George Corneliussen
Every single crime-based police drama that is currently on tv can trace its roots back to the classic 50's era police drama "Dragnet". The lead character on that series,Sgt. Joe Friday, was known for the catch phrase, " give us the facts, just the facts". Friday used this phrase whenever he was interviewing a witness to a crime. Whenever the witness would start to ramble, Friday would say "The facts, just the facts".
In the previous two articles on healthcare, I was strong on opinion but not so strong on "just the facts".
So, in the tradition of Sgt. Friday, I will present you with just the facts, and let you deduce what they mean.
The following excerpts are from an actual letter sent to someone who is insured by the "Americam Community Mutual Insurance Company". The letter explains why this person's premiums for single coverage are going to be raised 17% beginning January 1, 2007.
It is important to note that the person who received this letter gets one of these letters from American Community every December, announcing a 15 to 17 percent increase in their insurance premiums. At no time does the income of the person insured come anywhere close to increasing 15 to 17 percent a year.
This means that the bite that insurance premiums take out of their pocket in never matched by an equal raise in income; therefore, a portion of the loss incurred every year is added to the following year's loss ( in essence, making insurance premiums as draining on the insured person's income as run-away credit card spending might be ).
The letter ( a scan of the actual letter, minus all personal information, is attached to this article )
___________________________________________________________________________________
Each year we review our claims experience to determine the premium rate we will require to cover costs for the coming year. We do this to provide the benefits of our policies as required by state mandates. We revised your billed premium to reflect this adjustment.
Please be advised that:
* The premium adjustment for your policy is independent of your personal claims experience. The experience of your policy is combined with the experience of all similar policies in your state to determine next year's rate.
* Many health care services are being used more frequently than in the past. To enhance quality and longevity of life, more procedures and tests are performed to confirm that a proper diagnosis has been made.
* Medical research plus advanced technology and development of new expensive prescription medication not only raise the level of care, improving the successful diagnosis and treatment of many diseases, but also raise the cost of treating these diseases.
Effective 01/01/07, your monthly premium will be advanced to $ 507.60 .
( This rate does not include any administration fees.)
___________________________________________________________________________________
As I said earlier, the entire letter is attached to this article. If you read the "facts" in this letter, you will see , among other things, that American Community, by their own admission, gives no break in premium cost to the person insured by them for being frugal in using American Community's insurance. The letter clearly states that the new rate is not based on how much the person insured uses their insurance.
The person insured by this policy is not a high health risk. They have no chronic health problems, and only see a doctor when necessary. Yet, they are faced with automatic raises in premium payments on a yearly basis.
A very interesting tangent to this is the fact that the person insured is shopping for a better health insurance deal, but is finding that most insurance carriers are not receptive to a customer who wants to drop another insurance company in order to do business with them.
To me, this letter is "nuts and bolts" evidence that the problem of healthcare coverage is a balloon about to pop. The insurance companies have decided that automatic rate increases are the way to go at a time when incomes are remaining level or in some cases dropping. If you were a detective assigned to cracking this case, how would you interpret these facts ? Remember, these are the facts, just the facts.
* click on " This Article's Images"on the top right of this page to see a copy of the original Amercian Community letter.
rate
email
print
link to this page
Comments: 35
I compare them to the gas companies, who, I believe, take great delight in playing with my wallet!!
The purpose of government is to manage the affairs of its people. What those affairs are should be determined by the people. We the people, need to dictate to our elected officals that it is time for some management on their parts of a situation we as individual have no control over.
The fact that no matter how much we, the people, complain we get no response of substance from insurance companies, indicates that those doing the "charging" have no fear of losing our business. How does that work ?
It is a well known fact that the insurance lobbies are some of the most powerful people in Washington. Why do they raise our rates? Because they can. Plain and simple. Washington is not about to shoot itself in the foot by regulating the industry. This is also the reason that auto insurance in now mandatory for all drivers.
