Long Island Coalition for a National Health Plan

February 22, 2008

The Myth That Will Not Die

Filed under: healthcare, Insurance — Tags: , , , , , — nhplan @ 3:00 am

just another myth Independent Voice

The Myth That Will Not Die
by Joe Kane
March 6, 2003 [with updates for 2008]

What do Senators Trent Lott, Orrin Hatch, John Kerry, Ted Kennedy, and all the members of congress have in common? They are all beneficiaries of the Federal Employees Health Benefits plan known as FEHB, an elitist health insurance program that has a grossly misunderstood myth built around it.

I call it elitist, because it can only work for some at the expense of others, never for the whole country. And yet, for more than a decade, some politician is on occasion saying that the FEHB is the model for solving the problem of millions of Americans being without health care coverage.

Of course it never comes to pass as it is a myth, and the number of uninsured keeps increasing, while our health care system stays on its course to collapse. Now once again the myth of the FEHB as a model to solve our growing health care crisis and “reform” Medicare, is being touted again, and tragically by two of my favorite well meaning
Senators, Ted Kennedy and John Kerry, as well as President Bush and Senator Frist. (In 2008, Hillary Clinton has gotten on board too.)

Trying to understand FEHB started for me with a famous weekly talk show back in the early 90s, during the debate on Clinton’s Health Plan. Washington reporter Lisa Meyers on Meet The Press, questioned Newt Gingrich about his health insurance. He said he paid about $400 a month. The following night she pointed out: “He pays only $104 a month and the Government pays $404 a month! When asked why he misrepresented the facts, his answer was that he made a mistake.

Duh! Possibly a deliberate lie?

That was my eye opener, so I called the Office of Management and Budget in Washington, and a gentleman named Doug McCormick explained that the Government subsidizes all Federal employee premiums an average of 72%. That there is also a bureaucracy called the Office of Personnel Management, that employs 153 people to administer all the different insurance plans.

Needles to say these insurance companies are all in business for profit, not for the health of the patient. So what we have here, is all of us taxpayers, which includes the 42 million (47 million in 2008) uninsured, are having our hard earned dollars giving corporate welfare to the private for profit insurance industry(HMOs), to protect their profit margins. An industry that to this day has failed to produce affordable quality health care coverage for everyone. The same failed industry that spends millions of their profit dollars lobbying congress to fool us into believing, that our great Democratic government, which has given our parents and grandparents Social Security and Medicare, is incapable of handling decent coverage for all Americans. The Yiddish word for that is called Chutzpah!

Here is the undeniable arithmetic, which will destroy the myth once and for all. I feel like I’m Toto pulling back the Curtain in the Wizard of Oz. A cheap limited coverage policy of $5000 a year, multiplied by 42 million to cover the uninsured, costs $210 billion. 72%
of that is $151 billion. Where in hell can they get that kind of money? (Updating the numbers to 2008 – a $7000 premium for 47 million uninsured gives us $329 billion, times 72% gives us 236,880 billion.) On top of which the OPM of 153 employees would have to be increased by hundreds of new employees to handle another 47 million private plans. A huge additional expense. The whole idea would be dead on arrival.

If we dare to consider 20 million underinsured getting subsidized, the money going
to the additional corporate welfare becomes more outrageous.President Bush and Senator Frist are now pushing for more corporate welfare for the managed care industry, under the guise of “Modernizing Medicare” and “Choices” for seniors, to force seniors to leave Medicare for some prescription drug coverage. This is the surest way to utterly destroy the whole Medicare program, as it fractures the insurance pool we call Medicare. The cardinal rule of fiscally sound insurance known to actuaries as “Spread The Risk,” is the immutable law that cannot be broken without weakening the sound financial structure of insurance. Simple mathematical logic: The bigger the pool, the lower the cost for everyone.

In 1993 the Executive Editor of the New England Journal of Medicine, and in the NY Times on 10/13/02, Dr. Marcia Angell offered the logical solution. Extend the time tested Medicare program to the non-seniors. That would cover all Americans, who can then choose their own doctor, and permanently assure the solvency of Medicare, because it’s based on that basic economic law.

The most fascinating fact is that Medicare’s track record on costs for non-medical administration is only a shade over 2%, so there would be a SAVINGS of over $250 billion dollars by eliminating the systemic wastage of the HMOs. They have by their very nature a 25% cost ratio because of sales commissions, advertising budgets, stockholder dividends and huge CEO multi-million dollar salaries and golden parachutes. Because they offer so many different plans, they create massive amounts of costs for processing the paperwork, that any doctor will tell you is killing them.

Only one plan is needed. Everybody is covered for everything when they’re all in one non-profit insurance pool. The savings would allow us to cover prescription drugs, long term care, deductibles and co-payments.The phoniness of President Bush’s words in his
State of the Union speech betrays how unaware or cruel he is. I quote: “Instead we must work toward a system in which all Americans have a good insurance policy, choose their own doctors and seniors and low-income Americans receive help they need. Instead of bureaucrats and trial lawyers and HMOs, we must put doctors and nurses and patients back in charge of American Medicine.” (emphasis mine)

So what is his solution for prescription drugs for seniors? Give taxpayer money to those same HMOs to offer seniors prescription drugs, wherein they can continue to stop doctors
and nurses and patients from being in charge of American Medicine. Mr. Compassionate Conservative: Why not eliminate those middlemen and save the money, by giving the funding directly to Medicare?

Take heed America, before the system collapses!

Joe Kane is an Executive Board member of the LI Coalition For A National Health Plan. He can be reached at kanekohn@yahoo.com

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