How rich is this?
Over at “Think Progress,” Igor Volksy reports that, while speaking to a crowd in Calgary, Canada last weekend Sarah Palin revealed a tidbit about her life growing up not far from Whitehorse:
“We used to hustle over the border for health care we received in Canada,” she said. “And I think now, isn't that ironic?”
Isn’t it? (I can imagine Palin, tilting her head slightly to one side, gazing into thin air, and referring to something that she will never understand: irony. )
As Volsky points out, this admission doesn't exactly square with Palin's stand on health care. She has warned us all that U.S. health-care reform will lead to “socialism” and that Canada needs to reform its health care system to “let the private sector take over.”
You might wonder: Why would Palin possibly disclose her across-the border excursions for care? The Globe and Mail reports that the Calgary crowd was “adoring”: in the end “about half of the 1,200 people in attendance gave Ms. Palin a standing ovation.” My guess is that Palin felt a need to respond to all of that love by acknowledging that, in the past, Canadians had bailed her out.
Volsky observes that “This isn’t the first time Palin highlighted the difficulty of obtaining affordable health care in America." During the presidential campaign, Palin discussed how she and husband Todd had “gone through periods of our life here with paying out-of-pocket- for health coverage until Todd and I both landed a couple of good union jobs.”
Maybe that’s Sarah Palin’s solution for the health care problem in the U.S.? Bring back the unions, give them more power, and working-class Americans will have the benefits they need. Not a terrible idea. Except—what about workers in non-union shops?
My take: There is little evidence that, these days, many Americans go to Canada for health care. (The cost of living in the U.S. is not that much higher than it is in Canada, so you won’t find the same very deep discounts that you might find in Thailand. Though, Americans do go to Canada for cheaper prescriptions.)
But it is true that some Americans (who can afford the airfare) have been leaving the U.S. to go to India and other countries where expensive surgeries are much, much less expensive.
I can well imagine that when Sarah Palin was growing up, her family would skip over the border for care. Many countries provide generous treatment for patients who are not citizens. (The U.S. is not one of them.) I wonder what story Palin’s family told the Canadian hospital: “we were here for the week-end and poor Sarah fell . .” ??
Last night on Rachel Maddow, she revealed that in 2009, the five largest health insurance companies made $12.2 billion in profits. A 56% increase over 2008. They did this with 2.7 million less policy holders. All during the very same period the United States was heading into the worst recession since the economic depression. More of us, soon, are going to have to skip over to Canada for health care.
Actually, Palin said that this happened when she was a kid. She was hustled over the border by her family. Sounds like she had no control over the situation. On top of that, what sort of town was she living in? Was the nearest hospital to her house located in Canada? For certain situations, you’d definitley need to go to the nearest hospital. But here’s the kicker: She said that this was in the 60s. Socialized healthcare didn’t make its way to that region of Canada till 1972 or later. So, this is hardly a “gotcha” piece, dripping with hypocrisy.
Oh, and speaking of “irony.” Here’s what she meant (IMHO): She’s a leading American politician. She used to go into Canada for healthcare. What leading American politicians do this these days? However, how many Canadian leaders skip across the border for U.S. healthcare? This is something that actually happens. Perhaps her grasp of the term “irony” isn’t as weak as people want to believe.
I read this same ironic statement from Palin, and went to the source article at a Calgary-based news site. Nowhere could I figure out what was the occasion for her appearance. The story mentioned 1,200 in attendance, paying $100 to $150 apiece for the privilege — and they were “adoring” according to the account. But nowhere did it mention what the occasion was, or who might be paying her to appear. There was some passing mention of her giving thanks to a local contracting firm that had done work on an Alaskan oil or gas project, but I couldn’t be sure if that was a hint or just incidental. Anyone else get any detail on this?
Further, for Greg:
According to recent Fortune 500 rankings, health insurers are not even in the top 30 U.S. industries in profit margin. They rank 35th. Their profit margin is at an average of 2.2 percent. That’s one-fifth of railroads. Their collective profit margin is one-eighth of drug companies and less than one-seventh of companies that sell medical equipment and/or products. It’s also less than that of medical facilities.
