G. Keith Smith, M.D.

The Daily Oklahoman, our local newspaper, while initially in opposition to Governor Mary Fallin’s rejection of the health exchanges of the Unaffordable Care Act, is now happily printing supportive editorials of her decision.  April 16^th’s editorial title, “With Obamacare, Nearly Every Promise Going Unmet,” is perhaps more true than the author(s) has any idea.

Here are some of the unmet promises in the article:

You can keep you doctor.  Not with the more restrictive network “panels” and certainly not if as many of the physicians quit practicing as polls show!

You can keep your insurance, if you like it.  No you can’t, and even if you wanted to, you will probably not be able to afford it.

This law makes healthcare affordable….you know…the Affordable Care Act….my personal favorite unmet promise.

The cost estimate for setting up the exchanges is now double last year’s estimates.  Wow.  This has never happened in government, has it?

And soon to be realized by states embracing Medicaid expansion, will be the lie of how the federal government will pay for all of this.  The federal government has never promised to pay for something, only to not pay for it have they?  Oh, and then there’s this…the federal government is broke.

Here is the part, the editorial left out.  When they said that nearly every promise has gone unmet, they were correct, in that several promises that were made have been delivered on, though none the current regime would like to have discussed.

Incentives have been created to force more private practice physicians into the indentured servitude of hospital employment.  This allows the hospitals to make money off of these hapless doctors and makes the physicians easier for government bureaucrats to control, corralled into groups.  

The Medical Loss Ratio is indeed creating the consolidation of the insurance industry it was meant to create, benefitting the big insurance companies who came up with this, a scheme meant to crush their smaller competitors.

The health information technology industry has made off with billions in revenue they would not otherwise have collected, as a result of the federal government making the purchase of their product essentially mandatory.  Physicians are, after all, paid less by Medicare, if they don’t buy these systems and subscribe to this insanity.

I wrote prior to Justice Robert’s ruling that the players involved in the creation of this law, really didn’t care how the supreme court ruled, as they had already accomplished many of their goals, identical to the list above.  This law was never about healthcare.  It was, rather, like almost everything else that oozes out of D.C., a diversion of wealth from the many, to the well-connected. 

While national and state legislators harp, “..get over it….Obamacare is now the law of the land,” keep this quote from Kathleen Sebelius in the Oklahoman’s editorial in mind:

“It is very difficult when people live in a state, where there is a daily declaration, ‘We will not participate in the law.’ “  This rare show of weakness and frustration by one of this law’s architects and primary henchmen should buoy the spirits of those involved in what the French would call, La Resistance.    

G. Keith Smith, M.D.

Check out this article by Reason Magazine’s editor in chief, Nick Gillespie (many thanks to Brandon Dutcher of the Oklahoma Council of Public Affairs for bringing this article to my attention).  It turns out that the uninsured folks the Unaffordable Care Act was meant to help, don’t want this help after all.  That’s kind of hard to comprehend, isn’t it?  Let’s take a closer look.

Why would the federal government shove a national health care scheme down not only the throats of these folks who don’t want it, but disrupt and basically ruin the insurance everyone does have? Premiums are expected to increase by 100% in most markets using conservative estimates.  Are they incompetent or just plain evil?

Put yourself in the shoes of the giant insurance company execs.  Fewer and fewer folks are buying health insurance.  These companies have priced their product increasingly above the market clearing price.  They therefore have a surplus of product and not as many buyers.  In a healthy marketplace, they would lower their price and deal with their increased “inventory” in this way, luring customers back to the table.

Or….they pick up the phone and call their congressman!  ”I want you to fix things so the purchase of my insurance product is mandatory!”  Bingo!  Inventory goes flying off of the shelves.  Stock prices go through the roof.  25 year old healthy people are now paying $2500/month for an insurance product they don’t want, subsidizing the sick and elderly and those otherwise uninsurable folks entering the market with pre-existing conditions.  Pretty sweet deal for the insurance execs if you know who in D.C. to call and how much to pay them to get this kind of thing done.

