The insurance industry is up in arms over congressional proposals to create a publicly financed competitor in an effort to bring down health-care costs. That may be because it doesn’t have to face much in the way of competition now: Most regions of the U.S. are dominated by just one or two health insurers.
Each year the American Medical Assn. (AMA) surveys the commercial health-insurance landscape and finds little if any competition. Its latest report says that, out of 314 metropolitan markets, 94% are controlled by one or two companies, or fewer. In 15 states, one insurer has 50% or more of the entire market.
Such market concentration has become a potent argument for supporters of a public insurer, President Barack Obama among them. With no need to generate profits, a public plan could offer lower premiums, thus bringing competitive pressure to bear on the private insurers to do the same.
In the modern health-care system, there is no higher power than the insurance market. And the insurers who populate that market have grown all the stronger. The Justice Department judges an industry “highly concentrated” if a single company controls more than 42 percent of the market. By that definition, 94 percent of statewide insurance markets are highly concentrated. A recent study by the advocacy organization Health Care for America Now showed that in Indiana, WellPoint controls 60 percent of the insurance market; in Iowa, Wellmark accounts for 71 percent; and in Alabama, Blue Cross/Blue Shield holds 83 percent. In the past 13 years, there have been more than 400 corporate mergers involving health insurers.
Economics textbooks tell us that concentrated markets reduce the competitive behavior that benefits consumers and lead to outsize profits for the dominant firms. Predictably, health-care premiums shot up more than 90 percent between 2000 and 2007, while the profits of the 10 largest insurers increased 428 percent over the same period.
We have a system that is not sustainable. This isn’t capitalism – instead we have several large insurance companies practically stealing money from American taxpayers.
Right now, President Obama is trying hard to get a bill with the help of all the major players, including the insurance companies. Therefore we’ve seen him go after costs and premiums, but he has not taken on the insurance companies in a direct manner.
If the current effort at reform fails or stalls, expect to see a full-throttled attack against these companies that informs the American people just how much money they are making and the tactics they are using to deny coverage to pad profits.
Paul Krugman has been tough on Barack Obama at times, but he’s behind him on health care. Today he mocks the media for focusing on everything but the actual policy issues.
The talking heads on cable TV panned President Obama’s Wednesday press conference. You see, he didn’t offer a lot of folksy anecdotes.
Shame on them. The health care system is in crisis. The fate of America’s middle class hangs in the balance. And there on our TVs was a president with an impressive command of the issues, who truly understands the stakes.
Mr. Obama was especially good when he talked about controlling medical costs. And there’s a crucial lesson there — namely, that when it comes to reforming health care, compassion and cost-effectiveness go hand in hand.
Of course, the policy issues are too boring for our brain-dead media when compared to all the drama surrounding the process.
Krugman also focused on one of the most important policy developments over the past several days.
I don’t know how many people understand the significance of Mr. Obama’s proposal to give MedPAC, the expert advisory board to Medicare, real power. But it’s a major step toward reducing the useless spending — the proliferation of procedures with no medical benefits — that bloats American health care costs.
And both the Obama administration and Congressional Democrats have also been emphasizing the importance of “comparative effectiveness research” — seeing which medical procedures actually work.
So the Obama administration’s commitment to health care for all goes along with an unprecedented willingness to get serious about spending health care dollars wisely. And that’s part of a broader pattern.
Many health care experts believe that one main reason we spend far more on health than any other advanced nation, without better health outcomes, is the fee-for-service system in which hospitals and doctors are paid for procedures, not results. As the president said Wednesday, this creates an incentive for health providers to do more tests, more operations, and so on, whether or not these procedures actually help patients.
MedPAC was originally created by Republicans to look for ways to cut costs in Medicare and Medicaid, so you would think they would be openly in favor of this development of giving this panel real power, but most Republicans are too busy trying to kill the reform effort.
Anyone who wondering why health care premiums are exploding just needs to take a look at the insurance industry.
Schumer pointed to the profits of the 10 largest insurance companies — which shot up 428 percent between 2000 and 2007, from $2.4 billion to $12.9 billion — as a reason health care reform is needed.
The insurance industry has not been playing ball on reform, and now Senate Democrats are getting fed up.
With other industry groups pledging savings to help pay the cost of health care reform, Senate Finance Committee Democrats slammed insurers for holding out — and threatened to impose new fees on the industry that could cost it as much as $100 billion.
The Finance Committee members are currently hunting for hundreds of billions of dollars to help finance reform, and with the hospital and pharmaceutical industries having pledged $235 billion, the senators said it was time that the insurers paid their share.
