Editore"s Note
Tilting at Windmills

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April 23, 2006
By: Kevin Drum

BATTLING THE INSURANCE INDUSTRY....Cathy Seipp, who contracted cancer several years ago, tells us that if we're in the market for a health insurance policy, we should pay close attention to the policy's out-of-pocket cap. Hers jumped recently from $5,000 to $7,500 in a single year:

By law, insurance companies aren't allowed to adjust your monthly premiums just because you get sick. But they can raise the out-of-pocket cap for all of their members anytime they like, which amounts to the same thing because it affects only the unvalued sick members.

....The worried well, however, tend to be remarkably ignorant about medical insurance. Policy wonks keep arguing about market competition and consumer choice. But healthcare for the sick isn't a market because choice disappears. You can't shop around for generic drugs when you have cancer. Whatever chemical treatment the doctor suggests, it almost certainly will be a brand name costing several thousand dollars a month.

....[My latest] oncologist's report clarifies what is the crux of my current problem with Blue Cross and the problem any health insurance company has with cancer patients who just don't hurry up and die already. These new therapies may be great for humanity but not for WellPoint executives who don't like the thought of a $2.5-billion annual profit reduced to, say, $2.499 billion.

One of the reasons America spends so much more than any other country on healthcare is because upwards of 30% of our expenditures are for paper shuffling by insurance companies doing their best to deny treatment whenever possible. By contrast, administrative costs in countries where there's only one paper shuffler and it's not trying to make a profit from its shuffling are closer to 10%.

Battling cancer is bad enough. Why should cancer patients have to battle private insurance companies as well?

Kevin Drum 1:02 PM Permalink | Trackbacks | Comments (66)

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Comments

Ah, Kevin

You can't get something for nothing.

If you want to insure against catastrophic illness, then you need to pay for it at a price determined by the market, not some intrusive government panel of lazy beaurecrats.

The market is working. It might not be pretty, but it's the best we got.

Posted by: egbert on April 23, 2006 at 1:10 PM | PERMALINK

My car is the best I got, too. I can get another. Try something less vapid, egbert.

The government already distorts markets in many areas, including health care. Claiming that the current system is market driven is bullshit. How come the new medicare drug law prohibits negotiation on drug prices? Is that the market.

Posted by: b on April 23, 2006 at 1:21 PM | PERMALINK

Reducing costs as much as possible can be understood in businesses where globalization is an issue; autos are a case in point. But who in Japan or China competes with Blue Cross or Aetna? What am I missing here?

Posted by: Hedley Lamarr on April 23, 2006 at 1:24 PM | PERMALINK

Why should cancer patients have to battle private insurance companies as well?

Ideology.

Posted by: craigie on April 23, 2006 at 1:24 PM | PERMALINK

You can't get something for nothing.

Tell that to Haliburton. Or any other Friend of Cheney.

Posted by: craigie on April 23, 2006 at 1:27 PM | PERMALINK

I can't help but notice that this woman is a writer for the National Review. I'm a bit mystified to see such blatant acknowledgements of the failures of our system from such a writer. Combined with the Wall Street Journal op-ed this week about the benefits of single payer, is the dialogue beginning to change?

I hope Cathy will be well.

Posted by: Ms. Clear on April 23, 2006 at 1:42 PM | PERMALINK

What's remarkable is that this woman has insurance at all. Beats me why Blue Cross would want to continue to have her as a customer. They're not required by law to do so, are they?

I'm a bit mystified to see such blatant acknowledgements of the failures of our system from such a writer.

Although I'm in agreement about the status quo's myriad failures and shortcomings, Ms. Seipp's travails don't provide such an example. Rather, they are an example of the system when it works well. She notes in her piece that she has survived well beyond the normal expected time for her disease. Sure, her treatment has been very expensive, but apparently she's been able to afford her portion of the costs. Where is the "failure" here?

Posted by: stranger on April 23, 2006 at 1:56 PM | PERMALINK

Cancer treatment under an HMO (such as Kaiser or Healthnet) involves no out-of-pocket expense and there are no forms to be submitted. Granted, you must have confidence in the care provided by your HMO, and there are other hassles such as getting referrals and scheduling appts for treatments, but I think this is an illustration of when PPO plans may be a worse option than an HMO. These specific deficiencies of a particular type of provider shouldn't be generalized to all insurance.

Posted by: Anon on April 23, 2006 at 1:57 PM | PERMALINK

but apparently she's been able to afford her portion of the costs. Where is the "failure" here?

I think you're right, but I also think that you should lose your job and get cancer.

Posted by: jerry on April 23, 2006 at 2:02 PM | PERMALINK

I wish you were right. I really do because I have a debilitating chronic illness.

Unfortunately, you should spend some time passing through the Canadian healthcare system to appreciate the benefits of the US system.

In particular, what it costs you in fights with insurance is made up for by the better service from the health professionals (doctors etc) in the US.

Posted by: A on April 23, 2006 at 2:13 PM | PERMALINK

Provided you can actually get health insurance to fight about - something that large and rising number of Americans don't have.

Posted by: Butch on April 23, 2006 at 2:21 PM | PERMALINK

"I can't help but notice that this woman is a writer for the National Review."

