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Tuesday, December 29, 2009

Big Winners in Health Care Reform? Big Pharma & Insurance Industry

One Senate health care bill proponent has predicted that the legislation passed on Christmas Eve would be bad for my portfolio. "Did you buy some? Looks like that investment would have went [sic] to shit as soon as the bill was passed on the 24th," predicts Rylock. Well, it looks like the entire health care industry - from Big Pharma to health insurers - are big winners on Wall Street. The rest of us? Not so much.

From Market Watch:
Since the lows in early October, stock in WellPoint Inc. (WLP 59.28, +0.10, +0.17%) has rocketed nearly a third from around $44 to $59 as fears about reform have eased. The picture is the same for Aetna Inc. (AET 33.44, -0.34, -1.01%) -- from around $25 to $33.50 -- and UnitedHealth Group Inc. (UNH 31.12, -0.27, -0.86%) -- from $24 to $31.30. Over the same period the overall stock market rose by less than a tenth.

38 comments:

Anonymous said...

That's the American way. As long as a small group of people that we'll never meet get very very rich and the rest of us and our loved ones lead miserable unhealthy lives full of sickness and early death while overpaying for useless services, I'm fine with that.

Anonymous said...

I guess the insurance tycoons are getting a pretty solid return on investment for the money they've pumped into your pal Charlie Dent and his Capitol Hill pals. I hope every spineless congressman that took that money gets voted out: republican,democrat,independent, whig, blue dog, red dog, green dog. All of them.

rylock. said...

Who made a prediction? I was telling you a fact. On the day the Senate health reform bill passed, an average of those insurance company stocks (UnitedHealth, WellPoint, Aetna, Cigna, Humana, and Coventry Health) went down by 1.03%. Are you refuting that?

Plus, we've agreed on here before that this legislation is marginally good for insurance companies. Obviously. It gives them approximately 16 million new customers. My argument has always been the same, in that, it's not as big of a hand-out as people (like you) make it out to be. (And let's also not forget the unrelated good news for the health insurance industry in the beginning of the week: http://online.wsj.com/article/BT-CO-20091221-708401.html.)

Like I pointed out in the other post, the insurance companies are currently making profit from denying people coverage and dropping people when they get too sick. The Senate and House's legislation no longer allows them to make money this way. The Senate also slaps a restriction on the industry forcing them to pay 85 cents on every premium dollar on actual health care; they can no longer spend as little as 60 cents on the premium dollar on health care and use the other 40 cents for overhead and profit.

Also, why would the insurance industry be fighting this legislation with billions and billions of dollars since the summer (and still to this day) if they wanted the legislation to pass? AHIP has been going nuts. Especially in the past month.

And here is my ultimate line on this issue that you continually make me repeat:

If you told me that we could have legislation that no longer allows insurance companies to deny people that have pre-existing conditions, no longer allows them to drop people's coverage when they get too sick, is no longer allowed to charge women up to 48% more than men, is no longer allowed to charge older people (before medicare) up to 12x more than younger folks, is forced to spend 85 cents of every premium dollar on actual health care, provides $100-150 billion dollars in subsidies for poor families to purchase health insurance, and reduces the deficit by $770 billion in the next 20 years, I would take that deal.

And if you told me that in order to get all of those provisions, the insurance industry would move from 86th most profitable to the, like, 53rd most profitable industry in America, I would still take that deal.


You can quote me.

rylock. said...

And while I would certainly like to see the insurance industry take a hit in this legislation, I have yet for somebody to effectively argue that legislation that is good for insurance companies cannot also be good for everyday Americans.

Those two are not mutually exclusive.

Anonymous said...

If this is the case why are no Republicans supporting the bill. They are bought and paid for by big pharma and the insurance industries. You'd be right in saying it won't hurt them as much as it should have but the insurance industry still opposes it..So what does that tell you..

Looking To Escape said...

The article implies more than it informs.

Anonymous said...

Rylock, the fact that you continue to state that all those things can be accomplished by spending less money shows that, despite all the research you've done, that you do not have a grasp of basic economics and business.

Fact - insurance for older people costs more than for younger people because their claims experiences are higher. Why is it wrong to charge more to a segment of the population that has higher associated expenses? Simple math - if you cut insurance costs for older people, the costs for younger people is going to go up.

