be analyzed. Insurance companies are profit entities and not charities. People deserve basic healthcare, but who is going to pay for it…maybe more taxes for all.