“Insurers need to have enough money to pay claims. In most states, individual coverage faces [medical] loss ratios between 55 and 65 percent.”

That’s the industry itself admitting that in MOST places, insurance companies have between 35 and 45% overhead when providing individual insurance policies. No insurance company directly publishes its ‘loss ratio’ — the fraction of their income that they spend on their patients, which they consider a ‘loss’. That’s bad business, because it always leads consumers to ask the question, what are we paying so much for? What do we get from insurance companies, anyway? The answer: not much.

Fraud is not included in measurements of overhead — not for the insurance industry, not for Medicare, not for anyone. Nobody can measure it: if we knew who was perpetrating fraud and how much, we would simply lock them up for it. Opposition to Medicare and the public option often centers around fraud because it’s an easy thing to make up numbers about. It’d be great to decrease fraud — it’s a constant battle, and one worth fighting. It is EASY, though, to decrease overhead: force wasteful insurance companies to compete against a government-run health insurance option. They’ll cut costs. Even the threat of a public option has caused insurance companies to treat patients better: imagine what we can do once we have one.

Finally, the majority of Americans do support a strong public option. Almost two thirds of us do.
http://prescriptions.blogs.nytimes.com/2009/09/25/times-poll-americans-strongly-favor-public-option/

The public option is our best way to fix the system. Health insurance reform without it is just a giveaway to insurance companies, and won’t decrease our costs. There are other ways to do it, and maybe there are better ways nobody’s suggested, but this is by far the best policy on the table right now, better then the Baucus bill, better than the Republican subsidy for the insurance industry, a dozen times better than the status quo. Get on board! If you care about costs and efficiency as much as you seem to, I can’t think of a reason not to support this policy.

It’s funny you choose to lecture me about differentiating between profit and overhead. I’ll just reference your own words: “What seems absolutely true to me is that even if these costs aren’t considered profit on the company’s 10-K, they are profit: the company investing in its own future enrichment through advertising, and directly profiting the people who make up the company through salary and benefits.” This is from YOUR article YOU posted a link to earlier in this thread. So which is it Nick? Who exactly is it that is confused about profit and overhead?

I never said I wanted to replace medicare. I simply said that anyone who thinks the government can run a public option with 8% overhead is delusional. My example was that the estimated fraud in medicare is roughly 20%. Wouldn’t fraud be included in “overhead”? So what would that make “overhead” on medicare? So I ask you again…How do you expect Americans to trust the government to run a public option when they clearly can’t efficiently run medicare?

The majority of Americans support healthcare reform. What I don’t understand is why a few people latch on to this public option rather than talk about reforming the system we already have in place. If they would just drop this public option, the reform would pass and we would all be that much better for it. Even Obama has waivered on the public option issue. Just drop it so we can get on with fixing the system.

Insurance companies experience fraud too, and it’s not recorded in their overhead numbers — I would be very wary of anyone who is telling you that they can ‘measure’ fraud (survey question 1: are you defrauding your insurer yes/no?). Medicare, medicaid, and the VA all have a higher satisfaction rate, serve all those they are instructed to serve (they don’t get to pick and choose like private insurance) AND do it for less money per person, with costs increasing more slowly, than private insurance. Just try walking into Congress and saying ‘Medicare doesn’t work, let’s replace it with a…” You won’t be allowed to finish your sentence before getting clubbed to death by cane-wielding Medicare recipients. Senior know this program is good for them, and they don’t want it changed. For the rest of us, the public option wouldn’t be a silver bullet, but it would be a huge improvement.

If you keep confusing profit and overhead, we really can’t continue this discussion. Profit is the money that insurance companies pay out in stock dividends. Overhead is the money that insurance companies spend on everything other than paying for our health care, which includes salaries, marketing, cost containment (legal struggles over what they’re allowed to refuse coverage for), rent, etc. Overhead really does hit 50%, especially for plans that cover individuals and not groups:
http://economix.blogs.nytimes.com/2009/10/02/what-portion-of-premiums-should-insurers-pay-out-in-benefits/

The situation really is this bad, and it’s getting worse as insurance companies combine into extremely large conglomerates (Wellpoint has a 10% market share nationwide, which is astonishing considering that it’s illegal for a company in one state to sell insurance in another) and gain monopolies in individual regions. Tort reform or interstate trade won’t fix that — we need to compete with these big companies, not make their growth easier.

