From my emailed News Bulletin this a.m.:ABC World News said that "this weekend showed the divide in the healthcare debate looms large:
At least 60,000 people marched on the Capitol, complaining Mr. Obama is trying to change too much
too fast." NBC Nightly News said that "
White House officials were unfazed by the protests."
Obama adviser David Axelrod was shown saying, "I don't think we ought to be distracted by that.
My message to them is: they're wrong."
Oh, is this going to bite them in the keyster.
And, it seems those favorite anecdotal examples of evil insurance companies
aren't exactly what they are represented to be...much less as frequent:http://online.wsj.com/article/SB1000142405...emEditorialPageOPINION SEPTEMBER 13, 2009, 10:54 P.M. ET
Fact-Checking the President on Health Insurance
His tales of abuse don't stand scrutiny.By SCOTT HARRINGTON
In his speech to Congress last week, President Barack Obama attempted to sell a reform agenda
by demonizing the private health-insurance industry, which many people love to hate. He opened
the attack by asserting: "More and more Americans pay their premiums, only to discover that their
insurance company has dropped their coverage when they get sick, or won't pay the full cost of care.
It happens every day."
Clearly, this should never happen to anyone who is in good standing with his insurance company
and has abided by the terms of the policy.
But the president's examples of people "dropped" by
their insurance companies involve the rescission of policies based on misrepresentation or concealment
of information in applications for coverage. Private health insurance cannot function if people buy insurance
only after they become seriously ill, or if they knowingly conceal health conditions that might affect their policy.Traditional practice, governed by decades of common law, statute and regulation is for insurers to rely in
underwriting and pricing on the truthfulness of the information provided by applicants about their health,
without conducting a costly investigation of each applicant's health history. Instead, companies engage in a
certain degree of ex post auditing—conducting more detailed and costly reviews of a subset of applications
following policy issue—
including when expensive treatment is sought soon after a policy is issued.
This practice offers substantial cost savings and lower premiums compared to trying to verify every
application before issuing a policy, or simply paying all claims, regardless of the accuracy and completeness
of the applicant's disclosure.
Some states restrict insurer rescission rights to instances where the misrepresented
or concealed information is directly related to the illness that produced the claim. Most states do not.To highlight abusive practices, Mr. Obama referred to an Illinois man who "lost his coverage in the middle
of chemotherapy because his insurer found he hadn't reported gallstones that he didn't even know about."
The president continued: "They delayed his treatment, and he died because of it."
Although the president has used this example previously,
his conclusion is contradicted by the transcript
of a June 16 hearing on industry practices before the Subcommittee of Oversight and Investigation of the
House Committee on Energy and Commerce. The deceased's sister testified that the insurer reinstated her
brother's coverage following intervention by the Illinois Attorney General's Office. She testified that her
brother received a prescribed stem-cell transplant within the desired three- to four-week "window of opportunity"
from "one of the most renowned doctors in the whole world on the specific routine," that
the procedure
"was extremely successful," and that "it extended his life nearly three and a half years."The president's second example was a Texas woman "about to get a double mastectomy when her
insurance company canceled her policy because she forgot to declare a case of acne." He said that
"By the time she had her insurance reinstated, her breast cancer more than doubled in size."
The woman's testimony at the June 16 hearing confirms that her surgery was delayed several months.
It also
suggests that the dermatologist's chart may have described her skin condition as precancerous,
that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular
heartbeat, and that she knowingly underreported her weight on the application.
These two cases are presumably among
the most egregious identified by Congressional staffers'
analysis of 116,000 pages of documents from three large health insurers, which identified a total
of about
20,000 rescissions from millions of policies issued by the insurers over a five-year period.
Company representatives testified that
less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).
If existing laws and litigation governing rescission are inadequate, there clearly are a variety
of ways that the states or federal government could target abuses without adopting the president's
agenda for federal control of health insurance, or the creation of a government health insurer.
Later in his speech, the president used Alabama to buttress his call for a government insurer to
enhance competition in health insurance. He asserted that
90% of the Alabama health-insurance market
is controlled by one insurer, and that high market concentration "makes it easier for insurance companies
to treat their customers badly—by cherry-picking the healthiest individuals and trying to drop the sickest;
by overcharging small businesses who have no leverage; and by jacking up rates."
In fact, the Birmingham News reported immediately following the speech that the state's largest
health insurer, the nonprofit
Blue Cross and Blue Shield of Alabama, has about a 75% market share.
A representative of the company indicated that
its "profit" averaged only 0.6% of premiums the
past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among
39 Blue Cross and Blue Shield plans nationwide.
Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that
the insurer's
ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio
(including claims settlement expenses) of 7.5%. Its net income, including investment income, was
equivalent to 2% of premiums in that year. In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported
that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among
41 preferred provider organization health plans. The insurer's apparent efficiency may explain its dominance,
as opposed to a lack of competition—especially since there are no obvious barriers to entry or expansion
in Alabama faced by large national health insurers such as United Healthcare and Aetna.
Responsible reform requires careful analysis of the underlying causes of problems in health insurance
and informed debate over the benefits and costs of targeted remedies. The president's continued
demonization of private health insurance in pursuit of his broad agenda of government expansion
is inconsistent with that objective.
Mr. Harrington is professor of health-care management and insurance and risk management at the
University of Pennsylvania's Wharton School and an adjunct scholar at the American Enterprise Institute. -------------------------------
Wonder why 85% of people with health insurance are happy with it?
