Simple Health Insurance Reform

by Ben Hoffman

Instead of 2000 pages of handouts to the insurance companies, how about this:

1. Insurance companies cannot deny coverage to anyone due to preexisting conditions.
2. Insurance companies cannot cancel insurance due to illness or injury.
3. Insurance companies’ administration costs cannot exceed 10% of revenue.

There we go. That will bring down insurance costs and improve service. Forget about the requirement to buy insurance. That’s just a huge handout to insurance giants.

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45 Comments to “Simple Health Insurance Reform”

  1. Actually your ill-conceived “reforms” would raise insurance costs. And there’s the problem that the government doesn’t have the right to dictate a company’s administrative cost levels.

    • I noticed you didn’t give any rationale for your opinion. Could it be it’s just based on emotion and not on reason?

      • Nor did you substantiate your opinions. But…

        Forcing insurance companies, which operate at a 3-4% profit margin, to cover preexisting conditions will necessitate them raising rates to offset the losses that would cause.

        The same is true of preventing them from limiting coverage for illness or injury, though that is something that I rather think they should be prevented from doing despite the raise in rates.

        Face it, insurance is a numbers gain like Social Security and Medicare. It takes X number of healthy people’s premium to pay for each sick person’s coverage. X, in this case, varying widely based upon the illness or injury in question.

      • [Forcing insurance companies, which operate at a 3-4% profit margin, to cover preexisting conditions will necessitate them raising rates to offset the losses that would cause.]

        3-4% is huge when you consider the scale in which they operate. Covering everyone will indeed cut into their profits, but so what? They don’t produce anything of value, anyway. All they do is take your money and give it to health care providers after skimming off about 30% for administration.

        [The same is true of preventing them from limiting coverage for illness or injury, though that is something that I rather think they should be prevented from doing despite the raise in rates.]

        That should be a crime. Nobody should die or go bankrupt because the insurance company decided it wouldn’t cover their illness.

        The insurance industry is exempt from antitrust laws. There should be some stipulations for that exemption.

        [Face it, insurance is a numbers gain like Social Security and Medicare. It takes X number of healthy people’s premium to pay for each sick person’s coverage. X, in this case, varying widely based upon the illness or injury in question.]

        That’s true, and Medicare and SS both operate at about a 3% overhead. Insurance companies operate at about a 30% overhead — thus the huge cost and the huge salaries for their CEOs.

      • The same is true of preventing them from limiting coverage for illness or injury, though that is something that I rather think they should be prevented from doing despite the raise in rates.

        I agree. Me the consumer enter into a contractual agreement that I will pay you money and that you will cover costs if I become sick or hurt. This is the whole point of insurance.

        That’s true, and Medicare and SS both operate at about a 3% overhead. Insurance companies operate at about a 30% overhead

        The price per covered patient is even close. Private is VASTLY more efficient.

      • [The price per covered patient is even close. Private is VASTLY more efficient.]

        No, you just made that up. On average, 30% of our insurance premiums goes towards administration, which includes multi-million dollar salaries for the CEOs.

      • No, you just made that up.

        No, serious. I didn’t.

        On average, 30% of our insurance premiums goes towards administration, which includes multi-million dollar salaries for the CEOs.

        10% of Medicare payments go to fraud alone; $47 billion in 2009.

        So, United Health had revenues of $87 billion. Using your 30% number, which I think is about 12% too hhigh, that results in $26 billion in admin costs.

        Medicare has a budget of $448 billion and using 3%, which I think is about 7% too low, admin costs come in at $13.4 billion. Now add the $47 billion in fraud and who knows how much on medical spending for no discernible reason and you see that spending in Medicare is much much higher than in the private sector.

        15,660,000,000

      • [10% of Medicare payments go to fraud alone; $47 billion in 2009.]

        I read that number may be closer to $60 billion. The real question is, why isn’t there better oversight?

        The Democrats introduced a bill last year (Health Care Fraud Enforcement Act of 2009) but it never got out of committee.

  2. I just posted about this a bit on my site today. The top 10 reasons to vote for health care reform. I think the reasons you listed and that I discussed on my blog are good reason for voting for health care reform.

