The Suicidal Insurance Industry

American Thinker ^ | March 04, 2009 | Bryan Riley

[neverdem]

When President Obama recently nominated Kansas governor and universal healthcare advocate Kathleen Sebelius to be to the country's Secretary of Health and Human Services (HHS), the president of America's Health Insurance Plans (AHIP) called it "a very smart choice.  She has a good intellect, a big heart and tremendous expertise."  AHIP and its predecessor, the Health Insurance Association of America, have a track record of financial support for Gov. Sebelius dating back to the time she served as Kansas Insurance Commissioner. 

Of course, the health insurance industry also supported President Obama's first choice, Sen. Tom Daschle.  Daschle's financial backers included AHIP, which paid Daschle $40,000 for two speeches, and health-insurance giant United Health Care, which paid him $5,000 for "advice." 

Many people criticized Daschle for taking money from the insurance industry.  Few people asked the more obvious question: What were insurance companies doing paying thousands of dollars to someone who devoted his life to policies that could put them all out of business?

Daschle's book Critical: What We Can Do About the Health Care Crisis praises universal, single-payer healthcare as a worthy goal.  However, he concludes that it would be politically problematic to implement such a system in the United States due to the opposition of special interest groups like the insurance industry.   

Here is how AHIP, the health insurance industry's top trade association, responded to the nomination of someone who views the very existence of insurance companies as an obstacle to reform:

"Senator Daschle is exceptionally well qualified to bring people together in support of universal coverage, cost-containment, and improved quality."

The industry's philosophy -- not to oppose policies that would harm insurance companies and their customers; not to simply acquiesce to ridiculous demands; but to enthusiastically embrace changes designed to reduce the ability of average Americans to buy health insurance -- was on display during the recent expansion of the State Children's Health Insurance Program (SCHIP, commonly pronounced S-CHIP), the federal program designed to provide healthcare to children. 

In the past, SCHIP benefits typically were limited to families earning up to 200 percent of poverty level.  The legislation recently passed by Congress raises the cap to 300 percent of poverty level and allows states to raise the cap even higher, subject to lower federal subsidies for those additional benefits. 

To qualify for SCHIP benefits, the government requires families to first drop their individual health insurance entirely. 

If families do not have an individual policy but get their coverage through their employer, they may be allowed to keep their group coverage in some cases.  States may offer this option if the employer pays least 40 percent of the cost, as long as the policies do not allow families to set up a health savings account to pay for their medical expenses.   

As a result of provisions like these, many kids who enroll in SCHIP in the future will not come from the ranks of the uninsured, but from families that drop their private coverage in order to receive "free" government care.  According to the Congressional Budget Office, even before these changes it already was the case that for every 100 children who qualified for SCHIP, 25 to 50 dropped their private insurance. 

Imagine for a moment that you are the chief lobbyist for U.S. health insurance industry, and Congress is considering a law that would give government healthcare benefits to people who can afford to pay for their own insurance.  Further imagine that Congress would require people who already have health insurance to drop that coverage in order to qualify for government aid.  What would your response be?

Here is the actual response if the insurance industry, provided by AHIP:

"This vital legislation provides health security for millions of children in working families and builds momentum for comprehensive health care reform.  Expanding coverage for kids is a big first step toward ensuring that all Americans have affordable, quality health care."  

Some foreshadowing of the insurance industry's apparent death wish came during the U.S. Presidential campaign.  Sen. John McCain proposed giving families $5000 each to buy their own health insurance, while Sen. Obama proposed giving everyone the option of a "new public plan" instead of private health insurance.  My review of campaign donation data indicates that employees of the nation's biggest health insurers -- Aetna, Blue Cross, Cigna, Humana, United HealthCare, and Wellpoint -- voted with their dollars, giving over twice as much to Obama as to McCain. 

In Ayn Rand's book Atlas Shrugged, industrialist Hank Reardon is stabbed in the back by his "man in Washington," Wesley Mouch.  In the novel, Reardon is a relatively innocent victim of the man hired to protect his interests from Washington predators. 

In the real world, the insurance industry is no innocent victim.  For example, to head its Washington operations, the industry chose someone whose experience came from working for the AFL-CIO and, I am not making this up, the Committee for National Health Insurance, an organization formed by labor unions to lobby for "a truly radical overhaul of the health care system" with the federal government as the nation's only health insurance carrier. 

I wonder how that job interview went:

Question: "Tell us a little about your experience."

Answer: "I've been working to put you all out of business."

Reply: "Great!  When can you start?"

I personally know someone who recently was sent out of her local welfare office in tears, because an overwhelmed government bureaucrat mistakenly told her there was no state coverage available for her child's leukemia. 

I know of a child who was hospitalized because her parents were not given government assistance to buy insurance, but instead were forced to use the local Medicaid-funded clinic where their daughter was misdiagnosed. 

I have read stories in my local newspaper about children who are strapped to "papoose boards" like tiny Hannibal Lecters in order to get their teeth examined.  Why?  Because instead of providing financial assistance to low-income families to make dental insurance more affordable, the government instead forces them to go to Medicaid-financed dentists. 

These horror stories are what we all have to look forward to as elected officials, aided and abetted by insurance industry lobbyists, gradually replace private health insurance with government-run healthcare.

Bryan Riley was the Republican candidate for Kansas Insurance commissioner in 1998, losing to incumbent Kathleen Sebelius.