The rest of the phone call looks something like this: “By the way, let’s throw in a Medical Loss Ratio formula that will destroy my smaller competitors giving these folks even fewer buying options.  That will more likely funnel them to me.  And you guys get your rationing game face on and cover my back with an Independent Payment Advisory Board so I don’t have to pay much on all these claims.  In fact, you could price the physician services so low that no docs will see folks for the more expensive conditions and everyone will blame the “greedy” doctors!  There’s a budget balancer for ya!  You’ll have all the data you’ll need to get all of this done after you mine the Electronic Medical Record Systems you make all of the docs buy.

Obamacare, just like almost any other “law” oozing out of D.C., was meant to line the pockets of those who wrote and promoted it.  Prior to this “law” the medical industrial complex had squeezed about as much money as they could out of folks willing to buy insurance from an increasingly consolidated market.  The only way to increase their revenue was to enlist the firepower of Uncle Sam, employing the political means (as opposed to the economic means) of obtaining wealth.  This “law” turned non-buyers into unwilling buyers and current purchasers were made to pay more.  Their next goal is the destruction of the stop loss industry so that those companies that have seceded by self-insurance are thrust involuntarily into this arena.  See my blog earlier this week for details on this.

I may start calling Obamacare “BIFOPE,” for “Buy Insurance From Our Pals or Else.” This conveys the true impetus behind this “law,” I think. And you thought they just cared about you. 

G. Keith Smith, M.D.

So the hospital stocks soared yesterday subsequent to the re-election of the current White House occupant.  I think it’s safe to assume that their stock price and his re-election are connected.  The stocks soared because the stockholders view these corporate hospital chains as more valuable than they were the day before.  I think it’s safe to say that with the Unaffordable Care Act in no danger of being repealed, these hospitals are better off financially and the stockholders are expecting greater returns due to the absence of threats to the Unaffordable Care Act.  

Question:  how can we reconcile the claim that this act will make care more affordable with the anticipation of greater returns to stockholders by these mega corporate hospitals?  While we will never know if Mr. Romney’s claim to provide “waivers” to this legislation would have ever come about, it is clear, isn’t it, that the mere threat of his “waiver” offer was keeping a lid on the hospitals’ stock value.  

We are not talking about pocket change.  We are talking about a 10% increase in the value of HCA.  In one day.  Those of you who are looking to benefit from this legislation need to keep your eyes open so you can see who the real beneficiaries of this legislation are.  Some, like the Health Information Technology cronies have already made off with billions.  Many of the “not for profit” hospitals have already benefitted from the fear created by the anticipation of the election results and the resulting ease in the hostile takeovers of physician practices.  The large insurance companies will see the industry consolidation they constantly seek, leaving bigger pieces of the pie for those few that remain once the medical loss ratio bankrupts the smaller players.  

In the health care arena as in all others, the government has foisted a great hoax on the populace, publicly promising them one thing while privately granting riches to the connected players.  Hopefully it won’t take forever for most folks to realize this scam and that they were lied to from the beginning.  The stock prices of these cronies are a smoking gun.

G. Keith Smith, M.D.

What is insurance, after all?  You see, big insurance companies walk a tight rope.  They don’t just want to not pay claims.  They actually set physician reimbursement at a level below the market clearing price.  Remember that price controls cause shortages. This approach by the insurance companies guarantees access to a physician’s office is limited.  No access to the physician means no access to the really expensive goodies like surgery and MRI’s.  Oh yeah.  All the while the insurance companies are collecting  premiums!  See how it  works?  Now they have to be careful that this doesn’t get out of control or they will lose business to competitors. So, many of us pay insurance premiums, an action which guarantees difficulty with physician access!  Isn’t insurance- for-everyone a great idea!!

In anticipation of getting more serious about the care denial business, the insurance industry lobbied hard for and received the Medical Loss Ratio provision in the Unaffordable Care Act, a provision that will drive their smaller competitors out of business.  Now, with the rationing abuses unchecked by competitive pressures,  there’s nowhere for us to run.  The insurance tightrope becomes a boardwalk.  See how it works?  Thank you Obamacare.  