    I have also pointed out in the past that even if this type of reform doesn’t work perfectly in some countries, it is a start and we should do all we can to correct it and make it work. Just because some countries don’t have it working perfectly (none of us are perfect) doesn’t mean American and Americans can’t develop the worlds first class health system for all Americans. I believe we can as long as others will try. We spent a trillion on a war based on lies to send Americans to their death and to torture others, why not give health care for those in need, a try?

    • [We spent a trillion on a war based on lies to send Americans to their death and to torture others, why not give health care for those in need, a try?]

      Because too many people are either corporatists, in the pocket of corporations, or just simple-minded right-wing ideologues. Our country is at the end of its run. 50 years from now, this country is going to have very little resemblance to what our founding fathers envisioned.

  3. Mr. Hoffman,

    “Insurance companies cannot deny coverage to anyone due to preexisting conditions.
    2. Insurance companies cannot cancel insurance due to illness or injury.
    3. Insurance companies’ administration costs cannot exceed 10% of revenue”

    How does that bring down costs? How does this improve service?

    • Good questions, grasshoppa. The first two are obvious for including service. The third is what contains costs.

      Right now, the big insurance companies operate at about a 30% overhead — part of which goes towards the huge CEO salaries and bonuses. And there’s also the 3 or 4 percent profit.

      So if a procedure costs $1,000, the insurance company collects $1,300 in premiums. If overhead was limited to 10 percent, they would only collect $1,100 in premiums. That’s a pretty good sized savings which would reduce our insurance premiums.

      The countries in Europe that have private insurance have limits on how much can go toward administration and they work pretty well. There’s no compromise in health care quality. There’s no incentive to deny coverage. There just aren’t the big profits and salaries in the insurance companies.

  4. Not good enough for Liberals.
    No provision in their for total control of your life and death.

  5. Oh, and what about Tort Reform?
    Oh, sorry that’s off the table completely because of the Democrats neck deep lobbyist relationship with Trial Lawyers.

  6. Instead of 2000 pages of handouts to the insurance companies, how about this:

    This is silly. Imagine buying car insurance AFTER the accident or life insurance AFTER you die.

    2. Insurance companies cannot cancel insurance due to illness or injury.

    THIS I agree with.

    3. Insurance companies’ administration costs cannot exceed 10% of revenue.

    Back to silliness.

    How about this?

    1. Extend the same tax credits to individuals that are currently being extended to corporations. This will force us to shop for our insurance. Can you imagine being payed by your company in food that it negotiates with a grocery chain?

    2. Allow the purchase of insurance across State lines. Or, in lieu of that, let individuals opt out of such nonsense as acupuncture, aromatherapy and such.

    3. Cap tort lawsuits.

    • Opps:

      1. Insurance companies cannot deny coverage to anyone due to preexisting conditions.

      This is silly. Imagine buying car insurance AFTER the accident or life insurance AFTER you die.

      Sorry.

    • 2. Allow the purchase of insurance across State lines.]

      The problem with that is, the cheapest insurance would be the ones that only pick the lowest risk clients, and it would be the ones that pay doctors the least, and the ones most likely to cancel your coverage if you got sick. No, that’s a bad idea. We need national standards.

      • the cheapest insurance would be the ones that only pick the lowest risk clients

        Yes. This is what insurance is all about. Insuring risk.

        it would be the ones that pay doctors the least,

        Not true. When I needed my car repaired after a collision, we did not go with the cheapest repairman.

        the ones most likely to cancel your coverage if you got sick

        Man/ALL of us claim that this is illegal.

      • [Not true. When I needed my car repaired after a collision, we did not go with the cheapest repairman.]

        Again, you’re comparing human body to cars.

        If you’re not sick and don’t have much money to spare, a lot of people will go with the cheapest insurance on the assumption it will be good enough.

  7. Mr. Hoffman,

    “Good questions, grasshoppa.”

    I hope you are not going to start being nice to me? I just could not take it. 🙂

    “The countries in Europe that have private insurance have limits on how much can go toward administration and they work pretty well. There’s no compromise in health care quality. There’s no incentive to deny coverage. There just aren’t the big profits and salaries in the insurance companies.”

    This contradicts everything that I believe to be true, so I want to give you a chance to convince me of these details. What European Countries are you referring to?

