Ezra Klein does a bang-up job of
explaining the fundamental problem with for-profit health insurance over at his
Washington Post blog.
Ezra also links to Congressional testimony by one Wendell Potter, who worked in
the insurance industry for some 20 years.
I would add only that non-profit private sector insurers don’t
labor under the same built-in conflict of interest. They don’t have “a
fiduciary duty to maximize profits.”
In Europe,
every country offers some combination of regulated non-profit private sector insurance
and public-sector insurance. The hybrid model seems to work well. If you have only public sector insurance (as
in the U.K.)
and Sarah Palin is elected president, you have a problem. Don’t laugh. Were
you laughing when GWB was re-elected? Okay, some people liked President Bush.
Obviously quite a few people voted for him. But you never know who is going to
wind up in the White House. When Margaret Thatcher took charge in the U.K.,
she took a hatchet to the National Health Service. It still hasn’t fully recovered.
Great point. Having a “compassionate conservative” destroy a single payer system in an effort to “reduce costs” is my only fear regarding health care reform.
Panacea–
Thanks very much. I agree
Also recommend Paul Krugman column today (Fri 27 June) in the NY Times
My addition-
Obama’s base is watching health care reform very carefully. As one of those, I believe the President and his White House team know this and will rise to the occassion.Also I believe they need and want to do the right thing for the nation.
Using his extraordinary power of personality and his still high popularity, combined with a restless citizenry on this issue, he will drag a weak and cowardly Congress (with some notable exceptions) across the goal line kicking and screaming all the way.
We WILL see meaningful US health care reform in 2009 and it WILL include a public health option.
Dr. Rick Lippin
Southampton,Pa
whoops -Sorry- Krugman NYT column is Friday 26 June
(not 27 June)
Rick Lippin
Rick:
Certainly Obama’s personality will be a factor in whether health care reform is passed.
The question to ask, however, is not whether this is politically correct, but rather is this economically viable?
It may be beneficial to contrast the for-profit model with the government model, which is a for-loss model.
At least when profits are the gauge, we can see whether or not a model is sustainable. Obviously, the for-profit model is not sustaiable, unless they operate differently.
The government model is not sustaiable either. It just takes longer for them to be declared officially insolvent.
Just consider the unfunded liabilities of Medicare and Social Security. Also consider that the “premiums” paid in and the investments of the trust funds are leveraged to pay for general governmental expenses. The reason the trust fund reserves earn interest is not due to the investment return of Treasury securities. The interest is loan interest, paid because the trust fund reserves are loaned to the Treasury to pay for expenses other than Medicare and Social Security.
Social insurance is not even pay-as-you-go.
Even the premiums are leveraged to pay for battleships, etc.
Don Levit
Rick– Thanks for your comments.
Don– Until you read the Medicare Payment Advisory Commmission Reports, publishe in March and June over the last 3 years, and the rerorts Peter ORszag wrote as head of CBO , you are never going to understand how Medicare is financial viable–if reformed.
For a short version, try reading this: http://www.tcf.org/list.asp?type=PB&pubid=657
Much more detailed and earlier piece done as an interview Wendall at Trudy Lieberman’s place at CJR.
Although not as bad, lots of the same horror stories about how non-profit insurance companies too.
Maggie:
I read the link you provided. I agree the reforms seem like very good ideas.
Why are you not addressing the basic issue of “where do the payroll taxes go, and what is the source of the trust fund interest?”
Don’t you think it is important that benefits be paid with dollars that are not leveraged?
Don Levit
I am compelled to point out the dangers in being lulled into complacency about the profit-driven/market driven behaviors of many of the so-called “non-profit” health insurers–especially the larger ones who control vast market shares in many states.
We need journalists to investigate and expose the strategic business relationships between the so-called “Non-Profit” Blue Cross and Blue Shield Co’s in the states that get away with highway robbery and the National BCBS in Ilinois.
BCBS Massachusetts, my state’s largest insurer by far, was clearly the main architect of the MA individual mandate law that forces all residents to buy private insurance or be fined by the state.
The BCBS MA four-year “Roadmap to coverage Project” created the mandate policy and then their massive lobbying and buying the silence of most advocacy groups with “BCBS grants” rammed the law through the legislature.
