DO NOT RESUSCITATE: Why the Health Insurance Industry Is Dying and How We Must Replace It, by John Geyman, M.D. (Common Courage Press:
Do you know what "Medical Loss Ratio" means? I didn’t till I read this book. "Medical loss ratio" is the fraction of their revenues health insurance corporations actually spend for patient care. Your medical care is your gain (to use the dog-eat-dog language of "the marketplace"), but the corporation’s loss.
Dr. John Geyman, Professor Emeritus of Family Medicine at the University of Washington School of Medicine and former president of Physicians for a National Health Program (PNHP), calls the
The oligopoly keeps its "Medical Loss Ratios" low by actually avoiding the old, the infirm, and (dare one say the word?) the sick. "Denial management," a companion term to "Medical Loss Ratio," isn’t just corporate-speak, but an activity that helps drive "MLRs" down. A "growth industry of its own within the private health insurance industry," this administrative pursuit denies care to as many Americans as possible. (p. 43) Among other examples: in 2006, 45 conditions were used by insurers to deny coverage in
Of course the industry profits—that’s no surprise. The eye-openers in this book are shocking details like the value of former United Health CEO William McGuire’s unexercised stock options: they soared from about $250 million between 1999 and 2001 to over $1.5 billion in 2005. (United Health, Wellpoint Inc. and
Corporate administrators actually boast about the results of what, in any just system, would be crimes against humanity: "In 2002," crowed Dr. John Rowe, chairman and CEO of Aetna (some industry leaders are actually former doctors), "
- Bait and switch: for instance, "Regence Blue Shield raised premiums for 137,000 individual-plan enrollees by an average of 19 percent in 2007 (an increase of 40 percent for 16,000 of them)."
- Added restrictions like new co-payments for cancer radiation treatments make continued coverage unaffordable.
- Policy cancellation: a regular practice by corporations, stranding their ex-enrollees. But administrators, whose ranks expanded by 2500% between 1970 and 2000 (compared with a modest 100% increase of doctors over the same period) trip merrily along in the mega-rip-off. "One senior analyst received $20,000 in bonuses for cancelling 1600 policies between 2000 and 2006, saving the company $35.5 million in medical expenses…Las Vegas-based Sierra Health terminated drug coverage for 2,300 HIV-positive Medicare Advantage enrollees, improperly claiming that they had not paid their plan premiums." (pp. 44-47)
A witch’s brew of rising premium costs, "denial management," and restrictions like the ones just cited, is responsible for 47 million people—or one out of every six Americans—going uninsured. According to Geyman that’s more than any time since Medicare and Medicaid came into being in 1965. Four out of five uninsured Americans are employed but simply can’t afford to pay for health-care. US employer-based insurance itself is declining (employers can’t afford it), leaving the employed to cast about for rampantly inflationary, unregulated individual premiums.
Even Medicare and Medicaid, initially safe havens for the aged and the poor, have been strangled by the health-insurance octopus. Corporations have created their own Medicare clones—"Medicare Advantage" reaped United Health Group a 22 percent gain in second-quarter 2007 profits. "Medicare Advantage was a ‘bright spot,’" crowed the corporation, blithely adding: "This is likely a function of the benefit changes United Health made to its Medicare Advantage product this year, as it raised premiums, cut benefits and exited unprofitable counties." (p. 103) Some readers may recall that 2003 Medicare legislation handed over 42 million seniors’ drug plans to the industry. At the same time the legislation prohibited the government from negotiating bulk discounts, and it banned any Canadian imports. Drug prices soared; government overpayment to the plans (your and my tax dollars at work) rose to 112 percent of traditional Medicare payments. (p. 102)
A startling fact this reader hadn’t realized is the extent to which the government subsidizes the whole mess. According to the federal Agency for Healthcare Research and Quality the government subsidizes 60 percent of US annual health spending. This includes direct payments to businesses and tax-exemption subsidies to the industry. "In overview," observes Geyman, "private health insurance covers…about two-thirds of the U.S. population while paying for about one-third of total health expenditures." (p. 77) So in fact we do have a weird sort of "national health-care:" it’s designed to minister to the well-being of the industry itself and to first do no harm to its profits.
