The story goes that insurers, especially medical malpractice insurers, are charging increasingly higher rates because of too many lawsuits and too many fraudulent claims. Well, as is pointed out in this post, one has to ask themselves if insurance companies are being so squeezed by lawsuits that they have to increase rates simply to stay afloat and are not just choosing to do so to make more money, shouldn't they be making far less money than they used to? The recent statistics on property and auto insurance company profits, even after Hurricane Katrina, do not fit well into this narrative.
Insurance industry profits hit record highs in 2005, despite Hurricane Katrina.
* The property-casualty insurance industry's after-tax net income for 2005 was the highest ever, a record-breaking $44.8 billion!
* 2005 profits are up 18.7% over last year's profit of 38.7 billion; 2004 had been the record until 2005.
* The property/casualty industry's surplus also is at the highest level ever, rising by more than 7% to nearly $427 billion.
(link to full Center for Justice and Democracy piece)
Even in light of these astounding post-Katrina numbers, insurance companies still argued that they need more support from the state and will need to premium raise rates.
They said that even with the increase, insurers face deep problems that can be fixed only by substantial premium hikes, a scaling back of commitments by several firms to the most disaster-prone portions of the country and, according to some, a greatly expanded role for the state and federal governments in insuring individuals against the largest of catastrophes.
"Unless insurers can get relief, you're going to see a pullback by the private industry," warned Robert P. Hartwig, chief economist of the industry-funded Insurance Information Institute.
"We're not being good stewards of our investors' capital or our policyholders' surplus if we keep doing business where we can't make money." (link to Los Angeles Times Article)
This perspective is already kind of hard to swallow, but it almost gets worse.
As explained by Peter G. Gosselin, of the Los Angeles Times, these insurance companies are doing fine because they have over time pulled back their coverage and (beleive it or not) gotten their own insurance for their insurance policy losses. In short, they have slowly shifted financial risks to be increasingly "borne by individuals:"
But the industry's remarkable performance also reflects a dozen-year effort by insurers to insulate themselves from the most extreme financial consequences of catastrophe by, among other things, shifting risks previously borne by companies to policyholders and the public.
The effort started after the last big batch of natural disasters in the early 1990s, among them Hurricane Andrew in Florida in 1992, and the Oakland hills firestorm in 1991 and Northridge earthquake in 1994 in California.
The effort has included industry adoption of increasingly sophisticated techniques for analyzing catastrophic risk, as well as self-imposed limits on how much firms will cover and where. It also has included successful campaigns to get states or state-created entities to shoulder such dangers as earthquakes in California and wind in Florida, Texas, Hawaii and elsewhere. And it has involved tightening policy language -- by, for example, narrowing the definition of "replacement cost" for homes -- in ways that leave individuals bearing more of the burden of putting their material lives back together after trouble strikes.
While premiums for homeowners insurance have increased by more than half since the early 1990s, coverage, especially in disasters, has shrunk. Historically, insurers covered a little more than 60% of total losses in disasters, according to Hartwig, the industry economist. During the 2004 hurricanes in Florida, they covered less than 50%, according to Hartwig's numbers. During Katrina, he said, they covered about 30%, due in part to the high flood damage.
In making these changes, the insurance industry has been part of a trend that has picked up steam as the U.S. economy has grown more competitive in recent decades -- a shift of financial risks from business and often government to individual households.
"If last year's hurricane season had occurred 10 years ago, it would have been devastating for the company," said Allstate Vice President Fred F. Cripe in an interview. "Last year, it was merely disappointing."
(link to Los Angeles Times Article)
See Justinian'stelling post and chart on this issue.
// posted by Russell King @
9:35 AM
When we take a long view on improving health, we usually find reasons to celebrate. In the last century, for example, infant mortality dropped by 90% and maternal mortality decreased 99%. Yet today, despite scientific advances, we face the fact that we are not a healthy nation:
– Our children’s life expectancy may be shorter than our own.
– About 70 % of deaths and health costs in the U.S. are now attributable to chronic diseases (e.g., cardiovascular disease, cancer) — many of which are preventable.
– More people die from obesity or tobacco than from homicide.
Our health care system has gravitated toward quick fixes rather than the persistent actions with lifetime rewards. Proven clinical and community preventive services go unused. Two out of three adults fail to get a flu vaccine or recommended colorectal screening. Millions of lives are lost needlessly. As a nation, we dedicate only three percent of our health dollars on health promotion — but over 20% of costs to the last year of life.
