03 March 2010

Private Health Insurance : Going the Way of the Dinosaur

In the map above, the countries with universal health care are in blue. Those trying to get it are in green. Note that the United States proudly takes its place among the third-world countries of Central Asia, Africa, and parts of South America. We should be ashamed.
Private insurance:
Bound for extinction

By Ted McLaughlin / The Rag Blog / March 3, 2010

One of the things the Democrats were elected to do was to fix our badly broken health care system. It looks like they are going to fail to do that. They might wind up passing the anemic and pitiful Senate health care reform plan, but that falls far short of really reforming the health care system. It does little but continue the broken system we currently have with a few modest and mainly cosmetic changes.

One of the worst failures is to leave Americans with no choice except to purchase private health insurance. While this will guarantee huge profits for the large private insurance companies for some more years into the future, it is ultimately doomed to an ignoble failure. We are already beginning to see that these private companies just can't do the job indefinitely. Consider the current situation with Wellpoint (whose subsidiary is Anthem Blue Cross of California).

Anthem Blue Cross is the company that recently announced it is raising most of its premiums by a whopping 39%. The Wellpoint CEO recently went before Congress and said they have to raise the premiums that much because, "One, people are getting older. Two, people are becoming unemployed, and if they're healthy they're dropping out of the insurance pool. Three, the cost of diagnostic testing is soaring." She asked for government help.

But frankly, there is little the government can do for these problems (and the terrible Senate bill does nothing to solve them). The fact is that the jobless situation is going to be around for quite a while, because it was not only caused by the recession, but by outsourcing jobs which continues unabated. And of course, people are going to keep getting older and medical costs and testing will continue to get more expensive.

That means the private insurance companies will continue to raise the price of their premiums and cut the number of things those premiums will cover. I can remember that years ago a private insurance policy would cover virtually all medical costs. These days a person is lucky if their private insurance covers a significant part of the costs (and there are many medical procedures not covered at all because private insurance considers them too expensive).

With each rise in premium cost, more people are squeezed off the insurance rolls -- thus making it necessary for the companies to again raise premium costs and further cut coverage. Soon we will be left with expensive private insurance policies that cover virtually nothing.

I believe the CEOs of the insurance companies know they can't keep their spinning plates in the air indefinitely. They know that at sometime down the road their policies will become so expensive and cover so little that the health care system will implode. They just don't care as long as they can continue getting windfall profits for as long as they can stretch this farce out.

Consider the following: Anthem Blue Cross brags that a woman can still get a private insurance policy for only $156 a month. That may sound good to some until they consider this policy has a $1500 deductible, and then only pays for 30% of most medical procedures and tests, makes the woman pay up to $500 a day for a hospital room, and doesn't cover pregnancy or delivery costs at all. How good a policy is that?

Whether the Republicans and the private insurance companies want to admit it or not, the days are numbered for private insurance health care policies. In an effort to continue their profits, they will keep raising premiums and cutting coverage until they price themselves out of the marketplace. Then they will be replaced by a single-payer government health care system like other developed nations have.

It is not a question of whether we want it to happen -- it has to happen. There is no other option. The Congress could have saved a lot of time, money, and heartache by passing a public insurance plan this year, but they're going to blow it. So we're going to get more years of insurance companies raising rates and denying coverage, of many more Americans going bankrupt, and millions more Americans dying because their insurance (if they have any) won't pay for their treatment.

Teddy Roosevelt failed, Bill Clinton failed, and now Barack Obama has failed, but single-payer public insurance will come. If for no other reason, the economics of the situation demands it. The right-wingers and blue dogs need to get used to the idea. There is literally no alternative.

[Rag Blog contributor Ted McLaughlin also posts at jobsanger.]

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