By Phil Billington / Chronicle contributor
On Wednesday, Sept. 9, President Obama repackaged his July 22 speech to sell again. Inspiring; kind of like selling left-over cold pizza. Again, the president vilified the insurance companies, disingenuously painting the entire industry with a wide brush. The perception is that insurers operate arbitrarily doing whatever they want. Indeed, onerous practices are prevalent but it is important to understand they don’t operate in a vacuum but rather under the auspices of the state in which they are licensed. Many of these outrageous rules are sweetheart deals made in back rooms; they operate with a nod and wink from the state.
This is not unlike what has been going on in the corporate world for decades. What we really have in the United States is Crony Capitalism.
Barack Obama has worshiped at the altar of cronyism his entire political life and is in no position to critique of any segment of the free market including his favorite piñata, the insurance industry. To be sure not all insurers routinely resort to bad business practices. In fact, some bend over backward to pay claims promptly and avoid customer complaints. Unfortunately, the number of bad actors are too numerous. Before we start talking about reform, we must be cognizance of these egregious practices:
Most insurance companies
• Routinely overcharge you on premiums when you’re healthy and deny your claim when you’re sick;
• Spend substantial sums in developing computer programs and systems that automatically and repeatedly deny and delay claims payments;
• Hire doctors specialized in poking holes in legitimate claims;
• Give extra bonuses to employees who can successfully deny the most claims;
• Will retroactively cancel individual policies if any condition was not disclosed when the policy was obtained, even if the medical condition is unrelated and even if the person was not aware of the condition at the time. Moreover, coverage can be revoked for all members of a family, even if only one member failed to disclose a medical condition;
• A few insurers completely control the market place; they control what’s done, and what doctors decide. Indeed, in 50 out of 300 metropolitan areas, a single insurer controls at least 70 percent of customers. And in many more areas, just two health care companies dominate the market. That puts both you and your doctor at a great disadvantage;
• American citizens can buy any product in any state from any other state, except health care. This is as un-American as it gets and should be abolished.
And to add insults to injury, many companies invest your hard-earned premiums in junk bonds and high-risk investments no one should touch with a ten-foot pole. Remember AIG, otherwise a fine insurance company, failed because it loaded up on “Credit Default Swaps,” a risky hedging scheme.
With a full understanding of the problems we are in the position to recommend reform:
• Contract arrangements between state and insurers should be left as is, except those contracts should ban the above abuses;
• Get Congress out of the business of new drug testing. That would increase pharmaceutical profit-years by 246 percent translating in 70-80 percent reduction in the cost of prescription drugs;
• Let Americans shop across state lines for health care. The expanded competition would substantially reduce the cost of premiums;
• Reform litigation practices to eliminate frivolous lawsuits;
• Break the linkage between employment and health care, making health care transportaby automatic. This is an old dinosaur from the 1960s pushed by unions to gain more leverage over labor.
• Subsidize the uninsured with low-cost catastrophic insurance policies. That would take much of the pressure off emergency rooms resulting in substantial cost savings.
It is noted that there is no mention of a public option, cooperative or any other state-run system. These bogus ideas should be put to rest. Shocking as it may sound; these reforms could be accomplished without any government intervention while putting health care on a sound and affordable footing. For example:
A consortium of seasoned health care professional, hospital officials, and insurance company representatives could be organized to lay out a plan for reform and oversight. This consortium would issue “Good House Keeping” seal of approval to doctors, insurers, etc. who conform to good health care practices and withhold it from the bad actors. This would drive the bad ones from the business. Consumers would then have a reliable way to pick a good doctor or insurer.
