Former Blue Cross Commercial Actor Denounces Insurance Industry

You may know Andy Cobb from the series of humorous video sketches he's done about Republicans, the media, and assorted inanities. But he works by day as an actor. And a few years ago, he was a commercial spokesman for Blue Cross Blue Shield of Florida. Now, he's speaking out about the insurance industry in a new video produced by Brave New Films for their Sick For Profit campaign (disclosure: I am a blogger fellow on this campaign).

Andy, who lives in Los Angeles, describes himself as a "spokesjerk" put in front of the cameras by the industry to deliberately stand in the way of reform and maintain the status quo. He asks for solidarity from spokesjerks like him - the Sham-wow guy, for example - to stop pitching products that rip off Americans.

More on this at The Huffington Post.

Insurance Industry Drops ANOTHER Flawed Report

(I'm writing this post in my role as a blogger fellow for Brave New Films' Sick For Profit campaign)

Not content having embarrassed themselves once this week with a "study" of health reform that doesn't look at any of the elements of health reform, AHIP has done it again. Blue Cross Blue Shield has sponsored this report, put together by the accounting firm Oliver Wyman, claiming that premiums will rise 50% on the individual market and 19% on the small group market should health reform pass.

Once again, the report doesn't factor in almost everything in the bill that would mitigate the premium increases, though it does come to a slightly better conclusion than the original AHIP report from PricewaterhouseCoopers, the one that they immediately distanced themselves from. The White House characterized it this way - "if the AHIP report was a $3.50 bill, this one's a $3.00 bill."

As Ezra Klein points out, the real value in these reports is how it shows the bankruptcy of the insurance industry as a whole, and how they simply cannot conceive of anything resembling a legitimate market for their services:

Essentially, they've spent so long pricing the sick and the old out of the individual market that they don't really know what to do when they're allowed back in [...]

This is the house they've built: an insurance market where plans are written for the healthy and all legal efforts are made to exclude the sick. That's meant premiums are somewhat lower than they'd otherwise be, but only because the people who most need health-care insurance aren't able to afford it, or in some cases, aren't able to convince anyone to sell it to them. Now that arrangement is ending and they're scared that they can't provide an affordable product to the people who need it. They may be right, but it's evidence of how deeply perverse their business has become, not of what's wrong with health-care reform. When they say that the individual market would be cheaper in the absence of health-care reform, they're saying the individual market would be cheaper if they could continue refusing to sell affordable insurance to people who need health-care coverage.

That's not the kind of business anybody should be working to protect.

How The Insurance Industry Is Destroying The Economy

I can't think of a state less equipped to deal with major health insurance rate hikes than Michigan, currently mired with - this will not be a typo - 15.6% unemployment. But that's exactly what they're getting.

In the past few days, 114,000 Michigan households have received bad-news letters from Blue Cross Blue Shield of Michigan, socking individual health insurance subscribers with premium increases averaging 22%, effective Oct. 1.

Blue Cross could have said, "Hey, things could have been worse. We asked for a 56% rate hike first and dialed it back to 22%" -- but that probably would have just made folks angrier.

Instead, the Blue Cross letters simply stated, "We know every Michigan resident faces financial challenges, and we thank you for your business and loyalty to the Blues."

The two numbers, unemployment and rate hikes, have a correlation. Individual insurance has expanded by 96% at Blue Cross of Michigan in the past two years. That's because they act like a non-profit state "co-op" would in a private sector allowed to discriminate against their customers:

In just the past two years, the number of under-65 individual subscribers has grown by 59,000, or 96%, at Blue Cross, the nonprofit "insurer of last resort" in Michigan. Private for-profit insurers tend to cherry-pick younger, healthier consumers, driving older and less-healthy people to Blue Cross if they have no employer-provided group coverage.

State law requires Blue Cross to offer insurance to anyone, but it also demands that the company not lose money on its insurance products. Therein lies the rub: Blue Cross lost $133 million last year on individual subscribers.

This is that "perfect market" that conservatives like to talk about. Given the ability to discriminate over its customers, private insurers dump the sick on to Blue Cross. And because the state requires Blue Cross to break even, they must raise their premiums basically at the rate of the cost of health inflation year-over-year, often on the poorest and most vulnerable members of society.

