America’s Healthcare Mafia Strikes Again
Politics / Healthcare Sector Aug 20, 2010 - 06:21 AM GMTBy: Mike_Stathis
Did you get a raise in 2009?
CEOs of the nation’s largest health insurers most certainly did; CIGNA, UnitedHealth, Humana and Wellpoint. In fact, as a reward for many years of excessive hikes to insurance premiums executed under his leadership, Edward Hanway, the former CEO of CIGNA was provided with a retirement package worth $110.9 million, paid for by the excessive and unnecessarily high insurance premiums billed to CIGNA’s policy holders.
Excessive premium hikes from U.S. health insurers are an industry-wide problem and have been for well over a decade. Rather than real competition, the industry engages in collusion with territorial monopolies and duopolies.
As you might imagine, soaring premiums have prevented millions of Americans from obtaining affordable health insurance. In addition, the equally long trend of rising co-payments, higher deductibles and lower benefits has escalated the nation’s rate of medical bankruptcy.
Medical bankruptcies now account for more than one half of all personal bankruptcies filed in the U.S. each year.
It should be obvious that excessive insurance premiums prevent millions of Americans from obtaining medical access. However, the dirty little secret is that excessive out-of-pocket costs have become leading contributors to America’s one million medical bankruptcies reported each year. Keep in mind that medical bankruptcy is virtually unheard of outside of the U.S.
Amazingly, according to medical researchers at Harvard, between 50 to 78% of all medical bankruptcies are filed by individuals who actually had full health insurance. That’s right, I said FULL HEALTH INSURANCE.
That means that co-payments and other out-of-pocket costs alone are enough to wipe out the savings of millions of Americans who purchased health insurance as a financial shield.
Perhaps now you realize why some Americans who can afford health insurance opt out of it. After all, why would anyone want to pay for a health insurance policy that’s subject to double-digit premium hikes each year? While they may be able to afford the premiums now (when they are relatively young and healthy) they have no idea what the premiums will be in say twenty years when their medical risk is much higher.
Given the extremely high inflation rate in premiums, these individuals figure they might not be able to afford health insurance down the road, when they are more likely to have medical problems. Therefore, some Americans view health insurance as a waste of money.
Once you examine all of the data, it’s easy to see that America’s health insurance system doesn’t provide real insurance. It’s really a very costly system of pre-paid medical that sticks you with a large chunk of the bill when you really need medical care the most.
If you live in America, it might be a good idea to carefully examine whether you’re really insured as well as you think. On second thought, don’t waste your time. Since there’s no price transparency for medical services, it’s impossible to know how much a diagnosis of cancer might cost. Moreover, you have no idea what you’ll be charged by insurers in the future. Therefore, it’s impossible to come up with a reasonable cost estimate for any medical condition you might have in the future.
If you’re diagnosed with a chronic disease, you’ll see firsthand just how difficult it is to come up with a 10% or 20% co-payment, annual deductibles, insurance premiums (which will soar) and other out-of-pocket medical costs. Only then will you understand how you’ve been hoodwinked all along by the healthcare industry and their close friends, the Washington mafia.
If you want to get a good idea how costly America’s healthcare system is, perhaps your best bet might be to ask several elderly Americans who have been through the system for treatment of chronic disease.
In the past, I discussed how much control the health insurance industry has over the healthcare system. I also showed you why the health insurer stocks soared as the healthcare reform bill came closer to being approved.
This was by no coincidence. Savvy investors understand that the healthcare industry pulls the strings of the puppets in Washington. As a result, health insurers make all of the rules of the game.
While millions of Americans continue to struggle with the consequences of the most colossal and fraudulent transfer of wealth in world history, health insurance companies continue to ratchet down their vice of control over the nation’s healthcare system, with double-digit increases in premiums and soaring payouts to industry executives. Indeed, profits from the nation’s largest health insurers are soaring, compliments of the bank accounts of policy holders.
