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Health insurers make money one way---by collecting more in premiums than they pay out in claims. New laws prevent health insurance companies from refusing to write anyone a policy because of a pre-existing condition. That means if Joe Smith, a heart transplant patient on dialysis decides to sign up for Insurance R Us, Insurance R Us pays his bills. Period. Eventually, all of the nation's sickest people will be on private insurance, which will subsidize the cost of caring for the chronically ill by collecting premiums from a bunch of healthy people tp pay for the sickest. That is how it supposed to work in theory.

Few  people who brag about "the best health care system in the world" realize that we have two parallel health insurance systems in this country. One is paid for with private dollars. The other is paid out of public funds. Each is about the same size, and each is larger than the total per capita health care expenditures of a country like Canada. That's right. We have socialized medicine in the U.S. It takes care of the sickest people. We also have a for profit system. It costs just as much--and it takes care of most of the healthy people.  That means, per capita, we spend twice as much as any other industrialized nation.  And neither group---"sick" nor "healthy" does as well as the average French citizen.

The new health care laws are designed to get the chronically ill off publicly funded insurance and into private plans. However, the privates, like United Health, Cigna, Blue Cross Blue Shield do not want congestive heart failure patients and dialysis patients and people suffering from multi-infarct dementia. And they have found a new way to turf these undesirables to some other plan---and eventually, back onto the public dole.

It's simple as pie. Sign up lots of members. Figure out which doctors and hospitals treat the sickest. Drop those doctors and hospitals from your plan. Cite "inefficiency" as the reason. Offer to let the patients who are losing their doctor and hospitals drop your insurance and sign up for a competitor's plan. The sickest of the sick--the ones who need their specialists the most---are the ones who will jump at the offer of changing to a different plan, even if it means paying a little bit more. And, suddenly, Cigna's dialysis patients become United Health's money sink. Meanwhile, the healthy people, who seldom use their insurance, will change doctors without batting an eye.

It happened last month in the northeast. It is happening tomorrow in my home town. Next month, it may happen in your city. The doctors and hospitals targeted will be those which serve the neediest communities---inner cities, minorities, the poor, the elderly,  rural areas. And each time an insurer realizes that many of its "higher utilizing" patients  see a certain group of doctors, because these are the doctors who specialize in treating poor, sick, minorities and people with catastrophic diseases like cancer, multiple sclerosis, lupus, heart failure, that insurer will drop the providers from their plan.

Doctors and hospitals will quickly realize that if they are to remain enrolled in private insurance plans, they will have to stay out of areas where the poor live--since poverty and illness go hand in hand. The suburbs will have a doctor glut. The doctors and hospitals will be careful not to locate on a public transportation route---that would allow low income people access. They will have gyms and lots of dermatologists. They will recruit in country clubs.

Where does it end? It doesn't. Not until every inner city doctor is off every private plan and every dialysis and heart patient is back on traditional Medicare or Medicaid. Meaning that the nation's private health care premiums will go to line the pockets of private health insurance company executives----who will be able to deduct their own, inflated "quality assurance" costs from the 85% they are supposed to spend on patient care. Meanwhile, we will spend general revenue funds--tax dollars--paying for most of the actual health care.

Ask yourself, why do we need the privates when the public plans are going to do all the work? Answer: we don't.  If a single payer is paying most of the bills, then what you have is single payer. Paying money to those who do not intend to pay the bills is just corporate welfare.

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Comment Preferences

  •  Very forceful. Thank you! n/t (6+ / 0-)

    There can be no protection locally if we're content to ignore the fact that there are no controls globally.

    by oldpotsmuggler on Fri Feb 28, 2014 at 07:57:00 PM PST

  •  There is one additional way they make money (7+ / 0-)

    By delaying payments for six months or six years, they can continue to use that money to make more money. It is to their financial advantage to delay payment as long as possible.

  •  Very insightful, (5+ / 0-)

    and a powerful warning to those of us who live where this has not yet happened.

    And most important of all, the inevitable conclusion. If the government is paying most of the medical bills anyway, why do we need private insurers?

