the state

this is actually the bill moyers interview i intended to share w/ my post on anthem health insurance. he talks w/ wendell potter, a long time p.r. man for cigna insurance:

wendell potter on profits before patients

WENDELL POTTER: The industry doesn’t want to have any competitor. In fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don’t want any more competition period. They certainly don’t want it from a government plan that might be operating more efficiently than they are, that they operate. The Medicare program that we have here is a government-run program that has administrative expenses that are like three percent or so.

BILL MOYERS: Compared to the industry’s–

WENDELL POTTER: They spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. So they don’t want to compete against a more efficient competitor.

. . .
There’s a measure of profitability that investors look to, and it’s called a medical loss ratio. And it’s unique to the health insurance industry. And by medical loss ratio, I mean that it’s a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry’s been dominated by, or become dominated by for-profit insurance companies. Back in the early ’90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.

So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they’ll punish them. Investors will start leaving in droves.

I’ve seen a company stock price fall 20 percent in a single day, when it did not meet Wall Street’s expectations with this medical loss ratio.

BILL MOYERS: They’re spending more money for medical claims . . .  and less money on profits?

WENDELL POTTER: Exactly. And they think that this company has not done a good job of managing medical expenses. It has not denied enough claims. It has not kicked enough people off the rolls. And that’s what– that is what happens, what these companies do, to make sure that they satisfy Wall Street’s expectations with the medical loss ratio.

i simply will not trust an industry that has no selfish motive to serve me well.  i don’t see how the market  can provide essential services (i.e. water, healthcare, etc.) w/out at least very rigorous regulation to prevent producers flexing their muscle against their consumers.

when my physiology goes haywire, i don’t have the luxury of consumer choice–the invisible hand isn’t going to help me.

i recently got notice that my health insurance premium (i buy my own individual coverage, since my wife’s work insurance is ungodly expensive to add family members) was going up about 50% this year.

so, i had a conversation w/ my local insurance agent who told me that anthem, my insurance company, does this every couple of years: they issue new plans, raise the premiums on the older generation(s) of plans, and invite customers to “update” their coverage.  just a simple hassle if you’re young & healthy, but if your situation is more complicated, or has changed (say, you’ve developed a health condition), you now have a pre-existing condition.  so you have to either pay higher rates for the new plan (or face anthem denying your new application) or stay w/ the old plan & watch your premiums rise (in fact, once enough folks jump ship from the old plan, anthem will eventually close the plan all together).

so now, i’m considering dumping anthem & going with a smaller insurer, who’s prices aren’t quite as nice, but who has a (little) better track record of customer respect.  and i’ll happily buy into a “public option” just as soon as congress gets its collective ass in gear & makes it possible.

also, my little health hassle made me all the more interested to hear this fascinating piece on bill moyers’ journal.  check it out here.