Well, then she should be more aware than the rest of us that when they raise her out-of_pocket cap its a good thing since it will encourage her to develop a cure for cancer. (And in the National Review world, she'll do it herself instead of relying on the government.)

Posted by: cactus on April 23, 2006 at 2:27 PM | PERMALINK

I think the real question here is;

How is that she could afford insurance in the first place?

She must be extremely wealthy.

Posted by: Ten in Tenn on April 23, 2006 at 2:45 PM | PERMALINK

Egbert and A favor a system for the rich and priviliged.

I won't claim to be an expert on health care. I'm fortunate I haven't had any chronic illness. But insurance companies shouldn't be able to tilt the tables in their favour after someone gets sick. That's a one-sided contract.

Some years back in upstate NY, when a young friend (husband, 2 kids) was diagnosed with cancer, when the $500,000 coverage ran out we all had to start raising large amounts of money for her treatment. She died.

Maybe things are different in detail now, but I've seen the same sortof crap happen to a friend with severe diabetes. Lost his job and his coverage. Who's paying for it now?

Insurance as configured now does not work. It's costly, ineffective and tied to the workplace. The Massuchusetts "experiment" is a distraction. I've been listening for 27 years to "the markets will work." They haven't yet!

Health care is NOT a rational market. You don't choose your health, sickness or accident. You're not qualified (without lots of time on your hands) to make an informed choice of treatment, etc., and often (for big ticket items) you will not be able or have time to shop around. I know it will freak the capitalists out, but IT DOESN'T WORK. We already have rationing, limited choice and inflexibility. Decisions are already out of doctors hands and in bureacracies'. Costs have almost continuously outpaced inflation but a large factor. More and more people have less or no coverage.

Why the US is the only "civilized" western nation that denies a rational health care system to its citizens is beyond me.

Posted by: notthere on April 23, 2006 at 2:55 PM | PERMALINK

Gosh, Kevin, but you sure do have some remarkably stupid readers for such a smart blog.

Beats me why Blue Cross would want to continue to have her as a customer. They're not required by law to do so, are they?

Yes, of course they are. Are there really people out there who can't figure that one out?

How is that she could afford insurance in the first place? She must be extremely wealthy.

You have to be "extremely wealthy" to afford a premium of $400 a month?

I can't help but notice that this woman is a writer for the National Review.

Just as Mitt Romney of Massachussetts is also a Republican, and we both believe in mandatory health insurance, which spreads the risk and makes it more affordable for everyone. It's a big tent. That's why I'm there.

I think this is an illustration of when PPO plans may be a worse option than an HMO.

So someone actually believes that the cutting edge treatments described in my op-ed would be even allowed under an HMO?

Posted by: Cathy Seipp on April 23, 2006 at 3:11 PM | PERMALINK

Cathy, it sounds like we have the same Blue Cross premium (for self-employed or do you get it from an employer?). When BC raised our premium to $600+ a month (turned-50 couple, no kids, no previous illness, haven't been to doctor for years) I chose move up to the $5,000 deductible. When I inquired if there was larger deductible (to try to lower premium even more), they told me $5000 was tops.

Interesting that they raised you to $7,500.

Is this just for those who've had illness?

Posted by: Tilli (Mojave Desert) on April 23, 2006 at 3:29 PM | PERMALINK

Cathy Seipp,

As one of the stupid readers of the blog (who also now and then checks out the National Review and other right wing sites), I think its worth sharing some statistics with you.

According to OECD figures (not rhetoric, figures), the US spends more money by far than any other country on earth on its healthcare, whether you count as a fraction of GDP, in actual dollars, or in PPP dollars (an attempt to adjust for different cost of living): http://ocde.p4.siteinternet.com/publications/doifiles/012005061T002.xls. As an example, we spend about 15% of our GDP on healthcare, and the next closest by that measure is Switzerland at about 11%. But for the most part, we spend at least 50% more, and often close to double, what other industrialized countries spend on healthcare.

For that, we get outcomes that at best could be described as middle of the pack for an industrialized country (data on life expectancy and infant mortality at: http://ocde.p4.siteinternet.com/publications/doifiles/012005061T003.xls) One might argue that different countries measure infant mortality or life expectancy or whatnot slightly differently, but given the huge disparity between what we pay and what they pay, we should have outcomes that are by far better than everyone else's.

Now, your stated goal is "mandatory health insurance, which spreads the risk and makes it more affordable for everyone." It may bring down the prices for those who already pay for insurance by forcing those for whom playing roulette and not having insurance is a more rational choice than paying the insurance companies for care they don't feel they need. Additionally, when you mandate something, the suppliers will then raise the price of that item. (I believe I've even seen these two points mentioned at the NRO.)

As much as there are anecdotes about the failings of other countries' health care systems, what seems to allow them to provide care that is at least as good in terms of measurable outcomes at a much lower cost is single payer or "socialized medicine." Insurance companies spend a lot on overhead and advertising, as well as a significant amount figuring out how to pass the buck. A government run service might have the overhead, but not the advertising or the buck passing expenses.

