The chairman and chief medical officer of Aetna took to the pages of the Washington Post on Tuesday to offer their perspective on health care reform. They were motivated, they said, by the increasing number of Americans going without health insurance, a concern presumably unrelated to SiCKO, Michael Moore’s new and very popular film on the failings of the U.S. health care system, and by a mystifying public perception that “that our industry might be opposed to reform.”
The essay dovetails nicely, by virtue of its extraordinarily weak argument, with George Bush’s recent comments about health care, which included this bone-ignorant gem: “I mean, people have access to health care in America. After all, you just go to an emergency room. The question is, will we be wise about how we pay for health care.”
The answer, obviously, is “not if I have anything to do with it,” and the Aetna guys are down with that. They say their industry only averages about a 6% profit, “less than many other for-profit sectors in health care; less than the margins at many not-for-profit health-care institutions; and far less than the numbers recently bandied about.”
Those rudely bandied-about numbers are the 20%-30% of insurance company revenues that don’t go toward medical expenses (what the industry calls “medical losses,” which gives you an idea of how they regard customer efforts to get medical care) but to overhead and profit. At Aetna in 2006, medical losses were a bit more than 20% of revenues, which means that of the $25 billion Aetna earned that year, more than $5 billion of it didn’t go to health care.
So Aetna spends somewhere between 75 and 80 cents of every customer dollar on health care, with the rest going to overhead — sales, marketing, administration and such — and profit. At Medicare, 97 cents of every dollar goes to health care. But the Aetna guys want you to think that they’re right in the Medicare ballpark on efficiency, so the only number they provide is that average profit. They don’t mention that even that number, disappointing though it may be to Aetna’s shareholders, is still double what Medicare spends on non-health care costs.
And for good measure, they throw in that bit of misdirection about their profits falling short of “the margins at many not-for-profit health-care institutions.” It’s true, as far as it goes: most non-profits consume more than 6% in overhead. But their overhead — their sales, marketing and administration costs — isn’t any higher than Aetna’s (it’s often less), and they’re not taking a profit, so they wind up spending more of every dollar on health care than Aetna does by a pretty substantial margin.
That wholly disingenuous effort with the numbers is actually the strongest part of Aetna’s case. Elsewhere, they acknowledge cherry-picking low-risk customers because otherwise, they say, they couldn’t make any money and customers couldn’t afford to buy their policies.
We do consider individual (as opposed to group-based) members’ health histories before contracting for insurance in the states where this practice is allowed. Without this approach, all would wait until they anticipated spending more for health-care services than the cost of their premiums. We are open to discussing guaranteed issuance — no medical underwriting — when there is a mixed-risk pool. But without an enforceable mandate for individuals who can afford to purchase health insurance — which we have advocated for four years — the individual market is prone to adverse risk, and the policies quickly become unaffordable.
That, of course, is one of the best arguments for single-payer national health care: everyone is covered, the risk is spread across all 300 million Americans, and we’re not wasting money paying people to deny coverage to the sickos in order to keep healthy customers’ premiums out of the stratosphere, a strategy which isn’t working all that well anyway.
The simple truth is that private insurers can’t compete with governments, whether it’s the federal government or individual states, in providing cost-effective comprehensive basic health insurance. Governments aren’t paying sales commissions, they’re not forced to advertise (other than public service announcements), they’re not paying big money to administrators, they’re not paying lobbyists and they’re not paying shareholders. They enjoy economies of scale that no private insurer can because no private insurer will ever wrap up 100% of the market.
When Aetna’s honchos say they’re eager to embrace reform, they mean they’re eager to embrace reform that guarantees their survival and a decent profit, which means reform with built-in inefficiencies and built-in penalties to those who buy their insurance. That’s why their defense of what they do ranges from weak to dishonest. They’re obligated to make the effort to protect their shareholders, but they know full well that the product they offer is inferior to what Americans could get from an inclusive taxpayer funded system because their product includes a whole bunch of costs that have nothing whatsoever to do with providing health care.
Returning to our genius president and his notion of emergency rooms as health care guarantors. In the real world, people know that emergency rooms are really, really expensive, which means that someone who can’t afford a hundred bucks or more to see a doctor before a problem develops into an emergency won’t be able to afford the automatic $1,000 cover charge for an ER visit, which ultimately means bankruptcy or something like it for either the patients racking up the charges or the hospitals eating the charges, or both. And of course turning emergency rooms into primary care centers for the destitute means that their real purpose — treating emergencies — gets subverted. And of course they aren’t equally available to all; it can be a long jaunt from some places to the nearest hospital.
Aside from confusing the medical refuge of last resort with routine access to comprehensive health care, Bush made clear that he thinks it’s the federal government’s role in the health care system should be limited to propping up private insurers, primarily by leaving the highest-risk and least profitable customers — the elderly and the poor — to receive their basic coverage from the government while at the same time legislating opportunities for insurers to profit from government programs.