A new approach is needed. As part of its overall plan to fix the fundamentally flawed health system, the Center for American Progress proposes a Wellness Trust. The Wellness Trust would:
– Deliver prevention outside of the bounds of the health system by paying for services wherever they are delivered, in pharmacies or supermarkets, workplaces or senior centers.
– Use its pooled financing to create incentives for providers, employers, schools and individuals to prioritize prevention.
– Operate independently like Social Security, with expert Trustees.
The premise of the Wellness Trust is that disease prevention is more like homeland security than health insurance: everyone needs it, no one notices if it works, and it depends on persistent, strong leadership and systems. While change will come at a cost, this cost would be dwarfed by the lost lives, productivity, and public resources that will result from a failure to act.
// posted by Russell King @
9:33 AM
Kaiser, ABC, and USA Today just released a pretty expansive poll documenting the country's opinions on health care. The nickel version is that your countrymen are mostly liberal, deeply confused, and more likely to loathe the status quo than clearly conceptualize potential alternatives. Respondents said it was the third most important issue in the country, behind Iraq and the economy, but before immigration, gas prices, or terrorism. That's probably because opinions toward the system are so overwhelmingly negative: 80% are dissatisfied with the cost of health care in the country, and 54% are dissatisfied with the quality. So the system starts out with few friends.
From there, things get more complicated. Nearly 90% are satisfied with the quality of care they received. Nearly 60% are satisfied with their costs. In other words, Americans believe everyone else's health care system costs too much and delivers too little. Their own system rocks. Meanwhile, a full 25% reported that they or someone in their household had problems paying for medical bill in the last 12 months, and 28% put off medical treatment due to cost. Of that 28%, 70% admitted that the delayed treatment was "serious." And remember, this is all in the last year.
Individual fears become more acute when asked about the future: 60% fear affording insurance "over the next few years" and 56% fear losing their coverage if they lose their job.
As for what's driving all these high costs, the reported culprits, in descending order, are excess profits of drug and insurance companies, medical malpractice lawsuits, fraud and waste, overpaid doctors, administrative costs, unnecessary treatments, unhealthy lifestyles, expensive new treatments, the aging population, and better medical care.
So, in sum: The health care system sucks, but nearly every American's health care is great. That would suggest the opportunities for reform are minor, unless directed at the loathed elements (like insurance or Pharma). Folks don't like the high costs and fear they'll soon be overtaken by bills, but they blame all manner of minor and moderate contributors for the problem, not their own health choices, overtreatment, or new technologies. Universal care is heavily desired, but only if it doesn't cost anything or demand any sacrifices. In other words, the appetite for reform outpaces the realism of would-be reformers. The tradeoffs of the current system seem poorly understood, and attitudes towards its desirability are contradictory. Not a whole lot of hope in here for anyone.
// posted by Russell King @
9:27 AM
Blue Cross of California has settled a group of more than 70 lawsuits and claims filed by patients who alleged that the health plan canceled their insurance after they got sick. The settlement comes in response to pressure from state regulators, which already fined the health plan $200,000 for canceling one California woman's policy, according to the Los Angeles Times. While the dollar amount was not disclosed, the patients received a substantial cash settlement and are "pleased" with the outcome, according to one plaintiff's attorney. Five other suits, including one filed against Blue Shield of California, are currently pending, according to the Times.
The suits accused Blue Cross of exploiting a state law allowing health plans to cancel individual policies if the insured lied on their application. They contended that the insurer intentionally designed the forms to be misleading, generating innocent mistakes that could be used against them as evidence of deceit. Blue Cross only checked over the forms when a patient filed a claim for treatment of a chronic condition or costly care, the plaintiffs said.
Find out more about the suit: Read this article from the Los Angeles Times
Meanwhile, Blue Cross of California has been working to position itself as a good corporate citizen (bwahaahaahaa), funding rural and urban health care initiatives across the state. Article
// posted by Russell King @
9:24 AM
Democracy Corps: "Seniors are the most volatile and persuadable group in this off-year electorate and certain to turn out in large numbers and thus the number one target for campaigns in the final month. Although seniors favored Bush by a 5-point margin in the last presidential election, Democracy Corps’ recent senior poll indicates that Democrats are winning the seniors’ vote by 4 points, 45% to 41%. Keeping and building that margin will determine how many seats Democrats win."
However, a new AARP survey finds that 59% of seniors are still undecided for their House races, and 52% for Senate races.
