A Broker’s Lament: We Brought This On Ourselves

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.

63 replies »

  1. 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.

  2. 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 bag.

  3. 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!

  4. “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.
    -David Reed
    Bangor, Maine

  5. 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.

  6. “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.

  7. 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 “insurance bureacracy”! Note that the collective profits of health insurers is around $12B (.5% of total health care spend).

  8. 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 the more resources must be used.
    I’m in North Carolina where the State Health plan is looking to change the insurance plans offered with lower coverage for people who are overweight and/or smokers. I expect that this is going to cost more to the insurance companies as well. The patient who is overweight is far more likely to develop diabetes, heart disease, stroke, and some cancers. Nutritional counseling would be a huge benefit but would also be a significant expense and most would not use it.
    Here is an example of something I would change. Prilosec (omeprazole) is sold over the counter. A 42 day regimen costs approximately 40 dollars. The State Health plan covers this name brand, over the counter medication if the patient has a prescription for a copay of $5 dollars. This makes no sense at all to me so perhaps someone here could explain the benefit.
    Thanks for the site, your post and your honesty. The only good thing that may come of the economic situation is a massive shift in the way health insurance is viewed. Kate@ http://aftercancernowwhat.blogspot.com

  9. 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?

  10. 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.

  11. 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 pay anything I guess they stay on the public dole. But everyone that is able to pay should have to pay something.

  12. 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 private insurance spends $3500 per member. By best if you mean winner of the most expense and inefficient price then yes Medicare is best at that. Medicare has this problem with fraud and waste that is almost equal to the total administrative cost of private insurance.
    Curious Brian when someone makes a claim like Jack’s what is the proper responce? His comment shows he has no idea what he is talking about. It’s mainly an opinion so you can’t factually correct him but it is still absurd. How does someone get this misineformed about the facts? No Jack doubling employers taxes to fund a Medicare for all would not be a bailout. Further the dozen doctors that would stick around for Medicare for all reimbursement couldn’t treat everyone anyways. Medicare for all isn’t even being considered as an option by far left nuts becuase even they would admit there is no chance it would work and is unaffordable.
    “but for you to imply that I’m casting stones without having first attempted to fix the system from within is erroneous at best, and duplicitous at worst.”
    I never said anything close to you didn’t try to fix the sytsem, I said you have your facts wrong. Lets argue what I say not what you want. You can spend your whole life trying to fix the system that doesn’t mean you know what your doing. Ted Kennedy has been trying to fix the system for 35 years, he’s still a moron that has done more damage to american healthcare then almost anyone else.
    I own 3 TPAs. We administer benefit plans for employers and provide other types of adminstration. Historically we mostly did self funded plans with stop loss and last few years self funded plans under HDHPs. For all my years in the business I compete with the large carriers everyone hates and help employers offer more efficient plans to their employees.
    “CDHC is failing miserably as health care financing reform”
    So says the lone agent in FL having a rough go of it. It is comments like this that drive me nuts. What is your basis for making this claim? I have offices in 2 states, clients based in over a dozen states and members in 45 or so states. I have a dozen agents writing business with me monthly using HDHPs to solve their clients problems. Just last week one of my agents handed out a rate pass and 3% increase. Almost all of the renewals we are doing are single digit. Who the F are you John to claim HDHP and CHDC has failed? Yes it is your right to share your opinion but it is equally my right to point out to everyone your one little agent in FL. Do you have any business outside of FL? I was just in Atlanta last month setting up a new group. They love it, so who do we believe the tens of thousands of employers with successful plans doing this, not all my clients, or the lone agent in FL?
    The rest of your comment just shows you don’t grasp insurance at the fundemental root of it. Covering an employees birth control is not insurance. Covering allergy medicine is not insurance. That is inefficient financining. To use an insurance company to pay those expenses adds 20% to the cost right off the top, without even getting into rather it is a prudent purchase or not. It’s a very simple solution, DONT HAVE THE INSURANCE COMPANY PAY IT! That doesn’t mean the member pays it, the employer can pay it directly via a self funded plan, they can fund it with an HRA, or they can pay the employee a higher salary and offer a Section 125 plan. All three of those methods pay the expense, save 20%, and don’t cost the employee a dime.
    If you wanted to get even more technical I could blow your mind with the math and savings from the $4 generic programs. We have gone in with HDHP plans and taken employees paying $10-$20 generic co-pays and tought them that not showing your insurance card can get you the same drug for $4. With CDHC we just saved the person $6-$16 and they received the exact same medication. How is that hurting people? Every Rx maker has assistance programs, we help the $10 an hour worker apply for assistance and get their drugs for free or get their co-pays covered. All done with the help of HDHPs.
    I don’t need to suggest anything I have the clients on the book. Presenting one tomorrow out the door carrier is offering 46% discount to go to an HDHP, which generates enough savings to fund the deductible. Problem is John this is all taking place on a level you just don’t get. Instead of trying to learn the new way of things you want to lash out at it.
    “It was shown in a Kaiser Family Foundation study that mothers in low-income families will too often forgo their blood pressure medicine to put food on the table,”
    and to buy a pack of smokes a day, and the duece duece at the corner store. When 40%+ of the poor aren’t smoking then I’ll worry about their health.
    Jack got any studies to back up your 31% claim? Careful what you post it better be good if your going to claim that sort of waste in private insurance and pretend Medicare is better.

  13. 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!

  14. 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.

  15. 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 Family Foundation study that mothers in low-income families will too often forgo their blood pressure medicine to put food on the table, and then they have a stroke or heart attack or, worse, die. I think we can do better.
    I’m not suggesting that there should be no cost controls, just ones that are not counter-productive.

  16. Nice cliche’, JFK, but it doesn’t help those in need and it doesn’t help the nation’s economy. Yes I have made proposals on reducing cost. See “Ten needed fixes for the health care system” at http://tinyurl.com/2hzj65 and “Medicare-for-all is best corporate bailout…” at http://tinyurl.com/9d6bx9
    And Clyde, ALL health care costs are passed along to this nation’s consumers anyway. But why are we tolerating the extra 50% waste in the system? Forgive me if you are employed by the health insurance industry, but that billing bureaucracy is draining 31% of costs without ever laying hands on the patient. If you want to reduce costs, let’s start there.

