Private Sector Health Insurance: Not Efficient
Jeff Alworth
Theory: private companies, owing to the rugged realities of the market, provide services better than public agencies--all services, including health care. (You could also call this a religion, but I'm trying to be generous.)
Reality, in two examples:
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At the end of 2010, my wife and I did a switch on our health insurance. Not a big one: we went from the plan offered by Kaiser to my work to a plan offered by Kaiser to my wife's work. For the past FIVE MONTHS, Kaiser has not recognized the switch. My plan was a bit better, and every other week, when I went in for physical therapy, I expected them to ask for a larger co-pay. Nope, they would say with certainty, peering into their computers, you're good. Finally, today I got a letter informing me that on January 1, my plan had changed. Recall this the next time someone lectures you about how efficient private companies are, or complains that a state agency is hopelessly inefficient.
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Farming out Medicare to the private market would actually increase costs by 40%. Why? Because "private insurance plans have much higher administrative costs than Medicare. Second, private plans have less bargaining power with health care providers and are unable to negotiate payment rates that are as low as Medicare’s."
All of this matters, because we're having a national debate about how to manage health care costs. The problem is, the debate is being held hostage by people who believe that private health insurance is cheaper than public insurance. This group is so insistent, they appear to be willing to default on American debt in a couple months to score a political point. But they believe in a fiction.
Sometimes the market can deliver cost savings. Sometimes it can't. Knowing the difference is critical in crafting sensible public policy.
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12:16 a.m.
Jun 1, '11
I'll add one more:
A couple of years ago, my parents and I were visiting Poland, and we tracked down the very church that my great-great-great-great-great-great grandfather was baptized in. While climbing up the steps, my mother somehow missed the step, slipped, and fell down the stairs, breaking her foot.
We took her to the emergency room of a nearby hospital, only to be repeatedly apologized to as there was a nursing strike on.
In two hours, Mom was diagnosed, x-rayed, given a cast, crutches and prescriptions for pain pills. On a Saturday. During a nurses strike. The cost to us (non-nationals)? Not a single penny.
I dare anyone to find a hospital who can do the same while fully staffed.
5:12 a.m.
Jun 1, '11
Jeff, when you changed coverage, a new insurance card should have been issued. did you give the new card to the PT provider? If not, they billed under your old coverage. If you just assumed that someone at Kaiser would immediately recognize the change in plans, you are part of the solution to the claim of inefficiency.
Provider offices need to be given new plan cards and information for billing correctly. 'Assuming' that both the provider and carrier will peer into their computers and instantly know that there is different coverage is not reasonable if you have not provided the information.
Of course if you provided the information and the new card when you visited in 2011 your concerns are well founded.
9:13 a.m.
Jun 1, '11
Kurt, to add a bit. We were switching within the Kaiser system, from my plan to my wife's. To Kaiser's credit, there was no service interruption. It just took them five months to recognize we were on a slightly different plan. I actually have no complaints with Kaiser, either, from which I've gotten great care. But that's the point: this is a good company.
8:12 a.m.
Jun 1, '11
Actually Kaiser is about the most efficient of the private insurers, and given they are non-profit they don't have to pay CEOs and their bonuses, they don't have to pay stockholders. Their premiums are consistently below the corporate providers. Their internet access to doctors and health records, and prescription management is state of the art.
That said, the GOP is determined to drive off a cliff to kill Medicare, which says they fear Koch Industries and their astro-turfing front organization, "Freedom Works" more than they fear the American voter.
The GOP wants us to turn in our govt. guaranteed medical coverage for a coupon where we can try to shop for private corporporate insurance if we're older or disabled. Good luck with that, and the prior conditions exclusion gets pretty all inclusive by the time you're in your sixties. The GOP's approach to health care reform is to make us all pay a lot more out of pocket so we will avoid going to the doctor when we need to. And about half of Americans now approaching retirement have zero savings and zero defined benefit pension, relying only on Social Security. So the GOP's idea of cost control and efficiency is "bring on the death panels" with rationing by income.
9:18 a.m.
Jun 1, '11
Bill, Kaiser used to be a nonprofit, but they aren't anymore, FYI.
2:02 p.m.
Jun 1, '11
That's too bad. Still they beat out available plans in cost and delivery here in the Willamette Valley. I'm a pretty satisfied customer.
3:22 p.m.
Jun 1, '11
Jeff - Kaiser Foundation Health Plan, Inc. is definitely still a not-for-profit: http://xnet.kp.org/newscenter/aboutkp/fastfacts.html
2:05 p.m.
Jun 1, '11
Reinforcing your post, Jeff, new polling out today shows the American people don't want Medicare killed and privatized, they don't want cuts to Medicaid, and they don't want to kill the Affordable Care Act.
http://knowyourcare.org/press/2011/06/01/may-2011-poll-memo/
4:48 p.m.
Jun 1, '11
Further reinforcement, a CNN poll out today showing large majority of Americans opposed to the GOP Medicare voucher plan, including even a majority of Republicans and self-identified conservatives are opposed. Still the idiots on the right pressed by their masters at Koch Industries rush toward the cliff, taking another vote today to end Medicare.
http://tpmdc.talkingpointsmemo.com/2011/06/poll-conservatives-and-republicans-oppose-ryan-budget.php?ref=fpb