Health Care--Early Thoughts-#1

For more than a year, the nation has engaged in a dialogue on health care reform. Aetna has been part of that discussion, sharing our experience and expertise. As early as 2005, we were the first national insurer to call for an individual insurance requirement to bring more people into the health care system.

Words from Aetna CEO and Chairman Ronald A Williams the day after health care passed the U.S. House. Need another reason to be very worried about health care reform? Our intrepid CEO blathers onward...

The challenge unmet by this bill, however, is how to effectively deal with the critical issue of affordability, which has become a burden for so many people, particularly individuals and small business owners.

That's right, the CEO of Aetna doesn't believe health care reform goes far enough. There you go Russ, putting words into this CEO's mouth. He just wants costs controlled and he didn't really say above he advocated the government requiring people to purchase his product.... And,you're correct. It wasn't the CEO who said that, it was Aetna's president Mark Bertolini who said as much in an article from Marketwatch.com-- under the headline "Aetna's President: Health Reform Bills Don't Go Far Enough"

So far the health-care reform bills lack the “teeth” necessary to bring meaningful payment reform, he said. Bertolini is factoring in some kind of health-care overhaul at this point, and “its acceptance and effectiveness will depend on providers and how they are organized,” he said.

Stuff like this always amuses me about liberals. They want so much to believe the altruistic motives of the politicians who carry their banners, but in reality, the Democratic Party is as much in thrall to corporate interests as the GOP--perhaps more. If the post-Bush Wall Street bailout didn't convince you, or the tax-dodging former Wall Street insider Timothy Geithner, now Obama's point man at Treasury, perhaps senior management at Aetna will finally merit your attention.

The mere fact this company lobbies to convince the government to force all Americans into the health (read: insurance) system should be enough. And, all that junk above about more teeth in payment controls? If you read this article and other statements by Aetna in congressional testimony what you find is Aetna lobbying both sides of the medical coin to their advantage. Payment control means physicians and hospitals should have their pricing scrutinized and, if required, tamped down by the Feds and state insurance commissions. Lower outflows for Aetna might mean lower premiums for their customers. Or, it might simply increase Aetna's profits. While Aetna is lobbying to lay bare the justification for physician, hospital and drug price increases, I don't see where they offered to lay bare their internal pricing, profits or expenses, nor those of their competitors. Oops.

In fact, this corportate president is so enamored of government health care reform, he had this to say about the failed Clinton initiatives:

“I think it’s a shame we didn’t get reform done then,” Bertolini said. “We have to get it done now. If we don’t fix it we will continue on an inexorable decline, and that’s no good because when they point the finger they’re going to point it at us.”

When I was a banker, we saw similar trends in our industry. Large banks often turned a blind eye to heavy-handed regulations and the cost in personnel and time required to implement them. The reason was simple; large banks can mitigate onerous costs of regulation much easier than small banks as a result of economies of scale. The extra cost burdens suffered by smaller banks, which cannot spread out initial compliance expenses as efficiently as larger entities reduces service and pricing advantages local banks typically realize vis a vis their larger siblings.

So, liberals, who often held up insurance companies as the bogeyman in the health care drama might need to take a breath and ask themselves why Aetna seems so sanguine about health care. Having government force people to buy their products on one side, while asking government to force cost controls on the recipients of their payouts (doctors, hospitals and pharmaceuticals) on the other is not what one would expect from a private sector company. And Obama, who spent much time on the campaign trail chastising these insurers should also be concerned. Except, we discover that in the fourth quarter of 2009, Aetna upped their lobbying expense 55%, to $802,000. The White House was among those tasrgets.

Be scared...very scared.