// posted by Russell King @
2:02 PM
Just in time for election day! State Republican legislators who helped kill WHO-endorsed Senate Bill 1, the ethics reform bill, are now claiming to be supportive of the measure. It's no surprise that this comes just weeks before an election being dominated by that very issue.
To refresh our memories, recall that the State Senate passed the bill overwhelmingly on a vote of 28-5 back in November of last year, and Gov. Jim Doyle said he would sign it. Assembly Republicans killed the bill back in May on a 45-51 vote.
Assembly Speaker John Gard (now running for Congress), brushed off the need for the bill in this quote from the local daily a few weeks before the vote:
"The fact of the matter is we have the toughest ethics laws in America," Gard said. "Those laws were enforced in Wisconsin, and people were convicted and are being punished. Combining the ethics and elections boards is a whole 'nother discussion."
Starting last year, five ex-legislators - former Senate Majority Leader Chuck Chvala (D-Madison), former Sen. Brian Burke (D-Milwaukee), former Assembly Speaker Scott Jensen (R-Town of Brookfield), former Assembly Majority Leader Steven Foti (R-Oconomowoc) and former Rep. Bonnie Ladwig (R-Racine) - were convicted of misconduct or ethics violations.
Ellis said Assembly Republicans view his bill as an attack on Jensen, who faces sentencing May 16.
"They haven't accepted the fact that what Jensen did was wrong and if they were to pass this, they would have to come to grips with reality and admit what he did was wrong," he said.
Among other reforms, the bill would combine the state Elections and Ethics boards to create an independent Government Accountability Board.
SB 1 history here.
// posted by Russell King @
6:01 AM
// posted by Russell King @
9:48 AM
In a word, the GAO says health savings accounts (HSAs, pushed by Bush and the GOP) are only reasonable if you're rich, young and don't get sick. Can we now put HSAs into the garbage can once and for all?
HSA-eligible plan enrollees generally had higher incomes than comparison groups, but data on age differences were inconclusive. In 2004, 51 percent of tax filers reporting an HSA contribution had an adjusted gross income of $75,000 or more, compared with 18 percent of all tax filers under 65 years old.
. . .HSA-eligible plan enrollees who participated in GAO's focus groups generally reported positive experiences, but most would not recommend the plans to all consumers. Participants enrolled in the plans generally understood the key attributes of their plan. Few participants reported researching cost before obtaining health care services, although many researched the cost of prescription drugs. Most participants were satisfied with their HSA-eligible plan and would recommend these plans to healthy consumers, but not to those who use maintenance medication, have a chronic condition, have children, or may not have the funds to meet the high deductible. http://www.gao.gov/....
// posted by Russell King @
9:46 AM
The just released report from the Commonwealth Fund describes the deplorable state of the U.S. health care system--the most expensive but by no means the best health care system in the world.
Once upon a time, it was taken as an article of faith among most Americans that the U.S. health care system was simply the best in the world. Yet growing evidence indicates the system falls short given the high level of resources committed to health care. Although national health spending is significantly higher than the average rate of other industrialized countries, the U.S. is the only industrialized country that fails to guarantee universal health insurance and coverage is deteriorating, leaving millions without aff ordable access to preventive and essential health care.http://www.cmwf.org/...
// posted by Russell King @
9:44 AM
...is gonna take a hit now that the Medicare "Doughnut hole" is kickin' in:
Millions of older Americans are confronting a temporary break in their Medicare drug coverage this month that will require them to pay the full cost of their prescriptions or face the painful prospect of going without. ...
"Virtually everyone who calls to say they've been denied coverage, they're shocked," said Robert M. Hayes, president of the Medicare Rights Center, a nonprofit that helps seniors navigate Medicare. "Trying to explain that this is the way the program was created by Congress angers folks who think it makes no sense. Many people feel blindsided."
// posted by Russell King @
9:43 AM
Since 2000, “workers’ health insurance premiums have risen a total of 84 percent, while their wages have increased 20 percent and inflation has risen 18 percent.”
// posted by Russell King @
9:40 AM
A new Kaiser Family Foundation report says health care costs are rising at twice the rate of inflation. It's part of a new plan with a brilliant premise: rich people get the best care because they pay the most money, so if everyone pays the most money, everyone gets the best care!
// posted by Russell King @
9:36 AM
“Most of the 9 million uninsured children in the U.S. live in homes where at least one parent works full time,” a new Families USA report finds. “In more than one-quarter of the cases, there are two working parents.”
// posted by Russell King @
9:32 AM
