As featured on p. 218 of "Bloggers on the Bus," under the name "a MyDD blogger."
Friday, November 06, 2009
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.
Senate Democrats are trying to extract some embarrassing information from the insurance industry about their deceptive practices.
First, Tom Harkin, who is seeking to subpoena insurers for failing to provide information requested by his committee.
Harkin, the chairman of the Senate Health, Education, Labor and Pensions (HELP) Committee, said his committee may demand information from health insurance companies about the reasoning for steep increases in premiums faced by small businesses.
"I've been inundated with letters and information about the exorbitant increases in premiums for small businesses in this country," Harkin said during an appearance on MSNBC. "I asked them to come and testify at a hearing I had yesterday. They refused."
"So now I'm asking them to give us information on which we can make some decisions on why these premiums are going up so much for small businesses," he added.
Jay Rockefeller also wants some information about the industry's "medical loss ratio," and how they cook the books to pretend that they spend a substantial amount of premium money on treatment and care.
The New York Times reports: "The health insurance industry likes to cite figures showing that 87 cents of every dollar in premiums is spent on medical claims. But a new Senate analysis suggests that for-profit insurance companies are spending much less than that, especially for policies sold to individuals and small businesses. Instead, as little as 66 cents of each dollar paid in premiums goes toward doctor and hospital bills, while the rest covers administrative expenses, marketing and company profits, according to the analysis. .... The [health reform] legislation that may reach the House floor later this week would initially require insurers to spend at least 85 cents of every dollar in premiums on medical claims."
A long-standing complaint from individuals and small businesses is that they get less for their money. "But insurance companies generally do not disclose how much they spend in different segments of the market. The Senate analysis of the figures does not include information from California, because that state's filings are not available through the National Association of Insurance Commissioners. ... The insurance industry's trade group, America's Health Insurance Plans, said Monday that the 87-cent figure it cited as the industry average was based on information collected by the federal government and was an accurate reflection of how much of each dollar in premiums was spent on medical claims." (Abelson, 11/2).
This comes at a time when the Senate is about to unveil their health care bill. This information could be crucial to massing public opinion against the industry and keeping the entire Democratic caucus on board with reform.
The House and Senate will be voting on health care bills in a matter of weeks. But the forces behind the status quo have not quit in their efforts to derail the bill or at least get as many goodies out of it as they can.
The lobbying expenses of the top 13 health insurers and their industry association, America's Health Insurance Plans (AHIP), spent nearly $8.2 million in the third quarter of 2009 to influence Congress on upcoming health care legislation, according to analysis released today by the nonpartisan campaign finance watchdog Public Campaign Action Fund (PCAF). The total marks an 11 percent increase over the pace of their spending in the first half of the year.
"Congress is marching toward passing landmark legislation to overhaul the health care system, and the health insurance industry is fighting them every step of the way," said David Donnelly, national campaigns director of Public Campaign Action Fund. "These insurance giants may be running out of time, but clearly they haven't run out of political cash."
This brings the total in lobbying to nearly $23 million this year, including $6.3 million from AHIP, $3.5 million from WellPoint, $3.5 million from UnitedHealth and $2 million from Aetna. Humana, which has spent $1.85 million in lobbying fees this year, saw their earnings rise 65% in the third quarter, a lot of it off the wasteful Medicare Advantage program, which represents a corporate handout and which is earmarked for scale-backs in the health care bills. Majority Leader Reid's office released this statement in response:
“It’s no wonder why Humana has been misleading seniors about health insurance reform -- they saw their profits rise 65 percent last quarter and want to make sure the gravy train doesn’t end. The insurance industry is making billions by gaming the Medicare Advantage system, at the expense of seniors’ traditional Medicare coverage, and taxpayers are footing the bill.
“The American people have had enough, but unfortunately Senate Republicans have sided with insurers like Humana and are working to protect insurance industry profits over Americans’ health care needs. When we pass health insurance reform this year, this will all come to an end. Our seniors deserve better and American taxpayers should not be asked to pad the profits of the insurance industry.”
Insurers like Humana are ready to pounce on this legislation when it hits the floor in both Chambers, particularly in the Senate, where they will use the amendments process to try and cripple reform and the cloture process to outright kill it. But the insurance industry isn't just fighting for their own self-preservation, they're fighting the interests of the people.
(I'm a blogger fellow for Brave New Films and their Sick For Profit campaign)
After today's announcement from Harry Reid, adding a public option to the Senate health care bill, some might think that a great victory has been achieved. And it's a significant accomplishment to this point. But we're at the beginning of the end, not the end. And now that this public option, with a state opt-out, represents the lower bound of health care reform, you can bet that the insurance industry will redouble their efforts to kill the bill and retain the status quo. In fact, they've already started. Blue Cross/Blue Shield of North Carolina has begun to lobby their customers to work against the bill, asking them to contact Senator Kay Hagan (D-NC). Not a front group, or some ad hoc organization funded by BC/BS. No, just the company itself.
(The mailer) reads:
Public option? Government Cooperatives? Community plan? Single payer? No matter what you call it, if the federal government intervenes in the private health insurance market, it's a slippery slope to a single payer system.
Who wants that?
The enclosed postcard to Hagan reads:
Senator Hagan, Please oppose government-run health insurance. We can meet our health care challenges without the government unfairly competing with the private sector. Tell Senate leaders that North Carolina doesn't need government-run insurance.
They've also deployed lobbyists and shills to Capitol Hill to make completely dubious arguments. At a hearing about the insurance industry's anti-trust exemption, this amazing exchange occurred:
University of Arkansas business professor Lawrence Powell, who testified on behalf of the medical malpractice insurance industry.
"The best possible outcome from repealing McCarran is continuation of the status quo," he said. "However, it is also likely that repealing McCarran would have negative consequences for consumers, by decreasing competition and accuracy in insurance pricing."
