I attended the Wisconsin Manufacturers & Commerce (WMC) Business Day in Madison this week. The afternoon session included a panel discussion on health care which was recorded (about 65 minutes). It will be archived on Wisconsin Eye in a few days.
John Torinus talked about how he is controlling health care costs at his company and how those same principals can be applied to other businesses and the public sector. It was a compelling presentation; one everyone should watch.
Also on the panel was the Secretary of the Department of Health Services Karen Timberlake. She talked about steps the state is taking to control costs. Again, I hope you will seek out this presentation and listen to her remarks as there are some very positive steps being taken. Regrettably, she had a few comments on health insurers that showed her great bias against “my” industry.
A Power Point slide focused on how in 2009 health insurers profits increased by 56 percent while over the same period they were "dropping" 2 million people. I don’t have access to the industry-wide P & L results for 2008 and 2009, but I happen to know 2008 was a terrible year for health insurers.
In addition to the usual underwriting losses, their investment portfolios (like everyone’s) were hammered by the stock market crash. (Investment returns often offset unexpected claims.) So if insurers collectively had earnings in 2008 of about 1.8 percent of revenues but in 2009 earnings recovered to about 2.8 percent (these are estimates but pretty darn close, I’d wager), that would be a 56-percent increase. By reporting only the percent increase, it sounds pretty bad doesn’t it? (Now I ask you, what business owner in his/her right mind would be content with earnings of only 3 percent of revenues?)
As for "dropping" 2 million members, do you suppose the economy had something to do with that? Hmmm, haven’t I been reading something about unemployment over recent months and don’t the majority of Americans get their health insurance through their employer?
At least in this case, Secretary Timberlake – like so many politicians on both sides of the aisle – seems to be distorting the facts to her end; i.e., if you portray health insurers as scheming to drop 2 million (just the sick, of course) customers to pad profits, does a gullible public conclude government might do better?
Well, we’re not as gullible as “they” think. And by distorting the truth so badly, “their” overall credibility is even lower than the insurers they vilify.
And while I’m thinking of insurers, I’m sure you’re hearing a lot from the same political class about recent premium increases. While I’m hardly a lackey for those insurers I represent – and clearly some of their increases seem unnecessarily high – regulators have a lot to do with premiums. Insurers are required to remain solvent. If we applied the same rules to Medicare, the tax increases would make premium hikes seem small! My suggestion is that Medicare’s “Board of Directors” (that would be Congress) get their own house in order before they presume to second-guess insurers!
Jon Rauser is president of The Rauser Agency Inc., Milwaukee. He writes an ongoing blog about the health care industry at www.rauserhealthreview.com.