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Wall Street Weekly | 08/21/2009 9:30 am

Bullies Threaten Insurers; Is Profitability a Crime? by Liz Peek

© Shutterstock

Bears, Bulls, Chickens and Pigs: wOw’s Wall Street Weekly with Liz Peek (Week of 8/17) 

Editor’s Note: Liz Peek is a financial columnist and the author of wOw’s SHEconomics.

In Washington’s sandboxes, the bullies are gaining the upper hand. This week’s news that Henry Waxman and Bart Stupak of the House Energy and Commerce Committee had written letters to 52 insurance companies demanding reams of information about compensation, client entertainment, executive retreats and other data was so dismaying. Unable to advance health-care legislation or tame an increasingly hostile electorate, Congress has decided to beat up on health insurers – Nancy Pelosi’s favorite "villains."

The letters are, of course, showboating – much of the data sought, such as the compensation for the CEOs of the largest companies, is already in the hands of the SEC. No, Waxman and Stupak aren’t after information. The real play here is to threaten the industry with embarrassing exposure, so as to prevent them from resisting President Obama’s No. 1 agenda item. It’s disturbingly Orwellian. House Democrats have seen how effective it is to loose populist anger against an adversary; who will ever forget the mortifying Congressional assault on poor Ed Liddy, the fellow that stepped in to help sort out AIG and was absolutely excoriated for his troubles.

Ironically, as The New York Times and others have reported, the insurers, led by lobbyist Karen Ignagni, have been on board with reform from day one. Ms. Ignagni, CEO of America’s Health Insurance Plans, must have been pretty darned surprised to have her industry come under attack. She had already guaranteed the president that the companies would agree to not deny coverage to clients with pre-existing conditions and to discontinue basing premiums on a person’s health status or gender – the two most important concessions that Obama has requested. Presumably the insurers do not welcome a government-run competitor, and will argue against that part of the proposal. Since many of these firms are publicly owned, management could be sued for not attempting to block legislation that would be harmful.

The attack on the insurance industry is worrisome mainly because it is yet another in a series of anti-business outbursts from the Obama camp and its Congressional allies. What is the industry’s crime? The president accuses the industry of being profitable, and indeed "making record profits" – as he stated at a recent press conference. (Actually, profits for the industry are down from the 2006-2007 levels.) What kind of charge is that?

The president and his reform teammates have implied that insurers are earning unconscionable profits on the backs of unfairly treated policyholders. Otherwise, the reasoning goes, how could an industry be so successful? That conclusion mandates the question – just how profitable are insurers? According to Fortune magazine, not as profitable as Internet sales companies, or pharmaceuticals, or railroads or telecommunications companies. In fact, in Fortune’s listing of industry by profitability, health-care insurers and managed-care companies came in 35th with a profit margin of 2.2%. Yes, the top ten companies last year earned $13 billion; it is a huge industry – the aggregate number, often quoted by reformers, doesn’t mean a thing.

For sure, we all have issues with our insurance companies. They are an easy target. But trying to develop important and complex legislation by demonizing companies that employ Americans, pay taxes and provide an important service does not reflect well on either the president or on Congress.

The Obama administration’s desperation to drive through health-care reform may reflect their anxiety about the economy. After all, coming up to the midterm elections, they have to have something to show for their control over all three branches of government. It must be driving them crazy that for every data point showing that a bottom has been reached in housing or manufacturing, there is a little hiccup showing that the consumer remains in lock-down.

591 Reader Comments (so far…) Sign In or Register to comment

Amelie Poulain
No, nothing so dramatic.  I am just referring to those who didn’t vote for Obama, and about the same number of Americans who are not excited about their HC proposals. 
By Amelie Poulain on 08/24/2009 3:44 pm
C jay
Liz whomever simply exhausts me!
By C jay on 08/28/2009 6:04 pm
Amelie Poulain
I have stayed away from this site for months because I couldnt stand all the Obama negativity - particularly on this woman’s page.  But I do have some lovely people I like to see here now and then.
By Amelie Poulain on 08/28/2009 6:24 pm
C Hardy

I am going to tell all of my experience this past week in Canada with their Healthcare system…Not saying its good or bad.

