The Weekly Walk of Shame: Health-Care Reform Redux

This Motley Fool series examines things that just aren't right in the world of finance and investing. Here's what's got us riled up this week. If something's bugging you, too -- and we suspect it is -- go ahead and unload in the comments section below.

Today's subject: The full health-care reform bill doesn't kick in until 2014, but some parts start at different points over the next four years. Starting last week -- six months after the law became effective -- new insurance plans weren't allowed to deny health insurance for children under the age of 19 if they have preexisting conditions.

The change led WellPoint (NYSE: WLP  ) , UnitedHealth Group (NYSE: UNH  ) , Aetna (NYSE: AET  ) , Cigna (NYSE: CI  ) , and Humana (NYSE: HUM  ) to announce that they would no longer offer new kids-only plans because of the added risk.

No longer issuing new policies upset Health and Human Services Secretary Kathleen Sebelius, who wrote a letter to the industry last week expressing her concern, and accusing the insurers of acting in bad faith.

Why you should be indignant: I'm no lover of health insurers -- my family has been turned down for insurance because of a preexisting condition -- but what did Sebelius expect to happen? You can't expect health insurers to act against their best interests.

Insurance is simply a risk-sharing system. Insurers just add up the estimated medical costs for all the people in the risk pool, add a little to cover their costs and profits, and divide by the total number of people in the pool.

When you allow people with preexisting conditions into the pool, the estimated medical costs go up, requiring the policy premiums to go up. That, in turn, causes those least likely to rack up medical expenses to drop coverage, because the insurance isn't worth the higher cost, which shifts the price even higher.

It gets worse, because the practice allows people to wait to buy health insurance for their children until they're actually sick. People can take from the system without ever paying into it. That's not how insurance is supposed to work. Insurers aren't charities; they're publicly traded companies and shouldn't be chastised for making sound business decisions that protect their shareholders.

The sum of the parts might be worth it, but there are a few aspects of the health-reform bill that don't seem to have been well-thought-out. Next year, insurers will be required to spend at least 80% -- and in some cases 85% -- of their premium revenue on medical costs.

That sounds like a good idea to avoid wasteful spending and greedy insurance companies pocketing profits -- even if it's redundant, given that the free market also does a pretty good job at inspiring competition, which drives down both of those.

But the problem is that one size usually doesn't fit all. McDonald's (NYSE: MCD  ) has high turnover amongst its hourly workers, which drives up the administrative costs of its health plan. Those costs are already a big factor because of the maximum benefits offered by the plan; the insurance is considered a "mini-med" plan, which is fairly low-cost but caps the annual maximum benefits.

Without some kind of waiver, the company might have to drop its coverage for its burger flippers. Alternatively, it could move the insurance in-house, like Wal-Mart (NYSE: WMT  ) has done -- collecting the premiums and paying out the claims itself -- but then McDonald's would be assuming all the risk.

What now?
There's not much to do but wait. When the full bill goes into effect in 2014, many of these problems will go away.

At that point, everyone will be required to be covered by health insurance. Payments into the pool by the relatively healthy will offset the higher costs of those with preexisting conditions. The problem only arises when you have one without the other.

For McDonald's and other companies that offer mini-med plans, 2014 marks a time when it'll have to offer a full benefits package for workers or face fines. Since these mini-med plans likely don't qualify, the high-administrative-cost argument becomes fairly moot.

Until then, investors will just have to hope the government stops complaining about companies acting in their best interests.

Agree? Think evil insurance companies need to suffer anyway? Let us hear it in the comments box below.

UnitedHealth Group, WellPoint, and Wal-Mart are Motley Fool Inside Value recommendations. Motley Fool Options has recommended a diagonal call position on UnitedHealth Group, which is also a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool owns shares of UnitedHealth Group and Wal-Mart and has a disclosure policy.


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Comments from our Foolish Readers

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  • Report this Comment On October 01, 2010, at 3:56 PM, TRILLIBRO wrote:

    The Healthcare bill is not about insuring the unisured, its about destroying the health care insurance industry. This article clearly shows that it is designed to put insurance companies out of business, and force a Govt. plan. The Insurance companies are designed around a business model that pays 65% in medical costs. When they are forced to pay 80%-85% in medical costs they will make massive employee cuts. I will never invest in companies that are basically being run by Politicians, their guaranteed to fail. I've learned more about investing in the past 16 months since I joined The Fools than my previous 24 years. One of the things David stresses during his research of a potential stock is management. Face it, Govt = horrible mgt..

