During one of his closed, invitation only, small group “town hall” meetings this week, Senator Al Franken made the following argument for why he insists a government option must be a part of any health care reform bill:
In case you missed it, Angry Al’s rationale is:
- Minnesota only allows non profits to be health insurance companies
- Minnesota has 90% of premiums paid go to health care
- All other states have only 70% to 80% of premiums go to health care
- Minnesota insurance is cheaper
- Therefore, non profit is cheaper.
While Al’s logic may follow from one point to the next, it exists in some fantasy land and not the real world.
Based on Al’s logic, if we looked at average insurance rates by state, we should expect to see Minnesota as one of, if not the cheapest state. We would also expect to see most other states in the range of 10% to 20% higher than Minnesota. We would expect to see state’s like Massachusetts where there is government run insurance, as the cheapest of them all. Finally, we should expect to find that “profit” for insurance should amount to somewhere between 10% and 20% of premiums paid. Let’s take a look, shall we?
America’s Health Insurance Plans (AHIP), a research and advocacy group, has this study that looks at average insurance rates. Flip down to page 9 where they compare family insurance rates by state.
In the study, rather than being one of the cheapest of states, we find Minnesota 17th most expensive, just barely out of the top third. We also note that at $5,508, Minnesota is only5% cheaper than the national average. Hmmm, that’s weird, shouldn’t they have been at least 10% and maybe higher?
As you look across the remainder of the study, where Al’s claims would have us expecting nearly all other plans to be 10% to 20% more expensive, we find only 11 states are at least 10% more expensive than Minnesota. In contrast, we see that 15 states are at least 10% cheaper than Minnesota.
Al’s implied assertion that government run things are best because they run cheapest, also bites the dust. Note that the highest cost state in Massachusetts. Not only are they the highest cost, they are highest by a margin that would make the most dishonest loan shark blush. Now, to be fair, this analysis was taken in the first year of Massachusetts state run plan, perhaps the rates have dramatically lessened…NOT!
Finally, another analysis done by AHIP shows where your (and my) premium dollar goes:
Contrary to Al’s implied assertion, average profits amount to only 3% of the entire insurance premium. In fact, on average, the entire SG&A cost is 13%. Clearly, even a non profit or government plan would have administrative overhead to operate the plan so the argument that non profits are cheaper by 10% to 20% because they don’t have to make a profit is completely specious.
Earlier this week Al stated that a government option must be a part of any health reform bill:
“I’m favorable to the public option, a strong public option which will provide competition for private insurance companies.
Al’s attempting to look Senatorial by inserting “facts” to support a decision he has already made. The problem with Al’s facts is that they are completely wrong. Given Al’s history with SNL, the next time Al asserts that government plans are cheaper because they don’t have to make a profit, the appropriate response would be “Al, you ignorant slut!”