Rhode Island Democrat Sheldon Whitehouse pointed out that the professor was relying on outdated information.
"You cite for the proposition that insurance markets are highly competitive an article by Paul Joskow. Do I have the date of that article correct, it's 1973?" he asked Powell. "I believe so," came the answer.
And, they've started to push their message out to media, getting an AP reporter to buy the canard that poor, henpecked insurance companies just don't make a lot of money.
WASHINGTON – Quick quiz: What do these enterprises have in common? Farm and construction machinery, Tupperware, the railroads, Hershey sweets, Yum food brands and Yahoo? Answer: They're all more profitable than the health insurance industry.
The missing ingredient here is scale. Tupperware is more profitable than health insurance on a percentage basis, but 1/6 of the US economy doesn't go through Tupperware. In real dollars, the insurance industry makes a mint. And remember, "profit" doesn't count salaries, not even what's given to CEOs.
The truth is that, even with this public option, insurers will do just fine in the health care bill. They get millions of new customers, with competition that is limited (not everyone can get the public plan, under even the most expansive version). But it's just not good enough for them. The notion that they might have to offer coverage with actual benefits, and not cherry-pick the healthy to pay their premiums, which would cut into those profits, is just distasteful to them. So they will fight. And we will be ready.
(This is part of my work as a blogger fellow for Brave New Films' Sick For Profit campaign)
Rattled by their failed effort to kill health care reform, Karen Ignagni, the head of the health insurance lobby, took to the Washington Post today to claim, no, really, we love reform, trust us!
Let me be clear and direct: Health plans continue to strongly support reform. In fact, last year we proposed new insurance market rules and consumer protections to achieve universal coverage, remove restrictions on preexisting conditions and end the practice of basing premiums on health status or gender. We firmly believe that all the cost concerns the report raised can be resolved.
Practically every option Ignagni brings up to "resolve" those cost concerns, like killing the excise tax on high-end insurance plans, would only exacerbate them by draining the system of resources and eliminating cost controls.
Furthermore, the entire notion that the industry supports health care reform is ludicrous on its face. They are the cause of most of the practices that need reforming. If they supported reform they wouldn't sustain a system that led to outcomes like this:
Jenny Fritts was 24 years old. Jenny lived with her husband Sean for the past five years, and together they had a little girl named Kylee, 2. Jenny was seven-and-a-half months pregnant with her second child – a beautiful, baby girl.
Jenny is dead. Jenny’s unborn baby is dead. They died because they were turned away for appropriate care at a for-profit hospital because they did not have health insurance. Sean rushed Jenny back to another hospital when her symptoms became even more severe, and he lied about having insurance to get her in the door. She was placed on a respirator in intensive care, but she didn’t make it. She died. And so did her baby.
They become two more of the more than 45,000 Americans who die preventable deaths due to our broken healthcare system every year. Two more. Mother and child.
It's completely outrageous for someone like Ignagni to even open her mouth about reform. The entire premise should be rejected. The industry has lost their right to speak on the issue.
(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.
In a late-effort push to alter or torpedo health care reform, the major lobby for private insurers has made a multi-state, million-dollar ad purchase claiming that seniors will see their care cut under Democrat-crafted legislation.
America's Health Insurance Plans (AHIP), which released a highly critical (and widely criticized) report slamming the Senate Finance Committee's reform proposal, has quietly put out a new spot claiming that millions of seniors will see their Medicare slashed by Congress.
"Is it right to ask 10 million seniors on Medicare advantage for more than their fair share?" the ad asks. "Congress is proposing over 100 billion in cuts to Medicare advantage. The non-partisan Congressional Budget Office says many seniors will see cuts in benefits."
You can see the ad here. It's airing in swing states with Democratic Senators: Pennsylvania, Colorado, New Mexico, Missouri, Louisiana and Nevada.
One of two things is going on. The industry may truly be worried about the shape of reform and whether or not it will preserve its profits. Or they are giving space to the Baucus bill, the only one without a public option and the friendliest to their interests, so that liberals can be motivated to pass it or something like it. Savannah Guthrie just said this on MSNBC:
I think there will be courtship of those moderate Senators, but look, one thing I heard this morning here at the White House was that the insurance company report, the Price Waterhouse Cooper report, has actually been helpful to some extent (now granted this may be spin but let me just tell you what their argument is) is helpful because some of the liberal Senators who are concerned that the Baucus bill was just way too easy on the insurance companies, now have some cover. If the insurance companies think it's so objectionable that they're getting off the train and writing this report and signalling they're no longer at the bargaining table on health reform, it must be something that really hurts them.
Reform advocates are having NONE of that. MoveOn has slammed the Baucus bill, which just passed the Senate Finance Committee, in a video featuring health care hero and former CIGNA executive Wendell Potter.
"Take it from me, the Senate Finance bill is a dream come true of the health insurance industry. If there is not public option insurance companies aren't going to change. The choice of a public health insurance option is the only way to keep insurance companies honest."
This is only the beginning of the health care fight, not the end. But the insurance industry has laid their cards on the table. They are against reforming the system in any way that cuts into their profits. And they should not be appeased with a forced market and a monopoly on insurance.
That Baby Should Learn About Personal Responsibility
(This post is part of my role as a blogger fellow for Brave New Films' Sick For Profit campaign)
Rocky Mountain Health Plans, an insurance company in Colorado, has denied coverage to a four month-old child on account of "obesity." How dare the kid not moderate his portions!
By the numbers, Alex is in the 99th percentile for height and weight for babies his age. Insurers don't take babies above the 95th percentile, no matter how healthy they are otherwise.
