September 14th, 2009 | 
Author: Thought I’d take time out and share these timely thoughts wrt the current healthcare ‘reform’ debate. Let’s get some comments going on this… Whadya think?
Commentary by Bill McIlroy – former Insurance company employee and current Health Insurance Broker.
I worked as an Underwriter and Underwriting Manager at four different health insurance companies in the late 90s and through 2005; it amazes me that there is so much media surrounding how the Government plan will apply pressure to insurance companies to “lower their costs”. It’s simply wrong and completely misguided. The Underwriting departments at insurance companies set the prices (along with actuaries). I PERSONALLY set prices for Individual, Group & Medicare products in my career. We ALWAYS set pricing based upon that 85% of ALL premiums would go to pay claims. DID YOU GET THAT? 85 cents on every dollar pays medical & prescription claims. The other 15% pays for expenses (salaries, benefits, utilities, rent, etc…). There’s typically 2% – 3% targeted for profit within the 15%. The media shouts that insurance companies are pocketing all this extra cash and that that the Government plan will force insurance companies to lower their prices. IT’S NOT TRUE!!! In addition – Does anyone think that the Government is going to run their plan with a smaller amount of administrative costs?
The problem IS NOT the insurance companies. In a free market society, demand almost always drives supply. If Americans weren’t so irresponsible with their own health and we didn’t shout about how we didn’t like being told what doctor to see and when, perhaps things would be different. HMOs were created in the 70s to keep healthcare costs down. Of course we didn’t like being told how to manage our health. We want to eat what we want, fail to exercise and take a pill to fix everything.
HealthCare is no different in theory than building a car. A door has a cost, steering wheel, tires, hood, etc.. Add all these costs together, slap on costs for the employees salaries, benefits, advertising, etc… At the end, there’s the price. PAY ATTENTION HERE – could the Government create a similar car for less by using the same parts? That’s what they want us to believe is going to happen with HealthCare. They want us to believe that they can lower costs, but not change any of the cost structure. You’re a smart person – think it through; 2 + 2 = 4; The Government is trying to have you look at a trick mirror and get you to believe they can make 2 + 2 = 3.
BOTTOM LINE: The ONLY REAL way to get the price of a car lower is by a cheaper car and the ONLY REAL way to lower healthcare prices is to make our healthcare worse (we pay more of our own maintenance issues, we insure less people, we have fewer doctors/hospitals, doctors make less money, etc…).
Bill McIlroy
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Posted in Insurance-Technologies
The health care debate isn’t really about health care delivery or financing. I believe it’s about control. At least two million of us (Sep. 12th DC tea party march) are wise to the power grab, but I fear it’s already too late to reverse it. 2010 and 2012 will be the true test of our resolve.
Interesting excerpt from Jim Collins’ latest book, “How the Mighty Fall”, HarperCollins, 2009, p. 90. You’ll recall that Jim Collins is the world-renowned author of “Good to Great”, 2001, (a.k.a. the “get the right people on the bus” book).
I found the parallel between Collins’ summation and our current political environment uncanny. Would you be comfortable with this type of leadership at the helm of your company? How about at the helm of your COUNTRY?
To fully understand the context of my rant, read the book as Stages 1 through 3 help set the stage for the Stage 4 excerpt I’ve posted below:
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Behaviors That Exemplify and Perpetuate Stage 4:
•Pin hopes on unproven strategies — discontinuous leaps into new technologies, new markets, new businesses — often with much hype and fanfare.
•Seek a big, “game changing” acquisition (often based on hoped-for, but as yet unproven “synergies”).
•Make panicky, desperate moves in reaction to threats that can imperil the company even more, draining cash and further eroding financial strength.
•Embark on a program of radical change, a revolution, to transform or upend nearly every aspect of the company, jeopardizing or abandoning core strengths.
•Sell people on the promises of a bright future to compensate for poor results.
•Destroy momentum with chronic restructuring and/or a series of inconsistent big decisions.
•Search for a leader-as-savior, with a bias for selecting a visionary from the outside who’ll ride in and galvanize the company.
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By the way, there’s only one stage after Stage 4. Collins calls it “Stage 5: Capitulation to Irrelevance or Death”.
Steve, extremely relevant. All this reminds me also of Atlas Shrugged and The Fountainhead, where the real doers, creators, hard workers really, are either penalized or mooched upon by their opposites, those that seek to not work hard, to live off the efforts of others, etc. etc.
The other thing that hit me this morning is that government assistance seems to rob people of their heart and soul, almost like a drug. Having spent 10 years in Arizona, selling payroll in the rural areas, I saw the stark reality of government assistance and the havoc it reaps on the Indian reservations. The clouded, distant look in their eyes… I see the same look in some of the eyes of juvenile offenders when I go into the detention center on Sunday mornings – hopeless, not even angry, just vacant. Government programs, especially detached federal ones, just seem to do more harm than good.
One more point, btw. I find it notable, duplicitous, and tending towards contemptuous, that tort reform, from what I understand, is not addressed in the healthcare reform bill. At the same time, I understand that trial lawyers, in this case malpractice lawyers, are heavy contributors to the democratic party and candidates. Aren’t these same attorneys getting extremely, and really out-of-proportion, rich from the ‘system’? I totally get the need for accountability within the medical profession, but is this system working? I don’t think so. Instead, why not give patients places to ‘review’ their medical experiences, of course understanding that their medical issues thus become ‘known’ to the extent that they share. Subsequent patients can then ‘see’ more information about potential docs. It seems we all just need a lot more medical information, easy access to it, and the ability to make CHOICES.
What d’ya think? Is there anybody else out there with a take?
Interesting commentary, but I cannot believe it can really be simplified down to that level. However, putting 20,000 (??) additional government employees on the governments administrative payroll to oversee the systems must add $billions to our debt before 1 patient is even treated. Then, if the government system does pinch the private sector to lower prices as Obama says, we will add to that $millions in unemployment costs as the private sector adjusts to the downturn in their business. Finally, a massive problems hits 20 years down the road when the 20,000 new government employees retire with 80% pensions and full benefits while producing no added value throughout the rest of their lives/retirement, yet the tax payer has to pay for their pensions.
The complexities of all these issues are immense… unfortunately, it’s hard to get all the facts and truths out of any politician or news reporter these days – and maybe that’s our (America’s) real problem…