Not Really Insuring Anything

For a long time, tobacco companies denied the fact that smoking actually increased the chances one could develop cancer, emphysema, lung disease and other sorts of upper respiratory afflictions.  Tobacco companies also spent the better part of two decades trying their best to convince the public and Congress that nicotine was not addictive.

Their public relations campaigns actually worked pretty well on Capitol Hill.

But, the truth about tobacco and its effects on the human body eventually reached a critical level of understanding and acceptance.  The consensus about tobacco is now so broad that Congress voted last week to bring tobacco under the auspices of federal regulation.  The truth was eventually undeniable.

Today’s health insurance companies are kind of where the tobacco companies were 15-20 years ago.  They’re becoming increasingly unpopular because of their profit model – a model that maximizes the collection of premiums and minimizes (sometimes through very dubious means) actual coverage of claims made by their customers.  Like the tobacco industry denials before them, the insurance industry has refused to cop to an open secret about their treatment of consumers.

That is, until now.

This morning’s LA Times describes in stark detail how three of the largest health insurance companies have been systematically denying coverage to patients that develop cancer or lymphoma.  They even deny coverage to women who get pregnant.  The three insurance companies (they’re the only three that have admitted to this practice) routinely pull the rug out from under their own customers when they are most vulnerable.

From the Times…

Pricing Americans Out

We’ve all felt a big financial squeeze over the past year. But, a recent study from the Commonwealth Fund crystalizes the role skyrocketing insurance costs play in the big squeeze.

Bearing the Brunt

The average cost of health insurance premiums has nearly doubled since 2000. While corporations and large businesses have been best equipped to weather the insurance premium storm, small businesses have been abandoned, left to fend for themselves on an increasingly slanted playing field.

Small business is the backbone of our economy, providing jobs and fulfilling the American dream for so many entrepreneurs. But, our health care policies force small business to bear the brunt of health care costs, effectively killing the American dream for so many.

Perhaps that’s why I get so disillusioned when I hear public officials talk about the importance of small business, only to turn around and hurt said American Economic Backbone by supporting the status quo.

McCain: “Happy Festivus, Insurance Industry!”

Over the past couple of months, a discussion on the core issues facing Americans has pretty much fallen by the wayside during the presidential campaign. Americans expect an adult debate on foreign policy, the economy and health care. Instead, the 24-hour news cycle is obsessed with one candidate’s middle name and who’s most at home taking shots at a bar.

It’s not surprising that people are getting fed up.

Fortunately for those of us who relish meaningful policy discourse, Senator John McCain is hitting the road this week to trumpet his plan for reforming the nation’s broken health care system.

As a primer for the headlines that are sure to come, I thought it might be important to highlight some questions about the Senator’s core policy prescription; tax credits to spur the purchase of private insurance.

Prior to the questions, however, let’s review some important facts about Senator McCain’s intimate relationship with the insurance industry.

Health Care: Mandate Conundrum

The private heath care system in the United States is far from perfect-covering some, under-covering others and leaving millions to fend for themselves. Perhaps the biggest challenge in dealing with the looming health care crisis is how to make our way out of a fragmented system and into a system of universal coverage.

An answer offered by Republicans and Democrats alike is mandating the purchase of private insurance. Former Republican presidential candidate Mitt Romney helped usher in the era of mandates when he was governor of Massachusetts. Senators Barak Obama and Hillary Clinton are both advocating mandates, albeit in different formats.

But, can private insurance mandates really help achieve meaningful, universal health care?

Mandate proponents say that to control the rising cost of insurance, we must get healthy people to join large purchasing pools with sick people. The theory being that healthy people pay premiums without taping into the system as often as sick folks.

It all makes sense on a spreadsheet, but when you bring actual people into the equation, it becomes much more difficult.

The problem with mandating the purchase of private insurance comes down to one word: trust. The public simply does not have faith in insurance companies. Bankrupcies, denial of care to those who ostensibly have insurance coverage and a 65% rise in premium costs since 2000 have seen to that.

One way insurance companies can begin to rebuild trust is by being more transparent. Disclosing broker commissions on health care plans, revealing a cost history of various premiums and revealing what portion of a premium goes to direct medial expenses would be a good start.