Whistleblower: 6 Ways Romney's Healthcare Proposals Enrich Insurance Companies and Sicken Americans
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It perpetuates a system of inequitable access to care and of higher cost to all of us. But it's good for health insurance companies in that this is a segment of the population that they don't have to insure. And they don't want to insure anyone who doesn't have the money to pay for the premiums. They really could care less about the uninsured.
It's a factor in rising healthcare premiums because hospitals have to cover their costs or they go out of business. That's just the way it is. So as they negotiate with insurers they have to ensure that they're getting reimbursed enough to cover their operating costs. And if you have a high percentage of patients who are unable to pay, you've got to make sure that you are reimbursed by an insurance company a certain amount to cover that. So that's where it comes in. We all, if we have insurance, are paying for that. And most people are completely unaware of the fact that their insurance premiums are as high as they are partly because of this ridiculous situation.
Frankly, it's why the hospital industry and the American Medical Association came around to endorsing the Affordable Care Act. Because the more people you bring into coverage -- and the Affordable Care Act will bring 30 million people into coverage who are currently uninsured -- the amount of care that they have to write off will be reduced significantly. If that happens, then that will have a positive effect on health insurance premiums as well.
3. Allow Insurers to Sell Across State Lines to Increase Competition, Choice and Quality (aka "The Silver Bullet")
Wendell Potter: It's not a bullet. It's more of a blank. The fact is that insurance companies are not interested, as it turns out, in that concept. The insurance is regulated largely at the state level, so regulations vary from state to state. So insurance companies that are based in one state don't necessarily think it would be worth the investment to offer policies in a neighboring state. The economics don't work that well because healthcare is delivered locally. You can't buy healthcare from Amazon. You have to be seen by a doctor locally and be treated locally and the cost of care varies from one place to another, one market to another.
So insurance companies just aren't interested in making the investment that would be required to go into another state and try to build a network of providers, which is very difficult to do. The barriers to enter a new market are very, very high, and that's what most people don't really understand, especially those who espouse selling coverage across state lines. It's not that easy.
If it were that easy it would've been done a long time ago because there is no prohibition against insurance companies from doing it right now. They can do it right now. They just don't because the economics don't work for them.
If you're a big corporation and you can operate in multiple states, you've got economies of scale there and you're also insuring large corporations that self-insure, so your own money is not so much at risk. So you've got economies of scale, you've got the fact that you're insuring or providing administrative services to companies that self-insure. So for smaller insurers that operate primarily in one state, you don't have the economies of scale.
So in almost every market in this country, what we have is one or two insurance companies, at most three, that are very, very dominant. You don't have as many insurance choices as people think. You have a few insurance companies that have been in the market for quite a long time. They've grown to be of a certain size. They have clout at the negotiating table with hospitals and doctors and other healthcare providers, so they can demand lower reimbursement rates than some new out-of-state plan that comes in that wants to establish a presence.