    “Right now, the big insurance companies operate at about a 30% overhead — part of which goes towards the huge CEO salaries and bonuses. And there’s also the 3 or 4 percent profit.”

    These huge money packages for CEOs are how much of the cost of insurance premiums? 3%-4% profit does not seem excessive to me. How does that compare to profits at the European insurance companies? So you are saying that the big savings in healthcare costs are from reductions in overhead, not reductions in service?

    • [This contradicts everything that I believe to be true, so I want to give you a chance to convince me of these details. What European Countries are you referring to?]

      Fair enough. As soon as I get some time, I’m going to write a post on that.

  8. Mr. Hoffman,

    I appreciate you posting detailed facts. I also realize that sometimes you cannot always find what you need when you need them. I could not respond to much of what you posted on some of your topics because of that.

    Take your time, I’ll be here.

    • Okay, I did a quick search and found three European countries that have private health care: Germany, Switzerland, and Holland. Germany has government run health insurance, but Holland and Switzerland have heavily regulated private insurance companies.

      Health care systems in the three nations more closely resemble the U.S. system of insurance-based coverage. Holland and Switzerland rely exclusively on private insurance, and all three rely on private doctors. The three European nations deliver universal coverage and world-class quality at a fraction of what Americans spend.

      All of them require that everyone purchase insurance, make sure everyone can afford it and ban insurers from such practices as refusing to cover the sick that are common in the United States.

      European health care is universal, but contrary to popular perception, it is not all nationalized. Facing rapidly aging populations, many European countries have gone much further than the United States in using market forces to control costs. At the same time, regulations are stronger and often more sophisticated.

      Most of Europe spends about 10 percent of its national income on health care and covers everyone. The United States will spend 18 percent this year and leave 47 million people uninsured.

      http://articles.sfgate.com/2009-11-29/news/17180234_1_health-insurance-health-care-health-coverage

  9. So this is how liberty dies… with thunderous applause. And lots of Christmas Cheer.
    Courtesy of Sen. Ben Nelson and his Cornhusker Kickback.

  10. Mr. Hoffman,

    Thank you for the response, I will double check your findings. For now I just wanted to comment on how much Sen. Nelson got for selling out to Obama care.

    From what I understand even Liberal Democratic Governors are not happy with provisions in the legislation which will strain their already over burdened budgets with new Medicade mandates. But there is one State that is not complaining because Obama Claus in the true spirit of Christmas is picking up the tab. I always love how generous Democrats get when spending my tax money. It makes me want to puke.

  11. Mr. Hoffman,

    I checked on the Health care systems of the three countries which you mentioned. Let’s start with Germany, which has over one hundred years experience with Government run Health care.

    Germany is a good example of what does not work. If the object is to get costs under control, do not do what ever Germany has done. From what I understand Merkel is under pressure from her coalition partners because the health care program is $11 billion in the hole.

    Next Holland. So far Holland’s system is working reasonably well. My main objection is that it does not have a long track record. It was only installed in 2006. Apparently it is much better than the total gov. run system that had been used since 1971. That was, from what I read, a total disaster.

    The Swiss program also seems to run fairly well. The Swiss have totally private Insurers and Providers, which are regulated.

    Since we seem destined to go down this Gov. insured road, the Swiss and Dutch models seem to be the way to go. You do have things that may not translate very well from such small nations to a large one such as us. Also you have the 2 different insurances. Basic, which everyone gets at the same price. The other Supplemental, which is where the Insurance Companies make their profits. I think the political fights over those are what will be the problem.

    One last point. The Swiss model which is the most experienced, has one feature to control costs that I know is politically impossible with your guys in total control. Contingent fees for lawyers are severely limited, so malpractice awards are rare. We all know that with the trial lawyers controlling your Party that can’t happen in our country.

  12. They say that observing the legislation process is like watching sausage being made. If you saw it you would not want sausage again. Well this is how they make sausage Chicago style.

    First Senator Nelson is bought off with Medicade dollars for his State. Next there is Chris Dodd. ObamaClaus left an extra special pork shoulder under his Christmas tree.

    http://www.washingtonpost.com/wp-dyn/content/article/2009/12/20/AR2009122002956.html

    “A $100 million item for construction of a university hospital was inserted in the Senate health care bill at the request of Sen. Christopher Dodd, D-Conn., who faces a difficult re-election campaign, his office said Sunday night.”