Fact - if you prevent insurance companies from dropping coverage or not covering pre-existing conditions, then the cost of insurance will go up. I agree with the intent of these provisions, but recognize that when they kick in insurance companies will have higher costs to cover - where do you think that is going to come from?

Now you may be thinking that all we have to do is eliminate insurance company profits and a portion of overhead and that'll be able to fund it. Wrong again. Per the Daily KOZ (which has to be gospel to you), in 2007 the top 10 publicly traded insurance companies made a total of $12.8 billion in profits. Their top execs made $118 million. So there's the first $13 billion of the $1 trillion hole this plan creates - where are you going to find the other $987 billion let alone the $770 billion reduction in the deficit that you claim? Please don't tell me 'future savings in Medicare' - that's agreeing to spend $$ today in the hopes there's something to offset it with. I don't like $1 trillion bets on politicians, R or D.

Finally, your fervent focus only on the federal deficit shows a lack of understanding of taxes and their impact on consumers. You need to also look at state deficits/tax increases and the cost of insurance under these plans and focus on the total $$ coming out of yours and my pockets. No one anywhere believes that this will be cost neutral to the consumer. Our costs will go up. Do you honestly care whether you're writing checks to the Fed, the State, or to Blue Cross? It's still money out of your pocket and you will have less of it in your pocket at the end of the day.

Bernie was right in the other post - you have to drive health care costs down in order to get anything accomplished. That means tort reform and competition.

The Banker

rylock. said...

Banker,

While I do love Kos and being told that I'm uninformed, let me point out a few things that you've left out:

Fact - The individual mandate will keep costs from sky-rocketing. Allowing insurance companies not to discriminate (as much) on the elderly, women, and folks with pre-existing conditions is coupled with the addition to millions of young healthy people (like myself) that don't have insurance.

Fact - The Medicare Payment Advisory Committee will be enhanced to save future money coming out of Medicare. The Senate bill already lengthens Medicare solvency to 2026, when it was scheduled to go bankrupt in 2019. The other good news about this independent board is that it can make suggestions with regards to Medicare to congress, and things that work well for Medicare can be tied into our current private health care system.

Fact - The health reform bill reducing the deficit by over $770 billion makes it the largest deficit reduction bill in decades. I agree with you that it doesn't fix all of our problems, but at least somebody in Washington is making an attempt to pay for what they feel is necessary. The same can't be said for all of the Republicans that voted for Bush's completely unpaid for Medicare Part-D legislation that are opposed to this legislation now, because we're "spending too much." Orin Hatch said, "that's just the way we did things back then." There's some strong fiscal conservatism!

Fact - Texas has pretty substantial tort reform, right? They passed stringent medical malpractice law that capped awards for pain and suffering at $250,000, and brought the number of malpractice lawsuits down several years ago. Costs must be down then, right? Unfortunately not. Texas is home to three of the top 10 most expensive cities in the country for health care prices.

(Opinion - I am not opposed to tort reform, however. I think it's a much more difficult situation than Republicans make it out to be, because there needs to be a good balance found for folks that actually do need to sue in order of medical malpractice -- and some of the proposals on tort-reform could make it difficult for people that were legitimately wronged from suing. This is why I agree with President Obama on not instituting it immediately, but doing more research and seeing what actually works and does not work, because unlike what Republicans say, we don't know that it works.)

Fact - These bills create more competition in the insurance industry than there is today. (I'll have to see which version we end up with to talk about it more specifically, but whichever one we end up with, competition will be increased.)

Fact - Allowing insurance companies to move across state lines without hefty federal regulation will become a race to the bottom, guaranteed. They will all move to wherever has the most lax regulation and the consumer will, once again, end up getting screwed.

(Opinion - I am also not opposed to buying insurance across state lines. There just needs to be regulations on insurance companies in order to do so. This is why I favor a national exchange. Things will be much more transparent in the exchange and companies will be forced to compete with each other without being able to move to wherever the most deregulated states are. And over time, when the exchanges expand and all insurance companies have to start competing for business, we will all be better off.)

You're right that this bill doesn't do enough for cost-containment. But it sets up many structures that we've never had before that finally at least gives us the ability to control costs if these pilot programs work.

Without this legislation, inflation is set to rise by 7.5% by 2016 with no subsidies for anybody purchasing health insurance, with CHIP probably over, and with costs and the deficit exploding. While this legislation might not have 100% perfect provisions to stop these things from happen, it at least takes a good whack at them.