  17. Universal Health Care?? JFK said it best. “Ask not what your country can do for you but what you can do for your country.” A single payer system doesn’t change anything, all it does is pass the cost on to someone else. Obviously, Obama’s many new tax plans don’t affect you, or you might feel differently and be asking for more accountability out of the rest of America. Give me a suggestion that will reduce cost and not just pass them along, and I am more then willing to participate further in that conversation. Will your idea make us healthier or further incentive people to keep doing what they have been doing? 40% of all health care claims are a direct result of obesity.
    Do you have a deductible on your house, car etc..? Why isn’t that acceptable for your health insurance?

  18. >>> “That is what insurance is for.”
    Clyde, the insurance doesn’t cover her until she reaches a very high deductible. It never ceases to amaze me that we spend so much time and money trying to avoid doing what’s right, when if we simply moved to universal health care we could both solve these problems AND improve the nation’s economy. Go figure.
    Winston Churchill said it best: “America will always do the right thing, but only after everything else fails.”

  19. Nate – I have thought about perhaps ignoring your long comments excoriating me (and several others), which contain far more than I wish to debate at this time; however, I will address three things:
    First, in my subsequent post I had a paragraph outlining much of what I have tried to do, within my industry and state, to effect positive change. As I stated, I know of no other health insurance agent in Florida who has worked as tirelessly as I have to try to improve the markets – for both consumers and for our industry – often at great cost to myself. You obviously don’t know me, but for you to imply that I’m casting stones without having first attempted to fix the system from within is erroneous at best, and duplicitous at worst.
    Second, you contend that my comments imply that you “don’t exist and haven’t done anything in the last 10-15 years”.
    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.
    Third, consumerism only works if the consumer has “skin in the game”. One of the biggest fallacies with consumer directed health care (CDHC, which, by the way, is a clear misdirection, nothing more than a fancy insurance phrase which actually means “consumers pay more out of pocket for everything”) was that having consumers pay up front for health care would somehow mitigate rising health care costs.
    To have “skin in the game”, one must have money to spend; in Florida, fully 40% or more of the working population makes $10 an hour or less. It is impossible to embrace CDHC and $3000, $5000 or $10000 flat deductible products when you’re making $9 an hour and trying to pay the rent and put food on the table and gas in your 10 year old Chevy.
    CDHC is failing miserably as health care financing reform, not because consumers need to have a better idea of what health care actually costs (I agree, they do), not because upper-middle income and affluent employees and their dependents don’t like HDHPs/HSAs (they do), but because hammering lower-middle income folks and the working poor with costs they can’t possibly pay isn’t the solution.
    PS – nobody gets 60% savings by going with HDHPs in Florida, and if you’re getting those savings with similar maximum annual out-of-pocket limits, then I would suggest that your actuarial analysis and modeling is flawed.

  20. Dear Jack Lohman,
    You are correct. Your grand daughter is not the problem. That is what insurance is for. However, the rest of America that is “super sizing” it’s way to being 50 pounds over weight and driving up our health care costs is the problem.

  21. Yea, sounds right Clyde. Except!!
    My daughter did everything right. Ate right, fed her family right, exercised, even got a high deductible policy because “those in the know” advised her. Then her 3 year old daughter was diagnosed with diabetes. So much for being perfect. She’s now paying through the nose for something she had no control over.
    You guys that live your lives perfect need to look at the real world out there.

  22. Steve – just to clarify, when I said that “we have brought it upon ourselves”, I was speaking only to those of my own industry – the health insurance/managed care industry. The original post from which Brian pulled my blog entry was from a closed email forum on which I participate (but on which I had copied Brian). That forum is comprised entirely of health insurance/managed care professionals, consisting of agents, carrier representatives and industry association folks. It was never my intent to imply that consumers somehow brought this mess upon themselves (if anything, I was trying to convey the exact opposite.)
    Sorry for the confusion.

  23. I’m not reading much in the way of any personal accountability. The healthy person needs very little “health care” and for that matter doesn’t “need” health insurance, regardless of economic status. Stop taking a pill for everything, start eating right, get off your fat butts and exercise. Yes, easier said than done – it’s easier just to bitch about it and blame everyone else. People want insurance protection for that catastrophic event, but they are expecting a service contract that doesn’t hold them accountable. People need to wake up and start being accountable for their own actions – I don’t NEED or want the government to “help me out”. Do the right things and the right behaviors – help yourself out. Supply and Demand.

  24. If you want to see the future of the health-insurance industry, take a good hard look at the telemarketing industry as it was 20 years ago and as it is today. The outcome, and the reasons behind it, will be exactly the same.
    The original idea behind insurance — a shared-risk pool — is sound enough. Where it went wrong was when insurance companies were allowed to sell stock, thus shifting their primary responsibility from “taking care of their clients” to “delivering large dividends for their stockholders”. Everything else that’s wrong with the insurance industry follows directly from that.

  25. The bottom line is that health care reform is political, and the insurance industry gives millions of dollars per year in campaign contributions to stay in the loop. They’ll likely be protected even in Obama’s solution, even to the detriment of the country’s economy.
    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.
    But “doing it right” has no campaign contributors.
    Jack Lohman

  26. Nate,
    Thanks for addressing the “P.S.” but not my main point.
    There should not be government interference in a company’s quest for market share. Nor should the government force hospitals to give insurance companies certain discounts.
    Didn’t say you were an agent, but I know many agents, and good ones never get fined.
    Don’t get me wrong, I’m not a big fan of government regulations, and CMS has some strange ones (like the one you are pointing out).

  27. Actuary,
    To start I am not an agent. Second it’s not as easy as just missing it, CMS is in the process of creating a speacial format in which payors need to report data to them. Using any of the existing EDI formats already created and programmed would have been to easy. They then have special reporting timelines for different ages and classes of people. To make sure they can levy some fines they then only allow update files you can’t send a compelte data set each time.
    While you might think it is obvious you obviously aren’t familar with the new law and its requirements. The new CMS reporting is similar to some arcane tax code change, even a great agent can’t perfectly comply with every bit of the tax code.
    Finally it wasn’t $1000, it was $1000 a day and you report quarterly so your talking about a $92,000 fine for not reporting one SSN on a custom file format with incomprehensible regualtions.
    There is a huge difference between anti monoply laws and Ted Kennedy making it a law employers had to offer HMOs. There is also a difference between a person choosing to buy MS OS and the government taxing me then using my money to subsidize an OS they beleive I should be using.
    Would expect better arguments out of an Actuary.