Insurance companies experience fraud too, and it’s not recorded in their overhead numbers — I would be very wary of anyone who is telling you that they can ‘measure’ fraud (survey question 1: are you defrauding the government yes/no?). Medicare, medicaid, and the VA all have a higher satisfaction rate, serve all those they are instructed to serve (they don’t get to pick and choose like private insurance) AND do it for less money per person, with costs increasing more slowly, than private insurance. Just try walking into Congress and saying ‘Medicare doesn’t work, let’s replace it with a…” You won’t be allowed to finish your sentence before getting clubbed to death by cane-wielding Medicare recipients. Seniors know this program is good for them, and they don’t want it changed. For the rest of us, the public option wouldn’t be a silver bullet, but it would be a huge improvement.

If you keep confusing profit and overhead, we really can’t continue this discussion. Profit is the money that insurance companies pay out in stock dividends. Overhead is the money that insurance companies spend on everything other than paying for our health care, which includes salaries, marketing, cost containment (legal struggles over what they’re allowed to refuse coverage for), rent, etc. Overhead really does hit 50%, especially for plans that cover individuals and not groups:
http://economix.blogs.nytimes.com/2009/10/02/what-portion-of-premiums-should-insurers-pay-out-in-benefits/

The situation really is this bad, and it’s getting worse as insurance companies combine into extremely large conglomerates (Wellpoint has a 10% market share nationwide, which is astonishing considering that it’s illegal for a company in one state to sell insurance in another) and gain monopolies in individual regions. Tort reform or interstate trade won’t fix that — we need to compete with these big companies, not make their growth easier.

You are delusional if you think the government can run a public option with 8% overhead. The estimated fraud in medicare is $80 Billion. That’s about 20%. What makes you think that a government that can’t efficiently run medicare, medicaid, or social security would be able to run a public option efficiently? Obama himself has said that the 8% is just an estimate and that it may be higher.

15-50% profit for insurance companies? Really? You care to back that statement up with any facts or sources? Which insurance company specifically had 50% profit? I would like to know so I can go buy their stock.

The point is: nobody’s whining. Insurance companies taking 15-50% overhead, though, is something that we should all be dwelling on: for every family like yours that managed to pull through, there is one that just couldn’t get the money together, no matter how hard they tried. Imagine if you’d lost your job during your mother’s illness, if your employer had gone bankrupt: what the insurance company skimmed off the top of your health costs would have been really useful. The federal government can provide insurance for something on the level of 8% overhead — the difference would be money in the pocket of working families — money they earned, and money that they deserve.

The idea of the public option isn’t that someone else pays for your family, it’s that more of your family’s premium money is returned to you in the form of benefits. Your anger and your opposition seems to be focused towards redistributive programs like medicaid, medicare, and SCHIP — but Kimberly (the original post seems like such a long time ago!) didn’t need a handout, she needed a reasonable, affordable policy that she could trust. It costs young people who work for small businesses a /lot/ more than it costs the employees of large businesses to get health insurance: this is unfair and needs to stop. A public option — a large group made of all the people who haven’t been able to find insurance in other ways (paying customers of a government service) — would restore fairness and parity to the current system, in which the people who can afford it least pay the highest premiums for the worst care.

I just don’t see how you think that improving our system is “feeling sorry for ourselves” or “crying to a local representative”. The government made the laws in which our current system of insurance operates — we can’t change that system without changing government and law. I know bad things happen to good people. I hate it when bad things happen to good people. I want to stop as many bad things from happening to good people as I can, and the strong public option seems like a great way to start.

I consider myself pretty liberal but I, unlike you, wouldn’t expect anyone to think that an 85% tax rate is reasonable.

Regardless, suffice to say that I happily pay my own way in all matters. I’ll spare you my household budget.

And I’m not upset with you. I just think that you might find — just might find — that when you get sick, that insurance that you pay for might not cover what you expect it to. I want you to have all the insurance you deserve — and competition between private and public options is the best way to get that.

In situations where lower income people are concerned, we’ll have to agree to disagree. The majority of the people I know who can’t make ends meet, both young and old, are trying very hard, but you call them lazy. In any event, all people (whether you dislike them or not) are currently covered under the American emergency room mandate, and Medicaid and SCHIP are simply more humane, cheaper ways to serve the same population.