    Remember when Santa ObamaClaus said “Absolutely, we need earmark reform. And when I’m president, I will go line by line to make sure that we are not spending money unwisely.”

    Well he made his list and he checked it twice. He found out who was naughty ( Republicans ), and guess who was nice?

  13. Mr. Hoffman,

    “He was a little naive thinking the Republicans would actually try to work with him.”

    That is just a slight bit of exaggeration. President Obama wanted to steamroll everybody. He has bigger majorities in both Houses of Congress than any President I can remember. So the man did not compromise at all. The bones he threw to Republicans did not have enough meat on them to keep a chihuahua alive, except maybe the pork which he always seems to find the money for.

    When a total Liberal Rino like Senator Snowe won’t even vote for the Senate Bill, how could you expect normal Republicans to totally betray their core principles?

    • [So the man did not compromise at all.]

      How can you say that? First of all, it was Congress that wrote the bill and they did nothing but compromise. They took out the single payer proposal. Then they took out the government option. Then they took out the removal of exemption from anti-trust laws for the insurance companies. Then they took out the expansion of Medicare. Then then added the abortion crap.

      The current bill in the Senate is nothing but a compromise, which is why it has lost the support of many progressives.

      • You might want to try reality for a change.

        The Liberals have made not a single compromise with the Republicans. NOT ONE. The only compromises that were made were between the far left and the slightly more moderate Democrats.

        When that wasn’t enough, Reid decided just to buy the remaining Dems’ votes outright instead.

      • [The Liberals have made not a single compromise with the Republicans.]

        How can you compromise with people who don’t want to do anything? Republicans have no desire to reform health insurance and really only want to block reform.

  14. Mr. Hoffman,

    “How can you compromise with people who don’t want to do anything? Republicans have no desire to reform health insurance and really only want to block reform”

    Totally incorrect. The Republicans refused to be a part of adding bureaucracy and debt to an already overloaded system. They had plenty of ideas which Democrats wanted no part of because they would have worked.

    1)Tort Reform
    2)Buying insurance across state lines

    Also riddle me this, Batman. Many of your Democrats keep drum beating about all of these people who are dying every so many minutes because they do not have health care. They cannot give us the names of these folks.

    Can you?

    For the sake of argument let us assume this lie is not a lie. Ok, from what I understand about Obama-care the benefit cuts in Medicare and the tax increases to pay for this begin in the first year,
    but the benefits do not kick in until after the third year.

    10 years of taxes to pay for 7 years of universal health care. A gimmick Obama said he would not use, but will. Now if as Senator Harry Reid said, Americans are dying every so many minutes, how can you guys live with yourselves allowing thousands of Americans to die for 3 years until Obama-care starts paying?

    Can you answer that?

    • [They (nut-jobs) had plenty of ideas which Democrats wanted no part of because they would have worked.]

      So why didn’t they implement reform when they controlled all branches of government?

      [10 years of taxes to pay for 7 years of universal health care.]

      No, it was 10 years of taxes for 10 years of service. It’s paying in advance rather than running up the debt. You know, like fiscal responsibility?

  15. “So why didn’t they implement reform when they controlled all branches of government?”

    The Republican run Congress and Senate did not have the majority the Dems have today. They were forced into Bi-Partison agreements, which the dems promoted vocally throughout that period.

    Where are the outspoken Bi-Partisan voices today?

    Note Hillary’s comments in 1993:

    “So, I’ve stayed consistently focused on health care and am engaged right now in this battle with the president over his threatened veto of the children’s health-insurance program. But I learned, among other things, that we’ve got to build a consensus. A plan is necessary but not sufficient. We’ve got to have a political consensus in order to withstand the enormous opposition from those interests that will have something to lose in a really reformed health-care system.

    • The Republicans had no interest in reforming health insurance. The only thing they wanted to do domestically is deregulate and ban abortion.

      • Democrats do not care about Healthcare either, they just placate the poor to get elected and then try to convert our the U.S. into a Socialist State.

        How’s that for partisan B.S.!

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