Today I came across this article in the LA Times:
"Insurers See Banking Future"
"Many have found that managing customers' money is more profitable than underwriting medical coverage."
"WellPoint Inc., the nation's largest health insurance company, ran into a snag last year while pursuing an important new business initiative. Federal banking regulators insisted on classifying WellPoint as a healthcare company. And that was interfering with its efforts to open a bank."
"The Federal Reserve Board eventually agreed that the company's core insurance business could be considered financial services. But what about its mail-order pharmacy and its program for managing chronic diseases, which was overseen by WellPoint doctors and nurses? Wasn't that healthcare?"
"WellPoint finally convinced the Fed that those activities were merely "complementary" to its main business -- financial services. It pledged to limit them to less than 5% of total revenue.
That a medical insurer would agree to keep a lid on healthcare expenditures so it could get approval to open a bank illustrates a fundamental change in the industry: Insurers are moving away from their traditional role of pooling health risks and are reinventing themselves as money managers -- providers of financial vehicles through which consumers pay for their own healthcare."
"This is a turning point," said Jacob Hacker, a professor of political science at UC Berkeley who has written extensively on healthcare reform. "It's a fundamental shift away from the idea of broadly shared risk. It's going to lead to a complete transformation of the health insurer, which will be increasingly focused on providing management of money."
"The company also stands to collect fees for maintaining the accounts, handling some disbursements and investing the balances -- and for overdrafts, electronic transfers, even printed checks and monthly statements."
Read the rest of the article here:
http://articles.latimes.com/2008/oct/22/bu... -----------------------------------------------------------------------------------------------
So in essence, the insurance companies will "manage" health savings accounts the same as banks manage checking accounts, and nickle and dime these accounts to death with fees and practices that put them in the best possible to take more of the money in fees and profits, rather than spend them on health care. And if fees take money that you can't now put towards uncovered costs, oh well.
But the following was what brought me up short. This is a correction to the Times made to a previous article on health care:
"Insurance firms' revenue: A chart accompanying an article in Wednesday's Section A on health insurance companies opening banks incorrectly gave figures on revenue from premiums for the four largest firms in millions of dollars rather than billions of dollars. The correct totals: WellPoint, $55.9 billion; UnitedHealth, $68.8 billion; Cigna, $8.7 billion; and Aetna, $23.5 billion."
Now, consider what this means: the total profits for the big insurers mentioned in this correction was $156.9 billion. This is for one year. This is money that is being extracted for health care, that does not go to health care. This goes into the pockets of the insurance company shareholoders, directors and managers. The cost for the latest health care bill, which opponents are crying about because its about $100 billion more than the last bill scored before the dems lost the 60th vote in the senate, is a little less than $1 trillion dolars, but over 10 years. (The media never makes this clear; they only refer to the 10 year amount rather than the annual amount.) This amounts to about $100 billion per year. So the cost of the health care bill, e.g. what the government is going to spend per year to subsidize almost everyone to have health insurance, is about $56 billion dollars less per year than what the health insurance companies curently rake off the top in profits.
This says a lot, but what it really says is that the current for profit system using insurance, is not only broken but is not the best model for health care delivery. Its damn near akin to my using a car rather than a boat to try and sail across the ocean. It just does not work. And the costs of trying to do this, we will never be able to maintain over time, as the costs will continue to rise.
Posted By:
Sunday, February 28th 2010 at 1:30PM
You can also
click
here to view all posts by this author...