"I could understand if we could control what he's eating. But he's 4 months old. He's breast-feeding. We can't put him on the Atkins diet or on a treadmill," joked his frustrated father, Bernie Lange, a part-time news anchor at KKCO-TV in Grand Junction. "There is just something absurd about denying an infant."
Bernie and Kelli Lange tried to get insurance for their growing family with Rocky Mountain Health Plans when their current insurer raised their rates 40 percent after Alex was born. They filled out the paperwork and awaited approval, figuring their family is young and healthy. But the broker who was helping them find new insurance called Thursday with news that shocked them.
" 'Your baby is too fat,' she told me," Bernie said.
Rocky Mountain Health Plans' alibi is that as long as everybody denies coverage for a pre-existing condition, they will too.
So essentially, the insurance industry is telling this family to starve their child as the only way to get him health insurance.
That, or the baby should learn some personal responsibility and take care of himself better. Maybe push-ups.
UPDATE: A happy ending on this one. Rocky Mountain Health plans relented and will no longer consider an infant's added heft a pre-existing condition. Unfortunately, there aren't enough newspaper articles in the world to help everyone abused by the insurance industry.
Nancy Pelosi understands that her place is in the home in the health care reform debate is to position her caucus at the left edge of what is possible to get 218 votes. Everything she has been doing recently has moved toward that goal.
Speaker Nancy Pelosi is not among those praising Sen. Max Baucus (D-Mont.) for bringing his healthcare bill in well under President Barack Obama’s $900 billion limit.
Pelosi (D-Calif.), an advocate of the government-run health insurance option left out of the Senate Finance Committee chairman’s bill, criticized the means by which Baucus kept costs down.
“The savings come off the backs of the middle class,” Pelosi told a closed-door caucus meeting. “This is why we need a strong public option going into conference with the Senate.”
By contrast, Blue Dogs want to "pre-conference" the bill, so they don't have to take a tough vote. That's ridiculous and a corruption of the legislative process. The House reflects to a far greater degree the concerns of the American people; there's absolutely no reason that it cannot stake out its priorities with a vote.
The problem with simply accepting and rubber-stamping the Senate Finance Committee bill is not only that it isn't generous and doesn't cover as many people as needed. The real problem is that it's not going to feel different to the vast majority of people. Maybe that's a virtue, in some respects, but in the sense that health inflation will continue to ascend, costs will still rise, medical bankruptcies will still not be avoided, and the whole thing will be a "comprehensive incrementalism" rather than a sweeping change, I think people might look back and say, "what was the fuss about?" Now, I think Ezra is right here:
Which is only to say that this is not the end. That's true also for the House and HELP bills. All these proposals are major improvements for the uninsured and those left out of the employer-based market. That means they're major improvements for those who are hurting the worst. And in constructing exchanges and beginning the hard work of delivery system reform and creating a system of subsidies and an individual mandate, they're building the foundation of a better health-care system. But as they embark on that project, they're leaving most of our current health-care system virtually untouched, which means most of the systemic problems will remain unsolved.
I think that project can start now, particularly in the area of competition with the insurance industry in the form of a public option. Until we discover that this is all that is possible - and I don't think we're they're yet - Pelosi is absolutely right to engage and strategically position herself at the left edge.
The House still doesn't seem to grasp how to pay for the bill, knowing simply that they don't want to piss off labor with the tax on high-end insurance plans. A tax on "windfall insurance profits" would have a similar effect, however. And a public option that could lower costs would decrease the amount of people hit by the high-end insurance plan tax.
The real danger here is that the comprehensive incrementalism is so incremental that the industry decides the plan doesn't cover enough people, and they start breaking their own promises. This is what's intimated here. While I do subscribe to the "if the health industry hates it, well it must be good" theory, I think there's a real danger of not controlling rising costs because of the thinner risk pool. And that could incentivize insurers to continue their worst practices. More reform is really a cumulative answer to these problems, and we should not stop halfway.
Democrats are getting a lot of pressure from unions to eliminate the one provision that would corrode, or at least stop privileging, the inefficient employer-based health care system we have for the majority of this country:
As Democratic leaders prepare to bring healthcare legislation before the full House and Senate for votes this month, they soon must decide who will be taxed to pay for expanding coverage -- the wealthy or the insurance companies.
Legislation emerging from the House would slap a surtax on upper-income people. But many Democrats, especially in the Senate, fear the political fallout over voting to raise anyone's income taxes.
The most prominent Senate bill would impose a tax on insurance companies that provide expensive policies, sometimes dubbed "Cadillac" plans. But labor unions -- a powerful force within the Democratic Party -- bitterly oppose the idea, saying the tax would be passed on to workers in the form of higher premiums or shrunken benefits.
This would have been mitigated greatly by passing the Employee Free Choice Act first, because now it looks like Democrats are just dumping on labor unions. They need to pass EFCA very soon.
But let's be clear what the tax on insurers would do. It would only affect 10% of all insurance plans, and a lower percentage of those are union plans. And it's the only way to take in revenue for health care that extends beyond the cost of health inflation. I don't think the excise tax is entirely well-designed - it isn't adjusted by region based on cost-of-living, and without indexing it will quickly affect the average plan - but the House bill financing is not at all well-designed. It's just a budget-buster, with the effects past the budget window to hide them. That's a recipe for getting the bill dismantled in the future.
In other words, surpluses in the early years make up for deficits in the later years. But since time doesn’t actually stop when the CBO ten-year scoring window expires, what you’re left with is legislation that worsens the long-run fiscal outlook. That’s not really so awful since it basically just means that you’ll need to change the law sometime in the next ten years, and the law will definitely be changed in the next ten years anyway. But I’d say it’s definitely worse than the more robust form of deficit neutrality given by a bill that includes a revenue source which grows over time in line with costs.