  28. Nate
    For one who rails against government intervention, it is surprising that you would “Force providers to offer the same discounts” and “Cap market share for any metro area at 15-20%”.
    Perhaps we should force suppliers to stop giving Wal Mart better prices than smaller stores. Maybe we should force people to buy computers without a Microsoft operating system because they have such a high market share.
    P.S. A good agent would NEVER miss something so obvious (like a SSN) if it would cost them $1,000.

  29. As converter boxes have shown the only way to prepare the public for change is to change it and force them to learn. Consumerism will be taught of necessity. We also need to keep in mind that any given year 80% of the population have minimial care, your average person is deciding to take generic or brand or rather to go to the ER for a flu, they are not making major life threating decisions. All of our groups that have put in HDHPs see an increase in generic utilization, it’s a small change with no negative impact that saves money. Before we hand over the system to politicians we need to grab this low hanging fruit.
    The biggest fallacy of the left and those demanding “reform” is this comparison of the American System to the rest of the industrialized world. America’s health care system is the most expensive in the world is the most dishonest argument out there. We don’t have A system, we have 50 states, 3+ Federal, and tens of thousands of employer systems. As an aggregate they might be the most expensive but it is dishonest to disparage those that work based on the failure of a few. What’s even more ironic is those on the left wish to model the new reformed system on those that have performed the worst in the US. Medicare, MA, and NY are the most inefficient and overpriced systems in the world, and it is these the left wants to copy. What the general public needs to learn quick is reform is not about improving what they have, it is about the managers of failed systems trying to subsidize their systems at the expense of the rest of the country. There are states like Utah and Idaho that measure favorably against the rest of the world. Why don’t we model reform after those success stories instead of the failures like MA, NY, and Medicare? Progressive and liberal ran healthcare is and has been a complete failure since the passage of Medicare.
    Peter we could start by Ted Kennedy not passing laws forcing employers to offer the carriers he thinks we should all be with. Next we could manadate pricing parity, why are public owned hospitals allowed to give deeper discounts to members of BCBS then my members? It’s our tax dollars just the same as their’s and its not the role of government to pick winners. Force providers to offer the same discounts and we would eat their lunch. Cap market share for any metro area at 15-20%, that way your guaranteed to always have 5-6 options to choose from. Finally stop passing laws with unreasonable fines that force all but the largest carriers out of business. Under the new CMS reporting to identify primary coverage for Medicare enrollees if I miss reporting a SSN they fine me $1000 A DAY, I only charge $120-$240 A YEAR an individual. Congress consistently passes laws favoring a few large national carriers, those laws need repeled.

  30. Here is a point most of the pundits miss:
    We already have nationalized health care…it is already in place for Congress, public workers, military, medicare, medicaid, illegals. Joe worker is the only guy without it.
    There is a lot of truth in the article, but one correction…No, John, WE (consumers) didn’t bring it on OURSELVES…YOU in the HC industry brought in on US!

  31. “folks like Dubya, Limbaugh, Boehner, and Nate”
    “schmucks like Olbermann”
    Deron, tell us how the right are “folks” but the left are “schmucks”?
    “Being a conservative is not easy in a world of liberal media and liberal blogs like this.”
    Deron, my comment about thinking the solutions were to, “just say no” was meant to show that solutions are about policy and actions not whimsical thinking. You are trying to improve the health of your employees, and I assume get cost reductions, from policies and actions you have taken, (and money spent) not from just saying to your staff, “just say no”.
    Nate, your comeback to my post on BCBS was only about their reserve account, I guess the rest was as I intended, indefensible. You’d think that if their reserve account was at state required levels they’d cut us a deal – guess not, cause the bonuses are just tooooo goooood.
    But, as an anti-guvmnt type, how would you like the private market to make sure there are no big insurance monopolies and only a bunch of small ones? Would that require government regulation or hands off – like maybe the hands off the government took with our financial markets?

  32. Great discussion–brings out most of the flaws in our current system. We should not forget that structural government under-reimbursement of Medicare and Medicaid, and the resultant cost-shifting, have also contributed to the continuing growth of premiums. If brokers are making a percentage of premium, every time a state cuts its Medicaid budget, the broker just made a few more bucks since premiums will need to go up a bit more to cover the unreimbursed costs. Discussion also underscores the number of entrenched interests and the difficulty of true reform.

  33. Nate – I agree with much of what you’ve said about the HDHP/HSA option, and we offer it as an option to our employees. However, that option promotes consumerism and I don’t think this country was completely ready for that. It’s difficult to readily determine which providers offer the best value, the most important part of consumerism. There has also been a lack of education about healthy lifestyles, although I’m not sure who should take responsibility for that.
    Physicians and patients were spoiled by the days when copays, deductibles, and coinsurance were low or non-existent. Whether you are from the left or right, I think you can agree that we were insulated from the true costs of care. What that did was cause insurance companies to protect their bottom lines by employing tactics such as prior authorizations, more restrictive medical policies, and other administrative processes that create enormous complexity and cost for all involved.
    Sadly, it gives fuel to the single-payer fire because all parties have created this mess. I don’t like a total government solution because it basically says that we as individuals (not this ficticious “free market” that it’s often called) screwed up. I’ve always been told that the most intelligent people don’t go into government because it doesn’t pay very well. It’s hard to argue that based on the performance of our government in my lifetime. However, the flipside is greed and that is one of the root causes of many of the problems we discuss today.
    Single-payer is a drastic measure for solving this problem. Why don’t we just standardize medical policies and administrative requirements across all payers? There’s no reason that Aetna and Medicare should have different policies regarding colonoscopies or bone density scans. As a medical group administator, I can tell you better than most that it is mind-numbing trying to keep all of these policies straight.

