Fact versus Fiction about Nonprofits
By Michael P. Tremoglie
Tea Time Blog
One of the most pernicious deceptions liberal Democrats have propagated during the health insurance reform debate is about the role of nonprofits. Experts at fear mongering, hate mongering and demagoguery, the Democrats have succeeded in perpetrating the myth that if an entity is government run it is not-for-profit. If it is not-for-profit, it is purely altruistic - existing solely for the greater good.
The biggest demagogues are Senators Schumer and Rockefeller. Their methods are classic. They demonize the “profit making” of private insurance companies while praising the “altruism” of the nonprofit.
They engage in the usual fallacies of the demagogue. They use the argument ad verecundiam (appealing to an authority) and establishing false dichotomies.
So far only Sen. John Ensign and Dr. Donald Palmisano, a former American Medical Association president, have exposed the speciousness of the nonprofit/government entity altruism claim. Predictably it has not received much repetition in the mainstream media. Indeed, Thomas Frank, a particularly vacuous liberal columnist for the Wall Street Journal continued this spurious theme in a column he wrote.
It is vital for an informed public to review the refutations of the claims by the reformers of the moral superiority of a government run system. Here are some claims followed by the facts:
· Claim: Private insurers are only interested in making a profit for their stockholders. Nonprofits have only the good of the community as their interest.
Fact: “Nonprofits” are also concerned about making profits. Their profits are returned to the operation of the business.
· Claim: Private insurers deny claims because they put patients before profits.
Fact: A study by the American Medical Association determined that during 2008 the largest denier of claims was Medicare. Medicare denied 6.85% of the claims received. By contrast Humana only denied 2.9% of the claims they received; Cigna only denied 2.56% of their claims.
· Claim: Private insurers are only profit making.
Fact: 44% of private insurance companies are nonprofit. Among these are the dominant companies in some markets. The paradigm of the wealthy nonprofit company is the Blue Cross/Blue Shield plans of many states which are very profitable nonprofits or which were so profitable as nonprofits that they converted recently to profit making.
Finally, there is one aspect of nonprofits that no one as mentioned that is worth reviewing.
Nonprofits do not pay taxes and those who donate to them deduct their donation from taxation. This deprives the community of funds.
The Democrats are confusing the public about the nature of nonprofits.
Whatever a nonprofit is, it is not the same as a charity. The two are not synonymous.