Why the Insurance Industry Needs Obamacare to Stay in Business

[cr726]

I heard this gentleman on Sirius Stand Up with Pete Dominic, he worked in the healthcare business as well.



[QUOTE]Why the Insurance Industry Needs Obamacare to Stay in Business
by WENDELL POTTER on APRIL 10TH, 2012


Health insurers are banking on the individual mandate.
If there is a group of people more anxious about how the Supreme Court will rule on the health care reform law than President Obama and the millions of Americans who are already benefiting from it, it is health insurance executives.

Not only have their companies been spending millions of dollars implementing the parts of the law that pertains to them — and most of them do — but they also have been counting on the law as very possibly the only thing that can preserve the free market system of health insurance in this country. This is why it is so ironic that defenders of the free market are the most vocal critics of the law and the ones hoping most ardently that the Court will declare it unconstitutional.

Health insurers have known for years that their business practices of excluding growing numbers of Americans from coverage and shifting more and more of the cost of care to policyholders are not sustainable over the long haul. That’s why their top priority during the health care reform debate was to make sure whatever bill Congress passed included the much-vilified individual mandate. And it’s also why the big insurance companies have been working almost frantically to reinvent themselves lately.

Cigna and Aetna recently became the latest of the biggest national firms to rebrand themselves and roll out new logos and self-descriptions. Cigna is now “a global health service company“ while Aetna is now “one of the nation’s leading health care benefits companies.” What this means is that these companies and their competitors have come to understand that the very policies that enabled them to make Wall Street-pleasing profits over several years has led to a health insurance marketplace that is shrinking. And as it continues to shrink, so will their profit margins.

Cigna and Aetna and a handful of other companies got to be the giants they are today largely by acquiring scores of their smaller competitors in the 1990s and 2000s. Their acquisition strategy now is very different because they know the glory days of being able to report profits every quarter that are greater than what they reported a year earlier, which shareholders demand, are over. So instead of acquiring other insurers, the big firms are now diversifying by buying data and care management businesses and, to the alarm of many consumer advocates, hospitals and physician groups.

They are doing this because they have failed miserably at expanding coverage and controlling skyrocketing medical costs, as they promised they could do as they were torpedoing Bill and Hillary Clinton’s health care reform bill two decades ago. Even though they hated many of the Clintons’ proposals, they recognized even then that government intervention in the health insurance business would be necessary, that we couldn’t rely solely on them or the free market to fix our broken system.

Here’s what Karen Igagni, who heads America’s Health Insurance Plans, the industry’s largest PR and lobbying group, told a Congressional panel in the fall of 1993:

“The need for national health care reform has been well documented … Universal coverage at broadly affordable cost becomes possible only when insurance risks are spread across a large community. Currently, most health coverage is priced using ‘experience rating,’ where high premiums are set for high cost groups and low premiums are set for low cost groups. Experience rating financially discriminates against populations that experience high costs: the very young, the very old, the chronically ill, and those with pre-existing conditions, such as diabetes.”

And here’s what Larry English, the former president of Cigna HealthCare, told that same Congressional committee:

“There are many specifics in the President’s plan we believe should be supported enthusiastically. Among them are universal coverage, portability, the elimination of pre-existing condition limitations, the elimination of cream-skimming and cherry picking underwriting practices, the use of community rating, a standard benefit plan and malpractice reform.”

When it became clear, however, that some of the regulations the Clintons were proposing might curtail profits, the insurers began to disown what they had told Congress. They embarked on a campaign to persuade the public that the “invisible hand of the market,” as English said in a speech the next year, would do a much better job of controlling costs and expanding coverage than the Clinton plan.

When the Clinton bill died in Congress, that invisible hand went to work. But it proved to be so ham-fisted that physicians and patients soon rebelled. As it turned out, people didn’t like being required to change doctors, as many of them had to do. And women didn’t like being forced out of the hospital within hours of having a baby or undergoing a mastectomy. So insurers had to ditch many of the practices that presumably would bring down health care costs.

The free-market solution the insurers came up with after the failure of managed care was to herd people into high-deductible plans, just as they herded us into restrictive HMOs 20 years ago. The problem, of course, is that the insurers have to keep increasing both premiums and deductibles to keep meeting Wall Street’s profit expectations. It doesn’t take a rocket scientist to see how that is not a sustainable strategy — unless, of course, the government requires all of us buy coverage and gives subsidies to people who can’t afford the premiums on their own.