  • Report this Comment On October 01, 2010, at 5:23 PM, TMFBiologyFool wrote:

    TRILLIBRO,

    The medical loss ratio (MLR) (Medical costs paid/Revenue from policies) for most insurers is north of 80%. Your 65% might include other revenue/income, but that's not factored into the requirement.

    -Brian

  • Report this Comment On October 01, 2010, at 5:26 PM, SwiperFox wrote:

    The perfect argument for the Public Option.

  • Report this Comment On October 01, 2010, at 5:50 PM, BonnieABaker wrote:

    And the CEO is paid what?

  • Report this Comment On October 01, 2010, at 5:53 PM, KeitaiOtaku wrote:

    I have no sympathy for anyone making money off of the misery of others. We pride ourselves on having a great healthcare system in this country? BS. It is a great healthcare system for the wealthy only, and it's garbage for the rest of us. I have no sympathy for the complaints of this article: all healthcare insurance companies should be non-profit.

  • Report this Comment On October 01, 2010, at 6:44 PM, nin4086 wrote:

    @Brian

    You hit the nail on the head. Re: McDonald's, I am sure they will figure a way out after they are done venting.

    @TRILLIBRO/SwiperFox

    Sometimes free markets don't work for the benefit of the the people. Remember, pollution->cancer, mortgage market->recessions? The answer is not for the government to take over the market but to step in and surgically regulate the part that will fix the problem. Mandating the payout to 85% will provide insurers with an incentive to cut down their costs. Since they are already near 80%, this should be easy.

    However, a major problem in the government plan is that if fails to address the root cause of the healthcare crisis: cost of healthcare. Doctors, nurses, pharma companies, hospitals make too much money. Because they can. We need to regulate this market (not the insurance market because if they are at >80%, we can expect the 85% rule to not change anything significantly). The government pumps a lot of money into energy efficiency rebates, home ownership incentives etc. Why not do the same for healthcare? How about scholarships for training more healthcare workers, rebates to hospitals for reducing admin/overhead costs, grants to universities to make royalty free drugs?

  • Report this Comment On October 01, 2010, at 7:00 PM, nopcmerde wrote:

    So this little problem gets solved in 2014 when a massively bigger problem takes its place: forcing people to buy insurance whether they want to or not...or getting fined if they don't. Effectively, freedom becomes a crime.

    Obscene, just obscene. I hope the Supreme Court throws that obscenity out on the dust heap of failed leftist assaults on freedom, where it belongs.

  • Report this Comment On October 01, 2010, at 7:35 PM, Observero0 wrote:

    The expensive health care & expensive health insurance situation will continue until folks have to pay for their health maintenance out of their own pocket instead of using the health insurers as cost buffers so we don't know the cost of service until after the service is provided. Health maintenance costs should be borne by each individual & a tax credit up to $5K (indexed to inflation & including health insurance premiums & excluding cosmetic medicine) should be allowed. If we used our car/home insurance like we do health insurance, we wouldn't be able to afford car/home insurance either (to say nothing of the car/home).

    The "health care" bill did nothing but enslave folks to the health insurance industry. What company wouldn't love mandated customers that it can charge what the company wants for its ponzi scheme products? BTW: The bill did nothing to reduce reduce health care costs (e.g., increase the number of doctors &/or primary care clinics); nothing to assure access to health care; & nothing to improve health care.

    The health insurance industry merely passes the increasing health care costs on to the patients. I'd certainly like a detailed, logical explanation on why it's ok for a hospital to bill my health insurance $3200 for a brain MRI (with/without contrast) when the online website says the cost should be $792 (http://www.healthcarebluebook.com/page_Results.aspx?id=136&a.... And, I'd like that explanation to be other than, "that's what the state allows us to charge." Anyone feel like this bill is collusion among gov't/health insurance/health care?

  • Report this Comment On October 01, 2010, at 8:26 PM, pkluck wrote:

    To keitai, we do have a great health care system in the US, probably the best in the world. Does it have problems that need to be addressed, you betcha, but this boondoggle of a mess obama give is going to make it worse. Part of the problem is union members, teachers and such have free health care, no deductibles no co-pays. When anything is free it gets used... a lot, which drives costs up. Health insurance should be like home owners or car insurance, small medical bills are paid for by the individual and major catastrophic expenses paid for by health insurer's. People who have preexisting issues or can't get insurance should be covered under medicaid, not a perfect situation but much better than the crap we got with obama care. This would never fly though because politicians rely on union votes to get elected and no union will stand for such insurance.

