HealthCare Followup: The United Way
After my previous article I had a number of questions/misconceptions put to me that I thought might be common enough for me to address with another post — so here goes!
Observation: My health insurance premiums only went up 6.5% last year, not 20% like your article suggests.
It's likely that your employer is paying for some or all of your healthcare. A 6.5% increase on your end — assuming you are paying at-most half of your premium (with your employer paying the other half or even more) that means your premiums went up at least 13%. Even just considering the part coming out of your own salary, a 6.5% increase vs a 3% raise (not even counting the people who got less or are in salary freeze) means a lot of the extra money you earn is going straight to the health insurance company, meanwhile gas, food and your electric bill aren't getting any cheaper.
Ultimately, reality is the average American's salary really is going up 5x slower than their health insurance cost — whether they got a 2% raise with a 10% increase or a 4% raise with a 20% increase — so count yourself lucky if you're among those for whom this is not the case, but keep in mind for half the country it is. Even if your share of the health insurance premium increase is only slightly more than your raise, that's likely been going on for a few years now and there's little hope of it stopping. Eventually you will feel those costs squeezing your take-home pay more and more.
…and that's not the worst part. The worst part is that even if you might feel the 6.5% extra coming out of your pocket isn't a big deal, the human resources department at your company is paying the additional 6.5% or even more for every single employee in your company. At some point, especially at smaller companies, management may find the annual premium hikes are cutting too far into the company's bottom line, and drop their employee health coverage. It's already happening for many small businesses, and it's only going to get worse as these insurance premiums continue to climb at such a steep pace.
Question: But didn't the average American do better than a 4% salary increase last year?
No, unfortunately they did not. If you have a job where you even need to ask that question then should consider yourself very lucky indeed because you are likely doing far better than the average American.
Question: I saw the chart you posted and I get that United HealthGroup blew Exxon Mobil out of the water in terms of profitability, but what's wrong with that? This is a capitalist society, are you suggesting there should be a limit on how much money a company can make?
Absolutely not, what I am suggesting is that it's highly suspicious that a health insurance company is so HUGELY outperforming an oil giant that just last year many people said should be subject to a windfall profits tax due to its record-setting profits. An insurance company makes money by charging policy-holders a monthly or annual premium, and then making sure that overall it pays out less money than it took in. In this case, we're not talking about home-owner's insurance or car insurance but something far more serious — insurance for people's medical care, insurance for their health. How is it that a health insurance company is making so much money? One might suspect they're either overcharging for their premiums or underpaying on the back end by denying claims that should by all rights be covered. I would charge that they are engaged in both sorts of misconduct (all the more serious because people's lives are on the line), and worse.
In fact, worse has already been essentially proven and let off with a slap on the wrist. United Healthgroup bought up two of the databases which health insurers purchased their "Customary & Usual" charges from and then artificially (some would say fraudulently) lowered the prices, thereby lowering the amount they themselves paid out to United policy-holders, under the pretext that the customers were being charged an amount more than was "Customary & Usual" and therefore United would only cover a percentage of the lower amount — leaving their customers to foot the bill for a much larger chunk of their medical expenses than they were entitled to.
On top of this, they sold access to their databases to other health insurance companies — which would be absolutely normal if not for the conflict of interest and blatant abuse of it by manipulating the prices in said databases. United lured in other health insurers by promising them a 16:1 return on investment, thus spreading this poison throughout this nation's entire healthcare industry.
The lawsuit over these events was settled out of court and in the end the largest price paid by anyone was a financial slap on the wrist to United Healthgroup, a slap on the wrist kept mostly out of the public eye with no long-term consequences for any of the people responsible and no disincentive to keep conducting this sort of business. Maybe it's a bit harsh to consider some executives might be tried for negligent homicide, or manslaughter at the very least, but undeniably people have died due to not receiving care, due to an inability to pay, due to insurance companies like United Healthgroup denying/reducing coverage under questionable or even provably fraudulent pretenses.
Of course, this is just one way companies like United HealthGroup are making these massive profits through potentially fraudulent and/or exploitive practices. Anyone who thinks it is the only way, or that they've learned their lesson and won't do it again, is being dangerously optimistic. Everyone needs healthcare, and when health insurers conduct business in this way — jacking up premiums, lowering coverage and even denying coverage outright — they're hurting everyone in this entire country, and that's not hyperbole. Everyone needs health care, and those who aren't currently being ripped off by these companies are uninsured because they can't even afford to be ripped off by health insurance carriers, making them either the unluckiest or perhaps in some ironic way the luckiest of them all.
Currently the insurance companies seem to be successfully lobbying congress for language in current healthcare legislation making their customers liable for up to 35% of medical expenses. That means if you're lucky enough to be paying as little as $5,000/year for your coverage — and let's just pretend we live in a fictional world where that price won't go up 10% to 20% every year for the next decade, but actually will remain steady — over ten years you'd be paying $50,000 for your insurance, and then if one of those years you have an accident and end up with $50,000 in hospital bills, the insurance company would only have to pay $32,500 leaving you to pay $17,500 out of your own pocket even though you thought you were insured.
Well let's look at those numbers for a minute. Your total out of pocket medical costs (including your monthly premiums) would be $67,500 even though your total medical bills only came to $50,000 plus whatever routine doctor's visits you had in the meantime. Even if your routine annual checkups came to $1,000/year (which for most people they do not) you still would have been financially better off sticking your money under a mattress instead of giving it to the insurance company, and if that's true for a guy with $50,000 in hospital bills then imagine how much money the insurance companies are raking in from people who don't.
Factor in the high incidences with which they find excuses to deny coverage for people who have medical expenses in the $100,000+ range and it starts to look like the insurance companies are not playing averages at all, every single customer at an individual level is either profitable, extremely profitable, or they try to find some excuse not to pay. That's not how insurance works in any other field, and allowing it to work that way when people's lives hang in the balance is dangerous and irresponsible. It has become excruciatingly clear that these companies are overcharging and under-providing, and our government and current healthcare system has done nothing other than reinforce the current flaws, allowing them to take root and grow.
