Our Profiteering Health Insurance Industry: Should The Government Bail It Out Again?

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Backtrack to 2008 to 2010, when the increasing costs and unaffordability of insurance and health care for Americans were a front-burner issue. They remain so today.

Soon after coming into office, the new Obama administration worked for two years, in the name of health care "reform," to appease corporate stakeholders in our well-entrenched medical-industrial complex. The political question then was not what was in the best interests of patients and families, but how to gain the support of the major corporate players, especially the insurance, hospital, and drug industries. Following their huge campaign donations, sending more than 4,500 lobbyists to the Beltway (eight for every member of Congress) (1) and a rapidly revolving door of conflicts of interest, the Patient Protection and Affordable Care Act (PPACA, or ACA and Obamacare) was passed by a narrow margin in Congress almost seven years ago.

Today, it is obvious to all that patients are still not protected by good insurance coverage at affordable rates, and that the very name of the bill is a misnomer. The costs of health care keep rising at rapid rates as insurers, hospitals and drug companies blame others for these increases. None of these industries have contained costs as they pursue their business model of making profits, with their highest priority maximizing revenues for their CEOs and shareholders. As we are now seeing, insurers exit markets when they are not sufficiently profitable, even as health care stocks have soared to the highest sector of the S & P 500.

Not only did the health insurance industry get some 20 million new enrollees as a result of the ACA (mostly through Medicaid expansion), but insurers gained many ways to decrease their risk for covering enrollees' health care costs. These include offering plans covering as little as 60 percent of costs (bronze plans), receiving "risk corridor" funds protecting them from losses (now a court case), benefit designs that still discriminate against the sick, shrinking provider networks, restrictive drug formularies, offering limited-benefit bare-bones policies, and deceptive marketing practices. In no way have they contained costs, even as they have been subsidized by new enrollees through the exchanges. All the while, they have gained market power through consolidation as they consume 15 to 20 percent of U. S. health care expenditures, mostly through profiteering, administrative overhead, and bureaucratic waste. If their merger agreements survive court challenges, just three giants--Anthem/Cigna, United Health Group, and Aetna/Humana will collectively have a margin share exceeding more than 130 million Americans. (2)

Insurers have segmented the market in their own interests, shifting the burden of care of sicker patients to public programs. They have increasingly privatized both Medicare and Medicaid, resulting in higher administrative costs compared with public Medicare and Medicaid. They also maximize profits by cutting staff and value of coverage, resulting in worse outcomes for patients compared with public plans. (3)

Most people are unaware that the government already pays for about 64 percent of total health care spending--about $1.9 trillion in 2013, much of that by subsidizing private health care industries, especially private health insurance. There is a long history to this subsidization, dating back to policy decisions after World War II giving tax exemptions to employers for their costs of providing employer-sponsored health insurance.

The ACA bailed out the industry in 2010, which is once again calling for more government subsidies to stay in business. A just-released estimate by the Department of Health and Human Services (HHS) acknowledges that the three-year risk corridor deficit from 2014 through 2016 for insurer losses will exceed $14 billion. (4)

The Congressional Budget Office and the Joint Committee for Taxation estimate that the net subsidy from the federal government in 2016 for health insurance for people under age 65 and costs for Medicaid enrollees under age 65 will be $660 billion. (5) That estimate includes effects of preferential tax treatment for employer-sponsored coverage.

We can anticipate that insurers will make good on their threats to leave the market when we recall that 2.4 million private Medicare beneficiaries were abandoned in 2002, when they lost their Medicare + Choice coverage despite infusion of more federal dollars. (6)

The incoming Trump administration and Republican-controlled Congress will be pressured to continue a further federal bailout of the private health insurance industry. But why whip a dead horse? It is past time to learn that corporate greed and the business model do not, and will never, serve the common good. As Wendell Potter, former Cigna executive and author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans, observes:

Folks, we are guilty of magical thinking. We've fallen for insurers' deception and misdirection, hook, line and sinker. And many of us can't be persuaded that we are being duped. Meanwhile, the shareholders of the big for-profits are laughing all the way to the bank. Every single day. (7)

We--Americans needing health care, employers, federal and state governments, and all of us taxpayers--cannot afford another bailout of the health insurance industry, especially since we have a real fix-- single-payer, not-for-profit national health insurance, Medicare for All. It will provide universal access to care for our entire population, save us all money, give us free choice of physician and hospital, and improve our health care outcomes in a reformed system dedicated to service and the public interest. Corporate stakeholders with their political and economic power, and their lobbyists (most unregistered) are again pushing for continued government bailouts of this industry, which has not earned it. Another bailout cannot reverse the health insurance industry's continuing death spiral.

John Geyman, M.D. is the author of The Human Face of ObamaCare: Promises vs. Reality and What Comes Next and How Obamacare is Unsustainable: Why We Need a Single-Payer Solution For All Americans

visit: http://www.johngeymanmd.org

1. Eaton, J, Pell, MB. Lobbyists swarm capitol to influence health reform. Washington, D.C. The Center for Public Integrity, February 23, 2010)

2. Mattioli, D, Hoffman, L, Mathews, AW. Anthem hears $48 billion Cigna deal. Wall Street Journal, July 23, 2015: A1

3. Geyman, JP. The health insurance industry's last-ditch holdup. The Huffington Post, August 15, 2016.)

4. Blase, B. A taxpayer bailout of ObamaCare insurers just got a lot more expensive. Forbes, November 21, 2016.)

5. CBO and JCT. Federal subsidies for health insurance coverage for people under 65: 2016 to 2026. March 24, 2016.

6. Waldholz, M. Prescriptions. Medicare seniors face confusion as HMOs bail out of program. Wall Street Journal, October 3, 2002: D4.)

7. (Potter, W. It's way past time for us to stop deluding ourselves about private health insurers. The Progressive Populist, September 1, 2016: p. 20.)

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