Stanley Feld M.D.,FACP,MACE
In my last two blogs I
covered several points. I also asked readers to consider the unanswered questions.
"Why, if the traditional media has published articles stating that the
cost of healthcare has been decreasing would a premium increase be justified?"
"Why do consumers’ deductibles continue to increase
"How can Medicare be losing money?"
"Where is the extra money going?"
It seems obvious to me that
the Obama administration wants to put healthcare insurance companies out of the
business of selling private insurance.
In January 2014 Health
Insurance Exchanges will be the only vehicle through which healthcare insurance
can be sold.
At present less than half
the states have signed up to develop State Health Insurance Exchanges.
States are not signing up
because the exchanges will put a tremendous financial burden on individual
states after the second year. In the end
states will have little say in developing operating rules for the exchanges.
States will also be losing
their independence and freedom.
administration has said the federal government will run the Health Insurance
Exchanges if states refuse for form their own exchanges.
It looks as if the
healthcare insurance industry is in check-mate. The industry’s response was to
not only pass the 3.5% tax “user fee” for every policy sold but to raise
premiums by double digits.
"My question is why would an
industry having problems holding on to its customers because present premiums
are unaffordable raise premiums?"
I believe the healthcare
industry has lost interest is selling private healthcare insurance.
At present the healthcare
insurance industry sell its administrative services to the government to run
Medicare, Medicaid, Tricare and Government workers Medicare.
The healthcare insurance
industry will continue selling its administrative service to the government for
the new government run Health Insurance Exchanges. Ultimately these exchanges
will be selling National Healthcare Insurance
(“The Public Option”).
The healthcare insurance
industry is raising premiums now to set a new standard for the fees it will
charge the federal government in the future.
These fees are not
administration claims the government’s overhead for Medicare is 2.5%. That statement is true. It
will go up to 5% with all the new Obamacare bureaucracies.
However, the 2.5% only
covers the cost for the bureaucrats that out source administrative service to
the healthcare insurance industry. The processing and adjudication of claims are the administrative
services done by the healthcare insurance industry.
The fees for those services
are anywhere between 30 and 50% of every healthcare dollar spent.
Some of the healthcare
insurance industry’s true “overhead” and expenses are counted as a direct medical care expense.
The law mandates that 80% of
healthcare dollars are spent on direct patient care and 20% can be for
healthcare insurance expenses.
The problem is direct
medical care expenses include creating provider networks, administering those
networks, negotiating a very complex web of allowable fees and reserving unpaid
The healthcare industry’s
recent response to the new “user fee” has been,
“Health plans share the
goal of affordable health care coverage for all Americans. Arbitrarily capping
premiums without addressing underlying cost drivers will not move the country
closer to that goal.”
The healthcare insurance industry
claims they are for affordable care for all Americans.
Data show that premiums are increasing
because of the unsustainable rise in medical costs, new benefit mandates that
make coverage more expensive, and the effect of younger and healthier people
forgoing insurance because of a slow economy.
My question is where is the
data? The administration has told us that the costs of medical care is .4% as
opposed to a 2.7% rise in the GNP. The implied claim is Obamacare is bending
the cost curve
“Moreover, the health care
reform law imposed new rate review requirements and a federal cap on health
plan administrative costs and profits, further suggesting that rising premiums
are being driven by increased spending on medical care”.
America’s Health Insurance
Plans association response is lame and unbelievable. The traditional media has
taken the response at face value.
“Focusing on affordability
is critical as the reform law is fully carried out in 2014. That is why policy
makers should address provisions that will further increase premiums, like the
health insurance tax, and take steps to ensure broad participation in the
President and Chief Executive
America’s Health Insurance Plans
Washington, Jan. 7, 2013”
Karen Ignagni has a very difficult job.
She is at times effective. Her current response is a nice gentle way of saying
the government is to blame for the rising premiums.
As I see it both the government and the
healthcare insurance industry are not telling the exact truth. The hope is to
let the rise in premiums slip by the public notice.
All President Obama has to
do is raise taxes once more to cover the increases he did not anticipate in his
takeover of the healthcare system.
The healthcare insurance industry
will continue to walk away with unconscionable profits.
The victims will be
consumers who feel powerless already.
The dirty little secret is
consumers are not powerless. Consumers simply have to wake up.
Then loud and effective consumer
protests must be organized. These organize orderly protests will get the President's and the congresses' attention.
If nothing is said the
President and the Democratic congress believe consumers are happy with all the tax
increases, premium increases, the deterioration in health care coverage and failures to form new bureaucracies.
It will only get worse for everyone as consumers remain silent.
The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.
Please have a friend subscribe