Posted by: cactus on April 23, 2006 at 3:48 PM | PERMALINK

Cathy Seipp,

A follow-up to my earlier point. Most economists will tell you that there are instances where it makes sense for the government to intervene or even be the service provider in a market. One instance is when one or another party finds a way to offload its costs on third parties. (Example - pollution.) Another is when the good provides a massive public benefit but there is a "free rider" problem, such as national defense. (We may all benefit from keeping out the Canadian hordes, but if a private company took up the job, who would it be able to bill?) A third is A third problem is when information is extremely opaque. Arguably, public health fits under the last two categories.

Posted by: cactus on April 23, 2006 at 3:55 PM | PERMALINK

Cathy Seipp,
sorry to read about your illness, really I am.
I probably would never vote Republican but I'm not ultra-left either.

Have liked some of your writing in NR. Just wondering if you did say something about becoming logical when you left liberalism behind?

I'm pretty new to this blog but the biggest fools I see here are the uncritical idealogues, mostly Bushites. Some form of unalloyed allegiance.

A) You're still covered because you can afford to pay the premium. Where's the logic if you loose your job and all income from ill-health?

B) Median household income is approx' $48,000 a month in this country. Disregarding the 45 million odd we know are uninsured (does this number include the illegals?), which ever way you cut it, that leaves a lot of individuals and families with pretty marginal income. As the trend at work has been, deuctibles, co-pays and out-of-pocket cap have all been rising. People compromise to buy insurance they can just afford, then, when something happens, are hit with bills they have no reserve for. Why do you think there are so many health related bankruptcies? People moving onto (ever harder to get) medicare? What are you making?

You being a writer for NR has nothing to do with this except for their regularly stated views which a lot of people have very logical disagreements with.

My mother died of kidney cancer before her "genetic time" after a similarly healthy lifestyle. Fortunately it happened in the UK. None of my family can fault the care she received over 2 years or the dignity of dieing at home assisted by wonderful support from visiting doctor and nurses.

Of course, I could go on and on. See post above:
health care is NOT a market.

What do you think should be done? What is the (a?) solution?

Posted by: notthere on April 23, 2006 at 4:27 PM | PERMALINK

Whoops.
Actually $48,000 annually.

But remember, $48,000 a month is only $576,000 a year. Mere pocket change for so many of our favorite fat cats.

Posted by: notthere on April 23, 2006 at 4:32 PM | PERMALINK

A correction to notthere's post above...

the latest median household income figures released by the Census in August of 2005 were for 2004, and they showed household income to be $44,400 a year.

(http://www.census.gov/hhes/www/income/income04/prs05asc.html)

The $400 a month premiums Cathy Seipp mentions amount to $4800 a year - a bit more than 10% of the pre-tax income of the median household. (And of course, 50% of households make less.) Throw in what they'd have to pay out of pocket, etc., and while perhaps one doesn't have to be rich to have healthcare, one does have to be better off than the median to be able to afford not having to choose between healthcare and food or housing.

Posted by: cactus on April 23, 2006 at 4:38 PM | PERMALINK

Doctors should be selective about the insurance companies they work with then use a billing service.

Problem solved.

Posted by: Matt on April 23, 2006 at 4:53 PM | PERMALINK

Dear Ms. Seipp,

For as long as I am employed at my company, I pay health care premiums of $28 per month for my entire family. We can use this at plan doctors or non-plan doctors for a bit more of a co-pay. Nyahh! Nyahh! You must be more than ten times stupid as me if your plan is more than ten times more per month than mine.

If I had to pay $400 per month for health insurance, my family would be living in cardboard boxes.

Are all NR writers as illogical and short sighted as you?

Say hi to Roger for me!

Posted by: jerry on April 23, 2006 at 4:58 PM | PERMALINK

As I've said many times before, reducing national spending on health care will be completely impossible unless something is done about end-of-life care. Spending vast amounts to keep dying people alive for a few weeks or even days longer, when quality of life and chances of survival are both zero, is both a financial and moral disaster.

Posted by: Peter on April 23, 2006 at 5:00 PM | PERMALINK

cactus--thanks for the figures. After the nit-picking we went thru the other day on the same median, I just picked a high figure and threw in approx'.

jerry--
$28 per month with decent co-pays, deductible and cap. Wow! Do you know how lucky you are? Better hope your company(?) stays afloat.

Second thoughts, you're not a senator or congressman are you?

Posted by: notthere on April 23, 2006 at 5:17 PM | PERMALINK

No, my luck, and it truly is that, is thanks to the hardworking union members, their strikes, and their accompanying buying power in the largest aerospace manufacturing company in the United States.

I think the connection between employment and healthcare, and the connection between size of employer and cost of insurance premiums, is completely illogical, and terribly pernicious.

And having grown up in the Kaiser health care system (another great successful partnership between unions and healthcare) I grew up with very long lines in the pharmacy, very good healthcare, lots of doctors, cutting edge medicine, and the knowledge that my mother wouldn't have to take her wallet out during the entire visit. All paid for.

Seipp is blind, deaf, and dumb. The perfect pundit!