Michigan is not the only state seeing large rate hikes in its health insurance market. Oregon small businesses are seeing double-digit rate increases this year. In California, policies have gone up 9% since 2007, three times higher than the overall cost of living. Blue Cross and Blue Shield of Rhode Island has proposed a 16% rate hike, with UnitedHealth of New England up 11.6%. Washington state consumers will see large increases as well. Overall, increases by double digits are expected nationwide.

We hear from conservatives that businesses may drop their plans under health insurance reform. Actually, that's virtually assured if nothing is done. Companies, especially small businesses, will have no chance keeping up with these ever-increasing rates and hope to compete in the global marketplace. And ultimately, those businesses who do pay for these rate hikes do so out of potential wage increases for their employees. Wage growth stagnates and people wind up with less disposable income. The money funneled to health insurance companies could be used to reverse the recession and pull us into economic recovery. In this sense, insurance companies are acting like a siphon, reducing the fuel that can be used to drive the engine of growth.

And that siphon will take more and more money out of your pocket, unless we do something now.

Co-Op'd

If you're going to create a substitute for the public option, it would be a good idea to know what it actually does before presenting it to the nation as the substitute.

The White House has indicated that it could accept a nonprofit health care cooperative as an alternative to a new government insurance plan, originally favored by President Obama. But the co-op idea is so ill defined that no one knows exactly what it would look like or how effectively it would compete with commercial insurers [...]

As the debate rages, lawmakers are learning that creating cooperatives — loosely defined as private, nonprofit, consumer-owned providers of health care, much like the co-ops that offer telephone, electric and other utility service in rural areas — will not be easy.

The history of health insurance in the United States is full of largely unsuccessful efforts to introduce new models of insurance that would lower costs. And the health insurance markets of many states suggest that any new entrant would face many difficulties in getting established.

Here's some more good news: Kent Conrad, the brainchild of this idea, admitted today that co-ops won't bring down the cost of premiums for individuals, unlike the public option. Which would be the point.

ROBERTS: What would they do to reduce costs? Because that is one of the central issues of health care reform.

CONRAD: Well, the important thing is they’d provide more competition. … Beyond that, I think it’s very important not to over-promise here. [...]

ROBERTS: So nothing really in driving down the costs of service then?

CONRAD: Uhhh, no. If you believe competition helps drive down costs, then they would certainly contribute to holding down costs.

A note on how these would affect "competition" - in Conrad's home state of North Dakota, Blue Cross Blue Shield emcompasses almost 90% of the health insurance market. And they're a non-profit that thinks they can qualify as a co-op, under Conrad's rules, making them eligible for some of the $6 billion in seed money, I presume. Amazing that Conrad's plan and the dominant insurer in his state match up almost perfectly, ain't it?

The co-op model should be seen for what it is, protection of the insurance industry. Which makes sense, considering how many Senators are in bed with those interests, in some cases quite literally. And given that the industry and their Republican representatives in Congress will STILL oppose co-ops, learning from the lesson that making a ruckus will cause Democrats like Kent Conrad to give up whatever benefit to the people can be managed in exchange for nothing, you can pretty easily see an outcome where even the weak co-ops are given no ability to come into existence, the way it happened in Iowa:

In the 1990s, Iowa adopted a law to encourage the development of health care co-ops. One was created, and it died within two years. Although the law is still on the books, the state does not have a co-op now, said Susan E. Voss, the Iowa insurance commissioner.

Wellmark Blue Cross and Blue Shield collects about 70 percent of the premiums paid in the private insurance market in Iowa and South Dakota.

Conrad keeps saying that there aren't the votes for anything but his favored idea, but no Senator has come out and said they would join a Republican filibuster of health care reform under any circumstances. Until we reach that point, 60 votes - and maybe some combination of the Maine two - remain in play. Sounds like a better scenario to me than one where 60 House progressives have already said they won't vote for anything without a public option. Mr. Emanuel, are you paying attention? Are you doing the math? Or are you reading the LA Times?

