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That Is What We Do
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Israel in the Tank for Obama
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The Obama Watch
Nonprofits Cleaning Up
Here’s something you won’t hear from Dr. Obama in his next speech on health care.
As the years have gone by, the insurance companies have competed with one another by presenting more and more complicated insurance packages, the packages growing steadily more intricate and unfathomable, with expanding this and overlapping that and conditional the other. Insurance companies, like the casinos in Las Vegas, are in business to make money, so the edge is always with the house. Except that my father is convinced that sooner or later one of the companies is going to come out with a package with a flaw in it, that the complexities are eventually going to reach the stage where even the company isn’t going to be able to keep up with the implications of the math…
— Donald E. Westlake, Somebody Owes Me Money
In a speech delivered yesterday by President Obama on the subject of health care…
(Aside: Editors in this business want timely material. No one looks to reach back through the mists of memory to resuscitate the extinct, the defunct or the antiquated. In other words, nothing older than thirty-six hours. This administration has been kind to writers in this respect. We simply begin every column with mention of an Obama health-care speech from yesterday, and amazingly, we are never wrong. For a guy who doesn’t know the first thing about the subject, he sure talks about it an awful lot.)
….he slammed the insurance companies for “jacking up rates” as far as they can get away with, thus necessitating the ministration of his ministries. The image could not be clearer. He sees, or wants us to see, insurance companies as predators prying profits from our infirmity. This tactic plays right into our national weakness, our inability to process complex calculations. If we cannot add two and two to make four, he gets to fake more. If the statistics annoy us like static, then we are at the mercy of the state. If we cannot do the sums we must accept his summary; if we cannot find the quotient we are left with his quotations.
Various pundits have spluttered ineffectually about the lower markup in insurance than other industries, said to be a mere three percent. Most people, sad to say, don’t really get this sort of thing. They see the price going up, whether at the gas pump or in the restaurant, they figure someone is lining their pockets at the expense of the little guy. Doctors, hospitals, health insurance, are viewed this way as well. The rate rises on the invoice and the patient’s heart rate rises along with his voice. Somewhere someone is taking advantage of him somehow. Three percent, thirty percent, three hundred percent, those are just green-eyeshade esoterica.
Not being able to figure this out for themselves has left too many people at the mercy of the math media. For months I have been searching in vain for the magic bullet to bring this point out clearly, that profit is not the problem. Then yesterday, while writing a dialogue on health-care to be performed on stage, it hit me: NONPROFITS.
In every state in the union, customers have an option to buy health insurance from nonprofit organizations, including most of the Blue Shields. Some estimates put the market share of nonprofits at 45 percent. According to the Alliance for Advancing Nonprofit Health Care, the five largest health insurers in the country are all nonprofits. This leads to two critical points everyone can comprehend without being a math whiz (using the Talmudic style known as mimah nafshach, meaning “from whichever direction you prefer”).
(1) If the profit motive is really the corruptive force skewing the medical economics, then let everyone buy a policy from a nonprofit without government interference.
(2) Conversely, if the extra expense in the system is attributable to profiteering, why can’t the nonprofits charge appreciably less for the same degree of insurance?
I made a series of calls to insurance agents, although I considered them redundant. If nonprofits were much cheaper, we would all be their customers. But I checked nonetheless and confirmed my hunch: the price of health insurance is about the same whether purchased from for-profits or from not-for-profits.
With this obvious fact staring us in the face, how does the President sell his specious rhetoric to the masses? The answer, I guess, is not very well. We may be weak at figgerin’ but a 40 percent approval rating after one year of pushing obsessively for health-care reform falls somewhere beneath the threshold for success. In fact, in a speech delivered yesterday by President Obama on the subject of health care…
About the Author
Jay D. Homnick, commentator and humorist, is a frequent contributor to The American Spectator. He also writes for Human Events. Here he speaks at the Rally for Religious Freedom in Miami on June 8, 2012.
Letter to the Editor View all comments (67) | Leave a comment
More Articles by Jay D. Homnick
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David Moshinsky| 3.12.10 @ 6:48AM
Not only are non profits part of the mix, but most larger employers are self insured. The reason for the high cost is third party payers. There is no incentive to save money, if the money saved is not your own.
Ralph Novy| 3.12.10 @ 1:16PM
Bingo.
Duh.
Single Payer.
