FIXING THE GAME

Ideas from the insurance industry and its supporters

Fixed Rule:

The insurance industry’s lobbying group, America’s Health Insurance Plans (AHIP), has put out their plan to “reform” our health care system.

One of their recommendations is that administrative processes should be streamlined across the health care system (see page 4 of their proposal). They make the following concession:

“In advancing this recommendation, we recognize the need for our industry to come to the table with proposals for how we can do our part.”

The insurance industry certainly has a long way to go to become administratively efficient. Study after study has found that the private health insurance companies have much higher administrative costs than public, government-run plans like Medicare. In his report “The Case for Public Plan Choice in National Health Reform: Key to Cost Control and Quality Coverage,” professor Jacob Hacker notes:

“The public Medicare plan’s administrative overhead costs (in the range of 3 percent) are well below the overhead costs of large companies that are self-insured (5 to 10 percent of premiums), companies in the small group market (25 to 27 percent of premiums), and individual insurance (40 percent of premiums)...

“In international perspective, the United States spends nearly six times as much per capita on health care administration as the average for Organization for Economic Cooperation and Development (OECD) nations. Nearly all of this discrepancy is due to the sales, marketing, and underwriting activities of our highly fragmented framework of private insurance, with its diverse billing and review practices. Indeed, according to research by the Commonwealth Fund, the United States could save up to $46 billion a year if it spent what other countries with mixed public-private insurance systems, such as Germany, spend on insurers’ administrative costs.” [Emphasis added.]

So is AHIP proposing the one solution that has been proven to lower health care costs by adding true administrative efficiency: adding a national public plan option to our health insurance system? Of course not!

The insurance industry is not interested in making the system more efficient. The system’s inefficiencies mean higher profits for them.

Despite all their bravado about private industry always being more efficient than government, insurance companies are afraid to compete side-by-side with a public plan.

Fair Rule:

• A public alternative to insurance company coverage that is accountable to us.
• Fair regulation and oversight of insurance companies, with government as a watchdog.



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