We aren’t talking about “nice” earnings. We’re talking about record profits. During the first half of 2010, health insurers' profits on average soared by more than 20%. Leading the wolf pack was Aetna, with earnings skyrocketing to more than 40% in the second quarter of 2010 versus a year earlier.
When you’ve transformed a public service like healthcare into a business, higher profits arise from only two sources; higher premiums and lower benefits. Make no mistake. The health insurance industry is using both mechanisms as a means to boost profits. This is adding to the financial misery of the nation. Washington knows this, but similar to their response to the banks which caused the global economic collapse; the industry is being shuttled even more power and money.
Essentially, what this means is that Americans are being forced to pay more money for the same level of medical care so insurers can deliver higher profits to shareholders. This misaligned arrangement has placed life and death in the hands of shareholders rather than physicians.
Many of these insurers continue to raise premiums by 15% to 29%, versus about 1% inflation rate over the same time period. That’s a 1500% to 2900% increase in health insurance premiums over the inflation rate.
Several of the media’s so-called experts have been warning about “imminent hyperinflation in the U.S.” due to the printing frenzy by the Federal Reserve. However, this scenario is highly unlikely, as I have discussed in the past.
The closest the U.S. will come to hyperinflation will be seen in the healthcare industry unless drastic changes are made (you should ask yourself why you haven’t heard any mention of healthcare inflation from your most trusted sources of information).
What would you imagine the industry’s response is to soaring insurance premiums?
It’s the same song and dance as usual. They claim that premium hikes are needed due to rising medical costs. As the facts show, this is a complete lie.
The fact is that premiums have been inflated by absurd amounts in order to generate record profits and secure criminal payouts to executives.
But that’s not the end. If you happen to live in the United States, not only are your insurance premiums soaring, but you’re also receiving fewer medical benefits.
According to reports from the seven largest health insurers’, the proportion of premium dollars spent on medical care (known as the Medical Loss Ratio, or MLR) in recent quarters has declined by a significant amount. CIGNA led the way with a 6.4% reduction in the second quarter of this year, down from 85.2% to 78.8% MLR. This year-over-year decline in MLR is unprecedented.
Do you think this might have anything to do with Mr. Hanway’s 9-figure payout?
Sadly, most Americans are unaware they’re being exploited by the medical-industrial complex because they rely on the media for their source of information. Instead of real healthcare experts with no agendas, the media interviews individuals that have no expertise in healthcare. And most Americans swallow what they are fed by the media without question.
Always remember this. The media serves as the paid whore to corporate and political interests. It’s as simple as that. If you continue to watch TV and read print media or any other media platform that uses advertisements, you’ll never get the truth.
Soft-dollar payments to media sources in exchange for advertisements and commercial airtime creates biased media content that serves the interests of those who pay for the ads. If you don’t realize that by now, you probably never will. If you do realize it but continue to feed the monster, you have no one to blame for your demise other than yourself.
Those of you who are guilty of enriching the media (by providing an audience which they use to raise the sales price for ads) should be just as disgusted with yourselves as you are with the Washington criminals that have squandered America’s former greatness.
Americans continue to permit widespread exploitation day after day, whether we are talking about the healthcare industry or the financial industry. Meanwhile, much of the world watches in disbelief, while others can do nothing at this point but laugh, and I certainly understand why.
I’ll guarantee you Western Europeans wouldn't allow their private health insurers to pull the same stunts seen in the U.S. Of course, Europe has universal healthcare so the government of each nation has a financial stake in the quality and cost-effectiveness of medical care. This helps keep the system in check. Consequently, private insurers in Europe actually play by fair rules, and competition rather than collusion is the norm.
Due to a higher level of accountability, European healthcare systems have virtually no fraud, score higher on critical healthcare indicators, and medical errors are drastically lower than in the U.S. And citizens of European nations also report much higher rates of satisfaction with their healthcare system than citizens in the U.S. And of course, everyone is provided with full medical access.
In contrast, over 40 million Americans have no medical insurance (including Medicare and Medicaid), while the costs of medical care are twice that seen in Europe. There’s something drastically wrong with this picture.
