Lunge, Parry, Thrust: The Health Care Reform Debate Continues in Earnest

For four months I have hoped and prayed that Congress would pass health care reform legislation as outlined in H.R. 3200: America's Affordable Health Choices Act of 2009.  I have listened and participated as Democrats and Progressives have debated the necessity of a public option.  I have sat white knuckled in agitation at the possibility that both would opt to throw out H.R. 3200 and its Senate counterpart in its entirety on the basis that it might not contain a public option.  I watch hopefully as the House debates the merits of HR 4872:  Reconciliation Act of 2010.

My experience and frustration with the health insurance industry has its roots in my childhood.  I was born with hip displasia, and for eighteen months, my parents labored to pay the medical bills for my treatment.  My legs were held in a little metal frame for eight months, and I was held immobile by a full body cast for another ten months while the bones and ligaments in my hips formed.  I am able to walk today because of my parents sacrifice.  Sadly, my parents struggle didn't end with me.  One year later, after a ten month pregnancy, my sister was born ancephalitic with a portion of the back of her head missing.  She lived only two hours.  Once again, my parents struggled to pay the medical bills.  I was healed, but the strain of those years, at least in part, cost my parents their marriage.

Years later, my frustration with health insurance, or rather a lack of insurance, reached new heights when I incurred over twenty thousand dollars in medical debt from just two visits to the emergency room at Providence.  I dropped out of college, and took a full time job to pay off the credit cards used to pay for my visit.

In brief, many of your have already read my experience with the end of life debate when my father succumbed to cancer in March of last year.  The experience is still raw and that is all I have to share on that matter today.

Finally, my frustration came to a head back in June of 2008 when my private health insurer raised my insurance premium twenty-one percent.  I was laid off from my job in early June, but felt relieved that I had a portable, private health insurance plan that would cover me through my unemployment.  Not two weeks passed when I received the notice of the increase in my premiums.

Instead of collapsing in rage (very tempting), I renegotiated my premium back down to a "reasonable" rate by aggreeing to pay an even bigger deductible, but not before making a silent vow to myself to learn everything I possibly could about private health insurance.

I blogged about many of my encounters with the health insurance industry, and I encourage you visit my blog at daytodaydemocracyalaska.com and here on Diva's site to read more, and follow me on that journey.

I have learned a great deal since then, and that knowledge has led me to the nearly unshakable belief that no health care reform can occur in an environment where the private, for profit health insurance companies continue to practice business as they have been since they were allowed to function as for profit financial entities as opposed to the not for profit organizations of their inception.  Health insurance companies, once scoffed as being bothersome middlemen in the health care industry, have managed to insert themselve into every aspect of that industry.  Any reform must seek to severe the hold that Wall Street has on health insurance and that health insurance has on the medical industry.

I have perused many quarterly financial statements from several of the biggest health insurers (see previous blogs,) and I can tell you that profit drives all of their decisions.  This is to be expected in a free market society, but profit motives, while beneficial to investors, can only spell disaster for the insured when profits come into conflict with their ability to receive proper or even adequate health care.  Let us not forget that we, the policy holder, paid for our services, and by that standard, we have every right to demand that our concerns be heard in Washington, and we should be concerned.  

Simple Facts:
1.  Member to benefit ratios (the percentage of premiums paid towards actual medical care) decreased from the low 90 percentile to the low 80 percentile from the nineties to the midpoint of this decade.  Insurance companies pay out less of a percentage of our premiums than they did in the nineties (American Medical Association and the Department of Health and Human Services. Bottom line.  Policy holders are getting less and less for more and more.

2.  According to financial reports posted by health insurance companies themselves (simply Google Quarterly Financial Report and plug in the name of your health insurer), at the end of the fiscal year, what remains of our hard earned premiums after payment of medical costs, are dispersed out to shareholder in the form of dividends to shareholders and to other financial entities (companies) within the same parent organization.  The Gramm-Leach-Bliley Act of 1999 allowed banks, investment bank and insurance companies to exist under one umbrella organization.  The consistent profits generated by health insurance premiums have served for years as a way to offset losses incurred within the larger organization.

3.  Many of the major investment companies (Prudential, American, etc.) have listed health insurance assets as comprising approximately 3% of portfolios.  Once again, the consistent profits generated by health insurance premiums have proved to be of greater benefit to the shareholder than the policy holder.

4.  Private, for profit, health insurers are no longer required to set aside a portion of each years premiums as a buffer against unforeseen surges in medical health care costs.  This practice has seen drastic increases in premiums to the policy holder.  Many Americans still operate under the belief that insurance companies are required to keep a percentage of premiums in reserve, but a careful examination of the financial reports submitted by health insurance companies makes it very clear that this is not the case.