Anonymous said...

Rylock, where to start...

I did not say you were uninformed - I said you do alot of research but need to work on your business and finance acumen. It's not a criticism, just an observation based on reading what you write. I don't engage in personal crap, it's a waste of my time and yours.

Now on to your comments -

These bills do NOTHING for cost containment. Individual mandates do not lower the cost of providing health care. They provide more revenue to cover health care costs. Big difference.

Your comments on MedPAC and deficit reduction are wholly based on believing that politicians will follow through on promises of reducing spending. I recognize you are young and haven't had to live through the lies coming out of Washington for very long - welcome to the real world. Politicians WILL spend anything they get their hands on for something else. And that is a bi-partisan comment, R and D included, I don't care who is in charge. Just witness the TARP funds and how that was approved for a specific purpose and now is being used for anything/everything.

Texas - wrong fact to focus on. Since the 2003 tort reform in Texas, take a look at costs - medical liability coverage rates (this is the insurance costs doctors to cover their exposure) have declined 25-50% on average. Lawsuits against hospitals have declined 70% - and I have heard no cry whatsoever that people are being screwed. Both of these things reduces the cost of providing health care, which is what we need to do. Also, I disagree that we need to do more research on Tort Reform - it's been researched to death.

Where do these bills create competition? Unless you have interstate competition (currently prohibited) you will have no more competition than you do today, you'll just be paying more for it because we'll have more government overhead.

If you want federal regulations for insurance, you can have it in 30 seconds - copy New York state. Best insurance commission in the country. Just federalize their laws and regulations, do what they do and you're fine, no need to reinvent anything. And you don't need any exchanges (and their expenses to operate) - you have the market, let it work.

All these bills do is spend a pile of cash and hope there's something to cover it. Why the rush? If you're willing to delay tort reform (even though it has been demonstrated to work) because it needs to be studied more, why not enact interstate insurance and take the time to study this more? Maybe then our legislators will actually read the damn thing and see what it does.

The Banker

rylock. said...

Banker,

These bills provide numerous pilot programs to address cost-containment and set up many new systems to try and address the cost-control situation. I'll try to take the easy way out this time (and not write a page about each of these mechanisms), but if you reeeeally want to go one-by-one down this list and still tell me that they're not trying to address cost-containment, I'll do it. Tell me that bundling payments, prudent purchasing, the Medicare commission, the excise tax, the individual mandate, etc. doesn't at least take the first step at addressing cost-control.

Now, with regards to tort reform, the Washington Independent has a great post saying that most health economists and independent legal experts say that malpractice liability costs are a small fraction of the spiraling costs of the U.S. health care system, and that the medical errors that malpractice liability tries to prevent are themselves a huge cost -– both to the injured patients and to the health care system as a whole.

Annual jury awards and legal settlements involving doctors amounts to “a drop in the bucket” in a country that spends $2.3 trillion annually on health care, said Amitabh Chandra (a Harvard University economist). Chandra estimated the cost of jury awards at about $12 per person in the U.S., or about $3.6 billion. WellPoint has also said that liability awards are not what’s driving premiums.

And a 2004 report by the Congressional Budget Office said medical malpractice makes up only 2% of U.S. health spending. The CBO concluded that even "significant reductions" would do little to curb health care expenses.

A Bloomberg study also found that the proportion of medical malpractice verdicts among the top jury awards in the U.S. declined over the last 20 years. “Of the top 25 awards so far this year, only one was a malpractice case.” Moreover, at least 30 states now cap damages in medical lawsuits.

The experience of Texas in capping damage awards is a good example. Contrary to Perry’s claims, a recent analysis by Atul Gawande in the New Yorker found that while Texas tort reforms led to a cap on pain-and-suffering awards at $250,000, which led to a dramatic decline in lawsuits, McAllen, Texas is one of the most expensive health care markets in the country.

No matter how many lawsuits Texas has stopped, the issue was supposed to be cost-containment. And Texas ranked third among the states in health insurance premium increases — 40 percent — from 2001 to 2005.

And more to my point: "Last month, a Dallas jury awarded $17.7 million to David Fitzgerald, 53. Mr. Fitzgerald had been hospitalized for ulcer surgery when he developed an infection. The infection was not properly treated, and eventually Mr. Fitzgerald had to undergo amputation to save his life. David Fitzgerald lost both legs and both arms because of a treatable infection contracted while he was in a hospital.

