Don’t blame the insurance companies

    In the long debate over health care reform, Democrats have made hay by beating up on the health insurance industry. This week, the Obama Administration was at it again, going after California’s Anthem Blue Cross for a planned 25-percent rate increase in annual premiums for its nearly 700,000 customers.

    Health and Human Services Secretary Kathleen Sibelius expressed indignation “at the whim of private, for-profit insurance companies who are raking in billions in profits each year,” while President Barack Obama called the rate increase “a preview of coming attractions” if Congress fails to pass his health insurance bill.

    House Speaker Nancy Pelosi (D-CA) has led the attack. As Democrats cobbled together a health care bill over the summer, she predicted, “The glory days are coming to an end for the health insurance industry in our country.” As Democrats went home for the August recess, she accused the insurance industry of “carpet bombing, shock and awe” against public opinion and distributed a memo urging Democratic legislators to demonize health insurance companies.

    When those same legislators heard from outraged constituents, Pelosi blamed health insurance companies, which she deemed “the villains in this.”

    While health insurance companies might be an easy target for Democrats, their vilification of the health insurance industry is treacherous. Unlike 1993-1994, when they vigorously opposed President Clinton’s proposed health care plan, the health insurance industry supported the Obama Administration’s efforts to reform the system. By the time Obama was sworn into office, the Association of Health Insurance Providers (AHIP) had already come out in favor of proposals to require health insurance companies to enroll anyone – regardless of pre-existing condition, mandates to purchase health insurance and federally-imposed limits on premiums for the elderly, among other proposals.

    The Democratic assault on the health insurance industry is also dishonest.

    Each year, Fortune Magazine ranks the most – and least – profitable industries in America. From 2006 to 2008, the health insurance industry finished 33rd, 28th and 35th in profitability relative to other American industries. They were less profitable than public utilities, metals manufacturers, and even – in 2008 – the construction industry. So unprofitable are health insurance companies, in fact, that Fortune ranks the industry as among the worst possible investments, just above auto manufacturers.

    As for Anthem Blue Cross, it loses money on its individual health insurance business in California (its $2.7 billion profit for the quarter came from the one-time sale of a business unit).

    Health insurance rates are going up this year – but not because of greed. Instead, the economic downturn has prompted many healthy people to drop their insurance, leaving more expensive, sicker people in a declining pool, driving up premiums.

    But perhaps the biggest villain of all is Pelosi herself, who – with Senate Majority Harry Reid – pieced together corrupt health care reform packages that did little to reform the system, and nothing to drive down costs for consumers.

    Americans can be justifiably outraged at massive bonuses taken by executives in financial services companies that benefited from a multi-trillion dollar bailout just last year. 
    But to blame rising health insurance costs on a greedy health insurance industry is dishonest, at best, and demagoguery at worst. The facts tell a different story.


    Jim Burkee is an associate professor of history at Concordia University Wisconsin and a former Republican candidate for Congress.

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