To be clear, I think they should impose the surtax TOO, and use that money to expand the subsidies in the exchange. But the real goal here should be getting employers out of the business of providing health care, or at least into the regulated exchange. Taxing high-end plans does this, and does it in a mostly progressive way.
The (Not So) Symbolic Middle Finger From The Insurance Industry
Here's a nice detail from an LA Times story about Hilda Sarkysian:
Surrounded by supporters, Hilda Sarkisyan marched into Cigna Corp.’s Philadelphia headquarters on a chilly fall day, 10 months after the company refused to pay for a liver transplant for her daughter.
"You guys killed my daughter," the diminutive San Fernando Valley real estate agent declared at the lobby security desk. "I want an apology."
What she got was something quite different.
Cigna employees, looking down into the atrium lobby from a balcony above, began heckling her, she said, with one of them giving her "the finger."
There's video of this confrontation. Check it around 3:40:
Sadly, this exchange is the only ledge on which the Sarkysians can hang a wrongful death lawsuit on CIGNA. A judge threw out the case on the basis of a 1987 ruling from the Supreme Court as well as ERISA (the Employee Retirement Income Security Act), which bars individuals from holding insurers of employer-paid health care plans responsible for their coverage decisions, but they can claim that the finger incident caused them "emotional distress." Even Hilda Sarkysian calls this absurd: "They kill a beautiful 17-year-old girl, and I get to go after them for a finger? That's sick."
But of course, the insurance industry sticks their proverbial middle finger up at the country every day, with plans that cost more every year for the same coverage, companies that rescind policies when patients want to use them, and byzantine rules that they use to get out of providing care. The only surprise about this gesture is that it's not one of the health insurer's corporate logos.
Monthly premiums for Blue Cross coverage for them and their three daughters have soared over the years to almost $2,000, Scaglione says.
She estimates that in the past six years, the family has spent more than $140,000 on premiums and co-payments.
Yet when she tried to switch from the family's expensive individual insurance to a Blue Shield group plan that's more affordable, she said, she and her oldest daughter were denied coverage. She said neither of them has the medical conditions that were listed as reasons for being denied - bronchitis and a skin ailment.
"I have three children," said Scaglione, 47. "We have to have insurance. Stitches may be required. A broken bone may have to be set. We have no chronic diseases. We're a normal family. This is crazy."
Consumer advocates consider their story emblematic in many ways of complaints that plague the entire health insurance industry.
"We've seen people denied for things as minor as heartburn," said Anthony Wright, executive director of Health Access California, a statewide health advocacy coalition. "It gets to the point where living is a pre-existing condition.
Mrs. Scaglione's health insurance coverage costs three times as much as the family's MORTGAGE. And she can't get out of it and into a group plan, because Blue Shield flat-out invented reasons to deny the coverage. She has demanded to see the medical records that show her daughter having bronchitis and her having a skin condition called rosacea, but the health insurer refused the request.
As the debate continues, the Scagliones remain among California's 3 million consumers in the pricey individual insurance market.
"I wonder how many other families are like ours," Scaglione said. "What's the option, to be uninsured? This forces me to stay with our same plan. Premiums will go up and up and up. What, do we not feed the kids? It gets to the point of being absurd."
Blue Shield of California can be reached at (866) 256-7703. You might want to ask them what health care ailments they think you have of which you're unaware.
Just a few thoughts about why this WellPoint case matters to the overall health care reform debate:
• Maine is a "swing state" for health care reform - Given its Senators, and given this behavior by the insurer who controls over 70% of the local market, obviously a scandal like this in Maine, where Anthem is literally suing the state to guarantee a profit, is deeply embarrassing to the political class if it spreads and becomes a big story.
• Regulation alone cannot work - Here we have a state where insurance companies are regulated much like a public utility. The Superintendent is vested with the power to protect consumers and ensure reasonable rates. And despite that, the insurance company sues for a better profit margin. This is not entirely abnormal among utilities, who troll for a friendly judge to allow them to raise their rates. In the area of health care, however, we are being told that tough regulations will solve the problem of skyrocketing premiums and get everyone covered. I think we know what to expect - lawsuits like this in every state, with private corporations arguing that their corporate personhood status somehow entitles them to a profit - that's basically what they're saying in this lawsuit.
• The for-profit health care system is doomed - in this case, the Maine Superintendent of Insurance allowed Anthem to raise their rates by 10.9% to reach an actuarial "break-even" rate. Over the past ten years, they have raised their rates by double digits 8 times. If you had an individual plan in Maine in 1999, today it probably costs FOUR TIMES as much. That's just not sustainable for anybody. Before long, people will simply not be able to carry health insurance. And they will easily reach the hardship exemptions in the individual mandate in the Congressional bills. If you have to raise your prices by 11% every year just to break even, your business doesn't work. Increasingly, insurance companies are losing market share and only staying in business due to growth in Medicaid and Medicare. Government subsidization of this private industry, in other words, is keeping them alive. So why keep them afloat at all?
In short, this is an important case to expose to understand insurance industry practices and the future of health reform.
Media Discovers WellPoint's "Right To Profit" Case
News outlets are starting to report on Anthem Blue Cross and Blue Shield, a subsidiary of WellPoint, suing the state of Maine to guarantee a 3% profit for themselves. Here's a report from the Maine Public Broadcasting Network:
The state and Maine's largest private insurer Anthem Blue Cross Blue Shield are locked in a legal battle over how much profit Anthem should be able to make. Earlier this year, Maine's insurance superintendent Mila Kofman denied Anthem's request to raise rates for its individual insurance products, calling it "excessive," and instead approved an increase that leaves Anthem without a profit margin for providing those 12,000 policies. Now Anthem has filed suit to get the decision overturned.