Remember “coverage doesn’t mean care?”  This is the purpose of the “Independent Payment Advisory Board.”  Not to keep the cost down by keeping bills low.  To lower physician payment to levels that no one wants to see patients!  If you don’t get through the doctor’s door, the rest of the wonderful care available is unavailable.  The beauty of this is that the physicians will be made out to be the bad guys.  

I’ve decided that the model adopted by many smart companies, self insurance, is the way to go.  For individuals.  We should all become our own third party administrators.  Rather than pay premiums, the payment of which virtually guarantees denial to care, we should use this money to buy care.  When a month goes by that no medical purchases are needed, stow the money away for a rainy day.  

This is exactly what self-funded companies do.  They have access to “re-insurance,” so that very expensive claims can be paid, but they pay for virtually everything else “out of pocket.”  These plans also have a history of seeking out the best physicians, as this decision alone, can determine the plan’s solvency.  Self-funded plans then are the opposite of third party plans like the giant insurance companies, seeking and finding the higher quality providers, cost-conscious all the while.  

Scary to be self-insured, isn’t it?  What if you need heart surgery or a total hip replacement?  In Oklahoma City, you can receive open heart surgery for under $25,000 and hip replacement for about the same amount of money.  This isn’t cheap, but it is as cheap as it gets.  Keep in mind this is two year’s premiums if you are paying $1000/month.  

Cancer?  Cancer-only coverage is available if you want to protect against this risk.  Very soon in Oklahoma City, affordable cancer treatment will be available, removing the worry of bankruptcy associated with this diagnosis.  If you guessed that getting this treatment out of the hospitals was the key to reducing the cost, you go to the head of the class.  They typically mark up the price of chemotherapy drugs by 10 times.  10 times!  It’s amazing the lengths to which these folks will go to avoid making a profit.

Could you be self-insured?  What do you think would happen to the price of care if vast numbers of people rejected insurance altogether and paid their own medical bills?  This lowering of prices, the result of all those more well-off and risk tolerant becoming self-insured, would bring the purchase of health services within the reach of those not as well-off.  This deflationary snowball would continue and more and more people would actually be able to afford to pay for their care, rather than purchase insurance out of fear of bankruptcy only to be denied care.  Very few people would have health needs they found unaffordable, fewer than we have today for sure.

I don’t know about you, but I’d prefer to buy medical care than to buy a worthless piece of paper guaranteeing me only a place in line.  

G. Keith Smith, M.D.

Thomas DiLorenzo has a new book out:  ”Organized Crime-The Unvarnished Truth About Government.”  I highly recommend it as well as his books on Lincoln and the statist, Alexander Hamilton. His discussion of the mechanics of Washington influence peddling will either wake you up to what the vast majority of politicians are about or will make you laugh out loud if you already know.

He actually has a chapter called, “Pay to Play: Why the Fuss?”  I think that reading this book will help everyone understand many of the otherwise unnoticed events taking place all around us.  Today, for instance, Aetna announced their plans to buy Coventry Health Care for 5.7 billion dollars.  If you asked “where did Aetna get 5.7 billion dollars to go shopping for competitors to buy out” you go to the head of the class.  If you are having trouble connecting the dots between the high cost of the premiums you pay to Aetna and their buy out of Coventry, you should go to the back of the class.  

What if 5.7 billion dollars weren’t taken out of the medical economic marketplace?  What would the price of health care look like then? This is a pretty significant overhead, don’t you think?  How much more expensive is a cardiac surgery than it should be to ensure that the Aetna suits get their cut, one that stuffs their accounts with numbers like 5.7 billion?