Why can't this "2 + 2 = 4" thing fly?
Trick question. We know why.
The mystery is why we sheepishly go along with it.
Alan Brooks| 3.12.10 @ 1:23PM
I don't read all this GOP minutiae, any more than I read the Dems'; here is my overarching take on politics and intellectualism: it is necessary a progressive should think justice can be legislated, when it cannot. If it were up to conservatives, without restraints, the world would exist mostly to serve their own families. Self deception can sometimes be more ingrained in the intelligent, as their thoughts are more sophisticated, thus the illusory memes are more insidious. Intellectuals are tricksters, they sell their versions of reality; an intellectual isn't an altruist, and the academy isn't a charity. The intellectual is selling not only his body of work, not only his information (or misinformation and disinformation) but also his image, his ego.
Ralph Novy| 3.12.10 @ 3:45PM
Alan:
Wow. Do you hear yourself?
"Intellectuals are....blah, blah, blah."
That's one of the foremost talking points of every brutish dictator/conqueror since time immemorial.
Maybe you should step back and rethink that?
Et Tu, Brutus?| 3.12.10 @ 5:32PM
10-4
Eric A.| 3.12.10 @ 8:16AM
Whether for-profit or non-profit, private medical plans face the discipline of competition.
Which reminds me of the biggest success story the GOP failed to tell: the partial privatization of Medicare through the Medicare Advantage program. When Democrats were about to add drug coverage to government-run Medicare, President Bush pulled a rare conservative rabbit out of the hat and demanded that seniors be allowed to buy their Medicare medical and drug coverage from private companies.
The result? For the first time in history, costs of a government-funded health plan came in under projections. Plus the private plans offer better coverage, fewer denials, and better quality than government-run healthcare. You’d think conservatives would trumpet their success at applying free market principles to expanding health coverage. You’d be wrong.
Some conservatives, who would rather be righteously mad than win a battle for conservatism, incorrectly portrayed this as “George Bush created a brand new entitlement”. False. The Medicare entitlement already existed, and Democrats were already proposing to expand it to include drug coverage, when President Bush seized the moment to block further expansion of big government and roll it back with partial privatization. (Just imagine if Bush had succeeded in partially privatizing Social Security. Conservatives would be giddy).
If we’d given the credit due, we’d be in position today to offer the public mind a clear free-market alternative to Obamacare, and the GOP brand would stand for something. But the public today isn’t saying “we love conservatism” and “look how free markets worked for Medicare Advantage”, they’re just saying “Obamacare stinks” and “throw all the bums out”. Most don’t even know we have, today, a wildly successful example of free-market health coverage provided by partially privatizing a government program.
Arguably, the primary hidden objective of Obamacare was the gutting of Medicare Advantage, because Democrats know they must eradicate working examples of how free markets and privatization benefit the middle class. See how they’re now pushing to confiscate our 401ks and give us government bonds; see how they fight to eradicate the D.C. school voucher program. They must never allow us to see an example of the individual prospering through more freedom.
Politically astute Democrats know what clueless conservatives don’t: small incremental examples of conservative success set the stage for bigger conservative successes. If conservatives attack each other in purity contests, and spit on their own partial successes instead of promoting them, then leftists win – and freedom loses.
Ralph Novy| 3.12.10 @ 1:19PM
Eric A.:
"The result? For the first time in history, costs of a government-funded health plan came in under projections. Plus the private plans offer better coverage, fewer denials, and better quality than government-run healthcare."
I seriously doubt that. Please support those assertions.
CDJ| 3.13.10 @ 1:17PM
Try this for starters:
http://newsbusters.org/blogs/t.....ction-rate
Note the table is not arranged in order of percentage of denial.
Go here to compare original Medicare vs. Medicare Advantage plans:
www.medicare.gov
In many cases you can get an Advantage plan for under $25 a month, even at $0 per month (I know for a fact, I've had $0 premium plans for several years). These plans also include Part D drug coverage. Currently I have Seattle's Group Health Advantage plan, $17 a month including Rx drugs. Group Health, a non-profit, is one of the highest rated network of providers in the country. I've been on original Medicare as well as other Advantage plans.
Advantage plans ALWAYS offer better coverage. You can't even get a routine mammogram under original Medicare.
You really have no idea what you're blathering about.
wyn| 3.13.10 @ 8:42PM
Why have so few people picked up on Medicare Advantage's great success? Unless you're a senior, who would notice. Too many other things in life to worry about. Like Congress trashing the Constitution.