  •  and another way for insurance companies to save (5+ / 0-)

    Here in the heart of America, Blue Cross-Blue Shield has found a very successful way to save money.....if you have an orphan disease, then you have to find a doctor off the BCBS plan. Because this is an off plan doctor, then you are reimbursed at 55%, not 70% of the medical costs. And the deductible is raised and so is the cap, no longer $2000 but now $3700. But BCBS still reimburses at the rate they decide and this is typically 50%. This means you are out-of-pocket some $13,455 in medical expenses before BCBS starts reimbursing you 27-28% of your medical expenses. That of course assumes that BCBS doesn't also decide to disallow some of those doctor bills. They are very nice about it all - they write a very nice letter suggesting that if you disagree, you are welcome to sue them.

    •  If you have a problem that can (0+ / 0-)

      only be treated by one person you need to call the insurer for a special dispensation. You can also call your state's insurance commissioner and find the person that ACA pays for to help people with insurance problems.

      You may not be getting the best treatment for your disorder and there may be an on-panel doc that would do just as well.

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Sun Mar 02, 2014 at 03:27:35 AM PST

      [ Parent ]

  •  Here's another problem. People in low-wage (5+ / 0-)

    jobs are very likely to lose those jobs and/or fall well below the poverty line very quickly when they experience serious chronic illness.

    This lands them right on Medicaid, leaving the taxpayer to foot the bill for all of their care after For-Profit insurers got to collect the (massively subsidized) premiums for years and years while they were healthy.

    Private profits, public losses.

    Welcome to the Whole Foods of the blogosphere.

    by JesseCW on Fri Feb 28, 2014 at 09:56:19 PM PST

  •  The segregation of dollars into public and (2+ / 0-)

    private is an artificial construct that has no basis in fact. It's not unusual for us to categorize things in terms of who uses them or even their purpose, like distinguishing between a sledge hammer and a tack hammer, but the distinction between dollars is actually unhelpful. Because all dollars are belong to us, the people in whose name they are issued to represent our obligations.

    That dollars have no intrinsic value is a hard concept for people don't get symbols to understand. But it doesn't help to pretend that it does.

    Anyway, when it comes to using dollars to represent the obligation to compensate the providers of health care or medical services for their time and expertise, it really doesn't make much difference how many hands those dollars pass through. What matters is whether the participants in the transaction contribute to health or aggravate the illness. Insurers who hold themselves out as payers but then delay or even deny care are predatory creatures. If, on the other hand, because of long experience and an awareness of outcomes, insurers can evaluate the quality and appropriateness of care, then they earn their share of the income stream.
    I don't think it makes a whole lot of difference whether the bureaucracy handling the paper work and the distribution of dollars is in the employ of public or private corporations as long as the standards of their operation are similar. The quantity of dollars being virtually infinite -- i.e. we can make as many of these units of measure as we want -- what's detrimental is the setting of arbitrary limits on how much can be spent.
    Imagine rationing the number of inches available to measure waists and then arguing people's waists must shrink because there aren't enough inches to go around.

    Economics has largely gone astray because it has confused form with function. Instead of attending to process and transformation, economists focus on appearance and size. In their world view a mushroom cloud is better than a bullet, not just because they can see it, but because it's much more deadly. Thus they are able to argue that U.S. health care is the best simply because it costs more than anyone else's.

    If bigger = better, then increasing cost is desirable. We have a similar problem in suggesting that the wholesale incarceration of young males is bad. That they've been taken off the streets comes as good news to people who fear them. Much depends on our preconceived notions, a term I prefer to prejudice because prejudice involves cognition and judgement and a review of alternatives. Notions arise from the gut emotions, an unreliable mess of hormones.

    by hannah on Fri Feb 28, 2014 at 10:28:56 PM PST

  •  single payer (1+ / 0-)
    Recommended by:

    Tipped and Recced.

    One small point-of-order: We still don't have true single payer. In addition to the corporate welfare, we need to eliminate the often unaffordable co-pays, too.

    We need to face the fact that health care must be a right, the simple possession of all, paid for in its entirety by taxes.

    The way all civilized nations do it.

    "It's high time (and then some) that we put an end to the exceptionalistic nonsense floating around in our culture and face the fact that either the economy works for all, or it doesn't work AT all." -- Sean McCullough (DailyKos user thanatokephaloides)

    by thanatokephaloides on Fri Feb 28, 2014 at 10:33:57 PM PST

  •  Perhaps some hospitals are inefficient. (1+ / 0-)
    Recommended by:

    I'm a supporter of single payer. I spoke at rallies for the public option.