Posted by: jerry on April 23, 2006 at 5:27 PM | PERMALINK

Cathy,actually I think NRO has some of the stupidest readers. I happen to work in a small company and when it came to picking out our insurance last year the majority picked the PPO that has a 80/20 maxing out to $5000/yr. I pointed this out to the other folks but they all wanted the PPO so thats what we got. Yeah, I could pull off $5K/yr if something happened, but I wonder about the clerical staff who are probably only making $25K/yr. BTW IMHO $400/mo is not exactly a middle class expense for individual insurance. Maybe upper middle class. Perhaps you need to head over to Atrios who just happens to have a post on pundits who don't understand people who live okay but are on a paycheck to paycheck routine. I think you also forget that when you do get sick and have to pay out the deductible you are more likely to have a loss of income and also have to continually pay out for the deductible and by that point of course the insurance co. won't let you change to a lower deductible. I have a client who was making okay money and had put away a little money but when she came down,quite suddenly, with a chronic illness she had to quit work and the cobra was going to cost $500. Did I mention that she's on disability now but can't go on medicare for another year and doesn't qualify for medicaid because she makes $47 too much in disability. Just one of her meds costs her $350/mo more than a third of what she gets in disability. But hey, hey, hey the Repubs would say its her own fault she should have bought herself long term disability insurance.

Posted by: mai name on April 23, 2006 at 5:32 PM | PERMALINK

Oh, just to be clear, I was offered three plans. One completely free, one about $10 per month. The $28 per month plan is the blue plate special with the gold fringe.

When I was a self-employed dotcommer software consultant, I paid about $600 per month for insurance that was no where near as good. And because I was self-employed and not a corporation, it wasn't even fully tax-deductible (IIRC it went from being not a tax-deductible expense to being 25% deductible.) What a great way to encourage more entrepreneurships and small businesses!

Posted by: jerry on April 23, 2006 at 5:33 PM | PERMALINK

That's something I think isn't talked about enough: how many people with great ideas and the energy to innovate choose to stay with the company they're with because they can't risk not having health insurance for themselves and their families? How much would the economy grow if we could free them from that worry?

Posted by: Ted on April 23, 2006 at 6:15 PM | PERMALINK

Yes, of course they are. Are there really people out there who can't figure that one out?

Um, Ms. Seipp, I'm one of Kevin's readers, but I don't think one need be "stupid" not to be overly familiar with the munitiae of health insurance regulations.

In fact, your answer (that Blue Cross is required by law to keep you as a customer) is highly counterintuitive. I was self-employed at one time, and distinctly remember the high deductible policy that I paid for featured a lifetime benefits cap (I think it was $1m). My understanding was that, once that limit was reached, my coverage was at an end. Fighting a battle with cancer could easily, I'd have thought, generated medical bills exceeding $1,000,000 after several years. Now that I think about it, even Medicare has such a cap. If your policy lacks such a proviso, or if you're still well under the limit (whatever it is), then, good for you. But I don't think you have to use insults against readers who don't possess your apparent encyclopedic knowledge of health insurance, simply for asking honest and good faith questions about your plight.

Posted by: stranger on April 23, 2006 at 6:31 PM | PERMALINK

For those who think that an HMO would be a better option than a PPO for any serious illness, I've got some good stories about that. I just had surgery for an orthopedic injury. I didn't get to have a second opinion because my PCP was a bozo and sent me to a non-specialist first - that counted as a second opinion, even though his only opinion was that my PCP was a bozo and why was I in his office since this was so clearly the wrong place to be. Of course it took me two weeks to get an appt with this guy. I could have fought this of couse, but the expedited grievance process can take up to 30 days, and I didn't really want to walk around for another 30 days without getting this fixed (it's not urgent, but it is really painful) (Actually that's not true, it was urgent for the first two weeks, and after that it didn't really matter, the early best-fix options were past the expiry date).

There's a guy down in OC (I live in LA) who is an expert in my injury, one of the few in the world since it's rather rare. He's written the textbook on the subject, and was recommended to me by several expert orthopedic surgeons (who I paid to go see myself at $200-400/pop since I couldn't get a valid second opinion from my HMO). Miracle of miracles, he even works in a group that accepts Blue Cross HMO. But I can't go see him because he's not in my group. I can't change my group because I already have a referral to the orthopedic surgeon in my group, who has done a total of three of these operations in his life, the last one several years ago. As you may or may not know, the single biggest indicator of success for an operation is how many of these operations the surgeon has done. So I can't change doctors, I can't change groups, the only option I have is to go to a surgeon who is completely inexperienced at this operation, or pay for it myself.

I want to switch to the PPO option, because next time I want to pick a competent doctor, but now I'm not so sure, and frankly I've had it with Wellpoint/Blue Cross.

Posted by: Brent on April 23, 2006 at 6:35 PM | PERMALINK

I choose to believe that the above post is not by the real Cathy Seipp, who certainly would not be stupid enough to call the readers of this blog stupid simply because they are not experts in the field of providing health care.

The post is however a good satire of lawless market cultists, and I certainly enjoyed it on those terms.

Posted by: Disputo on April 23, 2006 at 6:47 PM | PERMALINK

It's fun, too, to look at which judges sitting on which courts get big campaign comtributions from insurance companies, hospitals and doctors.