Indeed, America is quite different than Western Europe. The fascist government seen in America holds as its top priority the enrichment of corporations at the expense of the people, as one would expect in any fascist nation.
Sadly, America’s tightly controlled corporate media monopoly has convinced the vast majority of Americans to think they have a democracy, and that “things will be better when the republicans (or democrats) are in office.” This ignorant mentality demonstrates just how brainwashed and naïve most Americans have become.
Others representing the GOP want you to think America is headed towards socialism. They are hell-bent on propagating this myth as a manner by which to sway votes to their side of the two-party Washington mafia. In reality, both political parties are the same because nothing changes regardless which party is in office. If you are an American, your living standards and economic opportunities have been in decline for three decades.
Remember, in socialist nations citizens are provided with free healthcare and education (K-12 and college). Although by no means am I in favor of a socialist government, based on what we see today in America, socialism would represent be a radical improvement.
No American will get fed up enough to dedicate the energy required to make a real change until they truly understand how badly they are being raped by America's fascist government. This is a regime that serves corporations at the expense of the people. By the time most Americans realize the affects of this historic exploitation, it will be too late since the damage is slow but cumulative.
President Obama’s healthcare reform requires health insurers to provide higher quality care at lower administrative costs. According to the new law, health insurers will be required to spend 80 to 85% of policy holders’ premium (the MLR) on medical care.
However, because Obama failed to mandate (a badly needed system of) federal regulation for the entire insurance industry, it’s up to each state insurance commission to draft the specific regulations pertaining to the insurance portion of the law.
While the health insurance industry continues to reduce the MLR, it’s also shuttling millions of dollars to its partner in crime, the health insurance lobbyists. These are the white collar thugs responsible for buying off federal and state officials and regulatory agencies such as the state insurance commission, all of which are supposed to work for you.
Just prior to passage of the (completely useless) Wall Street reform bill, credit card companies raised annual interest rates dramatically as a means to secure future profits once the consumer protection laws of the bill were made effective. As a part of this law, new rules were passed to determine under what circumstances interest rates could be raised. This is specifically why credit card companies raised rates in advance of the law’s passage.
We are now seeing health insurers play the same game mastered by the credit card industry. As the new healthcare law draws closer to implementation, insurers have raised the administrative costs while lowering the premium dollars to be spent on medical care (MLR) so as to “grandfather” the system when it comes time for the new guidelines to be made.
It’s highly discouraging that most Americans have no idea how badly they’re being exploited by the medical-industrial complex. Most of them don’t even realize how broken their healthcare system is. How can Americans vote for officials who determine the laws affecting their healthcare system if they don’t truly understand the problems or solutions?
Americans have been fed numerous myths about healthcare by industry hacks and others who have been granted media access. For instance, most Americans actually believe that the high costs of healthcare are due to medical malpractice and medical utilization by illegal aliens. Anyone who believes these myths hasn’t examined the data.
These same hacks try to justify the high costs of U.S. healthcare using scare tactics. For instance, they claim that high costs are required to ensure the continuation of the “world’s best healthcare system.” Unfortunately, America by no means has the world’s best healthcare system. Anyone who has examined the data understands this. Industry hacks will make any claims they can in order to divert attention away from the facts so as to ensure the continued control over the system by the medical-industrial complex.
And when it comes time to scare Americans away from universal healthcare, paid-off media hacks always bring up the most extreme example, the Canadian healthcare system.
Ask yourself why these individuals never mention other universal systems, such as those found in Japan, the UK or Western Europe. The answer is clear. They don’t want you to know the truth. They’re being paid-off by the medical-industrial complex to ensure that the ball stays in their court.
As I have discussed in the past, Obama's healthcare reform provides virtually no real improvements to the current system. In fact, one could argue it actually makes the system worse.