Or, why the UAW is pushing Obama-care?: -------------------------------
http://www.nytimes.com/2009/09/09/health/p...y/09insure.htmlThe Work-Up
Bristling at Health Plan to Cover Early Retirees By STEVEN GREENHOUSE
Published: September 9, 2009
Within the battle over President Obama’s health care overhaul, critics of organized labor
have latched onto a little-noticed provision in the legislation already circulating in Congress.
The provision would cost
$10 billion in federal money to subsidize employer-sponsored health
plans covering early retirees, as a bridge to Medicare.
Labor’s critics assert that the provision, aimed at retirees ages 55 to 64, is a Democratic
payback to unions and would
further drive up the federal deficit.
“It looks like it’s just a big giveaway of $10 billion to bail out a bunch of unionized companies,”
said Gregory Mourad, director of legislation for the National Right to Work Committee, a nonprofit
group that often battles organized labor. “It’s part of a Christmas list of giveaways to unions.”
But supporters deny that the provision is a sop to labor, saying it would help stabilize the health
insurance system and would benefit union and nonunion retirees alike, as well as their employers.
Backers include the United Automobile Workers, the United Steelworkers and the A.F.L.-C.I.O. Variations of this program have been approved by the three House committees that have adopted
health bills, and by the Senate Health, Education, Labor and Pensions Committee.
It is not clear whether the provision will be included in whatever bill the Senate Finance Committee
may eventually come up with, under the chairmanship of Max Baucus, Democrat of Montana.
Under the provision,
the federal government would pay as much as $10 billion to cover 80 percent
of the cost of an early retiree’s medical claims of more than $15,000, with a cap at $90,000 —
at which point the employer’s plan would pay the rest.
The plan, which is called the temporary catastrophic reinsurance program by many of its backers,
would in essence subsidize employer plans whenever they paid for an unexpectedly costly medical event.
Supporters say the program will cover all employer-sponsored group health plans — whether a
unionized health plan for steelworkers; a state, county or municipal plan for retired firefighters;
or a corporate plan for white-collar retirees.
Most significant to the U.A.W., it would also cover the health care trusts, known as VEBAs —
voluntary employee beneficiary associations — set up for Detroit’s autoworkers. The plan
would help extend the life of these trusts before they pay out all their assets for health care.“It has the potential to make a lot of key employers and unions pretty happy,” said John Sheils,
of the Lewin Group, a health care consulting firm.
According to the Kaiser Family Foundation, the nation has 5.8 million retirees ages 55 to 64,
and 3.3 million of them have employer-sponsored coverage. Health experts say no one knows
how many were union members.
Supporters of the proposed program say it would help stabilize the financing of early retiree plans
until the recession ends and until the full impact of a health care overhaul takes effect a few years
down the road, assuming Congress does pass some form of health legislation.
The subsidies, supporters say, will help employers’ balance sheets and also preserve health
coverage for those who retire before age 65, when Medicare coverage begins.
Alan Reuther, the U.A.W.’s legislative director, said the program would help persuade employers
not to terminate health coverage for early retirees. If those plans are terminated, many early retirees
will lose their coverage, and if that happens, he said, many early retirees will join the new regional
insurance exchanges that Mr. Obama wants to set up as part of his reform package, something
Mr. Reuther said could end up costing the government more money.
“This plan is trying to encourage private employers, state and local governments and VEBAs to keep
providing coverage to early retirees because that’s better for them,” Mr. Reuther said.
“If they stop providing coverage, and you’re on your own and you go into an exchange, that’s bad
for the exchange because
a bunch of high-cost people are going into the exchange. That will push up
rates for everybody else, and that will cost the government more.”
Supporters say the provision resembles one passed in 2003 when Congress created the Medicare Part D
program to subsidize prescription drugs for older Americans; it took effect in 2006.
In that case, the government gave sizable subsidies to employers that offered coverage to help finance
prescriptions for retirees. The goal was to discourage those employers from terminating those programs,
which would have saddled the government and seniors with higher costs.
Mr. Reuther said the proposed reinsurance program was not specifically intended to help unionized retirees.
“I’ve seen Fox News types saying this is a union provision,” he said. “It has little to do with unions. It’s open
to any plan that has early retirees.”But Mr. Mourad disagreed. “With the current administration,” he said,
“I have a funny feeling we’ll see union-covered
plans given a lot more of that $10 billion.”Unionized companies are more likely than nonunion ones to offer health coverage to early retirees.
Forty-six percent of large companies with unionized employees offer retiree benefits, Kaiser says,
compared with 24 percent for those without union workers. Over all, 31 percent of companies
with more than 200 workers offer coverage to early retirees, down from 66 percent in 1988.Many
governors, mayors and county executives favor the provision because it would transfer some
of their health care costs when they face huge strains.
“We welcome this effort to help cities and towns meet some of their financial obligations for retirees
who are not yet eligible for Medicare — and that
often can be police and firefighters,” said Neil Bomberg,
a lobbyist for the National League of Cities. “This would certainly save hundreds of millions of dollars for
many cities and towns, and that would be very significant.”
Mr. Sheils voiced concern that the program would not help the neediest, but instead early retirees with
employer benefits. He said he was worried that
Washington would be pressured to spend billions more
as soon as the first $10 billion ran out.
Having done calculations on how rapidly the $10 billion would be spent, Mr. Sheils said:
“We found that
the money would be gone in just a little bit over one year. Wouldn’t you expect them to push to extend it?”-----------------------------
...as a retired law enforcement officer...this stuff would allow me to stop working now, rather than at 65...
reduce my taxes and my insurance cost...but, we simply can not afford it...no matter how it would benefit me.