"Superintendent has noted that Anthem's done pretty well." Janet Mills is the Maine Attorney General who is representing the superintendent of insurance. Mills' office counters that Anthem averaged a 3.2 percent profit margin in its individual line of products for the nine years that the company has been in Maine. And that going a year without a profit from those products will not drain the company.
"She found that in fact that had contributed to $17.5 million and that its executives were pocketing rather large salaries and bonuses." Anthem spokesman Chris Dugan did not comment on the lawsuit beyond acknowledging that it had been filed. In a brief filed with the Maine Superior Court, however, Anthem calls a 0 percent profit margin unfair and unprecedented; it says it wants to have a profit margin of at least 3 percent.
Remember, the new rates offered by the Maine Superintendent do not prevent Anthem from making a profit; they can do that the same way other companies might do so in a recession, by cutting overhead costs and lowering executive salaries and taking up more efficient management of their business. But as I've reported and as Igor Volsky confirms, Anthem wants the state of Maine to guarantee a 3% profit as a Constitutional right:
A 0% risk and profit charge, by definition, builds in no cushion for any of the risk that Anthem BCBS takes on by selling Individual Insurance Products in Maine. In addition, with a 0% risk and profit charge under the Superintendent’s approved rates, Anthem BCBS will not be able to provide any contribution to the surplus of the Company…Anthem BCBS — a for-profit Company — cannot be required to operate its highly risky Individual Insurance Products essentially as a non-profit company that must offset losses generated by the Individual Insurance Products through its group insurance business in Maine.
This is a fantasy argument from a legal perspective. The Superintendent works for the people, not Anthem BCBS, and she is not required to provide a profit margin for it or any company as an inalienable right. Anthem is a very profitable company already, and the individual market they want to jack up 18.5% represents a small portion of their business (about 6%) which has brought in $17 million dollars over the last decade. The Superintendent can say no, under the law, to allowing Anthem to charge an "additional $12 million in annual premiums for the same level of benefits.” She does not have to guarantee Anthem a profit. WellPoint may be able to cut their own employee health care, but under the regulations of Maine, they cannot squeeze their customers without the Superintendent stepping in to protect them.
The Wonk Room has provided copies of the briefs in the case here and here.
It goes without saying that Maine is a linchpin of health care reform, given the position of their moderate Republican Senators. Maybe they should look into what's happening in their own state.
Arnold Supports Health Care Reform - Just Not In California
One of the enduring takeaways of the Schwarzenegger era is just how much latitude he is given on the national level as some kind of transformative post-partisan leader, when those same reporters know that California is crumbling into dust under, and in many cases because of, his leadership. We witnessed this again today as national media types heaped praise on the Governor issuing a letter about the Obama health care reform plan:
“As Governor, I have made significant efforts to advance health reform in California. As the Obama Administration was launching the current debate on health care reform, I hosted a bipartisan forum in our state because I believe in the vital importance of this issue, and that it should be addressed through bipartisan cooperation.
“Our principal goals, slowing the growth in costs, enhancing the quality of care delivered, improving the lives of individuals, and helping to ensure a strong economic recovery, are the same goals that the president is trying to achieve. I appreciate his partnership with the states and encourage our colleagues on both sides of the political aisle at the national level to move forward and accomplish these vital goals for the American people.”
I love the phrase "significant efforts," by the way. Others might call them "failed efforts," but YMMV.
But this "praise" for health care reform is just a piece of paper. One would think that the national media would seek to know the actions of the Governor on health care - one would be wrong, but one would still think that. And it would take about 10 seconds of Googling to figure out that the Governor has vetoed key elements of the legislation working through Congress. Last year he vetoed AB1945, which would have banned rescission, the insurance industry practice of dumping sick customers for technical violations on their applications like typos the moment that they try to use their policies for treatment. He vetoed SB840, the universal health care bill, on multiple occasions in the past. He vetoed SB1440, which would have mandated that insurance companies spend 85% of premiums on medical care. He vetoed SB973, which would have created a public insurance option by linking local and regional measures. He vetoed AB2, expanding the state's high-risk pool for people with pre-existing conditions.
He basically has vetoed many of the same provisions to be found in the current health care bill. And he is threatening to veto every bill on his desk this year, including another bill to ban rescissions so that customers who have paid insurance premiums for years aren't left to die when they want to use their policies. Anthony Wright notes some of the other bills:
* AB 119 (Jones): GENDER RATING, to prohibit insurers from charging different premium rates based on gender.
* AB 2 (De La Torre): INDEPENDENT REVIEW, to create an independent review process when an insurer wishes to rescind a consumer's health policy, create new standards and requirements for medical underwriting, and requires state review before plan approval. Also raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history.
* AB 98 (De La Torre): MATERNITY COVERAGE, to require all individual insurance policies to cover maternity services.
* AB 244 (Beall): MENTAL HEALTH PARITY, to require most health plans to provide coverage for all diagnosable mental illnesses.
Dan Walters calls these bills "nothing of cosmic importance". Well sure, he's not going to have a kid, and women are charged more than men by insurance companies anyway! To an entitled white man with a good-paying job, he doesn't have to worry about losing his policy or not getting comprehensive medical coverage. But to a woman who can't afford to lose her job to have a baby, or someone with a mental health problem who can't get relief for his suffering, or someone with an individual policy living constantly in fear that his or her insurance will get revoked precisely when they need it, these are issues of "cosmic importance." Anyone saying otherwise is ignorant.
And yet the Governor will have no problem holding these bills, and these people, hostage. His buddies at the Chamber of Commerce probably don't want him to sign them at all. So he writes a pretty letter supporting health care reform, while denying the very same measures to his own constituents. And national media types call him a "bold leader."
Subsidiary Of WellPoint Sues Maine To Raise Insurance Premiums 18.5%
A wild story out of Maine.
