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Insurers spent $86 million to fight health reform

By Ezra Klein

Funneled through the Chamber of Commerce, of course:

The Chamber of Commerce received the money from the Washington-based America's Health Insurance Plans when the industry was urging Congress to drop a plan to create a competing public insurance option. The spending exceeded the insurer group's entire budget from a year earlier and accounted for 40 percent of the Chamber's $214.6 million in 2009 spending. The $86.2 million paid for advertisements, polling and grass roots events to drum up opposition to the bill that’s projected to provide coverage to 32 million previously uninsured Americans, according to Tom Collamore, a Chamber of Commerce spokesman.

By Ezra Klein  | November 17, 2010; 11:06 AM ET
Categories:  Health Reform  
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Comments

but how much did they spend supporting health care reform, including the individual mandate which they are hugely in favor of?

Posted by: james2121 | November 17, 2010 11:35 AM | Report abuse

Well, they got their money's worth. Harry Reid's promise of an up-or-down vote on the public option THIS YEAR (using reconciliation) turned out, of course, to be a lie.

http://www.huffingtonpost.com/2010/03/19/reid-promises-separate-pu_n_506272.html

I wonder if Bernie Sanders will trust any other promises from the Majority Leader.

Posted by: stonedone | November 17, 2010 11:38 AM | Report abuse

stonedone forgets that insurers weren't the ones that bargained away the public option. It was hospitals. So actually they wasted $86 million to get a bill that basically makes them a public utility. So sorry they didn't get their "money's worth."

http://wonkroom.thinkprogress.org/2010/10/05/daschle-interview/

And actually Ezra it wasn't spent to "fight" health reform as much as it was to shape it to try to fix some of the things going wrong in MA after their reform that they knew of through their experience in dealing with it.

Posted by: visionbrkr | November 17, 2010 11:53 AM | Report abuse

I didn't forget it. If you had actually read the article you linked to, you'd see that Daschle said: "It was taken off the table as a result of the understanding that people had with the hospital association, with the insurance (AHIP), and others. "

Posted by: stonedone | November 17, 2010 12:22 PM | Report abuse

stonedone,

yes i read it. I also read this as part of it:

“The other was that it would contain no public health plan,” which would have reimbursed hospitals at a lower rate than private insurers.

Do you think private insurers care (other than the fact that they remain viable which in some parts of the country may be questionable) if hospitals get paid at a lower rate that private insurers have to pay?

So you're basically focusing on the devil (as is Ezra) that are private insurers while not focusing on who actually made the deal.

Hospitals bottom lines are as fragile as insurers are. if they're going to accept $155 billion less in money from the federal government don't you think to remain viable they need to get paid at least what private insurers would pay them thus making a public option a threat to their viability? Look around. hospitals are laying people off left and right in many states.

http://www.ama-assn.org/amednews/2010/04/05/bisd0405.htm

http://thecurrent-online.com/news/hospital-layoffs-75-of-staff-forest-park-hospital-cuts-back-300-jobs/

http://www.wndu.com/hometop/headlines/Memorial_Hospital_cites_Obama_Health_Care_Reform_on_hospital_layoffs_106485623.html

http://www.spokesman.com/stories/2010/sep/17/hospital-to-announce-layoffs-next-week/

http://www.fiercehealthfinance.com/story/hospital-mass-layoffs-spread-california-increase-massachusetts/2010-08-18


So how many more of these articles would have ended up being published and how many more hosptials would be having layoffs in the future if a public plan with its reimbursement rates went into effect?

Posted by: visionbrkr | November 17, 2010 12:39 PM | Report abuse

--*Insurers spent $86 million to fight health reform*--

When the collective is making decisions about the running of your business, where do *think* the money should be spent?

Posted by: msoja | November 17, 2010 12:48 PM | Report abuse

James2121: They spent $86 Million just to make sure Congress heeded their deal with Obama killing the public option. If they actually had any problem with the core reforms - the individual mandate, the lack of rate oversight, the unenforceable coverage regulations - which of course they don't, they would have spent $860 Million against it. Hell, part of that $86 Mil was just to give Axelrod cover to claim "The Health Insurers! They hate us! They really do!"

Posted by: michaelh81 | November 17, 2010 12:52 PM | Report abuse

Visonbrkr: if there was a public plan with Medicare rates, the hospitals would make more money. Whatever profit margin they lost from ripping off privately-insured patients suffering from information assymetry among other things, they would make up in volume and predictability in a nation where everyone had reasonable coverage.

Posted by: michaelh81 | November 17, 2010 12:56 PM | Report abuse

And so this means the Republicans will be trying to repeal the individual mandate, correct?

Posted by: klautsack | November 17, 2010 1:04 PM | Report abuse

Standard bait-and-switch argumentation, BTW. I say the bill was a giveaway to the insurers. You reply that it was also a giveaway to hospitals. Yes, yes it was. That wasn't the point of the article, though.

