A few thoughts for the weekend about some matters that concern most of us – – first, insurance on everything from homes and cars to businesses, and second, the cost of drugs. If you haven’t negotiated insurance rates on your car(s) recently you might be surprised to find that all sorts of things are in play; your gender, your marital status, your age. Companies do have reasons for obtaining this data, but just what is, in fact, relevant?
Does a ticket for a minor traffic violation during a five-year period validate a rate raise when few such items have occurred over a thirty-year time span? Should being sideswiped in a parking lot while parked cause another upward blip in your insurance rates? In CT and perhaps elsewhere the insured have another cost factor built into their policies – – a little something for uninsured or underinsured motorists. It’s not enough that you take care of your own liability you have to fund someone else’s as well. And even if no claims are made an applicant must divulge unreported incidents so the insurer can feed that data into some kind of actuarial table. In the case of the uninsured portion of one’s bill, you are placed in a pool to protect the company from that particular risk. As one sales rep explained it to me, the risk is greater in a town of 50,000, say, than in a smaller spot with only 10 residents. Well, I guess that’s a no-brainer from a lot of perspectives. In the end it seems as if it’s the insurance company that is being better protected than the insured.
And what about those battles with insurers over losses in one’s home? Lawsuits and court cases can languish for years while the victim of negligence languishes in a modern-day version of Dicken’s 19th c. BleakHouse. While a town and a contractor wrangle over whose was the greater liability when a resident’s home was destroyed through negligence, the resident receives only marginal personal insurance reimbursement, and as the case drags on, the two defendants in the ensuing lawsuit, settle in the end for much less than was warranted. But settling avoids having the case even further delayed by waiting through court dates and no doubt numerous appeals. And of course both defendants were backed up by insurers and legal teams beyond the capability of the complainant.
Perhaps the most egregious assault on private citizens, though, is in the realm of health insurance and the cost of drugs. One reason often cited by pharmaceutical companies for high prices is that the cost of researching and developing new drugs is necessarily costly. However, studies in the field indicate that marketing and administrative costs far outdistance funds spent on research and development 35% to 13%. (Article here) And while the number of industry jobs in research has remained “virtually the same since 1995”, marketing jobs have increased by more than 60%. And at a time when Congress is re-examining its own regulations with respect to what members may accept in terms of meals, the free lunch syndrome among drug “detail men” at hospitals runs up significant bills for the industry. (In the case of Congress, a pizza sent to a late-night meeting is currently deemed permissible, but rules changes may widen those parameters to allow better and more food.)
Why then, one wonders, did Congress protect the pharmaceutical industry in the recent drug-benefit bill by preventing any possibility of negotiating better rates? Drug companies have one of the lowest tax rates in the country as it is, but this ‘encouragement’ apparently hasn’t led to many new drugs in recent years. Often a series of what are sometimes called “me too” drugs enter the market with perhaps a new ingredient that does not create a significantly different product. Nevertheless, drug prices have increased in both brand name and generic categories since 1990 – – 113% for generic and 162% for brand names. For those covered by Medicare or private insurers just 8% of patients did not fill prescriptions because of cost. In the case of the uninsured or Medicaid recipients that figure rose to 26% and 29% respectively.
It is becoming increasingly clear then, that our government protects certain industries over others and certainly over the needs of private citizens. Right now there is constant talk about tort reform, but one almost never hears any thoughts about reforming the insurance industry or demanding fair pricing from pharmaceutical companies. Instead such programs as health insurance accounts are touted as miraculous new ways to protect the public from future medical costs. “Why”, promoters of such programs say, “you can put up to $5000 away each year, tax free.” That may sound good to people who have a healthy income with financial room to spare, but for those already strapped with health-care and other expenses living paycheck to paycheck, such plans are meaningless. Add to that, threats that Medicaid funds may be on the table when tax-cutting plans are formulated and the only beneficiaries of government largess are, once again, the big corporations with the prospect of ever decreasing protections for the average person.

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