    But one single payer size does not fit all.  Britain's national health care system is one kind Germany's is another.  Overall, I favor a German standard where the government sets standards and prices, people are insured for life, and private companies compete within this framework to offer care the most efficiently. Everybody gets good coverage, and yet private sector ingenuity is tapped to meek delivery more efficient.

    Obamacare does a lot of this, what the German system offers, at least theoretically:

    1) it sets standards for care.
    2) through competition on the exchanges prices are kept down.  Anyone who thinks that competition between insurers before was anything but insurers competing to get the healthiest as paying customers and dumping them when they got sick is blind.
    3) it limits the amount of administrative overhead that can be allocated to the insurers, making sure that a floor is in place of funds that must go to actually caring for people.
    4) and inevitably it will drive some of this cost containment to hospitals.
    5) cherry-picking patients is limited by banning pre-existing exclusions.

    There are also for-profit hospitals that are inefficient or that serve only certain kinds of patients. If these hospitals get their prices squeezed, fine.

    I've read the biggest pressure nationally right now on hospitals that have served the poor and poor areas is in Republican states that didn't allow for Medicaid expansion.
    Why doesn't your diary complain about that?

    I am no fan of the kind of crap that health care insurers got away with.

    In practical political terms, without knowing who you are on a site like this, you raise health care insurers as convenient bogey men - and we can all agree to hate them - and you are saying Obamacare is creating loopholes to allow them to get away with bullshit. But I don't even know what states you're talking about. There is no data.

    My question boils down to this: if you are going to complain about two healthcare systems in our country right now, why aren't you focusing on the democratic states where Medicaid was expanded and things seem to be going overall well and other states where hospitals have been shuttered because republicans won't let Medicaid be expanded.

    You're pitching a single payer system you're blaming ACA for coddling the insurers we all hate and you are in my opinion inadvertently I imagine providing cover for the shysters blocking broader coverage for poor people in their states.

    •  it's easy enough to know who this diarist is (0+ / 0-)

      from her ongoing health care diaries.  She is pointing out an important problem here.  Moreover, calling out insurers as abusers of the system is not the kind of cover ReThugs would make use of anyway.

      •  I didn't mean to impugn the diarist... (0+ / 0-)

        I was accessing the information on the phone and it wasn't easy to navigate to find out.

        And I am not suggesting gloss over problems.

        But what I am exceedingly frustrated about getting lost in the weeds is that the biggest problem with ACA was created by the Republicans who didn't extend Medicaid.

        And also: some efficiency needs to be put into a system that for many years worked out a way to take advantage of our bloated healthcare expenditures.  We were paying too much and getting too little in the way of outcomes.  Some hospitals were part of this.

        Impressionism is not helpful. Data is.  

    •  Why, goingallout, you are (0+ / 0-)

      attempting to demand clarity from a smashing example of conspiracy theory; health care style, that I've seen.

      We have decided that all the ills of our truly poor health care is because of insurers and no amount of factual information will dissuade them.

      Facts don't matter.

      Gut feelings and prior reinforcement will do to erect the superstructure of vitriol over DKos's favorite punching bag.

      What's not to love?

      I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

      by samddobermann on Sat Mar 01, 2014 at 06:20:58 PM PST

      [ Parent ]

      •  Insurers have been a massive part of the problem.. (0+ / 0-)

        They were incentivized in the old system to provide as little care as possible, to take money for no service, to bloat their management ranks.

        Do not take my post as denying any of this.

        What surprised me about ACA is that it handled this.  I am a single payer/public option supporter.

        It's just that for prices to be reasonable, there will be adjustments throughout the system, not just among insurers.

  •  The Swiss system is based on highly regulated (1+ / 0-)
    Recommended by:

    insurance companies which cannot make a profit on the basic care required for everyone in the country. If people are too poor to pay the premium, the government pays it. Strict regulation appears to be the key.

    The spirit of liberty is the spirit which is not too sure that it is right. -- Judge Learned Hand, May 21, 1944

    by ybruti on Sat Mar 01, 2014 at 09:13:55 AM PST

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