Anthem Health Plans of Maine, a subsidiary of WellPoint, is suing the state because they want to increase premium rates by 18.5% on their 12,000 individual insurance policy holders, so they can guarantee themselves a 3% profit margin. This story shows how silly it would be to solely rely on regulation to rein in insurance industry practices.
Like many other states, Anthem Health Plans hold a monopoly on the individual insurance market in Maine, controlling 79% of all the plans. Also like many other states, they are licensed to sell insurance through the Department of Insurance, who must clear all rate increases prior to implementation. Originally, Anthem Health Plans were a nonprofit Blue Cross and Blue Shield corporation licensed to practice in Maine since 1939. In 1999, Anthem bought the business and began to operate it as a for-profit company. Since that point, Anthem has raised premium rates 10 times, and 8 of those times have been double-digit rate increases.
The average individual Maine rate-payer is paying four times as much for insurance than they did ten years ago.
But this isn't good enough for Anthem Health Plans. They first proposed a 14.5% rate increase for its individual insurance products, then they revised it up to 18.1% and finally 18.5%. This is an average increase. Some plans would see increase of 24.5%, some 38.4%, and for its Preventive Care and Supplemental Care Accident rider, which is part of 1/3 of all their policies, Anthem proposed a rate increase of 58.2%. This amounts to Maine consumers paying $12 million more in annual premium dollars for the exact same level of benefits.
Anthem isn't hurting for profit. Their Maine operations have generated an average annual return of $70 million dollars over the last five years. Anthem paid dividends to their parent company, WellPoint, of $75 million dollars last year alone, and $152 million since 2006. Their nine highest-paid employees totaled over $4.3 million in compensation. The individual market, while a smaller portion of their overall business, still generated $5.4 million in profit over the last two years.
The reason Anthem desires these rate raises is because their actuarial charts show they can guarantee a 3% profit through this increase. That's an estimate, however, and in 8 of the last 10 years the profit margin achieved has actually been higher. The Maine Superintendent of Insurance ruled in May 2009 that the 3% profit and risk margin sought was "excessive and unfairly discriminatory," as per the laws of the state, and instead approved a rate increase of 10.9% for Anthem. Given the recession, the financial health of the company, and the years of large rate increases, there was no way she could approve anything higher.
So Anthem sued the state. But not after filing revised rates at a 10.9% increase so they could get that going while they litigated for an even higher rate.
The Superintendent of Insurance explained in a court filing that there is no statute mandating that Maine must provide Anthem or any other insurer with a guaranteed profit. Given Anthem's ability as a large operation to cut costs, just as any family must do during a recession, the Superintendent argued there is nothing preventing them from making a profit with a 10.9% rate of premium increase. But Maine is under no obligation to guarantee one. That would be a "socialized profit," which Anthem is asserting the right to without any legal basis in fact. Furthermore, policyholders have contributed $17.4 million in profit to Anthem's bottom line over the past decade, which should be more than enough to cover potential losses from just the individual insurance line this year.
Anthem argued that they were discriminated against relative to other companies in Maine because one other individual insurer was provided a 3% profit and risk margin (that company, MEGA, asked for 2.2% rate increase back in 2007, a far different scenario). This, the corporation said, violated their equal protection rights under the federal and state Constitutions. This is a laughable claim, that the state must guarantee a profit for every insurance company licensed to provide a product. It's nowhere to be found in the Maine Insurance Code, and the Superintendent of Insurance is allowed under Maine law to consider each company's situation individually. In this case, she ruled that a 18.5% increase in premiums would be unfair and excessive.
This is a very revealing case. Those arguing against a public option claim that insurance regulations alone will be sufficient to provide an affordable product for everyone. Here's a case where Maine is attempting to regulate the industry, and the industry sues the state in an effort to grab more profit. While claiming to be on the side of reform, they will fight tooth and nail, and can be expected to do so for every regulation in the national health care bill, right down the line.
Brave New Films has put together a video exposing the practices of Anthem and its parent company WellPoint. You can send your friends in Maine the news about this lawsuit, to highlight this practice. Maine Superior Court will consider this case on Wednesday.
From Maine Superior Court, Civil Action, Docket No. AP-09-29 Anthem Health Plans of Maine, Inc., d/b/a Anthem Blue Cross and Blue Shield v. Superintendent of Insurance, et al.
...Arthur Delaney now has this story up at The Huffington Post. He notes that Anthem lied about their individual market performance:
In its filing, Anthem said it had lost $3.7 million on its individual insurance products over the past five years. The AG says Anthem has made $5.4 million from individual consumers over the past two years, and points out that Anthem paid $75.7 million in dividends to WellPoint in 2008, $40.4 million in 2007, and $35.6 million in 2006. And its executives paid themselves pretty well, too.
In a post at Brave New Films' blog about closing in on the insurance industry, I mentioned the case of Dawn Smith, a MoveOn member and CIGNA who suffers from a treatable brain tumor. She spent two years being denied treatment for her tumor, and has seen her premium costs rise consistently since being diagnosed, and then, CIGNA raised her medication a whopping 10,000%. Dawn wrote a letter to CIGNA's Chief Medical Officer asking how they could do this:
Dr. Kang:
As you probably know, your company has denied me needed care for two years while I suffer from a debilitating but treatable brain tumor. I pay my $753.47 premiums. I follow the proper procedures. But CIGNA refuses to give me the care I need.
Instead, you keep increasing my prices. First my premiums rose by hundreds of dollars, and now my prescription costs are going up by more than 10,000%.
What makes you think you can treat sick people this way? When will you stop doing this to me and the thousands of people like me who are suffering? And if you solve this latest problem, how do I know you won't do this to me again next week--that you're actually changing your ways and not just trying to make your PR problem disappear?
Please answer these questions. I need to know, for the sake of my health and my life. Many others have signed this letter too, to support me and make sure I get answers.
