Why Health Insurers Make Lousy Villains

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Roy in WA: check again on those admin costs - anything like 15-30 cents for private sector is out of the dark ages - check last month's Sherlock Inc report on admin costs, when updated for electronic billing and records, it's down to 8-9 cents, which is much closer to even Medicare's "hidden" admin costs. As this report points out, when Medicare and private sector are compared for same functions, private sector is lower.
see for yourself:
http://healthplans.hcpro.com/content.cfm?content_id=237493&topic=WS_HLM2_HEP
JB of Mich: insurers approve 96-98% of claims the FIRST time around, (google it: AMA's 2009 insurer report) and they are processed electronically, so explain to me where there is undue waste in denying claims. Insurer admin costs are just as much public record as profits, as are top exec compensation. Try finding out what your cardiologist, radiologist and anaesthesiologist make -- you wanna know where profits are, check Forbes or Morningstar: they're in the supply, services and pharma sectors, not insurance.
But if all you wanna do is rant on in ignorance, feel free, you have a lot of company.

Susan F of OR 11:46AM August 27, 2009

Anyone who believes in Single Payer is a dope. No competition...that's what you believe will save the healthcare industry? Wow. Uninformed. Without competition there is no innovation. That's first and formost. Without competition, you are stuck with what you are stuck with....man, where are these people from- the former Soviet Union??? If you don't like your car, buy a different one, you don't like your TV, buy another one....why is it just health insurance? What about property and casualty insurance? Can we get single payer for that as well? One last thing about single payer...is the federal government an insurance company? No. They are not. Those who believe in single payer know NOTHING about health insurance. CMS has paid out enough in fraud. If private companies ran the way CMS did, your wish would come true b/c ALL private firms would be out of business....

FR of TN 11:01AM August 27, 2009

But it was lacking one thing: Facts! Next time, try developing an actual argument, not some ridiculous generalization about how government does everything poorly. That meme is as bogus today as it was when Reagan said it. The fact is that government has a purpose and it does quite a few things much better and more efficiently than the private sector.
As for the author's point about profit margins: He misses the point entirely. The point is not massive profit margins or lack thereof as it is a false measure. Profit is determined after all other items are expensed. As some previous posters have mentioned, there is an excessive amount of waste in any insurer's business. They spend an inordinate amount of money in denying coverage and claims. Combine that with their administrative costs and other expenses and it reaches 30-47% of every premium dollar that is spent on something other than providing health care according to a recent University of Minnesota study. This is where a tremendous amount of savings could be realized if we achieved some real measure of health care reform. It's obvious that a single-payer system would be the most cost efficient but we are much more likely to end up with some sort of public-private system such as we have now.

JB of MI 10:04PM August 26, 2009

ANYTHING that has EVER been run by the government has already gone or is going BROKE!!! Here is just one more word on government quality of service: SUCKS!!!

Boris of NY 8:00PM August 26, 2009

To counter all the wild claims that have circulated for years, the insurance industry's own, "educational arm, "the Council for Affordable health Insurance," commissioned a study on Medicare & the private sector. On Jan 10, 2006, they issued a report titled, "Medicare's Hidden Administrative Costs: A comparison of Medicare and The Private Sector," By Merrill Matthews, Ph.D.
Presenting the best case they could for private insurance, & the worst case they could justify for Medicare, they concluded that when all factors are considered, Medicare's administrative costs are 5.2%, & the industry's costs are 16.7%, a difference of 11.2%. Rounding these numbers, you get about 5 cents on the dollar for Medicare, & 16 cents for private insurance. In other words, Medicare pays 95 cents of your doctor bill from every tax dollar while private insurance pays 84 cents from your premium dollar.
With health insurance, government or private, we hire someone else to pay our doctor bill, & both charge us for the service. The government charges a nickel on the dollar; our insurance company charges 16 cents. As consumers of this service, anything that doesn't pay our doctor bill is economic waste.
When 11 cents more of every private insurance premium dollar pays for expenses that don't pay our doctor bill, shouldn't we question the need and desirability of having this institution between us and our doctor, whose goal is profit for its owners, not service to us, its clients?

