Yeouch

Thought I'd be working today, but had to share this. I've seen more than a few insurance industry employees supporting their industries in the debate over the public option. That's their prerogative, but this news kind of indicates that they shouldn't necessarily picture themselves as members of a big corporate 'family'.

In the memo from Randy Brown, WellPoint's chief human resources officer, the company said it would lower its contribution toward worker premiums and raise deductibles in two of its three benefit plans. "Your cost per paycheck will probably increase," the memo said.

Hard times for everyone, but I have to point out -- if you make pens, you usually get some free pens. If you're a cook, free soup. I get free database access. My partner gets free textbooks. Shouldn't insurance employees have, you know, particularly good insurance? Or maybe the legal fees, top-level salaries, and lobbying expenditures (they made the exceptional step this year of phoning 3 million of their own customers with a push-poll robocall opposing reform) are getting a little bit too expensive for Wellpoint to cover?

As It Should Be

There's a lot of disappointment and outright snark that SuperObama hasn't trained his unstoppable firevision on the evil hordes that have delayed public option legislation for so long:
Sold us out. Obviously holding back the ultra-falcon-punch maneuver that could have ended this debate long ago. And maybe that's true -- maybe he's an alien exile, biding his time to see whether or not humanity is worthy of his advanced technology. People who believe this are probably really heartened by the news that he's quietly trying to shore up support for a public option. They might say, here it comes! The part where a million lobbyists surround him and he wrecks them all with nunchucks or maybe a Klingon Bat'leth.

I'm heartened, too, but not because I spend much time paying attention to the president's temperature on the public option. I'm heartened because I see lines like this in the article above:

...at a closed-door meeting of Senate Democrats on Tuesday, Assistant Majority Leader Richard J. Durbin (D-Ill.) marshaled polling data from districts represented by conservative Democrats that showed a majority would back the requirement that Americans get health insurance so long as there was a public option.

"To argue that this is some fringe position is to ignore the obvious," Durbin said.

That's us represented there -- not swept up in the wake of a charismatic politician or a wave election, not knee-jerk motion towards Democrats because George W. Bush was a bad president and the economy went sour, but people reading the newspaper and deciding that this policy is good for them and their children, and supporting it.

We're the only part of the political process that can't be bought outright -- we are the only part of this debate that isn't worried about re-election, or donations, or finding a golden parachute in private industry. This is why FreedomWorks tried to falsely inflate the numbers of people who attended the 9/12 rally -- it's why town hall opponents tried to yell over the voices of others, and why opponents of reform generally want to look like 'regular people' and not an amalgamation of strong party supporters, industry beneficiaries, and ideological extremists. Because we, and by that I mean we the people, have the promise of the Constitution that the policies that we want will become law.

And what we want is cheaper, less exploitative health insurance for more people. Of the many programs that have been proposed, it is the strong public option that puts people over profit and respects the American tradition of private industry. We know -- the mortgage crisis and Bear Stearns/AIG/Fannie/Freddie taught us -- that unregulated industry can literally destroy itself, and we're the ones that end up suffering when that happens. Any crucial industry, and there are few more crucial than health-related industry, has to be carefully balanced into our national community.

This will only be brought about through citizen action: that's as it should be. We wouldn't want something as important as this to be dictated from Washington.

All this is to say -- keep up the pressure. Google your Senators and put in four calls -- two for each, one at the national office, and one at the nearest local office. If they have an office in your town, stop by and tell them what you care about and what you expect from your representatives.

I'll do the same, and somehow try to encourage constituents from Arkansas to visit the blog. I've got a dozen hits from Turkey, and one last night from Japan, but no Arkansas so far -- and people from Japan can't pressure Blanche Lincoln (D-AR) to get her head right.

EDIT: This great article ably underlines the point that it's not just whether we get a public option, but how strong that public option is -- which is a great point to make when you're talking to your representative. The best public option is one that anyone can choose, as well as one that has significant license to negotiate prices with providers.

Every Country You Wouldn't Mind Moving To

Proponents of the public option often point out that nearly every industrialized country has created a government-based policy to address the basic health needs of their population. This is hard to visualize -- which may be a reason that detractors of public option legislation barely ever mention the fact. But look at this:

(from this blog, which is the weirdest place I've ever been in my life, via reddit)

Knowing just a little bit about which countries are rich and which are poor, the map above basically shows that nations who have resources guarantee their citizens health insurance. Even some nations that don't necessarily have the resources -- India and Mexico, for example -- are working on a way to provide basic universal care. Now, not all these health care systems are top notch -- Japan's has had some problems during their long recession, and Russian hospitals are famously corrupt -- but none of these nations are seriously considering or have seriously considered giving up their universal health insurance.

I believe this is because the people in the blue countries above -- over a billion people, by my count -- understand that health insurance and the profit motive do not mix. Insurers who are responsible to their stockholders will always try to take more in premiums and give less in care -- exactly opposite to our interests as a nation and our individual benefit. This is why simple regulation of insurers won't decrease their ability to refuse insurance and care to the sick or needy -- if a company like GradMed has the resources and motivation to monitor the entire web looking for mentions of their brand, then they have plenty of resources and motivation to discover ways to get around government regulation. We end up in an arms race: a well-funded industry trying to outwit a less well-funded government agency. The insurers have been winning that fight for generations.