At the time of passage of the MA Insurance Mandate Law, BCBS MA, a “non-profit” that enjoys significant tax-exemptions all at taxpayer expense, paid their outgoing CEO William Van Faasen $19Mil in a golden parachute. Actually it was a bit over $19Million. Seriously.
This same “non-profit” health insurer BCBS MA pays their current CEO over $3Mil a year.
Just because the non-profits are not AS obscene in their profiteering and garnering personal fortune from the health care sector should not let them off the hook. Something stinks in Denmark and the public deserves to know what it is.
Ann, Don and Dr. Steve
Ann –Thanks for your comment.
You are entirely right about the Blues.
When I talk about non-profit insurers, I’m not thinking of the Blues . . .
(I almost added a line about this in the post, but was trying to keep it short–for once–since I was mainly just linking to Ezra’s piece.)
The Blues were corrupted some time ago. . . And you’re right, they deserve a post. of their own.
I’m always looking for guest-posters– Is there anyone out there who would like to tackle the Blues?
Don–
If we put a brake on Medicare spending, and brought growth in spending down below growth in GDP,
Medicare would be on solid ground.
There are, as I’m sure you know, two Medicare trust funds–the financing is handled very differently in each case.
The question you are concerned with really isn’t about healthcare, but about how the government handles financing– a whole other topic that belongs on another blog. This is why readers on this blog havien’t been responding when you bring it up.
Dr. Steve–
Of course there are non-profit insurers that have been influenced by competing with for-profits–and have been corrupted in the process. (See what I say to Ann about the Blues)
But there are non-profit insurers out there that could serve as models for what a public-sector plan might be. They are, in fact, better than Medicare is today. But now that we have a good administration, MedPac’s recommendations for reforming Medicare are finally going to be taken seriously, and Medicare is going to begin to realign financial incentives, paying more for higher quality
collaborative care.
In the late 1980s and early 1990s, as for-profits took over the business, I was at Barron’s and did a great deal of work reserachign the differences between for-profits and non-rofits.
. Many of the old non-profits were good (again, I am Not talking about the Blues).But they were driven out of business.
Dr. Steve, I know that you believe that single-payer is the best answer–though you view a public-sector option as a far-less than-ideal but plausible compromise at this point in time.
Here is my question for you. (This really is a question just for Dr. Steve.) I am always bemused by the degree to which single-payer advocates seem to think that government will always put patients ahead of ideology– and provide “the best” insurance.
Until 1998, the Federal Employees Health Insurance (which is run by the Federal Government) didn’t cover contraception.
If we had single payer, a dozen years from now, it is quite possible that we would wind up with a president and a conservative Congress that would decide that our only insurance option–the government plan–shouldn’t
cover contraception. “The Pill” has become quite expensive. A great many young women would be hard-pressed to pay for it out of pocket.
Or, a libertarian president and Congress might decide that everyone should be “responsible for himself”–and that the government insurance should not pay for many treatments for poor people who are obese, or are addicted to tobacco, or “just aren’t taking care of themselves.”
(As the Robert Wood Johnson Foundation has pointed out in excellent reports that I have written about on this blog, the majority of people in this coutnry who are actually “obese” (not just overweight) are poor, as are the vast majority of adults who smoke. And most of the smokers suffer from some form of mental illness. Poverty creates great anxiety and depression which, in turn, leads to self-medication. (smoking, excessive drinking)
Unfortunately, I can imagine a government being elected that decides that these people don’t “deserve” govt subsidies for certain treatments.
This is why I’d always like to have an alternative . . .
I would like to offer a couple of examples of the propensity of individuals to game the health insurance system when they can. Charlie Baker’s June 22nd post on the merged marked (individual and small group combined) in Massachusetts includes the following paragraph:
“I asked our finance people to check and see if individuals purchasing insurance from us either directly or through the state’s Connector web site were buying for a few months at a time, and using a lot of services. The results were astonishing. Between April of 2008 and March of 2009, about 40% of the people who purchased individual insurance from Harvard Pilgrim stayed covered by us for less than 5 months. Even more amazing, they incurred, on average, about $2,400 per person in monthly medical expenses – roughly 600% higher than what we would have expected. It wouldn’t surprise me if other health plans have the same problem.”