If you read DiLorenzo’s book you will see the real crime, though. Huge corporations (not just heath care giants) will pay politicians giant sums to enable industry consolidation.  Simply, the fewer players in any market, the more power those remaining will have. Monopolies or near-monopolies are the goal of the giant corporations as this power frees them from the customer-serving influences of the free market.  With Uncle Sam riding shotgun, they can take what they want from individuals, rather than live or die based on the quality of the product or service they provide.  Their profits soar no matter how abusive they are to their captive “customers.”  I guess deep down, these giant corporations want to act like the government! 

So what is the real crime?  Think of Coventry’s sale to Aetna as a casualty of Obamacare.  Heavy regulations like the Medical Loss Ratio (that don’t really affect the big carriers), have not only forced smaller companies like Coventry (historically better with customer service than the bigger players) to sell out, but to do so at a lower price. Garage sale prices are always lower if the seller is facing bankruptcy.  And see how it works?  You carefully shopped and bought Coventry but you get Aetna anyway!

You see now that Obamacare allowed Aetna to steal Coventry in a way.  Made them sell and for less than what they thought was fair. This is government at work.  The same thing is going on with the rural hospitals, forced into the corner with “Recovery Audits,” a predatory activity by Medicare that the big hospitals have embraced.  Unable to comply or withstand these “Audits” many if not most of the rural hospitals will fail, a failure which results in consolidation, fewer players.  

If this were occurring in the furniture or swimming pool industry, we might shake our heads and shrug it off.  That those in Washington are enabling this activity in the health care industry will result in misery and death while their rich benefactors get even richer.  Health care is much too important to involve the mob from D.C., the District of Criminals.

G. Keith Smith, M.D.

The socialist editorialist Clarence Page has called the GOP out, Mitch McConnell, in particular, for not having a replacement plan for Obamacare if they can manage to repeal it.  This very short-lived interlude, void of any more health care ideas from Washington, is kind of nice.  I’m sure the GOP will spoil the silence, though.  Seriously, what on earth would lead someone to believe that any answer coming from Washington wouldn’t be designed to line the pockets of the special interests at the table writing the bill? 

I’m all about repeal.  But let’s not stop with Obamacare.  Let’s move on to many disastrous legislative interventions brought to us from the other side of the aisle.  How about Medicare Part D, brought to us by a GOP-led executive?  Why didn’t the GOP change the tax code to end the discrimination against individual purchases of health insurance during the time they had all the power?  Hint:  see paragraph one of this blog.  This tax reform isn’t likely as the shift away from employer-purchased plans will gut the scam of PPO repricing, a devastating blow to the big insurance companies. 

Remember how “repricing” works.  My apologies to loyal followers of this blog for repeating this, but it is important…I’ll have something new at the end.  Insurance companies are perversely rewarded by seeking out the most expensive “providers” they can find.  They subsequently “reprice” a bill of $100,000 to perhaps $28,000 and charge the employer plan a fee percentage to the extent that they have “saved” them this $72,000.  Hospitals gladly produce these bills for their pals, as they can write the fictitious loss off as “uncompensated care” and bill Uncle Sam for a percentage of this number.  Insurance companies agree to lock out certain competitors to garner the hospitals’ participation in this little scam. 

Insurance companies make more money doing this than they do from premium collection!  This money isn’t included in the calculation of the new MLR (medical loss ratio) requirements of the UCA (Unaffordable Care Act).  This MLR only applies to premiums collected.  Beginning to see why the big insurance companies wrote the bill this way?  Administrative fees and PPO access fees are also not included in the MLR calculations. 

Changing the tax code ends this scam.  Individual policies (as opposed to group or employer-sponsored policies) are not subjected to “repricing” fees.  You will know that the GOP is furious with the insurance companies when this tax reform passes.  If the GOP threatens to pass it, then doesn’t, you will know that they did this to raise money from the insurance companies as extortion. 

What would the reaction of the average working person be to the following from the GOP:   “We aren’t advocating a replacement plan because this government is so completely compromised, corrupt and incompetent that something as important as health care can’t be trusted to it.  We are going to fade back and punt this to the states and let them unwind the insanity we have thrust on everyone in the country.  Our gift to you is to remove ourselves from this issue entirely, rather than continue to sell our influence at your expense.” 

