Thursday, April 21, 2011

HuffPo Whiffs It

Wendy Potter rants on HuffPo about how the Paul Ryan plan to overhaul Medicare and save the federal government from financial suicide is actually a windfall to insurance companies.

Just shows his ignorance about the real world.

Ryan, chairman of the House Budget Committee, wants to dismantle the Medicare program and replace it with a system of vouchers. Starting in 2022, the government would give the average 65-year-old Medicare beneficiary $8,000 a year to buy coverage from a private insurer. That's the amount health care analysts estimate will be what the Medicare program will spend on every 65-year-old in 2022 if the government doesn't turn it over to private insurance companies.

There are quite a few problems with his theory.

First, carriers that currently administer Medicare (and Medicaid) have a sweet deal. They are paid an admin fee for claims adjudication and have no risk. As long as their costs don't exceed the government allotment they make money.

Why would they want to give up that?

Besides, they can't compete with the government on claims cost since they lack the unlimited borrowing power of the government and are required to be financially solvent.

Second, when you consider all the government intrusion in the day to day lives of the health insurance carriers and the way they keep changing the rules for funding, expenses, etc on Medicare Advantage plans, there is no way carriers would want to jump back in that market.

There are fewer carriers and fewer plans in the Advantage market than a few years ago and those numbers will continue to dwindle.

Expansion as a primary payer for age 65+ health insurance is not something any of them want to do.

Here's why this would be a dream-come-true for the insurance industry: The more health plan enrollees have to pay out of their own pockets, the less insurers have to pay for medical care. The money that insurers avoid paying out in claims goes straight to their bottom line -- and into shareholders' pockets.

Apparently Wendy has not noticed how Medicare taxes and Medicare premiums have risen almost every year while benefits have been reduced.

Insurers have been shifting more and more of the cost of care to their policyholders over the past several years by enticing -- or pushing -- them into plans with ever increasing deductibles.

Yup. Just like Medicare.

The rest of his rant gets in to class warfare where he bemoans the salaries of insurance executives but says nothing about the trillions in borrowed debt forced on all of us by the government.

Reading his post reminds me of a Hall and Oates song.

Out of touch . . .
blog comments powered by Disqus