For-Profit Health Insurance Companies Have No Business Being in the Health Care Industry
When it comes to someone turning a buck off of shipping a package or mailing a certified letter – okay. But when someone is making a PROFIT off of the health care they provide you there’s a real conflict of interest. A serious, sometimes life or death conflict of interest.
Just as FedEx or UPS is going to look at your packages in terms of revenue, expenses and profits, so the private, for-profit health insurance companies will look at your health care needs. It’s a shame that FedEx and UPS probably do so more ethically at times.
We have to ask ourselves, what is the driving force behind the decisions of private, for-profit health insurers at the end of the day?
How Much Could We Save if We Cut Out Their Profits
During a recent interview between NPR’s Steve Inskeep and Angela Brawling, CEO of health insurance company Wellpoint, there were some enlightening moments.
They worked out how much it actually is that private health insurers make in profit. Turns out they don’t make 1% in profit as many large for-profit insurers have lead people to believe. Yes, if you count all providers of health care – including the non-profit health care providers (medicare- government, medicade – government, non-profit health insurance groups, co-ops) then the total as a whole is only 1%.
However, private, for-profit insurance companies like Wellpoint currently make roughly 4% in profits.
Still doesn’t sound like too much, right? Then why the talk of 1%? Consider this: the top 10 private health insurance companies profits increased 428% between 2000 and 2001 while people’s premiums have risen at least 78% in that same time frame.
To put that in real perspective, profits went from $2.4 billion to $12.7 billion. That’s a nice chunk of money that could go towards covering the yearly cost of the proposed health care reform.
How Health Insurers Are Getting Their Profits and Why 2008 Doesn’t Count
Now, some in the health care reform opposition will point out that in 2008 there was a drop in profits. However, the drop in earnings is a poor argument to make. The explanation for the decrease in profits is partly due to the fact that the economy tanked in the last quarter of 2008.
That also led to more people losing their jobs and their insurance. It is worth noting that the number of insured increased in 2000-2007 from 38.4 million to 45.7 million. However that’s only a 19% improvement, which makes their profits during that time even more impressive. But that could be due to health insurers using less of our premiums for actual health care.
As Wendell Baker, former PR CEO for Cigna, points out on the Rachael Maddow show in 1993 roughly 95% of the premiums we pay went towards covering medical claims. Now that number is down to around 80%. So as our premiums have went up 78% the money going towards our health care has decreased approximately 15%.
They’ve also been weeding out competition, something they’ve been accusing the government of trying to do with a public health care option. There are approx. 1300 health care providers now in 2009.
A study on competition in the health insurance industry conducted by the American Medical Association, found that since 2000 the largest health insurers have been absorbing their competition.
“Over the five years since the AMA’s first study, the country’s largest health insurers have continued to pursue aggressive acquisition strategies. The largest insurer, WellPoint Inc. (formed from the merger of Anthem Inc. and WellPoint Health Networks), has acquired 11 health insurers since 2000. The second-largest health insurer, UnitedHealth Group (United) has also acquired 11 health insurers since 2000.
To put this in perspective, in 2000, the two largest health insurers, Aetna and United, had a total membership of 32 million lives. As a result of mergers and acquisitions since 2000, the top two insurers today, WellPoint and United, each have memberships, respectively, of 34 million and 33 million, totaling more than 67 million covered lives. Together, WellPoint and United control 36 percent of the national market for commercial health insurance.”
It’s good to know that as some people strain and even buckle under the rising cost of health care the insurance companies’ bank accounts have gotten bigger by providing less coverage and reducing people’s options.
Why a Public, Non-Profit Option Would Be Great
You know what would be super cool about public health care from the government that’s not an option with private insurers, if we really didn’t like it we would be able to vote and have it changed by way of the people we elect.
We don’t have that luxury with private health care. Not unless you’re a shareholder of your insurance company, and a major shareholder at that.
Now the counter for this would be that you have the freedom of choice and you can just take your business elsewhere in the private market. The thing is, if a dispute has arisen that has caused you to change health insurers you most likely have a medical issue. If you approach another insurer they’ll see what caused all the fuss and base your denial or premiums accordingly.
You get screwed over when you need health care the most and there’s nothing you can do about it if you don’t have the funds to pay for it.
Same goes for if you lose your job and the employer-paid health insurance that goes along with it. Having to pay the full price on your own may prove burdensome to those who aren’t use to carrying the full cost and no longer have income coming in.
For more facts on why health insurance companies need an extreme overhaul (i.e. no for-profit companies that gouge us for money for basic health care.) visit the National Coalition on Health Care.