Mergers, Privatized Medicare Drug Program & Greed Fuel Health Care Costs Increases
Santa Monica, CA -- As United Health, the nation's second largest health insurer, announced a 21% profit increase today for the first quarter of 2006, a pop-culture campaign is urging Americans to "sink the health insurance pirates."
A music video, "Pirates of the Health Care-ibbean" featuring a new song by the band the Austin Lounge Lizards, "Go Ahead & Die," is available at: http://www.Cal-Medicare.org. The video and song are part of a campaign to build support for a universal health care program that would be funded by eliminating health insurance companies.
"HMOs and health insurers have plundered health care and held patients ransom for far too long," said Jerry Flanagan, Health Care Policy Director for the Foundation for Taxpayer and Consumer Rights (FTCR). "Mergers and acquisitions have given a handful of insurers a stranglehold over the health insurance market. The result: patients pay more for less health care."
In the last decade there have been more than 400 mergers of managed care companies. Now just 5 companies -- WellPoint, United Health, Aetna, Cigna, and Humana -- account for more than half of the entire U.S. health insurance market. A recent study found that in over half the local markets surveyed, just one insurer provides health care to more than 50% of those with insurance.
The Foundation for Taxpayer and Consumer Rights cited recent figures released by the Centers for Medicare & Medicaid Services that show that health insurance overhead costs -- including profit, advertising, and administration -- are now the fastest growing component of health care spending.
United Health cited the new Medicare prescription drug program as one source of its profits. In the biggest change ever to the 41-year-old Medicare program, the Bush Administration put the nation's largest HMOs in charge of the so-called prescription drug "benefit."
"The disastrous handling of the new privatized Medicare drug benefit by health insurers is just the latest example of their indifference and greed imperiling the disabled and seniors. Every dollar spent on overhead and profit makes health care more unaffordable for Americans. So far, it's the insurance companies that are benefiting," said Flanagan. "Seniors are left desperate for their medications and taxpayers are picking up the tab."
HMO profits have jumped as sales increased for President Bush-backed junk policies that don't actually protect patients when they are sick and need the insurance most: health savings accounts and association health plans. Click here to read more information on these junk health plans.
"We think the song's pirate theme aptly describes the situation," said Hank Card, rhythm guitarist for the Austin Lounge Lizards. "I particularly like the lines, 'Because your basic coverage will cost an arm and leg/We'll happily replace them with a hook and peg.' "
HMOs, PPOs, and other health insurers waste billions of dollars each year that could be used to provide care and keep expenses down. Insurers spend 20% of our premiums on overhead including profit and administration compared to public programs like Medicare that spend just 2%.
According to a Harvard Medical School study, in 2005 medical bills were responsible for half of all bankruptcies. Of the approximately one million Americans who file for bankruptcy each year as a result of illness, most have college degrees, work full-time, and own their homes. Three-quarters already have insurance.
A September 2005 Public Policy Institute of California poll found that 59% percent of Californians would trade the current system for "a universal health insurance program, in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers." A 2003 ABC News/Washington Post poll found similar support across the nation (62% for universal health insurance, 32% for the current system).
Key elements of a new "California Medicare" program include provisions that all Californians would be insured and that universal coverage would be paid for by eliminating health insurance companies. The California Medicare program would take advantage of bulk purchasing and focuses on preventing disease. A recent Lewin Group study found that Californians could save $8 billion each year under such a program.
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The Foundation for Taxpayer and Consumer Rights is the nation's leading non-profit and non-partisan consumer advocacy group. For more information, please visit us on-line at: http://www.ConsumerWatchdog.org