The Perfect Storm

Lia van Rijswijk, RN, MSN, CWCN

During the past 11 years, the group that lobbied successfully against any kind of national healthcare system because it would cause "bureaucrats to make medical decisions, hospitals to close, and patients to lose their ability to chose their own providers" managed to accomplish all of the above while turning a nice profit. The argument that a free-market system will reduce costs while improving care has turned out to be a fallacy. Indeed, the General Accounting Office reports continue to show that Medicare administrative costs average 1.1% to 3%, whereas private health plans spend an average of 9.5% on administration. Furthermore, health insurance overhead costs (including lobbying fees) increased 12.5% in 2001 and 16.4% in 2002.8

When you are dealing with the realities of this market-based system and have to watch patients struggle to pay their premiums and prescription drug costs, these numbers are enough to make you ill. Having said that, these companies are in the business of making money and keeping stockholders happy. That's their objective. The price tag of freedom inherent in a free-market model is reduced security. Politicians and industry executives argue that measures to stabilize the market and increase security of the system - eg, price increase controls or regulations to protect providers and consumers - impede the "freedom" of the free market. In a free market, some win and some lose. If we Americans decide that healthcare is a necessity that must be accessible to all and not just a commodity, the freedom of this market - including the freedom of suppliers and providers - must be restricted. Finding the right balance between these two opposing forces, especially given the billions of dollars at stake, will not be easy. The tidal wave of the perfect storm that may hit as a result of exorbitant costs, an aging population, and provider shortage is on the horizon. And the life rafts currently in use are taking on water. - OWM


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4. Johnson SJ, Rohrbaugh RL. Reserve and surplus levels of hospital plan and professional health services plan corporations: Application Notice 2004-01. Available at: Accessed May 10, 2004.
5. Rhode Island Department of State Press Release. Secretary of State Matt Brown says "absurd" blue cross executive pay points to need for insurance commissioner. Providence, RI. March 17, 2004.
6. Families USA. Top dollar: CEO compensation in Medicare's private insurance plans. Available at: Accessed May 11, 2004.
7. Aetna. Aetna Reports First Quarter Results. Available at: Accessed May 9, 2004.
8. Foundation for Taxpayer and Consumer Rights. CA Health Insurers spend $1 million lobbying in 90 days. Available at: Accessed May 11, 2004.

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