  • Report this Comment On October 01, 2010, at 8:57 PM, NCRICK wrote:

    Obama stated on numerous occasions that he wanted a single payer plan (public option). He further stated he would probably be willing to take "baby steps" to get it. Hence Obamacare. The gov't will create mandates, rules, regulation and pressures to make it impossible for private, competitive, insurers to stay in business. The gov't will "be forced to create a public option" to fill the void that they created. When has the government ever done ANYTHING better than private enterprise. It will take a few years but if they succeed--and I hope they don't--it will be take a number and get the next Dr or ? to look at you. The emergency rooms of today will look like paradise by 2020.

  • Report this Comment On October 01, 2010, at 9:20 PM, lctycoon wrote:

    NCRICK, that would result in quite literally a situation where only the rich get care... period. They'll leave the country to get it - nobody else will be able to afford that.

    Something tells me, though, that this may have been what Congress and Obama had in mind.

  • Report this Comment On October 01, 2010, at 10:03 PM, lowmaple wrote:

    pkluck; rose tinted glasses. Greatest for those that can afford it. And someone else mentioned nurses wages. There were bidding wars over nurses staring some years ago because there are not enough in the world. Supply and demand,the basis of commerce.

  • Report this Comment On October 01, 2010, at 11:53 PM, matthunt97 wrote:

    Teachers get free health insurance? no co-pay? ODD!! but my wife has had a reduction in health care coverage and she is a teacher.....plus I pay $500 to be on her plan...I wish it was free...HAHAHA!!

    If we collectively take a serious look at the current and compare it to the future and 2014......we must honestly conclude that it will be a wash.....trading one set of problems for another set.....the consumer of health care will be surely screwed either way....

  • Report this Comment On October 02, 2010, at 12:42 AM, jomueller1 wrote:

    How come people can be so brainwashed that they think the US has the "best health care system in the world"? I would not know which country has the best but the US ranks very low in my opinion. I see several problems: The idea that companies should provide health care is wrong. Probably the idea came up when health care was cheap and some companies wanted to do something good for their workers. At one time some companies provided housing. Sounds good but do we want schooling and transportation from employers? Food and energy? C.mon, nobody would want that.

    Next, pols in DC are dumb. They make all these laws and any dummy would see the outcome. Yes, insurers work for profit and pick raisins if the law lets them. To make a good system we have to accept that any health problem has to be paid for. So the question is: "How do we organise it efficiently and effectively?" What we need more is cooperation and also more not-for-profit insurers. The latter saves at least 10%. Then we need to get the litigation down to a sensible level. I do not see why the children of someone who died from malpractice should become millionaires, especially not if they are already grown up and were not financially dependent.

    I agree that people who engage in risky activities should pay a premium. What is considered risky can be negotiated between insurers and representatives of the insured. That way nobody feels betrayed and the insurers can cover everything, as it should be.

    In the current system there are to many uninsured and the insured foot the bill indirectly because the health care provider charges the insured more to cover the "donation" for the uninsured. I am 68 but I am not eligible for medicare as I did not work long enough in the US. I am therefor uninsured. I would gladly join some insurance plan if it was available but it is not. An agent came up with only one solution: Lloyds of London. If this is the best health care system in the world I do not want to see the second best.

  • Report this Comment On October 02, 2010, at 12:58 AM, Johnwzee wrote:

    Can the proponents of this attempt to take total control of the Health system of this country by the government actually believe that the government plan will provide better care and cut costs? Havent they seen how government control of any area makes for lousy service, more graft and higher costs?Think of our Energy Department, Department of Education and Control of Housing......

  • Report this Comment On October 02, 2010, at 8:27 AM, skypilot2005 wrote:

    A corporation’s primary function is to make money and create wealth for its’ shareholders. Not provide health care, free housing, lifetime employment, etc. It’s sad I have to remind some readers of the Motley Fool this.

    If insurance companies are eliminating products because they feel they may be unprofitable, fine. That is their responsibility to the owners of the companies. The stockholders will hold them responsible.

    We do not want government interfering with corporate decisions made in good faith in the interests of their shareholders.