A public option would, for a small part of the population, change that equation. It would create an insurer whose responsibility was first to the people, and only to the people -- the voters that create and shape it are the same people that it is intended to serve. This is no big secret to the countries on the map above -- they all know this -- those who haven't created a system of universal health insurance haven't because they lack the resources to put such a system in place.

We've got those resources. What's stopping us? Industry lobbyists? Partisan bickering? Lack of political will among those who support real change?

How Much is Too Much?

The long-awaited second part of Professor Reinhardt's article on insurance costs and loss ratios was posted yesterday. In the first part, he explained that it's not just insurance company profits that drive the cost of insurance up: they have considerable overhead and costs, sometimes reaching, sometimes passing 15%.

That article, though, was about the group market. When you insure a large group, risk is distributed more widely and you can do things like look at historical data, rather than give individual physicals, and cut out a great deal of brokering and marketing. For the individual non-group market, which is especially important now that Fox News is reporting that 149 million Americans are unemployed, overhead is much, much higher. How high? I say I say, how high?

-- So high that insurance lobbies fought 2008 state laws that tried to restrict their 'loss ratio' (i.e. the percentage of income that they pay out in care) from going below 70%.

-- So high that they claim that 55 to 60% is average -- which means that for every dollar you give them, you have purchased the right to get two quarters and a dime's worth of health care.

-- So high that small firms, who buy insurance for fewer than 10 people at a time, pay up to 18% more in premiums than large firms.

-- So high that three fourths of all families who shop for individual health insurance policies end up buying nothing.

That's hiiiiigh. Forgetting your debit-card at the grocery store while you're buying a bag of Doritos and a 2-liter bottle of Squirt high.

A public option would allow the government to create one large group out of this terribly underserved part of the population. These people have money; they need and deserve insurance -- although opponents of reform like to blame the victim ("I don't want to pay for somebody else's..."), these people would be happy just to have a deal similar to those who are covered by large companies. Large companies, I would add, that almost all started as tiny businesses, or groups of freelancers -- if we continue to unfairly punish customers on the individual or small-group market, we may not even have the next generation of innovative large businesses -- the financial and health risk won't be worth striking out on one's own.

But a 55% loss ratio (let's call it a 55% care ratio) makes insurance industries big financial players with a lot of money to throw around, and this is why we have Blanche Lincoln channeling Ronald Reagan in the Senate Finance Committee. 45% of our premium dollars are more than enough to buy a little democracy.

EDIT: but not all the democracy: progressive stalwart Shakesville transcribes this exchange between White House spokesman Robert Gibbs and ultrajournalist Helen Thomas, who has been asking him whether Obama will veto a health care bill without a public option over and over again for over a week.

Money and the Power

Just a brief note: I have to go talk about kigo in a train station cocktail lounge.

This article in the Guardian tries to count the obscenely huge amounts ($380 million!) that the insurance industry has spent in its quest to prevent a strong public option, or any other reforms that might affect their income. Sad, perhaps-I-will-have-a-cocktail-in-abovementioned-lounge ironic twist: it's our premium money they're using to buy off our own elected officials.

The other notable thing about the article is that it relies in part on officials from the Clinton administration, who are a particularly interesting kind of witness, having themselves gone up against the opposition to reform and failed. Here is Clinton-era labor secretary Robert Reich, explaining the public option in concrete terms:


EDIT: sorry about the overlap with the sidebar -- Reich is ok-looking, but I'm not so sure that anybody really needs to see him in widescreen. We should at least have the option to see him in a variety of dimensions, but alas.

If It Gets Real Bad, Think About Space

Well, the public option amendments were both voted down yesterday in the Senate Finance Committee. Three questions: first, why? Second, what happens next? Third, what can we do?

1) The reason this amendment was voted down was lobbyist money. One of the votes that almost nobody counted in the press, and which I overlooked as well, was that of Max Baucus himself, the chairman of the Finance Committee -- who kept repeating that the bill didn't have 60 votes in the Senate, so he couldn't vote for the amendment. But Baucus, as 538.com points out, has told his own constituents that he "wants a public option too" and there's a strong argument to be made that his leadership alone could have motivated a fence-sitter like North Dakota's Kent Conrad. The Senate as a whole, when they take up the debate, could easily strip the Finance Committee's public option amendment -- the HELP committee didn't seem to have any trouble putting a public option into their bill, whether it would pass the general vote or not. For the Schumer amendment, Baucus and Conrad alone would have been enough for passage -- just these two senators. But Baucus (as well as Blanche Lincoln, and frankly all the 'no' votes on the public option) is a MASSIVE recipient of health insurance lobbying money. Here is a graphical representation of the clouds of buzzing health insurance industry lobbyists that feed on the Montana senator (explained here). A comparison of 'no' voting Democratic senators with the money they accept from industry lobbies is here -- Baucus is at the head of the list with 7.7 million dollars raised over the course of his career, and Lincoln is second. We could have had this amendment: we should have had it. Voters and activists have done their part and the nation wants it. It is very specifically the political patronage of the health insurance industry that has prevented the passage of a public option.

