Democracy Under Assault
Theopolitics, Incivility and Violence on the Right

Michele Swenson

Why commercial health insurance no longer works

Why Commercial Health Insurance no longer works

Only one of five Colorado health care reform proposals evaluated by the Lewin Group in 2007 has demonstrated any cost savings for the state – $1.4 billion. The Colorado Health Services Single Payer Insurance proposal is also the only one shown capable of providing access to comprehensive health care for all.

Single payer -- or single-risk-pool – insurance would eliminate wasteful administrative spending of multiple fragmented U.S. health insurances, and permit true choice of providers and hospitals.

Currently over 30 percent of U.S. health care dollars go to inefficient administrative costs, CEO salaries and profits of over 1200 U.S. commercial insurances. Providers and hospitals are forced to hire extra staff just to deal with administrative costs of multiple insurance authorization procedures and drug formularies, and requirements for claims, billing and provider re-credentialing – excess costs ultimately passed on to consumers.

U.S. commercial health insurance no longer performs the function for which it was developed in the 1930s and ‘40s – to spread health care risk and cost.

Assertions that the ‘free market’ will lower health costs are belied by the fact that commercial health premiums have risen 78% since 2001, and that increasingly we pay more for less coverage. U.S. health insurance is best described as a monopoly market, now dominated by three behemoths – UnitedHealth, Wellpoint and Aetna. Annual premium increases continue to exceed both the rate of inflation and raises in workers’ earnings.

In response to rising premium costs, more and more employers are moving employees into catastrophic insurance policies with high out-of-pocket costs that place individuals and families at greater health and financial risk.

Out-of-pocket health costs and unpaid medical bills both rose 59-60% over the decade preceding 2005, relates the American Hospital Association -- costs ultimately passed on to taxpayers and consumers. An estimated 50 percent of personal bankruptcies are due to large medical bills.

Commercial health insurances guarantee profits by covering the healthy and rejecting anyone requiring health care as a 'pre-existing condition.' Middlemen in ‘Denial Management’ scan claims for excuses to delay, deny or renig on reimbursements, at an additional cost of $20 billion annually, reports The Wall Street Journal (2-14-07). Thirty percent of provider requests for reimbursement are denied, requiring repeat appeals.

Privatization of public programs like Medicare forces taxpayers to subsidize private insurance plans at higher cost. Medicare prescription drug reform is a multi-billion dollar gift to the insurance and pharmaceutical lobbies. 

Many hesitate to share personal information with their doctors, for fear it will be used as excuse to deny them coverage. In no other industrialized nation do people fear loss of health care benefits with change of jobs; nor do families agonize about losing everything due to huge medical bills, as U.S. families do.

Single Payer insurance is the only health care model that offers security. No longer would cancer be a twin battle – one with disease, and another to retain insurance coverage; family premiums that average over $1,000 a month would be eliminated, and families would be saved from the ‘Sophie’s Choice’ of which family members to cover. Single Payer insurance eliminates wasteful administrative costs of multiple private insurers, and permits negotiation of bulk rates for pharmaceuticals and durable medical equipment.

Every other industrialized nation has some form of single payer insurance. All average half as much health care costs and better overall health outcomes than the U.S. Will the U.S. continue to insure the bottom line of the insurance industry, or choose instead to insure health care access for all?

Read summaries 19 federal and state studies of Single Payer proposals since 1990.