...By the way, here's a GAO report saying that co-ops wouldn't lower costs. And here are several experts saying how difficult it would be to start them up. And here's my favorite headline of the day:

Co-Ops Are the Single Dumbest Idea I Have Heard in the Health Care Debate in Twenty Years

OK, let’s start with the notion that a co-op can do a better job of negotiating prices and protocols. But wait, on day one how many members does the co-op have? Well it has no members on day one. So, the co-op's provider relations guy goes to the doctor and hospital administrator and demands better prices and protocols. My guess is the provider’s response would go something like this, “So you are here because your stated objective is to screw my reimbursement down more than it is, you have no members now, and if I give you the rates to take members away from the existing health plans you are going to make life even more difficult for me than those existing health plans have?" My guess is that when the provider stops laughing…

Casting Call For The Next Harry And Louise

First, a short history lesson: in 1992 and 1993, the insurance industry made exactly the same kind of concessions on health care reform that they have thus far, lulling the Clinton Administration into believing they had a partner, only to double-cross them with attack ads that helped cement public opinion against reform and sink the plan.

This year, the industry offered concessions, attended the meetings, talked nice about reducing costs and ending discrimination in coverage, and then backing off their commitments. Now, one company has taken the next step:

One week after the nation's health insurance lobby pledged to President Obama to do what it can to constrain rising health costs, Blue Cross Blue Shield of North Carolina is putting the finishing touches on a public message campaign aimed at killing a key plank in Obama's reform platform.

As part of what it calls an "informational website," the company has hired an outside PR company to make a series of videos sounding the alarm about a government-sponsored health insurance option, known as the public plan. Obama has consistently maintained that a government-run plan, absent high-paid executives and the need for profits, could be a more affordable option for Americans who have trouble purchasing private insurance. The industry argues that creating a public insurance program will undermine the marketplace and eventually lead to a single-payer style system.

Well, that would be just awful.

WaPo has storyboards of the proposed videos, and basically, we're back in Harry and Louise land, with the scare level amped up. Confusing plans, forced rationing, an uncertain future - it's all on display. If you read the Luntz memos, you could write one of these ads yourself. And since Luntz is being paid by health insurance companies, maybe he wrote them.

Insurance groups have mostly stayed off TV at this stage of the process, at the request of the Finance Committee Chair. But clearly, they're ready to gut the plan whenever they see an opportunity.

The smart move at this time would be to lock the industry out of the negotiation room. Foxes don't get to deliberate over their inclusion in the hen house.

Blue Cross Backs Down - And What The Legislature Can Do Now

This is why we have a fourth estate:

Facing a torrent of criticism Tuesday, Blue Cross of California abruptly halted its practice of asking physicians in a letter to look for medical conditions that could be used to cancel patients' insurance coverage.

In a statement issued about 6 p.m., the state's largest for-profit insurer said, "Today we reached out to our provider partners and California regulators and determined this letter is no longer necessary and, in fact, was creating a misimpression and causing some members and providers undue concern.

"As a result, we are discontinuing the dissemination of this letter going forward."

The Los Angeles Times occasionally earns its moniker of the Los Angeles Dog Trainer, but they have covered the many Blue Cross issues with a great deal of honor and professionalism. And they can be proud of the results.

Meanwhile, as comprehensive health care reform goes out the window in California for the coming year, Ezra Klein has a couple ideas about how to make the current private insurance system work a little better. He's right that making insurers compete to offer better care is actually counter-productive, because the costs incurred would outweigh the new memberships. But government can play a role to force insurers to compete in ways positive to both their bottom line and the welfare of their consumers, through some mandated steps:

Universality: Insurers cannot compete effectively unless everyone is in the pool. If the healthy can leave, insurers cannot compete to offer better care. They'll have to compete to attract the healthiest, which means offering the lowest costs, which means insuring the fewest sick people. The system has to be universal.

Community Rating: Insurers cannot be allowed, before offering insurance, to use demographic subslicing to cherrypick the market. That means no more preexisting histories, no complex formulas around age and income and race and region. They offer insurance to anyone who wants it for the exact same price. No exceptions.