Bill Hussein O'Stalin| 3.12.10 @ 8:49AM
While the erstwhile Obama complains about profits in the private sector, Obama sits atop one of the greatest guaranteed profit schemes in the world, with guaranteed returns every day of every year, the federal tax system.
Even the lowest tax rate of 15% is over 5 times as much as the average profit of a health insurance company.
J.C.Eaton| 3.12.10 @ 8:50AM
.....not that "throw all the bums out" is a bad thing.
John3| 3.12.10 @ 9:08AM
Thank you for this discovery. As a member of the health care system, I know for a fact, that ALL of the government-run healthcare systems (medicare, medicaid, tricare) are very difficult to deal with, have very many denials and many times, work NOT to pay physicians and hospitals. The healthcare bill that they are trying to pass is not aimed at improving health care--it is aimed at changing America into a larger welfare state full of entitlements that we cannot afford--thereby affording the Democrats a PERMANENT majority for many decades to come--if this Republic survives this horrible experiment.
Tim| 3.12.10 @ 9:40AM
Another Ad Hominick attack...
Jay| 3.12.10 @ 9:49AM
One thing that is never pointed out about Medicare: If a person has almost any form of health care insurance, that coverage is primary and Medicare is secondary. Therefore, the private insurance covers the vast majority of the costs and Medicare might pick up some of what is not covered. That blows a BIG hole in the position that Medicare is effective and efficient.
Ralph Novy| 3.12.10 @ 1:21PM
Huh? How does that make sense?
George True| 3.12.10 @ 10:26AM
Regarding Jay's comment, If a person is on Medicare, then Medicare IS the primary payer. Even if the individual has a Medicare supplement plan from a private insurer, or Tricare military retiree insurance, Medicare pays first, and then the private supplement or Tricare pays what Medicare did not pay.
The one notable exception to this is Medicare Advantage. If a Medicare recipient has a Medicare Advantage plan, then that plan becomes the primary and in most cases the only payer. In fact, if someone has a Medicare Advantage plan, they are not allowed to have a Medicare supplement plan from a private insurer because they would be paying two premiums for what would largely be redundant coverage. The exception is Tricare. A Medicare eligible military retiree is allowed to have a Medicare Advantage plan and still retain Tricare. Tricare would then pay whatever the Medicare Advantage plan did not pay.
The reason Obama wants to get rid of Medicare Advantage is because it is a prime example of the private sector doing the job better than government can, thus it exposes his lie that the private sector insurance market is "broken". The Centers for Medicare and Medicaid Services is only too happy to pay the private insurers to administer their Medicare Advantage programs. In fact, CMS would like nothing more than to get all Medicare recipients off of original Medicare and on a Medicare Advantage plan administered by an insurance company. CMS pays about 20% LESS to the private insurers for each Medicare Advantage recipient than it does to directly administer recipients on original Medicare. And at the same time, the Medicare Advantage recipients pay on average $1000 less per year out of pocket for deductibles and co-pays than those on original Medicare. so the private insurers do it cheaper and better, and CMS knows that. Obama and the Dems know that too, so when they loudly proclaim the opposite, they are telling a deliberate, intentional, and well-rehearsed lie.
Ralph Novy| 3.12.10 @ 1:30PM
"The Centers for Medicare and Medicaid Services is only too happy to pay the private insurers to administer their Medicare Advantage programs. In fact, CMS would like nothing more than to get all Medicare recipients off of original Medicare and on a Medicare Advantage plan administered by an insurance company. CMS pays about 20% LESS to the private insurers for each Medicare Advantage recipient than it does to directly administer recipients on original Medicare. And at the same time, the Medicare Advantage recipients pay on average $1000 less per year out of pocket for deductibles and co-pays than those on original Medicare. so the private insurers do it cheaper and better, and CMS knows that."
I doubt that.
Please cite supporting sources.
Pingback| 3.12.10 @ 11:21AM
The American Spectator : Nonprofits Cleaning Up links to this page. Here’s an excerpt:
Pingback| 3.12.10 @ 11:21AM
The American Spectator : Nonprofits Cleaning Up links to this page. Here’s an excerpt:
Dave| 3.12.10 @ 12:16PM
I work for Blue Cross Blue Shield of Michigan. BCBSM is a bit of an odd duck being heavily regulated by the State of Michigan and forced to accept all comers regardless of health AND forced to put all comers into the same bucket actuarially. Result: skyrocketing premiums AND BCBSM is losing money on insurance (individual policies right now and big groups - read UAW- are shrinking). It has for-profit subsidiaries that keep it in the black but its core business is in trouble.