Separately, with respect to purchasing COBRA coverage after a layoff, the people who buy it are most likely to need it and use it. Aetna, for example, says that the medical cost ratio on its COBRA business typically runs between 150%-200% of premiums collected.
Finally, all these articles about canceling policies after a policyholder gets sick all relate to the dysfunctional individual market which insures about 18 million people. By contrast, roughly 160 million people get their health insurance through an employer. Over half of those are in self-funded plans. In my own case, I’ve had five surgical procedures between 1994 and 2005 racking up something over $200K in bills (at list price). I never had a problem getting a claim paid though there were occasional clerical mistakes that were quickly corrected.
So, yes the individual market is dysfunctional in its current form, in part, because plenty of individuals are willing to try to game the system. However, it can be fixed through community rating or modified community rating coupled with a mandate to acquire health insurance with subsidies for people who can’t afford the premium on their own. Given the aggregate cost of healthcare in the U.S. today, I think people in the middle of the income distribution and above should expect to pay 12% to 15% of gross income for health insurance before being eligible for a subsidy. Many already pay that much and more through their employer but don’t realize it. If we are prepared to make some tough choices around coverage and payment policy, end of life care and malpractice reform, we should be able to bend the medical cost growth curve and mitigate the burden of paying for health insurance and healthcare for both individuals and society in the future.
Hi Maggie,
While I appreciate the non-profit insurance exemption, I do agree with other comments that we are as guilty. But after reading Wendell’s comments, I’m not really moved.
1. If he doesn’t like the term Medical Loss Ratio, call it Cost of Goods sold. It’s pretty much the same thing.
2. Stock price is always a corrupting factor. When your COGS’s rises 2%, the market will react. The challenge for any public organization is to make long-term and not quarterly decisions.
3. I’ve thought of the health plan CEO’s egregious response to recissions. It is bad and it has me thinking are they incompetent and evil? That doesn’t seem logical. After thinking about it more, my defense is that they don’t want to have thread the line between a material ommission or non-material on an application. The folks who process individual claims at my plan have gotten pretty jaded from people ommitting information so I can see what happens. The best solution for an applicant to is to disclose all information and this won’t be an issue.
4. Now that I’ve sold my soul with the last comment, there is the whole question of profit maximizing in health care and the conflict it causes. The health care industry is fairly guilty of this collectively. I think that it’s time for the government to redo the DRG process for the entire industry. Fix prices for everything, add mandates to eliminate egregious behavior, and those who can operate within those prices will be profitable and those who cannot will exit.
DeadHedge & Barry
DeadHedge I agree, the stock price is always corrupting.
Wall Street wants quarterly growth which leads to short-term thinking.
You say, “the challenge for any public company is to make long-term and not quarterly decisions.” I absolutely agree.
But can you name six large public companies that do this? (I would say Microsoft–after that, I’m hard-pressed.) Think of everyone involved in the sub-prime disaster–no long-term thinking there. Think of the auto industry designing SUVs–at a time when growth in global demand for energy was clearly outripping growth of supply;
Can you name six large healthcare industry companies that do this? (I
can’t think of a single one.) There was a time when Merck was well-managed, but that was a long time ago. By cancelling policides, refusing to pay claims, delaying payments to providers and hiking premiums while trying to satisfy Wall Street’s demands for double-digit profits, insurers have given themselves a very bad name. Now they are in trouble.
When drug-makers decided to push the FDA to “fast-track” not-fully-tested drugs like Vioxx–and then tried to to cover up the dangers that the drug posed to customers– very short-term thinking . . . . When they decided to reach for the skies when they priced cancer drugs– another example of not looking ahead. They should have realized that they were asking for government to step in and protect dying patients. Now, government will
smooth the path for generic biologics (many of them cancer drugs) to come to market. One way or another, drug prices are going to fall.
Warren Buffet tells us that when he looks for stocks he has a very, very hard time finding management that takes the long view. (This is one reason, no doubt, why he is friends with Bill Gates.)
Bottom line– being for-profit creates an inevitable conflict of interest. In the rest of the developed world for-profit companies in the health care industry are very tightly regulated–and in some areas they don’t exist. (I don’t think many European countries have for-profit hospitals . . )
On the CEOs resonse to recissions . . Do you remember when the CEOs of tobacco companies stood up before the television cameras in the 1990s and said that they didn’t believe that tobacco was dangerous to our health?