And the second travesty is that the $17.7 million — which he could surely use over the many remaining years of his life — was cut by more than half by Texas law. The award included $6.72 million in economic damages and $11 million for pain and suffering. But the $11 million immediately was reduced to $250,000. Because that’s all Texas law says he can have."


This is all happening while health care costs in Texas still rise faster than 47 other states in the country.

I'm not saying that our medical liability system is a good one, but reforming it like Texas did won't be the savior of health care costs that people think it will be.

Looking To Escape said...

rylock. said...
Fact - The health reform bill reducing the deficit by over $770 billion makes it the largest deficit reduction bill in decades.



This is a dubious number because some of the Democrat bookkeeping is suspect.
.
I had heard on Dec 23 the Republicans released a rescored bill with the Democrat's bookkeeping corrected. The savings dropped dramatically.
.
Parts of "health reform" are being dealt with in a separate bill, such as the so called doctor fix.
.
The CBO must cost out a bill as it is given to them.
.
http://www.nypost.com/p/news/national/vital_igns_wrong_in_fuzzy_dem_math_Urb95cbHtBa4qC4a8G5O0K
.
I admire Harry Reid's accounting logic.

Looking To Escape said...

http://www.nypost.com
/p/news/national/
vital_igns_wrong_
in_fuzzy_dem_math_
Urb95cbHtBa4qC4a8G5O0K

rylock. said...

Sorry, but I could talk about tort reform all day.

Banker, you're right that there has been a decline in doctors' liability insurance premiums, but the 27% decrease in those premiums is dwarfed by the 67% reduction in malpractice payments, suggesting that liability insurance companies have pocketed most of the gains. The Texas data provides no evidence that patients or taxpayers have shared in the windfall at all.

In spite of rhetoric to the contrary, the data show that the health care system in Texas has grown worse since 2003 by nearly every measure. For example:

• The percentage of uninsured people in Texas has increased, remaining the highest in the country with a quarter of Texans now uninsured;
• The cost of health insurance in the state has more than doubled;
• The cost of health care in Texas (measured by per patient Medicare reimbursements) has increased at nearly double the national average;
• Spending increases for diagnostic testing (measured by per patient Medicare reimbursements) have far exceeded the national average; and
• The growth in the number of doctors per capita in Texas has slowed since the liability law took effect.

Anonymous said...

Ohare you and your right wing whack pack are too much! Big Pharma and Insurance are happier than they might have been.

Their Republican puppets and some of the Dem sellouts insured that a healthy public optinon was not in the Bill. That was their greatest fear. A public option would have ended the decades of double dipping price gouging at the expense of the people of America by these 21st Century robber barrons. Finally, Health Care monopolies would have had to act normal. They can live with what is there and in fact Newt Gingrich has said once the Republicans have the majority they will repeal all the health Care provisions.

America will remain a third world nation in terms of its Healthcare future. Of course some of you boneheads don't care as long as you keep getting that Republican manjuice poured down your throats.

Bernie O'Hare said...

Anon 5:47 is to reasoned Democratic argument what PigPen is to reasoned Republican argument.

For some reason, the LongDems are full of homophobic fears.

rylock. said...

Let's stick to the issues then!

Anonymous said...

I have to believe that the defeat of the public option was the number one objective of big pharma and big insurance. In that sense their their billion dollars worth of lobby money was well spent. They knew that dispite the Republican bullshit some form of reform would pass as the true majority of America wanted reform. They worked with their tools to ensure the changes would be minimal.

The kiss of death for the Insurance and Pharma boys would have been a public option. That would have exposed the bloated pork profits these companies feed on. That and the blood of the American people.

rylock. said...

Also, Bernie, though I would love nothing more than talking tort reform, I'll get back with you on the stock scenario:

I think a more reasonable approach to understanding the stock increase is that the insurance companies were excited about the lack of a public option. When the stocks rose, it was right around the time a public option basically met its demise in the Senate. Somewhat conversely, the stocks fell when the Senate health reform bill actually passed (granted not as much as when they rose, but still).

So, there's my final theory if we're talking straight stocks. The insurance industry was pumped about the loss of any form of a public option, and they were slightly unhappy to indifferent about the actual Senate bill's passage.

rylock. said...

