Providing health care for all shouldn't make insurers rich
By Milton Fisk and Kay Mueller
Herald-Times
Guest column
April 24, 2008
Government subsidies and outsourcing may be good for business without always being good for the public. Medicare outsources the administration of its prescription drug program, Medicare D, to private insurers. Medicare Advantage — Medicare C — subsidizes managed care insurance plans for seniors choosing them. Several current presidential aspirants — Clinton and Obama — would subsidize the purchase of insurance for the low-income uninsured. Each of these plans offers private insurers protection against a less wasteful plan, one that does without private insurers.
Involving the insurers in the Medicare drug and Advantage plans is a needless drain of Medicare funds.
The drug companies charge much more for the drugs used under Medicare D than they do for the same drugs bought by Medicaid. The law forbids Medicare to negotiate prices of Medicare D drugs with the pharmaceuticals. Medicaid bargains a 30 percent discount on drugs while the insurers running Medicare D bargain only a 5 to 10 percent discount. Medicare C’s Advantage Plan turns over managed care to private insurers, paying them 10 to 12 percent more than Medicare pays for seniors in its regular program.
Suppose one of those presidential aspirants wins. What would the subsidies they want cost? They want subsidies to help at least the poorest two-thirds of the 47 million uninsured buy insurance.
The insurers would be in for a windfall injection — from the government and low-income individuals — of about $150 billion each year. Any industry would love this. But would it serve the public interest?
The answer comes from looking at how to get quality health care to the uninsured for much less. The private insurers operate with enormous overhead. Profit is an essential part of it, since without it, investors turn away.
Then there is marketing, lobbying, paperwork, computer systems, colossal salaries for upper level managers and the expense of constantly merging and reorganizing. In sum, overhead accounts for roughly 25 percent of premium income, while overhead for Medicare is five times less!
The presidential aspirants who promote this kind of insurer protection plan recognize the waste involved. So what is their response? They would make subsidies contingent on reducing overhead. Sen.Clinton’s plan says premiums are not to be dedicated to “excessive profits and marketing.” This might reduce overhead from 25 percent down to 15 or 20 percent of premium income — still three or four times more than Medicare’s overhead. How can anyone stand before the public and say they want to waste billions of taxpayers’ dollars just to protect the insurers?
It is not right to use the uninsured as an excuse for making the insurers richer. We don’t need the insurers to provide the uninsured with health care.
Those proposing insurance protection plans spread the view that we shouldn’t help the uninsured unless the corporations make a buck out of it. Whatever happened to the public interest?
This guest column was written by Milton Fisk and Kay Mueller, who are members of the research committee of Hoosiers for a Commonsense Health Plan. Fisk is also an author of a book on health care reform.