When Big Insurance Rejoices, Something's Wrong

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If you had any doubt about who some Senators on the Senate Finance Committee really, truly care about, consider their recent votes. Just look at the votes against creating a public option to compete against private insurers. Then, consider the giddy response of the industry, according to an article in the trade press:

"We are pleased by the rejection of both the Rockefeller and the Schumer amendments containing public plan options," says Tom Currey, president of the National Association of Insurance and Financial Advisors, Falls Church, Va.... America's Health Insurance Plans, Washington, is also welcoming committee rejection of the amendments. "The government-run plan is a roadblock to reform," AHIP spokesman Robert Zirkelbach says.... "[W]e are very pleased with this outcome," says Janet Trautwein, president of the National Association of Health Underwriters, Arlington, Va.

The Committee also drew praise from the "special" interests--including trade groups for the insurers, underwriters and brokers and agents--for voting for allowing insurance agents and brokers to sell health insurance to individuals and groups through a proposed government "exchange" program. In other words, the amendment would allow these actors to profit from this government program, if it were to pass Congress, further reducing how much money from premiums paid through the exchange goes to providing health care. Sen. Tom Carper, D-DE, who sponsored the amendment to allow brokers and agents to participate in the exchange system, was singled out for high praise from the Council of Insurance Agents and Brokers.

When I saw that, I recalled sitting next to Sen. Carper a few years ago at a small, private fundraiser that I was asked to attend by my employer, which just happened to be one of the country's largest health insurers. He pulled in quite a few bucks in donations that afternoon. Money talks, folks.

As a CNN investigation revealed, the senators who voted against the public option have received millions of more dollars in campaign contributions from the health care industry than those who voted for it. If the Senate Finance Bill reaches the president's desk, it might as well be called the Health Insurance (and Underwriters and Brokers and Agents) Profit Protection and Enhancement Act of 2009.

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Medical loss ratio

Under the Finance Committee's bill, how much of your premium would be allowed to go to administrative costs, overhead, etc?

Did United Health get the 35 percent figure they lobbied for?

Also, can you please give your thoughts on the 40 percent excise tax that would be placed on families whose plan would cost more than $21,000 a year ($1,750 a month) by 2013?

My family of three is already paying $1,500 a month to United. My Mom has diabetes and our premium is likely to go up given that my Dad just turned 60. We tried to change to a cheaper plan, but my Mom's diabetes is a pre-existing condition and thus she didn't qualify.

So, basically, it looks to me like we're going to get hit with a 40 percent tax because our premiums are high due to my parents' age and an (incredibly common) pre-existing condition, and that an exorbitant percent of our premiums will be going to insurance profits if the Finance Committee's bill goes through.

Does this sound about right?

On a related note, do you know if the Finance Committee has fixed the loophole that would allow self-insurers to continue to discriminate against individuals with pre-existing conditions?

Would you mind emailing me your response so that I can include it on my blog?

Thanks,
Andrew