Same thing. A combination of denial, and righteousness–truly believing they are doing the right thing–and that they have the right to deny care to very sick people because doing otherwise would hurt their bottom line.
In other words, they don’t understand the difference between blood and money–and that you should never let someone bleed to death becuase there is money at stake.
Finally, you dismiss the notion that these CEOs could be incompetent–or stupid. Here I would quote an old friend who was the
chief economist at Scudder
(the white-shoe money-management company): “I’ve known many a CEO up close and personal, and most of them are dumb as dirt.”
This is what surprised and disappointed me when I became a financial jouranlist. I thought famous succcessful CEOs would be smart . . Very, very few were.
But I do agree with you about the government setting prices– and letting the companies that can’t succeed within those limits fail.
We can’t rescue them–or rig the market to make it easier for them.
Barry-
Yes, wealthy well-insured people can buy good insurance that pays their claims whenever they want an operation (wherther or not they need it.)
The biggest problems are in the individual market that covers only 18 million people– and in the small employer market, that covers millions more.
Yes the employees of wealthy corporations that self-insure are less likely to have problems..
What is your point? That these people don’t matter?
That because the system is working well for you it must be a pretty good system?
Oh, and you think the statisical middle class (families earning, say $55,000 gross joint income should hand over 15% of their income to a for-profit insurance company before being eligible for a subsidy from wealthy taxpayers?)
15% of 55,000 is $8,250–
That family probably nets
around $48,000 after incomes taxes, social secruity taxes and Medicare taxes.
Subtract $8250 from $48,000–and they have less than $40,000 to live on.
In most of the country, raising a family on less than $40,00 a year– while also trying to save for retirement and a college educaiton for children is very, very difficult.
The answer: offer a public-sector plan that costs 20% to 30% less. And offer subsidies, on a sliding scale to famlies earning up to $88,000 (the House’s suggestoin).
The subsidies should be funded, in part, by taxpapyers earning over $250,000 as the president has suggested, by capping their tax deductions.
Finally, Medicare should stop paying for unncessary heart surgeries–private insurance would follow suit, making private-sector insurance less expensive–and better able to compete with public-sector insurance.
I would say that “medical insurance” is a shill, as the link points to a service he is promoting.
So that anecdotal remarks about UK health care can be seen as not passing the smell test.
Health insurance companies should be regulated like utilities. Innovations that reduce health care costs, while improving outcome should be rewarded.
“What is your point? That these people don’t matter?
That because the system is working well for you it must be a pretty good system?”
Maggie,
No, that is NOT the point. The point is that the individual market can be FIXED without blowing up the entire system, implementing a government system that relies on dictated prices like Medicare does, and eventually evolves into a single payer system. It can be fixed by moving to community rating or modified community rating and guaranteed issue, which eliminates the need for medical underwriting, coupled with a mandate to buy insurance with help from a reasonable subsidy mechanism.
Regarding your hypothetical family earning $55,000 gross ($48,000 net) you did not include the approximately $13,000 health insurance policy that the employer is providing. Even if the employee paid $3,000 toward the premium, the employer paid the other $10,000 which is not included in the employee’s total income for tax purposes. If that were cashed out, as under the Wyden-Bennett bill, and tax rates on the bottom 75% of the income distribution were lowered so they didn’t pay any more in taxes than they do now, $55,000 gross becomes $65,000 and $48,000 net becomes $58,000. At 15% of gross income, his health insurance obligation is now $9,750, coupled with a subsidy of $3,250. Under the current system, in my example, he was already paying $3,000 out of pocket. The bottom line is that for most middle income people with employer provided coverage, you could design a system under the Wyden-Bennett approach that would leave most people with employer coverage now net better off if you eliminated the tax preference and adjusted overall income and payroll taxes appropriately.
Even the current reform proposals being discussed will require middle income people to spend 10% of income on health insurance before being eligible for a subsidy while those with very low income would be helped by the expansion of Medicaid eligibility.
Finally, you didn’t address my citing of Charlie Baker’s blog post about widespread gaming of the system in Massachusetts or Aetna’s contention that COBRA take-up business is not profitable for most insurers because of adverse selection. As for insurance executives refusing to swear off retroactive canceling of policies unless they could prove fraud or willful representation, the problem is that the bar required to prove them in court is extremely high. It’s a bit like trying to prove incompetence in the workplace. We often know it when we see it but we can’t easily reduce it to contract language or prove it in court. At any rate, the issue would become moot with the combination, guaranteed issue, community rating and a mandate to acquire insurance.