2) Nobody really knows what happens now. The Baucus Bill will have to be merged with the Health, Education, Labor and Pensions committee (HELP) bill, which contains a public option, and it will have to go up for debate on the floor of the Senate, and it will have to be merged with the House bill, which also contains a public option. It seems true that there are more than 50 votes to pass a public option in the Senate -- but to prevent a Republican filibuster, we need 60 votes, which means all 58 Democrats, plus Sanders of Vermont, plus one other vote. Nobody can work on that one vote, though, and nobody can really put together a strategy to pass parts of the plan through budget reconciliation (a legislative option that only requires 51 votes) until Senate Democrats get it into their heads that a public option is what the nation wants, that it is overwhelmingly what the party wants, and that the coming election will be much harder for everyone if the health care plan they end up passing is a give-away to insurance interests.

3) What we can do now is much more than what we could before we knew what was going to happen in the Finance committee -- in the coming floor debate, we will be well served by Senators of all stripes, from all states coming forward to support the bill. Signing up with HCAN or just using their service to call your senator sends a clear message that supporters of the public option have supporters among the public. If your senator's for the public option, tell them to get up and speak out for it. If they're waffling (this list is a good source to figure out who's a trustworthy supporter, and who's weak), tell them how much you hate waffles, and threaten to make pancakes of them in the 2010 elections (or some such metaphor, which is better constructed and less threatening).

And if you find yourself wanting to hock a lugie at Max Baucus for selling us out, maybe it'd be a good idea to take a second, chill out, and listen to Carl Sagan sing techno about space.

The Loss Ratio and Insurance Industry Profits

John Rockefeller is in the Senate Finance Committee right now hammering away in the speech that everyone needs to hear most -- that health insurance companies are bleeding our benefits dry, and that a strong public option is the best solution to the problem.

Most of what I learned about health insurance industry profits, I learned from a single person's writings -- Uwe Reinhardt, Princeton economist and opinion writer for the New York Times. My favorite article on the topic, so far, is this one -- it breaks down the way to answer the question "how much do insurance companies make" in a comprehensive way.

This is important because an insurance company -- and we saw GradMed claim that they don't even collect this data for themselves or the insurance companies that they broker -- will never share this information with potential customers. They are forced by law, however, to share it with potential investors, and that's where Professor Reinhardt comes in. I've seen pictures, but I picture him with a monocle and a handlebar mustache. Egads, he says.

Insurance industry profits -- that's the amount that the company takes out of the economy, free and clear -- usually hang between 3 and 6%, which is not exceptional for most kinds of industry. What is exceptional, though, is the amount in marketing and administrative expenses that the company spends. Keep in mind that, unlike buying a cell phone, where you give a guy some money and he gives you a cell phone, insurance companies essentially take your money and then give it back -- the product you get is the insurance company holding your money, and the money of many others, for you, and then reorganizing it to pay for the medical care of the people that need it. So these costs become extremely important: the money taken out of your premiums, and the money that's left, determines what kind of coverage you get.

Not much of a product, true. But it's even less of a product when the insurance companies are only paying out 84.4% (in Reinhardt's example, Wellpoint in 2008) of the premium money that they've collected. That's an 84% loss ratio -- to the insurance companies, GradMed included, the company has lost 84% of "its" money (actually your money, but held by the insurance company). 84% loss for them means 84% care for you.

Where does the money go? Profits are substantial, but don't explain the whole picture. The rest is marketing -- GradMed paying alumni associations to run advertisements, insurance executives googling their products and leaving dodgy comments, TV ads, newspaper ads, etc. etc. etc -- as well as 'administrative costs', which covers the salaries of the people who work in the insurance industry. What seems absolutely true to me is that even if these costs aren't considered profit on the company's 10-K, they are profit: the company investing in its own future enrichment through advertising, and directly profiting the people who make up the company through salary and benefits.

You have to hand it to them, though. Taking 15% off the top of your health care dollar: not too shabby as a con game. A strong public option would also have administrative costs, but estimates for Medicare put their administrative cost at between 3% and 8% (and their profits at ZERO, where they should be), which is nowhere near the expense and waste we're experiencing with private insurance.

UPDATE: The Rockefeller public option amendment was just defeated, 8 to 15. Democratic senators voting against it were Conrad of North Dakota, Lincoln of Arkansas, Nelson of Florida, and Carper of Delaware.

DOUBLE UPDATE: The Schumer public option amendment was also defeated, 10 to 13. A slightly weaker option, it picked up Thomas Carper and Bill Nelson, but Kent Conrad and Blanche Lincoln (who was wearing an enormous green lapel pin that said "BLURGH") still voted against it. No Republicans, of course, voted for the amendment or even bothered making serious arguments about the bill -- it all seemed to have been posturing for the general senate debate, and insistence on this new weird "defend Medicare" attitude they've all suddenly come to after decades of trying to slash Medicare.