Without the individual mandate, so loathed by free market lovers, the pool of people willing and able to buy coverage will continue to shrink, as will insurers’ profit margins. Over the coming years, that pool will become increasingly older and sicker, meaning premiums will soar. Insurers will begin to desert the marketplace. They will not go out of business, but, as their acquisition strategy shows, they will be very different companies.

Insurance executives know they will have to transform their companies even more rapidly — and get out of the risk business sooner rather than later — if the individual mandate is struck down. They have run out of silver bullets. As for those who believe the free market can work in health care just as well as any other sector of the economy, they will see, if the Court declares the law unconstitutional, that it simply does not.

Wendell is a Senior Analyst at the Center for Public Integrity where this first appeared on 4/9/2012.
*
[/QUOTE]

[url]http://wendellpotter.com/2012/04/why-the-insurance-industry-needs-obamacare-to-stay-in-business/[/url]

[AlwaysGreenAlwaysWhite]

Funny thing about the free market...

The weak will fall, the strong will thrive, regardless of what is thrown their way...

[cr726]

[QUOTE=AlwaysGreenAlwaysWhite;4432307]Funny thing about the free market...

The weak will fall, the strong will thrive, regardless of what is thrown their way...[/QUOTE]

Guess you didn't bother to read the article.

[Jungle Shift Jet]

A lib notion by a lib group discussed on a lib show....:zzz::zzz::zzz:

[cr726]

[QUOTE=Jungle Shift Jet;4432312]A lib notion by a lib group discussed on a lib show....:zzz::zzz::zzz:[/QUOTE]

“As one former insurance executive testified before Congress, insurance companies are not only encouraged to find reasons to drop the seriously ill; they are rewarded for it. All of this is in service of meeting what this former executive called, ‘Wall Street’s relentless profit expectations.’” —*President Barack Obama, Remarks to Joint Session of Congress, September 9, 2009

Following a 20-year career as a corporate public relations executive, Wendell left his position as head of communications for CIGNA, one of the nation’s largest health insurers, to help socially responsible organizations — including those advocating for meaningful health care reform — achieve their goals.

In widely covered testimony before the Senate Commerce, Science and Technology Committee in June of 2009, Wendell disclosed how insurance companies, as part of their efforts to boost profits, have engaged in practices that have resulted in millions of Americans being forced into the ranks of the uninsured. Wendell also described how the insurance industry has developed and implemented strategic communications plans, based on deceptive public relations, advertising and lobbying efforts, to defeat reform initiatives.

[AlwaysGreenAlwaysWhite]

[QUOTE=cr726;4432309]Guess you didn't bother to read the article.[/QUOTE]


I did... My favorite part was the quote about the insurance companies wanting the 'large community' i.e. us, to absorb the multitude of factors increasing the cost of doing business...

Well, duh... If you're offering to lower the hit our profits will have, "We'll take it!"

[PlumberKhan]

lolz....gotta love it.


This law is the epitome of...not overpowering government influence....but overpowering corporate influence. Insurance lobbyists wrote the law.

Follow the money.

[palmetto defender]

Without getting into 2700 pagesof stupidity (why should any law be this long), there are a few points.
1. Anybody without some health insurance is an idiot. But don't force people to buy it.
2. No organization should have to treat a person who can not pay. I can't buy food without money or gas.
3. No person WITH insurance should ever be dropped because they become ill.
4. Pre existing condition. There should be a waiting period before insurance coverage kicks in on THAT medical condition.
5. Certain things should be covered. Mammogram, PAP smear, prostate, But not overdone. Already too many tests.
6. Coverage to age 26. Why? I can see 22 - the end to college if one attends. Why 26. If still in school, get the school's plan. Or get a job with insurance.
7. Birth control. If a plan includes it. Religious groups should have the option. But why just BC. What about a drug which is necessary to maintain life. A bit more important, no? People who have a thyroid problem - millions - need thyroid replacement meds or they wii DIE. There are other conditions similar. The BC thing is pandering to women. BC is pretty cheap - $10/month. That's 2 drinks or a couple packs of smokes.
8. Tort reform. Let's control costs.
9. Fraud. Brutal penalties. Harsh fines well above the fraud value, jail, confiscation of personal property. I am talking doctors, hospitals and patients here.

[JetPotato]

[QUOTE=PlumberKhan;4432366]lolz....gotta love it.


This law is the epitome of...not overpowering government influence....but overpowering corporate influence. Insurance lobbyists wrote the law.

Follow the money.[/QUOTE]

Um, no.

Insurance companies overall did not support this law. The law was a direct attack at the insurance industry. The mandate may seem like it helps them by getting them more customers on the surface, but it doesn't.