Ah! Anon 10:29,

Beat me by two minutes!

Anonymous said...

Rylock, suffice it to say we disagree on most everything on this bill. It's bad legislation that is being crammed through the process. Don't you ever get suspicious when someone tries to ram something down your throat?

You're banking (pardon the pun) on covering a $1 trillion expense with pilot programs and promises from politicians. As for bundling, purchasing, etc. - you actually believe that the 'profit whores' in private insurance haven't wrung out all the inefficiencies they can??? Here's a scoop for you - government creates inefficiencies, it doesn't eliminate them. Ask any medical professional who has to file for reimbursement under Medicare about how efficient that is. I've talked to many, and it's one of their biggest headaches. Your positions being naive doesn't even begin to describe it.

At the risk of repeating myself, individual mandates and excise taxes are not cost containment measures. They are revenue generation measures. Please stop referring to them incorrectly, it weakens your argument and I'm sure you wouldn't want to do that. You can admit that it'll take more revenue to cover these costs, that's ok.

With all the stuff we've talked about regarding tort reform, the biggest expense is the elimination of unnecessary tests/procedures done under the 'defensive medicine' posture. A doctor orders a whole bunch of stuff done even though he doesn't believe they're necessary so that his legal defense is covered. It's terrible and costly, wastes valuable resources, blows through buckets of cash, and accomplishes nothing.

Texas' biggest problem with increases in medical expenses is due to illegal immigrants - est. at 1.2 million people. Total cost to Texas for health care and education $4.7 billion annually, or $725 per legal household.

Finally, the fact remains that every other country that has nationalized health care hits a financial wall and has to ration care in order to contain costs. Every single one. How long will it be until Americans are going to other countries for medical care because of the rationing here? Were you aware there is a 2,000 bed hospital being planned for the Cayman Islands? Not sure if you've ever been to the Caymans, but I assure you that facility is not for the native population.

One other thing - stop with making paragraphs bold print. It's the equivalent of typing IMs in capital letters - in other words, rude.

The Banker

Bernie O'Hare said...

Hey Banker,

Although I disagree with much of what Rylock has to say about health care reform and Charlie Dent, I'm glad he's here.

He's young, smart, researches everything and tries to avoid getting personal. In a month, we'll have him supporting Charlie Dent.

Anonymous said...

I am too Bernie - that's why I keep going back/forth with him, I enjoy it and it makes us all sharper.

It's been a long day and I'm a bit grouchy I guess. Rylock, I apologize if I came across that way.

The Banker

Bernie O'Hare said...

I get testy with him, too. But I am also honored that he has enough respect for us to try and argue with us rationally. He does force us to defend our positions, and I hope we do the same with him. In one month, we'll have him leading the charge of Democrats for Dent. If not, I'll slip drugs into his Gatorade.

Anonymous said...

The CBO has estimated that tort reform would eliminate one half of one percent of medical costs.

The problem with de bunker is all his statements are opinion. Doctors he talked to? I know a couple Doctors who some years ago hated to even shoot the shit about public health care. Even as Republicans they are now so frustrated by the claim work of the various Insurance companies that they state they have to hire or join affiliations just to do the paperwork. Medicare paperwork bother them? You bet but that is actually more straightforward than the private companies.

Have medical insurace companies wrung out the inefficiences, probably but that doesn't stop them from recording double digit cost increases every year. Where does the $$ go? In their pockets.

Defensive medicine? Factored into the 1/2 of 1%. That is if the CBO is to bew trusted. I know you R's only cite them when they agree with your positions.

Keep going rylock these old farts are still trying to rescind Social Security and Medicare. Thank God, rylock is our future and you are our past.

Anonymous said...

I think it's great. I think we should give the police and fire fighters to the insurance companies. Govt can't run those entities either. Let's pay more than what we pay in taxes now to the police, for instance, (forget the firefighters for now) and pay private insurance companies to "insure our safety." Rich people will have to pay more because they are more likely to get robbed, so will poor people because they are in bad neighorhoods. INsurance comapnies will decide the premiums for all for police protection. If you get robbed or raped or mugged, you would then call your insurance company instead of calling the police directly and they would first check to make sure all your premiums are paid. THen then they would notify THEIR PARTICULAR police force which could be miles away from you. But that's OK. You can wait. If for some reason, you're in a real jam that will require a lot of cops, like a bad car accident, the insurance company reserves the right to terminate or cap your insurance right then and there and leave you high and dry. It's the American way. Put paper pushing money sucking bureaucrats between you and the police. I love it. Charlie Dent? Wake up and take it to Congress!

rylock. said...