OMathew, Robert, Barry,
OMathew–
I agree completely. Healthcare, like gas and electricity, is a necessity. Profits should be capped. Shareholders should not be trying to make double-digit profits in this area.
Barry–
A great many employers have dropped their health insurance benefits.
Can you point to some who have then turned around and given all employees earning $55,000 a $10,000
raise?
This is a fantasy– particularly in a recession.
The Wyden-Bennett bill isn’t going to pass; that seems pretty clear at this point.
Finally, as to what Charlie Baker has to say . . Of course he is gong to try to make it sound as if the customer is the problem. . . Hardly an unbiased source.
And most people have tired of hearing insurers blame the victim (the patient).
People with pre-exisitng conditions shouldn’t have to hide those conditions– that is what is wrong.
Finally, the president of the united states says we need a public sector plan to “as an important tool to disclipine the insurance industry” and “to keep the insurance industry” honest.
The majority of the American peopled elected him –and trust him, depite the terrible economoy he inherited.
This means to me that, at he very least the insurance industry will be
tightly regulated (in terms of what it has to cover, what it can charge, the amount of premiums it has to pay out in reimbursements, premium hikes and profits–and, very likely we will have
a public sector option.
Robert–
Yes, that was an ad. I’ve deleted it.
Two interesting discussions on Mark Thoma’s blog:
Are Advances in Technology the Source of Rising Medical Costs? –
http://economistsview.typepad.com/economistsview/2009/06/are-advances-in-technology-the-source-of-rising-medical-costs.html
A Public Plan – http://economistsview.typepad.com/economistsview/2009/06/a-public-plan.html
I would like to make a few comments about regulation of utilities, especially electric utilities. First, due to the enormous capital intensity of the electric utility business, they are what economists call natural monopolies. It doesn’t make sense to have more than one set of transmission and distribution lines going through a town or region. So, in light of the natural monopoly status of utilities, it makes sense to regulate what they can charge. Regulators also understand that utilities have to continually access the capital markets to build new facilities to support growth and to maintain and update their existing infrastructure. The assets of the utility constitute its rate base. It will have a mix of debt, preferred stock, and common equity that is sensible for its business. Regulators will look at both the size of the rate base and the weighted average cost of capital to determine the rates that utilities need to charge to cover their costs of both operations and capital. As costs, including fuel costs, increase, the utility company can petition the Public Utility Commission for a rate increase on both its residential and commercial customers. Some state regulators are better than others at granting timely rate relief as costs increase. Allowed returns on both common equity and total capital vary somewhat across states but generally fall within a “zone of reasonableness.”
There are some tradeoffs associated with this approach. First, it tends to foster a cost plus mentality within the management. For years, utilities referred to their customers as “ratepayers” and not customers. In the earlier days that I’m familiar with (1960’s, 1970’s, and 1980’s), innovations that reduced costs were largely passed on to ratepayers which reduced the incentive to innovate in the first place.
The key difference between health insurers and utilities is that insurers are not nearly as capital intensive and are, therefore, not natural monopolies. Indeed, the larger insurers generate considerable free cash flow, and most of their modest capital spending is technology and information systems related. As electronic medical records start to proliferate throughout the provider community, technology and scale will become increasingly important. As a result, the insurance industry, which has already undergone a lot of consolidation, will consolidate further.
That said, the market should remain highly competitive even with more consolidation. Exchanges, similar to the Massachusetts Connector, should bring much needed transparency to shopping for health insurance and allow individuals to compare various company offerings with respect to price, deductibles, co-pays, out-of-pocket maximums and the like. Exchanges should be a valuable component of healthcare and health insurance reform, and I strongly support them. Insurance brokers will continue to be available to help insurance purchasers as needed.