The combined profits of America’s 10 largest health insurers is $8.3 billion. That’s two-thirds of Walmart and half of G.E. ALSO, it’s less than one-seventh of what Medicare loses each year to fraud. The combined profits of the top 14 health insurers (the ones that crack Fortune 500) are $8.7 billion. I’m not sure where Rachael Maddow gets her numbers, but even her fans know how she leans.
Why are costs rising, though? Government intervention. Mandates. Not allowing insurers to sell across state lines and compete properly. And let’s not forget fraud, abuse and costly lawsuits. Why aren’t we tackling these issues?
Ron, Greg,
Ron–Hospital care was covered in Alberta long before the early 1960s. Palin’s brother burned his foot–he would have gone
to the hospital.
Greg– see Ron’s 2nd comments.
He’s write profits always have to be put in context as a percent of revenues, per share, etc.
Dollar amounts are meaningless. An enormous company might have $10 billion in profits, but if that’s only 1 percent of revenues, they’re in deep trouble.And insurance company profits have been so low that a 58% increase doesn’t tell you anything.
You have to ask “up 58% from where?”
But also see my reply to Ron. He is wrong on why insurers’ profits are so low.
Ron– selling across state lines simply allows insurers to sell sleazy policies (filled with hidden holes) using states that don’t regulate insurance very well as their base. (For example, in some states you can sell insurance that covers pregnancy but not complications during pregnancy.)
It’s similar to what credit card companies have done.
Insurance companies themselves should be investigating fraud & abuse. The Wall Street Journal has written about how, instead of investigating, they simply pass the cost along in the form of higher premiums. (I quote in my book.)
The reason insurance is expensive is because health care in the U.S. is so expenisve. We pay far more for everything–drugs, devices, specialists, hospitals– than other countries and we also undergo many more surgeries, diagnostic tests, etc. etc.
That’s what is driving health care inflation. Higher volume and higher prices, year after year.
Priceline’s profits were a tiny percentage of revenues, because they booked the total amount paid for a ticket as revenue. They didn’t book the difference between what the customer paid for a ticket and what the airline was paid for that ticket, which would have been more in line with reality.
Likewise for health insurers. Counting all premiums as revenue is a little misleading. Look at what percentage of the remaining after Medical Loss Ratios, and I bet profit margins suddenly look a lot healthier.
2.2% profit margin on a company with 78% MLR means it’s actually a 10% profit margin in the real world. Not amazing by any stretch, but not anemic either.
So we are now holding people responsible for the actions of their parents? Do we really want to go there?
She’s to be held responsible for her comments as an adult, which make no sense. Hypocrisy imparts far too much intent and comprehension to Palin’s statements, which likely had neither.
Easy Mr. Langan, why don’t you come down from your “Theory of Everything” and mingle with we simple folks. Her parents took her brother to a Canadian Hospital in the sixties. What is it about that statement that “makes no sense”?
So you can explain to me her point in mentioning that her family sought healthcare in Canada when she was a child?
Do tell!
Mike C–
For 12 years, I wrote about things like profits and revenues (as well as social policy) at Barron’s.
I can read a financial statement.
I wrote a book about the Bull market (titled Bull!) that Warren Buffet recommended to Berkshire Hathaway’s investors. (And the book was very hard on Wall Street, large corporations etc.)
I’m not bragging, just saying, please trust me. This is one of 3 areas I know well (the others are healthcare and English literature.)
The amount that insurers are keeping for administrative costs does not going into “profits”
It pays for advertising (huge sums–it’s a very competitive business), lobbying (huge sums, insurers are terrified fo a public option),salaries of employees,etc etc etc
It’s all a matter of public record.
Could they spend a lot less on advertising and lobbying? No doubt. But any individual company that did that would start to lose market share and would be sued by its shareholders.
I know many people don’t like to realize it, but healthcare is so expensive because drugmakers (16-18% profit margin) device-makers, some hospitals and doctors are making huge profits.
Many are overcharging and selling unnecessary products, tests and treatments.
