Shannon is right. Government pays for half of health care, and has low overhead. The self-insured (GM, GE and other large employers) account for a large portion of the insurance market, perhaps even half. So that leaves just a quarter of all health system revenue or about $600 billion last year flowing through the insurance companies' book. If you took 30 percent of that, the best estimate of what they pay in administrative costs, you have $180 billion. Now you couldn't eliminate all of that overhead, but if you reduced it to the same level as Medicare, it would probably be enough to pay for the uninsured.

Thanks Merrill. Your work is now more important than ever. Herb Shapiro

"A third of every health care dollar goes towards administration."

This can't be true. we know that about half of the $2.3 trillion we spent last year was paid for by federal and state government (VA, Medicare, Medicaid, military). The rest is out of pocket or private insurance, which does have 30 percent overhead, but government-run health care has a lot lower overhead bill. So it's probably closer to $350 B overhead for private insurance, and far less for the other half. Right?

In trying to reform the health care system, how do you reform the health insurance provider system? We've essentially been letting them do whatever they please - increasing premiums, not covering treatments they see as "unnecessary," not paying claims on time. Reforming their practices and procedures really should be the first step in the major health care reform. If we could cut some of those administrative costs, not only would we have money to use elsewhere, but it might actually create a more efficient and effective insurance system.

Our system of medical care through private insurance giants is becoming ever more obviously rotten to the core...still, we're so fortunate to not have that soul destroying single payer socialist medical system that all those misguided nations have imposed on their peoples...aren't we?

Why is single payer, by any name, off the table?

Byard,

Conceptually, no one disagrees with the belief that the current system is broken, unsustainable, and that insurance carriers themselves bear a great deal of culpability. I would also agree that universal healthcare is, ultimately, the only possible result of the current crisis. The question becomes, how do we get there and what does it look like when we’re done?

A wholesale elimination of insurance companies inferred by a single payor, nationalized system creates problems that are more than just onerous. One large problem is the group of 2.3 million employees the Bureau of Labor statistics states are working within the health insurance industry. On October 3rd the bureau noted that the number of unemployed stood at 9.5 million people. Simple logic notes that eliminating the health insurance industry has, at least in the short term, the prospect of increasing unemployment by 25%.

Another issue is purely within the amount of the economy invested in the health insurance industry. Elimination means either 1) liquidating those companies assets … which in light of implementing a system where the actual contracts or business has no value, means the only value remaining for distribution is the hard assets or 2) forcing those companies to change their product on a wholesale basis and in very short order. As regards the first possibility, just recently the insurance company AIG, which has a market capitalization of 6.26 Billion dollars, was provided a bailout, being described as too large and important to the economy to be allowed to fail. Wellpoint’s market cap alone is 21.5 Billion. Before one advocates eliminating something of that size, one needs to consider whether the political or economic will exists to follow through. I would contend that will does not exist. As regards the second possibility, let’s look at IBM as an example. IBM is a company who successfully changed itself from a company that manufactured adding machines into one which now promotes itself as a company who provides not only technology but business solutions. But it was only able to accomplish the metamorphosis over two generations. Due to the capitalization of the companies and the effect of devaluing that capitalization, the proposal would likely cause significant economic issues.

However, a laissez faire approach of allowing competition between the insurance carriers to drive down the costs doesn’t get us there either. If it did, Michael Moore would not have had a reason to make “Sicko”. It’s accurate when a lot of pundits say that promoting electronic medical records will reduce costs by eliminating repeat tests and increasing efficiencies, but I believe the gains are really only incremental. Similarly, tort reform to reign in malpractice costs is not the magic bullet to reducing costs either. People should be compensated for gross negligence on the part of providers. It’s also an accurate statement to say malpractice costs to physicians and providers are astronomical, but I believe this is more an issue of profit motive than claims (http://www.centerjd.org/ANGOFFReport.pdf).

So here’s where we are … we need a system that provides coverage for all, sick as well as healthy, so we can spread the inherent risks and costs, AND we must avoid a wholesale dismantling of the current system because of the disastrous affect that would have on the economy.

Thanks Merrill- I addition to impact on health insurance premium rates this US economic collapse will drive three more things in US Health Care

- the efficacy imperative
- the prevention imperative
- the fairness imperative (THE MOST IMPORTANT)

Dr. Rick Lippin
Southampton,Pa
ralippin@aol.com

Before opting for health insurance plan, the need is to make a good research because both private players and government organizations are competing with each other in order to attract the maximum customers, thus creating an overall confusion with a wide range of plans.

___________________

A very important point has been focused in this article. I am a university student and as partial requirement of our Principle of Insurance course, I had to make a term paper which also includes a case study on a insurance company. That time I visited a renowned insurance company and interviewed the executive director of claim department. That time I suddenly realize how different the reality is from the theory we read in the book. The insurance companies think very little about the society. For their own profit they keep open thousands way to delay the payment or not to make the payment at all. This specially happens in case of health care. In the policy papers there are many rules and regulation that we do not read in time of taking the policies. At the time of payment sometimes the insurance company use those rules as a weapon for delaying payment. But this type of practice has a very bad impact on the overall economy and as a result today we are facing this global economic crisis.