Let’s Pick on the Little Guy

Remember the days of playground fights? When someone supposedly said something about someone else, sides are picked, and a rumble of sorts erupts with a lot of pushing and shoving. Nothing too serious – I’m talking about 3rd graders here, long before post-pubescent muscles increased the chance of anyone actually getting hurt.

I’ll admit that I was a bit of a chicken back then – elementary school politics never truly concerned me, at least not enough to risk bodily harm. However, not lending a helping hand was socially disastrous, as no one wanted to be labeled a chicken. So, I developed a simple strategy – when the fight broke out, pick on the little guy. This was the easiest way to save face and come out unscathed.

Today, I look back at that strategy, and I feel a bit embarrassed. Picking on the little guy - what a despicable and cowardly thing to do. Oh well, I was only 8 – what did I know.

What I didn’t realize back then was that this is a very sound and popular business strategy, especially if you are in the health insurance business.

I was pleased when President Obama was critical of Anthem Blue Cross when they recently posted record profits, handed out huge bonuses, and simultaneously raised rates for small and individual plan subscribers by as much as 39%. This new pricing will effect as many as 1 million of their subscribers. I wonder gow many of them will end up losing their health insurance because of this rate change.

It would be another matter entirely if Anthem Blue Cross had to raise rates in order to stay solvent, and did so across the board. This wasn’t the case. I am also sure that many Anthem Blue Cross individual policyholders will threaten to leave them because of this rate change. Which brings to mind one of my favorite Abbott and Costello routines:

Costello: "I'd rather marry a homely girl than a pretty girl anyway,"

Abbott: "Why?"

Costello: "Well, if you marry a pretty girl, she is liable to run away."

Abbott: “Isn't a homely girl liable to run away too?"

Costello: "Yeah, but who cares?"

Yes, I know, not very politically correct, but trust me, it was very funny in the days before Gloria Steinem.

The point is, Anthem Blue Cross doesn’t care if an individual subscriber leaves. Besides, even if they do leave, chances are they won’t be able to get affordable coverage elsewhere, especially if they have a pre-existing condition.

All that Anthem Blue Cross (or any other health insurance carrier for that matter) cares about is losing the large groups, of 50,000 or more subscribers. A loss like that would severely affect their bottom line. “So you want to take your overpriced individual plan elsewhere? Don’t let the door hit you where the good lord split you on the way out.”

But if you were the administrator of a large group, well, that’s a different story. They’ll wine you and dine you, and cut your rates to the bone to keep your business. We’ll just make up the difference by overcharging the little guy. There is no actuarial reason for doing this – you don’t have higher medical expenses if you work for yourself as opposed to working for GE. They charge the little guy a higher rate for a very simple reason – they can.

I know that this is just business, but it doesn’t help the policyholder whose health insurance now costs more then his mortgage.

Fortunately, there are 2 simple solutions to this problem, one that has the government tell the carriers what they can’t do, and one that tells subscribers what they can do.

The first solution is having the federal government pass a law that all health insurance carriers must have the same rates for all subscribers across the board – no loopholes allowed. This involves ‘big government’, and I can see the tongues wagging about this on Fox News for months on end. Besides, I don’t think they would ever get this through Congress. So this is not the best solution.

The second solution is to allow individuals to form groups so that they can purchase their insurance in bulk like the other big groups. New Jersey has a small business group called NJBIA that does just this for auto insurance, and the rate differences are outstanding. The problem is, PAY CLOSE ATTENTION, there is a federal law that prohibits groups doing this for health insurance! I wonder who passed that law? I also wonder what corporations contributed heavily to their campaign funds? Want to take a guess?

As an adjunct to either plan, the federal government should allow people to purchase health insurance from any health insurance carrier they want. So, if I want to purchase a policy from Horizon Blue Cross in NJ or Anthem Blue Cross in California, I can choose the carrier that has the best rates and coverage. The problem now is, PAY CLOSE ATTENTION AGAIN, there is a federal law that prohibits you doing this for health insurance.

It seems to me that the second plan would be easy to pass Congress and implement, especially if there was a grass roots effort to make people aware of how unjust the existing laws are. Oh, to be sure, the Spin Doctors will be hard at work coming up with reasons why we shouldn’t allow these two laws to be changed, but please don’t believe a word they tell you. This plan promotes business and competition, and eliminates a de facto monopoly that many carriers now enjoy on our health insurance dollar. Monopolies are illegal, right?




When little guys gang up, they become a formidable foe. The health insurance carriers would learn that, sometimes when you pick on the little guy, it turns out that his name is Lee…first name Bruce. By making these simple changes, the government can make drastic inroads to making health insurance affordable for everyone.