The Alan Katz Health Care Reform Blog

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Posts Tagged ‘HealthCal.org’

Bashing Insurance Companies May Be Fun, But Avoids the Real Issue

Posted by Alan on March 1, 2010

That health insurance carriers were ascending to the throne of political piñata in the health care reform debate has been apparent for some time now. Last July President Barack Obama began referring to health care reform as health insurance reform. A couple of weeks later Speaker Nancy Pelosi described insurance companies as “almost immoral” for opposing the creation of a government-run health plan. That insurance companies were to be cast as the villains was pretty much inevitable. People like and trust hospitals and doctors much more than health insurance carriers. And pharmaceutical companies, while profiting far more from health care than medical carriers are a bit removed from people’s daily experience. The reality is the only group Americans trust less when it comes to health care reform than insurance companies are Republicans in Congress.

Compounding the situation the health insurance industry has had atrocious timing. America’s Health Insurance Plans (AHIP), the industry’s trade organization, released a report warning that health care reform plans being considered by Congress would dramatically increase medical insurance premiums for many Americans. The message was hardly welcomed by Congressional Democrats, but what infuriated them was the timing. The Senate Finance Committee was about to vote upon the closest lawmakers had come to a bipartisan agreement (meaning at least one Republican voted for it. The vitriol the report inspired went far beyond its substance.

Then there’s the timing of recent rate increases in the individual health insurance market. While Anthem Blue Cross’ individual market increase first captured the public – and lawmakers’ attention – it’s now clear several carriers have levied double-digit premium increases in multiple states in both the individual and small business market segments. Many political observers believe that these rating actions breathed new life into flagging reform efforts.

But the 24-hour news channels and other media along with their innumerable pundits need fresh meat. Their job is to keep people watching (or reading) so the commercials don’t run together. There’s only so many ways you can use “insurance company” and “venal” in the same story before it gets old. Insurance company bashing will continue, but there are signs that serious attention may be given to aspects of America’s health care system reform beyond insurance markets.

Consider: Daniel Weintraub is one of California’s most respected journalists. In addition to reporting for and providing opinion pieces to the Sacramento Bee he maintains an excellent blog on health care issues, HealthyCal.org. In the past, Mr. Weintraub has been hard on insurance carriers. Nor is he a fan of the health care status quo in this country. So it must have been a surprise to even him when he wrote a post that makes clear that bashing health insurance companies is not the same as enacting meaningful health care reform.

Mr. Weintraub begins his post citing the political travails California insurance companies face in the state today, ranging from separate investigations by Attorney General Jerry Brown and Insurance Commissioner Steve Poizner to a host of legislative hearings led by lawmakers who, like the Attorney General and Insurance Commissioner, are seeking higher office in this election year.

While noting the entertainment value of this spectacle and recognizing that “it might actually produce information relevant to the health care debate,” Mr. Weintraub makes clear that “health insurance company profits and administrative costs remain a relatively small factor in driving the cost of coverage skyward. The biggest reason that health insurance is getting more expensive,” he continues, ”is that health care is getting more expensive.”

The post includes a useful pie chart describing national health expenditures as broken down by the US Centers for Medicare and Medicaid Services. Of the $2.3 trillion on health care Americans spent in 2008, $159 billion (approximately seven percent) “went to private insurers after deducting all the costs they pass through to the doctors, hospitals and other health care providers.” Put another way: “health care costs nearly doubled between 1998 and 2008, increasing by 96 percent. If we had eliminated private insurance companies in 1998, and assuming they provide no benefit in managing costs, health spending still would have increased by 83 percent during that decade.”

None of this means that health insurance companies and their behavior should be ignored nor their misdeeds forgiven. But as Mr. Weintraub notes, “when this election year is over and the current political bash-fest comes to an end, the core costs of health care will still be there, and chances are they will still be rising.”

That a respected journalist is noting that attacks on health insurance companies are diverting attention from other serious issues with America’s health care system is significant. But he’s not alone. According to Politico.com, Warren Buffett is advising President Obama “to scrap the health care bill and start over” because the legislation “does not focus on controlling costs.” (He went on to say that he’d vote for the Senate bill as opposed to maintaining the status quo).

President Obama and his allies will argue that their legislation does attack rising costs – and they have some evidence to back their claim. But few could honestly say it goes far enough. And while good starts are important, the question is whether the Administration and Congress have the political will to follow-up with meaningful cost containment measures.

Attacks on the health insurance industry will continue. Every drama needs a villain and in this particular theater, carriers are the bad guys. But that folks like Mr. Weintraub and Mr. Buffet are calling out politicians for failing to more fully address the most critical issue undermining America’s health care system – runaway medical costs – is an encouraging sign.

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