The End of Health Insurance as We know It?

https://wendellpotter.com/2012/03/th...as-we-know-it/

The End of Health Insurance as We know It?

by Wendell Potter on March 5th, 2012

Speech by Aetna CEO signals a sea change in how Americans obtain coverage.

Aetna CEO Mark Bertolini caused quite a stir when he said at a Las Vegas conference a few days ago that the insurance industry as we know it is, for all practical purposes, a dinosaur on the verge of extinction.

Time to sing, “Ding dong the witch is dead”? Not quite, but the day when most Americans get their coverage from what we think of as an insurance company is close at hand. It won’t be long before most of us get coverage through either a state or federal government-run plan or a local nonprofit company. The big investor-owned corporations like Aetna and the companies I used to work for, Cigna and Humana, know that the days of making a killing off of basic medical insurance policies are over. And the companies have no one to blame but themselves and a fatally flawed, uniquely American system of providing access to care.

While Bertolini was by no means predicting that Aetna and its competitors were about to close their doors and get the hell out of our lives, he most certainly sounded the death knell for the standard business model insurers have followed for many years — actually insuring people.

“The system doesn’t work. It’s broke today,” he said. “The end of insurance companies, the way we’ve run the business in the past, is here.”

Bertolini ticked off a number of reasons why providing basic health insurance to Americans was no longer viable — changes in demographics and the economy and, of course, health care reform at both the state and federal levels. What he did not say was that the standard operating practices of the industry were simply not sustainable and actually contributed more to the demise of the business model than any external factors.

Ever since the health insurance industry came to be dominated in recent years by a handful of big for-profit corporations, insurers have actually been driving away customers and shrinking the universe of people they were willing to cover, because of the return on investment and the profit demands of the large institutional investors that own most of the corporations’ shares. It is because of those demands that insurers price their premiums beyond the reach of millions of Americans. It is because of those demands that insurers reject on average a third or more of all applicants because of “preexisting conditions.” And it is because of those demands that insurers have routinely canceled the coverage of thousands of policyholders when they got sick. Now you know why more than 50 million of us are uninsured. It is not because most of those people are being irresponsible. Most of them either can’t afford to buy coverage or can’t buy it at any price.

The number of people who get their coverage through the workplace is also declining because of shareholders’ profit demands. As recently as the early 1990s, more than 60 percent of small businesses were able to offer coverage to their employees. Now it’s well below 50 percent. Over the past two decades, insurers have methodically “purged” small businesses when an employee or dependent got sick or seriously injured.

Even though the population of the United States increased by more than 27 million during the 2000s, the number of people enrolled in managed care plans declined significantly, according to U.S. Census Bureau data — from 179.4 million in 2000 to 169.4 million in 2009.

As a former managed-care analyst was quoted as saying in Barron’s last October, “There’s no organic growth left in this business except for pricing.”

Another standard — but unsustainable — industry practice is shifting more of the cost of care from insurers to their policyholders, and from employers to their workers, through ever-increasing deductibles. You can’t keep making consumers pay more and more for their care and expect them to see the value of buying coverage. My former colleagues in the industry estimated, in private meetings, that the average American family could not afford to pay more than 16 percent of its total household budget for medical insurance and out-of-pocket deductibles.

These unsustainable business practices explain why insurers were so insistent that the Affordable Care Act contain a mandate that every American not eligible for a government program like Medicare or Medicaid be required to buy coverage from a private insurer and that those unable to pay the premiums be given subsidies by the government — subsidies that would go directly to the insurers.

Bertolini was correct in noting that the Affordable Care Act — which essentially will ban medical underwriting after 2014 as well as several anti-consumer practices — has accelerated the timeframe in which the industry’s current business model bites the dust. But reform was only an accelerant.

Over the coming weeks, I will be writing about how these companies are evolving and what that means for all of us.

Wendell is a Senior Analyst at the Center for Public Integrity where this first appeared on 3/5/12.

And some people think that by the insurance corporations paying Obama to mandate that everyone now must make contributions to the insurance welfare kitty is going to save the industry from going the way of the dinosaur.
The affordable healthcare act is a misnomer. Nobody has seen their rates go down to being affordable, if anything ,rates are going up.
It used to be that employers both public and private provided medical benefits as part of their compensation package, but now the rates have gone up so much that it is bankrupting public agencies and causing private employers to demand that the employees pay more out of their paychecks toward "healthcare insurance",
Some private employers are making a political statement against the AHCA and are laying off workers because they cannot afford the high rates. They say the AHCA is going to cost jobs.
For self employed and self insured people like myself, right now we have a choice, but in 2014, the new law will kick in and impose a fine (they call it a tax) on anyone who refuses to contribute to the healthcare insurance corporate welfare program. The fine is $695 or 10% per year of your reported income-whichever is higher.
I read that this fine will be levied by the IRS. It is a tax, but not really. It is not the same as an income tax, and the IRS cannot enforce a lien or garnish anyone's wages like they can do with a real income tax.
In other words, it is a rather weak mandate, and millions of people will shrug it off. The feds still have not yet figured out how they are going to deal with this problem of self insured people , it is more voluntary than anything else.
I came up with an idea, but I don't know if it will work, I will ask my accountant.
Right now on my tax return, there is no "payments for health insurance" deduction on my return because I am self insured.
But come 2014, I thought that maybe calculating exactly how much money that I pay for Medicare tax per year and writing that in the new healthcare insurance column of deductions, that might keep the feds off of my back.
Medicare is a form of healthcare insurance, (actually it is medical insurance) and I have been paying it for all my working life, so technically, I won't be lying. It's worth a try.

