What's so great about private health insurance?

[Guest guest]

What's so great about private health insurance?

The bloody battle in Congress over a 'public option' ignores the insurers' role

in creating the nation's healthcare crisis and their efforts to throttle reform.

Hiltzik August 3, 2009

Throughout the heroic struggle in Congress to provide a " public option " in

health insurance, one question never seems to get answered: Why are we so intent

on protecting the private option?

The " public option, " as followers of the debate know, is a government-sponsored

health plan that would be available as an alternative to, and in competition

with, the for-profit health insurance industry, otherwise known as the private

option.

On Friday, the House Committee on Energy and Commerce narrowly passed a reform

bill incorporating a public option resembling Medicare. It was a bloody fight

among members of Congress, some of whom believe that the public option will give

the government unwarranted power over healthcare, and all of whom enjoy

government-provided healthcare that's a lot better than what most of us get.

But the battle is just beginning. After the committee vote, House Speaker

Pelosi warned that the health insurance industry will conduct a " shock and awe "

campaign to kill the public option when Congress returns from vacation in

September and starts debating the measure. We can expect to be overwhelmed with

an industry ad campaign worth millions of dollars (remember Harry and Louise?)

exhorting us to write our lawmakers to preserve the American way of healthcare.

So it's proper to remind ourselves what that American way entails. For if the

insurers have proved anything over the last 15 years as the health crisis has

gathered speed like an avalanche roaring downhill, it's that they're part of the

problem, not the solution.

The firms take billions of dollars out of the U.S. healthcare wallet as profits,

while imposing enormous administrative costs on doctors, hospitals, employers

and patients. They've introduced complexity into the system at every level. Your

doctor has to fight them to get approval for the treatment he or she thinks is

best for you. Your hospital has to fight them for approval for every day you're

laid up. Then they have to fight them to get their bills paid, and you do too.

One Wendell Potter reminded a Senate committee in June that health insurance

executives had assured Congress in 1993 that they would work to secure universal

medical coverage and end denials of coverage to people with pre-existing

conditions. Then they moved heaven and earth to kill reform.

They've made the same promises now, Potter observed. But they're in an even

better position to throttle reform. Mergers and acquisitions have turned the

industry into a cartel of huge corporations.

" The industry is bigger, richer and stronger, and it has a much tighter grip on

our healthcare system, " he said. The last thing they want is a government

program set up as their competition.

Potter knows the insurers' ways because he was a top executive in the industry

for 20 years. But the hard numbers bear him out. The two largest insurers,

WellPoint and UnitedHealth Group, each acquired 11 other insurers between 2000

and 2007. They now control a total of 67 million " covered lives " (that's

customers in health insurance-speak).

This consolidation has produced functional monopolies in communities across

America. The American Medical Assn. (itself no great fan of reform) found in a

2007 survey that in 76% of the country, defined as its major metropolitan

statistical areas, one insurer had a share of 50% or more of the conventional

insurance market. This phenomenon gives the companies enormous power to drive up

premiums and maximize profits.

Why do we tolerate this? The industry loves to promote surveys indicating that

most Americans are " satisfied " with their current health insurance -- 37% are

" very satisfied " and 17% " extremely satisfied, " according to one such study.

Yet these figures are misleading. Most people are satisfied with their current

insurance because most people never have a complex encounter with the health

insurance bureaucracy. Medical care generally follows the so-called 80-20

statistical pattern -- 20% of patients consume 80% of care. If your typical

encounter is an annual checkup or treatment of the kids' sniffles, or even a

serious but routine condition such as a heart attack, your experience is

probably satisfactory.

But it's on the margins where the challenges exist. Anyone whose condition is

even slightly out of the ordinary knows the sinking feeling of entering health

insurance hell -- pre-authorizations, denials, appeals, and days, weeks, even

months wasted waiting for resolution.

And that's among people with affordable employer-paid insurance, an

ever-shrinking cohort. The percentage of small and medium-sized businesses

offering health coverage to employees shriveled to 38% from 67% between 1995 and

2008, according to the National Small Business Assn. Without reform, the number

will continue to plummet.

Meanwhile, people employed by big companies that offer a health plan are within

a layoff notice of losing coverage for themselves or their families, joining

America's 46 million uninsured.

Their only alternative right now is the individual market, where insurers

scrutinize applicants' medical histories, looking for reasons to turn them down

or charge them exorbitant premiums. Have hay fever, asthma, a cholesterol pill

prescription? Are you a woman of child-bearing age? You're virtually uninsurable

at an affordable cost.

Even if you're accepted, your carrier reserves the right to cancel your policy

retroactively if it finds that you left even a tiny condition from years back

off your application.

The public option may be your lifeline -- if it's enacted.

Signs of the industry's mobilization against the public option are everywhere. I

don't claim clairvoyance for having predicted this development back in March;

given the industry's record on reform, a child could have done so.

You've heard of the Blue Dog Democrats, those mostly rural conservatives who

blocked a summertime vote on reform legislation on Capitol Hill? According to

the Center for Public Integrity, the biggest backer of the Blue Dogs' political

action committee is the healthcare industry, which is on the path to pumping a

total of $1.2 million into the PAC's maw in the current 2009-10 election cycle.

Then there's the advocacy group called the Campaign for an American Solution,

which describes itself as " a grass-roots effort . . . to build support for

workable healthcare reform. " The organization owns up to being an " initiative "

of America's Health Insurance Plans, or AHIP, the industry's chief lobbying arm.

Unless I've missed a radical change in lawn and garden horticulture, you can't

get much further from the grass roots than to be a creation of the industry with

the biggest stake in the debate.

Despite all this, America's health insurance plans, which helped create our

dysfunctional world, are deferred to as though they're a disinterested party.

AHIP subtitled one of its policy papers " A Vision for Reform. " But are the

insurers now, and have they ever been, anything other than a roadblock?

Hiltzik's column appears Mondays and Thursdays.

http://www.latimes.com/business/la-fi-hiltzik3-2009aug03,0,6650122.column