Respectfully, Dawn Smith
MoveOn asked people to join Dawn in signing the letter, and over 100,000 did.
In the comments to the post asking people to co-sign Dawn Smith's letter, a representative from CIGNA responded in the comments:
CIGNA has spoken with Ms. Smith and successfully resolved the issue pertaining to this matter. We originally filled the prescription as prescribed by Ms. Smith’s doctor.
CIGNA learned through a third party political organization that Ms. Smith’s prescription mistakenly did not specify “brand name needed”. We have been in contact with both Ms. Smith and her physician and have corrected the inaccuracy. Customer service and satisfaction is important to us, we remain committed to working with our customers and physicians to ensure they receive the highest level of service.
Without that third party political organization - MoveOn - raising the profile of Dawn's case, there is probably no chance CIGNA would have responded so swiftly. But there's more to do. CIGNA may have agreed to lower the drug costs, and allowed various tests to go forward, but she is not giving up the fight. She wants answers about why she was denied treatment for two years, and why she and so many others have to suffer because CIGNA wants to maximize their profits. Dawn talked about her story in this video, and how it's not unique, but sadly the norm for a rapacious insurance industry that happily takes premium cash but resists giving it out in health care costs.
You can help Dawn by adding your name to a statement of support for her that will be delivered to CIGNA CEO Edward Hanway.
Fighting the insurance industry is a game of inches, but a collection of voices can make a difference. With some help from Congress, we can move toward a system of health care that doesn't involve ganging up on the insurance industry to force them to do the right thing.
So how's that Finance Committee doing on health care?
Well, they did manage to beat back a requirement that people show a photo ID to use the exchanges or access subsidies, though the enforcement requirements in the bill still deny undocumented immigrants the ability to but insurance on the exchanges, which is pitiful, and restrict LEGAL immigrants from doing the same for five years. So it's a win without a victory.
In better news, Max Baucus continues to be pushed to the left on affordability.
In a push to lock down votes, Senator Max Baucus, the Montana Democrat and chairman of the Senate Finance Committee, is pulling together a last-minute package of changes to his health care legislation aimed at addressing the chief concern among his fellow Democrats: that health insurance be made as affordable as possible for moderate-income Americans.
“There’s an effort to solve people’s problems,” said Senator John D. Rockefeller IV, Democrat of West Virginia, who has been a critic of the bill. “How far that’ll go, we’ll see.”
Among the proposals under consideration is an amendment by Senator Maria Cantwell, Democrat of Washington, that would create a “basic health plan” for Americans earning less than 200 percent of the federal poverty level, or $44,100 for a family of four. The proposal would let states develop or expand various existing insurance programs that now typically cover people who qualify for Medicaid. Small states could develop plans jointly.
The Baucus bill would already expand Medicaid to Americans earning up to 133 percent of poverty, and Ms. Cantwell’s proposal would effectively expand it further. But because her plan is expected to be cheaper than providing subsidies to those low-income people to buy their own insurance, it could save money that could be used to make other provisions of the bill more generous.
The Cantwell Amendment sounds pretty good at first blush. While not a public option, it's a proven idea (Washington state has this) that would reduce costs up to 200% FPL that can be used to increase subsidies above that level. UPDATE: Ezra Klein has a good interview with Cantwell about her proposal. She claims it would hit 75% of the total uninsured.
But I really like what Jay Rockefeller's cooking up - a legitimate floor for what insurance companies must spend on treatment and care.
This is delectable politics. Fresh off a meeting with Ob-Rahma, Jay Rock has come back to the Senate and demanded 90% loss ratio for any coverage the subsidies pay for. "Loss ratio" is insurance-speak for what they actually have to spend providing actual health care. That means the insurance companies can't steal 20% of our tax dollars to pay for executive salaries. They get 10%.
They're peeing their pants right now.
But I suspect Jay Rock has offered this as an outcome of his meeting with Ob-Rahma. I'm sure at that meeting they said, "Jello Jay, We'd like you to pitch other ways to save money. We'd like to come up with a way to keep costs down."
And voila!!! 90%!!! Insurance companies have to actually provide health care without gobs of executive subsidies. We're actually going to demand a certain amount of health care in exchange for the half trillion MaxTax!!!
There's no way to vote against this and still claim that you are on the side of the people instead of the insurance companies. With the cost savings in the bill, not to mention the ease of using the exchange to advertise services, insurers should easily be able to spend 90% of all premiums and still make a health profit. The only problem with this is enforcement, and how you get compliance from insurers who lie about loss ratios currently.
The Finance Committee will consider all these amendments and have a final vote on the bill next week, with Harry Reid bringing a merged bill to the floor the following week. We now know the schedule - time to make sure the best bill gets out.
Kevin Drum is as shrill as he gets, which is to say, measured, polite, and miffed.
In case you missed it, Jon Stewart had a good riff on this last night. His question: Why are Democrats so lame? It's a good one! They have a huge majority in the Senate, the public is strongly in favor of a public option, and yet....for some reason they can't round up the votes to pass it. Hell, they can't even round up a normal majority to pass it out of the Finance Committee, let alone a supermajority to overcome an eventual filibuster.
If Democrats really do lose the House next year (about which more later), this will be why. If they don't pass a healthcare bill at all, they'll be viewed as terminally lame. If they pass a bill, but it doesn't contain popular features that people want — like the public option — they'll be viewed as terminally lame. At a wonk level, a bill without a public option can be perfectly good. But wonks aren't a large voting bloc, and among people who do vote, the public option is very popular. So, um, why not pass it?
