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  A Banner Week for Big Insurance, Part I: Mandating Profits
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COMMENTARY:

A Banner Week for Big Insurance, Part I: Mandating Profits

by James Ridgeway
First published in his blog Unsilent Generation yesterday, 17 September 2009

This is turning out to be a very good week for the private health insurance companies (or as I like to think of them, the bloodsucking middle-men whose only role in the health care system is to squeeze some profits out of human illness and suffering). Yesterday, AP/Forbes reported on the uptick in insurer stocks, which jumped from 3 to 6 percent in a single day:

Shares of health insurers jumped Wednesday after an key Democrat released a much anticipated Senate version of a health care reform bill that excluded a government-run insurance option.

The so-called public option had been a contentious issue with health insurers, with the industry viewing it as unfair competition. Instead, Sen. Max Baucus released a proposed bill that would require every American to obtain health insurance, which would be a financial boon for the health insurance industry.

It doesn’t take Einstein to figure out why this is great for the insurance industry: If there’s no public alternative to compete with private insurance companies, guess where all those people will have to go to buy their government-mandated insurance? As for the touted co-ops and exchanges, all they are ultimately likely to offer is better access to private insurance. And people of limited means will get government subsidies, mostly in the form of tax breaks, to buy private insurance–which means a transfer of funds from the taxpayers to private insurers. We might as well be writing our checks directly to United Healthcare, Wellpoint, and Humana, instead of the the IRS.

As Mark Karlin pointed out on Buzzflash yesterday, taxpayer subsidies are the only way to solve the ”issue of how for-profit insurance can co-exist with the goal of reducing medical costs.” Karlin continues:

This isn’t a ‘free market’ solution; it’s socialized support of “profits”–basically a shakedown. It’s the only way– under the myth of Big Insurance providing enhanced “value,” which it doesn’t–that for-profit insurance companies can survive, because they are...unnecessary (essentially, a expensive redundancy) except for the explicit purpose of enriching a select few: the executives and shareholders.

We saw this happen under Medicare Part D, which was written by Big Pharma under the Bush Administration. Seniors got a reduction in prescription costs, but without the government being able to negotiate the costs of the prescriptions. It was a multi-billion dollar socialized medicine gift to Big Pharma.

Karlin is right to compare what’s going on now to the Medicare Part D scam, which I’ve written about often. For decades, the drug companies had opposed the idea of a Medicare prescription drug plan. But at a certain point, they realized that if the plan was constructed the right way, it stood to reap them huge rewards in the form of government-subsidized profits, without the onerous burden of too much government control. That’s how we ended up with the convoluted, overpriced, privatized system that is Medicare Part D, instead of the comparatively simple and efficient structure of original Medicare.

The insurance companies also cashed in on Medicare Part D, since the whole program is financed by the government but run through them. So when health care reform came up this time, they were prepared: From the start, they showed a willingness to support health care reform, as long as it was the right kind of health care reform–i.e. one that expanded, rather than threatened, their role in the system, and thus their profits. As Robert Pear wrote in the New York Times last week:

While the White House has struggled to define its position, insurance companies have never wavered. Starting two weeks after the 2008 election, they have said they would accept greater federal regulation of their market practices if Congress also required everyone to have health insurance.

These may have been tactical concessions, to abate public wrath, but they were well received in Congress. While making these offers, the industry conserved its resources for the bigger battle over a public option.

In other words, so what if the law says that private insurers have to accept some people with pre-existing conditions, or stop cutting them off when they get sick, as long as the law also provides them with a huge set of new, government-subsidized customers–and absolutely no competition. It could hardly have worked out better for the insurance industry if they’d written the plan themselves.


Born in 1936, James Ridgeway has been reporting on politics for more than 45 years. He is currently Senior Washington Correspondent for Mother Jones, and recently wrote a blog on the 2008 presidential election for the Guardian online. He previously served as Washington Correspondent for the Village Voice; wrote for Ramparts and The New Republic; and founded and edited two independent newsletters, Hard Times and The Elements.

Ridgeway is the author of 16 books, including The Five Unanswered Questions About 9/11, It’s All for Sale: The Control of Global Resources, and Blood in the Face: The Ku Klux Klan, Aryan Nations, Nazi Skinheads, and the Rise of a New White Culture. He co-directed a companion film to Blood in the Face and a second documentary film, Feed, and has co-produced web videos for GuardianFilms.

Additional information and samples of James Ridgeway’s work can be found on his web site, http://jamesridgeway.net.

This article is republished in the Baltimore Chronicle with permission of the author.



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This story was published on September 18, 2009.
 

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