Posted by: ferd on April 23, 2006 at 7:18 PM | PERMALINK

Last week, Massachusetts Governor and 2008 GOP presidential hopeful Mitt Romney signed legislation mandating that all residents of the Commonwealth acquire health insurance. But while many analysts are lauding the Romney blueprint, a new American Medical Association report on the entrenchment of health insurance monopolies shows one of the many pitfalls of the Massachusetts model. For the details, see:

"Health Care Monopolies and the Massachusetts Model"

Posted by: AvengingAngel on April 23, 2006 at 8:46 PM | PERMALINK

"One of the reasons America spends so much more than any other country on healthcare is because upwards of 30% of our expenditures are for paper shuffling by insurance companies doing their best to deny treatment whenever possible."

Kevin, I really enjoy reading your posts. Most of the time I find myself in general agreement with your perspectives.....

....but on this topic you are talking out your ass.

30% of healthcare expenditures are *not* due to "paper shuffling" or any other sort of administrative activities.

Nationwide, on average, in the private healthcare insurance market $0.86 of every premium dollar goes directly to paying for medical services (ie physician charges, hospital charges, pharmacy charges, medical devices).

$0.05 goes to prevention, case management and other consumer services.

$0.06 goes to government payments, regulation compliance, claims processing and other administrative.

$0.03 goes to health plan profits.

Premium increases very closely follow cost increases. The bulk of cost increases comes from consumers (members of plans) increasing utilization of services (43% of premium increases) and from health care cost increases in excess of the normal rate of inflation (30% of premium increases). General inflation accounts for 27% of premium increases.

These are the facts. They come from the latest industry inside reports. I work in the industry (economics) and I don't have a horse in the race. I'd be gainfully employed even under a single payer system. I am ambivalent regarding private versus socialized healthcare provision.

I'm just flabbergasted by the way the realities of healthcare provision become grossly distorted by both sides of the aisle.
Get it right. You compromise your integrity and your believability when you are so way off the mark.

As for increasing co-insurance rates, given the above facts, if coinsurance rates did not increase then even more people would be priced out of the market. Also, given the above facts, it should be obvious that a knee jerk cry for socialized healthcare is not the answer in so far as costs are concerned because someone will still have to pay, whether it be through employers or through taxes taken out of ones paycheck.

As for your ill friend, it is truly sad that she has developed cancer. However, how does exploiting her situation to make false inflamatory statements about the insurance company help anyone.

$7,500......I'd pay that much to save my life or the life of a loved one and so would you. If your friend, or anyone else, lacks the means to pay the money, then there are government programs, Medicaid, Medicare, CHIPS, Family Health PLus, etc there to pick up the tab.

Again, you are cheaply politicizing a tragic occurence. You sound like a major whiner asking for something for free.

Just remember, even in Canada healthcare is not free. It's cheaper, but that's mostly because Canadians don't consume as much as we do. I guess that would give you something else to whine about.

Posted by: avedis on April 23, 2006 at 10:19 PM | PERMALINK

Avedis you are making a couple of common mistakes. You assume than administration by insurance companies constitutes the whole administration cost. However most administration costs are by providers complying with insurance requirements. Incidentally insurers don't do preventative care or medical case management By definition any costs by an insurance company other than direct payout to providers or profit is an administrative expense.

Posted by: Gar Lipow on April 23, 2006 at 11:32 PM | PERMALINK


Just remember, even in Canada healthcare is not free. It's cheaper, but that's mostly because Canadians don't consume as much as we do. I guess that would give you something else to whine about.

Yet somehow, even though they consume less, they live longer, and this is true of about 20 other countries. Somehow, we seem unable to elect people who recognize the wisdom of stealing proven solutions, instead of concocting "market-oriented" nonsense. The incentives are all wrong in private health insurance, and that is why all these market solutions are likely to fail.

Posted by: dr2chase on April 23, 2006 at 11:53 PM | PERMALINK

Jerry I hate to break it to you, but you are not paying $28 a month for your insurance, you are paying a great deal more than that. Your employer is paying the rest of the premium (and group plan premiums are significantly higher than individual plans), and that is money that could be paid to you in salary instead, but your employer prefers to pay your insurance premium because of the tax benefits. There's no free lunch, and there's no $28 health plan either.

Posted by: Aaron on April 24, 2006 at 1:24 AM | PERMALINK

Because only in America, do you have private sector Cancer treatment costing US$200K plus, especially if the doctor recommends something 'cutting edge'.

Some of the expensive stuff, just isn't available in other countries for years.

American insurance companies have to watch claims more, to make sure the cost doesn't spiral into infinity.

Posted by: McA on April 24, 2006 at 1:27 AM | PERMALINK

You know, it's lines like this:

"WellPoint executives who don't like the thought of a $2.5-billion annual profit reduced to, say, $2.499 billion."

that are going to alienate people who might otherwise agree with you on healthcare reform. Unless we decide that nobody should ever make any money for providing health care or health insurance, who gets to decide how much profit is too much? And while that $2.5 billion number may look huge to most people, I notice that you didn't bother to mention mention that they made that much from over $45 billion in revenue (only about a 5.5% profit margin), or that they have 33 million members, so they only made about $72 per member. I don't think one could say they are raking it in at the expense of cancer patients.

