Wall Street Option

We have been discouraged by recent violence at "town hall meetings". This manufactured violence hides the real discussion about the violence our current system is doing to every American. Millions un-insured and many millions more under-insured drive the costs up for everyone, costs we must compensate for with lower wages and compromised working conditions.

When the "Wall Street Option" is the only option available to the public, we can be certain higher prices are in our future. Publicly traded health insurers are rewarded with higher stock prices when they increase premiums and withold benefits. This ratio of premiums to benefits is called the "medical loss ratio". The higher it is, the more the stock price of the company is punished on Wall Street. The lower it is (meaning the less a company actually pays in claims to its policy holders), the more hedge funds bid the stock price up in anticipation of higher insurance company profits. In this upside down world, premium dollars get sent to Wall St., not to people in the form of benefits.

The average of medical loss ratios for publicly traded companies in the early 1990's was around 95%, or roughly 5 cents of every premium dollar was spent on overhead, salaries, bonuses, marketing, and dividends. Today that number is slightly below 80%, with over 20% going to salaries, bonuses and stock dividends. That means over 20 cents of every single premium dollar is going to pay for offices, PR campaigns against reform, stock dividends, corporate jets, salaries and CEO bonuses, 300% more than just 15 years ago. It is no accident that the roles of the un-insured have ballooned during this time, as have those who are 'under-insured' (junk policies with high premiums and absurd co-pays and deductibles).

How do they get their "medical loss ratios" down? By "recission" - meaning they just cancel your policy at a moment of most urgent need; by denial of claim - allowing you to keep your policy but denying you use of it; and by premium increase to the point where individuals and employers who actually use their policies are priced out and must leave.

Add to all this the recent proposal from the insurance industry to increase the maximum amount a policy holder is responsible for from 20% to 35%! One thing you can count on with the private insurance industry, it won't get cheaper and you won't pay less. With friends like these, who needs enemies?

How big are those CEO salaries? Of the five biggest providers, the average CEO paycheck is over $11,000,000.00.

And how much profit are we talking about? So much that 60% of all personal bankruptcies now result from medical bills, up from 48% when we first discussed this in 2005. And a large portion of that 60% actually had "health insurance"!