Tobacco Companies and Health Insurance in Bed Together. Also, Health Care Reform.

Harvard University is a name you tend to trust. Its got a lot of things going for it — it’s an Ivy Leaguer, it’s difficult to get into, and it’s incredibly expensive. So when I see a report generated by Harvard Medical School researchers that says that “U.S., Canadian, and U.K. insurance firms hold at least $4.4 billion of investments in companies whose subsidiaries manufacture cigarettes, cigars, chewing tobacco, and related products”, I tend to believe them. Even if some companies, such as Sun Life, has denied the accusation. 

If this revelation seems surprising or ironic to you, you’re most likely not alone. You may even be saying to yourself — ‘Self, why would a company that’s in the business of promoting good health also promote smoking?’ The answer is actually incredibly simple, in a maniacal sort of way. 

Money. It all has to do with the monies. You see, the incentives here would seem to point toward health insurance agencies investing in tobacco business because smokers pay for higher premiums on health insurance. Here’s some quotes from an article entitled “How Smoking Affects Life Insurance Premiums“:

“Insurance companies charge higher premiums to people who smoke. You may ask why and for sure the answer is as obvious as it gets. They smoke and that’s why. Given the fact that 7 years is chopped off of their life expectancy, insurance companies make it a point of getting what they pay for…”

“Arguing on why smokers pay more for life insurance is an undeniable lost cause. Smokers are charged more for the fact that they statistically die younger. If not death, they usually make more insurance claims than a person who does not smoke at all.

Life insurance companies make it a point to address the adverse effects of cigarette smoking to society, the environment and to people in general…”

“A person’s life expectancy greatly affects the cost of their life insurance rates – this means that if someone is more prone to diseases, the higher the chance of possible death.”

Back to the Harvard findings, Prudential Financial Inc. has $264.3 million invested in tobacco holdings and “is a major investor in three tobacco firms, including Reynolds American, whose subsidiary R.J. Reynolds manufactures Camel and Pall Mall cigarettes, and Philip Morris, maker of the popular Marlboro brand.”

That’s right, health insurance companies are essentially trying to make you sicker so they can then charge you more. They are pumping money into the tobacco industry and then profiting on the higher premiums smokers pay.

According to the Harvard article, which quotes the World Health Association, 5.4 million people die annually as a result of the use of tobacco products.

“It’s clear their top priority is making money, not safeguarding people’s well-being.”
–Jon Wesley Boyd 

President Obama recently announced his health care reform plan — to create a government-run insurance plan that would compete with private ones. The idea here being that if insurance agencies had to face competition that’s not as focused on as they are on being huge jerks (see above paragraphs), then it would result in better coverage because the private plans would either compete or just whine a lot. 

Which brings me to my next point, the AMA is opposing Obama’s health care reform. No surprises here, as the AMA has had a grand and elegant tradition of opposing health care reform, resorting to cheap scare tactics — one of the more well-known involving former actor and President Ronald Reagan.

It’s called Operation Coffeecup, and involved a grassroots effort to stop things like Medicare. In 1961, Mr. Reagan was recorded by the AMA decrying the evils of socialized medicine and how it is all just this whole big slippery slope that’ll lead to full-fledged socialism and the stripping of all our liberties. The recording was distributed by the AMA in an attempt to scare citizens into writing to their Congressmen and Senators to stop the passage of Medicare. As we all know, Medicare went through.

The AMA has spoken out against health care reform proposals countless times in the past — Operation Coffeecup is just one example. Of course, the President of the AMA has said (quoted from an NY Times article) that health care reform is important:

“Health care reform is as important to us as it is to him [Obama],” Dr. Nielsen said. “We will be engaged in discussions in a constructive way. But we absolutely oppose government control of health care decisions or mandatory physician participation in any insurance plan.”

The ‘mandatory physician participation’ in the quote references this:

Under a proposal favored by many Democrats, doctors who take Medicare patients would also have to participate in the new public plan. Democrats say that requirement is needed to make sure the public plan can go into business right away with a large network of doctors.

More from the same article on the AMA opposing Obama’s plan:

But in comments submitted to the Senate Finance Committee, the American Medical Association said: “The A.M.A. does not believe that creating a public health insurance option for non-disabled individuals under age 65 is the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”

If private insurers are pushed out of the market, the group said, “the corresponding surge in public plan participation would likely lead to an explosion of costs that would need to be absorbed by taxpayers.”

Two things:

 

• Inferior plans should be driven out, so that better ones may survive. The current private plans thrive on a system that screws people — of which having holdings in tobacco companies while charging higher premiums for smokers is just one example
• If insurers are driven out of the market completely (doubtful), then that is money taxpayers won’t be spending on private insurance, so you can transfer the money you would be spending on private insurance over to tax dollars for the public plan. Employers offering health care would also be paying into this plan for you. Now the incentives turn around from being focused on raking in as much income as possible while spending as little on the health care as possible to actually being about the health care. 

 

The AMA, while it is “America’s largest physician organization”, does not represent all doctors. In fact, there is a Physicians for a National Health Care Program organization that advocates a single-payer model.

PNHP contends that a single-payer option is economically feasible and cites, among other things, a US General Accountings Office report from 1991 that

“If the US were to shift to a system of universal coverage and a single payer, as in Canada, the savings in administrative costs [10 percent of health spending] would be more than enough to offset the expense of universal coverage”

Hrm. What a ramble this blog entry turned out to be.