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Democrats vs Republicans on Health Insurance

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How to limit the rising cost of health care (or more accurately, health insurance) is one issue where there is a lot at stake and a clear difference between Democratic and Republican parties.

The Patient Protection and Affordable Care Act (aka “Obamacare”) will do a little, but not nearly enough, to slow the rise in the cost of health insurance (and thus, indirectly, the cost of health care) primarily by requiring private health insurance companies to pay out 80-85 percent of the money they receive as premiums for health care services (compared to the 70-75 percent that was the industry average before the act was passed).

The most cost effective means of reducing the cost of health care would be to cut the private health insurance companies out of the loop completely. They add nothing in terms of the quality or quantity of actual health care provided. Their overhead (including generous compensation for executives) and profits simply add to the cost of health care.

The additional costs of having private, for-profit insurance companies acting as middle men for the delivery of health care in the U. S. accounts for most, if not all, of the increased amount we pay for health care as a nation. Other industrialized countries have socialized health insurance or (in the case of Great Britain) socialized medical care.

Since Medicare adds only 3 percent for overhead to the cost of health care, we could realize significant savings by offering a public option to buy into Medicare. This idea was briefly discussed and quickly and quietly laid to rest during the negotiations related to The Affordable Care Act.

This is a prime example of how corporate influence keeps our government from serving the common interest. While the health insurance companies gave a little ground during the negotiations related to The Affordable Care Act, for the most part they got what they wanted: a mandate that everybody buy policies from them, with no public option as an alternative.

If we ever get a government that is no longer controlled by private corporations, and instead is truly “of the people, by the people, and for the people,” one sure sign of its arrival will be the adoption of some form of public option for health insurance.

Republicans are using their usual scare tactics, including deliberate mislabeling, by invoking the bogeyman of a government take-over of health care or socialized medicine. In reality, Obamacare is not even socialized health insurance (which is what most other industrialized countries have). Our real concern should be continuing a system where private, for-profit insurance companies act as the gatekeepers to health care, deciding which doctors we can see, what treatments will be approved for payment, etc.

The Ryan Plan to “save” Medicare (whether you call it a voucher plan or a “premium support” plan) simply moves tax dollars for Medicare from the government-run plan to private health insurance companies. It does nothing to contain or limit the cost of health care.

In fact, by moving seniors to private, for-profit insurance companies, with their higher overhead costs, the Ryan plan will actually either increase the amount of tax money spent on health care, or alternately, reduce the amount spent on actual medical care.

So, we the voters are left with a clear choice with regard to the issue of health insurance:

If the Republican party gains control of both houses of Congress and the White House, Obamacare will be repealed, Medicare will be turned into a voucher system, and funding for Medicaid will be altered to block grants to the states. The cumulative effects of theses changes would be to further line the pockets of private insurance companies, increase the cost of health insurance to seniors, and limit the availability of health care for the poor.

As long as we have divided government, the status quo will be as good as it gets. The Affordable Care Act will remain in place, but there will be nothing more done with regard to limiting further increases in the cost of health insurance or health care.

If the Democratic Party gains control of both the executive and legislative branches, we might (I emphasize might) see some movement toward a public option. That is one of the reasons I plan to vote a straight party (Democratic) ticket for the first time in my life this November.

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About Winston Apple

Winston Apple is the author of "Edutopia: A Manifesto for the Reform of Public Education." He is a former teacher. He has a Masters Degree in Curriculum and Instruction from the University of Missouri at Kansas City (1990). He is also a singer-songwriter and recording artist.
  • This is interesting. It seems that this said Obama Care is
    beneficial to the public but will have a negative effect on companies. It seems
    that employers are going to pay more for their employees’ health care.


  • Winston Apple

    Clavos and Glenn,

    Would either of you (or anyone else) care to weigh in on the $716 billion question? President Obama is praised (by Democrats and supporters) for saving that money by eliminating over-payments to providers, thus pro-longing the solvency of Medicare; or alternately, accused (by Republicans and detractors) of cutting from Medicare to finance his “government take-over of medical care” (a/k/a “Obamacare”).

