What scares the right about Obama's plan is that it can work.
It is an inclusive plan.
It's a plan that allows people with serious health issues to have insurance.
It's a plan that encourages health care after obtaining health coverage.
It leaves private health insurance companies intact, but forced to compete fairly for business.
Barack Obama Proposes Civilized Medicine.
What the right refuses to do is take ownership of our current health care crisis. If they did, we'd have an entirely different election. What gives the Dems the high ground on health care? Their recognition of the scope of the problem, the willingness to change the dynamics of the status quo and the (tentative) willingness to piss off Corporate America.
...which is a lot more than the right is willing to do.
Civilizing Premium Rate Setting
Premium rates are an area where insurance companies are terrified of an Obama health plan. Insurance companies want unquestioning authority to raise premium rates and determine covered services, deductibles and co-pays. They will strive to please Wall Street, but are only concerned with Main Street until they get their signature on a contract. The idea that they might have to compete with a mega group for business spells an end to their gravy train, which to them, must be a gut-churning development. It would be one thing if the insurers honored their contracts, but they make you fight and argue and prove beyond what's reasonable to get what you've paid for.
For example, during the latter part of September a group of 200 people were protesting the obscene profits that Antham Blue Cross Blue Shield in Mason, Ohio was generating. It seems Antham denies claims for covered services like ambulance transportation from a car crash site to the hospital and rehab services for the injuries received in a car crash. You'd think all this denial of services would lead to modest rate hikes. Not so:
A report released Tuesday by Hewitt Associates found that Cincinnati-area employers saw their health-care costs rise an average of 11 percent from 2007 to 2008, compared to an average 6 percent increase nationally. Last week, Families USA released an analysis that found that health-care costs rose more than eight times faster than wages for Ohio working families.
With that kind of increase, you'd think that the company is struggling. That their profit picture is anemic. Again, not so:
From 2003 to 2007, the group said, Anthem Blue Cross and Blue Shield, a subsidiary of Wellpoint Inc., saw earnings rise from $203 million to $420 million.
Since claims payments are at an all time low and premiums prices are going through the roof, you'd think there'd be some public relations value in restraining top management compensation. Oh, hell no:
In 2006, Wellpoint's chairman of the board, Larry C. Glasscock, earned more than $23.8 million.
Profits are the sticking point here. It seems the consumers buying Antham's health policies and Antham are far apart on what is a reasonable profit. Antham doesn't care if these people join the 47 million people electing to go without insurance. Those people might as well be eggs in Antham's omelette.
Like Antham, the Republicans fail to realistically respond to the 33% of the overall population (46% of those earning less than $30,000 per year) who can't afford health care and 47 million uninsured (15.7% of our population). This situation is the same or worse than when it was reported by Gallup last May when 28% of respondents said health care was in crisis and 48% said it was a major problem.
The nuances of insurance rate setting is difficult for the consumer to understand, but the basics are clear. You add up all the payable claims for the insured group and compare that amount to the total amount of collected premium dollars for the same time period. If the premiums exceed the claims, the policy is profitable. The issue between the insured and the insurance company comes down to how much gross profit is acceptable. Sixteen points (16%) is usually batted around as acceptable, but it should be noted that the Medicare and Medicaid fiscal intermediaries get less than that and you can assume Wellpoint gets more than that. Here's Wellpoint declared earnings statement. They don't mind claiming a 5.45% net margin, but are fearful of declaring their gross margin. There's good reason for that. The points between gross margin and net margin include executive pay packages...among other things. I did find this in Wellpoint's August 2008 2nd quarter report.
Gross profit was $6.1 million (58.9% of total revenue) in the second quarter of 2008 compared with $7.9 million (83.7% of total revenue) for the second quarter of 2007. The 23.5% decrease in gross profit dollars is attributable to and consistent with the 49.2% decrease in license revenue and due to having attained higher margins in 2007 as a result of the large South American contract. Gross profit for the first six months of 2008 was $11.4 million (57.8% of total revenue) compared with $11.1 million (77.5% of total revenue) for 2007. The $0.3 million increase in gross profit dollars is attributable to 2007 acquisitions. However, gross profit as a percentage of sales, decreased 19.7%. This decrease in gross profit percentage is consistent with the 19% decrease in license revenue and due to having attained higher margins in 2007 as a result of the large South American contract.
Wow. That says it all. Gross profits of 57.8% to 83.7% depending upon the quarter. That's predatory, not civilized. That is what scares the right about Obama's health plan. The National Health Insurance Exchange would give those people protesting Antham, a subsidary of Wellpoint, an option. The profiteers on the right don't want the competition.