National Physicians Alliance

Committed to Advancing the Core Values of the Medical Profession:

Service, Integrity, and Advocacy



Do contracts make us healthier?

Posted by Jonas Green, MD March 26, 2011 at 6:04 PM

Insurance agents seem to think so and soon the law may be on their side. Congress is considering a bill that would count fees paid to health insurance agents and brokers as medical care.

Here’s why you should care.

One of the best things about health reform is that it requires insurance companies to spend at least 80% of the premiums they collect on actual medical care. So 20% of premiums go to overhead and profits — that’s hundreds of billions of dollars each year! By comparison Medicare spends 3% on overhead (and has no profits), and most other countries health systems overheads are less than 10%. And remember, the 20% we’re talking about here isn’t for all overhead, it just the overhead of the insurance companies.

The idea that some insurance companies are spending less than 80% of premiums on health care is jaw dropping. So the Health Reform law makes some of the companies a bit more efficient. Boo hoo.

Insurance agents, many of whom earn more than doctors, are worried that they may take the biggest cuts.  How can they protect themselves? If brokers and agents fees are classified as health care than it can come from the 80% instead of the 20%. Make it law, (HR 1206) and they’re protected forever. Eureka, someone’s discovered gold.

Of course this supported by the insurance agents organizations, but even their best arguments are lame. Proponents of HR 1206 argue that agents set up the contracts that get patients insurance which can be used to get medical care. In other words, by helping establish access to something that pays for access to medical care, their fees should be counted as medical care.  That’s like counting cars as food because they help you get to the grocery store. In fact, it’s more like counting garage door openers as food because they enable cars to get out of the garage so you can go to the store to get food.

The absurdity is transparent … which of course means Congress is interested. To make things worse, the National Association of Insurance Commissioners (whose job is to regulate insurance companies in each state) have signed on.  It turns out most of the Commissioners have close ties to the industry they’re supposed to regulate.

This unfathomably ridiculous law has dangers beyond the obvious. Members of Congress who opposed health reform are trying to do everything at their disposal to overturn it. But since everyone agrees the health system needs reform, and cutting waste needs to be a prominent feature, labeling insurance agents as health providers creates troubling precedents for any effort to rein in costs. Soon every other special interest will seek a law calling their job “health care”. (Wall Street hedge fund managers who trade health insurance stocks keep health insurance companies in business. No insurance companies means no health care (right?), so hedge fund fees are health care too.)

The vote scheduled for Monday. Call your representatives to be sure they vote against HR 1206.

Jonas Green, MD, Los Angeles, CA

Comments are closed.

Comment With Facebook