Risk Adjustment: Merely having everyone in the system won't be enough, and nor will forcing insurers to do away with their most delicate cherrypicking tools. Insurers will just become sophisticated at advertising on G4 Tech TV, and in snowboarding magazines, and in urban centers -- in places, in other words, where the young and the healthy gather. So atop the universal system, atop the community rating, you need risk adjustment, which means either that insurers are reimbursed more for taking on sicker patients, or, my preferred method (and the one used in Germany), insurers with particularly healthy pools pay into a central fund that redistributes to insurers with less healthy pools. At the end of the day, it has to be as profitable for an insurer to insure a sick person as a healthy one.

Information Transparency: It needs to be easy for individuals to compare insurers on plan comprehensiveness, price, outcomes, etc. That means we need a marketplace where folks can go to shop for insurers, and they need to have standardized comparisons, or non-partisan rating authorities, providing information they can use.

One Market: This is contained in the last point, but there needs to be a singular place, or set of them, where individuals can shop around for insurance. This is hard stuff to find, and harder yet to understand, and real effort needs to go into constructing an easily accessible marketplace that customers can effectively navigate.

And the legislature can absolutely go through the incremental steps to implement these policies and make the current broken system a little more fair and more beneficial. The last two could arguably pass right now.

A little imagination from our leaders in the Legislature can at least improve what we have now.

Your Semi-Regular Blue Cross of California Outrage of the Day

Today we find them asking doctors to break doctor/patient confidentiality and report back to them on their customers so the insurer can knock them off their plans.

The state's largest for-profit health insurer is asking California physicians to look for conditions it can use to cancel their new patients' medical coverage.

Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose "material medical history," including "pre-existing pregnancies."

"Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately," the letters say. The Times obtained a copy of a letter that was aimed at physicians in large medical groups.

Fortunately, doctors are recoiling at this effort to enlist them as de facto employees for Blue Cross. This is why eliminating pre-existing condition has to be the very first priority of any major health reform. If the insurers weren't spending so much money trying to get sick people kicked off their roads, maybe they could afford to actually help people get well.

Meanwhile, it turns out that one interest group is really interested in single payer healthcare: employers:

Many large employers are struggling with the obligation to cover the rising medical costs of retirees, but last year officials in Michigan found a way to save at least $40 million on care for retired teachers and other public-school workers: Send the bills to Washington.

Almost overnight, by taking advantage of a little-understood feature of Medicare, the school retirement system shifted a big chunk of the healthcare costs of more than 100,000 retirees off its budget and onto the federal government. This year, the state is shifting its civil service retirees too.

Michigan is not alone. Across the country, state and local government agencies, big nonprofit organizations and major corporations are rushing to do the same. One result is that the Medicare trust fund is evaporating even faster than expected.

At the heart of what critics say is a major cost-shifting maneuver is a program called Medicare Advantage, which pays private insurers a bonus to take over Medicare coverage for seniors.

The payments to the private insurers average more per senior than the cost of care with regular Medicare. The bonus payments enable insurers to offer features that seniors in regular Medicare don't get.

That has made the private plans attractive to individual seniors, with nearly 9 million -- about 1 in 5 -- now enrolled in them.

Medicare Advantage payments were floated as one way to pay for SCHIP, by the way. If you want a public program, that's one thing. But a public program that actually uses the private insurers, allows for all the same pitfalls as the private system, and has no funding source whatsoever, that's not the way to go and will crumble the only safety net left for the poor and the elderly.

Going After Blue Cross of CA

The public hearing scheduled for July 19 about Blue Cross of CA and its deceptive, anti-consumer practices will now be held on August 7. Not only are they angering their subscriber base by going out of their way to deny claims and cancel policies for "discrepancies" as trivial as typos, but they're starting to piss off hospitals as well.

Blue Cross of California's latest antidote to rising healthcare costs isn't going down very well with physicians. The state's largest for-profit health plan is set to roll back its payments for about half the services and procedures provided by physicians next month.

And many of the 53,408 physicians in Blue Cross' preferred provider organization (PPO) networks say that's a prescription for disaster.