First of all, Bernie and Banker, I really enjoy these debates! And if I write things in bold, I usually just want to make sure that you don't miss them, because it probably comes with a decently lengthy post and I think the bolded part is some of the most important. Didn't mean to come off any other way! And onto policy:

I disagree with this being rammed through. The stimulus was rammed through; this wasn't. This has been front-and-center on every news outlet, on every TV, in every paper, and on every website for the past nine months. If this is "rammed through," the administration's not doing a very good job. Or if by "rammed through," you mean no bipartisan support, I still don't understand the charge. Have you seen the Republican party in this congress? If Obama proposed huge tax breaks for people that love the 2nd amendment and small government, they'd still find a way to oppose it and call him a socialist.

And, you're right, I am hoping that all of these pilot programs work. If anything, there are finally things in place to address cost-control. Some might work, some might not. But at least it's something. Right now, we have nothing. What we have now is completely unsustainable -- and at least the legislation moving through congress now has a shot at fixing it. These programs are set up to test new things and to implement ones that work.

If we keep moving along blindly and stick with the status quo, average families and the country will soon be bankrupt. You think we're ramming something through now? Wait until the country's even more panicked because we couldn't fix our broken health care system before it's too late. And you'll have to forgive me and other liberals for not taking Republicans at their word on fixing it; after all, the only Republican to even try was Nixon.

And I'm not even going to touch your claim that health care is completely sufficient. I have a feeling you'll look at that one later and wonder what you were talking about.

With regards to the individual mandate, it actually does control costs. Therefore making it a cost-control measure. It controls costs by putting more healthy people into a system. If I'm misusing the terminology and something that controls the cost of health care from raising isn't "cost control," then I'll take your advice and use different lingo for it -- but I still don't see what you're talking about.

The excise tax, however, is certainly a cost-control measure. I don't mean to be rude, but do you know what the excise tax does? It's not just a tax. it's not like taxing people $500,000 and higher just for the revenue. It's a tax specifically designed to curb costs and make people not so reliable on cadillac plans. Many of the nation's leading health care economists recently sent a letter to Harry Reid praising the excise tax as one of the Senate bill's "most effective cost control measures." So, again, you're going to have to explain what you're talking about.

rylock. said...

And I see you didn't touch the Medicare commission, prudent purchasing, or bundling, besides the fact that you think they won't work because the health care system is as sufficient as it can be? Weird. I understand, though! These three things are great ideas that work against your argument. I wouldn't want to touch them either if I were you.

And to tort reform! I see that you just shot me a definition of what tort reform is. I love it! Thanks! This is just what Dent did when I tried to talk to him about the health care bill increasing Medicare's solvency and cutting money primarily from Medicare Advantage because drug and insurance companies make tons of wasteful government and private money through it. He didn't seem to have an answer, so he said, "wait. wait. wait. Let's take a step back here." and then he proceeded to go on this long, worthless diatribe about the "history of Medicare." You'd be a great politician!

But, seriously, you never want to argue tort reform with regards to Texas. Texas is probably literally the worst state for health care in the country. Anybody could pound anybody over the head with their god-awful statistics any day. And you might be right that illegal immigrants are a big problem for Texas' health care, but that doesn't change the fact that tort reform didn't make things better -- it arguably made things worse.

And you're closing with rationing? Really? Rationing?! Come on, man! I have more respect for you than that. You don't want to sound like one of those people, do you? If you don't be careful, you're going to be going off about Obama's birth certificate.

But, with serious regards to "rationing," you think "rationing" by the government would be worse than the for-profit, non-regulated health insurance industry? The industry that "rationed" about 13 million people over the last three years? How about the industry that "rationed" off 10% off all cancer patients preemptively? Or the industry that "rationed" 6% of Americans after they found out that they had a disease? How about the 20,000 people that have been "rationed" in our system from the three largest insurers over the past five years -- totaling them approximately $300 million profit? Wow. Yea. Sounds like we'd better be careful of government rationing! Before we know it, it could happen here!