“We need the insurance companies to step up to the plate and be part of the solution. Most of the negotiations so far, the insurance industry has been at the table but you can only sit there at the table with your arms crossed for so long,” said Sen. Chuck Schumer (D-NY).
Schumer and Sens. John Rockefeller (D-WV), Debbie Stabenow (D-MI) and Robert Menendez (D-NJ) pounded the insurers, who they portrayed as unwilling to help pay for reform even while they have enjoyed exploding profits.
“The insurance companies are the people who are just rapaciously, greedily and unstoppably making money by underpaying the patient, by underpaying the provider and by overpaying, therefore, themselves,” Rockefeller said.
We’re seeing a new urgency from the White House and other Democrats on the health care reform issue, and it’s refreshing to see them ratchet up the pressure on the insurance industry.
Can Harry Reid get health care through the Senate? it will be a very tough battle, as Roll Call points out in this excellent article summarizing the current state of the negotiations. Reid seems to be feeling the pressure from the liberals in his caucus, as he’s instructed Finance Chairman Max Baucus to stop trying to please Republicans.
Senate Majority Leader Harry Reid (D-Nev.) on Tuesday strongly urged Finance Chairman Max Baucus (D-Mont.) to drop a proposal to tax health benefits and stop chasing Republican votes on a massive health care reform bill.
Reid, whose leadership is considered crucial if President Barack Obama is to deliver on his promise of enacting health care reform this year, offered the directive to Baucus through an intermediary after consulting with Senate Democratic leaders during Tuesday morning’s regularly scheduled leadership meeting. Baucus met with Finance ranking member Chuck Grassley (R-Iowa) on Tuesday afternoon to relay the information.
According to Democratic sources, Reid told Baucus that taxing health benefits and failing to include a strong government-run insurance option of some sort in his bill would cost 10 to 15 Democratic votes; Reid told Baucus that several in the Conference had serious concerns and that it wasn’t worth securing the support of Grassley and at best a few additional Republicans.
By Tuesday afternoon, the Finance Committee began looking at ways other than taxing health benefits to deliver a health care overhaul that costs less than $1 trillion and is deficit-neutral, as Baucus wants. Baucus’ office declined to comment, but Senate Budget Chairman Kent Conrad (D-N.D.), a key member of Finance, confirmed as much late Tuesday.
“I would say there’s a search for alternatives,” Conrad told reporters. “There’s been feedback. There’s been additional questions in terms of getting the votes and public support.”
I’m surprised to hear Reid taking such a tough stand, but Democrats are fed up with the bi-partisan approach. Taxing benefits is a bad idea, and they need to look for other ways to fund this. I’m in favor of taxing soda and other crap that big companies sell and market to kids. Would it kill us to pay a little more for pop?
Naturally, any push by the Democrats to get this done with a public option and without the support of Republicans will also make it more difficult for moderate Democrats to support the bill, but it was encouraging to hear Ben Nelson praise Reid’s efforts. Nelson is always a tough vote.
“Harry is the leader, and people certainly pay attention to Harry’s advice and leadership,” Sen. Ben Nelson (D-Neb.) said. “I’m sure he’s going to find a way to sell what needs to be done. … He’s very good at that, and I hope he’s able to do it.”
President Barack Obama has been vague about details of his healthcare reform efforts, but he provided a hint on Monday of one direction he could take — community health centers.
As he announced the nominations of his two top health executives, Obama highlighted the allocation of $155 million to 126 community health centers as part of the $787 billion economic stimulus package.
“These health centers will expand access to care by helping people in need — many with no health insurance — obtain access to comprehensive primary and preventive health care services,” Obama told a news conference.
“That helps relieve the burden on emergency rooms across the country, which have become primary care clinics for too many who lack coverage — often at taxpayer expense.”
The Health and Human Services Department said the money would create 5,500 new jobs and help provide health care to an estimated 750,000 low-income Americans.
Gary Pickens, chief research officer for the Healthcare business of Thomson Reuters, a division of Thomson Reuters Corp, agreed the centers relieve overburdened hospitals.
“Hospitals currently have overcrowded emergency departments and would probably prefer to see care given in more appropriate settings for conditions that don’t require hospitalization,” Pickens said in a telephone interview.
This addresses one of the most pressing problems facing our health care system. Emergency rooms are overcrowded, as too many Americans without health insurance rely on them for care. Community health centers can help handle many of these cases, and they provide better care as they are organized to handle primary health services as opposed to emergencies.
More money is on the way.