  • Report this Comment On October 02, 2010, at 10:03 AM, woodland2010 wrote:

    There are two huge errors in Obamacare policy. The mandates on the people and small business. Small business must buy for employees now or pay a fine. People must buy or pay a fine. This is government of the people for the people? I own a few small businesses and have talked with both other business owners and employees about this issue. I don't know anyone who is concerned about the cost of medical care for employees as it is much cheaper to just pay a $2k fine than a year of insurance- not to mention this can be reduced by only hiring part time people. We simply see it as another government tax. Employee fines in the new laws for not getting coverage can only be withheld from any federal tax refund. Most of my employees have already joked that they will simply increase their withholding allowances so they will not get a refund to have the government take it away from them- their words not mine. What the public and politicians don't get is that business will always find a way to survive. If needed it will be either more layoffs or an increase in prices to the consumer as costs of doing business inevitably do get passed along. Or both. Add higher prices to the huge debt this administration has racked up over the past 2 years (not to mention the increased taxes that have to happen to pay for this) and from any basic Econ 101 class that is a recipe for high inflation- no matter how the government and fed spins deflation. Please! I am looking forward to my fixed rate mortgage being a third of the going rate and the ability to buy fixed income products with an 18% return. Anyone remember the early 80's after Carter? Many of my retired relatives and clients are living comfortably on the interest of 30 yr T-bills they purchased back then. You think we have a housing problem now? What happens when we have double digit mortgage rates- most recently in the early 90's. Warren Buffet is a very smart man for investing in builders of mobile homes- this will be the future for many of today's people that don't save and will now have to pay more to the government. This Obamacare plan needs to be repealed before it becomes one more factor that destroys our economy- unless that is the intent of the current congress and administration. Hope is not a strategy, it is a paralysis. Hope has shifted out country on a path to socialism in two quick years. Scary.

  • Report this Comment On October 02, 2010, at 12:13 PM, jrj90620 wrote:

    The reason doctors,hospitals and the whole healthcare industry charge so much is because of excess demand caused by consumers not feeling the cost due to 3rd party payers.What we need is LESS INSURANCE.I believe insurance should only cover major health costs.Let everyone pay the first $5-10K of medical expenses per year.Have catastrophic coverage for major medical problems.This would cause people to shop price and reduce demand,which would lower prices charged.

  • Report this Comment On October 02, 2010, at 12:14 PM, snapperreef wrote:

    KeitalO,

    Then I guess you also have no sympathy for doctors or nurses. Have you known anyone who has gone to an ER and been refused care? The Shrine clinic for children makes no distinction between rich or poor. Even prisoners get the same std of care as the rest of us.

    The only non-profit businesses are operated by govt. Is this what you want ? Do you think your healthcare should be free too?

    Maybe we should throw in a free new car periodically in case walking causes misery.

    Why don't you start working hard and saving and become wealthy so you can get some of that great healthcare of which you speak?

  • Report this Comment On October 02, 2010, at 1:08 PM, dc46and2 wrote:

    haha, listen to the looters squeal!

  • Report this Comment On October 02, 2010, at 2:50 PM, Robin1938 wrote:

    Just talking about insurance companies dropping kids only policies: They are few in number, mostly poor, and present a really small bump in any insurance company's finances. While the theory of cherry picking and risk aversion is correct, in this case it seems like a "message" rather than a real business issue.

    As to the mandate, you can't cover high risk folks without a mandate that all are covered for the reasons given on acverse risk selection.

    As to those who advocate for choice in being covered, until they support emergency rooms, hospitals, and physicians refusing care to those who can't pay upfront or have insuracne, they should rethink their position. Otherwise, we the nsured are paying for their irresponsibility when they get sick.

    This is complicated issue and simplistic or partial answers don't "get 'r done".

    85% Medical loss ratio is both doable and desirable without the sky falling. If they cover sick kids, voila - it's done.

  • Report this Comment On October 02, 2010, at 3:57 PM, dba3 wrote:

    To bad you forgot a little thing; Freedom. If you throw out the constitution then you can force people to buy something, until then it is unconstitutional. And auto insurance is not an example since you do not have to drive. Also all this talk and not one word about tort reform. That is the simplest and most effective way to drive down costs and stop defensive medicine.

  • Report this Comment On October 02, 2010, at 4:56 PM, edallan wrote:

    It IS true that "the U.S. has the best healthcare in the world" --- if you are like Dick Cheney. For other people, maybe "not so much." And for a lot of people, such as lower-income staff even at a number of health care facilities (let alone others with low incomes), "You gotta be joking!"

    I have not heard that Scandinavians or Japanese are particularly suffering, nor Israelis. I attach below a link to the CIA chart of comparative life expectancies:

    https://www.cia.gov/library/publications/the-world-factbook/...

    Obviously, there are a number of confounding variables, such as the enthusiasm of the Republican party for making it a lot easier to commit murders, but the U.S. ranks 49th, noticeably after Bosnia and WAY down from Jordan. (That doesn't mean, of course, that wealthy people from other countries don't come to the U.S. for treatments that are not available in their own countries -- or that realistically are not available to average Americans, either.)

    Health care in the U.S. is expensive for a number of reasons, one of which is notoriously the friction caused by absurd administrative costs.