Jay| 3.12.10 @ 12:32PM
I am on Medicare. I am retired, but I have company-provided insurance, not Medicare Advantage. Medicare INSISTED that they are secondary to my private insurance. Medicare winds up paying a VERY small percentage (if anything at all) of my covered medical costs.
Obama wants to totally eliminate private health care insurance so that only the Federal government provides insurance, and therefore controls 100% of the whole health care industry.
All of the bills under consideration accomplish this goal. Make no mistake, Obamacare IS socialized medicine.
LQQKY| 3.12.10 @ 12:50PM
One thing continuously overlooked in the insurance debate is that the insurance companies are regulated by the various states; not the feds. If there a limited number of insurers in a given state, it's because that's the way the state wants it. BTW, I believe that the average insurance company's ROI is in the vicinity of 3-4% hardly a greedy rate.
John K| 3.12.10 @ 4:06PM
All great comments. One thing I don't see mentioned much as the reason for skyrocketing premiums is the plethora of new treatments and procedures available year after year and happily, demandingly, consumed by the American people. It's a wonderful thing how much better our lives are for it. My aunt lived half her life on crutches and arthritic pain relieved with aspirin but this year my wife, with similar symptoms, will have a replacement and we will tour Italy soon. Yes, we can put a price tag on this and it is high, but people have made it clear it's what they want. They want to live longer, healthier lives with less pain. The only way to lower costs is to restrict care, period.
George True| 3.12.10 @ 5:10PM
Jay: You are right. Your company retiree health plan is the primary payer. And I suspect the reason Medicare pays little if anything is because your company plan probably pays equivalent or better than what Medicare would have paid under the circumstances when you factor in the various Part A and Part B deductibles under original Medicare.
Ralph: doubt to your heart's content. It doesn't change the facts. Medicare Advantage DOES cost CMS less per recipient than what they have to pay overall for each recipient on original Medicare. CMS themselves have said this, so CMS is my source. Google it and you will get many hits. The main reason is because insurance companies have administration costs averaging 17% of each dollar spent, whereas CMS's admin costs are between 33-37% depending on whose numbers you use.
Also, CMS themselves have said that the average Medicare recipient will pay $1000 lessout-of-pocket in a typical year. The reason is because deductibles on your average Medicare Advantage plan are typically lower than original Medicare. My personal experience of brokering a number of different MA plans in recent years and comparing the average out-of-pocket deductibles and co-pays in those plans to those in original Medicare has proven that statement to my satisfaction.
Tony in Central PA| 3.12.10 @ 5:11PM
If you can judge the brains and knowledge of a politician by his BS, Obama ranks near the bottom in Presdential history.
Pingback| 3.12.10 @ 7:01PM
I Got Money in the Bank » Blog Archive » The American Spectator : Nonprofits Cleaning links to this page. Here’s an excerpt:
Sara Love Rast| 3.13.10 @ 11:22AM
I am a dyed-in-the-wool conservative, and I've long enjoyed the spirit and the literary excellence of American Spectator. It's impossible to overstate my horror at the thought of the consequences of Pres. Obama's health care plan.
But I must speak up about what you missed in your analysis of non-profit health insurance. We live in Alabama, where Blue Cross is about all there is. Every year they charge more and cover less.
Our 34-year-old daughter has rheumatoid arthritis. Blue Cross makes an annual announcement of some kind or other in which they refuse to cover all or part of her admittedly expensive maintenance medication, Humira. Humira is the only thing standing between a healthy, relatively normal life for my daughter (notwithstanding other complications) and the certainty of increasingly crippling joint damage and pain. It costs $1750 a month for two injections. Blue Cross's latest offer was "you pay the first $5000 this year and we'll pay half of the rest. My daughter, her husband and two children live on less than $40,000 a year after taxes. How can they be expected to pay that?
The giant omission that the non-profits didn't disclose to you is this: Although they may post no profits at the end of the year, they pay enormous performance-based bonuses to their employees. That means the less they cover and the more they charge, the bigger the employee bonuses. This rather pits the insurance company employee making coverage and rate decisions against the insurance company customer, if you see what I mean.