  34. Margalit Gur-Arie,
    “The hundreds and thousands of plans and their wasteful management is a problem and so are the profits and the CEO salaries and the built in administrative waste that results from a limitation on profits.”
    by your lack of logic 100Ks of physicians are a problem, thousands of hospitals are a problem, they should all be forcibly merged into megaprovider and eliminate all that waste. And then we can move on to the 100Ks of grocery stores and restaurants that inefficiently feed us. And why in the heck do we have tens of thousands of school districts with all those administrators and principals? Why do we even have towns, cities and states? Sorry if you can’t grasp this but a fractured competitive market will ALWAYS be more efficient then a centralized bureaucracy.
    Insurance companies do need reigned in, it’s what I do every day for a living, but clueless people chirping that for profit insurance companies need to be eliminated because they are inefficient or pull resources away are not opinions they are ranting of idiots. If we are arguing global warming and someone keeps insisting the earth is flat and all we need to do is turn it over they are going to be called a moron and told to shut up, most of these HC arguments are just as foolish.
    Brian what ploys would those be? How many is many? And the factual inaccurate characterization made about HDHPs still stand.
    “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.”
    That sounds like a pretty definitive statement. Someone saying that is basically saying I don’t exist and haven’t done anything in the past 10-15 years. If he said the brokers I know and myself have done XYZ then go for it man fall on the sword. He didn’t though; he perpetuated the lie that “The Industry” is evil and profit driven. A large portion of the public, already to lazy to do any research and learn what they are talking about, read comments like that and it reinforces the beliefs that our current system is a failure and nothing in it is worth saving. That couldn’t be farther from the truth, there are a million changes we could make to the current system that would make it affordable for all and continue to provide the best care in the world. Those changes won’t win elections or spread the ideology so people will continue to spread lies and propagandize trying to paint the “The System” a failure that must be scraped. If he doesn’t want to get called out on what he says then say it accurately.
    “The health insurance industry (with lots of complicity from legislators, lobbyists and industry groups like ours) has let them down.”
    You can go to a thousand restaurants and get a bad over priced meal. Any number of car dealers will over charge you for a car. There is not an industry out there where an uninformed lazy person will not be taken advantage of. Insurance is no different, if you insist on buying insurance from your wife’s brother who does it part time you will almost surely get screwed. If you shop around and put the same effort into it you would any other purchase of that magnitude you can find affordable solutions. “The Health Insurance Industry” has worked it’s ass off to save billions of dollars for millions of clients. If some are to stupid and lazy to not make bad decisions that is not the fault of the industry. Yes there are thousands of agents if not tens of thousands who should not have licenses but they are the minority.
    “The fact remains that many brokers DO take money from the health plans while representing to their employer clients that they’re objective.”
    This may shock you but did you know many politicians DO take campaign contributions while representing to their constituents they are objective and representing their needs? I can fire an agent or change insurance companies a lot easier then I can change a senator.
    “”In addition to its annual profit, Blue Cross has a $1.3 billion reserve account – enough to cover more than three months of operating costs.”
    WOW how dare they comply with state law and maintain adequate reserves to cover their IBNR, that means Incurred But Not Reported Peter. 3 months reserves are standard because that is how long it takes to get all the provider bills and pay them. Any less then that and they would be considered potentially insolvent and watched by the state insurance commissionaire.
    I’ll repeat it for you again Peter I don’t like insurance companies, specially really big ones with de facto monopolies. They are the result of your politicians, Ted Kennedy, deciding they want to regulate a couple large carriers instead of fighting with a bunch of small innovative plans. In fact your argument is proof that government reform is a failure and we need to remove them from any solution. Thank you for supporting me Peter.
    “less expensive (often 15-25% less expensive than a more traditional PPO with copays).”
    My clients are reducing their carrier premium 20-60% by going to an HSA. If your only getting 25% reductions you need a new carrier.
    “When appropriate”
    When is it not appropriate to save 10-20% for the same service? Paying insurance premium on a known expense or small dollar claims is ALWAYS 10-20% more expensive then paying for it yourself. HDHPs are ALWAYS appropriate, anything more is inefficient financing not insurance.
    “nor are they being embraced enthusiastically by anybody other than those employees (and business owners) affluent enough to pay the deductible as well as open and fund a separate HSA”
    This is your ignorance of the market not fact. I have an entire book of business and only 1-2 groups are affluent and open HSA accounts. All of my clients take the premium savings they aren’t sending to the carrier and pay the small claims themselves. Contrary to your claim tens of thousands of employers are embracing HDHPs and no that doesn’t mean the employees are getting stuck with the full deductible. Any employer paying for a $250 deductible plan is wasting money. Any broker that isn’t aware of how HDHPs and 105 plans cut cost should lose their license.
    I can design and deliver health plans far cheaper then what a carrier would sell you direct or a politician can dream of promising. Who should deliver my services if not an agent? 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%? In what other industry does the delivery man not get paid?
    “(which is an exercise in futility anyway in this down market). Why?”
    I’m writing more business then we can handle each month. We have a great product that people are eating up. Every month the agents that work with me are taking accounts from agents that aren’t telling their clients about this.
    “Carriers now often offshore customer service, and so the folks answering calls for assistance often drop the ball in one way or another.”
    We take all of our calls here in the good ole USA. OH and NV to be exact, sounds like people are just choosing to work with the wrong people?
    “The plan designs become ever more complex, making it more and more difficult for claims and billing folks to get it right in the first place.”
    I wouldn’t know about this, our clients design their own plans so they are pretty simple to follow. Maybe we shouldn’t let politicians heard us all into mega-carriers?
    If 100K insurance plans are a problem then so are 100K independent physicians and thousands of hospitals. If we had one provider group and one hospital wouldn’t that make billing easier? Heck if doctors only had one office and TIN that would make things easier. You are over looking a ton of benefits that multiple competing plans bring to the table.
    “There has been no attempt at efficiency, no attempt at streamlining the process, no attempt at working toward claims and billing and other administrative processes that would be universal for all carriers.”
    You apparently have never heard of EDI, 834s, 837s? A provider can bill ANY insurance company in the country with the same format, it’s law we have to accept it, I know it cost us a fortune to comply and we didn’t get a single penny from Washington to do it. Your above statement is just totally devoid of truth. I could also point out hundreds of efforts by TPAs and PPOs to standardize our work. Not being aware of these says more about you then the industry.
    What law in Florida prevents you from charging a broker fee? If your clients really appreciate your service as much as you say they do then they should gladly be willing to pay an extra $50 a month for it.
    I only abuse colleagues that abuse facts and the truth. I have never attacked someone for expressing an opinion. Someone that wants to come on here and tell outright lies as a means to achieve political goals needs attacked and exposed for what they are. This post, while misleading and not in any way expressing the true nature nor extent of the market, was not one of those. Some of the comments are so shallow of thought they deserve no respect. If someone can’t respect their own opinion enough to make an educated one they are owed no respect by those correcting it. The level of distortion the left has taken this argument can only be fixed by attacking their lies as aggressively as they are told. I would be willing to wager if you polled your average progressive they would say Medicare Admin runs 3-5% compared to private insurance that runs 20-30%. They would also say that by eliminating insurance company profit we could cover the uninsured. The majority would also agree that 45 million Americans and uninsured because they can’t afford/get insurance. How would you suggest debating those so misinformed? Kindly correcting them 100s of times doesn’t work, take Peter as a perfect example. There is a side of the political spectrum more interested in the political opportunity of reform then the actual achievement of reform. Those in the middle need to see what this debate is really about. Since Ted Kennedy passed the HMO Act of 1973 this has never been about delivering better healthcare at a more affordable price, this has always been a war about money and power.