My Cousin was 2 weeks over due with her 1st child…the Hospital was over booked & under staffed so they could not admit her to induce her labor - she had to go back every 4 hours to take a pill that would slowly induce her labor…they told her those pills could put her into labor in a couple of hours or days…thankfully it was about a day…when she delivered - the baby could not stay in the nursery b/c it was over crowded so she had to keep her with her at all times.

I thought I was going to have to take my daughter to one of their clinics b/c of a sinus infection so I asked my cousin who is a Dr up there - and she said in the town we were at they have 2 clinics that are open from 5pm to 8pm 7 days a week & another clinic about 30 mins away that is open from 8am to 12pm…what happens if you get sick between 12 and 5 - she said you could go to the ER but there is 90% of the time a wait of 16 to 18 HOURS!!!  If you have a Family Dr there is a 2 month waiting list and you can not get in on that day to see them so your stuck going to one of the clinics during those hours and hopefully you are seen…My cousin, the Dr, also said that she has her practice and she works there 4 hours a day & then at one of the clinics from 5 to 8. 

I am not sure if that is the kind of universal healthcare I want here…can it be promised that it wont be that way? 

By C Hardy on 08/24/2009 12:32 pm
DeBúrca obj

I’ll tell you my experience in Ireland having a baby there, having a daughter who needed a second opinion for surgery which we got there and an xray taken and forwarded back to her doctor here, and being there on a short visit with a 3 year old who had a terrible stomache flu.

When I had my son there, since I was residing in the country I was eligible to see both a General Practitioner AND a OBgyn. If The way they do it there, you alternate between the two every 3 weeks. I called and got in to see the GP within a week or two of my phone call for a first visit. She recommended the OB, who I saw 4 weeks following. From that time on I alternated between the two, no problem. Had at least 2 sonograms done during the pregnancy as well as amnio, which I scheduled within a week of the proceedure. My son was born healthy, but the day I was to leave the hospital, just as my first two children did, he tested high on his biliruben level and had to go to ITU and lay under the lights until the count went down, which was about 3 days. Since I was breastfeeding him, they allowed me to stay in a ward throughout the 3 days so that I could remain close at hand and not have to go home and pump. So, I had care throughout my pregnancy as good as I ever had here, a 3 day postpartum hospital stay, followed by 3 days in a ward for convenience along with my son spending 3 days in ITU. NO CHARGE. When I left the hospital, I was given a social worker for follow up, which is required after all births. The social worker makes weekly visits to weigh and check the baby for the first few weeks. Also, we had a follow up with the Pediatrician for baby shots, etc. All this was covered as well under the NHCS.

Before all this, when I was not yet a resident, my daughter was with me on a one month vacation there and since she was about to have a major spinal surgery I decided to have a second opinion while in Ireland. My husband’s doctor saw her within the first week of our stay, 50 Euro. That doctor set us up with an appt with an Orthopedic Surgeon for a consult. We were able to get in before the end of our stay and that surgeon spent an hour examining her and going over her xrays. He gave us a written opinion to bring back with us. 50 Euro.

Then when we moved to Ireland, a few months after my daughter had her surgery, at the 6 month point we needed a follow up xray taken and sent to her surgeon back home. I called the doctor, got an order for the xray, got an appt. within 2 weeks. We went to the Children’s Hospital at an appointed time and to my shock, after the horrible experiences I had previously had back in the states while waiting for xrays to be taken…. they called us as soon as the appt. time came and took her right in! I couldn’t believe the whole thing took less than 1/2 hr. Then, not only were we NOT charged, but they didn’t even charge us to forward the xrays to her doctor in the States.

About 4 years ago when my son was 3, he became quite ill with the stomach flu while we were on a short visit (about 10 days) to Dublin. My mother in law phoned her doctor, told her the situation and we had an appt the VERY AFTERNOON of that phone call. We waited no longer in that doctor’s waiting room than I have ever waited in the doctor’s waiting room here. My son was thoroughly examined and taken care of. Since we were no longer residents we paid the fee. 50 Euro.

