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Insurance Companies Increase Cost of Medical Treatment: Privatization is About Making Corporations Bigger Profits, Reducing Care

By FZ - Posted on 17 June 2011

-Originally blogged by Mark Karlin on Buzzflash

June 16, 2011- The Republican effort to privatize Medicare insurance is nothing but a strategy to redistribute wealth upward. It has nothing to do with improving care and cutting costs. In fact, it would decrease access and the quality of health care for seniors, with the exception of the richest Americans.

That is because for-profit insurance companies make money, as BuzzFlash has noted before, by adding overhead (profit) to the cost of health insurance and denying as many medical services as possible to increase net revenue.

Wendell Potter, a former CIGNA vice president, reveals where some of that profit goes:

You might be surprised to learn that more and more of the dollars you pay for coverage are being sucked into a kind of black hole.

It doesn't really disappear, of course. It just doesn't do you a bit of good - unless, of course, you believe it is to your advantage that it ultimately winds up in the bank accounts of a few investors and insurance company executives, including those who have to power to deny coverage for potentially life-saving care.

If you've been paying attention to what health insurance company CEOs have been saying to Wall Street over the past several months, you will know that they are spending more and more of their firms' cash - which comes from you, of course - to "repurchase" their firms' stock. And Wall Street absolutely loves that.

In a just-released report on an effort by GOP Louisiana Gov. Bobby Jindal to privatize the oversight of health care benefits for state workers, the consultants concluded that the state would be paying more in premiums using a for-profit third party. Moreover, this was a report that Jindal commissioned and then tried to unsuccessfully suppress.

The Jindal report concluded, "that a private company would raise premiums to maintain a pre-tax operating margin of 4.5 to 7 percent." The consultants noted that the current state "agency [administering health care insurance] is generating surpluses through lower than expected expenses and cost-saving measures."

So, there you have it, yet again: privatization of health insurance increases costs and, in most cases, reduces care except for those who can afford comprehensive policies with low deductibles.

What privatization is about is not saving money, but making the wealthy insurance companies - including CEOs and shareholders - more profitable, at a higher overall cost to the American economy and a lower standard of care for most citizens. 



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