I know.  It will never happen.  Fun to think about, though.

G. Keith Smith, M.D.

The idea that a branch of the leviathan federal government (that is in charge of reviewing the power of the very same leviathan government) would issue a ruling that would limit the power of the very same leviathan government is naive.  This corrupt “brother in law” arrangement, as Gary North has called it, precludes any objectivity by SCOTUS.  As Tom Woods has said, it should come as no surprise that a government that is in charge of determining its own powers has expanded its powers.  Today’s ruling was a surprise only in that Roberts sided with the left. 

The court’s decision has insured that the bill will continue to do what it was intended to do all along:  bestow power, money and favors upon those who brought their check books to Washington as this debate unfolded nearly 4 years ago.  Small insurance companies, unable to comply with the Medical Loss Ratio provision will go out of business.  That was the point.  This is the reason that the large insurers supported this bill.  Less competition for the big boys who will now be in complete control.  Small hospitals (particularly rural hospitals) will more likely succumb to hostile takeover bids by the big city corporate hospitals.  That was the point.  That is the reason the American Hospital Association supported this bill.  Physicians will sign on as hospital employees unable to afford the computerized medical record expense or just feeling disgust toward the end of their careers.  That was the point.  Physicians who will as employees do as they are told are much easier to control than the private practitioners focused on the needs of their patients. 

The pharmaceutical industry, whose profits were protected by this bill, will continue to make incredible amounts of money.  That was the point.  Newt Gingrich, lobbyist, and his HIT (health information technology) clients have already walked with billions.  They will continue to do well.  That was the point. 

The whole focus was getting everyone insurance.  The bill doesn’t do that!  It does, however, penalize people for not buying insurance.  Seriously, who benefits from that?

 There never was a discussion about costs.  The reason for this is that if costs are rational, the cronies listed above will not achieve the same profit margins.  Costs will be discussed, whether the elite want them to be or not now, as the court’s decision will cause the cost of health care premiums to increase very shortly.  This will force an examination of the costs of care, the result of which will alarm those who have not paid attention to this aspect of the issue.  More and more facilities and physicians will post their prices to the embarassment of the large hospitals and insurance companies that supported this legislation. 

The curtain on this sham will finally come back as more and more physicians opt out of Medicare and Medicaid, leaving folks with “coverage” but no care.  Make no mistake: the losers of this court’s decision are the poor and the elderly. No one will see them.  This will be the deadly proof that this bill was never about health care at all, but about business as usual in Washington.  The court’s decision will truly reveal that the purpose of this bill like almost all others was to make already rich people much richer.

G. Keith Smith, M.D.

I’ve been asked how physicians and patients will be affected by the Court’s declaring the Unaffordable Care Act unconstitutional.  My sources tell me that this is extremely likely.  I am reminded of the comment of the brilliant Joe Sobran, who said, “…if Iraq needs a constitution let them have ours…we’re not using it.”  Incredibly, this “brother-in-law” court appears poised to reject Obamacare based on “the constitution.”    It is useful to review the reasons this legislation was passed in the first place to keep any specifics about the bill in proper context.  The bill served at least two purposes, neither of which has anything to do with health care.  

A tax increase:  Taxes are sent to the government with the hope that some of them will be returned for roads and bridges, that kind of thing.  Politicians make more money, however,  by doling taxpayer loot out to those who bribe them.  We all remain hopeful that some of the bribers will be road and bridge builders, I suppose.  Insurance works the same way.  We pay premiums, hoping that when the day comes and we need to make a claim, some of our premiums will be returned.  Insurance companies are prevented from becoming too abusive (refusing to pay claims) through competition.  If one insurer is too abusive, another will gladly accept a disgruntled customer.  With the government acting as the only “collector of premiums,” customers (patients) are disarmed, unable to retaliate against poor service.  To the extent that claims are denied or delayed this amounts to a simple tax increase.  The federal budget will look improved at first with loot from this new robbery rolling in and rationing of care in full swing.   Later, as demand outstrips supply, the program will become bankrupt, the bankruptcy assuming the form of long lines for care.  The political hacks that dumped this on us won’t care a flip, as they will be long gone, leaving future politicians to deal with the politically impossible chore of dismantling a federal program, or alternatively  will be smeared as mismanagers of the earlier politicians’ great idea.  FDR understood this.  To this day he is considered one of the great ones because he introduced the Ponzi scheme of old age pensions, a program that threatens to bankrupt us today.  