And the final reason why that argument doesn't make any sense is that, while I might be an ardent supporter of single-payer, this bill has absolutely no "government takeover" of health care anywhere in it. And, believe me, I wish it did.

rylock. said...

Finally, Bernie, I do take pride and have absolutely no problem with admitting that I'm wrong when somebody points out a statistic or something to me that completely nullifies my argument. It's happened before and I've switched my position. I have no problem with that. How else are you going to learn?

That's why I hate the "flip-flop" charge for politicians. Isn't flip-flopping (some of the time) a good thing? Why the hell would you want somebody that would stick to their initial argument, solely because they don't want to admit they were wrong, even if there's substantial evidence proving otherwise?

With that said, I do like Dent as a person, but I think 90-95% of his policy and political positions are absolutely horrendous. If you can turn me into a "Democrat for Dent" (even though I have absolutely no idea how they exist), I don't know what I'll give you, but I'll give you something. $100? I don't know.

I just can't wait to get that guy out of office! He's killin' me in there.

Either way, I love talking to people like you and Banker, because you guys actually know what you're talking about. Hard to find! Most of the people that disagree with me just yell at me for being a "crazy socialist."

Anonymous said...

Rylock and Anon 1241, here's the CBO figures on tort reform savings:

October 12, 2009 — Medical-liability reforms such as capping noneconomic damages and tightening the statute of limitation for filing a suit would trim $54 billion from the federal deficit over 10 years, largely by curbing defensive medicine, according to a report released Friday by the Congressional Budget Office (CBO).

Overall, tort reform would reduce the nation's healthcare spending by 0.5%, the report stated. Forty percent of these savings would stem from lower malpractice insurance premiums for providers. The rest of the savings would result from lower use of healthcare services, as providers would order fewer tests and procedures intended simply to avoid a lawsuit.

The CBO estimate of tort reform's potential to reduce the deficit is roughly 10 times greater than what it projected last December (a reduction of $54 billion instead of $5.6 billion). At that time, the agency said that evidence about the extent of defensive medicine — and how tort reform could reduce it — was murky. However, more recent research suggests that "lowering the cost of medical malpractice tends to reduce the use of health care services," according to the latest CBO report.

So Anon 1241, we've reached the point where you think $54 billion isn't enough to worry about.... Sorry, I still think it's a big number. I also think it's interesting that it grew so much in just 10 months. I wonder what the real savings are?

The Banker

Anonymous said...

Rylock, just a couple of things as I have a pretty busy day today.

I need to correct a perception you have - I absolutely believe we need to reform our health care system. We need to and should provide quality care for all our citizens. It's the right thing to do. So I do not believe in the status quo or that anything we're doing is sufficient. In fact I don't quarrel with goals like not allowing insurance companies to drop sick people, or to not cover pre-existing conditions. I think they are good goals to try to achieve.

My problem with this process is the Ds statements that they can accomplish all of this and spend less money doing it. It won't happen. Period. Someone has to and will pay for it, and in fact all of us will pay for it. Not just the 'rich' or 'evil business,' but all of us. I wish some D somewhere would just be honest and admit this will cost a fortune but they believe it's the right thing to do. That I can respect. But don't lie to me, it's disgraceful.

As to MedPAC, bundling, prudent purchasing, etc., again I did not say that the current system is sufficient - I said that I do not believe that the federal government will find tens of billions in savings that private industry has missed. I’ve worked in private industry my entire career. We are constantly trying to find ways to more efficiently deliver goods and services, it’s a huge part of what we do. To shovel the crap that we're going to pay for this by some bureaucrat finding savings that private industry missed is just ludicrous. Anyone who has had to write a budget and then live or die by it knows that. Side note – that is one of the biggest problems we have with government today is that these people have never had real jobs and don’t know the pressure of having to run a business and make a payroll. Less than 10% of Obama’s cabinet appointments have private industry experience. The average over the past 100 years was closer to 35 or 40% - Hell, Clinton’s cabinet was close to 40%. I’d much rather have people who have lived it regulate it than a bunch of intellectuals who have no idea how the real world works.