Doctors say the health plan imposed the new rates unilaterally. In most cases, they say, Blue Cross will get its way because it controls the lion's share of their patient base. But other physicians say they've had it with Blue Cross. More than 300 of them have sent notices threatening to dump the insurer if the rates take effect as scheduled Aug. 6. Some say the new rates won't even cover the cost of supplies. 'I don't know how anybody can afford to stay in practice and accept Blue Cross rates,' said Dr. Charles Fishman, a San Luis Obispo dermatologist who sent a letter telling Blue Cross he would drop its contract if his rates were not improved. A spokeswoman for the insurer described the level of complaints over the new rates as routine, and she said the number of termination notices from physicians over the issue was negligible - less than 1% of the doctors in its PPO networks.

Surely, this will come up in the August 7 hearing, to be held at the Carmel Room Auditorium at the Junipero Serra Building, 320 West 4th St., Los Angeles, from 10 a.m. until 3 p.m. And It's Our Healthcare is amping up the pressure by demanding that Blue Cross return to the state millions in excess profits:

This year alone, Blue Cross has sent almost a billion dollars in profit out of California to its corporate headquarters in Indiana.

Blue Cross is able to amass such a profit because it currently relies on business practices that harm millions of Californians, such as:

--Spending less of California's premium dollars on patient care than other larger insurers
--Denying coverage for pre-existing conditions?and instead seeking to insure only the healthy
--Selling insurance designed to provide limited benefits, coupled with high deductibles and co-pays
--Raising rates however and whenever it chooses

We urge the state enact meaningful reform to stop these practices and we urge the state to order Blue Cross to return the hundreds of millions of dollars in excess profit to California.

We, the undersigned Californians, ask the state to make Blue Cross reform its business practices to start putting people ahead of profits and stop using California as an ATM.

Blue Cross has already settled out of court on some of these issues, but there is no indication that they have curtailed their practices and cleaned up their act. Blue Cross has also taken the lead in torpedoing meaningful health care reform in the state. It is maybe the most unconscionable company in the state, and I don't know what it takes to get a corporate charter revoked, but theirs ought to be.

At any rate, you can keep the pressure up by signing the petition.

Thank You Blue Cross

The fact that Blue Cross of California is leading the insurance company effort to stop any reform in the state's health care system makes me smile broadly. There couldn't be a more reviled corporate entity around these parts than Blue Cross, the team who systematically tried to throw any sick person off their rolls and reduce any effort to get them to actually pay for medical treatment, which after all is their entire job. Health Access picked up on this and noticed that Blue Cross tried to use the Enron energy crisis as a scare tactic ("Unintended consequences do happen"), when in fact nobody is more like Enron than... Blue Cross.

Because there are so few rules on insurers now, Californians are concerned now they are one job change or life event away from facing a blackout of coverage. We have over 6 million Californians in a coverage blackout. Frankly, we have tolerated deregulation for too long: new and fair rules would increase the security that Californians have now with their coverage, so they are not denied because of their health status.

BlueCross' ad campaign may backfire with the public. They won't believe BlueCross, and they will make it clear to Californians what we can win with health reform.

I don't think it's may, I think it's will.

Nobody's going to buy this for a second. That's why the campaign is only in Sacramento and not statewide. If our leaders in this state are anything like Democratic national leaders, they'll immediately drop all health care reform plans for fear that Blue Cross will continue to be mean to them. But having Blue Cross argue about responsible health care policy is like having Tony Soprano argue about gun control. And it's up to us constituents to let the politicians know that.

State Assembly: Californians Should Be Allowed To Use Their Own Healthcare

The Nunez health reform measure made it out of an Assembly Committee today, but I'm more interested in this other bill that Randy Bayne discusses:

HEALTH PLANS WOULD BE BANNED FROM RESCINDING POLICIES WHEN CONSUMERS USE COVERAGE

In a victory for consumers Tuesday, the Health Committee also passed AB1324 (De La Torre), which re-states and re-emphasizes California’s law prohibiting health insurers for canceling coverage consumers if they turn out to be sick.

The bill comes about after several high profile cases in which several insurers such as Blue Cross of California rescinded coverage – retroactively – from policyholders after expensive claims were made. Consumers were left with hundreds of thousands of dollars in bills after the insurer refused to pay the bills incurred during the time patients believed they were insured. Blue Cross alleges that the patients knowingly lied about their health status on their applications for coverage, triggering the cancellation.

