June 25, 2009

Executive testmony

Wendell Potter, former health industry executive, explains how the industry cheats customers.

15 years ago, when reform was last on the table, 95% of the money collected in premiums went to pay for health care. Now it is less than 80%. The term for this value is the "medical-loss ratio." As Ezra says, this is a telling construction. It means they regard paying medical reimbursements is a cost.

George Lakoff made a similar point in an interview I had with him. In most businesses, the more your customers demand, the better off you are. This is true for people who make good things, like high butterfat ice cream, and people who provide services to correct bad things, like autobody shops. In the case of a health insurance company, the incentive is reversed. Providing services reduces your profits. And that is why we are where we are today.

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