Posted by: Aaron on April 24, 2006 at 1:32 AM | PERMALINK

A few points...

First, Cathy isn't enjoying arguing with her insurance company. You think that's bad, so you want government to pay for health insurance. Well, have you ever argued with a government beureaucrat? Far worse.

Secondly, you can't just compare health care spending and health measures. First you have look at populations.

For example, at any health care expenditure level blacks have lower life expectancies and higher infant mortality rates than whites. This appears to be biological - higher susceptibility to obesity, diabetes, high blood pressures, heart disease, and many other diseases. Are you comparing US outcomes with outcomes in other countries with equal percentages of blacks? I doubt it.

Also, consider violence - less violent countries obviously spend less money on patching people up after violence but have lower death rates from violence. It has nothing to do with their health care system.

Similarly, consider AIDS, drugs, etc.

You need to control for all of those so you can compare apples to apples.

I'm not sure if it is possible and certainly your approach does not try to do so.

Posted by: Michael Friedman on April 24, 2006 at 7:15 AM | PERMALINK

These wild-sounding claims (30% of expenditures are for paper-shuffling? By insurance companies alone?) need to be supported to be credible. This is the internet, isn't it? Where are the links?

Posted by: sammler on April 24, 2006 at 10:55 AM | PERMALINK

How does this abstract from the New England Journal of Medicine do as a cite. (Full article behind a subscription wall, but I think this is where the 30% figure comes from. This was from 2003 but I doubt things have changed significantly in 3 years - certainly the new drug benefits haven't simplified the system.

On the anecdotal side, my wife worked for a small doctors office and he and his nurse spent at least one day a week on billing. And had to do lots of refiling 'cause insurance companies would reject even valid claims only to say later on appeal "Gee, I don't know why we rejected that."

For those who say "doctors should restrict the number of insurance companies they work with" - that means not treating a lot of patients. Might even be considered unethical in an area with only a few doctors.

For those who say "use a billing service" - why do you think any billing service would charge less than the cost of services?? They're still going to be dealing with a hundred different claims systems all using different treatment codes with different mechanisms, different deductibles and limits, different appeals processes, with perverse incentives to delay or deny payments to keep up profits. Oh yeah - and the doctor and his nurse STILL need to fill in the right diagnostic and treatment codes - unless the billing service knows some magic formula for translating. And there's still the fundamental problem of the doctor and nurse being able to find out in advance which treatments are allowed. How does adding one MORE layer of processing to the problem reduce costs?? Is this some magic supply side economics thing??

Posted by: Butch on April 24, 2006 at 11:56 AM | PERMALINK
Nationwide, on average, in the private healthcare insurance market $0.86 of every premium dollar goes directly to paying for medical services (ie physician charges, hospital charges, pharmacy charges, medical devices).

$0.05 goes to prevention, case management and other consumer services.

$0.06 goes to government payments, regulation compliance, claims processing and other administrative.

$0.03 goes to health plan profits.

That doesn't actually (even if assumed true) demonstrate your point.

What it says is that 6% of insurance premiums go to paper shuffling at the insurance company end.

How much of the 86% that goes to physician charges, etc., goes to paper shuffling at the provider end is not clear from what you've said.

And, of course, the distribution of private insurance premium dollars isn't the same thing as the distribution of US healthcare dollars, and the private insurance system creates costs that are external to it within the healthcare system.

So, you've presented information which, even if correct, doesn't contradict the position you seek to use it to rebut.

Posted by: cmdicely on April 24, 2006 at 12:08 PM | PERMALINK

Health is not a commodity. Why on Earth does anyone think it makes sense to apply market models to health care? It's not like people choose when to get sick or which disease they'll suffer from...

Posted by: A Hermit on April 24, 2006 at 12:13 PM | PERMALINK

"...contracted cancer" -- do you know something I don't? Any doctors out there? One cannot "contract" cancer, right? I think one can contract a disease that will make he/she more likely to develop cancer, but you can't contract cancer, right?

Sorry, I realize this is off-topic, but the phrasing bothered me.

AJ

Posted by: AJ on April 24, 2006 at 1:21 PM | PERMALINK

For those of you following along with Cathy Seipps comments, let me show you how to call bullshit on her bullshit.

Rule #1, whenever someone starts citing the GDP as the basis for comparing expenses, CALL BULLSHIT. This is statistical manipulation. The conservatives love to pull figures out of their ass to prove their point and they're fond of integrating the GDP as some kind of standard by which to compare countries. Do the research and you'll find this is bogus. Apples an oranges in the context of the point Cathy (who is the real deluded idiot -- maybe it's the chemotherapy that's burned even more brain cells) is lying.

Posted by: Pile on April 24, 2006 at 2:38 PM | PERMALINK

Ms. Seipp's story is reflected in the small-bore battles my wife has with our insurance company ALL THE TIME. They will sometimes not pay a claim, then when she calls their answer is along the lines of "we're just checking to see if you're paying attention". My son gets a certain treatment; the office administrator has a seperate file for him because the insurance company has asked to see the medical records 16 times.