“Return on Investment”:  Health information technology companies, big pharma, big hospitals and big insurance companies either have already received huge benefit from this law and/or stand to in the future.  This quid pro quo of political bribery was very successful.  HIT companies were successful in getting Uncle Sam to declare the purchase of their products mandatory.  Incredibly, 20 billion dollars in taxpayer subsidies were doled out to buy this product.  I like to refer to this as a “bail in,” as opposed to a “bail out.”  Close negotiations with the big pharma lobbyists in connection with the health care law insured maintenance of their profits.  Big hospitals were granted the upper hand in hostile takeovers of physician practices and smaller hospitals due to the intentionally expensive mandates that the little guys couldn’t handle.  The big insurance companies supported this effort in anticipation of the country being carved up into regions over which these big boys will have complete control.  The medical loss ratio provision of the bill insured that their smaller rivals would be destroyed, a political gift,  the deception of which can not be overstated.

The players haven’t changed.  Bankruptcy due to cancer is the fault of the government-created cartel of big hospitals, big pharma and big insurance companies.  Death from rationing (the favorite budget-balancing tool in the universal health care bag) will likewise be inexcusable, but will be implemented by the same cast.  The free market, one characterized by real competition and transparent prices, has brought a standard of living to the world that no other economic system could have produced.  Why do most continue to believe that the application of this mutually beneficial system of exchange does not apply to medical care?  

After this law is overturned, lawmakers will be in a heat to “fill in the gaps.”  My advice:  take some deep breaths.  A real opportunity to return to healthcare sanity is upon us and the solution (a transition to a free market) will not come from Washington, short of repealing countless past laws bought with bribery.   Application of the libertarian principle of non-aggression is indicated.  By this I mean that no individual’s health needs should be the involuntary responsibility of any one else.  Short of this, the feds should turf as much of this as possible to the states for them to figure out on a local level, as local politicians are more accountable to their electorate.  Washington politics has made millionaires too numerous to count already, as a result of this fiasco.  That is what politicians do:  make already rich folks (who agree to kick back bribes) richer.  To paraphrase the great libertarian Harry Brown, “..this is much too important to leave to the incompetent, inefficient and corrupt officials in the federal government.”

G. Keith Smith, M.D.

IPAB: Independent Payment Advisory Board.  MLR:  Medical Loss Ratio.  ACA:  Affordable Care Act.  Can you say George Orwell?  Let’s take one at a time.

IPAB:  First, there is nothing independent about this proposed outfit.  Selection of the folks on this panel will make senate confirmation hearings look apolitical.  These seats, like almost everything in Washington, will be sold.  Not really sure why Blagovich is in jail….selling seats and positions of influence is standard operating procedure in D.C.  Second, there is nothing advisory about this outfit.  What they say goes.  And they will be wrong.  No one and no group can possibly determine the “moving target” of the market clearing price (that price that is “correct,” in that at this price there are neither surpluses or shortages) and get it right.  What is the “correct” price today may not be the “correct” price tomorrow.  What’s right in Baton Rouge may not be right in Camden Maine.  They should all read Mises’ “Socialism” prior to taking the job…not that it would make any difference.  Here he clearly shows that socialism’s failure is due to the absence of a rational system of pricing.  In fact any economic system without rational market-determined pricing will fail.  IPAB, however, is not a board intended to maximize the utilization of resources.  It is intended to intentionally ration care by setting a price below that required in the marketplace.  One would have to be incredibly naive to believe otherwise.