    It's important to keep in mind that the primary goal of for-profit insurance companies is to maximize profits by whatever means are considered legal, regardless of whether they are ethical or moral.

  • Report this Comment On October 02, 2010, at 5:04 PM, wrkdiver wrote:

    I believe Kaiser was the first company to offer health, offering Kaiser Permanente to their employees as a benefit, and in my opinion they are probably still the best.They offer free inoculations for flu, whooping cough, and anything else they think you might need. When my late wife was diagnosed with cervical cancer They had four specialist examine her to determine a course of treatment, then during her radiation treatments they waived the co-pay and the parking fee. Later, during chemotherapy the doctor would look at her, say, "I think you need a unit of blood, and we would wait while they cross-matched. Every time! And the cost to the City of Los Angeles was approximately $380/month with a co-pay that started at zero and only went up to $30 per visit over 20 years. Maybe the government should have just bought Kaiser!

    Skypilot, you are, of course, correct, the job of business is to make money for the shareholders(owners). However intelligent, enlightened(?), and clever management knows that happy, healthy employees will work harder and produce more for the company.

    High cost of medicine caused by greedy doctors?

    Ever hear of that fella Edwards that ran for President? How did he get rich? Ask any doctor what they have to pay for malpractice insurance! Put a muzzle on the ambulance chasers, limit giant payoffs for minor problems(TORT REFORM), and let insurers sell across state lines(like auto insurers), and watch what happens.

  • Report this Comment On October 02, 2010, at 5:16 PM, wrkdiver wrote:

    Edallan, "The enthusiasm of the Republican Party to make it easier to commit murders"? Well, that crack blew all your credibility!

    Why don.t you check

    A. Where the U.S ranks in number of murders per capita

    B. How many of those murders were committed by

    people who under current law did not have the weapon

    legally

    C, The murder rate in countries like Mexico and Brasil

    which have much stricter laws on gun ownership.

    By the way, i checked my local NRA chapter and, yup,

    NO DEMOCRATS(That's a joke, son)

  • Report this Comment On October 02, 2010, at 5:54 PM, edallan wrote:

    Dear Wrkdriver,

    Statistics on world homicide rates.

    http://www.data360.org/graph_group.aspx?Graph_Group_Id=441

    The government of Mexico is upset because of the great number of guns purchased in the U.S. and smuggled into Mexico. Now, of course, presumably it's Mexicans who are doing the buying and using against each other. But it's extremely lax gun laws in some states that make it very easy to stock up.

    Census Bureau statistics on homicides by states

    http://www.census.gov/compendia/statab/2010/tables/10s0297.p...

    There's a pretty fair match-up, I think, between states with relaxed gun laws and murder rates.

    Table of life expectancies by state (in manageable form):

    http://www.businessweek.com/bwdaily/dnflash/content/sep2006/...

    Editorial from yesterday's Washington Post on "Virginia is for smugglers."

    http://www.washingtonpost.com/wp-dyn/content/article/2010/09...

    You know what states are most dominated by Republicans. Please feel free to draw your own conclusions. As you saw, I drew mine.

  • Report this Comment On October 03, 2010, at 10:15 AM, skypilot2005 wrote:

    On October 02, 2010, at 5:04 PM, wrkdiver wrote:

    “Skypilot, you are, of course, correct, the job of business is to make money for the shareholders(owners). However intelligent, enlightened(?), and clever management knows that happy, healthy employees will work harder and produce more for the company.”

    wrkdiver, I agree with your statement: “However intelligent, enlightened(?), and clever management knows that happy, healthy employees will work harder and produce more for the company.”

    I was just stating a fact. A fact I fear many people lose site of. The majority of Americans are not economically literate. Most do not take the time to learn about the stock market, individual stocks, economic theory, etc. And, that’s OK.

    We are free to spend our free time as we see fit. But, if you ask the average American about a Balance Sheet, Stock Holder’s Equity, etc. you will find they are not familiar with them. They choose to spend their free time doing something else. Again, that’s OK.

    Offering great benefits and maximizing stockholder return are not mutually exclusive. But, I feel that decision should be left up to individual companies and the people charged with maximizing stockholder value not, the government. The government should not decide which benefits should be mandatory.

    If a companys’ benefits are lacking, they will lose their talent to other more “enlightened” companies.

    Let our economic (Capitalist) system work. Our levels of standard of living over the years proves that it does work.. Most reports I’ve seen of countries that supposedly, have higher standards of living than the U. S,. fail to mention we are paying for their Defense. Japan and Europe are a good example. What would their standard of living be if, they were not under our Defense “Umbrella” and had to pay to defend themselves?