[neverdem]

You can't make this up.

[Lorianne]

The insurance industry knows which side its bread it buttered. That’s why they are supporters of Democrats

By the way, it’s called Univeral Health Care but it’s really Universal Health INSURANCE ... with the spoils going to the companies who contribute the most to get the thing passed.

There will be no competition in the health insurance industry. It will be an even bigger government run protection racket than it is now at the States level.

[Lorianne]

The insurance industry knows which side its bread it buttered. That’s why they are supporters of Democrats

By the way, it’s called Univeral Health Care but it’s really Universal Health INSURANCE ... with the spoils going to the companies who contribute the most to get the thing passed.

There will be no competition in the health insurance industry. It will be an even bigger government run protection racket than it is now at the States level.

[null and void]

Rather than having this as a program, the funding should be in individual trusts.

Yes, I’m saying the SCHIP program should be called SCHIT...

[Kansas58]

Hi Bryan, good to hear from you!

You forgot to tell everyone that Kathleen Sebelius, as Insurance Commissioner, took for ever to approve justified rate increases and otherwise made life difficult for them.

This, of course, made several companies leave the state.

The lack of competition made things worse, of course.

[neverdem]

Does it matter who does the rationing? Whether it's provided by the government or insurance companies, they keep the money when they deny care.

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[Alamo-Girl]

Thanks for the ping!

[businessprofessor]

I do not think the insurance industry supports the rats. The insurance is paying protection money. They knew that the rats would win. They are hoping for some leniency. This situation is not much different that dealing with the Mafia. Either pay protection money or get whacked.

I agree that the rats want to remove competition from health care. The rats will eventually cut out private health insurance. In the short term, the rats will make the private health insurers heel to their rat masters.

Government policies (championed by the rats) have corrupted the private health insurance market. You seem to blame the private insurers. I blame the rats for interfering with private health care markets. The insurance industry is just responding to rat corruption.

[businessprofessor]

Private health insurers do not ration care except when the rationing is imposed by government. Only government has the power to ration goods and services. Private insurers negotiate contracts with employers to provide specified levels of medical coverage. If you are unhappy about the level of medical care provided, your beef would typically involve your employer and government requirements. The health care industry is put into the difficult situation of enforcing contractual terms on third parties (plan members).

Government has drastically interfered with private health care markets. Outrageous government restrictions and requirements have increased the cost of health care and reduced choice. The entire idea of employer provided health insurance is a government creation.

[Lorianne]

There is no free market in private health insurance. It is a governement (for now State) protection racket. Only certain insurance companies are allowed to sell in a particular State and the State can coerce or mandate the coverage terms, etc.

I DO blame the insurance companies because they are complicit in this scheme. They LIKE less competition. Also, they know who they have to pay off in the State legislatures to get the rates that they want and to limit their competition.

Anyone who thinks we have a free market health insurance system in this country just hasn’t examined the facts. Your State controls who can sell insurance and under what terms.

The Dems (and some Republicans) want to take this current State protection racket to the national level, that’s the only difference. The only people who will lose in this are State politicians because the payola will then go to Federal politicians ... but for the same kind of protection against competition. The Feds will decide who can sell insurance and set the terms.

It’s a win-win for insurance comapanies and federal level politicians. It’s a lose-lose for everyone else.

[businessprofessor]

I do not have details about the market for private health insurance. I agree that the market is heavily regulated. I still think that some type of market exists but I agree that competition is heavily restricted. I think that state restrictions on private health insurance are violations of the commerce clause, at least in spirit. The states in collusion with the feds have erected artificial trade barriers for private health insurance.

Government is the driver of this dreadful situation. Private businesses always seek to limit competition. In many other industries, private businesses cannot use the power of government to limit competition. In health care, government has been the driver of limitations on competition. Bush to his credit tried to deregulate the market for private health insurance. He was blocked at every step by rats and rinos.

I do not think it is a win situation for private insurance in the long run. The rats have no use for private health insurance in the long run. Unless we have a conservative revolution, private health insurance will be dead in 5 to 10 years. It may find a niche by providing out of country care for the hordes that seek treatment outside of this country.

[neverdem]

Private health insurers do not ration care except when the rationing is imposed by government.

That means they ration all the time, IMHO. Two evils don't make a good. They cherry pick patients and deny care as well as tell doctors how to practice medicine. Everyone wants something for nothing. They all can go jump in a lake. I'd rather go fishing. I wish I never went to medical school.

State regulators frown on NYC doctor's flat fee

[El Gato]

Does it matter who does the rationing? Whether it's provided by the government or insurance companies, they keep the money when they deny care.

Yes it does matter. You, or your employer, can switch insurance companies if they don't give good service and value.

Switching government is a bit more difficult. They tend to take umbrage at that, with guns.

[neverdem]

You, or your employer, can switch insurance companies if they don't give good service and value.

Third party health insurance that is tax deductible from employers is another scam. Why health insurance benefits are not taxable benefits escapes me except that it was started under FDR's World War II price controls. I don't know which causes more distortions. Is it third party health insurance that is tax deductible for employers or tort lawyers from defensive medicine and malpractice insurance? All I know is that we can thank the left.

[El Gato]

Third party health insurance that is tax deductible from employers is another scam

You may be right, or not, but it's still a fact that there is competition in the private insurance market, and there would be none if government health care becomes universal, or even just nearly so.