The returns on both common equity and total capital that the industry earns are quite cyclical but, on average, do not exceed the average for corporations generally as measured by the S&P 500. The larger insurers can potentially still grow at an above average rate if they make sensible acquisitions that will allow them to leverage their technology infrastructure. Competent integration of the acquisitions will also be important. The cost of health insurance has been increasing because of steady increases in the cost of healthcare. Contrary to what some keep saying, the insurance industry would much rather see healthcare costs increase no faster than general inflation so their customers can continue to afford insurance. The bottom line is that competition is already vigorous and will become even more vigorous with insurance exchanges. We don’t need regulators to cap profits.
Reading Barry’s latest post about capital, utilities, and regulators has me wondering about how this country ever allowed private insurers to evolve and to behave the way they have the last 20 years anyway. If everyone is to be treated at an ER or after a disaster or accident at the local hospitals, just how did the idea of insurance exclusions and rate discrimination based on illness records ever come about. I mean in a universal, single payer tax supported system, the access and payment aspects speak logically for themselves. However we have allowed a private insurance system to evolve in this critical social area whose main job is to cherry pick and charge the well while denying and shedding off the sick, and this is the main basis of our health insurance system for those under 65 especially in the individual market. Just how could a society ever have allowed such an illogical social evolution in a critical area, and what makes anyone think that the main players in this industry up to now have any real social obligation vision without strong social intervention. If we need such strong social intervention, why have we waited so long to recognize these obvious system faults, and is bolstering these visionless and faulty players a good idea?
Robert, & NG
Robert–Thanks for the link to Thomas’ blog.
The first post is interesting, but there’s a basic flaw in his analysis.
Thoma ignores the fact that longevity is largely tied to income and education. Wealthy people live 6 years longer than the poor.
Even if a person who grew up poor becomes affluent, he doesn’t live as long as someone who grew up in an affluent, healthier environment. (Better food, more opportunity to excercise, better air quality, and, most imporantly, less mental stress–less anxiety and depression.)
Thoma overlooks the fact that regions where there is more diagnostic testing, etc. (NY, Mass, CT, etc.) are also wealthier areas.
In fact, when it comes to longevity, access to healthcare (or lack thereof) is much less important than income.
The second post seems to me much stronger. The parallel between public vs. private education and public vs. private insurance suggests, very clearly, why we shouldn’t object to the fact that a public-sector plan would enjoy
certain economies of scale and subsidies from the government.
I would add only that there is one major difference: people send their children to private schools not only for the education, but for the social contacts that they will make (in expensive private college) and the “socialization” that will take place if they spend k-12 in private schools with affluent kids. (They will learn, as David Brooks puts it, the
skills they need to succeed in corporate America: how to talk, how to dress, how to schmooze with the boss.)
That means that private schools can charge much, much more for the same level of education, and still attract students.
It’s not clear that private insurers would be able to charge much,much more for the same level of coverage and care. Probably, they would lose customers.
In order to succeed, private insurers will have to become more efficient, cut some of their internal costs, and figure out ways to form hospital and doctor networks that offer better care (See Atul Gawande’s June 1 New Yorker article and what he says about “acccontable care organizations.” )
If for-profit insurers focused on forming networks that practiced medicine the way the Mayo Clinic does, they
could compete . . .
NG–
I agree–it is remarkable that we have allowed private insurers to shun the sick for so many years, discrimating against patients who suffer from pre-existing
condtions, punishing them if they (quite naturally) tried to hide those conditions in order to be eligible for care. . .
You ask: why did we put up with this for so long?
It actually hasn’t been that long. For-profit health insurance didn’t exist until after 1980, when Ronald Reagan became president.
Before 1980, non-profit healthcare insurers enjoyed tax breaks that made for-profit insurers reluctant to try to compete with them. (For-profit insurers also saw healthcare as a high-risk business–they hadn’t yet figured out how to avoid sick patients.)
Richard Nixon had given non-profit insurers the tax breaks. To his credit, Nixon understood that healthcare was a necessity and that it shouldn’t be too expensive. The tax breaks helped the non-profits make insurance affordable.
(Nixon also backed a very generous plan for universal coverage. He and Ted Kennedy had reached an agreement. Unfortunately this was just a couple of months before “Watergate Summer.”
Once the Watergate scandal broke, Nixon lacked the authority to lead the nation on healthcare reform )
When Reagan came to office, he canceled the tax breaks for the non-profit insurers.
Now, the for-profit insurers saw they might begin to move into the market, and use their deep pockets to drive non-profits out of the business–which they did.
