The incentives of which you speak are profit driven. That is why regulation that allows for the consumer to participate in deciding those profits is the best way to lower costs to the consumer. The ideas I and numerous others have put forth are ALL about the consumer.
The fact of the matter is this: Health care is NOT a right any more than dinner on the table is. Asking our government to regulate business to make getting dinner and affording health care easier is an appropriate role for government.
I think you missed or ignored some very important points in the video:
WENDELL POTTER: Absolutely right. It's the way the American system has evolved, the political system. But it does offend me, that the vested special interests, who are so profitable and so powerful, are able to influence public policy in the way that they have, and the way that they've done over the years. And the insurance industry has been one of the most successful, in beating back any kinds of legislation that would hinder or affect the profitability of the companies.
BILL MOYERS: Why is public insurance, a public option, so fiercely opposed by the industry?
WENDELL POTTER: The industry doesn't want to have any competitor. In fact, over the course of the last few years, has been shrinking the number of competitors through a lot of acquisitions and mergers. So first of all, they don't want any more competition period. They certainly don't want it from a government plan that might be operating more efficiently than they are, that they operate. The Medicare program that we have here is a government-run program that has administrative expenses that are like three percent or so.
BILL MOYERS: Compared to the industry's--
WENDELL POTTER: They spend about 20 cents of every premium dollar on overhead, which is administrative expense or profit. So they don't want to compete against a more efficient competitor.
BILL MOYERS: You told Congress that the industry has hijacked our health care system and turned it into a giant ATM for Wall Street. You said, "I saw how they confuse their customers and dump the sick, all so they can satisfy their Wall Street investors." How do they satisfy their Wall Street investors?
WENDELL POTTER: Well, there's a measure of profitability that investors look to, and it's called a medical loss ratio. And it's unique to the health insurance industry. And by medical loss ratio, I mean that it's a measure that tells investors or anyone else how much of a premium dollar is used by the insurance company to actually pay medical claims. And that has been shrinking, over the years, since the industry's been dominated by, or become dominated by for-profit insurance companies. Back in the early '90s, or back during the time that the Clinton plan was being debated, 95 cents out of every dollar was sent, you know, on average was used by the insurance companies to pay claims. Last year, it was down to just slightly above 80 percent.
So, investors want that to keep shrinking. And if they see that an insurance company has not done what they think meets their expectations with the medical loss ratio, they'll punish them. Investors will start leaving in droves.
I've seen a company stock price fall 20 percent in a single day, when it did not meet Wall Street's expectations with this medical loss ratio.
BILL MOYERS: And they do what to make sure that they keep diminishing the medical loss ratio?
WENDELL POTTER: Rescission is one thing. Denying claims is another. Being, you know, really careful as they review claims, particularly for things like liver transplants, to make sure, from their point of view, that it really is medically necessary and not experimental. That's one thing. And that was that issue in the Nataline Sarkisyan case.
But another way is to purge employer accounts, that-- if a small business has an employee, for example, who suddenly has have a lot of treatment, or is in an accident. And medical bills are piling up, and this employee is filing claims with the insurance company. That'll be noticed by the insurance company.
And when that business is up for renewal, and it typically is up, once a year, up for renewal, the underwriters will look at that. And they'll say, "We need to jack up the rates here, because the experience was," when I say experience, the claim experience, the number of claims filed was more than we anticipated. So we need to jack up the price. Jack up the premiums. Often they'll do this, knowing that the employer will have no alternative but to leave. And that happens all the time.
BILL MOYERS: So, the more of my premium that goes to my health claims, pays for my medical coverage, the less money the company makes.
WENDELL POTTER: That's right. Exactly right.
BILL MOYERS: So they want to reverse that. They don't want my premium to go for my health care, right?
WENDELL POTTER: Exactly right. They--
BILL MOYERS: Where does it go?
WENDELL POTTER: Well, a big chunk of it goes into shareholders' pockets. It's returned to them as part of the investment to them. It goes into the exorbitant salaries that a lot of the executives make. It goes into paying sales, marketing, and underwriting expenses. So a lot of it goes to pay those kinds of administrative functions. Overhead.
