Tag: Government health care

In the health care debate, President Obama pleads with Americans to get the facts straight before making up their minds. But that’s easier said than done, and by his actions, I wonder if the president really believes this.

Here’s an example: A page at mybarackobama.com under the title “Setting the Record Straight” holds this prominent statement: “It seems like a new lie about health insurance reform crops up each day. These lies create fear and anger — and we’re seeing the results around the country. It’s time to work together to set the record straight and expose the special interests and partisan attack groups who deliberately spread these rumors and lies in a desperate attempt to preserve the status quo.”

A direct quote from the president shown on this page is “Where we do disagree, let’s disagree over things that are real, not these wild misrepresentations that bear no resemblance to anything that’s actually been proposed.”

So what are “things that are real,” Mr. President? Here’s some Wall Street Journal reporting (Fact-Checking the President on Health Insurance: His tales of abuse don’t stand scrutiny, September 14, 2009) that casts doubt on the president’s truthfulness. Referring to the president’s address to Congress earlier this month:

Later in his speech, the president used Alabama to buttress his call for a government insurer to enhance competition in health insurance. He asserted that 90% of the Alabama health-insurance market is controlled by one insurer, and that high market concentration “makes it easier for insurance companies to treat their customers badly — by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates.”

In fact, the Birmingham News reported immediately following the speech that the state’s largest health insurer, the nonprofit Blue Cross and Blue Shield of Alabama, has about a 75% market share. A representative of the company indicated that its “profit” averaged only 0.6% of premiums the past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among 39 Blue Cross and Blue Shield plans nationwide.

Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that the insurer’s ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio (including claims settlement expenses) of 7.5%. Its net income, including investment income, was equivalent to 2% of premiums in that year.

In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among 41 preferred provider organization health plans. The insurer’s apparent efficiency may explain its dominance, as opposed to a lack of competition — especially since there are no obvious barriers to entry or expansion in Alabama faced by large national health insurers such as United Healthcare and Aetna.

The president and the Birmingham News certainly have different views of the facts.

That speech also told two tales of patients allegedly abused by their private insurance companies. Congressional testimony, however, provided a different set of facts than what the president presented in his speech (Fact-checking the president on health insurance).

Advocates for more government control over health care, including President Obama, cite cases where people have been abused by private health insurance companies. We ought to be sure that these cases are real, and we need to be aware of the scope of the problem, before we assign weight to these arguments.

Wall Street Journal reporting (Fact-Checking the President on Health Insurance: His tales of abuse don’t stand scrutiny, September 14, 2009) provides some vitally important information in the health care debate.

As it turns out, the facts underlying two cases that President Obama cited in his address to Congress last week are quite different from what the president wants us to believe.

In one case, the president said this in his speech: “One man from Illinois lost his coverage in the middle of chemotherapy because his insurer found that he hadn’t reported gallstones that he didn’t even know about. They delayed his treatment, and he died because of it.”

Here’s the Wall Street Journal reporting on this same case: “Although the president has used this example previously, his conclusion is contradicted by the transcript of a June 16 hearing on industry practices before the Subcommittee of Oversight and Investigation of the House Committee on Energy and Commerce. The deceased’s sister testified that the insurer reinstated her brother’s coverage following intervention by the Illinois Attorney General’s Office. She testified that her brother received a prescribed stem-cell transplant within the desired three- to four-week ‘window of opportunity’ from ‘one of the most renowned doctors in the whole world on the specific routine,’ that the procedure ‘was extremely successful,’ and that ‘it extended his life nearly three and a half years.’”

In the second case, the president said this: “Another woman from Texas was about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne.”

The Journal reporting: “The woman’s testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist’s chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.”

Did President Obama lie about these cases? Or is he simply misinformed, and if so, who is feeding him misinformation?

A second issue is the number of cases of rescission. That’s where an insurer cancels a policy, leading to stories like the two above. The number of cases identified by Congressional staff analysis is 20,000 over a five-year period. This may be evidence of a small problem that needs some gentle reform. A wholesale government intervention is not justified by these cases.