Finally, let me see if I can do a better job explaining 'cost containment' vs. 'revenue generation' because I believe there is a big difference and it’s important that you understand how they work. Let me use a different example (with made-up numbers) - say you're living alone and you have the 'ultimate cable package' from RCN costing $250/month, and you're finding that pretty steep. You a few choices - you can switch to SECTV's ultimate package for $225/month, or drop to a lower cable plan for less cost. Or you could get a roommate and split the cost with them. The 1st is cost containment - directly lowering or containing the cost of the service. The 2nd is revenue generation - bringing in additional revenue from the roomie to cover the same costs.

Rolling these back to the Individual Mandate - forcing people to have insurance is like bringing in a roomie - brings more revenue to the table. It doesn't contain costs, that's a separate part of the equation.

In a good plan you need to do both, which this plan purports to do. But please don’t insult my intelligence by ignoring the fact that you’re bringing in $100’s of billions of revenue and then telling me it’s ‘neutral.’ That’s insulting. Just tell me the truth.

Having said all that, I wish you and yours a great New Year!

The Banker

Anonymous said...

Here's a good article on problems retirees are running into when trying to get into Medicare:

http://online.wsj.com/article/SB10001424052748703344704574610570928560200.html?mod=WSJ_hpp_sections_personalfinance

Sorry, don't know how to do hyperlinks in blogs.

If someone can explain to me why it should be such a problem, I'm all ears.

The Banker

Anonymous said...

Here's the entire link:

http://online.wsj.com/article/SB10001424052748703344704574610570928560200.html?mod=WSJ_hpp_sections_personalfinance

The Banker

Anonymous said...

The morass of details obscures the obvious big picture. More people using the same number of services will lead to rationing and higher costs. Let's keep this simple, stupid.

Anonymous said...

One more day left of the decade from hell.

Anonymous said...

Why is it that if other countries don't have to ration care, we are worried we will? Why are we so confident that we'll screw up what the whole rest of the industrialized world figured out back in the late 40s?

Anonymous said...

Funny thing is we already ration care. Depending on your policy see if you can get all the care you want. It is all about the cash.

This is and has always been a Straw Dog but the Republicans keep troting it out and some people still think it hunts.

Amazing!

rylock. said...

Banker,

Hope you had a good new year! I've been pretty busy, but I'll quickly point out a few things.

I don't think that you feel our health care system is perfect. You're obviously smart, and no smart person would think that way. What I was suggesting is that there is a lot of money to be generated from current wastes in the system. Let's take Medicare Advantage, for example, and Medicare Part D to be more specific.

The consumer could save tons of money if the Part D extension were simply controlled and negotiated solely on behalf of the government with competitors for prescription drug benefits, rather than being looped multiple times through private insurance companies and PhRMA. Much of the Medicare cuts in this plan are coming from the unwarranted profits to insurance companies through Part D, and may actually make savings better for seniors (by using some of that money to plug up the donut hole).

Interesting, though, right? Can't believe the Bush administration missed that one!

To be fair, this bill would be tons better if the Obama administration didn't strike an $80b deal with PhRMA in the beginning. It's really a shame that we're keeping the status quo on drug prices, when it would be so insanely easy to lower them. But, even though I whole-heartedly disagree with it, I think that was a small price to pay to make sure that reform wasn't derailed. Because, honestly, if PhRMA came out against this legislation, I would guess that we would have no reform bill right now. I wish it wasn't that way in Washington, but it sadly is. One person can't change that. At least not in a year.

Finally, back to tort reform! Yes! Funny that tort reform is supposed to be the ultimate consumer-saving plan, but most all of the statistics you cited were solely government saving revenues. Big difference between actually saving the consumer any money. And we know that-that's not going to happen if we look at Texas (the state with the most strict tort-reform regulations, coupled with arguably the worst and most expensive health care in the country).

The watered-down, almost do-nothing public option saves the government $25 billion. I'm not regarding that as a real consumer-savings measure anymore, because it doesn't.

Now, the real public option -- that's another story. That would save the government approximately $110 billion and be pegged at Medicare rates (at +5% or maybe even +10%), directly competing with private insurance companies will bring costs down for consumers.

Looks like we're in agreement, then! We both want to save the government money (the robust public option is set to save about $50 billion more than tort-reform) and it will actually create downward pressure on premiums to reduce the average cost for consumer through increased competition!

Glad we worked that out! Good to know that we agreed on what should happen this whole time.

Anonymous said...

If Obama says it's good for us, it must be true. He would never lie. Those who believe Obama are just plain smarter than those who don't.

It's like watching a zombie movie.