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Insurers Getting Rich By Not Paying for Care

by Wendell Potter
Center for Media and Democracy
April 25, 2011 - 10:18am

If I had stayed in the insurance industry, my net worth would have spiked between 4 p.m. Wednesday and 4 p.m. Thursday last week -- and I wouldn't even have had to show up for work.

I'm betting that just about every executive of a for-profit health insurance company, whose total compensation ultimately depends on the value of their stock options, woke up on Good Friday considerably wealthier than they were 24 hours earlier. Why? Because of the spectacular profits that one of those companies reported Thursday morning.

Among those suddenly wealthier executives, by the way, are the corporate medical directors who decide whether or not patients will get coverage for treatments their doctors believe might save their lives.

UnitedHealth Group, the biggest health insurer in terms of revenue and market value, earned so much more during the first three months of this year than Wall Street expected that investors rushed to buy shares of every one of the seven health insurers that comprise the managed care sector. In my view, it would be more accurate to call it the managed care cartel.

UnitedHealth is always the first of the big seven to announce earnings every quarter, so investors consider it a bellwether. If UnitedHealth exceeds Wall Street's expectations, as it has been doing consistently, investors assume that the other six will do likewise. Sure enough, all seven -- Aetna, CIGNA, Coventry, Health Net, Humana, UnitedHealth and WellPoint -- saw their stock prices close Thursday afternoon at or near 52-week highs.

UnitedHealth's shares shot up more than 8 percent during the day. Increases of that magnitude are so rare that I could almost hear the champagne corks popping in the Minnetonka, Minnesota office of UnitedHealth's CEO, Stephen J. Hemsley.

Wall Street analysts had worried that health insurers would have such a hard time complying with the provisions of the year-old health care reform law that their profit margins would decline. Those concerns were put to rest when UnitedHealth reported that its operating margins were "stable" at 8.7 percent in the quarter. The company's stellar performance should also put to rest -- forever -- the myth that "ObamaCare" is "bleeding insurers dry," as industry apologist Sally Pipes contended in a Feb. 24 commentary in Forbes.

Noting that UnitedHealth's 13 percent increase in profits prompted the company to raise its full-year earnings forecast, the Minneapolis Star Tribune opined, "Life under new health care reform laws may not be so rough after all."

Indeed. Consider these numbers: UnitedHealth's profit during the first three months of this year increased to $1.35 billion from $1.19 billion a year ago. When you do the math to determine the company's earnings per share, the result is nothing short of jaw-dropping. On that basis, UnitedHealth's profit jumped from $1.03 to $1.22 per share. Wall Street analysts had been expecting the company to earn just 89 cents a share. When you beat Wall Street's expectations by 33 cents a share, you have accomplished something that most CEOs can only dream about. 
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Massachusetts Dems Pass Bill to 'Eliminate Collective Bargaining as We Know It'

By Mike Elk, a third-generation union organizer and labor journalist based in Washington, D.C.
MichaelMoore.com
April 28th, 2011 6:24 AM 

Last night, the Massachusetts House of Representatives overwhelmingly passed a bill (111-42) to strip public-sector workers of their ability to bargain collectively for healthcare. The rhetoric surrounding the bill, proposed by Democratic State House Speaker Robert A. DeLeo, is in many ways similar to what Wisconsinites recently heard as Gov. Walker pushed his infamous unionbusting bill.

But how could a state in which Democrats control both the State House and the Governor’s mansion be pushing a bill that attacks workers’ rights to collectively bargain?

The State of Massachusetts currently faces a budget deficit of $1.9 billion. House Democrats say that by limiting the collective bargaining rights of public employees over healthcare they can save the state $100 million a year. Democrats in Massachusetts, much like Democrats in New York, have focused on cutting basic government services and workers’ wages instead of raising taxes on the richest. Thus, House Speaker DeLeo proposed the plan that would limit the rights of employees to collective bargain over healthcare. And many Democrats, who have been supported by labor unions in the state, passed it.

“We are going to fight this thing to the bitter end,’’ Robert J. Haynes, president of the Massachusetts AFL-CIO, told the Boston Globe last night.  “Massachusetts is not the place that takes collective bargaining away from public employees.’’

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Connect the Dots: "Civics and Policy Basics for the Busy Majority"

Connect the Dots  

www.connectthedotsusa.com

Budgets and Deficits and Debt, Oh My!

Click here for slides, and to print booklet

Andrea Witte's new website urges you to

HELP SPREAD THE WORD:

"Share these presentations (or even just a single slide) with your friends, family members and co-workers. Let’s keep asking for more dots and keep connecting the dots to good policies so we can get our country back on track. And let’s ensure our democracy lives up to our children’s expectations."

