Making health insurance for-profit creates mess


HEALTH insurance should be provided to everyone at minimum cost and expense. For-profit corporations should not even be allowed to sell it. Call me a socialist - I've been called worse - but this is one realm of capitalism that does not serve the best interests of society. It's why we have a health insurance mess, and one of the reasons why millions of Americans go without coverage.

Call me crazy, but that's where I am.

I don't think health insurance should be free. But it should be affordable. Take out the profit, and it might be.

I regard as one of the few but great victories for consumers and common sense the stinging rejection two years ago of an effort by CareFirst BlueCross BlueShield, the state's largest health insurer, to switch from nonprofit status and sell itself to a California for-profit company. CareFirst executives would have reaped fat bonuses had the $1.37 billion deal gone through. But in stepped Maryland's insurance commissioner of the time, Steve Larsen, who blasted the whole deal off the table and called the executive bonus package "essentially a ransom a bidder would have to pay for the right to purchase the company." A month later, the General Assembly locked CareFirst's 66-year-old nonprofit mission into law.

Too bad there weren't more such reforms elsewhere, a massive deprofitization - my word, but feel free to use it - of health insurance and, while we're at it, medical malpractice insurance. The two are joined at the hip.

And too bad Steve Larsen isn't around to at least keep an eye on things for Maryland consumers. If there ever was a time when consumers needed a strong regulatory hand and a vigilant eye on insurance companies, it's now.

Larsen's successor, one-time insurance man Al Redmer, apparently takes a decidedly different - shall we say laissez-faire? - approach.

After Tropical Storm Isabel damaged homes in the eastern part of Baltimore County, Redmer, a Republican, took some heat from the county executive, a Democrat, for being slow to get after insurance companies about uncovered losses and slow claims processing. Redmer countered that he had no control over the federal flood insurance program, fumed at criticism and called it political. Maybe it was. But Isabel victims, not just political rivals, felt he should have taken more aggressive action against flood insurance providers.

Maybe that's not his style. He's an industry guy, after all, not Ralph Nader. Maybe he's content to let the free market do its thing. Maybe, in his own little way, Redmer wants to leave a bright red mark on this blue state.

In September, Redmer approved a 33 percent increase in the medical malpractice premiums charged by Medical Mutual Liability Insurance Society of Maryland, which provides coverage for about three-quarters of the state's doctors in private practice. The 33 percent jump came on top of a 28 percent increase the year before.

Redmer seemed to believe the rate increase was justified, and he didn't seem terribly concerned about how this might affect the average person. In fact, he claimed it wasn't within his authority to consider "the impact that a proposed rate increase will have on the consumer."

As I said ... no Ralph Nader.

So the big rate increase led to claims of a malpractice crisis in Maryland, and that's what led to a special session of the General Assembly, and that's what led to a $65 million state subsidy of doctors' malpractice premiums, and that's what led to a 2 percent tax on HMO premiums to pay for it.

And that's what led the HMOs to announce - boldly, without blinking - that they would pass the cost of that tax on to their customers.

"It's Economics 101," said Donald J. Hogan, a member of the governor's staff. "These companies are in business, and they have a duty to their shareholders to make a profit." (Ah, there's that P-word again. Republicans are just so accepting of the P-word, in every aspect of life!)

So Al Redmer told the HMOs they could pass along the cost simply by giving customers 45 days' notice.

Just like that.

Badda-bing, badda-boom!

(Being as quick as he was to approve this action by the insurers, could it be that Redmer was a little hasty in approving that 33 percent malpractice premium increase last September? I think it's a question that needs to be asked.)

Now the Democrats, who approved the new tax, are the ones fuming and saying Redmer should make the HMOs justify the additional charge to their customers. It's a little hypocritical of them to be screaming about this - the tax was their idea - but they have a point.

Don't the big insurers have reserves to draw on? (CareFirst is apparently sitting on more than $300 million.) Aren't doctors making less while premiums keep going up? How much profit do these for-profit insurers need?

Call me crazy, but I think these are the kind of reasonable questions an insurance commissioner should ask. Come on, Al. Do your job or go back to selling insurance.

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