Thursday, November 07, 2013

Blame the insurance companies, not Obamacare (Juan Williams)

A very interesting and enlightening tip from Scott Lemieux at Lawyers, Guns, & Money. You may recall that Juan Williams left NPR amidst unpleasant circumstances, then went to work for Fox News. But surprisingly enough, he has remained a genuine journalist—and one who clearly thinks for himself. I agree with Scott Lemieux that this analysis by Williams hits the nail on the head:
Insurance cancelled? Don't blame Obama or the ACA, blame America's insurance companies

Liar! Pinocchio! Deceiver!

With all the charges flying against President Obama in the on-going effort to stop ObamaCare it’s time for a reality check.

Having failed to kill the Affordable Care Act in Congress by shutting down the government the opposition is currently taking delight in charging the president with lying to the public when he said anyone who likes their current healthcare plan will be able to keep it under the new law.

It turns out that some people in the individual care market – about 5 percent of the overall insurance market -- are having their insurance policies cancelled.

It is estimated that half of those folks will get better coverage for a lower price. Some people will even get subsidies to help them pay the lower price.

But some people losing their current policies [and being offered better coverage] are going to have to pay a higher price. Taking crocodile tears to a new level, ObamaCare opponents are now rushing to their defense and calling the president a liar.

These critics include Republican politicians who did not vote for ObamaCare; these are Republican governors who refuse to set up exchanges to reach their own citizens; these are people oppose expanding Medicaid to help poor people getting better health care; these are people who have never put any proposal on the table as an alternative fix for the nation’s costly health care system that leaves tens of millions with inadequate medical coverage and tens of millions more totally uninsured.

The fact is if you are one of the estimated 2 million Americans whose health insurance plans may have been cancelled this month, you should not be blaming President Obama or the Affordable Care Act.

You should be blaming your insurance company because they have not been providing you with coverage that meets the minimum basic standards for health care.

Let me put it more bluntly: your insurance companies have been taking advantage of you and the Affordable Care Act puts in place consumer protection and tells them to stop abusing people.

The government did not “force” insurance companies to cancel their own substandard policies.The insurance companies chose to do that rather than do what is right and bring the policies up to code.

One of the most popular and important provisions of the Affordable Care Act is setting basic minimum standards of medical insurance coverage. Here are some of those standards:


The American health insurance industry is one of the most profitable in the history of the world. Before the ACA, they made money by finding any excuse, any loophole to deny coverage to the sickest and most vulnerable people in our society.

[JW: Amidst the polemics over health care reform during the past five years or so, you may have seen arguments claiming that US health insurance companies actually have low profit margins. But the numbers offered to support those arguments are generally quite misleading, not least because the "costs" used to calculate those profit margins include executive salaries, marketing, and various other sorts of overhead linked to the fact that they are profit-making enterprises. The only figure that really matters is the so-called Medical Loss Ratio—that is, how much of their revenue do they actually spend on health care. The Affordable Care Act requires them to spend at least 80-85% on health care, with slight variations according to various details, and many companies whined and complained about that. The equivalent figure for Medicare is about 98%. Draw your own conclusions.]

Rather than being vindictive and canceling policies under the pretext of ObamaCare, the insurance companies should be thanking their lucky stars that they do not have to contend with a public option or a single payer system. That is what the law allows in every other modern industrialized democracy.
[JW: Actually, some other successful systems include a role for heavily regulated non-profit insurance companies.  But Williams is basically right.]
You can read the rest here.

—Jeff Weintraub