Within the confines of ever-shrinking coverage Americans pay more and more for less and less; many avoid doctors altogether. Thus the industry actually makes people sicker. In 2000 The World Health Organization found that the US ranked 15 out of 25 countries on indicators like child survival to age five, and disability-adjusted life expectancy. And The Commonwealth Fund’s 2007 study of 12,000 adults in Australia, Canada, Germany, the Netherlands, New Zealand, the U.K. and the U.S. reported that Americans experience more medical errors than any of the other citizens studied; avoid necessary care because it’s too expensive; have more trouble paying for essential care; and "are most likely to believe . . . that their health care system needs to be completely rebuilt." (p. 75)
As I write this article my local paper, The Boston Globe, has just run a front-page above-the-fold story, "Bay State premiums highest in country: rein in health costs, Massachusetts urged." The Massachusetts "reform"—in 2006, state legislation required everyone to buy insurance—has tanked. The average employer-sponsored family plan in Massachusetts "was $13,788 in 2008, 40 percent higher than in 2003. Over the same period, premiums nationwide rose an average of 33 percent." (Boston Globe, August 22, 2009). Geyman has a chapter that shows how "incremental system ‘reforms’," Massachusetts’ among them, continue reverting to the default position: profit-maximization for health insurers and profit-driven hospitals. The book cites Harvard Medical School physicians (and PNHP co-founders) Steffie Woolhandler and David Himmelstein, who told The Boston Globe two years ago: "Hospitals like Massachusetts General are reporting record profits and enjoying rate increases tucked into the reform package. Blue Cross and other insurers that lobbied hard for the law stand to gain billions from the reform, which shrinks their contribution to the state’s free care pool and will force hundreds of thousands to purchase their defective product." (p. 129)
Re-visit Michael Moore’s "Sicko" and then read this book. You can easily skip around chapters (the book starts off with an historical description of the change from a non-profit system to today’s oligopoly, but you can read the book as a group of essays). Health-insurance has never been at the top of my hit-list of "fun" reads, and I’ll admit to taking wine and coffee breaks while getting through this small volume. But I learned an enormous amount by reading Do Not Resuscitate, discussing it with friends and family, going back to it again and again to answer their questions. The book’s 36 charts and graphs are usually clear, often startling in their impact, and drawn from a wide range of sources, from the World Health Organization through the Rand Corporation, the Commonwealth Fund, medical journals, and more.
Given the terror instilled across the country by the industry and its lobbyists during the Congressional so-called "debate" over health care, it is sobering to find that many Americans agree with Dr. Geyman about a national health system. As many as 74 percent of respondents favored single-payer in the 1940s; 50 to 66 percent have declared themselves for it in polls since then. It is also sobering to realize how long the battle for what Europeans take for granted has been in the US: Theodore Roosevelt and the Progressive Party made national health insurance a platform plank in the 1912 campaign. The initiative was defeated in 1917 by employers and organized medicine.
Recommended sites: Physicians for a National Health Plan
Interview with Dr. John Geyman, author of Do Not Resuscitate: Why the Health Insurance Industry Is Dying And How We Must Replace It, August 21, 2009
Ellen Cantarow: You used to be President of Physicians for a National Health Program from 2005 to 2007. Could you explain how this organization began?
Dr. John Geyman: It started in the late 80s—its co-founders were David Himmelstein and Steffie Woolhandler. They wrote an article for AMA Journal in 1989 laying out the area for health care reform. We’re now 16,000, mainly physicians, based in Chicago. Primary care specialties and psychiatry are more common than other subspecialties. Our object is to study options for health care reform. Our website www.pnhp.org is a terrific resource on health-care reform with all kinds of good links and active current publications. We’re not primarily a political organization but we do try and energize grassroots reaction. The Washington DC chapter hand-carried 535 copies of my book, Do Not Resuscitate, to every member of Congress. We have our greatest influence through research and education. We have been trying in various ways to mobilize support for H.R. 676 (John Conyers’ bill).
