October 13, 2009--Insurance Fraud
For months the health insurance industry offered support for various efforts to expand coverage. CEOs of the major providers stood at Barack Obama’s side, nodding their heads in apparent agreement as the president called for reform.
All along I suspected that they must have made a deal with the administration: in spite of the rhetoric by Obama and his representatives that reform would lead to lower costs to the insured I assumed that if the kind of reform these executives were supporting was ever approved by Congress and signed off on by the president there would be more money, more profit in it for them. After all they are publicly owned companies and there was no way they would agree to anything that would negatively affect their bottom lines. Their Wall Street investors wouldn’t sit still for that.
Since I have been inclined to trust the Obama administration about this, I assumed the extra profits that would flow to the health insurance companies, eliciting their support, would come from the tens of millions of new customers they would sign up if reform were ever approved. Especially all the younger, low-risk people who would be required to buy insurance who currently do not have any. Insurers make more money from them since they pay premiums but get sick much less often than older folks.
But then just yesterday, the day before the Senate Finance Committee is set to vote on the so-called Baucus bill, the one many concede is most likely to include the core of what is likely to ultimately be approved by both houses of Congress, the medical insurance industry came out with a report sharply critical of the Baucus plan. Claiming, listen to this carefully, that if approved it would dramatically raise the cost of insurance premiums for all Americans. And thus, they now no longer support it.
Here is the opening sentence of the New York Times article about this (full piece linked below):
“Obama administration officials and Congressional Democrats fired back on Monday at a new insurance industry report that said premiums would climb sharply with the passage of comprehensive health legislation.”
Putting aside the suspicious timing of the report and the fact that the insurance companies themselves paid for it, why would anyone without political motives believe a word it contains?
One could pore through the more than 1,000 pages of the Baucus bill or the full report of the independent Congressional Budget Office, which says that the bill would be budget neutral, actually saving taxpayers more than $80 billion over ten years, in an attempt to figure this all out--neither I nor I suspect you are inclined to do this—but if one were to apply just common sense to the new insurance industry report how likely is it that any for-profit business would criticize anything that would bring them more profits?
If it were true that health insurance premiums would go up an additional 18 percent, as claimed, for families because of comprehensive reform wouldn’t that by definition mean that income and profits for the insurers would also go up?
When was the last time any business just passed along rising costs? Isn’t it routine, when this happens, for them to see this as an opportunity to make more money?
So what’s wrong with this picture—without a public option (and the Baucus bill does not include one) all low-risk new policy holders would have to pay cash (with or without subsidies) for their insurance on the open market, which would mean lots of new profits for companies; while all others would see the cost of their policies rise faster and higher than if there were no reforms, also good for the insurance companies’ bottom line.
Why then are they now opposed to comprehensive reform? Again applying just common sense, it must be because they must have just figured out that even the Baucus tepid version of health reform is actually a good deal for citizens and a bad one for insurers.
This to me then means that I should probably be feeling better about the Baucus plan than up to now I have been.
In other words, if they’re again’ it, I’m for it.
All along I suspected that they must have made a deal with the administration: in spite of the rhetoric by Obama and his representatives that reform would lead to lower costs to the insured I assumed that if the kind of reform these executives were supporting was ever approved by Congress and signed off on by the president there would be more money, more profit in it for them. After all they are publicly owned companies and there was no way they would agree to anything that would negatively affect their bottom lines. Their Wall Street investors wouldn’t sit still for that.
Since I have been inclined to trust the Obama administration about this, I assumed the extra profits that would flow to the health insurance companies, eliciting their support, would come from the tens of millions of new customers they would sign up if reform were ever approved. Especially all the younger, low-risk people who would be required to buy insurance who currently do not have any. Insurers make more money from them since they pay premiums but get sick much less often than older folks.
But then just yesterday, the day before the Senate Finance Committee is set to vote on the so-called Baucus bill, the one many concede is most likely to include the core of what is likely to ultimately be approved by both houses of Congress, the medical insurance industry came out with a report sharply critical of the Baucus plan. Claiming, listen to this carefully, that if approved it would dramatically raise the cost of insurance premiums for all Americans. And thus, they now no longer support it.
Here is the opening sentence of the New York Times article about this (full piece linked below):
“Obama administration officials and Congressional Democrats fired back on Monday at a new insurance industry report that said premiums would climb sharply with the passage of comprehensive health legislation.”
Putting aside the suspicious timing of the report and the fact that the insurance companies themselves paid for it, why would anyone without political motives believe a word it contains?
One could pore through the more than 1,000 pages of the Baucus bill or the full report of the independent Congressional Budget Office, which says that the bill would be budget neutral, actually saving taxpayers more than $80 billion over ten years, in an attempt to figure this all out--neither I nor I suspect you are inclined to do this—but if one were to apply just common sense to the new insurance industry report how likely is it that any for-profit business would criticize anything that would bring them more profits?
If it were true that health insurance premiums would go up an additional 18 percent, as claimed, for families because of comprehensive reform wouldn’t that by definition mean that income and profits for the insurers would also go up?
When was the last time any business just passed along rising costs? Isn’t it routine, when this happens, for them to see this as an opportunity to make more money?
So what’s wrong with this picture—without a public option (and the Baucus bill does not include one) all low-risk new policy holders would have to pay cash (with or without subsidies) for their insurance on the open market, which would mean lots of new profits for companies; while all others would see the cost of their policies rise faster and higher than if there were no reforms, also good for the insurance companies’ bottom line.
Why then are they now opposed to comprehensive reform? Again applying just common sense, it must be because they must have just figured out that even the Baucus tepid version of health reform is actually a good deal for citizens and a bad one for insurers.
This to me then means that I should probably be feeling better about the Baucus plan than up to now I have been.
In other words, if they’re again’ it, I’m for it.
posted by Steven Zwerling at
6:10 AM
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