The Obfuscation Report

When Private Insurers Claim They Can't Compete Against Public Health Care, They Just Make Themselves Look Silly

by Robert Creamer at HuffPO

You've got to give the private insurance companies credit for chutzpa. The argument that they have been making to Congress -- with straight faces -- that they "can't compete" against a public health insurance plan is preposterous. That's because it is internally inconsistent.

If it were true, then private health insurance firms must be inherently unable to provide health insurance as efficiently as the public sector. And if that were true, why would our nation allow itself to be held hostage by private insurance companies that unnecessarily siphon billions of dollars of wasted health care dollars from our collective pockets?

Every time the private insurance companies -- or their Republican apologists in Congress -- make the argument that "private insurance companies can't compete", they might as well dress up in clown suits and put on big red noses: they just look silly.

President Obama pointed out the absurdity of the argument in his news conference yesterday:

Just conceptually, the notion that all these insurance companies who say they're giving consumers the best possible deal, if they can't compete against a public plan as one option, with consumers making the decision what's the best deal, that defies logic.

The insurance executives are the first to tell us all about how much more efficient the private sector is at doing anything than the "government." Do they mean to tell us that the "best and the brightest" from private industry can't compete with a "bunch of government bureaucrats"?

There is, of course, considerable evidence that private insurance companies are generally more inefficient than public insurance plans. For instance, only 3% of every Medicare dollar goes to administrative costs, while from 13% to 17% -- and sometimes more -- goes to administering and marketing private plans.

Or there's the fact that "MedicareAdvantage" plans -- where private insurers are paid by Medicare to provide insurance for Medicare beneficiaries -- have required about a 20% subsidy above the cost of providing insurance through the regular Medicare system.

But the image of the poor little private insurance companies arrayed against the public colossus is ridiculous. One Republican went so far yesterday as to argue that the way a private insurance company would compete against a public plan was the way a rabbit competes with an alligator. The private insurance companies are not cuddly cute little bunnies. Many of them are giant multi-billion dollar companies that have massive provider networks, longstanding client bases and pay their CEOs tens of millions of dollars.

The real problem for private insurance companies is not that they can't compete with a public plan. It is that they can't compete and continue to do business they way they want to do business. And that, of course, is the point of a public option -- to change the behavior of the players in the health care market to assure that everyone has access to quality health care, and to stop the skyrocketing increase in health care costs.

The whole idea of insurance is to spread risk. Everyone pays into a common insurance pool, so when anyone gets sick they can count on getting the health care they need even if it costs far more than they could afford individually.

But left to their own devices, private insurance companies have an ever-present incentive to minimize their own risk of paying out for health care to their policyholders. That's why they try to select only customers who are well and get rid of those who are sick. That's why it's in their interest to spend millions on armies of people whose only job is to deny claims -- a task that has no value in the broader scheme of the health care system, but makes perfect sense from the standpoint of a private insurance company. That's why they don't want to take people with pre-existing conditions -- because they are more likely to get sick.

And, private insurers are not in business to provide health care coverage for every American, or to slow the growth of health care costs. They are in business to maximize return for their investors and the pay of their top management. So when left to their own devices, private insurers generate huge profits and pay their CEO's tens of millions of dollars.

The entry of a public insurance option into the health insurance marketplace would change the rules of the game. If consumers had a public option, who in their right mind would sign up with a company that would discontinue your policy if you got cancer or had a heart attack? Who would join a plan where they had to pay for bloated executive salaries -- or had to regularly do battle with an insurance bureaucrat in order to get a claim paid? Why do seniors like Medicare? They don't have to contend with these kinds of problems. They have secure, reliable health insurance.

So to compete, private insurance companies would be forced to change the way they do business. They would have to end all of those practices that American consumers have grown to hate, cut administrative costs -- maybe even cut CEO pay. Of course since the CEO of Cigna makes $26 million -- 65 times the salary of the President of the United States -- he could afford several million dollars in belt-tightening.

They could compete - but they would have to change the way they compete. That's what they are fighting tooth and nail to avoid - and that's also the whole point of health care reform: to change the incentives that determine how the players in the health insurance market do business day to day.

Of course there is another reason why all the concern about the competitiveness of private insurers is so absurd. The point of health insurance reform is not to benefit the private insurance companies. It is to provide everyone access to quality, affordable health care -- and to control exploding health care costs.

It's up to every one who cares about health care -- and the future of our economy -- to make sure Members of Congress remember what is really at stake in the health care debate. And it's not the health of the private health insurance industry.

Robert Creamer is a longtime political organizer and strategis,t and author of the recent book: Stand Up Straight: How Progressives Can Win, available on Amazon.com.

FEINSTEIN: BAD CHOICE FOR INTELLIGENCE

Stephen Zunes @ HuffPo

Ignoring the pleas of those calling for a more credible figure, Senate Democrats have instead chosen Dianne Feinstein (D-CA) to lead the Senate Committee on Intelligence. Feinstein was among those who falsely claimed in 2002 -- despite the lack of any apparent credible evidence -- that Saddam Hussein had somehow reconstituted Iraq's arsenal of chemical and biological weapons, as well as its nuclear weapons program.

She used this supposed threat to justify her vote in October 2002 to grant President George W. Bush the unprecedented authority to invade Iraq. Most congressional Democrats voted against the resolution. So it is particularly disturbing that Democrats would award the coveted Intelligence Committee chair to someone from the party's right-wing minority.