The for-profit insurers then proceeded to raise premiums and make it difficult for sick suctomers to purchase insurance.
Why did we put up with this?
Because in the 1980s and 1990s, Reagan’s belief in “free market competition” creating the fairest system swept the country.
It seemed, to many, that “what was good for America” was what was good for corporate America..
Many affluent Americans began to make large sums in the stockmarket. To them, what was good for shareholders was more important than what was good for customers. (Tney didn’t seem to take in the fact that they were also customers.)
These days, people are beginning to see things differently.
Here in NH, our local ‘non profit’ community hospital (CEO is paid over $750K per year) has bought up *every single physician practice* in the area.
The physicians say they just can’t compete (they were losing money) because they don’t have the purchasing power or reimbursement leverage with the insurance companies unless they surrender to being bought out.
The hospital operates as a non profit, but has a holding company that is for-profit. I don’t believe the physicians are ‘hospital employees’ per-say, but their practices are certainly owned by the hospital. The obvious conflict is that all of the labs, xrays, MRI’s, etc, etc. are done @ the hospital and the hospital actually bills the patient an additional $25 for any office visit to your doc which they call a ‘exam room user fee’
There are conflicts of interest and monopolies going on which are not being disclosed to the consumer. I think we need to dig deeper below ‘non-profit’ status for all healthcare entities, (not only insurance companies)to get the most accurate picture.
It would be great to see some good investigative reporting done on these hospitals that hold non-profit status but are investing millions upon millions in building high risk surgical (cardiac, bariatric) and oncology centers when we already have large-volume centers within an hour away. The duplication of services is one issue, but the outcomes (mortality & complication rates) are another.
This is exactly what the Dartmouth Atlas Project has shown to be counter-productive…..more high tech care does not equal better care, just more expensive care.
Lori
Hi Maggie,
I can’t think of any health care company that has been able to avoid succumbing to a quarterly outlook. I also probably need to stop assuming that CEO’s try to do the right thing. I remember attending a lecture in grad school by Perdue Pharmacy executives, who were the makers of Oxycotin. I worked psych crisis on the side and we were terrified of Oxycotin since there was no tapering drug. I asked the executives how they could make such an addictive substance and they assured me that a tapering drug was being developed. A few years later, no tapering drug, and the executives faced prison time and fines after their conviction for knowing how addictive Oxycotin was and doing nothing about it.
However, I still don’t see a new story in Wendell’s comments just more of the same, unfortunately.
Health insurance is regulated like a utility in most states: mandated benefits, rate regulation, and community rating/guaranteed issue in group markets.
That’s the problem.
Lori, Deadhedge and John–
Lori-
You write: “It would be great to see some good investigative reporting done on these hospitals that hold non-profit status but are investing millions upon millions in building high risk surgical (cardiac, bariatric) and oncology centers when we already have large-volume centers within an hour away. The duplication of services is one issue, but the outcomes (mortality & complication rates) are another. ”
You are absolutely right. I am afraid that many local reporters (and, more importantly, their editors) are afraid of alienating local doctors.
And national reporters don’t usually know enough about individual non-profit hosptials to do the story. . .
But some national reporters have done these stories–and more need to look into them.
Deadhedge–
Yes, I think you probably are overly optimistic about CEOs.
30 or 40 years ago, people who became CEOs often wanted to do the right thing.
But in recent decades, pressure from Wall Street
investors interested in quick profits pushed such people out of Corporate America.
John–
“Community rating” is not the problem–unless you actually believe that people who suffer from cancer or Alzheimer’s (through no fault of their own) don’t deserve access to insurance at the same rate that you pay.
That WaPo blog is pretty great and explains things very well. You bring up some good points here as well. Whomever is elected to lead this country needs to take all parties into account when dealing with health care. They can’t be a pawn of special interest groups to the detriment of the people that they are elected to serve.
Thanks a lot blogger for such a nice article about personal injury .Occupational hazards like prolonged exposure to toxic substances, repetitive work movements and noise and air pollution give rise to a number of illnesses like cancer, cardiac and obstructive lung diseases, asthma, musculoskeletal disorders, skin diseases, hearing loss and vibration-related diseases. Jobs that are by nature hazardous lead to severe injuries, lifelong disabilities and even loss of life.
Thank u
🙂
keep blogging