Healthcare vs. the profit principle

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now you don't have to have seen sicko to know that if there is one area of human endeavor where private enterprise doesn't work, it's healthcare. consider the private, profit-making insurance industry, which bush is so determined to defend. what "innovations" has it produced? the deductible, the co-pay and the pre-existing condition are the only ones that leap to mind. in general, the great accomplishment of the private health insurance industry has been to overturn the very meaning of "insurance," which is risk-sharing: we all put in some money, though only some of us will need to draw on the common pool by using expensive healthcare. and the insurance companies have overturned it by refusing to insure the people who need care the most--those who are already, or are likely to become, sick.

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this is not because health insurance executives are meaner than other people, although i do not rule that out. it's just that they're running a business, the purpose of which is not to make people healthy but to make money, and they do very well at that. once, many years ago, i complained to the left-wing economist paul sweezey that america had no real healthcare system. "we have a system, all right," he responded. "it's just a system for doing something else." a system, as he might have put it today, for extracting money from the vulnerable and putting it into the pockets of the rich.

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but let's not just pick on the insurance companies, though i wouldn't mind doing that--with a specially designed sharp instrument, over a period of years. sunday's los angeles times featured a particularly lurid case of medical profiteering in the form of one dr. prem reddy, who owns eight hospitals in southern california. i do not begrudge any physician a comfortable life--good doctoring is hard work--but dr. reddy dwells in a 15,000-square-foot mansion featuring gold-plated toilets and keeps a second home, valued at more than $9 million, in beverly hills, as well as a $1.4 million helicopter for commuting.

the secret behind his $300 million fortune? for one thing, he rejects the standard hospital practice of signing contracts with insurance companies, because he feels that these contracts unduly limit his reimbursements. (in a battle between aetna and reddy, it would be hard to know which side to cheer for.) in addition, he has suspended much-needed services such as chemotherapy, a birthing center and mental- health care as insufficiently profitable. and his hospitals are infamous for refusing to treat uninsured patients, like a patient with kidney failure and a 16-month-old baby with a burn.

http://www.thenation.com/doc/20070730/ehrenreich

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I think it is a big mistake to give up Medicare to a for profit HMO.

UnitedHealth Profit Rises on Government Medical Plans

UnitedHealth Group Inc., the largest U.S. health insurer, said profit rose 22 percent on gains from government-sponsored medical programs. The shares fell as costs consumed a higher portion of revenue from commercial plans.

Net income for the second quarter climbed to $1.2 billion, or 87 cents a share, from $981 million, or 70 cents, a year earlier, the company, based in Minnetonka, Minnesota, said today in a statement. ...

...Shares of Humana Inc., a Louisville, Kentucky-based insurer dominated by government-sponsored business, declined 98 cents, or 1.4 percent, to $67.33 at 4:22 p.m. in New York Stock Exchange composite trading. The shares rose 9.8 percent yesterday after the company said its ratio improved in the second quarter....

...Of more than 150 companies that sell Medicare Advantage plans, which provide extra benefits such as lower out-of-pocket expenses and health-club memberships, UnitedHealth is the leader, with about 1.3 million members. Medicare will spend $76.3 billion this fiscal year to provide Advantage benefits to 8.6 million senior citizens.

In the second quarter the company extended its collaboration with the advocacy group AARP to expand marketing of Advantage plans to people 65 or older through 2014.

Medicare Advantage was a ``bright spot'' for UnitedHealth in the quarter, said Carl McDonald, an analyst with CIBC World Markets in New York, in a note to clients today.

``This is likely a function of the benefit changes UnitedHealth made to its Medicare Advantage product this year, as it raised premiums, cut benefits and exited unprofitable counties,'' McDonald said....

http://www.bloomberg.com/apps/news?pid=20601087&sid=avOG0v4eR7p8&refer=home

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