A few years ago, I was plowed into by an uninsured driver. I sat in a courtroom for hours waiting for my chance to see the driver who hit me "get what was coming to them".
After all the cases had been heard, my "plower's" name was yet to be called. I walked up to the judge's bench and asked what happened to the uninsured driver who hit me.
I was told that they had come in a few days earlier and pleaded "no contest" and agreed to give up their licence for six months. I asked the officer of the court what that meant and he said " Oh they'll just drive around for six months wihout a license".
When I asked him where that left me, since I had to pay for the damages to my car out of my own pocket, I was told " That's your problem, we don't handle that end of it." I was then told, " You could hire yourself a lawyer and sue them for the money, but I doubt if you'll get anything. It would be cheaper for you to just fix the car yourself and forget it".
Funny how the letter of the law seldom matches the reality of it.
PS: I might add that the uninsured driver who hit me did so, right in front of a police officer. That's right my key witness was a police officer and it made no difference at all.
Bye Bye Miss American Pie,
drove Chevy into the levy
now rates are real high.
I guess the sad thing about all of this is that war chests are usually to be used against an enemy, and apparently we are all on the wrong side of this war.
Just another bright and shining example of unchecked corporate power.
I pretty much argee with what you say.
I argee, but the insurance companies collect the money. As the place where the buck stops, the insurance companies need to be accountable for the money they charge.
Funny, we never see or hear of insurance companies calling for investigations into whether or not the cost of healthcare are fair . Wouldn't you expect a company that most of it's customers ( that's customers, not stock holders ) accuse of overcharging be anxious to prove to its customers that what it charges is fair ?
They are only "my" facts in the sense that I compiled them. You say it's different in your country. How is it different ?
By the way, what points in this article do you believe are not worth discusssing ?
Health Insurance reimbursement rates to providers, pharmicies and hospitals are negotiated annually by insurance companies. These reimbursement rates are based on a percentage of the Medicare reimbursement rate set by the federal government. For example, the doctors portion of a single view chest xray was $7.10 a couple of years ago. A private carrier would then agree to pay the doc 125% of that fee or $8.88. Medicare reimbursement rates for most procedures have been reduced practically every year in the recent past. So, on a per service basis, health care costs are going down NOT UP. In addition, MCR and the private insurers have been steadily bundling services. For example, if you visit the doctor for a cold and to have a boil lanced, the doctor will only get paid for lancing the boil. Again, the insurer's per service costs are going down NOT UP.
There are two ways the insurer's costs go up - if they insure additional persons, they pay out for more services. They also collect more premiums but their premiums are calculated over a group rather than one an individual basis, they may take in an extra $1,000 in premiums while paying out and extra $1200 in claims. That means everyone's premiums will go up so the insurance company can get back it's comfortable profits. But if the insurance company has to raise everyones premiums by double digit percentages, there is a problem with their underwriting practices. The second way the costs go up is when patients start going to the doctor more often. This may mean that a company's insureds are aging or getting less healthy so they need more care. Again, we have a basic underwriting problem if this requires the kind of massive increases we are seeing. Or it means that doctors have figured out that they can get paid for multiple procedures by making the patients come back 5 times for what they could previously get paid for in one visit. So patient's costs go up and the insurance companies costs go up because they have improperly set their reimbursement policies.
The same criteria apply to prescription reimbursement. Despite the fact that insurers refuse to cover many medications and have increased the copays to the point where they are paying a much smaller $ amount towards peoples prescriptions, they are still claiming massive cost increases and factoring that in to massive premium increases.
Overall, it appears that insurers are taking the American public for a ride. They run their business in a sloppy manner and end up increasing premiums by enormous amounts. We are paying more and getting less no matter how you slice it.
The lobbyists for the healthcare industry operate as though they were invisible. There is a power base there that dwarfs most others. One of the reasons this has been allowed to happen is because we, the people, have delegated way too many things to our elected officals on a "no questions asked" basis.