Our insurance is excellent - except we're constantly battling them to pay for the things they're contractually obligated to pay for.

Posted by: American Citizen on April 24, 2006 at 2:48 PM | PERMALINK

Jerry.

You have to be completely retarded to believe that you are paying "only" $28.00 for your entire family. My "free" health insurance costs my company $450.00/month and has been increasing at a 20-30% clip every year for the last 3 years.

Another thing to clue you in. Your social security payments are being matched by your employer as well. The number that's on your pay stub is only 1/2 of what is actually being paid. At the current pace of my contributions to social security, if I retire at 65, I would have to live to be 180 in order to be paid back fully.

Please get educated on these issues..

Posted by: Neal on April 24, 2006 at 3:10 PM | PERMALINK

As a further follow up.

I just did a quick calculation on how much additional income I could derive if I didn't have to pay for health care and social security

$310.00/month for social security
$450.00/month Health Care
=$760.00/month

nice huh?

Posted by: Neal on April 24, 2006 at 3:14 PM | PERMALINK

Whoopsi, I forgot to double up the social security..

That would be $620.00/month for social security

=$1070.00/month for both my "free" health care and social security

Posted by: Neal on April 24, 2006 at 3:18 PM | PERMALINK

Neal, you're absolutely right. That $28 per month is not free, using your figures it represents a $422 per month after tax wage increase to me, or about $703 per month before tax wage increase. So my plan is better than Cathy's plan, it costs less in after tax money, and I only pay for about 1/15t of it's actual cost. I'm good, I'm good, I'm good.

Woohoo!

Question for Neal and Aaron, if we went to universal health care (something I favor) will I get a $422 per month raise? Will the shareholders get that back in dividends or share price increase? Will the executive who gets to put "eliminated $$gazillion health care plan from bottom line" on her resume get a $20million bonus? (Answers: no, no, yes.) (Btw kiddies, I never said it was free. That's the sound of your strawman burning up.) And Aaron, if you think group insurance is more costly than individual insurance, you are a complete dolt with no real world experience and no understanding of how insurance works.

Posted by: jerry on April 24, 2006 at 3:37 PM | PERMALINK

For Cathy

To hell with being oh so pleasant. Really rooting for you. If for no other reason than we need all the conservatives we can get who are as passionate about universal health coverage as are liberals.

The existence of superlative health technology does not necessarily equate to the availability of great health care.

Posted by: Martin on April 24, 2006 at 3:52 PM | PERMALINK

Jerry, I think it would have been wiser for you to accept the fact that you were wrong and slink away quietly, because now you've just gone and made yourself look foolish.

Do you understand the very basic idea that your true "cost" is greater than $28? If so you would realize how dumb it sounds to say "I only pay for about 1/15t of it's actual cost".

Do you honestly believe that the savings from eliminating employer-paid health insurance would not be passed on the shareholders and employees, and it would all go to the executives? If so I won't waste my time with someone naive enough to believe that.

As for group vs individual insurance premiums, I would guess the 5+ years I've spent as a health actuary pricing both group and individual plans should qualify as "real world experience." It would have been awfully hard for me to pass all those actuarial exams if I had "no understanding of how insurance works."

Group insurance is more expensive for a number of reasons. Employers typically pay most of the premium, so the insureds are shielded from the true cost and thus utilization is higher. Group insurance is guaranteed issue, meaning if someone applies for a policy we have to take them no matter how high risk they are, and premiums have to go up to mitigate this risk. I could go on. Thanks for playing, get back to me when you actually have a clue what you are talking about.

Posted by: Aaron on April 24, 2006 at 4:25 PM | PERMALINK

Jerry:

Please go to your human resources department and find out how much they are paying for your health care. You are going to be shocked.

One large company I worked actually gave us an "Opt Out" clause in our contract in case we wanted to negotiate our own health care or go without. A very appealing option to healthy young single people. This was 10 years ago for me and it would have added $299.00/month to my Salary.

Please begin to understand this concept, I believe it will help you tremendously.

If experience teaches us anything "Universal" health care would be an oxy-moron.

Posted by: Neal on April 24, 2006 at 5:02 PM | PERMALINK

Jerry,

We talk down to you because we hope then you won't notice that we are full of shit.

Posted by: Aaron & Neal on April 24, 2006 at 5:42 PM | PERMALINK

Dear Jerry,

People like you who pay pennies for health insurance are classic examples of why your company will soon file for BK and you find your $28 ass out of a job. I.E GM...Ford...shall I go on?

Posted by: Justin on April 24, 2006 at 6:59 PM | PERMALINK

That's really classy. Stop acting like a child.

It's usually the one who truly is full of it that ignores the issue and starts hurling insults.

Posted by: Aaron on April 24, 2006 at 7:01 PM | PERMALINK

Jerry,

Of course I was the one who started hurling the insults, but remember, IOKIYAR. After all, isn't that what class is all about?

So if you would like to also be insulated from charges of name calling, or (better yet!) insulated from charges of hypocrisy when you blast others for hurling insults after you started the insult hurling (which I hear is going to be a new event in the 2008 Olympics), you better become a Republican, you asshole!