In the 1990s apparently, some regulation was lifted allowing non-profits to award to their employees any cash in the black at the end of the year. Before that companies whose employees had group plans with Blue Cross and whose group had fewer claims than payments during the year were refunded the overpayments, so that every rate payer received a check. Blue Cross employees were paid well, but they did not get these bonuses based on how little they get away with doing for the insured.
Furthermore, nowadays, Blue Cross employees enjoy other perks, such as lavish cruises. And Blue Cross through national insurance PACs pays millions of dollars to political candidates in about equal numbers for Democrats and Republicans. I'm supposing that money originates in rate-payers pockets.
Yes. Blue Cross may call itself a non-profit. But somewhere along the way, somebody redefined what a non-profit is.
Sara Love Rast| 3.13.10 @ 11:52AM
Says Eric A.: "Whether for-profit or non-profit, private medical plans face the discipline of competition."
Says I: Balderdash. Blue Cross Alabama holds a virtual monopoly in Alabama. I'm sure that must be true of health insurance companies in other states.
It would be an excellent thing if health insurance companies did compete across state lines. We could certainly hope for lower costs and better coverage. But of course opening state borders for competition among insurers would cost the taxpayer nothing. So it must be a bad idea if what you want is an expensive federal 3000-page overhaul.
Northern Rebel| 3.13.10 @ 1:31PM
As a former financial professional, I know for a fact that insurance companies collude to enhance their bottom line.
However the answer is not government intervention. Government oversight of insurance companies, is like adding shit to beef stew, because the meat went bad.
The answer is education.
Our high schools teach global warming, and which animal is going exstinct next, rather than how money works, and the power of compound interest. I was 33 yrs old before I learned what the rule of 72 was.
How many of you folks know what that is?
A gentleman named Art Williams revolutionized the life insurance industry through education, much to his competition's dismay.
He has a website where you can by a small magazine style booklet called "Common Sense", that should be required reading in every high school.
Our country wouldn't be in this financial klusterfuck, if normal Americans were given the information that banks, and insurance companies keep to themselves.
The "Gummint" only exacerbates the problem, and it's obvious when you see what happens when they try to run something like the post office, they know nothing.
Do you want them running health care like they operate the DMV?
(shudders in fear)
John II| 3.15.10 @ 1:54AM
The rule of 72, which has been known to mathematicians for several centuries, is a method of calculating the time (in years) it takes for an investment at compound interest to double in value. You divide the percentage of interest into 72. There are alternate rules of 70 and 69 when the rate falls outside the range of 6-to-12 percent, but I don't remember which direction requires which rule.
And I'm not sure why the hell I need to. I can always look it up. What bothers me is all this minute yap-yap about numbers when the issue we're confronting is basically philosophical.
Try this for a number: When Professor Obama assumed power 14 months ago, 60 percent of American households were getting more government benefits and services, measured in dollars, than they were paying for in taxes. Today the figure is already up to 70 percent. Considering the extent to which Americans have already allowed themselves to slip into state dependency and the creepy notion that they world owes them a living, it's astonishing that a substantial majority are against socializing the medical system.
Philosophical question: do we want a social order of free and responsible citizens, or a regime of dependent and passive subjects hankering after the illusion of security without liberty?
That's what the debate is really about. And the Left's efforts to suppress and distort the debate mirror what they really want.
Pingback| 3.13.10 @ 5:42PM
Don’t do away with Medicare Advantage? | links to this page. Here’s an excerpt:
Pingback| 3.13.10 @ 5:42PM
Don’t do away with Medicare Advantage? | links to this page. Here’s an excerpt:
Dennis Bergendorf| 3.14.10 @ 12:58PM
Interesting point on non-profits. If you look at other areas where for-profits compete with nons, you'll see little "price" differential. In our area, there are several for and non-profit hospitals, and as near as I can tell, services (at least for lab work, etc.) are priced about the same. About ten years ago, a group of people bought an old gas station and ran a gasoline co-op. They could never get the price more than 2-3 cents a gallon below the commericals after they factored in the cost of card readers, maintenance, etc. Members found themselves going to the convenience store down the street where they could buy other things. The allure of a saving 30 or 40 cents on a fill-up soon wore thin.