When I lived in Ireland, other that what I’ve mentioned above, we had to use the doctor for a few, typical type visits as well. My daughter had an eye infection once, I think a sore throat and cold once,  my husband was ill once or twice and had to go. Never was it any more difficult to get them in to see the doctor than I have ever experienced here. We phoned and got an appt. quickly. The only difference is that I wasn’t charged as it was covered during our residence there, under the NHCS.

I could go on and give you both good stories AND horror stories about healthcare incidences I’ve had here. Waits in ERs, long waits for mri’s, bills that never seem to be covered, xrays taken by technicians who didn’t know what they were doing, hospitals where the only thing between a disaster and recovery was ME BEING THERE catching mistakes almost made by healthcare providers. Our system is not perfect by any means, and not only is it not perfect, but it costs a hell of a lot more. Paying $1200 a month for COBRA and then being afraid to get sick because I can’t afford what the insurance company won’t cover when the bills come… or times when we were UNinsured because of job loss and denial of coverage due to pre-existing conditions.

I want Universal Healthcare here, no question about it. 

By DeBúrca obj on 08/24/2009 1:10 pm
C Hardy

DeB if we could get Ireland’s universal healthcare - then I say heck yes but again its not all peachy for everyone & yes there are good and bad stories from all countries who already have universal healthcare.  I was just sharing my experience - but it appears you took it as bashy, which it wasnt.  I just said that I hope when we get universal healthcare our waits and our clinics are not like those in the town I was in, in Canada.

Just b/c I am not 100% on board doesnt mean I am bashing it…I am curious about it and dont want it rushed through…what is so wrong w/ that?

By C Hardy on 08/24/2009 1:22 pm
DeBúrca obj
No, I didn’t take it as bashing. After reading yours I just thought I would share my experience too. Nothing more nothing less.
By DeBúrca obj on 08/24/2009 1:26 pm
C Hardy
I know there will be issues all around regardless of what insurance we all have, if its private or universal but I think we most agree that we NEED it.  There are way too many without and that is just not right.  I dont understand have some Americans gotten so greedy that they can’t help each other out?  In Canada their sales tax is 13% - I was shocked but then figured how else do they pay for the healthcare & other programs they offer. 
By C Hardy on 08/24/2009 1:51 pm
DeBúrca obj

I think that yes, the idea that we are not all in this together as a country has developed over the last couple of decades to the point that Americans HAVE become greedy and mean. What is really strange is that along with this greedy, mean, angry attitude all you hear about these days is religion! It seems the more religious some people get, the less they care about their fellow man.

As far as taxes go, countries individually set their priorties. Some choose to pay taxes but expect a lot in return and get it. However, I think a lot of people in this country don’t realize how much they already ARE spending on services AND taxes. And when you put all our taxes in together, income, sales, property… we do have high taxes here too, but we don’t get much in return. Our priorities are to spend our tax dollars not on the people like for education and healthcare, but on the military industrial complex. Pair that with taxes that have plummeted for the wealthiest 2% in the country… and you see where our priorities are. One of the ways the President wants to help pay for this is to raise taxes on the highest incomes in the country, those who can well afford it, merely to the same tax rate they were paying under Reagan.

By DeBúrca obj on 08/24/2009 2:37 pm
Amelie Poulain

Yes. CH.. the HC in Canada isn’t perfect.  Maybe its the same problem in the US, finding doctors who want to live in the out of the way towns to service the people out in the sticks.  That’s the problem.  Not many doctors with a big dream want to live out in desolate, isolated communities.  Same in Canada.  Also, so many doctors make good money and don’t care to work endless hours.  It is up to them how much they want to make and how much they want to work.  So many spend mornings on the golf course or in pilates or at home with their families, and only have a 4 - 6 hr per day commitment to their profession. Its really odd. My doctor retired last year.  My new doctor, a recent graduate, is only at the clinic near me on Thursdays. And its a lousy walk in clinic.  She works out of 5 different clinics, and is also a highly regarded specialist in hormones.  It is the way she has designed her life and likes it that way. I find it annoying as hell, but I have no say in how she runs her career of course.   

