Breaking News: Insurance Industry Launders $10M to $20M in Attack Ads

The insurance industry denies (and their interest group) that payments to providers for treatments are purposefully delayed. Ask any doctor, hospital, dentist, lab and they will share the truth. Companies continually owe these providers 30 to 35% of the submitted claims. Add this to the quick rejection of procedures generally by non professionals.

The history of health insurance in the U.S. and my experience in this industry (CIGNA) explains why I believe health care reform with a public option would benefit our economy and all Americans.

In 1925 doctors and hospitals had learned enough about disease in the preceding decade to be reliably helpful treating sick people. Soon they had to charge more for their services than most people could easily afford. By the time of the Great Depression the affordability problem so worsened that the administrator of Baylor Hospital in Dallas created a payment system that evolved into Blue Cross. In exchange for a tax break, and by charging everyone the same premium regardless of age, gender, or pre-existing conditions, the Blues made quality health insurance available to a great number of people.

Observing the success of the Blues and putting aside earlier doubt about the viability of health insurance, Commercial insurers entered the market. Their sales efforts accelerated in the 1940s as businesses sought to skirt wartime wage controls by offering insurance to compete for labor. (President G. W. Bush’s proposal to alter health insurance tax exemption policy to benefit the self-employed may have hastened what is likely to be businesses’ inevitable withdraw from health insurance. Bush’s failure to put forward a viable alternative to the workplace as an insurance supplier doomed his proposal). To compete with the Blues and to skim off the best risks commercial insurers configured their rating systems to exclude potential high risk policyholders entirely.

To survive the Blues followed suite. Without a tax advantage they became virtually indistinguishable from other health insurers. Then large corporations employing a great number of younger people began to self-insure, relying on insurance companies for claims processing only.

Rising concern about medical care costs and its fair distribution prompted an increasingly greater number of Americans to call for a government funded universal health care system as has been adopted successfully in every industrialized nation. Most conservatives oppose this solution claiming, often incorrectly, it's “socialistic and detrimental to quality care.” Nonetheless, driven by widespread public recognition that private insurance underserved the needs of seniors and our poorest citizens, Medicare and Medicaid came to be in 1966.

Forty years later in a Republican Congress Medicare Part D, a tax-payer subsidized prescription drug plan promoted by drug and insurance company lobbyist, went into effect. To obtain coverage. it required seniors to enroll in private insurance. In some respects, Part D worsened problems in our health system, It enlarged unfunded entitlements and presented a confusing array of prescription drug plans with high marketing and administrative costs. In Hartford County, CT, 48 plans are offered. With annual open enrollments, covered drugs and premium costs are altered annually.

As the private market progressed the cost of illness increasingly shifted to the sickest people undermining the very idea such costs should be spread out among the general population. Today 30% of Americans are covered by one or another kind of government funded health insurance. Collectively these plans account for 45% of U.S. expenditures for health care. Viewed in a broad perspective, these plans function to provide affordable, quality insurance coverage. Medical services are delivered by mostly private sector physicians and hospitals. Is this socialism?

To sustain revenue growth and profits in markets remaining open to them, private insurers prospered by making corporate acquisitions, selling new products such as dental insurance and, prompted by improving medical technology and growing inefficiencies in the U.S. health-care-delivery system, health maintenance organization (HMO) programs. Still, consumers in the broad market for health insurance remained under-served. Costs for health services and insurance continued to rise at a rate exceeding general inflation. Health Savings Accounts, intended to foster consumer choice and price competition, only led to more confusing insurance alternatives that concealed the continuing rise in Americans without private insurance. Cost went on shifting from the young and healthy to the old and sick. Markets became dominated by a handful of insurers. Employers outright reduced or eliminated employee health-care benefits. Hospitals merged and became less willing to help low-income patients.

Ruinously expensive, discriminatory, and unethical private health care products are an affront to anyone with a capacity for moral outrage or a sense of social responsibility.

The U.S., a self-proclaimed champion of capitalism and innovation, is observing the private sector in other countries outperform us. Last year in India, relying on economy of scale, cardiac surgeons at a 1,000 bed hospital (the average U.S. hospital has 160 beds) performed 3,174 by-pass surgeries, more than double the 1,367 at Cleveland Clinic, a U.S. leader. India's entrepreneurs plan to build a 2,000-bed hospital in the Cayman Islands to deliver elective and necessary services 50% below the costs in the U.S. In 2007 Americans seeking medical care in other countries numbered 750,000; in 2010 that number is projected to rise to 1 million.

So, what is the best means to secure the obviously need for U.S. health-care reform? According to the non-partisan Congressional Budget Office (CBO), Democrat legislation passed in the House and a parallel bill before the Senate would extend protection to 36 million uninsured Americans, save thousands of lives every year, and reduce the deficit by $100+ billion over 10 years. Moreover, the bills would increase choices for everyone, disallow medical underwriting, pre-existing condition exclusions and, subject to approval in Congress, implement structural and provider reimbursement changes to curtail run-away health care costs devastating our economy.

House Republicans filed health reform bills but the GOP seems reluctant to talk about them, even at town hall meetings. Best known is the Boehner bill. According to the COB, it would extend coverage to 3 million Americans meaning the proportion of non-elderly with insurance would remain about where it is today. It shaves $68 billion off the deficit in 10 years. The Boehner bill shies away from politically challenging but common sense provisions benefiting individuals purchasing health insurance coverage. Examples are funding subsidies for lower-income people, abolishing the tax exclusion for employer coverage, and health insurance exchanges where people unable to get coverage through work can shop for competitive insurance plans.

Can Americans hurt by our progressively failing health system expect effective reform will finally occur? Radio and TV talk-show hosts have so politicized reform that enactment is at risk. Some in Congress wish to kill reform only to destroy Obama, Others push for tort reform and other solutions that haven't demonstrated effectiveness as an agent for for reducing consumer health care costs.

Then there are politicians who place self interests and ego ahead of public needs. Connecticut’s Senator Lieberman, former Democrat who turned Independent, comes to mind. As Gore’s running mate, he supported a Medicare buy-in plan and continued to do so as recently as September. Now he’s opposed to it, bowing to an insurance industry that under-serves Americans.

There’s a lot of history that isn’t fit to repeat itself. Hopefully, this Congress will overcome decade’s of resistance by opponents of reform to end America’s status as the only developed country that places so many of its citizens at risk for medical bankruptcy. If Congress fails us again I’m going to be very ill.