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A Broker’s Lament: We Brought This On Ourselves

Sinibaldi_2
A huge segment of the American population is simply far too strapped to ever afford the premiums and costs associated with health insurance/health care as it is structured today.

It isn't the employees of government (local, county, state or federal) who will demand immediate change. It isn't the employees of institutional companies (the Motorolas, GEs, Microsofts of the country) who will demand change. It isn't those on Medicare or Medicaid or the VA who will demand change. It isn't the wealthy. It isn't the poor. And, it isn't the vast majority of health insurance agents who work with large group clients (because, while that market is becoming ever more difficult and the work more taxing, they're still selling SOMETHING to these bigger businesses and government entities).

Why don't these people see what I'm seeing? Simply because, while they are feeling the effects of the rise in health care/health insurance costs and the downturn in the economy, most of these businesses and their employees and dependents (and the affluent) have yet to have a clue about how expensive things really are (or in the case of the rich, they can still afford their out-of-pocket expenses). The agents who market to large employers are still making lots of money (I know, I rub elbows with them at my local Health Underwriters meetings once a month).

That leaves individuals and small businesses and the agents who work primarily in those markets – the very folks most beleaguered by the current situation. While the employee of a regional electric utility is complaining about monthly payroll deductions for his family that now exceed $500 or more on a $60,000 annual salary, the longtime employee of a local small electrician is looking at monthly payroll deductions for his family of $1,500 on a $35,000 annual salary. His apprentice is younger, and so is "fortunate" to have monthly deductions for his family of only $900 on a $20,000 annual salary. The electrician's helper making $9/hr can't afford even his half of the premium for just himself.

Individuals  on personal health insurance policies are also feeling the "pinch." Most of my individual clients see increases of 18-25% a year.

It is all of these folks (and there are tens of millions of them), coupled with those who have already been priced out of the market altogether, who will fuel the fire for radical reform. It is these folks who complain – long, loud and bitterly – that the American dream is leaving them behind. It is these folks to whom the politicians will ultimately listen, because they're the ones making all the noise. It is these folks who will ultimately define what the next set of reforms looks like – and those reforms will NOT be confined only to the small group and individual markets – nor do these folks give a rat's rear end if the insurance industry is involved. (After all, we're doing such a wonderful job for them now.)

And, in my opinion, rightfully so. The health insurance industry (with lots of complicity from legislators, lobbyists and industry groups like ours) has let them down. Period. We have chased profits, chased commissions, swallowed every piece of spin the insurance industry has fed us, and generally ignored the growing number of folks who are beyond dissatisfied with the status quo. They're mad, and they're not going to take it any more.

We're not talking about 5 million, or 15 million people. No, when you add together all small group employees and their dependents, with those who have individual coverage, and the 50 million or so who have no coverage, you're talking about 100 million people or more.

We have brought this upon ourselves, because we (the industry, maybe not each of us individually) have ignored what folks want in favor of what WE want. The industry has ignored calls for more efficient claims and billing, lower bloat, curtailing outrageous CEO and executive salaries, and a more reasonable approach to return on investment. Our industry has ignored any attempt at out-of-the-box thinking to get reasonably priced health insurance to most low-wage Americans, instead focusing on mis-communications to get Americans to buy into what the industry wants ("High Deductible Health Plans are good for you. We don't care if you can't afford the deductible. Now accept that fact and shut up.") Most of all, our industry has simply ignored an ever-louder clamor for us to get our act together. Instead of focusing on a long-term vision for the future of the industry (one that actually includes the very consumers to whom we sell products), the health insurance carriers have instead bellied up to the short-term trough of immediate reward (executive compensation, shareholder value, golden parachutes).

I'm normally not negative, either. I've always considered myself a realist. Yet here I am, watching every prediction I've made over the past 15 years on forums like this come true.

The saddest part is listening to all of the gnashing of teeth and screeching and wailing, mostly from the very folks who have repeatedly turned a deaf ear to the situation year after year because they were making gobs of money. (Yes, I'm talking about a lot of you on this very forum). In fact, some of you are still wearing your rose-colored glasses, and acting like if you just click your red-sequined shoes together, you'll be able to get back home.

Well, you ain't Dorothy, and this ain't Oz.

Let's see what the President and Congress come up with, and try to work with it – because it is inevitable that the reforms will be major, because we've waited too long to save our current system as we know it.

I will not apologize for the above, and I will probably not respond to the rants, flames and cacophony that are sure to ensue. We brought this upon ourselves, so now we'll have to deal with it.

Note by Brian Klepper: John Sinibaldi
is a St. Petersburg, FL-based health insurance agent – or as his
industry association prefers to be called, "Health Underwriters" –
catering primarily to small employer groups. He's posted reality-based
columns here in the past, including a particularly pithy one
recently on small group coverage in Florida. The fiery comment above was written to colleagues on a national health care brokers' forum.

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mikeChrisRickDavid ReedTom Leith Recent comment authors
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mike
Guest

excellent! The redemptive truth for your business, is what the American people do not want government health care work either. Your industry has the opportunity to put something together in the private sector so that people can live with. Come with a product that works for the employee and business owner and you are a hero to the average American worker.

Chris
Guest
Chris

John, Amen. Very Very insightful and honest assessment of the industry. I work in the health care industry in the Health IT and Wellness space. I constantly see this when meeting with brokers and clients. They all worry more about what the commission level will be if they work with us not what how we will help the client make better decisions, achieve healthier outcomes, and lower cost. Fear and uncertainty fly around left and right to derail any significant change thus continuing to line the pockets of the brokers and carriers with the plan sponsors and consumers holding the… Read more »

Rick
Guest

Excellent piece! The redeeming truth for your industry is this: The American people do not want government run health care either. Your industry has an opportunity to put something together in the private sector that people can live with. Come up with a product that works for the wage earner as well as the business owner and you become a hero to the average hard-working American.
Kudos to you and I’m spreadin’ this article across the internet!