Posted by: Aaron on April 24, 2006 at 7:28 PM | PERMALINK

Damnit, stop pretending to be me!

I cannot stand to have my flaws pointed out to me!

I might actually cry like a little school girl.

Posted by: Aaron on April 24, 2006 at 7:29 PM | PERMALINK

I agree with Aaron.

If we wingnuts keep getting called out on our bullshit, the terrorists will win.

Posted by: Neil on April 24, 2006 at 7:35 PM | PERMALINK

As another person who has outlived the statitistics for my cancer, I say to Cathy "you go girl!" I have had the unfortunate circumstance of changing jobs and Health plans since my diagnosis in Jan. 2003. I have been blessed with a clinic that is not associated with any Health plan, so I pay "Out of Network" for my treatment. The benefit is that my doctor is not beholden to an insurance company, so I get the best of the best. I can tell you all that the insurance companies will do everything in their power not to pay. They deny, I appeal, they pay. When they try to say that a test, drug, or treatment is "not medically necessary" and I ask for documentation as so the reason, they amazingly pay the claim. If anyone wants to understand the "business" of cancer care, check out US Oncology with a google search. They run clinics in 33 states and have paid lobbyists in most capitals. The Dept of Commerce investigated them when they found a $7.50 pill was being billed to Medicare at $748.00. The patient was responsible for $148.00 and Medicare was paying $600.00. One needs to remember that most Drs. are employed (Contracted) with insurance companies, and hence the insurance company mandates the treatments that you will receive.

Posted by: Sarah on April 24, 2006 at 7:46 PM | PERMALINK

Show me where I insulted anyone.

If you had any real arguments against the simple facts I've presented you wouldn't feel the need to play these childish games.

It's also pretty funny that you think I'm a Republican.

Posted by: Aaron on April 24, 2006 at 7:56 PM | PERMALINK

Mea Culpa everyone.

I just accepted my own challenge and discovered that I did indeed insult Jerry a few comments above when I called him "foolish", "naive", and "clue[less]".

I now realize that if I had any real arguments, that I would have never stooped to hurling insults. I am a fraud.

What's worse, I have now gained the understanding that I am a troll whose only goal is to waste the time of others. So, please, listen to me one last time and ignore everything I write from this point onward.

However, I still think it is funny that I am a Republican. Damn, that is hilarious!

Posted by: Aaron on April 24, 2006 at 8:22 PM | PERMALINK

If you're discussing something that has to do with economics and someone ignores the most basic of economic principles (no free lunch), they look foolish, and it is not an insult to point out that simple fact.

If someone claims that all of the savings from eliminating employer paid health care will only go to executives, when there are countless examples of employers giving those savings right back to employees if they decline coverage, then that person is naive, and should be called on it.

When someone makes a patently false claim about the relative price of group vs individual health insurance and suggests someone with vast experience pricing both products doesn't know anything about insurance, that person is clueless and should be called on it.

Now on the other hand, when a troll chooses to ignore the facts laid before them because it contradicts their incorrect opinions about health insurance, and instead just replies with "You're full of shit" without making any other arguments or even bothering to address the issues at hand, now that is hurling insults. If you can't see the difference between what I said and what you've done then you are just being dishonest.

And is there any more childish technique you could use then pretending to be me? Do you actually want to discuss the very real issues of how to fix healthcare in America, or do you want to play silly name-calling games on the internet? You're acting like a 12 year old.

Would you care to enlighten us as to why anything I said would lead one to believe I am a Republican? Or is it just that anyone who disagrees with you must be, because obviously there's no room for disagreement within the ranks of the left, gotta toe that party line!

You still haven't addressed the facts that I have presented re: health insurance. We're waiting, if you can stop the little kiddie "let's pretend to be Aaron" games and act like an adult for 10 seconds.

Posted by: Aaron on April 24, 2006 at 8:48 PM | PERMALINK

Yes, but Aaron, that's all some people here have going for them. A childlike concept of healthcare insurance.

CM Dicely, you are correct that there is administration (and associated costs) at the provider end. Do you think there would be less under a single payer system? Do you think there is less under the foreign socialized systems? You'd be wrong on both counts if you said - as you were implying - "yes".

Some providers are very efficient and streamlined administration; taking advantage of electronic/computerized systems/software packages, etc.

Regardless, provider administration cannot be construed to be a cost liability created by private insurance companies. Hell, Medicare (CMS) was the founder of the DRG, etc system of prospective payment.

To a large extent, it was provider greed and excess that created the need for much of the "administration" that you find cumbersome. Without some of the "paper shuffling" that providers must go through, healthcare would cost even more and, therefore, there would be even less of it.

America is more plagued by greed at the provider end than it is by greed at the payer end, and if you want to point fingers at barriers to your beloved concept of socialized medicine, then you need look no further than the providers. It is the AMA who is the strongest opponent.

One reason socialized medicine would fail here is the greed of physicians. Too many became doctors so they could be wealthy ans for little other reason.

Posted by: avedis on April 25, 2006 at 2:00 AM | PERMALINK




 

 

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