  35. Brian – Hands down, I spend more of my online time at THCB than anywhere else. You and Sarah do a great job. I would have included Matthew in that, but he calls my side of the ideological continuum the “loony right” so I can’t possibly give him credit! 🙂

  36. Deron,
    I called Nate on the carpet because he is abusive to his colleagues. Period. Until he behaves in a way that is collegial, as you have done, I will continue to hammer him. Because that’s why this blog is the best read expert site of its kind.
    As for politics, we feature people of all ideological persuasion. So long as they’re rational and observe the social graces. We’re equal opportunity rationalists.

  37. I certainly don’t support Nate’s harsh delivery and tone, but he makes some points that should not be ignored. Everyone here does. Being a conservative is not easy in a world of liberal media and liberal blogs like this. It’s made even more difficult when you have folks like Dubya, Limbaugh, Boehner, and Nate speaking the loudest on the right. The liberals only have schmucks like Olbermann to worry about. The Democrats certainly paid more attention is public speaking class because they are a heluva lot more eloquent than Republicans as a whole. Their message, however, is no better.
    Peter – You took a shot a me earlier, and that’s ok because that’s what you do. The point is, nearly every single one of us has contributed to this mess. If you work long hours and have high stress levels, you will cost the system money at some point. If you regularly eat fast food because you don’t have time to make a real meal, you will eventually cost the system money. If you are not setting a good example for your kids … Etc. The point is, no one here is in a good position to call out another stakeholder group until you are prepared to look in the mirror. Things like HIT and single payer will not fix the system, if ultimately we aren’t prepared to change our own ways. The only things more certain than that are death and taxes.

  38. Great. A guilt-ridden insurance exec wants to atone by stepping in front of an Amtrak train with everone else chained to him. This article is about healthcare finance…not delivery. Too bad GM didn’t sell health plans. Then people could have chosen from an entire line of products from the Chevette to the H1 Hummer, all based on their individual needs and wants and busgets. Also risk tolerance. A wreck in a Chevette might have a tad more risk than in the Hummer.
    As for North Carolina, the state healthplan has been strapped before now. The solution then was to cut MD and other reimbursements by 30%. Some groups have dropped Blue Cross just because of that.
    Between the government and the insurance industry, since 1983 they have gutted primary care to the point where no one in their right mind would go into primary care with there own money at risk. And now the surgical subspecialists have been gored to the point of not taking ED call without compensation from the hospital just for being available. Soon the general surgeon will cease to exist. Enter the PA and the nurse practitioner, less costly providers of care.
    This is all brought to you by entities that want accountability more than capacity. They want documentation more than service. They want bullet points recorded more than the next patient served. As I write this I have 24 or so unfinished records from last night, which I will finish on my own time. Had I done them in my 10 hour shift and left on time with all the paperwork done, 6-8 people wold have waited an additional 1-2-3 hours for care. At this point all the care has been provided. But without the paperwork I cannot get paid and I have no defense against the John Edwards crowd. If I worked for someone other than my own corporation, why would I do this? There would be no incentive for me to do this.
    So please, Mr. guilty insurance broker, if you are not up to the task of changing your industry, get out of the way. But the government is not run by people smarter than you. You are smarter than they are. So after the meeting, become a recovering broker, and sell products that people can afford and can and will actually be accepted by providers.

  39. Just a thanks John Sinibaldi for another frank, honest and revealing post from inside the industry and in the trenches. Nate “Limbaugh” aside, most of us appreciate your contributions – all of them. Please keep coming back.

  40. Hands down this is one of the best health policy discussions, as viewed from the trenches, I’ve read in years. John thank you for getting it started.
    I’m not sure whether I feel more like a member of the circular firing squad or Uwe Reinhart’s pigs at the trough.
    Lynn Bailey
    Healthcare Economist