    What qualifies a politician to know better than a CEO the levels of benefits their company should offer? Honestly, answer that question.

    For example, I’ll go with the decision of a person who has years of business experience and an M. B. A. verses the average politician who has a Law or Political Science Degree and no business experience.

  • Report this Comment On October 03, 2010, at 10:59 AM, rfaramir wrote:

    The answer is removing all government mandates and returning to the free market in health care. The free market works. We currently do NOT have a free market.

    Mandated licensing limits the number of doctors in the system, raising their salaries and our costs for no benefit. If having a license were a perceived benefit (most of us would like to see a *licensed* physician), they would get one, but not everyone has that luxury, so it hurts the poor most.

    Mandated coverage (of anything, but especially of sex-change operations, birth control, ED remedies, pre-existing coverage) is fascist welfare, nothing less. Insurance coverage has to be a willing exchange between the insured and the insurer, benefitting both, or it shouldn't be done.

    Get the government out of healthcare and see it get more profitable, more cheap, more available, and better. Repeal this mess, and replace with liberty.

  • Report this Comment On October 03, 2010, at 11:45 PM, galivantstomt wrote:

    I think that the "law" requiring insurance companies to take all comers is entirely fair. Getting lost in their alligator tears is the simple fact that they will receive nearly 30,000,000 new customers will greatly reduce the overall "risk" they are taking. Furthermore, the excessive rates they charge those who have to purchase their insurance individually have been assessed inordinately rates for years (small businesses, individual entrepreneurs, temps just to name a few. Amongst the people the insurance companies been cherry picking getting the healthy and/or charging rates that are impossible for them to pay thereby forcing to go bare.

    For my money, the health insurance as we know should have been replaced by a system that provided health care to all, ala Canada, France, Sweden, etc.

    The stunts they are pulling now are just a cheap way of trying to scuttle a plan taht somehow left then in business in the first place. Five will get you ten the bellyaching will stop one the entire population become insured. If the weak sisters want to drop them do it. Its a dog eat dog world and they may as well be devoured now rather than later.

    Health care reform and financial reform are, if they are the only things accomplished by this congress represent changes that have been long overdue.

  • Report this Comment On October 04, 2010, at 11:15 AM, puckjohnl wrote:

    The devil is always in the details for any grand scheme. The isue is not mandating an 80-85% MLR, it is, more importantly, what is ALLOWED to be included in these calculations. Some of the costs currently considered for exclusion are clearly valid and legitimate MEDICAL costs, but the 50 members of NAIC whose recommendations will go a long way toward deciding this issue are gaming the system like no tomorrow. Check on the situation in MAINE where there are very few legitimate insurance providers. The state is screaming for an exemption from this MLR requirement because they know it will result in less competition and fewer providers. Wellpoint's CFO has already stated that they are building cash reserves to buy up all the lesser providers whose business models will be unable to absorb MLR requirements. So much for increased competition! Obamacare is so badly thought out that even the general law of unintended consequences will be multiplied to a factor beyond belief when the time comes. I'm thrilled I own stock in Wellpoint. Even with all the uncertainty, I'll make out like a bandit. Just ask your own CAPS people, Brian.

  • Report this Comment On October 04, 2010, at 12:17 PM, Brent2223 wrote:

    I have never been able to understand how for profit corporations are so ingrained in the US health care system. Health care is not optional; we're all going to need it someday. How, as a society, can we expect for profit corporations to act altruistically when their sole purpose is to increase shareholder wealth? Running social programs with for profit corporations is never going to produce the desired result as they are inherently at odds with each other. A capitalist society will never do a good job helping those less fortunate, cause the premise is work hard and you'll be rich so darned if I'm going to use some of my wealth to help the lazy unsuccessful people in society (cause if you're not successful in a capitalist society the only explanation is that you're lazy).

  • Report this Comment On October 04, 2010, at 5:05 PM, SimpleEcon wrote:

    The Constitution was signed in 1787. Apparently it has taken exactly 223 years for American Politician to de-evolve, effectively losing their ability to read it. “The Senators and Representatives before mentioned, and the Members of the several State Legislatures, and all executive and judicial Officers, both of the United States and of the several States, shall be bound by Oath or Affirmation, to support this Constitution” (Article 6 of the Constitution). Only in instances where the constitution doesn’t specifically speak to a law may the state or federal government act in its own accord. In states like Arizona and Nebraska they decided it was their "right" to make immigration laws where they had none. Now the collective wit of Washington D.C. is deciding for us all that we will buy the healthcare product. Socially run government programs are the brain child of the rule-makers above you. Specifically those who believe that you are helpless to make important decisions like whether or not to have health insurance by yourself. The healthy, the wealthy, the poor and the needy all need to take some responsibility for themselves and get educated. Our government is walking all over us and our collective response is to allow it. I've heard comments from colleagues and friends alike as blatantly absurd as the, "Well sure this new health reform isn't perfect, but that’s ok because it is a step in the right direction." Pull your heads out of the sand and figure it out. It is absolutely a step in the wrong direction.