David Reed
Guest
David Reed

“I will not apologize for the above, and I will probably not respond to the rants, flames and cacophony that are sure to ensue. We brought this upon ourselves, so now we’ll have to deal with it.” The sad part is, there’s nothing to apologize for, and this article isn’t suprising to anyone stuck on the low-end of the scale when it comes to healthcare in America. We’ve been here, all along, and this is only an opportunity to say “Welcome. Where have you been? We’ve been here, saying that, for a long time…” But no one listened to us.… Read more »

Tom Leith
Guest
Tom Leith

Nate asks:
> If an agent can come to your office and show you how
> Nate can cut your premium 20-60% and get you net
> savings of 10-40% why doesn’t that agent deserve 3-5%?
Well, no.
He deserves a fee of some kind for the expertise and service he actually provided. Maybe a flat rate for delivering a plan, or an hourly rate for doing something special. The idea that he “deserves” an ongoing percentage of the total bill is an example of usury.
t

Peter
Guest
Peter

“No offense, Nate, but who are you, and what, exactly, have you done? It would be helpful for me to understand your positions (and perhaps give greater credence to your responses) if I had a better idea of what you do for a living, and what you’ve attempted, (and more importantly, accomplished) over the past 10-15 years. You say you have an entire book of business (implying that you’re a health insurance agent), but then in a subsequent post say you are NOT an agent.”
Nate, where are you? John’s asked for a response.

Actuary
Guest
Actuary

From Insurance News Net – Finally, the basic problems with the idea of government-paid, universal health care have been identified. USA TODAY’s editorial on the subject is spot on. The U.S. government merely paying for health insurance without controlling costs would lead to another financial disaster (“Obama holds health summit, but will he bust the budget?,” Our view, Medical service debate, Wednesday). By the way, Jack – if you want knowledgeable people to take you seriously, stop quoting the “31% waste of the insurance bureaucracy” myth. This would mean of the $2.4T spent on health care, $744B is spent on… Read more »

Aftercancer
Guest

Nate, Coming from a recipient of health insurance rather than a salesperson I’d like to thank you for your honest appraisal. As a cancer survivor, health care and health insurance issues come up in conversation frequently. I can tell you some real world things: CDHP’s are nearly as bad as not having insurance. People postpone having preventative screenings done if they feel that they can’t afford to pay the out of pocket. With cancer this increases the risk of death but also increases the cost of treatment to both the patient and the insurer. The later an illness is found… Read more »

Deron S.
Guest

Jack – I’ve heard the 31% figure mentioned many times over the last year or so, but I haven’t taken the time to check it out. It’s an important point, and I think it’s only fair that we determine if it’s accurate. I am concerned about the source, considering it’s PNHP. Are you aware of any independent source signing off on that?

Joe
Guest
Joe

Personally I think the medical care in Canada is a disaster. MD’s there don’t seem overly excited about it. Check out http://www.freemarketcure.com for an overview of Canada’s healthcare system.
Give our government 10 to 15 years and control of our healthcare and we’ll have the post office mentality in health care. Personally, I want a doctor that’s operating on my or my family to earn a good living and give a damn.

Joe
Guest
Joe

I think a lot of people could buy health insurance but refuse to do so. For the others with health issues like diabetes or cancer or heart issues, maybe the answer is to make every individual carrier have to guarantee issue the coverage to everyone. Then the government would stipend the carrier additional premium only for those with certain health issues. For example, the person pays $300 per month and if they have diabetes, the government would stipend them another $200 a month for the additional risk on that person if they have a specific disease. For those who can’t… Read more »

Nate
Guest
Nate

These are the types of comments that cause people to snap. Jack E Lohman – “The best, simplest, least costly, most effective thing we could do is expand what has been working so well for years, Medicare. You get sick, you get care, and the caregiver gets paid. Nothing could be simpler. We should immediately eliminate all other forms of state and private health care, and do it right. It would be the best bailout for 100% of our corporations who are now paying $6000 per year per employee.” Where to start, well Medicare spends over $7000 per member where… Read more »

Deron S.
Guest

Peter – Did you know that the founder of FAIR was so radical that he considered the Democratic Party to be “right wing”? The group admits to being progressive. My comment about the liberal media seems to have opened up a can of worms for you, but if your goal is to refute that, FAIR is probably not the best source to do that.
Shame on me for going down the ideological road. I should know better than that because that’s one of the main things stalling reform these days. I will behave from this point forward!

Jack E Lohman
Guest

Gee, Clyde, I didn’t mean for my suggestion — that we eliminate the 31% waste of the insurance bureaucracy — to chase you away. But if that is your area of work you should know that the handwriting is on the wall. There are going to major changes, and the long term does not favor insurers.

Jack E Lohman
Guest

And deductibles? The Bell Policy Center found that while health savings accounts coupled with high-deductible health plans increase cost-consciousness among enrollees, they have little effect on overall health care costs. A RAND study demonstrated that when hypertensive patients had to pay part of the bill, they had a 10% higher death rate. Certainly if people die earlier, we will reduce health care costs, but that sounds too much like a Philip Morris study I once read. Even partial payment by the patient can be counterproductive, like co-pays, which usually cost more than they save. It was shown in a Kaiser… Read more »