  41. Nate and others: It is important to note several things:
    First, 70% of my practice consists of high deductible health plans (HDHP) sold to small businesses; the vast majority of those qualify the employee for a health savings account (HSA). I am intimately familiar with HDHPs and HSAs, and when appropriate, they work wonderfully.
    “When appropriate” would be the operative term. For low-wage, working poor and many lower-income middle class folks, they’re simply not appropriate – but they’re the only things their employer offers because the premiums are less expensive (often 15-25% less expensive than a more traditional PPO with copays). HDHPs are not the answer for saving the third party payer system, nor are they being embraced enthusiastically by anybody other than those employees (and business owners) affluent enough to pay the deductible as well as open and fund a separate HSA. Almost no rank-and-file employees in blue-collar or light-industry businesses ever open or fund an HSA; for my small businesses struggling in this economy, it is impossible for the employer to try to fund any portion of the HSA. So for many folks, HDHPs and HSAs are just fancy ways of saying “you are now on the hook for more money, even though you don’t have it.”
    As for whether or not brokers (or in Florida, more accurately, agents – as there is no license in Florida for health insurance brokers) bring value to the table, it’s a mixed bag. On one hand, if the system “worked” like it should, and consumers were able to purchase and use health insurance products with little or no assistance, I’d say the vast majority of brokers are overpaid.
    However, the system doesn’t work well. In fact, it is dysfunctional at best, and virtually incomprehensible at worst. As an agent, my function has changed dramatically over the past decade. I used to spend 80% of my time selling group health insurance (which entails finding potential clients, assisting them in choosing the right plan(s) for their business, working with them on their contribution level for the employee’s premium, and installation of the product once the sale is complete). 20% of the time was spent after the product was installed, on things like customer service and employee education after the sale.
    Now, I spend better than 80% of my time (and my office staff as well) servicing the business, and less than 20% chasing new business (which is an exercise in futility anyway in this down market). Why?
    Simply because our system has become so completely convoluted and complex that most employees and their dependents don’t stand a chance of navigating it successfully.
    Carriers now often offshore customer service, and so the folks answering calls for assistance often drop the ball in one way or another. The plan designs become ever more complex, making it more and more difficult for claims and billing folks to get it right in the first place. Every carrier has their own proprietary way of doing things, and of course, none of their own system work with other carriers.
    So claims and billing clerks in provider offices must know how to key in things correctly for PPO, HMO, POS, EPO, and other different kinds of insurances for carrier “A” (since things are done differently for each of those different kinds of platforms); then they most know all the same information for carrier “B”, “C”, etc. All of them are different, none of the procedures are standardized, and there is ZERO efficiency in this kind of system.
    It is so complex that it is tailor-made for error, and in fact almost ensures errors will be made. What amazes me isn’t how often things go wrong; it is that something like 99% of all transactions are completed correctly. Still, with tens of millions of billing and claims transactions made daily, there are perhaps a hundred million mistakes made annually.
    That’s where we come in- we know how to navigate the system; know who to call to get things done; we’re knowledgeable and experienced and can guide the providers office through the process; we know what to tell the carrier representative to get the problem resolved.
    I have dozens of emails and letters from my clients, saying basically the same thing: “What would someone do if they didn’t have a John Sinibaldi Insurance working on their side?”
    To me, that’s the biggest travesty of the current system – that much of the additional cost is built in by the very nature of how the health insurance industry has chosen to structure their products.
    There has been no attempt at efficiency, no attempt at streamlining the process, no attempt at working toward claims and billing and other administrative processes that would be universal for all carriers. In fact, carriers go out of their way to ensure that THEIR method won’t work with other carriers – it is one way to keep providers and their staff “in line”.
    As for agent compensation, it is all over the board. I have small groups for which I’m overpaid. Yes, you read that correctly. However, I have dozens of small groups for which I’m paid next to nothing. Because carriers don’t wish to work with 2 and 3 employee businesses (they’re perceived as having higher claims, and therefore being more expensive for the carriers), they’ve chosen to cut commissions to ridiculously low amounts. I have groups for which the monthly premium is $4,000, but for which I’m paid $6.30 a month. I still have the same liabilities, the same customer service load, the same problems and shortcomings of the system with which to deal – but I have the joy of doing it for the price of two coffees at Starbucks.
    I am one of the few agents who have chosen not to limit micro-business clients (2 and 3 employee businesses) because of the low commissions, because I believe they are entitled to health insurance and agent representation just like businesses with 4 or more employees. That’s good for my clients, but it is killing my bottom line.
    In addition, I have spent the better part of the past 12 years working within the system to try to “fix” it. I have worked within the legislative process (often finding myself as the only agent in the entire state willing to take time off from work to travel to our state capital to testify on behalf of, or against, one bill or another). I’ve worked with legislators to try to craft legislation that might actually benefit consumers, all to often only to find myself stymied by lobbyists for the very industry for which I work. I have been one of a few “go-to” agents for our former Department of Insurance and now Office of Insurance Regulation, when they have questions on how a particular rule or regulation or upcoming bill may affect the markets. I have taken a great deal of time away from my practice to participate as one of three agents selected from the state to redesign our small group mandatory Basic and Standard offerings (redesigned once every 10 years). So just to be clear, nobody in my state has spent more time as an agent trying to improve the system.
    Finally, just to dispel whatever myths may be out there: Insurance agents are just like those in any other industry. There are some of us who work our butts off, but who always put consumers first. We make enough money to put food on the table and pay the mortgage, but we’re not getting rich.
    Then there are those agents (most of them), who push product without any clue as to how the system actually works, without any clue about the interaction between carriers and providers, without any clue about how the very design of health insurance and managed care products causes providers to have increased costs (because the providers have to employ far more claims and billing clerks to try to deal with the almost infinite number of administrative “quirks” inherent in our system). These are the agents who tell consumers that “it’s not my job to help you get your claim paid”. They’re the same agents who wonder why many of their clients are now my clients.
    I speak on behalf of the minority of agents who are willing to get involved, willing to do whatever is necessary to ensure that our clients get a fair break, willing to spend thousands of hours of “pro bono” time to try to make the system work. I cannot speak for the rest of the agents out there, many of whom are no better than the stereotypical used car salesman.

  42. “Blue Cross Blue Shield of North Carolina, the state’s largest insurer, earned $186 million last year while raising premiums on customers as the economy slid into recession.”
    “The top six executives at Blue Cross each made more than $1 million last year, topped by Chief Executive Bob Greczyn at close to $4 million. Greczyn’s annual income included a $3 million bonus and was a 23 percent increase over 2007.”
    “Other top executives also saw sizable bumps in their 2008 incomes. Chief Operating Officer James Wilson, for example, got a 32 percent raise, while Chief Financial Officer Daniel Glaser’s compensation rose by 21 percent and Chief Sales and Marketing Officer John Roos’ income went up 20 percent.”
    “In addition to its annual profit, Blue Cross has a $1.3 billion reserve account – enough to cover more than three months of operating costs.”
    Blue Cross spokesman Lew Borman said, “I think we put our customers first and foremost.”
    “Still, the average premium increases for 2009 policies are in the “high single digits,” he said, declining to be more specific.”
    “Blue Cross administers the State Health Plan, which provides medical coverage for almost 650,000 state workers, public school teachers and retirees. Lawmakers expect to spend $300 million this spring to cover the plan’s ballooning deficit.”
    Remember BCBS is supposed to be a non-profit.
    “Blue Cross Blue Shield of North Carolina is amassing more consumer complaints per year than any other health insurer operating a health maintenance organization in North Carolina.”
    “Blue Cross/Blue Shield of North Carolina was sued by the state medical society on charges that it engaged in deceptive and unfair business practices that harmed physician income.”
    I guess the system is working as it should Nate.

  43. Nate,
    You’re obviously a little limited, so let me repeat what I told you before. This is a professional forum that tries to adhere to the rules of courtesy and civility. Its fine to disagree, but we don’t need to tolerate your habit of spewing out terms like “ignorant,” “stupid,” “fool” and “so little common logic.” The quickest path to getting some respect from your colleagues is to show some. Difficult as it may be for you, maybe you could try to shape your thoughts into coherent fact-based arguments rather than insults.
    As it happens, Mr. Sinibaldi is a thoughtful, highly-respected and successful agent who DOES sell HDHPs to his small business clients. That he’s also able to understand the self-destructive behaviors within the broker/agent sector doesn’t make him either a hypocrite or a moron.
    The fact remains that many brokers DO take money from the health plans while representing to their employer clients that they’re objective. It is also true that the health plan and broker sectors, through MANY different ploys, have consistently driven up health care cost. They aren’t the only culprits, but they’re certainly big contributors.
    For a coverage professional to deny this is worse than willful ignorance. It is deceit.
    Consider yourself warned on your style.