MLR:  You should know what this means.  It has two meanings.  What those in government say it means to effect and then what it is really meant to do.  Two really different things.  What the government says:  no more than 10-15% of a health insurance company’s revenue from premium collection can be used for administrative overhead.  85-90% must be paid out to satisfy claims.  HOORAY for the consumer, right?  Wrong.  Here is what MLR really does.  It puts the little insurance companies out of business.  10% of 20 billion dollars is enough to pay administrative expenses at the big boys.  10-15% of 8 million dollars may not be enough to get it done for the little player.  Result?  All of the little guys clients go to the big boys.  Less competition in the marketplace.  Consolidation in the marketplace.  Why do you think the giant insurance companies supported this aspect of the newest health care legislation?

Affordable Care Act:  Even the government’s own studies show that this legislation will add at least 1 trillion in health care spending.  This will be primarily absorbed at the state level with wildly increased Medicaid expenditures.  Companies providing health benefits to employs are anticipating huge increases in their obligations.  Many companies will begin seeking insurance products that are insurance in name only, with little or no benefits attached.  EPO’s(exclusive provider organizations) are an example of such a product, an unimaginative twist on HMO’s.  

I think that in his worst nightmares, George Orwell never imagined such unapologetic and false labels issued by the state.

G. Keith Smith, M.D.

Ricardo Alonso-Zaldivar of the Associated Press (and an apologist for the current occupant of the white house) has written an article about the health insurance rebates mandated by the Unaffordable Care Act, aka Obamacare.  The overall amount to be rebated may top 1 billion, Oklahoma’s share to be about 22 million.  As you open your mail and find these checks try to wrap your mind around one of the most sinister parts of this health care bill, as these rebates are really a smoking gun of government and business, allied together, at its worst.

These rebates are the result of insurance companies’ failure to meet the “medical loss ratio” demands of the Unaffordable Care Act (UCA).  This ratio requires insurance companies to pay in claims 80-85% of what they collect in premiums, no more than the remaining 10-15% to be used for salaries and administrative functions within the insurance company.  Sounds great, doesn’t it!  It is great if you are one of the following:

1)A GIGANTIC insurance company:  10-15% of 100 billion dollars is plenty of money, for instance, to pay administrative functions and giant salaries of the CEO’s of companies this size.  This is a virtual guarantee that these GIGANTIC companies will receive the gift of the total destruction of their smaller competitors.  The SMALL insurance companies will have serious difficulty complying with this.  Fewer players in the insurance market will necessarily drive business to the GIGANTIC players and these “rebates” they are being “forced” to pay will be returned many times in terms of new revenue as small companies fold and their business goes to the giants.  

2)BIG GOVERNMENT:  if your goal is a single payer national health plan this is a big step.  By eliminating the smaller insurance carriers, the entire health insurance market is destabilized and creeps closer to that “no other choice,” “against the wall,” situation that those in government seem to love.  Rather than have government run health care, large carriers will run the government plan, carving the country up into regions, like meat for the wolves.  OK.  Here is the word that I hesitate to use but there is simply no other word for it.  This is fascism.  Professor Robert Higgs uses the phrase “participatory fascism.”  This marriage of government and big business has been called “mercantilism,” or “public-private partnership,” more recently, but this conspiracy between big business and government in health care deserves the term “fascism,” as people’s live are truly at stake here.

Did you wonder why the largest insurance carriers supported the UCA during the “health care debates,” prior to its passage?  Keep in mind they knew about the Medical Loss Ratio provision and these rebates when they supported the bill.  

Late in the AP article, the author refers to certain “exemptions” granted by the feds.  Why do you think some states received exemptions from the UCA, this part of it in particular?  Why do you think that certain labor organizations’ health plans received these same exemptions?  You don’t think that there is any politically motivated quid pro quo, do you?  

I’d like to say that I’m disappointed that the writer didn’t mention any of this in his article.  I guess disappointed but not surprised.

G. Keith Smith, M.D.