What Point, Wellpoint? - Is Private Health Insurance Sustainable?

There were two interesting articles in the Wall Street Journal last week on Wellpoint, the huge health care insurer.  The Saturday/Sunday Edition highlighted an interview with Angela Braly, the CEO of Wellpoint by Joseph Rago entitled “A Wasted Opportunity.”  The Journal quoted Ms. Braly as being shocked by the pricing demands of hospitals and physicians.

“Hospitals come in and ask for major increases . . . They come in and say, you know, we need a 40% increase. It would blow your mind, the difference w start with in some of these negotiations. . . .Why does that procedure cost $10,000 in this place and down the street it costs $1,000 –and when the hospital that’s getting paid $10,000.00 is asking for a 40% rate increase you have to say, why.”

The other article appearing on February 12, 2010, written by Laura Meckler is entitled “Wellpoint Takes Heat Over Rates.”  According to the article Wellpoint has been receiving pushback after announcing a  39% rate increase in individual insurance rates in California. Wellpoint states that although it earned an overall profit in 2009, it lost money in California.  Democrats cite these preposterous rate increases as justification for their health insurance reforms that require new controls over health insurers and Republicans insist they can conjure up health savings without a ‘trillion dollar government takeover” of the health insurance business.

Neither of the parties nor the public seems to seriously focus on the reality that the current system sustained by the Republican filibuster is unsustainable and is gobbling up our gross national product.  In 2009, alone the cost of health care as a percent of our gross national product jumped from.16.2 % to a rate of 17.3%. The fact that insurance companies for short term business reasons, have to submit to the leverage of certain hospitals and physicians, and hospitals and physicians can submit their bills to insurance companies and the government and expect a payment, without controls is not a hallmark of private enterprise. As Ms. Braly correctly indicated in her interview, the two main strengths of our health care system are first choice and flexibility and cutting edge treatment and procedures.  Those both appear to be luxuries that we can no longer afford absent a splintering of the health care market based on wealth and government support of inventive new delivery systems divorced from the impediments of traditional and bureaucratic thinking.