Congressional People's Caucus 'People's Budget' Earns High Marks For Fiscal Responsibility

 Congressional Progressive Caucus

Eliminates National Deficit by 2021
Read the People's Budget 

Read The Technical Analysis and Working Paper
Presupuesto del Pueblo (Español)

The CPC proposal:

• Eliminates the deficits and creates a surplus by 2021
• Puts America back to work with a “Make it in America” jobs program
• Protects the social safety net
• Ends the wars in Afghanistan and Iraq
• Is FAIR (Fixing America’s Inequality Responsibly)

What the proposal accomplishes:
• Primary budget balance by 2014.
• Budget surplus by 2021.
• Reduces public debt as a share of GDP to 64.1% by 2021, down 16.5 percentage points from
a baseline fully adjusted for both the doc fix and the AMT patch.
• Reduces deficits by $5.6 trillion over 2012-21, relative to this adjusted baseline.
• Outlays equal to 22.2% of GDP and revenue equal 22.3% of GDP by 2021.



Support for the People's Budget
Paul Krugman

“genuinely courageous”

“achieves this without dismantling the legacy of the New Deal”

Dean Baker"
if you want a serious effort to balance the budget, here it is."

Jeffrey Sachs

“A bolt of hope…humane, responsible, and most of all sensible”

The Economist

“Courageous”

“Mr Ryan's plan adds (by its own claims) $6 trillion to the national debt over the next decade, but promises to balance the budget by sometime in the 2030s by cutting programmes for the poor and the elderly. The Progressive Caucus's plan would (by its own claims) balance the budget by 2021 by cutting defence spending and raising taxes, mainly on rich people.”

The New Republic

“In passing, Miller also draws attention something that's gotten far too little attention in this debate. The most fiscally responsible plan seems to be neither the Republicans' nor the president's. It's the Congressional Progressive Caucus plan…”

The Washington Post

"It’s much more courageous to propose taxes on the rich and powerful than spending cuts on the poor and disabled."

Rachel Maddow

“Balances the budget 20 years earlier than Paul Ryan even tries to”

The Guardian

“the most fiscally responsible in town… would balance the books by 2021“

The Nation

"the strongest rebuke...to the unconscionable 'Ryan Budget' for FY 2012."

Center for American Progress

"once again put[s] requiring more sacrifice from the luckiest among us back on the table"

Economic Policy Institute

Ryan's Medicare Plan Would Be a Windfall for Insurance Companies

By Wendell Potter
opednews.com
4/22/11


Rep. Paul Ryan's plan to privatize Medicare would accelerate a trend started several years ago by corporate CEOs and their political allies to shift ever-increasing amounts of risk from Big Business and the government to workers and retirees.

If enacted, the Ryan plan would represent a windfall of unprecedented proportions for insurance corporations and other businesses.

For millions of average Americans, many of whom already are finding it impossible to save for retirement, it would represent financial calamity. The nation's middle class would pay dearly for Ryan's proposed shredding of the social safety net that Medicare currently provides.

Ryan, chairman of the House Budget Committee, wants to dismantle the Medicare program and replace it with a system of vouchers. Starting in 2022, the government would give the average 65-year-old Medicare beneficiary $8,000 a year to buy coverage from a private insurer. That's the amount health care analysts estimate will be what the Medicare program will spend on every 65-year-old in 2022 if the government doesn't turn it over to private insurance companies.

While that might sound fair on the surface, it would actually be a very bad deal for people who turn 65 that year, compared to those who turn 65 in 2021. That's because commercial insurance plans are much more expensive, and operate far less efficiently, than the current Medicare program.

The amount of money commercial plans actually spend to pay medical claims has been declining rapidly over the past several years while the amount they spend on administrative activities such as marketing and underwriting -- and to pay executives and reward shareholders -- has been increasing. That's why Congress included a provision in last year's health care reform law to require insurance firms to spend no more than 20 percent of their policyholders' premiums on overhead. By contrast, the current Medicare program spends just 3 percent of its budget on administration.

Continue reading here.

For 20 years, Wendell Potter worked as a senior executive at health insurance companies, and saw how they confuse their customers and dump the sick all so they can satisfy their Wall Street investors.

Wendell Potter is the Senior Fellow on Health Care for the Center for Media and Democracy in Madison, Wisconsin.  Read his blog  http://wendellpotter.com/blog

The Real News: Draconian Michigan Bill Promoted by Major Corporations

American Legislative Exchange Council organizes national campaign to pass "model" legislation in states     

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My Medicare Deficit Solution

By James Kwak
Baseline Scenario

David Brooks, perhaps realizing that it was a bad idea to swallow a politician’s PR bullet points whole, is now backpedaling. The Ryan Plan, which he originally hailed as “the most comprehensive and most courageous budget reform proposal any of us have seen in our lifetimes,” now has the principal virtue of existing: “Because he had the courage to take the initiative, Paul Ryan’s budget plan will be the starting point for future discussions.”