It’s a losing argument on both the financial and moral levels. No wonder it’s so tough for people like the Aetna guys to make even when they get their shot at doing so on the priciest editorial real estate south of New York City.
This kind of practices make the health care unaffordable and therefore more Americans will continue to have no insurance at all.
I have Aetna insurance. Kind of. It’s COBRA. I wasn’t aware that my outpatient coverage was limited to $2,000 a year, which oddly enough is almost exactly the amount of my premium for the year. Yeah, not much of a premium, but not much coverage either – much less than the coverage I had under Kaiser. I thought HIPAA and COBRA were supposed to guarantee that I would keep the same coverage, but gosh, was I ever wrong!
And now it’s all used up, six months into the year, because the chiropractor was mistaken – his services are NOT physical therapy but office visits, so are included in that $2,000. As with the doctor – who charged Aetna $172 for an office visit so he could get $90 out of them – the chiropractor overcharged impressively, about three times the amount he wanted to get. So a few visits to the chiropractor later and I’m out of coverage. I can still get up to $20,000 for hospitalization, for which I imagine the hospital would bill Aetna $40,000 to $60,000. Sounds like racketeering to me. How about you?
Meanwhile, I found I’ve been paying market rates for my prescriptions. I discovered this when I renewed a prescription with Aetna Rx Home Delivery and they raised the price from $175 to $295 without telling me. They refused to take the medication back and refund my money, so now it’s in dispute resolution (I hope) with Visa, and I’m ordering from Canada for half the price of the generic here (free shipping!). Another medication (Imitrex – about $20 per pill) is unavailable as a generic in the U.S., so I’m getting it from Canada for about one-third the price.
My only immediate quandary is what to do about the symptoms of rheumatoid arthritis I’m getting in my hands at too young an age. It runs in the family. The definitive blood test costs hundreds of dollars, to be added to office visits and (if needed) medication to keep my joints from being destroyed. I don’t know exactly what to do. Call my mom, I guess – though she might say something like, “Well, that disease is on your father’s side of the family. Call him. No, I don’t know his number.” She’s a Republican, has free government-paid coverage stemming from his military service.
Getting another policy before this one expires would cost me a minimum of $600 a month, and it wouldn’t cover my wife. Adding her would bring the cost to about half the mortgage payment, and since she doesn’t have insurance now, we’d have to pay maybe $12,000 for the first year’s coverage plus the costs of her office visits and treatments before she gets over the pre-existing-conditions hump.
What a country. Here’s a suggestion for our mutual mental health: Write something positive, substantially positive, about the U.S. because, when I think about politics based on bribery, health noncare, celebrity worship, the ascent of Liberty University law school graduates to positions of power, and the corporate state (just for starters), I kinda forget why I want to live here.
According to our president, M, all you need do is go to the nearest emergency room. Apparently he’s given personal instructions that they’re to take care of you. Quit yer bitchin’.
I’m working on that positivity thing. I’m thinking something about the great apple pies one can get on the way to the desert will do the trick.
“According to our president, M, all you need do is go to the nearest emergency room. ”
EMTALA. Look it up. Congress gave those “personal instructions”. It’s the law.
John, emergency rooms are for, astonishingly, emergencies. They are not intended as or suited for preventive care, primary care or ongoing care. I’m aware that they’re required to treat anyone regardless of ability to pay. One of the things that drives up our health care costs is that people without insurance wind up putting off care until it becomes an emergency and thus wind up seeking the enormously more expensive services at the ER rather than the less expensive routine visits that could have, if they could afford it, kept them out of the ER.
For M, going to the emergency room with a migraine might get him an Imitrx pill or shot, and if he gets a sympathetic doctor he might go home with some samples. I suspect he would feel obligated to pay for the visit rather than just dumping the cost onto everyone else, so it would probably wind up being a $1,000 pill. The ER won’t do a blood workup to check for rheumatoid arthritis, no matter what the president says, and they won’t treat it, either, although they would treat the pain if he walks in screaming.
In short, equating the ER with access to health care is not a sound response to the problem.
We have Aetna HMO. My husband hurt his knee on Sunday. We did not go to the emergency room (we should have)! He waited till Monday to see the Dr. The Dr wants him to have an MRI. Aetna has to approve the referral – which takes 24 – 48 or more hours! We’re still waiting – it’s Tuesday evening. HE CAN’T WALK.Is the injury serious or not – we need the MRI to know that. He has sick leave, but his employer is losing lots of money because he’s not able to do his job! So how is this all saving money? Maybe the idea is let the patiant wait, he’ll just go baxk to work and forget the MRI? What if he needed the MRI to check on a blood clot in his leg? Do we just wait and wait till someone approves the referral so he can get his MRI? I guess he’ll be making calls tomorrow like he did today to try and speed things along. He’ll write letters to his employer so that they know about the lack of customer service at Aetna. I DON’T GET IT?