See the article by Sharon Begley in teh March 15th
Newsweek that I twittered about today. (I’m in a hotel so can’t access the URL right now. Ezra Klein also linked to her piece in his column. )
Insurers have had a hard time raising premiums fast enough to keep up.
Maggie I wasn’t intending to question your knowledge of wall street and financial statements, just pointing out that 2.2% profit margin isn’t as bad as it sounds when every dollar received in premiums counts as revenue, even though spending 78% of those dollars as medical expenses doesn’t really count as an expense the way most people think of expenses in their own business. i.e. MLR doesn’t to me sound like an “operating expense” just like the money priceline was paying airlines for the tickets wasn’t really an operating expense.
Maggie, calm down. Palin was talking about one incident in the 60’s. She was born in 1964. She was a small child at the time at the mercy of her parents. That’s why she described it as ironic because she is a critic of government run health care.
A friend told me something interesting this morning about this $12.2 billion in profits. People who defend health insurance companies point out that they only have a 2.7% or so profit margin. That doesn’t sound like much until you realize what they really do is simply manage money. If the GDP is $14 trillion and 16% of the GDP is health care, then health insurance companies are basically collecting a 2.7% tax on $14 trillion.
Mario G
Mario G– I’m not particularly excited. Maybe I should have labeled this post “comic relief” or “humor.”
I just thought it was a funny story– adoring Canadian fans, Palin telling them that as a child she get healthcare in Canada.
I don’t take anything Palin says or does very seriously. I suppose there is a faint possibility that the hardline conservatives now running the Republican party might nominate her to run for the presidency, but if they did, that would simply turn the Republican party into a very small minority party.
Greg–
No insurance companies don’t just manage money.
In the individual market, an insurers’ major businesss is “underwriting”– calculating the risk behind the policies they write, and figuring out how much they should charge for those policides based on the risk that the particular person (or small group at a small employer) will become very sick. Insurers try to predict how much they are likely to have to pay out, and price the policy based on that risk.
(In most of this country, when selling policiest to individuals buying their own insurance, and to small businesses, they are allowed to charge different peoeple different rates for very similar policies based on their age, health,etc.
These actuarial calculations are fairly complciated.
The other very, very large part of their business is acting as a back office for large corporations that self-insure. The majority of large companies self-insure which means that they take the risk that their employees will become sick and that they (the coporation) will have to pay out more.
When companies self-insure, insurance companies handle out of the paper-work–signing people up, cancelling their policies when they move to another company, paying out to doctors and hospitals, collecting the necessary paperwork from patients, doctors and hospitals.
They also man “customer service” lines answering the many questions have about their insurance.
Insurers also talk to doctors who want to know if they will cover a particular procedure for a particular patient. And if not,why not.
Because customers change policies so often (even if they stay with one employer)and because customers and doctors have many questions, this is all fairly labor intensive.
All of the paper work and customer service operations help explain why insurers’ administrative costs are so high.
Medicare’s expenses are much lower in part because patients don’t move in and out of Medicare. They sign up once, and that’s it.
Customers and doctors are also much less likely to call Medicare with questions. There is only one Medicare (while there are hundreds of different private insurance policies)
and doctors pretty much know what Medicare covers.
The doctor bills Medicare; Medicare pays. Usually the patient isn’t involved.
Finally insurers also invest the money that they receive in the form of premiums–until they need to pay that money out in reimbursements.
Usually they invest in bonds. and traditionally invest pretty conservatively. They must have the money when they need to pay it out in reimbursements, so that can’t take too many risks.
This means that they aren’t very active money managers. And in recent years, interst rates have been so low that they have had a hard time making much money on fixed income investments.
Health insurance is Not an easy business. Before the 1980s there were very few for-profit health insurers. For-profit companies felt that it would just be too hard to predict how much they would have to pay out, and they knew that medical expensies kept rising every year.
So companies like Aetna sold property insurance and life insurance — but not health insurance.
Mike C–
The problem for insurers is that reimbursements keep spiraling (up 8% a year for each of the last 10 years) as doctors and hospitals “do more” and prices for virtually everything rise.
Insurers have had a hard time raising premiums fast enough to keep up.