Supporters of Obama’s healthcare reform claim that the requirement of insurers to underwrite those with pre-existing medical conditions represents an improvement. But they aren’t thinking clearly. Insurers can easily price those with pre-existing medical conditions out of their policy.
Alternatively, insurers will pass the costs onto everyone else; not only the costs for covering the financial risks, but also the costs for paying out ridiculous compensation and securing excessive profits.
These same supporters claim that the tax placed on healthcare vendors represents a real solution without realizing that these costs will also be passed onto consumers.
The real solution to America’s healthcare crisis involves addressing cost containment and structuring real industry regulation and accountability. This policy shift would diminish control of the system held by the health insurance mafia and other key members of the medical-industrial complex.
At the end of the day, healthcare must be placed in the hands of caregivers and consumers, not health insurers and shareholders.
Much like he has done in the past, President Obama pulled the classic bait-and-switch when it came time for healthcare reform. The only real improvement offered by Obama was the government insurance option.
Corporate giants have bought off Washington to ensure that competition remains a thing of the past in the U.S. Hence, the government option was cast aside by the White House due to demands and bribes from industry negotiators. Politicians call these negotiators lobbyists. I call them scumbags and the enemies of the American people.
The disgusting reality is that Obama was not even involved in healthcare reform. Yet this disastrous new law has his name written all over it, ensuring a distinctive spot on the long list of scars cast upon his legacy.
Most Americans against the new law have fought it only as a political reaction. Thus, they have rejected Obama’s healthcare reform for all of the wrong reasons. That means the people will never demand a real solution to their broken healthcare system. Instead, they will side with their political interests while failing to realize that both of America’s political parties are fundamentally the same. Regardless of their political support, the vast majority of Americans fail to understand the real problems underlying the worst healthcare system (dollar for dollar) in the developed world.
I find it both ironic and tragic how Americans continue to question why their living standards keep sinking, while drastic improvements are being made in developing nations. The reason for their confusion can be explained by their persistent reliance on the media for the truth.
Rather than seek out the insights of real experts without agendas, most Americans turn to the televised and print media, which have been bought off by big industry. This explains why they’re unaware that they have the most costly, error-prone and fraudulent healthcare system in the world.
Instead, most Americans actually believe they have the world’s best healthcare system because bought-off politicians and the media tell them so. But the facts paint a much different picture.
Americans aren’t concerned with facts. They’d rather watch trash TV and text their friends about things that don’t matter, all while eating pizzas, burgers, chips and wings, and washing it all down with beer and sodas.
Others are more concerned with getting high, compliments of the prescription drug industry. Many more remain under the hypnotic affects of mind-altering drugs, compliments of the medical-industrial complex. Either way, most Americans really don’t know or care what’s happening. To them, life is still pretty good.
American’s fascination with media celebrity and trash TV also explains why most are unaware they are facing a permanent decline in living standards. The forces serving to keep Americans in the dark about their healthcare system utilize the same tricks causing them to lose money in the stock market.
The media also partners with Washington to create fictional accounts of tragic events as a means by which to gain support of the American people. This deceit allows Washington to carry out its military conquests, which have been perceived by Americans as a war on terror, or as a means by which to spread democracy; something America itself no longer has. In reality, America’s brutal military campaigns are centered on oil, money and the fulfillment of Israel’s military interests.
Without truly understanding the root of the nation’s problems, Americans will never demand real solutions from politicians. Instead, they will go about their business, believing the illusions fabricated by the media until they wake up one day and see the cumulative affects of years of exploitation. By then, it will be too late.
If you want to learn about the realities of America’s healthcare system, as well as viable, cost-effective solutions that will create real free market healthcare, with improvements to quality and medical access, I invite you to read my latest book, America’s Healthcare Solution.
Please have a look at excerpts from the book on the following website.
Click here for an extended table of contents.
Like all of my books, this one isn’t just something you’ll read and discard. It offers real educational content that will raise your investment IQ.
By Mike Stathis
www.avaresearch.com
Copyright © 2010. All Rights Reserved. Mike Stathis.
Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.
The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.
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