As I’ve discussed before, the Ryan Plan is just one bad idea dressed up with the false precision of lots of numbers: changing Medicare from a health insurance program to a cash redistribution program that gives up on managing health care costs. Here’s the key chart from the CBO repor

Here’s how to read that chart. In 2030, under current law, a 65-year-old Medicare beneficiary’s health care will cost $60. (Obviously, this is using an index, not real dollars.) Medicare will pay $35 and the beneficiary will pay $25 in Part B premiums and cost sharing. Under the CBO’s more likely “alternative fiscal scenario,” her health care will cost $71, of which Medicare will pay $41. Under the Ryan plan, the same health care purchased in the private market will cost $100; “Medicare” will give her a $32 voucher, and she’ll pay the last $68 on her own.

The bottom line is that the Ryan Plan increases beneficiary costs more than it reduces government costs. In a weird sense, it’s a bizarrely pro-government plan: it helps the government’s bottom line at the expense of ordinary people.

So what should we do? Most importantly, we have to recognize that there are two separate problems, and they are not equal. The primary problem is health care inflation. The secondary problem is the long-term Medicare deficit. That’s a secondary problem because it’s largely a result of the primary problem. 

Continue reading here.

And here is the rest of it.

How Ayn Rand Became an American Icon

By Johann Hari
Slate
Posted Monday, Nov. 2, 2009, at 7:01 AM ET  

The perverse allure of a damaged woman.

Ayn Rand is one of America's great mysteries. She was an amphetamine-addicted author of sub-Dan Brown potboilers, who in her spare time wrote lavish torrents of praise for serial killers and the Bernie Madoff-style embezzlers of her day. She opposed democracy on the grounds that "the masses"—her readers—were "lice" and "parasites" who scarcely deserved to live. Yet she remains one of the most popular writers in the United States, still selling 800,000 books a year from beyond the grave. She regularly tops any list of books that Americans say have most influenced them. Since the great crash of 2008, her writing has had another Benzedrine rush, as Rush Limbaugh hails her as a prophetess. With her assertions that government is "evil" and selfishness is "the only virtue," she is the patron saint of the tea-partiers and the death panel doomsters. So how did this little Russian bomb of pure immorality in a black wig become an American icon?

Two new biographies of Rand—Goddess of the Market by Jennifer Burns and Ayn Rand and the World She Made by Anne Heller—try to puzzle out this question, showing how her arguments found an echo in the darkest corners of American political life.* But the books work best, for me, on a level I didn't expect. They are thrilling psychological portraits of a horribly damaged woman who deserves the one thing she spent her life raging against: compassion.


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For an edgier take on Ayn Rand and her admiration for a serial killer click here.

VIDEO: The Truth About GOP Hero Ayn Rand

By Jeff Sprouss
ThinkProgress
April 18, 2011

 A film adaptation of the 1957 novel Atlas Shrugged, by Ayn Rand, opened this past Friday. The release of the film has coincided with a resurgence of popularity for Rand on the American Right. The trailer for Atlas Shrugged had its world premier at this year’s CPAC conference, the Tea Party group FreedomWorks has rolled out a massive campaign to promote the film, and the story’s opening line — “Who is John Galt?” — has appeared on numerous signs at Tea Party rallies.

At the same time, some of the right’s leading political and media lights have heaped praise upon Rand. The author of the Republicans’ new budget plan to gut Medicare and Medicaid, Rep. Paul Ryan (R-WI), has said Rand is the reason he entered politics, and requires his staff to read her work. Sen. Rand Paul (R-KY) and Rep. Ron Paul (R-TX) have both declared themselves devotees of her writing. Conservative Supreme Court Justice Clarence Thomas has his law clerks watch the film adaptation of Rand’s book The Fountainhead. She’s also received accolades from right-wing pundits Sean Hannity, Rush Limbaugh, Glenn Beck, John Stossel, and Andrew Napolitano

During her lifetime, Rand advocated “the virtue of selfishness,” declared altruism to be “evil,” opposed Medicare and all forms of government support for the middle-class and the poor, and condemned Christianity for advocating love and compassion for the less fortunate:



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Democracy Now Interview with author of 'Treasure Islands' Says Tax Havens Tied to Wall Street Power

 April 15 2011
Democracy Now

Democracy Now features an eyepopping interview with British journalist Nicholas Shaxson, author of a new book Treasure Islands: Uncovering the Damage of Offshore Banking and Tax Havens.  who exposes how corporations and the wealthy avoid taxes and governmental regulations by sending money to offshore banks and tax havens. Shaxon says that there is anywhere from $10 to $20 trillion sitting offshore. He says it is "bigger and badder" than we ever imagined.