She took this extreme hawkish position out of her own predilection, not because of political pressure. Indeed, Senator Feinstein acknowledged at the time of her vote that calls and emails to her office were overwhelmingly opposed to her supporting Bush's war plans. She decided to ignore her constituents and vote in favor of the resolution anyway.

Background to the Vote

Public opinion polls in the fall of 2002 showed a majority of Americans would support a U.S. invasion of Iraq only if it posed a serious threat to the national security of the United States. Unfortunately for Senator Feinstein and others eager for the United States to conquer that oil-rich country, Iraq wasn't a threat to the United States. Though Iraq once had an arsenal of chemical weapons as well as an active chemical, biological, and nuclear weapons development program, these were all destroyed or otherwise eliminated by the mid-1990s, as were their missiles and other delivery systems. With strict sanctions prohibiting imports of requisite technologies and raw materials, and a lack of adequate internal capacity to produce them in Iraq, it was physically impossible for the Iraqis to have reconstituted its "weapons of mass destruction" (WMDs).

Former chief UN weapons inspector Scott Ritter had briefed Senator Feinstein before the 2002 vote, and presented evidence that Iraq had achieved at least qualitative disarmament and could in no way be a threat to U.S. national security. According to Ritter, "I had her look me in the eye and I asked her if she had seen any credible evidence contradicting my conclusions. She said she had not."

Similarly, I was among a number of scholars, arms control analysts, and other constituents who briefed her staff on how -- given the ongoing strict international sanctions imposed on that country and rigorous UN inspections through the end of 1998 -- there was no way for Iraqi dictator Saddam Hussein to have reconstituted his biological, chemical, and nuclear weapons programs. Citing reports from the UN, reputable think tanks, and recognized arms control experts -- as well as articles from respected peer-reviewed academic journals -- we thought we had made a convincing case that Iraq was no longer a threat to the United States or its neighbors.

Despite all this, Senator Feinstein insisted that Iraq somehow remained a "consequential threat" to the national security of the United States and claimed that Iraq still possessed biological and chemical weapons. And, in an effort to defend Bush's call for a U.S. invasion, she tried to discredit the UN inspections regime that had successfully disarmed Iraq by falsely claiming that "arms inspections, alone, will not force disarmament."

Similarly, even though the UN's International Atomic Energy Agency had correctly noted in 1998 that Iraq's nuclear program had been completely eliminated, Feinstein also falsely claimed that Saddam Hussein "is engaged in developing nuclear weapons."

When asked about such exaggerated claims regarding Iraq's military prowess, she insisted that she was somehow "privy to information that those in California are not." However, despite repeated requests to her office to make public what she was supposedly privy to, the only information her office provided has been the White House's summary of a 2003 National Intelligence Estimate (NIE). Based on the testimony of a handful of disreputable Iraqi exiles, this NIE met with widespread derision at the time of its release for its clearly inaccurate and politicized content.

Feinstein's supporters insist that her false claims about Iraqi WMDs were an honest mistake. But Ritter and other critics argue that it wasn't just ignorance and stupidity that led Feinstein to make these false statements about Iraq's military capabilities. She may very well have lied about the WMDs in order to frighten the public into supporting a U.S. takeover of that oil-rich country. Whether out of deceit or unawareness, however, Feinstein is clearly not suited to chair the committee.

Consequences of the Vote

I was also among a number of scholars specializing in the Middle East who warned Senator Feinstein that a U.S. invasion of Iraq would likely spark a disastrous armed insurgency, sectarian violence, and an increase in anti-American extremism in the Middle East and beyond. Despite this awareness of the likely consequences, however, she insisted that the United States should invade Iraq anyway. Such a decision raises serious questions as to whether she has the ability to rationally assess the costs and benefits of national security policies, which someone chairing the Intelligence Committee presumably should possess.

If her real goal was to protect our country from Iraq's alleged "weapons of mass destruction," however, she would have presumably called for the immediate withdrawal of U.S. troops once they invaded and occupied Iraq and discovered that there really weren't such weapons after all. It should have also been obvious that the longer U.S. troops stayed in that country, with its long tradition of resistance to foreign invaders, the more likely it would provoke a major armed insurgency and the rise of extremists groups. Despite this, Feinstein called on American troops to remain in Iraq for more than four years after the invasion. She voted to send hundreds of billions of dollars worth of taxpayers' money to support Bush's war effort even as California sank deeper and deeper into fiscal crisis.

During this occupation, U.S. authorities helped to rewrite the country's economic laws to allow American corporations to take over Iraqi industries and repatriate 100% of profits. Under U.S. tutelage, the new Iraqi government slashed corporate taxes and provided generous oil concessions to American conglomerates. In this way, the war has been extremely profitable for some giant corporations. Among these were the firms URS and Perini, both of which Feinstein's husband served as the majority owner. The Military Construction Appropriations subcommittee, under her leadership, steered government contracts to these very companies.

The Democratic Party's decision to appoint as head of the Senate Intelligence Committee someone with such a history of dubious judgment on intelligence matters is hardly new. The party chose Jay Rockefeller (WV) -- who is leaving his post to chair the Commerce Committee -- to chair the Intelligence Committee in January 2007, although he also made false claims about Iraq's WMD programs similar to those of Feinstein in order to justify his vote in favor of the invasion.

In the world of Senate Democrats, therefore, it appears that the quickest path to leadership in Intelligence comes from getting things wrong.