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Healthcare From The "Medical Mafia"

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May 21, 2009 – Comments (0)

I was reminded of a blog post I did at another site by this excellent post from devoish 

 http://caps.fool.com/Blogs/ViewPost.aspx?bpid=198116&t=01007615714290218050

 

I did a bit of research into health care costs when I was doing some lobbying against the Proposition 86 Tobacco Tax in California in 2006. Of the HMOs sponsoring the tax, every one of them had been convicted of Medicare fraud, overbilling the government for hundreds of millions.

In 2006, after a class action lawsuit alleged that Blue Shield engaged in unlawful, unfair and fraudulent business practices, Blue Shield agreed on a settlement of $6.5 million on behalf of former and current Blue Shield subscribers residing in California. In another class action suit, the California Medical Association won a 1.4 billion suit against a host of HMOs, WellPoint, PacifiCare, Health Net, Aetna, CIGNA, United, Anthem, Coventry, Humana and Prudential who were accused of engaging in fraud and extortion in a common scheme to wrongfully deny payment to physicians, in violation of federal civil racketeering law (RICO).

If you want to know why your health care costs are so high, look at this: insurance costs have increased 6.5% for each the past 10 years, to include a spike of 20% in one year. Normally, a free market would correct this in a few years. When there is either greater demand or not enough product, it is eventually answered with increased services and supply which stabilizes and/or lowers prices. But that is not happening with healthcare, which tells us that the market is being manipulated.

Let's see what Wellpoint has to say: "Our financial performance for 2006 was very strong, led by earnings per share growth of 22 percent for the year," said David C. Colby, executive vice president and chief financial officer of WellPoint, Inc. "We continued to price our products with discipline and significantly reduce administrative costs as a percentage of total revenue. Earnings quality was high, as evidenced by operating cash flow in excess of $4.0 billion."

I would say, that's $4.0 billion in healthcare that Americans paid for but didn't get.

From Wikipedia: Proposition 86 was a proposed initiative state constitutional amendment and statute on the California general election ballot of November 7th, 2006. Its primary intent was to impose a $2.60 per pack excise tax on the retail sale of tobacco cigarettes, as well as to levy a similar excise upon the sale of other commercial tobacco products, such as cigars and chewing tobacco.The proposition was defeated.

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