Insurance is about risk. Insurance companies want to take on clients that will likely make them money. That means not all clients are for them. More doesn't mean better.

By eliminating insurance company's ability to deny customers for pre-existing conditions, and mandating that all people have insurance, you've forced loses on the insurance companies. In fact, as a result of the fine being less than the cost of a policy, you've now taken away paying customers from the insurance companies who then show up at your door asking for money as soon as they get sick. Even bigger losses.

Health insurance is not health care. People need to get that through their heads. Insurance companies do not exist to provide you health care. Again, this is a game of risk played between a willing customer and a willing provider. The sole purpose of insurance companies is to make money. That's it. That isn't evil. That's business.

Think of it like a casino. Because that is what they are. Obamacare essentially told the casinos "Here, we're going to send you more customers. But they don't have to put any coins in the slot machine until the winning pull is guaranteed to be the next one".

Those companies have spent the past two years adjusting their business to survive this wreck of a law. And now that it may change again, they will be forced to adapt again. Sure, they have a legitimate gripe about constant change. But the good ones will figure it out and survive. And the bad ones will just complain about it and probably fail.

The article is pure, biased BS. It makes no sense to claim the industry saw the writing on the wall for years and years, pushed for this bill, and then "frantically" acted after it was passed. :rolleyes:

[chiefst2000]

[QUOTE=palmetto defender;4432711]Without getting into 2700 pagesof stupidity (why should any law be this long), there are a few points.
1. Anybody without some health insurance is an idiot. But don't force people to buy it.
2. No organization should have to treat a person who can not pay. I can't buy food without money or gas.
3. No person WITH insurance should ever be dropped because they become ill.
4. Pre existing condition. There should be a waiting period before insurance coverage kicks in on THAT medical condition.
5. Certain things should be covered. Mammogram, PAP smear, prostate, But not overdone. Already too many tests.
6. Coverage to age 26. Why? I can see 22 - the end to college if one attends. Why 26. If still in school, get the school's plan. Or get a job with insurance.
7. Birth control. If a plan includes it. Religious groups should have the option. But why just BC. What about a drug which is necessary to maintain life. A bit more important, no? People who have a thyroid problem - millions - need thyroid replacement meds or they wii DIE. There are other conditions similar. The BC thing is pandering to women. BC is pretty cheap - $10/month. That's 2 drinks or a couple packs of smokes.
8. Tort reform. Let's control costs.
9. Fraud. Brutal penalties. Harsh fines well above the fraud value, jail, confiscation of personal property. I am talking doctors, hospitals and patients here.[/QUOTE]

I strongly disagree with #7. Here in NY Smokes or a drink cost about $10 for one. So BC actually costs about the same as one pack of smokes or one drink at a bar. Actually you can get the BC for $5 at most pharmacies including Wallmart. So in essence BC costs half the price of a pack of smokes or half the price of a drink at a bar.

Another interesting thing is that Pharmacies offer certain drugs at discounts due to competition factors. Since insurance would cover the cost in full it wouldn't suprise me to see the cost for insurance companies be much much higher than it currently is for consumers. It is a lose lose situation as are most items when Government pandering is involved.

[palmetto defender]

[QUOTE=chiefst2000;4432773]I strongly disagree with #7. Here in NY Smokes or a drink cost about $10 for one. So BC actually costs about the same as one pack of smokes or one drink at a bar. Actually you can get the BC for $5 at most pharmacies including Wallmart. So in essence BC costs half the price of a pack of smokes or half the price of a drink at a bar.

Another interesting thing is that Pharmacies offer certain drugs at discounts due to competition factors. Since insurance would cover the cost in full it wouldn't suprise me to see the cost for insurance companies be much much higher than it currently is for consumers. It is a lose lose situation as are most items when Government pandering is involved.[/QUOTE]

Hmm. Perhaps I did not structure #7 properly. My point is that if a company (usually one dominated by thug unions) ELECTS to offer drug coverage, that's their business. Stupid, but their decision.
Obamacare REQUIRES all plans to have BC. What else frankly I do not know. My point is that if ALL plans MUST have BC, then they must have EVERYTING ELSE also. I am AGAINST this concept. It is expensive. My plan does not have drug coverage. That's the way it goes. I pay for mine, one of which as I may have alluded to (a thyroid replacement) is life sustaining. It's not expensive and neither is BC.
When I become eligable for Medicare, drugs are not covered. Fine with me. People are spending money like drunken sailors on 60" flat screens, $2000 for wheels on their car and vacations and crying about BC.
I am against mandatory drug coverage. And abortions as well. I am not anti abortion just a plan paying for it. Get a freebie at planned parenthood or the daddy can pay.