“Over the next two years, a total of $2 billion in Recovery Act funding will be invested in Community Health Centers to support renovations and repairs, investments in health information technology, and critically needed health care services,” HHS said in a statement.
These are the types of “investments” that contribute to the common good. It attacks the inefficiencies in the current system while improving the quality of care.
I’m a little disappointed with this pick. She will be excellent at HHS, and health care reform is very important, but Sebelius had a real chance of winning a Senate seat in Kansas in 2010 if she decided to run. This probably means the Democrats are pretty confident of getting over 60 without her, and taking Kansas would probably happen only if the Dems win in a rout.
Kansas Gov. Kathleen Sebelius yesterday accepted President Obama’s request to become his secretary of health and human services, stepping into a central role in the new administration’s ambitious effort to overhaul the nation’s health-care system.
Sebelius’s nomination comes just days before the White House is scheduled to convene a summit on health reform, an early step in the president’s bold plan to vastly expand the reach of the health-care system. A formal announcement of her nomination is scheduled for tomorrow.
The summit, which is expected to be the first in a series of open meetings across the country, is intended to spotlight the challenges presented by the nation’s balkanized health-care system — including soaring costs and gaping holes in coverage. It is also aimed at rallying public support for an overhaul certain to draw ideological and industry opposition. The health session, similar to last week’s “fiscal responsibility” summit, will open with remarks by Obama. Participants will then split into working groups led by administration officials.
In his budget proposal unveiled last week, Obama set aside $634 billion for a new reserve fund that over the next decade would serve as a substantial down payment on the cost of moving the country closer to universal health-care coverage. About 46 million Americans lack coverage, a number likely to grow as the economic downturn puts more people out of work.
Now that she’s nominated, however, I expect her to be a respected and competent voice behind the push for health care reform.
Paul Krugman has been pretty tough on Barack Obama, but he’s very pleased with the budget.
Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course.
The budget will, among other things, come as a huge relief to Democrats who were starting to feel a bit of postpartisan depression. The stimulus bill that Congress passed may have been too weak and too focused on tax cuts. The administration’s refusal to get tough on the banks may be deeply disappointing. But fears that Mr. Obama would sacrifice progressive priorities in his budget plans, and satisfy himself with fiddling around the edges of the tax system, have now been banished.
For this budget allocates $634 billion over the next decade for health reform. That’s not enough to pay for universal coverage, but it’s an impressive start. And Mr. Obama plans to pay for health reform, not just with higher taxes on the affluent, but by putting a halt to the creeping privatization of Medicare, eliminating overpayments to insurance companies.
On another front, it’s also heartening to see that the budget projects $645 billion in revenues from the sale of emission allowances. After years of denial and delay by its predecessor, the Obama administration is signaling that it’s ready to take on climate change.
And these new priorities are laid out in a document whose clarity and plausibility seem almost incredible to those of us who grew accustomed to reading Bush-era budgets, which insulted our intelligence on every page. This is budgeting we can believe in.
Krugman goes on to explain that cutting the deficit with this plan is definitely plausible. We’ll see how it plays out, but Obama seems to have support from the left.
Barack Obama has always excelled when it was time to give a big speech, and he delivered again tonight. He explained the crisis we face, along with his plans to address it. Some of mentioned that Obama needed to offer some hope, and that of course was an easy task for Obama.
But, he took things much further. he laid down the gauntlet on his agenda. He made it clear that he was committed to addressing energy, health care and education – this year!
One of the interesting details was his reference to finding $2 trillion of spending cuts over the next 10 years that he wants to cut. He mentioned farm subsidies for large agri-business and “cold-war” weapons systems as necessary cuts. The political fights here will be significant, but he made it clear he was willing to make serious cuts.
If you’re interested in a closer study of Obama’s speech and the importance of his rhetoric, dig around the web. A lot of sites are popping up about this subject and you can always find good discount printing options to get copies of his speeches for personal reference.
I’m listening to Obama’s remarks as he closes his Fiscal Responsibility Summit, and it’s rather stunning to see an interactive session that includes the President, and other leaders of our government like John McCain and Steny Hoyer. It was particularly interesting to hear John McCain speak and be supportive of the Obama Administration’s goal to get control of the military procurement process.
When looking at the list of attendees, it seems clear that Obama is serious about his goal to address the serious fiscal issues facing this nation. We are wasting billions of dollars with an inefficient health care system and wasteful weapons programs.
There seems to be some consensus on the potential of cutting corporate tax rates in exchange for closing loopholes.
Coupled with Obama’s aggressive, and honest, budget proposal, this might help generate some serious momentum for fiscal discipline.