  44. To get anywhere, we are all going to have to go to a 12 step program and admit our problem: “Hi, my name is Carla and I’m a physician, I’m addicted to our current healthcare system and have been completely focused on pushing through as many patients as possible, because that’s what pays.”
    “Hi, I’m an American patient and I’m addicted to our current healthcare system because it fulfills my every whim and doesn’t have time to help me do the hard stuff to improve my health.”
    “Hi, I’m your health insurance company and I’m addicted to our current healthcare system because it enables me to insert myself in the middle and make a nice profit, without really adding much value.”
    Mr. Sinibadi, thanks for being the first one to stand up at the meeting.

  45. You know Nate, this is getting to be rather humorous, or it could be so, if the situation wasn’t so dire.
    Why is it so hard to understand that there is no one single problem with our system? Yes, politicians are a problem and yes, people not living like Tibetan monks is also a problem and hospitals trying to fill beds are another problem and maybe even some physicians are a problem, but so are the private insurers. The hundreds and thousands of plans and their wasteful management is a problem and so are the profits and the CEO salaries and the built in administrative waste that results from a limitation on profits.
    There will be no good solution until we address all the problems. It doesn’t do any good for each constituency to highlight issues with other parts of this failing system. Every interlocking part of this system needs to be overhauled. Anything less will guarantee failure…. again.

  46. “Assembly Bill 167, requiring health insurers to cover acupuncture treatments.”
    In the midst of a major budget shortfall, higher unemployement then we have seen in generations, businesses struggling to stay open let alone continue to offer insurance Nevada politicians are passing mandates to drive the cost up even further. Politicans are a far greater problem then carrier profits. Any limitation in our ability to offer plans people want and need are strictly legal. If you want to fix the problem start by getting rid of the politicians.

  47. Nate,
    This is only half the truth. Of course the insurance companies have huge expenses compared to a single payer system that you just disregard or at best disregard – shareholder profits, management compensation, advertising, claims review (insurance companies can save either by shifting costs to other payors, so every associate doing this unproductive work is a good investment for the company), people doing all the negotiations with employers, doctors, hospitals and with pharmaceutical companies … let me respond to you with Michael Moore since you deserve no better (responding so unkind to other posters): MM went to the billing and accounting dept. of a larger Canadian Hospital and found only a handful of people.
    I am with you though that medical spending is (probably) the larger problem – just blaming insurance companies won’t cut it.

  48. Don’t worry Peter I’m hear to laugh at how stupid such a large part of our population is. I read trash like this and am shocked things aren’t worse then they are. How can so many commentors have so little common logic?
    Listen up fools as we go over this once again, it’s not that complex.
    Insurnace companies make around 6% profit. Brokers make 3-5%. The remaining over head, processing claims, would be required no matter what system you have. If you clowns got your way you would save 9-11%, this is roughly how much is lost in government programs to fraud and abuse. So in reality, not that any of you ahve seen that lately, you only shift the profit from private citizens and business to politicians and their favored benefactors.
    Now for the real ignorance in this argument. Insurance premiums are directly corrolated to healthcare spending. If your insurance premium has doubled in 5 years that is becuase your spending on HC doubled in the last 5 years. Insurance companies aren’t making 20% profits. There is no magic waste you can cut and lower premium 50%. The ONLY way to make insurance affordable is to cut spending on healthcare. Listening to you fools blather on how evil profit is and how getting rid of insurance companies will fix the problem of high cost would be hilarious except you might actually get someone to believe you and screw the system up more then it already is. How do you not grasp this? Only reducing what is spent on claims will make insurance affordable again. THERE IS NO OTHER SOLUTION, this is not an opinion you can argue, it is what it is.
    To argue opinions I disagree with just about everything John says. There are good brokers that know what they are doing and earn their 3-5% then there is the rest. Who’s fault is it some small employers pick a bad broker?
    “(“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.”)”
    Have you ever sold a HDHP? Comments like the above are ignorant of the facts. The VAST majority of the time the premium savings of a HDHP would cover the increase in liability. Further if you actually read a HDHP policy you would know it usually has lower total OOP. The policy holders liability is actually less with a HDHP it just comes up front. If they can’t afford the deductible of a HDHP then usually they wouldn’t have been able to afford the co-insurance of a normal plan. The bigger problem is the inability of brokers to explain the efficency of HDHPs to their clients.
    I’m working on a prospect now that offers employees a choice of a $500 deductible and 1000 deductible. The OOP on both plans is the same. The carrier, Humana, charges $64 a month more for the lower deductible. For those not good at math, and that includes half the employees on the group that took the $500 deductible plan, that means people are spending $768 more in premium per year to save $500. Yes they just blew $268 becuase they can’t do basic math.
    A huge amount of blame rest on the employers. My company has multiple methods to control cost, drastically cut carrier revenue and with it broker compensation. It’s nothing new or earth shattering we have been doing it for 20 years. In the past employers passed, they took the easy way out and just paid the insurance company for their low deductible plan. Now that they can’t afford it we are writing business hand over fist. There are plenty of options employers just need to find a broker that knows what they are doing and put in the couple hours of effort to learn how it works.
    I have all sorts of ideas on how employers can offer low wage employees better benefits, lack of ideas and solutions are not the problem. Employers have to listen and we need to spend less on care. Anyone saying anything else is just pushing propoganda.

  49. Deron’s solution – Just say no to healthcare, just say no to over eating, just say no to over billing, just say no to over pricing, just say no to cancer, just say no to over treating, just say no to law suits, just say no to fat and sugar, just say no to pollution, just say no to everything. Nancy Reagan would be proud.

  50. As I’ve said numerous times before, real reform can’t happen unless every stakeholder group is prepared to give up something in order to contribute to a better, more cost-effective, more sustainable healthcare system. That includes not just insurers, brokers, drug and device manufacturers but doctors, hospitals, trial lawyers and individual patients / consumers. Doctors and hospitals are the biggest contributors to driving healthcare costs ever higher, yet I’ve heard little or nothing from them about what or how they are prepared to contribute toward a solution.

  51. John I. – You bet I am! The difference is, I am trying to shine a light on all of us, including you and me. We are all part of the problem and we need to all be part of the solution. Our high per capita costs are not someone else’s problem. They are our problem.
    Contributing to reform on an individual basis is really very simple, as the Average Joe series on my blog suggests.