I'm still waiting for a defense of why the promised up-or-down vote on the public option was once again abandoned.

Posted by: stonedone | November 17, 2010 1:05 PM | Report abuse

michaelh81 wrote:

"if there was a public plan with Medicare rates, the hospitals would make more money. Whatever profit margin they lost from ripping off privately-insured patients suffering from information assymetry among other things, they would make up in volume and predictability in a nation where everyone had reasonable coverage.

It's a given that the government loses money on average for every Medicare patient. One of the goals of HCR was to LOWER Medicare costs. So you think that by giving up private insurance patients, where the hospital has at least SOME pricing power, in exchange for more Medicare patients with LOWER reimbursements without pricing power would work because the hospitals would make up for the losses in VOLUME?

You were a corporate exec for the old GM, right?

Posted by: 54465446 | November 17, 2010 1:14 PM | Report abuse

5446wasmynumber:

Best way to lower Medicare costs is by expanding it to everyone and letting younger healthier people pay into the system. That's what will happen in the long term. In 5-10 years, we'll open it up to people over 55. 5-10 years after that we'll open it up to people over 45, at which point a tipping point will be crossed: employer-provided healthcare will be seen as wasteful both to the employee and the employer, and it will start to disappear. 5-10 years after that Medicare will open to all and we'll effectively have single payer. This is also how the debt will be erased, in combination with defense cuts, some tax reform, and most importantly, a return to middle-class growth.

Posted by: michaelh81 | November 17, 2010 1:21 PM | Report abuse

michaelh81,

instead of statements like "whatever profit margins they make ripping off" maybe it'd be better if you had actual figures like I linked to that showed actual layoffs in actual hospitals across the country. Do you need more? In my state of NJ alone in the last 3 years 15 hosptials went into bankruptcy protection.


http://www.newjerseynewsroom.com/healthquest/nj-hospital-profit-margins-reach-lowest-point-in-decade

The key part of the article for those that understand basic math is that Medicaid pays 66 cents on the dollar (we're getting 15 million more of those deficits come 2014), Medicare pays 89 cents on the dollar and a public plan would at best have paid 5% greater than that so about 93 cents on the dollar. So they're STILL underpaying and who is overpaying? Those of us with private insurance. that'll stabilize once everyone's required to have insurance.

But for now the key to this article is 66 cents or even worse that charity care in NJ pays 42 cents on the dollar.

Posted by: visionbrkr | November 17, 2010 1:39 PM | Report abuse

michaelh81 said:

Best way to lower Medicare costs is by expanding it to everyone and letting younger healthier people pay into the system.


I'm sure the younger healthier people would LOVE paying about $500 a month for medicare. Those same people are currently opting out of private healthcare through employers because of cost and are the ones fighting the mandate almost as much as the tea partiers. What makes you think if you call it Medicare people would suddenly love to pay as much as it truly costs for it?

Posted by: visionbrkr | November 17, 2010 1:43 PM | Report abuse

visonbrkr:

I am not surprised that hospitals are going out of business: ripping people off is bad business. You're certainly right that those with private insurance are overpaying.

Medicaid may pay "60 cents on the dollar", but every other country pays "50 cents on the dollar", or half of our costs, and they manage just fine. Eventually in 2 or 3 decades we'll have no choice but to settle into a single-payer with rates somewhere between the current Medicaid and Medicare rates. Hospitals will figure out how to survive on that, just like they do in the rest of the world. If not, we can do fully nationalized health care like the VA or in the UK - even better!

Posted by: michaelh81 | November 17, 2010 1:49 PM | Report abuse

michael wrote:

"Best way to lower Medicare costs is by expanding it to everyone and letting younger healthier people pay into the system. That's what will happen in the long term. In 5-10 years, we'll open it up to people over 55"

Thanks for your courteous reply. The problem is, unless you make it mandatory for all, large numbers of healthier people WON'T buy in, but more of the unhealthy people will. So again, you will still lose money on average with every patient.

It's basic economics that you can never make up in volume on anything in which you lose money on every single item. That is unless and until you drive all other competitors out of the market and raise prices. That was of course the old Standard Oil practice when entering any geographical market. I can't see the government being that predatory can you?

Posted by: 54465446 | November 17, 2010 1:54 PM | Report abuse

Standard bait-and-switch argumentation, BTW. I say the bill was a giveaway to the insurers. You reply that it was also a giveaway to hospitals. Yes, yes it was. That wasn't the point of the article, though.

I'm still waiting for a defense of why the promised up-or-down vote on the public option was once again abandoned.

Posted by: stonedone | November 17, 2010 1:05 PM | Report abuse

Well if by give-away you mean it allows hospitals to stay in business at a 1.3% profit margin then I guess it would be considered a giveaway. And the article's actual intent i expect was to inflame your hatred towards insurers. MISSION ACCOMPLISHED.

