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Healthcare Insurers Get The Upper Hand



Stanley Feld M.D.,FACP,MACE

The healthcare debate is becoming more confusing daily. President Obama has promised change. Fifty-three percent of Americans voted for change. We are not going to get change. It turns out President Obama represents status quo except at a greater expense to the taxpayer.

The healthcare insurance industry controls the healthcare dollars across all insurance lines. These insurance lines are private insurance for small companies, corporations that are self insured, Medicare, Medicaid and self insured local and state governments.

This broad control of the health care dollar comes about because all these healthcare insurance providers outsource their administrative services to the healthcare insurance industry. The major healthcare insurance companies disguise this control by creating differently named subsidiaries that “win the administrative services contracts.”

Fifteen to twenty percent (15-20%) of the healthcare dollar goes to administrative services fees. This is a very high fee. Medicare claims it only pays 2.5% for administrative services. This is probably true for its in-house administrative services but not for outsourced administrative services.

The healthcare industry has also had a stranglehold on all providers of healthcare insurance by increasing premiums and decreasing reimbursement to physicians and hospitals while maintaining its outrageous administrative services fees.

All the stakeholders are captives of the healthcare insurance industry. This stranglehold has caused an increase in the uninsured and destroyed the ill conceived Massachusetts universal healthcare plan.

President Obama’s healthcare reform plan is not focused on eliminating this stranglehold. The Obama healthcare reform plan will still outsource the administrative services to the healthcare insurance industry while increasing the government’s bureaucracy to try contain costs.

When are our politicians going to figure out the only way to repair the healthcare system is to eliminate the middlemen and let the transactions be between patients and physicians?

“This year alone, the healthcare industry has spent over $34 million to hire 923 lobbyists to influence Congress, according to the Center for Responsive Politics.”

Why? Because the healthcare insurance industry has positioned itself so it cannot lose no matter which modified healthcare reform plan is adopted.

Some insurance company leaders continue to profess concern about the unpredictable course of President Obama’s massive healthcare initiative. I believe this is an act. Do not let it fool you. Patient welfare is not the healthcare insurance industry’s concern.

“The half-dozen leading overhaul proposals circulating in Congress would require all citizens to have health insurance, which would guarantee insurers tens of millions of new customers — many of whom would get government subsidies to help pay the companies’ premiums.”

"It’s a bonanza," said Robert Laszewski, a health insurance executive for 20 years who now tracks reform legislation as president of the consulting firm Health Policy and Strategy Associates Inc”.

The healthcare insurance industry hired the Lewin Group, a health policy consulting firm that is owned by UnitedHealth Group to do a study opposing the “public option”. The healthcare insurance companies contended that a government-run plan would put the healthcare insurance companies out of business.

I believe this is a diversion. The healthcare industry will make out like a bandit either with or without a public option. The consumer will not be so fortunate. .

Laszewski said the industry’s reaction to early negotiations boiled down to a single word: "Hallelujah!"

"The insurers are going to do quite well," said Linda Blumberg, a health policy analyst at the nonpartisan Urban Institute, a Washington think tank. "They are going to have this very stable pool, they’re going to have people getting subsidies to help them buy coverage and . . . they will be paid the full costs of the benefits that they provide — plus their administrative costs."

Tom Daschle has emerged, according to the mainstream press, as Obama’s key go-to guy. It is as though he never left. He has the ear of the President as well as the healthcare insurance industry and the pharmaceutical.

“He still speaks frequently to the president, who met with him as recently as Friday morning in the Oval Office.”

Tom Daschle declared after meeting with President Obama that the President is becoming impatient with the debate and might force his healthcare reform bill through the Senate with a 51 vote majority.

“He remains a highly paid policy adviser to hospital, drug, pharmaceutical and other health care industry clients of Alston & Bird, the law and lobbying firm.”

It seemed strange that UnitedHealth and other healthcare insurers would hire Alston and Bird to represent them by a “liberal” Democrat (Tom Daschle) until it became clear that with or without a public option the healthcare industry would experience a bonaza.

“UnitedHealth spent the most, $2.5 million in the first half of 2009, and hired some of Washington’s most prominent political players, including Tom Daschle.”

With the public now opposed to a public option the White House and Senate Democratic leaders have introduced the concept of a on nonprofit insurance cooperatives.

“Mr. Daschle began promoting a cooperative two months ago as a politically feasible alternative to a more muscular government-run insurance plan. It is an idea that happens to dovetail with the interests of many Alston & Bird clients, like the insurance giant UnitedHealth and the Tennessee Hospital Association.”

Liberal democrats are opposed to the nonprofit insurance cooperatives. They fear it will take longer to evolve into a single party payer system than the public option would. Liberal Democrats believe the only way to repair the healthcare system is to have total government control over the healthcare system.

They do not realize that as long as the healthcare insurance industry controls the healthcare dollar the healthcare system will not be repaired. As long as consumers do not have financial incentives to control their health and their healthcare dollar the healthcare system will not be repaired

The healthcare insurance industry does not want the healthcare system repaired. They want the healthcare system to generate more income for them rather than better health for consumers.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

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