Janine Jackson interviewed Steffie Woolhandler about Covid and health insurance for the June 10, 2022, episode of CounterSpin. This is a lightly edited transcript.
Janine Jackson: We don’t generally do media criticism by counterfactual, but it seems fair to ask, given that we are told that insurance companies protect us, you pay into them for a reason, and that it’s about things happening to you that you don’t have control over: So how are insurers responding to a genuinely public health crisis like Covid-19?
You don’t have to be poor or Black or an immigrant to be affected by this, so it should be a genuine test.
Joining us now with an assessment is Steffie Woolhandler. She’s a physician and professor at City University of New York, and co-founder of Physicians for a National Health Program. She joins us now by phone.
Welcome back to CounterSpin, Steffie Woolhandler.
Steffie Woolhandler: My pleasure.
JJ: Like I say, we don’t generally talk about what media don’t do, but I have not seen, really, any coverage about the way that insurers are responding to a public health crisis. So I guess I would ask you, what would insurers have done, ideally, but then what’s actually happening.
Steffie Woolhandler: “Media failed to cover the figures that were there in plain sight, showing a massive increase in insurance companies overhead and profit.”
SW: The major insurers saw 2020 as a giant opportunity for profiteering. What had happened is they had been receiving a little more than half of their total revenues from the government, either the federal government through the Medicare program or combined federal and state through the Medicaid program. So our so-called private insurers were already largely publicly funded.
When the pandemic hit, believe it or not, the total cost of delivering healthcare fell dramatically. And that’s because so many people were afraid to go get elective surgery, afraid to see their doctors, so that the revenues of hospitals and doctors’ offices plummeted, the payments to doctors and hospitals plummeted. Even as some hospitals were swimming in Covid patients, they still saw their total revenues, for all disease categories, go way down.
Now, the insurance industry, meanwhile, had already collected the premiums from the government, and they never bothered to give any of it back. And apparently the federal and state governments never demanded any of it back, because by the end of the year, the largest insurers had seen huge jumps in their insurance overhead. That’s the money they received as premiums and never paid out to doctors and hospitals, massive increases in what is known as insurance overhead.
And they put virtually all of that into their pockets as profits; you can hide some of it by expanding, or something called “intercorporate transfers,” where they mush the money around within their own corporation between subsidiaries. But by and large, they just pocketed this money as high overhead.
And the thing that’s interesting from a media criticism point of view is that this was right there in plain sight when the official government figures for health spending were released in December. The official government figures showed huge increases in private insurance company overhead, and they showed that most of those increases came from the overhead they were getting from the federal and state government.
So what ended up happening is they just got a whole lot richer, and they turned around and have used that for high profits, for expansion, to take over more of the public Medicare and Medicaid programs. And there was essentially no coverage of it.
What happened when the government figures came out in December was much of the media covered the other finding, which was quite expected, which was government public health expenditures jumped in 2020. Of course they did. That was what was supposed to happen. But the media failed to cover the figures that were there in plain sight, showing a massive increase in insurance companies overhead and profit.
JJ: I feel like a dummy in looking at this, because we are in a moment where we are supposedly really seriously looking at healthcare, and health expenses in this country. And so I feel genuinely confused about why we have a system, or continue to have a system, that would do that, where we would be facing a genuine public health crisis and we would be seeing profiteering from the very people who we’re told, yes, you pay when you’re healthy, and that seems bad, but when you’re sick, that’s when you’ll be really grateful for it. And that seems like the opposite of what’s happening here.
SW: Well, when you go into a public health system, a public health insurance system, that is kind of what happened.
So before Medicare was privatized by the Medicare Advantage industry, we were all paying a lot of money into Medicare payroll taxes. Once you turned 65, you paid a premium, but then if you got sick, essentially all of that money was paid out to take care of sick people. Ninety-eight percent of all the money that goes into traditional Medicare comes out as payments to doctors or hospitals or drug companies. Only 2% ever went for Medicare’s overhead, pushing the papers around and keeping track of people.
But you have to look at the Medicare Advantage industry, which is taking over traditional Medicare, where year upon year they report overhead of 15%. So 15% of the total cost is being scraped off the top for the overhead and profits of Medicare Advantage industry.
And in 2020, they got an extra opportunity to make even larger profits. So the year before the pandemic, their overhead was about $1,800 per Medicare enrollee. I mean, already a huge amount of money. That’s $1,800 for every Medicare Advantage enrollee is just going for insurance overhead. Outrageous.
