Health care reform and the role of insurance companies “why we NEED a public option”!

I wrote my first speech about the need for health care reform and the contributions insurance companies were making to skyrocketing medical costs when I was a freshman in college.  Very little has changed in the 3 decades since.  … Except in the negative direction.

What I’m sure about:

1)  I am sure that relying on big insurance companies to monitor themselves hasn’t worked in decades and that our health care costs have continued to skyrocket. In the last decade alone the increase in health care costs has been – 119% which is 3 times as fast as wages and 4 times as fast as inflation (Kaiser Family Foundation, 2009).

2) I am sure that these increases is unsustainable and hurt American families. In 2007, nearly 2/3 of personal bankruptcies were linked to medical expenses; 80% were people with insurance (Journal of American Medical Assn., 2007).  1,500,000 American families lose their homes each year due to medical costs (Health Matrix, 2008).  In 2008, about 57 million Americans were in families that had problems paying medical bills, and nearly three-quarters had health insurance coverage (National Coalition on Health Care, 2009).

3) I am sure that these increases are unsustainable and hurt American businesses. The current system decreases American manufacturers’ competitiveness. We spend: $2.38 per worker /per hour for health care costs   vs.$0.96 per worker /per hour for US trading partners (Heritage Foundation, 2008). While some would say the problem is that we pay benefits that are too high to labor union workers, this misses the point! Passing on the costs to workers hurts workers (see numbers above) and does NOTHING to make the cost of health care sustainable. The problem isn’t workers, it’s that COSTS ARE TOO HIGH!  Health care costs are the fastest-growing business expense in the U.S. (National Coalition on Health Care, 2009). They drag down earnings and wages, slow job growth,  and decrease dollars available for research and development.

4) I am sure that shifting the burden of health care insurance and health care costs to American families is NOT the answer (see #2 above). For those firms providing coverage, nearly 3/4ths of those surveyed (73 percent) say they are struggling to continue to provide coverage due to high insurance costs (Small Business Majority, 2009). In the Hewitt Associates 10th annual health care report, results of surveys with 343 executives “found that over half (52%) of employers believe the economic downturn will affect their health care programs in 2010. In addition, 19 percent of these employers are planning to move away from directly sponsoring health care benefits in the next 3 to 5 years, which is almost 4 times as many who reported this in 2008” (National Coalition on Health Care, 2009).

5) I am sure that increased competition is critical. From where I sit the provision of health insurance in many states looks a lot like a monopoly and one that rapidly is growing.

In 2007,  the American Medical Association reported that a single insurance carrier controlled at least 30% of the insurance market in more than 95% of insurance markets.  For 15 of the 44 states reporting, the top two insurance providers controlled 75% or more of the market. Twenty-two more states have 50%  to 74% of the market controlled by the top two insurance companies. For a breakdown of the percentage of the market is controlled by the top 2 insurance providers in the 50 states and the District of Columbia, see  Health Care for America Now, available at

A look at the Government Accountability Office report on Small Group Health Insurance Carriers by State released in February, 2009 comparing 2002, 2005 and 2008 results illustrates how the dominance of a few insurance companies is growing:

In 2008,

•   The median market share of the largest carrier in the small group market was about 47%, with a range from about 21% in Arizona to about 96% in Alabama. In 31 of the 39 states supplying market share information, the top carrier had a market share of a 1/3rd – 33% or more.
•   The five largest carriers in the small group market, when combined, represented 3/4ths – 75% or more of the market in 34 of the 39 states supplying this information, and they represented 90% or more in 23 of these states.
•   Thirty-six of the 44 states supplying information on the top carrier identified a Blue Cross and Blue Shield (BCBS) carrier as the largest carrier, and in all but 1 of the remaining 8 states, a BCBS carrier was among the 5 largest carriers.
•   The median market share of all the BCBS carriers in the 38 states supplying this information was about 51%, with a range of less than 5% in Vermont and Wisconsin and more than 90% in Alabama and North Dakota.

In comparing what states reported in 2008 to what they previously reported to GAO in 2005 and 2002, they found:
•   The median market share of the largest small group carrier has increased to about 47% in 2008 from the 43% reported in 2005 and the 33%  in 2002. Twenty-four of the 29 states providing information in both 2002 and 2008 saw increases in the market share of the top carrier that ranged from about 2 to 39 percentage points. In contrast, the top carriers in 5 states lost market share with decreases ranging from about 1 to 16 percentage points.
•   The number of states with a combined market share of the 5 largest carriers of 75% or more has also increased since 2002. The combined market share of the five largest small group carriers represented 75% or more of the market in 34 of 39 states, compared to 26 of 34 states reported in 2005 and 19 of 34 states reported in 2002.

The full report can be found at:

6) I am sure that it’s time we stand up to insurance companies who DO NOT have our best interests at heart – as evidenced by CEO compensation packages. Below from the Seton Hall University School of Law, Health Law and Policy Program website are the total compensations for CEOs of insurance companies for 2007 & 2008.  Following is a “humorous” analysis of just how much money this is!

“Perhaps a slight bit of context is in order, however: it has struck me that Aetna’s Ronald Williams received $24,300,112 last year. That’s $467,309.85 per week. That’s a house. Maybe not a house that Mr. Williams would live in, but a house nonetheless. The man makes a house a week. And interestingly enough, if Mr. Williams were to eschew the purchase of a house on any given week and instead look to deposit the money in a bank– in order to remain FDIC insured (up to $250,000)– he would actually need to open more than one account–every week. Lest we lament the fate of the other CEOs on the list, in 2008 Ms. Braly had to get by on $189,311.76 per week, and Mr. Hemsley had to somehow manage on $62,327.73 per week (but perhaps he was able to save a little from last year when he made $253,164.02 per week).  May 20, 2009 by Michael Ricciardelli Health Reform Watch weblog Seton Hall University.”

Ins. Co. & CEO With 2007 Total CEO Compensation

  • Aetna Ronald A. Williams: $23,045,834
  • Cigna H. Edward Hanway: $25,839,777
  • Coventry Dale B. Wolf : $14,869,823
  • Health Net Jay M. Gellert: $3,686,230
  • Humana Michael McCallister: $10,312,557
  • U.Health Grp Stephen J. Hemsley: $13,164,529
  • WellPoint Angela Braly (2007): $9,094,271
    L. Glasscock (2006): $23,886,169

Ins. Co. & CEO With 2008 Total CEO Compensation

7) I am sure that a public option that will offer competition to private insurance companies, and if properly formed, will help bring the cost of health care insurance down.

The following video by Robert Reich (Secretary of Labor in the Clinton administration, Professor at UC Berkeley outlines succinctly the points that it’s not too late to get a public option and that insurance companies want it to fail.

8 ) I am sure that it is up to us, the American people, to hold our Congressional leaders accountable and to demand that this decades old problem be addressed, that a workable solution be found, before we permanently damage the economic viability of families and business nationwide. Phone, tweet, blog, email, write your Congressional representatives and demand that they get the job done on health care reform.

Health care should be a right, not a privilege!

2 responses to “Health care reform and the role of insurance companies “why we NEED a public option”!

  1. Succinct. Right on the mark.
    Send it as an LTE to the Eagle and other Kansas papers.

  2. I am sure the vast majority of Americans still favor a strong public health option.

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