Villians and Rationing in Health Care

With the insurance companies coming under a considerable amount of criticism, The New York Times looks at insurance company executives. A project manager for Humana says, “I’m certainly not villainous or immoral in any way.”

Maybe, or maybe not. The real issue here isn’t the individuals involved but what the insurance companies have turned into. As business executives their goal becomes to maximize profits for their company, and in the case of health insurance this has serious deleterious effects. The ways insurance companies maximize profits were discussed in many previous posts, such as here and here. The more services they can deny, the greater their profits.

A comment from another executive at Humana touches on this:

“I believe we’re getting the pushback because we are standing up for what we believe in,” said Cheryl Tidwell, 45, Humana’s director of commercial sales training. “We believe there’s a better way to control costs by controlling utilization and getting people involved in their health care.”

“Controlling utilization.” If the government was doing this, conservatives would scream about rationing. Controlling utilization to reduce payment for unnecessary services makes sense. The problem is that the insurance companies have financial incentives to find deny services whether they are needed or not. They increase their profits even more if they can find ways to drop people who develop expensive medical problems.

This strategy is effective. It the early 1990’s, 95 cents of  every dollar received in premiums went to paying claims. Now that figure is down to just over 80 cents. Whether the insurance executives who came up with these ways to increase their profits are villains or brilliant businessmen is not the issue. What is important is changing the policies which lead to denial of coverage to increase insurance company profits.


  1. 1
    Duncan Paisley says:

    » Villians and Rationing in Health Care Liberal Values

  2. 2
    Eclectic Radical says:

    In addition, Humana is one of the big offenders in the junk coverage end of the market.  In states without a lot of regulation, they offer ‘build your own policy’ options in which someone eliminates coverage to save money. It’s real easy to get ‘health insurance’ at a low price like this, but you often end up with quite affordable ‘health’ insurance that does not pay for actual health care of any kind.
    We’re not talking about options on a car.

  3. 3
    Duncan Paisley says:

    » Villians and Rationing in Health Care Liberal Values

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