Ask someone in elected office why something is happening and the most likely response you will get is a " I'd tell you, but it's way over your head " answer. In other words, most elected officals are very comfortable with not having to answer any question they do not want to answer. We, the people, made it possible for them to feel they can do that.
One of the positive aspects of any kind of nationized healthcare would be the feeling by the entire country that the government of this country existed, at least in part, to help us survive as a group.
Thank you for your very informative comment. The way insurance works ( as laid out in your comment) exposes a hidden danger to our culture and nation that goes beyond physical health issues.
If insurance companies are operating under a system that allows them to charge whatever they "feel" like charging as opposed what they "need" to charge, they are ,in fact, helping to create an atmosphere of "srew everybody else, I only care about getting mine".
If everybody in this country decided to copy that "plan of attack" how long would we survive as a nation ? Can we survive as a nation if none of us give a hoot about the nation as a whole and only care about what we can get for ourselves ?
I agree with this exception:
The medical end of our system is top notch, but the financial end of our system stinks. The end result does not warrant a blank check on the part of those who sell insurance and health care.
1) Medicare has no business setting the benchmark for paying doctors/hospitals/etc
2) The government has no business subsidizing and propping up Medicare in the first place
3) the American people seem unwilling to give up their entitlement mentality
When it comes to emotional issues like life and death, the quality of life, and a person's general health, well, you can be sure there will be a great deal of gnashing teeth.
Healthcare is no different than any other product or service offered on the open market, and yet it is treated very differently.
Until competition is allowed to moderate the inherent greed of a monopolized system, we will continue to experience the same complaints you hear so loudly and so often, today.
Dismantle Medicare before it's too late, and let market forces drive costs down.
In theory, I agree that competition would be the best answer to the over all cost of health care/ insurance. In order for that to happen two things would have to happen first:
A. the health "industry" lobbyist system would have to be dismantled
B. some sort of bench mark would have to be set on what percentage of personal income could rationally be expected to be paid for health care ( a system to prevent price fixing )
While these two points may ,on the surface, sound over-simplified, addresssing them would remove many of the roadblocks currently facing a real useable healthcare program for everyone.
As for dismantling Medicare, I can't agree with that unless some system replaces it that addresses the needs of those who genuinely need that program.
I do have a question. Given the current state of our nation's record setting governmnet spending. Why is it better that our government spend billions apon billions on programs most of us will never benefit from, than to have those billions spent on national health care ?
here's a link you might find interesting:
http://www.budgetsim.org/nbs/
When energy prices go sky-high local energy companies send out information to their customers on how to cut their energy bills. We never see health insurance providers offering suggestions on how we can lower our premiums. We never even hear them say they wish they could charge us less. All we hear is "This is the bill , pay it or we are dropping you".
2. Medicare is one of the most efficient government programs, and most cost-effective healthcare program in the US.
3. Congressional timidity in the face of the healthcare crisis (disaster, really) in the US is matched only by the unconscionable cost per unit of care including "costs" (insurance administrative overhead at the provider and payer ends).
4. Hillary Clinton pretty much screwed up any hope for progress of healthcare reform in the 90's (a dozen years ago), and what a fun target for the Republican right wing. However dumb she was then (or now, if you like), I see no God-given right for insurance companies to continue "having their way" with the American people and providers when they have performed so poorly.
Your point number 4 is a great one. Call it bad timing, call it bad palnning, call it what you will, but Hillary's badly timed shot at forcing healthcare on the nation ( by a non-elected person ) will only be remembered by the masses as "something that was wrong". The mistake she made was that she tried to force something on the nation rather than convince the nation that it was a good idea.
I suggest to jJack that when I take my sick child to the emergency room for treatment, "shopping around" for the best price is far down on my list of things to do, at that moment. This is NOT the sort of situation that makes for accurate "market efficiencies".
