The coming health battle royale in California reminds us what we should have remembered from 1993: insurance corporations will kick, claw, and deceive to stop any healthcare reforms. This time, it’s Blue Cross out to sink Arnold’s healthcare plan—they like that every single citizen is required to sign up for healthcare, but don’t like that their profits would be capped at 15%. Why have a 15% profit margin, when you can have a 27%?
Meanwhile, guaranteed healthcare, with “Medicare for All” or single-payer financing, gets re-introduced in the Golden State, a Brooklyn hospital is suing the insurance companies for conspiracy, the “employer mandate” to provide insurance is dead, and FINALLY the business press is starting to notice the economic catastrophe that is our healthcare sector. That’s your updates from the fight for guaranteed healthcare—details below the fold…
The insurance companies sank Hillarycare—even though it carved out a continuing role for their profits—and they’re about to do the same thing to Schwarzencare.
When Blue Cross sells health insurance to someone who isn't covered at work, the company typically makes a 27 percent profit. By the time salaries and other administrative costs are accounted for, only half the money the company collects in premiums from that person goes for medical care.
Those figures may help explain why Blue Cross - the insurance provider for roughly one in four people in the state who have health coverage, and with political heft in the Capitol to match - so far is the only major insurer opposing Gov. Arnold Schwarzenegger's universal health care plan.
…. Schwarzenegger's plan could sharply curtail Blue Cross' industry-leading margins in a few key ways. Among the state's largest insurers, it would have by far the hardest time complying with a requirement that 85 percent of premium dollars go toward medical care. Blue Cross devotes significantly less than that - from 51 percent to 79 percent, depending on the type of insurance plan - according to financial data filed with state regulators.
Don’t get me wrong—Schwarzencare is terrible; it requires everyone to sign up for junk insurance, and nurses hate it because the insurers are a blight on our industry. Nonetheless, Blue Cross shows their true colors by turning down that bargain because a 15% profit margin isn’t enough for them.
Most tellingly, look at how Blue Cross is gearing up to fight the insurance reform planks that John Edwards among other have proposed:
The governor also wants to ban the practice of "cherry picking" young, healthy people least likely to go to the doctor, while denying coverage to others with even minor ailments.
That policy is legal - and not unique to Blue Cross - but the company's success at limiting exposure to big medical bills has helped it rack up fatter profits than the state's other top insurers.
"The idea that you have to sell health insurance to any comer is antithetical to their business model," said Peter Harbage, a health care expert at the non-partisan New America Foundation who has advised the governor. "It's not how they make money."
If we’re going to get any kind of healthcare reform, we will have to take on the insurance companies that are corrupting the system. It makes smart political sense to go after them head-on, rather than trying to protect them and give them the cover to continue blocking reform. It won’t be easy though:
During the two-year legislative session ending in December, the company spent nearly $2.5 million to lobby lawmakers and regulators, records show - nearly $800,000 more than Kaiser Permanente, which ranked second among health insurers. The $1.4 million that Blue Cross spread around to lawmakers and political causes was also easily tops among insurers.
The company also donates generously to community organizations - $2.7 million last year - helping to foster good will in halls of power.
Meanwhile, there’s great news from California. A plan for true guaranteed healthcare is up again. Sen. Sheila Kuehl’s SB 840 is the only “single-payer” or “Medicare for All” plan ever to pass a legislature. It works: everyone in, nobody, patients are guaranteed care, and the state saves hundreds of millions of dollars. Arnold vetoed it before—will he have the guts to veto it again?
In the words of the heroic Sen. Kuehl:
"It's amazing how much money you save by not wasting it on insurance companies," she said.
You hear that Blue Cross?
Elsewhere in our national battle for Guaranteed Healthcare:
A Brooklyn hospital is suing the insurance companies for conspiracy. Finally. One example:
In one example… says a woman admitted in October 2006 for a malignant brain tumor was denied coverage for eight days of treatment based on standards used for treating infectious disease.
States can no longer require employers to provide healthcare. Our two remaining options for healthcare reform: mandating individuals purchase insurance, or guaranteed healthcare with SinglePayer financing.
With all U.S. manufacturers fighting to maintain profit margins—and increasingly competing with companies from countries that don't have an employer-paid health insurance model—is it time for significant change in this area?