Saturday, July 23, 2011

Who's stealing your money? (short thoughts on two different approaches to healthcare reform)

I know there are more pressing political issues going on right now than healthcare reform (i.e. the debt ceiling crisis created by House Republicans), but I think it's interesting to consider a major (and rarely discussed) difference between Democratic initiatives in the Affordable Care Act and Republican initiatives as exemplified by Paul Ryan's plan for Medicare reform, aka privatization via a direct voucher system.

In the case of the ACA, Democrats are seeking (among other things) to bring a large pool of relatively healthy people (i.e. those who are between the ages of 18 and 30) into the private health insurance system via a mandate for individual coverage. Conceivably, this brings more revenue into the private healthcare system while at the same time creating public subsidies for those who (due to our wonderful free enterprise system) cannot afford insurance.

Conversely, in the case of Ryan's plan for Medicare, Republicans are seeking to dismantle a popular government-run single payer system and transfer the entire population of elderly Americans onto the private health insurance system while, over time, decreasing the size of vouchers relative to actual premium costs, thus pushing more of the premium onto "medicare" recipients. But only for those who are currently under 55. (Disclaimer: I'm 51 years old and this bothers me to a fairly extreme degree.)

Now, I realize that these are essentially two different issues, but think about it: if your private insurance company begins to insure a portion of the costliest demographic (i.e. those who are between the ages of 65 and, um, death) and you pay premiums into this privatized pool, do you think your rates will go up or down? Conversely, if a private insurance company begins receiving premiums from a considerably healthier segment of the population (i.e. the young, many of whom are currently holding out for a job that might provide health insurance), how do you think that would effect your premiums?

Now, think a little further: the highest paid CEO in Minnesota (my home state) is Stephen Hemsley - top executive at UnitedHealth Group Inc. In the last two years (2009, 2010), his total compensation exceeded $150 million. If total costs for UnitedHealth go up (due to providing coverage for a pool of seniors who had previously been covered under Medicare), do you think he (or his well-paid board) will let executive compensation from salary, bonus, and stock options decline? Or do you think (just maybe) that UnitedHealth would be more inclined to raise premiums for all their customers? Granted, they would still have to be "competitive," but presumably most private insurers will be subject to the same pressure: covering medical bills for seniors who had previously been covered by Medicare.

Incidentally, beginning in 2013, the Affordable Care Act will limit the deductibility of remuneration paid to officers, directors, and employees of health insurance issuers to $500,000 -- which sounds pretty reasonable to me. Why? Maybe because I have a high deductible plan (Blue Cross and Blue Shield of Minnesota) that runs nearly $300 a month and I'm currently selling plasma to help pay for a $1200 medical bill that the plan did not cover. Do you think I think compensation for Stephen Hemsley should be considered a deductible expense for doing business? Of course not. I resent my own bills, and I resent Hemsley's salary - even if I'm not a customer of UnitedHealth.

So, I might also add that Patrick Geraghty, the CEO at Blue Cross and Blue Shield of Minnesota, was paid more than $1.5 million in 2009. That's certainly not high by UnitedHealth standards, but still: wouldn't 500 grand be plenty? After all, I'm paying $300 a month for an insurance plan administered by Geraghty that sticks me with a $1200 medical bill. Further, everyone is accustomed to this: it's "normal." And I hate this concept of normal. I think we need a new normal.

Single-payer Medicare-for-all would have been a good option, don't you think? Well, maybe you don't -- and, unfortunately, it's never been seriously considered. But, for the sake of comparison, how much do you think Donald Berwick -- Administrator of the Centers for Medicare and Medicaid -- gets paid every year? After doing a little research, it appears he's paid at Level 1 of Salary Table No. 2011-Ex (Salary and Wages, U.S. Office of Personnel Management), or $199,700. That's a healthy salary, to be sure, but by UnitedHealth standards? I don't think he'd even be allowed into the executive washroom. And he certainly doesn't get any stock options.

Of course, this is an over-simplified analysis on my part. But when it comes to healthcare reform, I think I'm more inclined to trust the Democrats than the Republicans. And, if you consider the current insanity over the deficit ceiling, I really don't think the GOP can be trusted at all. Especially when they want to overturn the ACA first and then follow up by dismantling Medicare. So, think about this additional tidbit: if the ACA does away with the practice of denying coverage for pre-existing conditions, how many seniors under Ryan's "medicare" plan would struggle to even find coverage? How many would even be able to afford it? Do you think Republicans will seriously address that problem? [Hint: they haven't yet.]

The bottom line is that we should all be thinking about this stuff. And you know $tephen Hem$ley is.

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