Friday, February 18, 2011

I recently finished Wendell Potter's book, Deadly Spin. A very good read, highly recommended. Many of the horrible things he confesses to about the industry are not shocking, but I must admit even I didn't realize the extent of the rot and evil riddled throughout the for-profit health care system. What people won't do to earn an extra buck! (OK, many bucks). Beyond shameful.

Potter makes many good points in the book, too many to list, but I felt his discussion about the medical-loss ratio (MLR) was worth posting here. He writes, "The best example of the industry's secrecy is the medical-loss ratio, which, as I mentioned previously, is the measurement of the share of premium revenue spent on actual health care." When an insurer lowers its MLR, that means its spending less on health care leaving more for "overhead" (i.e. salaries, profits, etc.). Wall Street wants to see the MLR head lower; for it to rise typically means the stock price will selloff.

The graphic below depicts what Potter discusses about the MLR. Since 1993, the MLR for insurance companies has declined from 95% to 81% in 2007, an enormous drop-off in what is actually devoted to health care services. Note that the MLR for Medicare has consistently remained at the 97%-98% level, meaning "overhead" is at a scant 3% compared to about 20% for private insurers.

Yet Republicans and others backed by the insurance lobby will try to murky the waters, demonize Medicare and deflect our attention from plain facts like this.

Continue to fall for the "socialized medicine" and "government takeover of health care" line of crap. Potter divulges in the book that these exact phrases tested very well in PR focus groups when it came to effectively frightening people. The industry is by no means dumb, spending many millions to maintain the status quo and keep the public stupid. For them, it's always been money well spent.

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