  52. An insurance agent who shoulders himself and the industry with the blame for our disastrous medical inflation – no wonder that he will be showered with praise by everyone (except for most people in the industry). Phew, what a relief.
    And yet, this is only one side of the story. I have written about all this in rather abstract terms before, so let me tell you in rubber-meets-road terms what I experienced when I started training and practising in the US coming from Europe:
    -patients expecting testing (esp. subspecialty consults and imaging) where it isn’t medically indicated
    -doctors either giving in (or preempting dissatisfaction) in order to indulge the patient
    -doctors who also feel (all in all correctly) threatened knowing that with any bad outcome (related or unrelated to the enccounter at question), the test/consult that they didn’t order could be somehow constructed as being “standard of care” or “reasonable care”. (Of course, since all doctors image like crazy, the “standard of care” becomes warped, too.)
    -a drug industry that basically taxes many seniors for multidrug regimens, regimens which a) are clearly overpriced by international comparison b) often do not use generics even though that could cut the bill in half or more c) contain drugs with dubious indications to begin with
    -doctors in technical/surgical specialties making anything from 350 K/year up
    If you look at all this, you wonder whether we should just blame John, even though he’d take (and probably, to some extent, deserve) it.

  53. John – Unfortunately, complaining doesn’t do a whole lot of good. These days everyone has something to complain about, which causes it to lose its value. If the complainers were actually willing to be part of the solution, they would have far more luck making a difference. I’ve seen a lot of people talking about reform, but very few willing to do anything about it.

  54. Incredible article! Thank you. Buying health insurance if you are self employeed these days reminds me of the long lines to get toilet paper in the old Soviet Union.
    RE: Jean Murphy – you don’t have to have a chronic illness to be denied – my husband was denied insurance for among other things, having the wrong body type.

  55. Outstanding!
    And I must confess, surprising. Not the content, but the source. Extra points for candor and clarity. I’m reminded of a line I came across somewhere a week or so ago, that in a rare moment of honesty one physician blurted “I make my living on unnecessary procedures!” That makes two extra points, one from the health care side, now this from the insurance side.
    If somehow the word could spread…
    I wish I had a constructive suggestion.

  56. The truth, at last! And you are talking about people who can actually GET insurance. If you take medication of almost any kind or have been diagnosed with a chronic illness, such as diabetes, forget it. You can’t get insurance at any price. I wish President Obama would hire people like you to work on this issue.

  57. tcoyote – Agreed about insurance brokers. At best, most have done a pretty poor job of representing the interests of their small employers in terms of cost and access. At worst, the have acted in a matter that has actively hurt the clients who they are supposedly serving through a set of misaligned incentives (e.g., premium commissions from insurers, more money on churn, etc).
    I disagree about the author’s conclusion though. If there is going to be real reform, it is because the U3 and U6 numbers are going to really shoot up and for the first time in US history those with a 4-year college education experience real unemployment pain.
    Unemployment numbers may be grim at 8.1% but the reality is that the unemployment rate for those who are college-educated is still under/around 5% by most accounts. It has really been the manufacturing and real/estate & construction sectors that have taken the brunt of this so far in terms of unemployment with each approaching true depression-type numbers. Since these industries both employ a higher % of non-college graduates, college-educated workers generally haven’t borne the brunt of this so far.
    College-educated workers and other professionals may be spooked about their job security (hence the huge spike in consumer saving rates/large falloff in luxury spending since Oct) but the reality is that most of these people still have a job yet. If we see U3 unemployment numbers reach north of 10%, then college-educated will likely begin to be really-effected.
    It is exactly these type of people that are more educated and affluent who are able to more effectively organize, are registered and vote in higher % (especially in non-presidential years), and will be more likely to get the attention of people in Congress. If you get these people losing access to their health insurance benefits in large numbers, then you will see a chance for real reform and not some muttled attempt where we increase access but only by pouring a ton of more money into the system.

  58. This is a remarkably clear eyed view of a troubled industry by a middleperson who will probably be disappearing from the scene, and reducing some of the excessive costs he cited by doing so. Brokers were a major reason why high deductible plans didn’t really get going because they either didn’t understand how they worked, or realized that they were sticky enough products to reduce the churn which generates most of their commissions. If people don’t switch plans, brokers don’t get paid. Mr. Sinibaldi is correct: he and his colleagues are a big part of the problem.
    Will we have to go thru brokers to enroll in a public, Medicare like health insurance plan? Not bloodly likely. Will we need a broker to sift thru our online enrollment options for private health plans? Probably not.
    There are something like 500 thousand insurance brokers in the United States, and moving us from inadequate health insurance plan to inadequate health insurance plan generates a healthy fraction of their income. They are the well padded gatekeepers to a broken individual and small group market, and it is time for them to disappear.
    Some of my colleagues in the health insurance business have estimated that brokerage commissions represent as much as 25% of the spread between premium expense and actual medical benefits paid out that everyone in the medical care system complains about. It’s time for several hundred thousand of Mr. Sinibaldi’s colleagues to find another line of work. Perhaps they can become mortgage brokers and help us all refinance into our 2% mortgages!

  59. Thank you for putting this so clearly!! I am one of those in the self-employed/individual policy group, fortunate to have qualified for an underwritten policy years ago.
    Although the premiums have more than doubled in the past 5-6 years, that’s not where the problem lies (for me anyway). The coverage itself is practically non-existent in the pharmaceutical department (capped at $1500). I’m lucky to have only a 10% coinsurance, but when one annual routine test costs $6000 (MRI) or specialized PT sessions are ‘negotiated’ to be $120 each, these costs add up quickly.
    I’ve lost patience with the folks who are complaining, as in your example of $500 payroll deduction for insurance with a $60,000 salary, and who obviously don’t have a clue. Is it sick that I’m kinda glad that more and more people are discovering truly how warped everything has become?

  60. A sane voice from the health care industry? I’m stunned.
    It is simply immoral to have health care in the marketplace as a profit generating “industry.” Health insurance companies make substantial profits, the pharmaceutical industry makes enormous profits– their advertising budgets invalidate their whining about how much it costs to develop new drugs– while for profit HMO’s, clinics and hospitals outnumber the nonprofits. Profits made in the health care industry are literally blood money.
    The 100 million or more Americans you discuss are a big voting block, while those who sympathize with them make an even bigger voting block. Time is running out: America can’t afford you any longer. Will you reform yourselves, or will we have to do it for you?

  61. John Sinabaldi said-
    “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”
    John – please don’t even begin to think about apologizing for articulating the truth so well in this excellent piece.
    You are correct but I would add some of our nation’s biggest businesses are failing thus rendering them less able to assist with health care premiums for active emplyees, retirees and those they are laying off without retirement benefits.
    Dr. Rick Lippin