Michaelh81 said:

Visonbrkr: if there was a public plan with Medicare rates, the hospitals would make more money. Whatever profit margin they lost from ripping off privately-insured patients suffering from information assymetry among other things, they would make up in volume and predictability in a nation where everyone had reasonable coverage.

Posted by: michaelh81 | November 17, 2010 12:56 PM | Report abuse

Michaelh81,

Wait aren't we supposed to be trying to get away from fee for service models that drive all costs higher and result in unnecessary care? Isn't that what got us in this healthcare cost mess in the first place?

Posted by: visionbrkr | November 17, 2010 1:56 PM | Report abuse

michaelh81,

agreed that we'll eventually get to single payer although I'd prefer models that aren't run by the government. See this pesky fraud thing really bothers me and wasting $60-90 billion a year certainly cuts into the savings you project. My concern is that if we go there too quickly that we'll have other side issues like massive unemployment and other unintended consequences. It needs to be a slower transtion to that point. Right now (as i linked above) hospitals are cutting back staff. If we did a quicker move (which would have included a public option at lower rates hospitals have admitted that they'd be forced to lay off more employees to stay afloat.

Posted by: visionbrkr | November 17, 2010 2:06 PM | Report abuse

5446: Each time we open up Medicare to a lower age pool, they'll be healthier than their older counterparts. And it will be much cheaper than private insurance, being that Medicare has a tiny administrative cost and isn't in the business of skimming off profits for shareholders. This Medicare expansion will be a reinforcing loop in which case each time we expand the age pool, the Medicare system gets stronger and cheaper and private insurance gets more expensive and rapacious, which further encourages more Medicare expansion, etc. Before long we'll get to single payer.

BTW a key component in this will be the SCOTUS declaring the individual mandate unconstitutional and voiding most or all of ACA. So, back to square one, and something we already know works and has massive political support - Medicare.

Posted by: michaelh81 | November 17, 2010 2:07 PM | Report abuse

visionbrkr:

It will be easier to curtail Medicare fraud than it would be to try to enforce MLR ratios on private insurers or hold down their rates without much authority or enforce the coverage regulations.

I agree that a slow transition is both what's feasible and advisable, that's why I think this will take 2 or 3 decades. Hospitals will be fine, they will share the haircut with Dr's, Pharma, etc...

Posted by: michaelh81 | November 17, 2010 2:14 PM | Report abuse

michaelh81,


sorry but I disagree. insurers profits are 3.5% currently (and going down). Medicare fraud shows no sign of decreasing. My state of NJ already has an MLR of 80% and last year all insurers in NJ had over 85% spent on medical care and our costs are still skyrocketing here. When HHS rules (as it mostly has) the guidelines will be clear and you can simply look to those states that already have MLR's for the example.

Costs (IMO) will come down when doctors get their haircut as they are the largest in mass sharehold and the driver of costs. If doctors stop prescribing a colonoscopy at $2000 apiece for every 50 year old even if they have no history of colon problems then maybe we can seriously talk about cost control.

Posted by: visionbrkr | November 17, 2010 2:47 PM | Report abuse

michael wrote:

"Medicare has a tiny administrative cost and isn't in the business of skimming off profits for shareholders. This Medicare expansion will be a reinforcing loop in which case each time we expand the age pool"

See I disagree on this. What you call skimming off profits, is what a business is supposed to do. Furthermore, the profit motive is what keeps costs down, even if you don't like the idea from a doctor/patient perspective.

If no one is trying to make a dollar, then no one cares if you spend a dollar. Isn't that the most obvious lesson to be learned from our current huge Medicare deficit?

Posted by: 54465446 | November 17, 2010 2:56 PM | Report abuse

54465446,

and furthermore the incentive now is greatly reduced if not gone altogether to remove fraud from private healthcare since the NAIC has recommended to include fraud prevention inside admin costs (IMO its not a medical cost but should be included seperately and not factor into the equation). Because admin costs are so limited this will be one of the first things to be cut especially since come 2014 we'll all be getting subsidized by the government.

Again unintended consequences is why government many times does a lot more harm than good.

And medicare's 3% has already been proven false. They hide costs there where private insurers that are public companies can't.

Posted by: visionbrkr | November 17, 2010 3:10 PM | Report abuse

This is why you will never be able to curtail Medicare costs, or make a dent in them even with HCR:


"Medicare panel endorses prostate cancer vaccine"

Would I want to take it as a terminal prostate cancer patient to get 4 more months of life (the average)? Yes, probably, possibly.

Can we as a society ever climb out of the health care spending deficit while we continue to pay for such end of life treatments? No, not realistically.


Posted by: 54465446 | November 17, 2010 6:56 PM | Report abuse

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