Roy of WA 7:44PM August 26, 2009

Chad: here's the rub, most of the info Waxman wants is already public record, so if govt is so dang efficient, why doesn't he just as the 50 state insurance regulators for the info...but no, it'll be a lot faster to ask the private sector insurers, because they've already got it ready. Of course, it's much more intimidating this way...Waxman must think he's still on the Oversight committee.

Susan F of OR 7:05PM August 26, 2009

The insurance companies books along with any other company's books are open. This is why Congress can ask for the information they are asking for. Grow Up! Do you not understand that everything costs money whether you get insurance from private companies or the government, it will cost you. And by the way the government has more control. Just wait. You will be sorry beyond your tiny imagination if Obama's health insurance reform passes. That is not to say reform isn't needed, but government control sure as HECK isn't needed.

Chad of WI 6:59PM August 26, 2009

Profits: 60% of people with private coverage have NONprofit healthplans
Profits 2: KaiserHealthNews AdWatch says the profits AND exec compensation of the top for-profit insurers is 0.5% of national health care expenditure and would pay about 2 days of care
Claims denial: AMA's own 2009 insurer report card puts denial rate in 3-4% range for FOR-profits, and Medicare (tax-supported) is at the high end of that. Nonprofits have denial rates even lower, below 2%. AND the #1 reason claims are denied: Doctors sent bills to the wrong health plan. Gotta love that - you'd think they could get that right.
Premiums to wage increases: this is a bogus comparison. The real comparison is cost of medical goods and services to premiums. If medical costs rise faster than inflation and wages, blame doctors and patients, not insurers, who are just paying the claims people rack up.
Medicare efficiency: another bogus claim. Medicare uses the same private sector services (doctors, hospitals) as private insurers. Even forcing down doctor and hospital fees (then passed to private sector), Dartmouth Atlas of Care still finds 30% variation in treatment costs from one part of the country to the other (adjusting for local costs) WITHOUT comparable increase in outcomes. Translation: spending 30% more is wasted because it doesn't change whether you die or get better.
Medicare efficency 2: Medicare's alleged admin costs are NOT lower on an apples-to-apples comparison of function. See Sherlock Inc's report last month on insurer admin costs. Look it up, don't make me link it for you.
WHAT NEEDS TO CHANGE: fee for service reimbursement for doctors and hosptials. Heck, until last year, we were paying them for taking off the wrong limb! Pay for value and outcomes, not volume. Use standards of care to control for patient noncompliance (if people don't follow the treatment plan, sorry, stop paying).
If people in this country truly believe "price is no object" in health care, we can all go down the tubes together, no matter who signs the check to the doctor.

Susan Fitzgerald of OR 6:22PM August 26, 2009

Do a little math and you will see 30 million DENIED CLAIMS last year is a conservative not questionable figure. Just take the 500,000,000+ insurance charges (sometimes a doctors visit and tests can generate 5 to 10 at one time) and divide them by the 6-9% DENIAL RATE of the what are considered the best carriers like Humana, Aetna, Cigna, United Health, Tri-Care, Well Point, & the Medicare B's. Add to that the 1,300+ mediocre to poorly rated insurances some with DENIAL RATES up to 20%. This is not rocket science.

longwalksinparis.blogspot.com of IL 4:43PM August 26, 2009

How can anyone believe that the same SEC that didn't do a thing about Madoff and the Wall Street con men knows a thing about what goes on in the insurance industry? As for state regulators they are a joke - mostly frontmen from the insurance companies. Sub-corps are legal ways of making parent companies less profitable. If the insurance companies have nothing to hide then just open the books to Congress.

longwalksinparis.blogspot.com of IL 4:06PM August 26, 2009