Is H.R. 676 the only single-payer bill out there?
No, Bernie Sanders has introduced a bill in the Senate. H.R. 676 has 86 co-sponsors. Nancy Pelosi has promised that single-payer will get an up or down floor vote this fall. New York Representative Anthony Weiner will introduce an amendment to H.R. 3200. We think it will say, "Just substitute 676 for 3200." But the main bill right now is H.R. 3200 out of the House. It’s called America’s Affordable Health Choices Act of 2009. If you go to the Kaiser Family Foundation website they have a side-by-side comparison of all the Congressional bills, which is the best way to keep up with that.
But H.R. 676 doesn’t seem to have much chance.
It should, of course, and it will inevitably. It’s just a matter of when. What’s happening now in Congress is very disappointing to me. Basically it’s a surrender-in-advance thing. The push for bipartisanship was a mistake. The Republicans just want the market to continue. The insurance industry has framed reform such that they’re claiming to favor a bipartisan solution. They fight restrictions on what they do. They don’t want any restrictions on premiums, they don’t want comprehensive benefit packages, they fight against a public option. What they do want is the government to require everyone to buy insurance because they see a huge market out there of mostly subsidized people. And that’s not just private insurance, it’s Medicaid and Medicare too. This is the way it’s headed—a bonanza for private insurance, a bailout.
If that happens, what’s the next step for single payer?
We would have to remobilize, study and describe the increasing pain Americans have with health care. If that happens it will be a shambles. It will cost more money. The only option that actually saves money or doesn’t cost more is 676. H.R. 3200 costs $1 trillion more over ten years. What we really have is corporate money controlling the debate and controlling the vote and controlling the crafting of the various bills in Congress. The Center for Responsive Politics, which reports every three months or so on campaign financing and all the donations to each of the legislators, has shown how closely the people crafting the bills are tied to industry. They’re all paid off.. Baucus has gotten a million and a half dollars from the health industry in the last year or two, half a million just from the insurance industry. So he’s not going to be a single-payer supporter.
Do you have any idea what "the public option" would mean in practice? Does it have any chance of passing, and in what form?
On my website I have blogs about that. I have recent blogs on each part of H.R. 3200 including the individual mandate, the employer mandate, the public option, exchanges, and co-ops. My latest blog is about fiscal conservatism, which essentially says that if whatever we’re trying to do out of Congress this year is to save money, the only option is H.R. 676. Everything else is just inflationary. I’m looking at my blog and there’s a list of 8 or 10 bullets on why a public option won’t work.
Among the harms of the American health-insurance system you describe, is the privatizing of parts of Medicare and Medicaid. How does this work, and how extensive is it?
Private insurers have priced themselves out of the market; they cherry picked the market; employer-based insurance is going down; people can’t afford individual policies. So they seek markets in programs like Medicare and Medicaid.
In the 1990s private plans like Medicare Plus Choice came into being. If they didn’t make enough money they’d just abandon the plans and the people. At one point they stranded 2 million people.
In 2003 a bill came out of Congress, the Medicare Drug Benefit Modernization and Improvement Act of 2003. It brought on a drug benefit which was handed over to private industry. The government was prohibited from bargaining over drug benefits. Private plans were re-established under a new name, Medicare Advantage. They promote themselves like they’re better coverage. But they’re not. Lots of abuses, quite a bit of fraud. They go to the states and try to convince the governors that this will be much better than traditional Medicare.
