The Myth Of Private Health Care Efficiency
Bill Moyers recently sat down with Wendell Potter, an industry insider who worked for CIGNA, one of the top health insurance companies in the US, for the past 15 years.
Now Potter has now turned into health reform advocate, and the result is a must watch interview. Because not only does it uncover what many of us already suspected (people denied care unjustly), it also puts the lie to the myth that private industry is more efficient.
In fact, it’s nearly 700% less efficient by some measures.
BILL MOYERS: Why is public insurance, a public option, so fiercely opposed by the industry?
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.
On profits above people…
BILL MOYERS: You told Congress that the industry has hijacked our health care system and turned it into a giant ATM for Wall Street. You said, “I saw how they confuse their customers and dump the sick, all so they can satisfy their Wall Street investors.” How do they satisfy their Wall Street investors?
WENDELL POTTER: Well, 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.
On a free market system…
BILL MOYERS: So how can you object? How can we object when an insurance company wants to increase its profits? That’s a serious question. I mean, it sounds like a set-up but it’s a serious question.
WENDELL POTTER: It’s a very serious question. And I think that people who are strong advocates of our health care system remaining as it is, very much a free market health care system, fail to realize that we’re really talking about human beings here. And it doesn’t work as well as they would like it to. Yeah, there’s nothing wrong. And I’m a capitalist as well. I think it’s a wonderful thing that companies can make a profit. But when you do it in such a way that you are creating a situation in which these companies are adding to the number of people who are uninsured and creating a problem of the underinsured then that’s when we have a problem with it, or at least I do.
Folks, why do you think your insurance premiums keep going up year after year? Because more competition is making it more affordable? Don’t swallow the lie that big corporations can continue to merge and offer better, cheaper services. It’s false and I’m still baffled as to why people believe it as they continue to shell out more every year.
Obviously the health care reform issue is a sobering, multi-faceted problem and I don’t wish to demonize the health care industry because they’ve done a lot of wonderful things for people too. But they’ve also done a lot of really inhumane things that have resulted in a free market version of rationing and you can point to case after case after case of people dying because they couldn’t afford the care due to a pre-existing condition that had nothing to do with the treatment they needed. And that should be enough for us to seriously consider a publicly run option that puts pressure on them to reform their system so all will be covered, regardless of their past medical history.
I welcome your thoughts.