[parafly]

The health insurance industry does not need Obamacare to stay in business. Anything short of a single payer, universal health care system, and they will have a place in the market.

[JetPotato]

[QUOTE=parafly;4432827]The health insurance industry does not need Obamacare to stay in business. Anything short of a single payer, universal health care system, and they will have a place in the market.[/QUOTE]

This.

And from what we've seen recently, "insurance" companies are shifting and expanding their scope, so that insurane is a smaller part of their overall business. That's what they've really done to ensure their survival in the face of change.

[AlwaysGreenAlwaysWhite]

[QUOTE=chiefst2000;4432773]I strongly disagree with #7. Here in NY Smokes or a drink cost about $10 for one. So BC actually costs about the same as one pack of smokes or one drink at a bar. Actually you can get the BC for $5 at most pharmacies including Wallmart. So in essence BC costs half the price of a pack of smokes or half the price of a drink at a bar.[/QUOTE]

Walmart and Target are $9 but not the point...

Even if it were $20... $30... An $80 Nuvaring... It's the best investment toward not spending money you don't have in the future anyway...

[palmetto defender]

[QUOTE=AlwaysGreenAlwaysWhite;4432838]Walmart and Target are $9 but not the point...

Even if it were $20... $30... An $80 Nuvaring... It's the best investment toward not spending money you don't have in the future anyway...[/QUOTE]


Then why not pay for my thyroid med so I can live and continue my 6 figure tax payment each year. Or cholesterol drug ( I don't take one) to avoid a $200k bypass oy high BP meds (same bypass).
Sorry, seems discriminatory. Need that female vote? Individual responsibilty.
All or nothing at all. I am for the nothing at all REQUIRED drug coverage.

[PlumberKhan]

[QUOTE=palmetto defender;4432870]Sorry, seems discriminatory. Need that female vote? Individual responsibilty.[/QUOTE]

BC is more for the benefit of the male population....not the female population. :P

[palmetto defender]

[QUOTE=PlumberKhan;4432873]BC is more for the benefit of the male population....not the female population. :P[/QUOTE]

Well you do have a point there from a humorous point of view.
But Sultan Barack is tying the BC issue to "Women's Reproductive Rights".
Sort of like the "Right to life, liberty and the pusuit of happiness".
Obama, the leader who works tirelessly for "UNPERCEDENTED rights for women".

[Winstonbiggs]

[QUOTE=cr726;4432309]Guess you didn't bother to read the article.[/QUOTE]

What did the article have to do with free markets? The small group of large insurance players in the market want government to protect their business. Obama and the Dems obliged them for purely political reasons.

Free markets are predicated on a customer who understands his needs and businesses freely enter the market to meet those needs at a price point. Mandating people buy even from a private insurer has nothing to do with free markets.

The Dems made a deal to protect the establishment at the expense of consumers. A scheme to have private insurance companies protected from competition with the job of rationing health care gives cover to a real national plan where government would have to do it.

The Dems understand a real national plan that rationed care would be unpopular with Union workers and others who get great coverage through work. This was a way to get universality without the political fallout that rationing by the government would create. Plutacracy at work.

[PlumberKhan]

[QUOTE=palmetto defender;4432892]Well you do have a point there from a humorous point of view.
But Sultan Barack is tying the BC issue to "Women's Reproductive Rights".
Sort of like the "Right to life, liberty and the pusuit of happiness".
Obama, the leader who works tirelessly for "UNPERCEDENTED rights for women".[/QUOTE]

Obama. He's so shifty.

[cr726]

Those would be great points if the insurance companies were simply that, but you don't make enough money that way.

Insurance isn't exactly a true free market business. No one cares about health insurance until they want or need it, usually when they are sick.


[QUOTE=Winstonbiggs;4434032]What did the article have to do with free markets? The small group of large insurance players in the market want government to protect their business. Obama and the Dems obliged them for purely political reasons.

Free markets are predicated on a customer who understands his needs and businesses freely enter the market to meet those needs at a price point. Mandating people buy even from a private insurer has nothing to do with free markets.

The Dems made a deal to protect the establishment at the expense of consumers. A scheme to have private insurance companies protected from competition with the job of rationing health care gives cover to a real national plan where government would have to do it.

The Dems understand a real national plan that rationed care would be unpopular with Union workers and others who get great coverage through work. This was a way to get universality without the political fallout that rationing by the government would create. Plutacracy at work.[/QUOTE]