    Do you think that forcing small and mid market insurance companies out of the system will improve competitiveness and costs for consumers? Look up the term MONOPOLY, not the board game, and see what you learn about how a lack of competitiveness in an industry drives prices. The government wants to start at the bottom until they have ousted all players, so that they can have the same type of inefficiently run system that currently exists in so many other industries that could be privately run.

    Many commenters on this blog speak towards administrative cost in hospitals and health insurance companies being the problem. Maybe these amounts do need to shrink to make care more affordable for all. But health insurance companies operate at close to 80% MLR already. Can Washington claim that? What about the spending margins our government consistently operates on with the tax dollars we A) have to pay and B) don’t have any say in allocation on? Have you ever been to a state or federally funded party for a House of Representatives member? I have been and let me tell you after the ride in the helicopter and the champagne bubble bath I was almost too worn out for caviar, almost. Could you please pass the lobster Reginold, I think I’ll have another. These people spend money about as effectively as fake celebrities write books, sorry Paris Hilton.

    Why is everyone so surprised with ObamaCare. I'm not surprised at all. When you elect an unproven idealistic naive socialist leader for a capitalist society, not to mention potentially the most powerful person in the world, this is your result. Frankly, I am surprised that he hasn't tried to socialize more industries. Why not energy, schools, banks and the agriculture? Oh wait, too late.

    When any business, in any industry, feels increased costs they will pass at least a portion of those costs onto their consumers. If there is a drought in the Midwest and the farmers have a weaker than normal grain yield they will ultimately charge their buyers more money for the product they do have: growing their margins, to cover the cost of not having as much grain to sell. If KFC has to pay more money for the flour that goes into the breading on their chicken they will increase the price of selling that chicken. Ultimately this means you have to pay more money to stuff your face before you go home and convince yourself that all of your problems exist because someone else didn’t do enough for you or you got the raw end of some deal. Do you expect businesses in the health care industry to be any different? Or should they just take on all the costs bankrupting the welfare and livelihood of their employees and stakeholders because the collective left thinks that this health care problem should just go away.

    At some point Americans need to take a long hard look in the mirror and take RESPONSIBILITY for where their lives are. Medicare will cover those who are in unfortunate medical circumstances that truly aren’t their fault. For the rest of us, put down that chili-cheese dog and go exercise. The majority of us are fat and uneducated about how truly unhealthy we are. Check out the heart disease statistics in this country and try to keep your lunch down at the same time; they will jolt you out of your comfortable blame deflecting life. If you get healthy there won’t need to be as much money spent towards you health care (private insurance, public insurance, personal self coverage, or other) what a revelation!

  • Report this Comment On October 05, 2010, at 1:25 AM, mushrumps wrote:

    If one's health life were not sliced and diced into 5 or more stages, if it would be in every family's interest to maintain health insurance from birth to death without having to be forced into one. Think about that!

  • Report this Comment On October 06, 2010, at 10:50 AM, JuliaMan wrote:

    To blame Obama for this mess is walking blind. The congress fought until the bill was like this and then passed it. The republicans wanted it to be a mess so they could say it's Obama's fault. They were instrumental in making this mess.

  • Report this Comment On October 06, 2010, at 5:06 PM, joshgrady wrote:

    The most glaring omission from the healthcare reform bill was allowing competition for healthcare plans across state lines. In its current form, the health care industry is far from a free market.

  • Report this Comment On October 07, 2010, at 2:12 PM, theHedgehog wrote:

    Any attempt at a national insurance law is doomed to failure without universal coverage. The insurance companies are in it for a profit, as they should be - as companies. Would it cost us any more, as a nation, to have a government implemented universal coverage plan? Probably not. Would it be unfair to the insurance companies? Maybe, maybe not. They would surely continue to have a role: as claims processors. Not the big bucks industry they have enjoyed until now, but surely even the far right wing can understand the maxim "Compete or die" - even when that competition is with the government.

