Privatizing Health Care at Taxpayers' and Patients' Expense

Written by Christianity and the Confusion on November 3rd, 2007

Valuing Families

BY Adam Thompson

Privatizing Health Care at Taxpayers' and Patients' Expense

A perfect storm is brewing around the shady business practices of a private Florida insurance company that covers 2.3 million Medicaid and Medicare beneficiaries nationwide, including a raid by federal and state agents, allegations of fraud, a subsidiary in the Cayman Islands, signing up dead people, and excessive profits gleaned from government contracts. This sounds like a bad B-movie caper directed by Dick Cheney, but it is an all-too-real account of Medicaid and Medicare privatization going sour. 

Earlier this month, 200 federal and state agents raided the offices of WellCare Health Plans of Tampa, Florida, amid growing questions about the company's substantial profits and business practices. The raid comes a few months after WellCare and other insurers voluntarily suspended marketing after federal officials alleged the companies engaged in illegal and aggressive sales tactics, including enrolling dead people, impersonating Medicare representatives, and exploiting personal information stolen from federal records. 

Privatization Leads to Taxpayer-Subsidized-Profits… and Questions

WellCare is Florida's largest private Medicaid carrier and has Medicare Advantage members in 7 states. In 2006, the company had $4 billion worth of Medicaid and Medicare contracts, earning $139.2 million in profits. These profits – and those of other insurers – should be a “canary in the coal mine” warning for state and federal lawmakers and taxpayers. Only 81% of Wellcare's revenue was spent on medical care for its members; the rest went to profits, bonuses, and overhead. To push more Medicare beneficiaries into private plans, the Bush Administration pays private companies 12% to 19% more for every senior they enroll in Medicare Advantage versus traditional fee-for-service Medicare. Said one financial analyst,

These companies are making a lot of money off this Medicare Advantage product, and you just have to wonder if maybe something is wrong here.

Wall Street analysts are skeptical of WellCare's profits and business dealings, and so they should be. WellCare has a subsidiary in the Cayman Islands which provides the company with reinsurance coverage, a form of insurance for insurance companies. How convenient that WellCare pays itself for coverage – shifting money around in the form of reinsurance premiums. Adding to the controversy, WellCare is being audited by the State of Georgia, where the company has over 440,000 Medicaid and SCHIP members, most of whom are children. Health care providers are questioning the timeliness and the quality of coverage WellCare is providing under these programs.

To its credit, WellCare has given back for the generosity it has received – $105,000 to the Florida Republican Party this year; $66,000 to federal candidates, all Republicans, in 2006; and, its generosity knowing no bounds, $5,000 to the Florida Democratic Party this year.

Privatization – A Boon for Corporations, A Bust for Consumers

The problems arising from health care privatization are not unique to Medicare and Medicaid. A New York Times report details the substandard, and too often, deadly care nursing home residents receive after public nursing homes are acquired by private investment firms. In addition to reduced staff levels, higher death rates, and dirty facilities, the private corporations set up complex mazes of ownership that make it virtually impossible for disaffected seniors and their families and government regulators to exert any level of accountability over the medley of for-profit entities running the homes.

Medicare, Medicaid, and nursing home privatization is a serious problem for Americans who want accountability in health care programs and thoughtful stewardship of taxpayer dollars.

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Research Roundup

A number of new immigration-related reports were released this week:

  • While some analysts have tried to blame the rise of new immigrants for the increasing percentage of the population without health insurance, new analysis by the Economic Policy Institute shows that lack of coverage has been increasing just as fast among native-born people as immigrants.

  • Adding to other evidence that undocumented immigrants pay their share of taxes, the Iowa Policy Project has a new report finding that undocumented immigrants pay about 80% of the taxes paid by legal residents but get far fewer public services since they are barred from Medicaid, Social Security and many other programs. Better enforcement of employers' withholding of income taxes would increase the tax share paid by such immigrants.

  • Workplace raids by federal immigration officials are increasingly traumatizing the children of immigrants, often leading to the separation of parents from their children (who are usually American citizens), according to a new Urban Institute report, Paying the Price: The Impact of Immigration Raids on America's Children. More heartening, community members and organizations often reached out to care for children abandoned by these reckless federal raids that had little provision for the consequences on these children.

A new Common Cause study of a recent vote-by-mail election in Denver found that mail-in voting procedures decreased the disparity in voting rates between Latino and other voters. While Latino voting was 14% below overall voting rates in polling place elections in May 2005, Latino precincts had only 3% lower turnout in an all mail election in May 2007.

Tobacco manufacturers and retailers gave $96 million to state-level candidates, committees and ballot measures in the 2005 and 2006 election cycles, a new study by the National Institute on Money in State Politics finds, yet the industry lost many legislative battles in 2007 and five of seven ballot measure campaigns in 2006.

Three quarters of Americans believe smarter development and public transportation are better solutions to congestion than building new roads, according to a new survey by Smart Growth America and the National Association of Realtors. An overwhelming 84% of the public opposes privatization of public roads and highways.

If 15% of electricity energy was required to come from renewable sources by 2020, consumers would see $13-18 billion in lower electricity bills and reductions in global warming pollution equal to taking 13.7 to 20.6 million cars off the road, according to analysis by the Union of Concerned Scientists

As part of launching the new Spotlight on Poverty Opportunity, which is working to inject the issue of childhood poverty into Presidential debates, new polling shows that one-half (50%) of likely voters believe that “the hunger problem in the United States is getting worse,” an increase from 38% in 2002, and 54%, do not believe that “political candidates have spent an adequate amount of time discussing hunger and poverty issues.” 

In A Child's Day 2004, the Census Bureau presents detailed data on children's lives, highlighting that parents are increasing limits on children's television viewing, but as many in one in five children live in dangerous neighborhoods where parents keep them indoors out of fear.


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1 Comments so far ↓

  1. Anonymous says:

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