I always look forward to the weekly newsletter from former U.S. Senator David Durenberger (R - Minn.) at the National Institute of Health Policy. Excerpts from the latest:
"Again last week we read of record-setting profits at casualty insurance companies. The editors of the Wall Street Journal remind us that these very same companies demanded Congress subsidize the risks they undertook as a result of 9/11, which Congress finally did in November 2002. The subsidies are still there today, paying for those record profits, because premiums far exceed actual risk.
Reminds me of the same subsidy which the same industry demands as a price of doing Medicare business. Most know that the current GOP health policy includes moving the Medicare and Medicaid programs from the government to America’s health insurance plans - a move Democrats are scrutinizing for both accuracy of information and true value to beneficiaries.
Watching UnitedHealth Group’s corporate conscience on public display is not fair to the plans. But a simple test of the health insurance plan market is fairly predictive of what will drive the future performance of the for-profit plans. Money - pure and simple. Behavior change, care quality and value, electronic information exchange are all possible products. But profits – not healthcare cost containment - drive the train.
Vanessa Fuhrmans’ story of Aetna’s latest quarterly report in the Wall Street Journal is illustrative. Insurance company profits are up 28% because premiums are up. Investors dropped Aetna three months ago because profits were down. They thought Aetna was making a mistake trying to reduce consumer product prices in order to gain market share. So what we end up with is less health insurance price competition. Today, that hit Humana when the company reported tripling profits, setting record highs but “not meeting other targets.”
Nationally, the number of health insurance buyers is going down. The only new business is HSA-like plans, and new Medicare Advantage and prescription drug plans. Congress wants us to buy Medicare from private plans, and is willing to spend trust fund dollars to subsidize them – up to an average of 111% of what it pays for Traditional Medicare. Add this to the 21% we pay through premiums for doing business with private insurers (on top of the real price of medical services), and I have to wonder what it is that we are all getting for our money. We know what they are getting for the money they make for their investors, but what about us?"