  • Report this Comment On October 07, 2010, at 2:38 PM, fvalls wrote:

    The whole notion of "freedom" and "free enterprise" when it comes to healthcare is spurious at best. If we really followed that precept to its conclusion then if you fail to purchase or obtain health insurance you wouldn't be entitled to any benefits. As a society, would we leave accident victims by the side of the road if they had exercised their freedom and chosen to remain uninsured? I don't think so.

    Under our present system, the uninsured get taken care of when they are sick or injured and everyone else (taxpayers and other insured) pay for it. Mandating that everyone carry insurance may rankle those that want "freedom", but these same people are unwilling to live with the consequences (i.e. no insurance, no service). We can't have our cake and eat it too.

  • Report this Comment On October 08, 2010, at 10:53 AM, jokurs wrote:

    The current healthcare system is great- for the large corporations and the wealthy, maybe those on Medicare. For the middle and lower classes- it stinks. We need a national healthcare system , government run as in Canada, England and France. It is evil to have 50 million citizens without access! For those who haven't seen the movie "Sicko" do it now!

  • Report this Comment On October 08, 2010, at 8:53 PM, Kevin062 wrote:

    To Edallan,

    concerning your gun and crime statistics explain the District of Columbia which although not technically a state has by far and away both the highest murder rate and the strictest gun laws. An armed society has through history been a polite society and typically with a benevolent government. It is when only the abusive and criminal side of society is unilaterally armed that such people are free to act without conscience and or consequence. When seconds decide life or death the police are only minutes away, -can you wait? They can't be everywhere at all times and since it is already illegal for felons to own weapons do you truly believe that more laws would change anything?

  • Report this Comment On October 09, 2010, at 7:11 AM, ncalmd wrote:

    The current US system provides top notch care for those who manage to access the better institutions/physicians. However, it is otherwise a disaster. Neither party has come anywhere close to dealing with problem. If the nation wants to provide unlimited access to medical care for those over the age of 65, then the government has to impose price controls which it has done since 1983. Anyone interested in the health care debate should first understand how medicare determines what every service in medicine is worth, and how it structures its particpating, non-particpating, and "opt out" status for physicians who treat Medicare beneficiaries. You need to understand how the government has tried to slice and dice the components of your visit with your physician so that they can quantitify the "work product" based on how many components of certain parts of the medical encounter are embodied in each section of the report a physician makes on each encounter. As you get further into this study you will realize that medicare won't reimburse your physician for spending anything more than a couple minutes reviewing your medical history. Nor will they reimburse a physician for anything more than a couple minutes of explaining what is occurring and or other pursuits/options. Given that health insurers enjoy significant anti-trust exemptions and follow medicare's lead, its not hard to understand why this system is completely dysfunctional.

    Basic decisions need to be made prior to determining how to restructure. Do we want emergency medical care available to everyone regardless of their ability to pay. Do we want medical providers to be able to price their own services or do want to require all providers of medical services to receive the same level of reimbursement for the same service. Do we want to continue to have legal liabiity at substantially higher levels than other developed countries, who are managing to provide very comparable medical care at significantly lower percentages of their GDP.

    These are just a small number of the decisions that are involved in any restructuring of the system. As I think its highly unlikely that our representatives would actually take the time to understand how their decisions created this mess, any reform measures passed by congress are almost certain to fail.

    It may not be the best solution, but until that best solution comes along, I would strongly recommend adopting the Dutch system which provides universal private healthcare coverage. It's worth spending some time reviewing it.

  • Report this Comment On October 10, 2010, at 9:49 PM, priusqueen wrote:

    I have spent >20% of my net worth (just over $1 million when I retired at 55) on health care costs the last 6 years. I began buying stocks through dividend reinvestment plans when I was less than a teen, so I thought I would be able to retire despite working for the betterment of society, teaching, never making more than $50,000 a year.

    I was wrong. Though I had been healthy until my fifties, an inherited genetic mutation interfered. Most durable medical equipment to control problems caused by diseases and medications is not covered by health "insurance," and $10 and $25 co-pays add up quickly when one visits a physician and needs blood or other lab work often, and when one takes medication for months at a time. Without health "insurance," people in the US die. With it, in this country, most go broke. Those of us privileged enough to have learned how to invest and/ or who had excellent, thrifty, investing role models just end up with a whole lot less than we'd planned on and hope for the best.

    I have spent many months in three countries with public health insurance and observed firsthand the excellent quality of care available and received. I only wish my country were wise and caring enough to institute public health care for all and eliminate the need for health "insurance" companies that require physicians' and other care providers' office to employ numerous people to process, code, and otherwise waste time and effort on behalf of helping patients receive necessary care from companies reluctant to provide such.

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