A CORRESPONDENCE WITH BOB CESCA
Posted by politicalpartypooper on December 17, 2009
I sent the following email to Bob Cesca earlier today. I figured I’d share it with you. Bob has been working tirelessly at his blog for months on the health care reform issue, in which, although we didn’t get everything we wanted, we still got a lot. If you have a chance to read the Congressional bill, I urge you to do so. It’s long, but you begin to get a sense of how to pick the important parts out as you proceed. Most importantly, passing HCR now would get us off of “stuck”, which is our biggest enemy. There are a number of things in the current bill that can bring insurance companies to their knees, literally.
I just wanted to take a little bit of time to first, thank you for your work on health care reform, which is near and dear to me, and second, let you know of a few things I found when reading the congressional bill.
You and I haven’t always agreed, but on this one issue, I think we both agree that the quicker we get to Single-Payer, the better off our nation will be in so many different dimensions. I’ve been reading that Congressional bill, and although it’s verbose, it gets easier as you go to pull out the important pieces. There really are a lot of good things in this bill. Despite what Lee says, there are provisions that will be enforced which will cause insurers to end their practices of rescission, as well as rejection based on pre-existing conditions, or pricing structures based on the same. While it is true that we won’t have a Public option,. as the bill stands right now, we will have mandated coverage, and fairly decent expansion of Medicaid (150% of Fed Poverty Level), as well as a streamlined Medical Records provisions which might go a long way toward cutting administrative costs at medical facilities.
The bill itself will not lead to Medicare for all. But, the insurers will do that for us. Let me explain. I have said often that insurers cannot provide coverage for the sick at any cost, and this remains true. Sooner or later, insurers will start to falter. There are strict regulations already in place that dictate how much cash reserve any “insurer” must maintain. Insurers will hit this bill hard out of the gate; raising premiums quite a bit across the board, and hoping that their risk-based premium structure doesn’t grenade. It will. It has to. They must provide coverage, the bill dictates it. Where they cannot, to the poor, medicaid is available. Where a family or individual doesn’t meet the requirements for Medicaid, insurers must take up the slack, with Federal Subsidies on the premium side only, and there are limits to that, as well.
What this all boils down to is that Insurers will start seeing their cash reserves dwindle as claim experience, especially for the sick, begins to outpace premium collections, and drop perilously close to the minimum requirements. When that occurs, they will have no choice but to alert the Federal Government. The bigger the insurer, the larger the splash this will make. The one reason I liked the PO was because it would provide America with a fallback position for when insurers started to go belly up…and they will go belly up. What will the Fed do when the first insurer goes under? No one can predict this as a certainty, but given our current economic situation, it doesn’t take a genius to figure out that the publicly traded insurers will all see their stock prices drop off the cliff as investors abandon them at a record pace. Those “stocks”, those shares of ownership are part of how insurers maintain their cash reserves. If the insurance industry tanks, it carries a high probability that they will hugely affect every facet of American healthcare. Let’s face it, Bob, if insurers aren’t paying their bills, who is?
At that point, the Federal Government will have to make a quick decision. Do we bail all of them out? Or do we pay their ongoing debts, draft Single-Payer legislation (which is the only real logical solution), and never look back?
I can’t guarantee that things will happen this way. But I know the history of HCR, I know the words that insurers have used, and I know that before now, not only didn’t they want to cover everyone; they literally couldn’t. That hasn’t changed. Getting millions of young, healthy new clients, and trying to balance premiums between them and the million of uninsured has always been an impossible task for them. I do not see how they can pull it off unless they make insurance premiums so expensive that relatively few people can actually afford them. They have no guarantees that they will gain enough healthy clients to balance out the costs of people who will be almost certain to exceed insurer’s former caps on yearly claims. There are numerous insurers, and they will all fight for more business, trying to grab as many of the healthy that they can, lowering premiums to entice them, and then, WHAM! “Oops, we aren’t collecting enough premiums to pay claims.”
This might be the perfect storm Bob.