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President Obama’s Trick Plays Are Blind-sided By Healthcare Insurance Industry

Stanley Feld M.D.,FACP,MACE

President Obama’s healthcare reform plan will not repair the healthcare system. It will not provide universal coverage. It will not provide affordable coverage and it will not increase the quality of care.

The main reasons are:

1. It does not deal with malpractice reform.

2. It does not deal with the administrative services fees charged by the healthcare insurance industry to the private sector and Medicare and Medicaid.

George Stephanopoulos spoke with David Axelrod on the This Week program on October 18,2009. The interview revealed an administration blind spot as President Obama pulls tricks to sneak through a healthcare reform bill that the public does not want and the government cannot afford.

STEPHANOPOULOS: So — so you reject this argument that he has to draw more lines in the sand, twist the arms of his opponents, now tell people what he wants and expect it to get it done?

AXELROD: Let’s take the issue of health care, because that’s, obviously, one of the things that people are referring to. We are farther along than we’ve ever been in passing a comprehensive health insurance reform in this country. It’s something we’ve discussed for 100 years. We are on the doorstep of getting that done, and that’s because of the approach this president has taken.

President Obama has been ramming a healthcare bill through congress. Rahm Emanuel has been having meetings behind closed doors without Republican participation. He is even trying to sneak in the Public Option in the Senate bill the Democrats plan to bring to the floor.

This is not the definition of bipartisan agreement on legislation. David Axelrod’s remarks to prove his point is incomprehensible.

STEPHANOPOULOS: And yesterday, the president in his radio address suggested that he might be willing to take away their antitrust exemption.

Why would the healthcare insurance industry have an antitrust exemption to start with? The healthcare insurance industry’s pricing is non transparent to both the government and the private sector. Actuary calculations are a mystery, an inaccurate estimate and an easy way to cook the books.

STEPHANOPOULOS: Was he saying that he would sign a bill that would take that away and open the door to premium caps by the Congress?

David Axelrod avoided the question because it was a threat to the healthcare insurance industry. I think he knows the healthcare insurance industry wins no matter what kind of healthcare reform bill passes and the public loses.

AXELROD: Let’s talk about the insurance industry for a second, because most of the stakeholders in this health care debate are at the table, they’re trying to produce real reform, because everyone knows the current system is unsustainable.

Everyone is at the table because they want their pet dog to be included in the enormous injection of money into the healthcare system.

David Axelrod is also perpetuating the myth that Health Insurance = Health Care. Health Care really is medical care. We have excellent medical care in our country when you are sick. We have few systems at all levels of society to deal with prevention of disease.

Two prominent examples are the food industry and obesity and air pollution and chronic lung disease.

Health Care (Medical Care) is what your Doctor does for you.
Health Insurance is a third party’s promise to pay Doctors out of that third party’s own funds.

The healthcare market is unsustainable because of the pricing in the healthcare insurance industry. This is very different than medical care.

AXELROD: “The insurance industry has decided now at the 11th hour that they don’t want to go along with this. One of the problems we have is we have a health care system now that functions very well for the insurance industry but not well for the customers. In the last 10 years, healthcare premiums have doubled.”

David Axelrod is correct here. He fails to say that Medicare and Medicaid is outsourced to the healthcare insurance industry.

STEPHANOPOULOS: President Obama is saying, if they don’t play ball, they’re going to lose their antitrust exemption?

AXELROD: 10 years ago, 15 years ago, the healthcare insurance industry spent 95 percent of their premiums on health care. Now it spends 80 percent with a 20% profit. More of the money is going to bonuses, salaries, administrative costs.

George Axelrod got the numbers wrong. The healthcare insurance industry keeps more than 20% of every healthcare dollar. It buries its fees in the Medical Loss Ratio calculations.

AXELROD: One thing we ought to do, the House bill has in it provisions that — that says that if they fall below a certain level of return of these medical loss ratios — in other words, the amount of money that they spend on actual health care, that they — they need to rebate some of that money to consumers. That seems like a good idea.

If anyone believes that the healthcare insurance industry will refund premiums I have a bridge to sell you.

Medical Loss Ratio = Incurred Claims / Earned Premiums

The Medical Loss Ratio reflects what Insurers spend on Doctors and Hospitals, ignoring the accounting standards that direct inclusion of all claims against the entire insurance company ( including its shopping centers, blimps, skating rinks, billboards, management salaries "and so on") in the category called "Incurred Claims" – not just medical claims.
This is accounting slight of hand – including non-medical expenditures in a calculated value called "Medical Loss Ratio". President Obama is not fixing the accounting standards that generate enormous profits for the healthcare insurance industry at consumers’ expense.

The greater the incurred expenses, the less money there is available to cover medical expenses. The result is greater than the Medical Loss ratio. The artificial Medical Loss Ratio justifies increases in premiums by the healthcare insurance industry even as physician and hospital reimbursement decrease.



President Obama should be focused on the Medical Loss Ratio accounting standard. If he did the fair thing there would be no need for this disastrous healthcare reform legislation.

President Obama’s hea
lthcare reform plan is not for the people by the people. It is for special interests. The special interests are government and its control as well as the profit of the healthcare insurance industry. If is not for patients and affordable costs and improvement in the quality of medical care.

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

  • kpk

    Everything is very open with a very clear clarification of the challenges. It was definitely informative. Your website is useful. Thanks for sharing!

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