But I don’t mean the numbers on health care spending, inflation, or profitability. Those figures show that the vast majority of the dollars spent on health care go to providers – to doctors, hospitals, medical devices, and pharmaceuticals – rather than to insurers for their overhead and return to shareholders.
The profit margin in health insurance is low, typically 4 percent or less. Blue Cross & Blue Shield of North Carolina, that boogeyman of the state’s liberal imagination, posted a net margin of just over 2 percent last year. So the fact that Blue Cross is planning double-digit increases in its premiums next year does not identify the culprit. It just identifies the problem – excessive demand for medical services of marginal benefit, financed in ways that insulate patients from the real prices of the care they consume.
The numbers that really matter to Obama & Co. are the results of public-opinion polls. Consistently, they show that voters generally like medical providers and generally don’t like health insurers. That’s why the latter are being targeted. The Left needs villains to make their fictional account of health care inflation seem plausible. It’s really as simple as that.
You can see the problem clearly by taking a look at the results of a poll Gallup did last summer. Asked about names or groups whose health-care reform recommendations they had confidence in, 73 percent of respondents expressed confidence in doctors and 61 percent said the same about hospitals. Even drug companies (40 percent) got a higher rating than health insurers (35 percent).
Since then, the only significant change in public sentiment has been a dramatic decline in public confidence in the ability of President Obama and Democrats in Congress to recommend the right course of action. Republicans started low on the scale and likely haven’t improved their situation much. Voters have little faith in politicians of both parties at the moment, a sentiment that is both reasonable and reassuring.
What health insurers can do to improve their public image is a question beyond the scope of this column or my expertise. But policymakers could do something, if they were so inclined.
The existing health insurance industry is not itself a creation of free markets coordinating individual decisions and enterprises. It is the creation of government interference in the market. For decades, for example, if people bought medical services with cash, it has cost them as much as 50 percent more than paying for the same services via an insurance claim, because of the income and payroll taxes applied to cash but not to insurance premiums.
In the absence of this distortion, it is highly likely that health insurance would look more like other forms of insurance. Individuals and families would own their own policies, rather than having employers make all the decisions and workers feel trapped in their jobs because they can’t take their health plan with them if they leave. These individual and family subscribers would pay reasonable premiums, often fixed for multi-year terms, and most would file insurance claims only rarely, after being in a serious accident or developing a major illness.
That’s the direction employers and individuals are moving now, thanks to the proliferation of consumer-driven health plans that combine high-deductible insurance policies with tax-free savings accounts from which patients pay for routine services. The John Locke Foundation decided years ago to offer two such plans to our employees, and we have experienced virtually no premium increase over the past two years.
We don’t hate our health insurer. As consumer-driven health care continues to grow, other Americans may change their perceptions of health insurers, too. That’s one reason why the Left must destroy consumer-driven health care and impose government-run health care soon, before they run out of villains to bash.
John Hood is president of the John Locke Foundation and publisher of CarolinaJournal.com.
Providing affordable health insurance and restructuring health insurance companies is about every citizen having the ability to access health care. The health insurance industry ranked 88th last year in overall profit gains. The issue is about canceling policies due to catastrophic illnesses, denying policies due to pre-existing conditions and denying coverage despite obtaining pre-approval for procedures. Medical care for complications from diabetes cost approximately $192 billion dollars a couple of years ago. Obesity and complications are costing millions of dollars. The other issue is a policy owner can have a policy in NC, travel to Nevada and not be eligible for the same benefits. Establishing equal coverage across state lines is necessary. It is not about the Left, Right or anywhere in between. It is about taking care of our own. This bountiful nation is rapidly approaching a time when someone with a catastrophic illness, a disease from which recovery is slim to nil, neonates requiring extensive hospital stays with expected short life spans will be left for nature to take its course. The media add fuel to the fire by pointing fingers and taking a small tidbit of information and bending it to influence the masses. Let's face it...good news doesn't sell with a profit. Politics need to be left out of issues affecting the quality of life and kept within its boundaries. Polls can be interpreted and skewed to fit the outcome. Profits usually are utilized for expansion and salaries. How would you react if you got approved for a pacemaker by your insurance company, had the procedure and then the insurance company refused to pay for the main portion of the procedure and canceled your policy because you are deemed a future liability?