    I’ll go first. I have a bridge (to Nowhere) I would like to sell to anyone buying the Republican version, or buying the line that The Affordable Care Act, which gave private insurance companies nearly everything they wanted, amounts to a government take-over of health care.

    My only problem with The Affordable Care Act is the lack of a public option. Which could still be added, if and when the Republicans and their Blue Dog pals in the Democratic Party are reduced to minority status in both houses of Congress.

  • Glenn Contrarian

    Clavos –

    You didn’t get my point – I’m talking about the customers who aren’t eligible for either Medicare or Medicaid. For instance, one study by the GAO showed that denial of care rates varied from 0 to 40 percent. Do you really think that a denial-of-care rate of 40 percent is above board? Or is that a fairly obvious sign that a private insurer is finding any excuse under the sun to deny care?

    That, Clavos, is also corruption. It’s ripping off people at their most vulnerable time, when their very health is in danger. For instance:

    PacifiCare denied 40 percent of all California claims in the first six months
    of 2009. Cigna, which gained notoriety two years ago for denying a liver
    transplant to 17-year-old Nataline Sarkisyan of Northridge, Calif. and then
    reversing itself, tragically too late to save her life, was still rejecting
    one-third of all claims for the first half of 2009.

    When the profit motive comes in to play, Clavos, all else – including the lives of innocent people – tends to take a back seat. It is a vast mistake to assume that just because Medicare gets ripped off by private health insurers, that those same private health insurers aren’t ripping off customers, too.

  • Clavos

    sometimes it’s the private insurers themselves who are committing the fraud.

    We’ve discussed that before Glenn — several times.

    Who commits the fraud is immaterial; it’s Medicare’s money that’s being ripped off, they should be watching for that and taking measures to prevent it. As I said earlier, when I let a contract, I supervise the contractor — it’s my money that’s at stake.

  • Glenn Contrarian

    Um, Clavos – unlike Medicaid, sometimes it’s the private insurers themselves who are committing the fraud. Just ask your governor Rick Scott.

    That’s what happens when the profit motive overcomes the necessity of doing one’s job with integrity.

  • Clavos

    after all, do you really think that private insurers are free from fraud?

    Entirely free of it? Of course not. But the big difference between them and Medicare is the private insurers are using their own and their stockholders’ money to do business; they watch it closer — they have to make a profit. Medicare doesn’t have to make a profit.

    Back to another, earlier point: Medicare’s preposterous “overhead” level. I just found out that CMS (Medicare’s billing unit) doesn’t handle the billing themselves, it’s all contracted out to (gasp!! Horrors!) private companies!!!. Ask any doctor you go to: Medical billing is incredibly complex, time consuming and labor intensive. Since Medicare is contracting it out, you can bet it’s not carried on the books as “overhead.”

  • Glenn Contrarian

    Clavos –

    By the same token, fraud that takes place within private insurers aren’t taken into account in their overhead totals, either; after all, do you really think that private insurers are free from fraud? What’s good for the goose, y’know?

    And how about reading the other side of the story to see what the Obama administration has done differently from every other administration to both crack down on and prevent Medicare fraud. I’m sure you’ll just pish-posh it away, but it’s usually a heck of a lot better to fix a system – to fix what’s broken and keep what’s not broken within that system – than it is to tear it down and start all over again – especially when all the special interests would have a hand in every part of the new system’s design (see Citizens United).

  • Clavos

    Does the 3% Medicare overhead figure include the billions of dollars in fraud about which Medicare management is doing very little?

    Do the $2500 wheelchairs they buy for $5000 get counted in that “overhead?” I doubt it.

    They should be — but then, of course their overhead would be considerably higher than 3%.

    Figures don’t lie.

    But liars figure.

  • Glenn Contrarian

    It has to do with an observation of your judgmental ability…and the lack thereof. If you can’t be objective enough to admit that Obama faced a situation worse than any president since FDR’s first term, but instead claim that it’s actually worse NOW (when we gained 171K jobs last month) than when we were losing 800K jobs per month, then yes, you have issues with your judgmental ability.

    And because of that, I will look at all your opinions – including your above comments on the health care issue – with a jaded eye.