The question I have is was would be the enforcement mechanism. Blue Cross has already been doing this in violation of the law, and yet the fine they received was a paltry $1 million dollars (I believe it was handed down by Assemblymember Dr. Evil, who thought it was a lot of money). the text of the bill does not address enforcement satisfactorily or really at all.

I wonder why nobody has restarted the "three strikes law for corporations" debate, and it seems like the Blue Cross case would be a perfect linchpin to do so. When you have a company that is so flagrantly breaking the law, the state should reserve the right to revoke its charter to do business. Of course the Chamber of Commerce and the bought-and-paid-for Republicans would fearmonger that businesses would fly out of the state, but essentially they're arguing that companies should have a right to break the law repeatedly. Somebody has to draw a line.

Cancer Knows No Party, and Neither Does Blue Cross of CA

Elizabeth Edwards' acknowledgement of the recurrence of her breast cancer (which I hope is not more serious than the Edwardses made it out to be, but which I fear is) was but one story of cancer attacking prominent political figures. Tony Snow will have surgery for a small growth under his abdomen; he had colon cancer two years ago, so we hope that it's nothing more serious. And most tragically, conservative commentator and blogger Catherine Siepp succumbed to lung cancer. Cancer is not a disease that picks between political affiliations for who it afflicts, that much is clear. And so a problem affecting everyone must be solved with a universal solution.

Before she died, Catherine Siepp wrote about her experiences with Blue Cross of California. It was a bit shocking to hear a committed conservative talking about the failures of our health care system in such a frank and direct manner, but when a health insurance conglomerate acts so dishonestly, anyone in that position would be offended regardless of their politics.

By law, insurance companies aren't allowed to adjust your monthly premiums just because you get sick. But they can raise the out-of-pocket cap for all of their members anytime they like, which amounts to the same thing because it affects only the unvalued sick members. (And, of course, getting sick means that even while one's medical costs go up, the ability to pay goes down -- earnings potential is curbed when life becomes a series of treatment appointments.)

Lucky you, if you don't know what your out-of-pocket cap is. And if you're like every single healthy person I've queried, you probably don't. But you should know, because the out-of-pocket cap is the most important part of your policy, meant to stave off financial disaster in case of catastrophic medical expenses [...]

Another thing working in insurance companies' favor is that cancer patients rarely have the energy to argue about such nickel-and-diming. I recently managed to spend a morning forcing my way through multiple disconnects and transfers on the Blue Cross 800 number, but I was eventually told that the company would probably reimburse me for the extra $90 a month I was paying for that weekly anti-nausea drug if I filled out the right forms. My far bigger worry is that out-of-pocket cap, which is essentially what insurance is for. To drastically raise it seems the definition of bad faith.

Or so I thought -- until I began getting letters from Blue Cross in February announcing that it was retroactively disallowing the anti-cancer drug Avastin treatments it had been paying for since October, at $5,000 a pop every other week. It seems Blue Cross decided this new and expensive targeted therapy is experimental. (It looks as if Blue Cross is not asking to be repaid for my relatively unexperimental chemo, which had been costing about $2,500 every single week, but who knows?)

To decide after a therapy has proved beneficial that it's merely "investigational" and therefore should not be covered -- that, actually, seems the definition of bad faith.

Today, the LA Times reported that Blue Cross of CA is being fined a million dollars for illegally dropping the policies of sick clients for trumped-up reasons. Recission is harsher, but generally of a piece with what Siepp had to put up with near the end of her life. That fine is embarrassingly low (they made three billion last year) and won't make a dent in Blue Cross' policies. But at least the state of California has publicly stated that this health insurer is motivated solely by greed and will gladly let their customers suffer rather than carry out their responsibilities. As an individual policyholder with Blue Cross, exactly the profile that they dishonestly drop as a matter of routine, this scares the heck out of me.

I am truly sorry for Catherine Siepp and her family, along with any other family out there who has had to deal with the scourge of cancer. We need to ensure that these families get the best medical attention and all the support they need; it ought to be an inalienable right of this country not to have to suffer due to some corporate balance sheet. The current insurance system will never get us to such a goal.