In the book the case is made that private insurers are dying and they need these programs, which is ironic because they’re against the government but they jump on these programs and exploit them. There’s a good article in the August 17 issue of Business Week by Terhune and Epstein, which is essentially how the health insurance industry has already won. It explains how, and even describes which private insurers will do the best on Medicare and Medicaid. What’s coming out of the House, and probably if we got a bill this year out of Congress, is a mandate for people to buy insurance.
Like in Massachusetts?
Yeah, and it would be heavily subsidized by the government. And insurers would do great. But it would just increase health care costs.
This morning’s New York Times has a story about Florida seniors who are worried that their Medicare insurance may be adversely affected by the Obama Administration reforms. What truth is there to their fears?
I haven’t read it yet, so I can’t comment on that article, but obviously that’s an area of concern.. Hopefully Obama will eliminate all the overpayment to private Medicare plans. Right now they’re paid 14 percent more than regular Medicare. When private plans were first talked about at the end of the 80s or beginning of the 90s, the first idea was they’d save money. 95% would be paid by the government. But they’ve never saved money. It has always cost the government to have private Medicare plans. The money goes to administration, profit, and sometimes to fraud. But mostly it’s the increased administrative cost of private plans—15 to 20% versus 3% for Medicare. They have to market and decide who to take on and who to deny.]
Keith Olberman reported recently that insurers now are trying to pass a bill that would have the insured paying 35 cents for every dollar they spend on health care, whereas up till now they have been spending 20 cents. He compares that to casinos, which get less profit (New Jersey restricts casino profits to a max of 17 percent, Nevada, to 25). Is he right?
This is in the book. The insurance industry runs on medical loss ratios. [see review above] They want to have a medical loss ratio of 80 percent or lower because they want to keep at least 20 percent of the premium for profit, administration, marketing, and CEO bonuses. If they can get MLR under 80 percent they’ll get even more money. If they game it really well they’ll get it down to the 70s. In H.R. 3200, there’s a little sentence that the Secretary of Health and Human Services, Kathleen Sebelius, will be charged with the task of setting MLRs for the insurance industry. And I’ll tell you, if they really try to do that it’ll be hugely fought by industry and they will lobby to have a low number. If that were set at 95% it would kill the industry tomorrow, or even 90%. If it were set at 80% they’d go home and love it. So whether the government will actually take that on—I’d love to see them set it at 95% and force them to compete, but they won’t. There are 8 or 10 things in the fine print that will be huge deals. Another is what are the minimum benefits that insurers have to provide. Because they’ll want that to be the scantiest coverage they can manage. A third thing in the fine print: they will resist at all costs any caps or limits on their premiums. But those are the kinds of things that will determine whether reform works or not. They’re not on the front pages of The New York Times.
Your book begins with a frightening graph, "Who will have health insurance in 2025?" from American Family Physician, 2005. By 2025 average health premiums will have risen to almost $90,000 while average household incomes will just be a little over $80,000. Is this more or less likely in the light of the current Congressional "debate"?
All that is tracking right along. Health insurance is taking up more and more of family income and giving back less and less. We can’t pay all of our family income on health insurance. I think we’re at the break point, or even past it, for most people. Beyond that we have huge amounts of under-insurance now, where insurance doesn’t even come close to covering the cost of health care. So just to talk about insurance cost isn’t the whole deal. The average family of four spends $16 thousand a year on health costs, which is a huge chunk of their annual income.
So what’s going to happen?
What’s happening now is the health insurance industry is dying and it is trying to get a government mandate so we taxpayers pay for their continuance and profit. It’s a bailout.
What is our greatest hope?
We need rational health policy by responsible and accountable legislators.
Let me be devil’s advocate and ask how we’re going to get such legislators when it’s legislators paid off by the industry who dominate the debate.
That’s our challenge. Do we have a democracy or do we have a corpocracy? That’s what it’s down to.
Ellen Cantarow, a Massachusetts-based writer, has written for many US publications since 1977 on topics ranging from women’s social and political issues through Israel/Palestine and the US medical system.