  • Baronius

    Glenn, what does that have to do with anything? And if it did, what would you say to a person who felt compelled to criticize Romney over the lack of specifics on health care in an article about Pakistan?

  • Glenn Contrarian

    Baronius –

    The only reason why Boxer’s statement was rated half true was because she overstated the amount of admin overhead of private insurers…but their overhead is STILL over five times that of Medicare:

    We won’t settle this question, but we will point out evidence that even when you control for the differences, Medicare is still considerably more cost-efficient. In one study, CBO found that privately run Medicare plans had 11 percent overhead, compared to 2 percent for traditional Medicare.

    And I have to look at all your statements with a jaded eye ever since you claimed that if Romney takes the oath of office in January, that he’ll inherit a worse mess than Obama did in January 2009. That in and of itself showed you incapable of objective observation.

    I recommend you take a look at Chris Christie, who is now reviled by the Republican media because he had the guts – and the honesty – to praise Obama for his response to Sandy. By doing so, Christie earned the respect of a lot of liberals (including myself), because he had the courage to violate the First Rule of the Republican Party: Thou Shalt NOT say anything good about Obama ever!

    But at least you yourself are sticking by that rule….

  • Baronius

    Igor, do you really believe that linking to fact-checkers is an abdication of responsibility on my part?

  • Igor

    I read the article, too, and decided it supported Winston.

    If you have some contrary arguments, Baronius, please state them. Nobody else should be expected to make your argument for you.

  • Baronius

    I realize what the article said, Winston. But if you read the contents of it, it raises some interesting issues. That’s why I said it was a good primer. For example, it talks about how other governmental agencies do the collection of revenues, et cetera. Now, there is an adjustment to the budget for those administrative costs, but it’s a question that you didn’t address. Another is the relative lack of fraud investigation.

    I also notice that in your comment #5, you trimmed away a lot of the conclusion – all of the trimmed parts being points against your position. You end with the apparent conclusion “correct”, whereas the article ends with the conclusion “half true”. Hardly fair, is it?

    One point that the article doesn’t raise is that administrative costs are naturally lower as a percentage of revenues for sicker patients. The more money goes out, the lower the ratio of administrative costs. So comparing Medicare to ordinary insurance plans is deceptive.

    Lastly, your final question assumes that it was necessary to require insurance companies to pay out a larger percentage. There’s some circular reasoning there. It could just as easily be the case that it wasn’t necessary.

  • Winston Apple

    Baronius, The conclusion from the link you provide:

    “There is some disagreement over how much Medicare pays in overhead. It could be a few percentage points higher than the 1 to 2 percent that Boxer cites. But Boxer’s numbers are defensible since they come straight from the Medicare trustees’ report.

    Meanwhile, Boxer’s 20 percent-to-30 percent figure for the private sector is more squishy. Some plans have overhead rates that high, but only a fraction do, and the industry-wide average is quite a bit lower — 11 to 12 percent.

    We’re convinced that Boxer’s underlying point — that private plans have higher overhead than government plans — is correct.”

    However, I wonder if the private sector average is 11 to 12%, why was it necessary to require insurance companies to pay out 80 to 85% of what they receive in order to make health insurance more affordable?

  • Baronius

    This is a good starting point for learning why the numbers in this article are fictitious.

  • Igor

    Winstons analysis is correct and his conclusions well drawn.

    We, in the USA, maintain a very expensive fiction of a private health insurance system. It is bogus. It costs us more than $500billion per year to maintain that fiction.

    To what purpose? We’re not fooling anyone with this brave show of obstinance. It just makes us look sillier every year.

  • Winston Apple

    Well Doctor,

    While I accept that your diagnosis of the situation is almost certainly correct, I am invoking the right of voters everywhere, who vote on principle, to dream.

    Based on their agenda and their methods, there is no way I can vote for any Republican candidates at this point in time.

    And in the words of John Lennon: “You may say I’m a dreamer, but I’m not the only one. I hope someday you will join us…” and the Democrats will actually do what needs to be done.

  • I know you’re voting on principle, Winston, but you do realize, don’t you, that even if the Democrats retain the White House and (as seems likely) control of the Senate, there isn’t a cat in hell’s chance that they’ll recapture the House too?