The bottom line is that even those Americans with great insurance programs who might find they really can afford 100,000’s of dollars for care that happens to be outside their insurance perameters should not have to spend that money on medical procedures AT ALL. Everyone should receive the care they need without playing roulette with a bureaucrat who has your lives in his hands, while playing the odds and the statistics of what might go wrong with you over your lifetime.  Its just plain wrong IMHO.

 

Also, the worst thing that you guys can do is settle for less than a single payer system.  Or a hybrid of single payer and private like France.  

 

And there needs to be rules about trade unions for the nurses and doctors and support staff too.   The nightmares in Canada are largely a result of the unions playing hardball and nurses or doctors or other staff going out on long strikes.  THAT is where the backlogs begin. And re-negotiating with unions every few years always sets us back another decade it seems.  Long long wait lists, services cut, etc are because everything comes to a grinding halt when there is a health care strike. They need to fix that!

By Amelie Poulain on 08/24/2009 4:05 pm
C Hardy

Amelie - All I ask - being an American - is that Obama and his Administration listen to us - the people he swore he would protect and listen to and so far he isnt.  I mean did it take Canada only months to push their universal healthcare through?  I am sure it didnt…I dont mind having a system mirrored against all the rest that is out there - maybe take what doesnt work from all the other universal healthcares and make sure that doesnt happen to ours…yes we need it b/c there are way too many without coverage and when I say many I include children & the elderly. 

 

By C Hardy on 08/25/2009 8:55 am
deber B

Hi, C Hardy, actually compared to our population, a small percentage of "Americans" are without health insurance.   Why isn’t Obama really concerned about these Americans right now…today?   Why isn’t he putting these at risk people on medicaid today until he can take the time to design a healthcare plan that will serve all Americans efficiently?

Obama is a pure politician…..he seems more concerned with making his huge campaign donors profitable to insure more campaign money for the upcoming election.   His eye is on big business not on the little people who pay the taxes.   After all, ACORN alone donated $33 million to his campaign….I’m sure they are going to rake in the bucks somewhere.

Follow the money…..

By deber B on 08/25/2009 9:43 am
C Hardy
Oh and my Great Aunt who is 89 years old - is a dual citizen of the US and Canada and her Dr in Canada made a house visit to remove her corn from her foot - she called Wednesday & he was there Friday…but she also has lots of money & its a very small town oh and not to mention she has US Insurance.  I was told if I didnt have Insurance that I wouldnt be seen in the Canadian clinics and that if I take her to the ER they would turn me away also…………
By C Hardy on 08/24/2009 1:24 pm
S.J. Morgan
Ho many years ago was this?  I have a freind who had her baby two year ago and had a much different story.  Her husband is Irish and they moved back the the US for our care that is much better.  Thier daughter was admitted this past year for high fever and her Irish husband thought their hospital was a PRIVATE one sinc ethe care was so superior.  He said the insurance premiums here seem high but compared to the high taxes in Ireland it is not much different in the amount but our care is better by far!.
By S.J. Morgan on 08/24/2009 2:01 pm
DeBúrca obj
My son was born in 2002. Also, between our income taxes and property taxes here in the states, we pay more than my husband paid when he lived in Ireland. They don’t have property taxes there. And when you figure the taxes he paid covered his healthcare, we don’t even compete here. Also, what they do in Ireland the UK and Canada, is that many people choose to supplement their public healthcare with a private insurance plan, like VHI. (seniors do that here too). But because of the National Healthcare System there, the Insurance Companies are in no position to screw people there with high premiums. Also due to the National Halthcare System, the insurance companies do not take as much risk so they can also lower premiums. So, in my husband’s case, he had National Healthcare that was paid for through his taxes, that he always had whether in a job or out, sick or healthy… he knew he was protected. But also he carried a supplimentary VHI that he could use if he wanted elective surgery quicker or a private room, etc.  … and for this supplement, he paid for 2 adults and 3 children roughly 1200 Euro PER YEAR. That’s it.
By DeBúrca obj on 08/24/2009 2:45 pm