Mr. Obama uses that infamous political ploy (unfortunately used by all politicians) of presenting the uncommon case as if it were the common case. In Mr. Obama's speech he cites two cases where coverage was denied due to inaccuracies in the original applications. Mr. Harrington writes:
These two cases are presumably among the most egregious identified by Congressional staffers' analysis of 116,000 pages of documents from three large health insurers, which identified a total of about 20,000 rescissions from millions of policies issued by the insurers over a five-year period. Company representatives testified that less than one half of one percent of policies were rescinded (less than 0.1% for one of the companies).Life's not perfect, only 99.5% don't have problems...okay, let's overhaul the nation's medical system! I would bet that even within Medicare and Medicaid they also have issues with .5% of their populations. Nothing is perfect, not even Mr. Obama and his proposed plan. Mr. Harrington continues:
If existing laws and litigation governing rescission are inadequate, there clearly are a variety of ways that the states or federal government could target abuses without adopting the president's agenda for federal control of health insurance, or the creation of a government health insurer.Exactly. We don't need a completely different health care system to fix this problem.
Then Mr. Obama talked about the lack of competition in Alabama and how this leads to insurance companies treating their customer's badly by jacking up rates. Mr. Harrington replies:
1. If profits are evil and Blue Cross and Blue Shield are non-profits, then why does Mr. Obama has a problem with Alabama? Wouldn't the public option basically be federally administered Blue Cross and Blue Shield? Maybe, just maybe, the problem has nothing to do with profits.
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.
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.
2. Looking at an effect without examining the cause is plain foolish. Isn't it possible that Blue Cross and Blue Shield have a greater market share because they are a better run company than their competitors? That's the funny thing about competition, sometimes one guy wins. It doesn't always look like the idealized state sponsored pseudo competitive landscape government envisions.
I'm still waiting for that cogent argument....