A Debit to Fortune for journalistic laziness and reckless stenography in its interview with Aetna CEO Ron Williams in which he “defends the U.S. health insurance industry.”
While we understand Williams desire to offer “a defense,” we don’t understand why Fortune believes it can abdicate its responsibility even to explain the charges.
Allow us to: a dysfunctional market has led to massive insurer inefficiency and waste. That’s the charge, anyway.
Fortune, though, has a bad habit of going overboard to provide friendly forums to interview subjects. A Q&A need not mean lobbing easy questions and leaving weak answers unchallenged.
Williams, for instance, compares uninsured Americans to bank robbers. No kidding:
Today we all pay for the uninsured. If an individual sticks up a bank and walks off with $25,000, there are consequences. If someone who really could have had an insurance policy consumes $25,000 worth of health care, everyone else pays for that.
Fortune finds it’s impolite, apparently, to challenge this grotesque analogy. The idea that the underinsured are employing a strategy to win free healthcare is bizarre, never mind that they tend to be sicker and more likely to die early than those with insurance.
But if Williams is fool enough to believe that sliming the uninsured is a good PR strategy, good luck to him. Fortune’s job, on the other hand, is not to take dictation but to provide some intellectual rigor to the discussion.
Williams, for instance, makes health coverage-for-all sound almost easy—if only people would fork over the money required to buy it.
Forty-seven million Americans are uninsured. And Williams dismisses 30 to 33 million of them as easy to cover without any tax credits or subsidies: people who are eligible for
government coverage but haven’t signed up, college kids, non-citizens here legally, and
people with household incomes over $75,000.
How would these people get coverage? Williams doesn’t say, and, of course, Fortune doesn’t ask. But the implication that with the poor covered by the government every one else can afford to pay for themselves is flatly false.
Take a look at Aetna’s own price list. Aetna’s policy for individual family coverage in New York City costs more than—get this—$33,000 a year.
So a salary of $75,000—which, by the way, is well over the city’s median income —isn’t going to get it done, is it, Fortune?
And here’s a chilling stat from a report by the National Coalition on Healthcare:
Retiring elderly couples will need $200,000 in savings just to pay for the most basic medical coverage [according to Fidelity Investments]. Many experts believe that this figure is conservative and that $300,000 may be a more realistic number.
So start saving.
And all this is beside the fact that sometimes insurance is so poor that even the insured don’t have coverage, as a Wall Street Journal story we like (subscription required) said and which we described here last week.
Even more problematic is the incredible waste that plagues the U.S. healthcare
system. The Fortune interview briefly raises this point, but then the interviewer doesn’t sufficiently grill Williams about the 11 percent of revenues he acknowledges Aetna spends on sales and administration.
Eleven percent of premiums. For what? But it’s worse than that.
Paul Krugman in a September 2006 New York Times column headlined “Insurance Horror Stories” pegs the real costs:
we’re paying the price for pointless, destructive reliance on private insurers. Medicare, which is a universal health insurance program for older Americans, spends less than 2 cents of every dollar on administrative costs, leaving 98 cents to pay for medical care. By contrast, private insurance companies spend only around 80 cents of each dollar in premiums on medical care; much of the remaining 20 cents is spent denying insurance to those who need it.
The watchdog group Public Citizen in 2003 pointed to two studies showing the price we all pay for healthcare administration:
Bureaucracy in the health care system accounts for about a third of total U.S. health care spending—a sum so great that if the United States were to have a national health insurance program, the administrative savings alone would be enough to provide health care coverage for all the uninsured in this country, according to two new studies.
Those studies are from The New England Journal of Medicine and Harvard University, along with Public Citizen.
While you’re thinking about that and other things Fortune didn’t tell you, ponder Aetna’s share price in recent years compared to the rest of the economy as measured by the S&P500 (the green line), courtesy of the WSJ:
A credit to Adweek for a great piece on a misleading ad campaign designed by a group of college students who took a class sponsored by handbag-maker Coach.