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August 27, 2009

The Putrid Stench of Private Health Care Insurance

By Chaz Valenza

Nearly everyone recognizes something is terribly wrong with private health care insurance. The crux of the problem, obscured by a a massive school of red herring, is rarely identified though it infects the entire medical services system. Once exposed all arguments in opposition to reform crumble.


Nearly everyone recognizes something is rotten with private health care insurance. The crux of the problem, obscured by a a massive school of red herring, is rarely identified though it infects the entire medical services system. Once exposed all arguments in opposition to reform crumble.

Let's quickly net the red herrings, all of them.

At 4:00 p.m. on August 20, 2009, Brian Orelli, writing for the Motley Fool, published The Health Reform Witch Hunt.

Less than two hours later Motley Fools, money-minded individuals looking for salient investment advice, logged twenty-nine comments to Mr. Orelli's article.

To summarize, Mr. Orelli made the following points regarding the present health care reform debate:

  1. Congressmen Waxman and Stupack are on a witch hunt to, in Orelli's words, “Show us why you can't deal with a government-sponsored public plan,” in the form of letters to 52 health insurers requesting salary and bonus data for their top executives, costs of conferences and retreats, and the profit margins on their companies' products.

  2. Five top medical insurers – UnitedHealth Group, WellPoint, Aetna, Cigna and Humana – have reported profit margins between a high of 7% and a low of 1.5% over the three years 2006 – 2008.

  3. Medical costs, at 82% of every premium dollar, are the main reason health care insurance premiums are so high, and by mathematical extension, a public plan could only save 5%.

  4. He then postulates that private insurers will innovate and find ways to compete even if there is a public option.

None of the above points matter. This is no witch hunt. There is a real, live monster on the loose that needs to be caged.

If the goal of the piece was to stir the pot and incite a response from the “Fools,” it did just that. What's your guess as to the reaction from what can only be described as people with a bit of money to invest?

By my count: 7 opposed to most health care reform; 18 in favor of substantial health care reform and 4 for which I could not determine a position from their words.

Over 62% acknowledged that changing the current system is necessary.

People hate change. People who are happy don't want any change. Yet these individuals, who have money to invest, want significant change in our health care system.

“Why?” becomes an important question. What is it that truly bothers us about the current system? We can point here and there. This is unfair, so is that. But to see the monster we have to step back, far back, because up close having private health care insurance is warm and fuzzy.

Those who posted comments to Mr. Orelli's ...Witch Hunt struggled to get their arms around the hairy beast. Many posts were over 500 words long. Some brief passages deserve repeating here in the context of visceral instinct that something stinks.

From among those I counted as opposed to most reform:

“Health Care COSTS is where it's at [sic]. The current system could stand a little make over. Tackle tort reform. Do the obvious things first, people!”

“the uninsured are not all needy people, but for those that are, there are ways to make reasonable health care available. It is important to allow competition between insurance companies across state lines.”

“Being opposed to ‘Obama Care' does not imply that those opposing it are satisfied with the status quo. The issue is the kind of reform, not the reform itself.”

And from those in favor of reform:

“I agree the health care companies make way more than you realize its time for a public option I feel it is a necessary evil [sic].

“Not surprised to see MF (Motley Fool) join the chorus of right wing mis-informers" Tell me how anyone can justify the salary of UnitedHealth Group CEO William W. McGuire" who has made 342 million (dollars) over the last 5 years?”

Regarding medical insurance tied to employment, “It deprives individuals of the freedom to quit their job and sell their skills in the open market, especially if they have a preexisting medical condition.”

But, making a profit is not unfair. Then what is the inequity that pushes our buttons to the max? Scoobrs, who wrote at length, shot the monster point blank:

“The insurance provider who expunges the most or signs up the fewest unhealthy Americans always wins. From a national productivity perspective, this is damaging our economy in multiple fashions.”

Yes it is, and there lies the rub. There is no free market capitalism in the medical insurance system. These are not capitalist enterprises. What we have, and what we are reacting to, is a predetermined system of profiteering.

We recoil from the stench of a scam where the taxpayers pick up the bill for nearly everything: the government run insurance programs, much of the cost of our own medical needs, and the cost of “uncompensated services rendered” to those who cannot afford to pay.

A bombing campaign of sound bites is in order. How about:

“What the insurance companies have done is say: if you're a little sick we'll pay. If you get very sick you pay. While you're healthy, we'll take your money. Once you're old, we don't want you.”

“For all the years you're healthy and can afford coverage, insurance companies love you. When that's no longer the case, you're history.”

“The way medical insurance works now you pay for coverage when you're healthy. But once you have a terminal illness, the insurance ambulance boots you out at the next stop.”

“Those poor medical insurance companies. How can they make money if they have to insure people who may get sick?”

When seen for what it is, I challenge any free market capitalist, “Go ahead, defend that.”

Submitters Bio:

Chaz Valenza is writer and small business owner in New Jersey. He earned his MBA from New York University's Stern School of Business. His current feature film project is "Single Point Failure" an insider's account of how the Reagan Administration caused the greatest tragedy of the space age based on Richard C. Cook's book "Challenger Revealed." He is a former Director of Public Information for Planned Parenthood of NYC. His website is: www.WordsWillNever.com