Also, when buying insurance, we are at a remarkable disadvantage compared to the Insurance company. We are guessing about our own futures, and they are working from actuarial averages and "in house" statistics, which they aren't inclined to make public. We aren't buying a car that we can kick the tires of.
Currently, "market forces" operate this way:
Let's say there are 10 companies that all sell essentially the same item. Naively, one might think that this would drive the price to some lowest possible level, and all ten companies would be at or near the minimum level of profitability. That is, they would compete on price. Insurance would be a "commodity".
Instead, what has actually happened is that the ten companies engage in "obfuscation wars". They try to make their respective packages incommensurable, so that we--the consumers—cannot effectively shop based on price alone. One company may trade on its solvency, another on its honesty, while yet another on its flexibility of plans. They mix in complex schemes to make the policies have "investment value", and offer various deductibles. All in all, it's a pretty hopeless morass of obscurantist tactics.
Also, the "market forces" have caused to exist a basic over-complication of the services provided, such that, for many, the only practical way to navigate these shark-infested waters is by inviting one of the sharks to guide you! That is, we go to an insurance "rep" or agent, and trust in his good faith. How often to we have the opportunity to see a list of referrals? In CA, there is a case where someone bought insurance from such a rep, and filled in the forms according to the way the rep told him to. Wouldn't you know it? When the man came to need the insurance to pay off, it turns out that the way the forms were filled in were contested as fraudulent! But the REP was the person who told him how to fill in the forms, question by question. Until a substantial claim was made, no effort was spent by the insurance company to evaluate the veracity of those forms. Until the claim was made, they were perfectly content to accept this fraudulent contract, while it was to the company's advantage.
How can we take our limited anecdotal experiences and hope to rationally apply them to these large statistical problems? Do I want drug benefits in 15 years? Right now, I need NO drugs whatsoever (except caffeine). What will they invent in ten years? What disease will I have, then?
Remember that the basis of the idea of insurance is "pooled risk". The larger the pool, the fairer is the distribution of this risk. On this basis, it seems that the only reasonable thing to do is to make that pool as large as possible. Include everyone in one large pool. I think this implies a national health care policy.
"Until a substantial claim was made, no effort was spent by the insurance company to evaluate the veracity of those forms. Until the claim was made, they were perfectly content to accept this fraudulent contract, while it was to the company's advantage."
This type of behavior pretty much sums up most of the businesses we are forced to do business with these days.
With respect to other insurers and the free market forces, free market forces are in play. The insurance company negotiates a fee schedule with each doctor that participates in its insurance program. Large practices that staff hospital departments tend to have more clout in their negotiations because the insurers want their members to have access to the hospitals. Dr. Joe's Toenail Clinic has no clout and is pretty much stuck with whatever contract the insurer chooses to offer.
I promise I will spell everything out in plain simple english. Hopfully we'll all learn together.
Of course! But the point is, if a company thinks the contract is sound enough to collect the premiums, it is implied that they accepted the contract. It should not be allowed for these companies to "selectively" defraud claims on the basis of the amounts of the claims.
I agree, once an insurance company accepts a primium they should have to refund money paid to them if they decide not to honor a contract.
Canadian health care is AT LEAST as good as 90 percent of US Health care, and the people are coveed, even those with incomes so low (such as elderly, poor, disabled or students) that they do not have to pay taxes to get the health care.
Of course, Canadian taxes are higher, which is one reason this would never fly in the US.
I have said it many times before and I will say it again.
The political party in this country is Capitalism. For better or worse. For better and worse. Usually worse, for most of us.
I pay 82 dollars a week for the two of us; the kids are covered by the state. My company does not even pay half of the whole premium, which is one of the two reasons the kids are covered by the state. The Canadian government covers people much better, though, than the US Government.
You should publish an article about the Canadian healthcare system. In the articles I've done so far on healthcare comments either slam or praise the Canadian system. Me thinks both sides can't be right.