In addition, in this recession, some healthy people are dropping their insurance or scaling way back feeling that they can’t afford a comprehensive plan and probably don’t need it.
This means insurers find themselves insuring a pool of people that contains a higher percetage of sick people, and fewer healthy people.
This makes it harder to price the insurance. If they raise premiums too much, they’ll lose market share. If they don’t raise premiums enough, they won’t have the money they need for pay-outs.
See what I said at the end of my comment to Gregory–
it’s not easy to make a decent profit in the health insurance business–even when they are allowed to refuse to cover people with pre-existing conditions. .
The point is she can make one throwaway line, while in Calgary, about something her parents did when she was a small child and look at what it generates. There have been multiple articles, hundreds to thousands of webposts on the dailykos and huffpo and so many instances of faux superiority, it’s simply nauseating. They should hand out Zofran at the end of some of these posts. That’s the takeaway point.
Gov. Sarah Palin — who has gone to great lengths to hype the supposed dangers of a big government takeover of American health care
be calm ad much better care your health for your healthy life.
Regarding Maggie’s comments about Health Insurance Companies, I completely agree. In fact, I’m disappointed that the current Administration is using it as a “red herring” to persuade the public to support heathcare reform. While I do support passing the current proposals, the hard fact is that it’s HEALTHCARE COSTS that are the real issue. We could eliminate the insurance companies totally, and we will still have a healthcare cost crisis.
As for Palin, please let it go. Don’t turn this blog into another political “he said, she said”. Her comments, as recorded, are meaningless, in this specific instance,and generally.
US citizens who go to Canada for health care may find that it is very expensive.
Americans who do not qualify for the provincial health service will also find their US health insurance will not work across the border.
An emergency room visit cost me $500.00 cash for those reasons. I didn’t even bother to file a claim with Blue Cross because we were told up front that they wouldn’t pay it.
The oft repeated canard about hordes of Canadians coming to the states for treatment is just nonsense.
And those Canadians who do need treatment not available in their province can go elsewhere in Canada or to the US and submit a claim to their provincial health service.
Can you do that in the States? Not on your life.
Tom speaks my mind. I am dismayed that the main talking point from the Dems has been the bad old insurance companies. I also agree that way too much attention is paid to what Sarah Palin says. On both sides of the political aisle.
Everyone–
I’m beginning to agree with many of you that I made a mistake to post anything about Palin.
Sorry.
When I saw the snippet of news it just struck me as funny.But it’s definitely not worth much serious discussion.
The more interesting point that emerged on this thread has to do with insurance companies and their profits.
Tom–
You wrote ” the fact is that HEALTHCARE COSTS that are the real issue. We could eliminate the insurance companies totally, and we will still have a healthcare cost crisis.”
Very true.
So Sarah Palin makes a comment about a childhood experience, and in response Maggie emits this intellectual gem:
“I can imagine Palin, tilting her head slightly to one side, gazing into thin air, and referring to something that she will never understand: irony.”
Really? Really? You read a quote and you IMAGINE a facial expression or a gesture and conclude, for all your readers who are supposed to “trust” you about the American economy and healthcare, that “she will never understand irony”?
Are you a journalist or just another knife-fighter for the Democratic Party?
Tim–
Sorry.
But if you’ve seen Palin on TV often enough, and are a writer, you actually can imagine the body language that goes with her prose.
But you’re right, my sentence didn’t make a serious point. I didn’t see this as a serious post— just comic relief on a usually very serious blog.
Clearly, many readers took this post seriously. Which is why I now realize that I probably shouldn’t have posted about Palin’s speech (scroll up to my last comment.)
The chilling effect on discussion and the self-censorship that Maggie will undoubtedly feel she has to think twice about before she may “offend” somebody IS a serious outcome of these comments. This blog is for adults. “Take what you want and leave the rest.”
“Hospital care was covered in Alberta long before the early 1960s. Palin’s brother burned his foot–he would have gone to the hospital. ”
maybe not. my brother an i are about palin’s age, we lived in a small town outside a small city in the 60s, and our various injuries were treated at the doctor’s office. the hospital was for major surgery or grave illness.