Insurance companies and healthcare

[hugo]

Eliminating Insurance Profits Yields Limited Savings

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Lately, you've heard a lot of politicians railing against the health insurance companies. Speaker of the House Nancy Pelosi went so far as to call insurance companies "immoral" and "villains."

 

One of the selling points of the public option is that since it won't have to provide profits to shareholders, it will be able to provide health insurance at a lower cost. And, while this is true, it likely won't produce the huge savings that advocates for it imply.

 

That's because while insurance company profits are in the billions of dollars, they aren't a large percentage of the revenues those companies book.

 

According to the Wall Street Journal, for every dollar of revenue, the insurance companies pay out 83 cents to doctors, hospitals, and pharmacies. Much of the rest goes to cover overhead. Total profits equal only a few cents of the total.

 

Wellpoint, one of the nation's biggest insurers, was used as an example. Wellpoint reported $694 million in profits for its most recent quarter. Revenue taken in to produce those profits was $15.5 billion. This works out to a margin of 4.6 percent. That's not too bad, but Microsoft, as an example, has margins of 25.1 percent.

 

So, if the public option eliminates profits from the equation, that will cut four percent from the cost of health care. Now, when you're talking about spending of $2.4 trillion, a savings of four percent is a decent chunk of change. It works out to $96 billion. But that figure assumes that everyone will opt for the public option, which isn't going to happen. Let's say that ten percent of the public does. Savings will amount to $9.6 billion, which would pay for the cash for clunkers program three times over.

 

These savings, while certainly a plus, are the equivalent of a person saving money by eliminating one trip to Starbuck's a week. It will help, but it's not going to put the budget in the black.

 

If health insurance costs really are going to be addressed then the focus needs to be on the pay for service system. A report from the Commonwealth Fund shows that the United States spends two to three times more that other countries on doctor's fees, drugs, and inpatient acute care.

 

An economist from Dartmouth says that the system provides too many incentives for waste. Doctors get paid to prescribe MRIs and hospitals get paid to put in expensive proton beam accelerators. He added that the incentive structure is pushing costs.

 

That is the discussion that needs to take place. While a public option would cut costs, until the fee for service payment system is addressed, health care reform will not provide the savings we are looking for.

 

This is another case of the conventional wisdom being conventional, but not very wise. Buy and Hold Plus urges those reading this blog to think things through and not accept the conventional wisdom. The politicians are railing against insurance companies and various factions are fighting over the public option, but all that rhetoric misses the mark. Until the payment system changes, health care costs will continue to rise.

[timesjoke]

The problem with all of this is Obama keeps changing his keywords and refuses to truly lead us to a specific outcome because of the ever changing polls. Obama like Clinton watches the polls closely and changes his agenda sometimes daily to try and gather more popularity.........this worked well for him while looking for the nomination and even for the final election but now the people are getting tired of the ever changing, poll driven policies he is producing.

 

 

First it was healthcare reform, after a huge study group reported that most people like their insurance Obama decided America needed health insurance "company" reform instead in the mistaken belief he could 'Gin' up some support against "EVIL" big companies. Pelosi, Reed, everyone all jump on board to attack these companies but it has backfired.

 

 

The claims of cost savings? Proven false, in fact it has been shown that under most of the proposed plans there would be a very large increase in Government spending. There is only one plan that offers savings, and it is also the only plan that was worked out by a Bi-Partisan 6 man committie.

 

 

Right now Congress approval numbers are going down, Obama approval numbers are going down, most people polled trust the Insurance companies more than Obama and the Government. Most people do not want any kind of Government controlled plan. Obama can force this through, but it is a gurantee of political suicide if he does. One example is recent polls for the race with Arlen Specter where prior to his abuse of his people in the town hall meeting he had a very solid 11 point lead over his challenger. After the meeting he had a 12 point deficit.

 

 

It is clear now that most Americans do not want what Obama is trying to force down their throats, the only question now is will Obama listen to the people who elected him into office or will he instead believe he is way too Elite to listen to them and instead follow his socialist agenda?

 

 

 

 

An interesting point I heard on one of the news channels:

 

If your private insurance company unfairly refuses coverage or drops you, then you have the right to sue them. There have been thousands of successful suits against Insurance companies over the last few years...........now once your insurance is run by the government, do you think you will have the option to sue them if there is a mistake or an unfair change in the policy?

 

 

The Government plan will still be run by humans, in fact unqualified, lazy, and completely incompetent humans (as all Government leeches are) so they will screw up even if there are no changes (but it is silly to believe there will never be changes once they have control) made in the coverages. In a private company, human error is still the responsibility of the Company and you can sue them.

 

 

If a Government official makes a mistake that hurts or kills someone, you have to suck it up.

 

Do we really want that?

 

I know I don't.