But during the pandemic, that overhead soared, and was more than $2,200 per enrollee in 2020. And what should have happened is that government should have said, “Wait, we paid for this, we’re calling it right back, using it for medical care or returning it to the taxpayers.” But, in fact, it was ignored, this giant leap in overhead, and just recently the Biden administration announced that he was going to actually increase the payments to the private Medicare Advantage Industry. He gave them an 8.5% increase this year.
So there’s lots of talk about, oh, what are we going to do about cost? What are we going to do about inflation? But no one is talking very much about what are we going to do with the private insurance industry taking over Medicare and Medicaid, and inflating the cost of care in those programs, which is exactly what we saw in 2020, which is right there in the national health expenditure accounts, the numbers the government released.
And no one wants to talk about it, because the private health insurance industry has this formidable lobbying force in every state and every congressional district. And they’re just getting a message across to Congress and the government: Don’t interfere with our profit-making.
Extra! (7-8/09)
JJ: And private insurers also play a big role in board membership in media organizations, which is a thing that FAIR has looked at, but it’s a very silent or stealthy influence, because it’s not made explicit. It’s just kind of guardrails; we can’t do this. You know, it might make sense. “Oh, oh no, no, no. Somehow, for some reason, we can’t take this common sense response, or this public health response, to what’s going on.” It’s very weird.
SW: It’s weird. And it’s a public health response and it’s also, if we’re going to fight costs and inflation, we have to look for unnecessary costs, and there it is sitting there, huge overhead and profits in these private insurance industries. They’re private in name only, since at this point, more than half of their funding is coming straight out of the taxpayers.
We ought to be looking at that and saying, “No, we cannot afford to waste 15% or more on private insurance industry overhead when the fully public, traditional Medicare program could do the same job for 2% overhead.”
JJ: Absolutely.
Well, Steffie, we use you as an object lesson at FAIR. You might not know this, but years ago, there was a conversation on what was then called the MacNeil/Lehrer NewsHour, I guess, PBS NewsHour, in which we were talking about public healthcare and single payer and a response to public healthcare needs.
And you were one of four participants on a panel talking about actually publicly funding healthcare, and the host, which I’m guessing was Jim Lehrer, said, “Well, Miss Woolhandler, you’re in the minority here with your trying to argue for single payer,” or something like that. And you, because you had the presence of mind to do it, said, “Well, I’m only in the minority here because of the panel that you have selected,” you know?
And in fact, and this is what I’m bringing it round to, in fact, the US public has in mind this frustration that we’re talking about, has an understanding that there is a better way to do this, and media, it’s not just what they hide, but they don’t actually fairly represent public opinion in terms of what the US public is interested in and needs in terms of healthcare.
SW: I think that’s true. I think the majority of American people hate the private health insurance industry, recognize that their business model is to get as much money from you as they can in premiums and pay out as little as they possibly can in healthcare. That’s not gonna be surprising to listeners that that’s the business model of private health insurance. Polls are still showing more than 60% of Americans support a single payer Medicare for all.
And, certainly, there are bills in Congress. The Sanders bill in the Senate was just reintroduced, the Jayapal bill in the House was just reintroduced. But the media coverage of it, the discussion of anger at private insurance companies, of the profiteering by private insurance companies, is really very minimal.
And I do think media can be doing a better job when data comes out, as came out in December, showing the extent of profiting the private insurance industry, covering that information, and not what in fact happened, was the only thing what was said was, “Oh, look, healthcare costs went up 10%. It’s all because of public health spending.” That’s not true.
There was public health spending and then there was insurance industry profiteering that caused health costs to go up so fast.
JJ: All right. We’ve been speaking with Steffie Woolhandler, physician, professor at CUNY and co-founder of Physicians for a National Health Program. Thank you so much, Steffie Woolhandler, for joining us this week on CounterSpin.
SW: Thanks for having me.
The post ‘The Major Insurers Saw 2020 as a Giant Opportunity for Profiteering’ appeared first on FAIR.
This content originally appeared on FAIR and was authored by Janine Jackson.
Janine Jackson | Radio Free (2022-06-15T18:29:17+00:00) ‘The Major Insurers Saw 2020 as a Giant Opportunity for Profiteering’. Retrieved from https://www.radiofree.org/2022/06/15/the-major-insurers-saw-2020-as-a-giant-opportunity-for-profiteering/
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