5.  Insurance companies make contracts with providers and hospitals to provide care for a set fee.  According to the American Medical Association's 2009 National Health Insurers Report Care the Health Insurers have regularly seen fit not to pay for those services.  Cigna failed to pay for prescribed procedures in over 6% of cases reviewed.  The AMA report does not include cases where insurers paid only a portion of the total agreed upon amount.  Providers must make up for those losses, and the health insurers are not footing that bill.

http://www.ama-assn.org/ama/pub/news/news/health-insurer-report-card.shtml

6.  The GOP has cited repeatedly that the answer to health care reform must begin with Medical Malpractice reform, yet, they seem to be unaware that many of the same companies offering health insurance also provide coverage for medical malpractice.  Do they not question the logic of this situation?  This report by the United States General Accounting Office (GOA) confirms that profit motives and poor investment strategies of insurance companies have impacted providers in this country in much the fashion they have affected those paying premiums to health insurers.  In many cases insurance premiums to both groups have been increased to cover losses not related to the actual cost of malpractice or medical expenses.

http://www.gao.gov/new.items/d03702.pdf

This statement by the GAO further supports my belief that insurance companies in general have gained to much of a stake in the medical industry, and their influence must be curtailed.

Multiple factors, including falling investment income and rising reinsurance
costs, have contributed to recent increases in premium rates in our sample
states. However, GAO found that losses on medical malpractice claims—
which make up the largest part of insurers’ costs—appear to be the primary
driver of rate increases in the long run. And while losses for the entire
industry have shown a persistent upward trend, insurers’ loss experiences
have varied dramatically across our sample states, resulting in wide
variations in premium rates. In addition, factors other than losses can affect
premium rates in the short run, exacerbating cycles within the medical
malpractice market. For example, high investment income or adjustments
to account for lower than expected losses may legitimately permit insurers
to price insurance below the expected cost of paying claims. However,
because of the long lag between collecting premiums and paying claims,
underlying losses may be increasing while insurers are holding premium
rates down, requiring large premium rate hikes when the increasing trend in
losses is recognized. While these factors may explain some events in the
medical malpractice market, GAO could not fully analyze the composition
and causes of losses at the insurer level owing to a lack of comprehensive
data.

Indeed according to the GOA report, many states have already taken steps to reduce the cost of malpractice insurance.  If the cost of premiums have indeed driven doctors and nurses out of practice, then perhaps we should take a closer look at how and why premiums are adjusted, and what rules must the insurers follow?  Perhaps real malpractice reform lies not in capping punitive damages paid to victims of malpractice, but in reforming the policies that govern how malpractice insurers determine premium rates.

The legislation proposed in
H.R.4872: Reconciliation Act of 2010 will go a long way in reforming the health insurance industry.  For those who worry that forcing Americans to enroll in insurance will be giving the insurance companies a huge payout, I say that the new rules governing how they will do business will more than offset any profit they will make.  Remember that a good portion of this bill amends legislation already on the books to close the loopholes that allow health insurers to deny coverage (Health Services Act), refuse to make payments to providers, and to deny claims made by policy holders.  The profit margin currently enjoyed by insurers will take a drastic hit.  The end result will be that policy holders will see the member to benefit ratio increase to percentages seen in the 1990s.  This means that insurance companies will no longer be the cash cows they have been to parent companies and investors in the past.  The rights of the policy holder will take precedence over the shareholder and the CEO.

For this reason the health insurance industry is fighting and has been fighting this legislation since H.R. 3200 was first introduced by Representative John Dingell on July 14, 2009.  Representative Dingell, former Chair of the Committee on Energy and Commerce, has fought the good fight for increased medical coverage for Americans since the Bush years when his administration attempted to gut Medicare.  His bill, now morphed under the pressure of a debate that has spanned more than a year, and has touched Americans from all walks of life, contains the key which will unlock a health care system from which all Americans can partake.  This bill will go far to reinvigorate the morale of the country.

No, many parts of the bill will not take affect immediately, but this may not be as awful as we predict.  Medicare and Medicaid must undergo further transformation before they can carry the load hoped for by many Americans.  Doctors, surgeons, specialists, nurses, medical technicians and many more will need to be trained and ready to treat the influx of patients that would be generated with the advent of a single payer system. Health clinics will need to be built, and systems of operations worked out.  This is all part and parcel to growth and change.  Change and fear are often traveling companions, but fear need not paralyze us.  As was pointed out after the Inauguration of President Obama, much work remains, and it will not be easy.  There are more Americans to carry the burden because with the President's election, a brand new generation and a different demographic of American entered the effort, and they have joy in their hearts and a reason to be motivated.  I truly believe we are a new nation, infused with new vigor and health, and whatever price liberal America paid for desegregation and standing up for the rights of African-Americans, has been more than worth the effort as we see millions of people stand together for change.

With deep respect for the opinions of all who have been impacted by job loss, medical debt or home owner woes, I encourage everyone to embrace health care reform.  Please, make those last minute phone calls to our Alaskan Congressmen and women.  In addition, call your district Congressmen and women for the state of Alaska, and ask THEM to call our United States Congressmen.  Lets work this issue from the bottom up and get everyone in the chain involved.  This will send a clear message to politicians at all levels that we, the electorate, are alive and well and ready to exercise our rights as voters.