Quote:

---

Posted in reply to the post by geomancer:

https://wendellpotter.com/2012/03/th...as-we-know-it/

The End of Health Insurance as We know It?

by Wendell Potter on March 5th, 2012

Speech by Aetna CEO signals a sea change in how Americans obtain coverage.

Aetna CEO Mark Bertolini caused quite a stir when he said at a Las Vegas conference a few days ago that the insurance industry as we know it is, for all practical purposes, a dinosaur on the verge of extinction.

Time to sing, “Ding dong the witch is dead”? Not quite, but the day when most Americans get their coverage from what we think of as an insurance company is close at hand. It won’t be long before most of us get coverage through either a state or federal government-run plan or a local nonprofit company. The big investor-owned corporations like Aetna and the companies I used to work for, Cigna and Humana, know that the days of making a killing off of basic medical insurance policies are over. And the companies have no one to blame but themselves and a fatally flawed, uniquely American system of providing access to care.

While Bertolini was by no means predicting that Aetna and its competitors were about to close their doors and get the hell out of our lives, he most certainly sounded the death knell for the standard business model insurers have followed for many years — actually insuring people.

“The system doesn’t work. It’s broke today,” he said. “The end of insurance companies, the way we’ve run the business in the past, is here.”

Bertolini ticked off a number of reasons why providing basic health insurance to Americans was no longer viable — changes in demographics and the economy and, of course, health care reform at both the state and federal levels. What he did not say was that the standard operating practices of the industry were simply not sustainable and actually contributed more to the demise of the business model than any external factors.

Ever since the health insurance industry came to be dominated in recent years by a handful of big for-profit corporations, insurers have actually been driving away customers and shrinking the universe of people they were willing to cover, because of the return on investment and the profit demands of the large institutional investors that own most of the corporations’ shares. It is because of those demands that insurers price their premiums beyond the reach of millions of Americans. It is because of those demands that insurers reject on average a third or more of all applicants because of “preexisting conditions.” And it is because of those demands that insurers have routinely canceled the coverage of thousands of policyholders when they got sick. Now you know why more than 50 million of us are uninsured. It is not because most of those people are being irresponsible. Most of them either can’t afford to buy coverage or can’t buy it at any price.

The number of people who get their coverage through the workplace is also declining because of shareholders’ profit demands. As recently as the early 1990s, more than 60 percent of small businesses were able to offer coverage to their employees. Now it’s well below 50 percent. Over the past two decades, insurers have methodically “purged” small businesses when an employee or dependent got sick or seriously injured.

Even though the population of the United States increased by more than 27 million during the 2000s, the number of people enrolled in managed care plans declined significantly, according to U.S. Census Bureau data — from 179.4 million in 2000 to 169.4 million in 2009.

As a former managed-care analyst was quoted as saying in Barron’s last October, “There’s no organic growth left in this business except for pricing.”

Another standard — but unsustainable — industry practice is shifting more of the cost of care from insurers to their policyholders, and from employers to their workers, through ever-increasing deductibles. You can’t keep making consumers pay more and more for their care and expect them to see the value of buying coverage. My former colleagues in the industry estimated, in private meetings, that the average American family could not afford to pay more than 16 percent of its total household budget for medical insurance and out-of-pocket deductibles.

These unsustainable business practices explain why insurers were so insistent that the Affordable Care Act contain a mandate that every American not eligible for a government program like Medicare or Medicaid be required to buy coverage from a private insurer and that those unable to pay the premiums be given subsidies by the government — subsidies that would go directly to the insurers.

Bertolini was correct in noting that the Affordable Care Act — which essentially will ban medical underwriting after 2014 as well as several anti-consumer practices — has accelerated the timeframe in which the industry’s current business model bites the dust. But reform was only an accelerant.

Over the coming weeks, I will be writing about how these companies are evolving and what that means for all of us.

Wendell is a Senior Analyst at the Center for Public Integrity where this first appeared on 3/5/12.

---

Some activists are saying that with the present private insurance system that many millions of people simply cannot afford to pay the exorbitant rates demanded by the profiteering insurance corporations.
And the other reason that they are not hooked into the private system is that they are unable to obtain a paper policy because they have pre-existing conditions. I believe that both of these reasons are true.
But one thing that is never mentioned is that there are millions of people (like myself) who simply do not want to be a part of the corrupt private insurance system. I am not wealthy, but I would be poor if I was forced to waste $500 per month for a paper policy that offers no ROI, is basically useless to me because I am healthy and don't need their services, and I don't feel a strong need to support the shareholders and CEO's of their corporations.
I have no pre -existing conditions, I am not hooked on any pharmaceutical drugs, and I really don't trust the western medicine institutions at all. The doctors are just drug pushers, even though there some excellent doctors, they always try and sell radiation scans for cancer, statins to lower cholesterol, blood pressure maskers/reducers, psychotropic drugs for everything, including restless leg syndrome and you name it , they have a drug that will hook you for life.
There are many wealthy people who are self-insured also. They know how to be conservative when it comes to spending money, that is part of being wealthy, physically and financially healthy.
I simply refuse to partake, and that is my personal choice.
But I think this mandatory thing is a joke, and will be challenged by many people when it comes to roost in 2014.
It won't be me, because I cannot afford to pay for a legal fight, but it will be some people who can afford to fight this (what I consider to be) an illegal mandate.
Since when does the government have the power to order citizens to buy a commercial product ?
Sure, the government can propose a fine on people for not joining a corporate welfare insurance pool, but many people are not going to take this threat of a fine seriously, and I hope some with the money will challenge this (what I consider to be) an illegal mandate. I think that it is just a bluff to trick people into signing up. Time will tell, and if you've got the time, I've got the beer, and I have both !

Here is a link to a variety of AARP fact sheets on the new health care law:

https://www.aarp.org/health/health-c...rm_factsheets/