I will minimally defend Democrats. The Finance Committee has a 13-10 split, which is a bit less of a majority than the 60-40 overall split. Stewart's point was that Democrats had a supermajority and didn't use it in the Finance Committee is inaccurate. Furthermore, there's no such thing as a supermajority in the patently undemocratic confines of the Senate. Because the public option isn't popular among land as well as people, it doesn't have 60 votes in a Senate organized around land. There's also the problem of unanimous opposition from an entire political party, which really does represent a crisis of governance.
That said, yes! Democrats are lame! Especially in this case, where they have a popular policy that also happens to be the policy that best brings down costs and provides competition in the insurance market. As for Drum's point that a bill without a public option can be good at a wonk level, he's talking about something like the Swiss health care system, where private insurers exist without a public alternative, but are strictly regulated. Which is perfectly fine except for a few things:
1) It is the second-worst system in the world in terms of costs, rivaled only by... the United States. 2) We have no history of regulatory strictness, in fact we have the opposite history, so actually pulling off a regulation-based check on the insurance companies is a real long shot. 3) The Swiss have higher co-pays, insurance premiums and out-of-pocket expenses than Americans, which politically would not fly at all. People are already crushed by the burden of high-dollar health care here.
The truth is that the difficulty of Democrats to include a public option - though I don't think it's dead yet - reflects the breakdown of our political system and the influence of corporate money. The Swiss have their health care plan because they put it in place relatively recently, and the large health interests didn't want a public component. It's the same here, and frankly politicians in both parties have been bought off.
As I said, I don't think this is quite over. Labor won't budge on their insistence on a public option, and for a White House obsessed with keeping their majority that's a big deal - lose the support of the AFL-CIO and you lose seats, period. What's more, progressives understand the pressure points now - mainly, the White House and Harry Reid. If he includes a public option in the merged Senate bill it will be very hard to get it out, and then Senators will be faced with the unpleasant choice of filibustering a bill that has the overwhelming support of the Democratic caucus and the White House to protect insurance company profits.
I'd make two calls today - Reid's office and the White House switchboard.
Chuck Grassley is going on and on with his series of lies about the public option. All you need to know is that it saves hundreds of billions of dollars, and everyone who presumes to be worried about the total cost of the bill and at the same time rejects the public option is full of it.
Jon Walker has a good liveblog going. Earlier, Jay Rockefeller went to town on the Baucus bill:
10:24 - Rockefeller quoted in his defense of the public option former Cigna excutive Wendell Potter who called Baucus's bill the, "the Insurance Industry Profit Protection and Enhancement Act."
10:33 - Rockefeller pointed out that while the private insurance companies will receive a half trillion dollars in federal money, there is no requirement in the Mark for the private insurance companies to spend that money on care. The House bills has an minimum 85% medical loss ratio. Baucus's bill has no minimum medical loss ratio
10:37 - Rockefeller is putting the private health insurance industry on trial. He is going through all the different ways private insurance companies screw over their costumers and deny claims.
Chuck Schumer just now asked Grassley what he thinks of Medicare. He called it "part of the social fabric of America." It wasn't in 1964! Maybe in 40 years, the public option will be part of the social fabric of America. Grassley is dancing.
Bill Nelson interjects saying "how in the world do you make that leap" that a public option will lead to single payer? Grassley uses the Lewin Group statistics, not based on the public option plan on offer - also Lewin Group is owned by United Health Group and not an unbiased source.
...just to be clear, it's likely for us to lose this one. But this debate, according to Schumer, will revitalize the debate for the Senate floor. Hopefully Schumer will ensure that the floor amendment on the public option will only require a majority vote. Robert Reich has a good story on this as well.
...Orrin Hatch is trading off of the decades-old demonization of government from the Reagan era onward, saying that DC bureaucrats cannot manage health care. Well, I eagerly await Hatch, essentially a DC bureaucrat, recusing himself from all health care votes this session, including participating in any filibusters, because he clearly considers himself such a bad manager. Incidentally, the reason we're doing health care reform right now is because private management of health care has failed.
...Bob Menendez comes out for the public option. I think he may have been on the fence until now. That's another member of the leadership, the head of the Democratic Senatorial Campaign Committee, for the public option. He's the guy who delivers resources to Senate candidates, including incumbents, so that's notable.
...Note the states Menendez singled out for having no competition in the insurance market - Maine, Wyoming, Iowa, Montana, North Dakota. Every one in the Gang of Six!
...Conrad is up. Calls his co-op crap "the public interest option"! His main complaint is the Medicare reimbursement rate, which is more of an issue than I made of it last week. We'll see if he votes yes on the Schumer amendment, which does not tie a public option to Medicare rates. I think there's a way to meet halfway on this. Tying the public option to Medicare rates saves lots of money, but it could save half that by equalizing the reimbursement rates in some states.
...Nelson asks Conrad to change the name of his co-ops to something even more indecipherable.
...Bingaman is up. He's getting some clarifications. Rockefeller is getting a little fed up with the distortions of his amendment.
...Bingaman supports a public option, but it looks like he'll only vote for the Schumer "level playing field" public option instead of Rockefeller's. That's a cost, according to the CBO, of $85 billion dollars, if you look at the House bills. So I'm sure Bingaman will come up with $85 billion in new funding to make up for that, right?
...Schumer is making a very strong case for the public option. Of course, his plan would score lower and save less money, which he admits.
...TPM has that exchange between Schumer and Grassley, where Grassley calls Medicare part of the social fabric of America.
John Ensign is dredging up that Belinda Stronach (Canadian MP) came to the US for health care canard. He won't mention that she raised money for adding the cosmetic surgery she needed - COSMETIC, not the care itself - in the Canadian health care system.
Then Ensign claimed that US health care is great because if you take away every car accident and gun death, it turns out our preventable death rate is excellent. Which is just about the stupidest thing I've heard yet in this debate. Is John Ensign calling for a total gun ban in the United States?
...Debbie Stabenow's going to wrap up the debate before a lunch break. Stabenow frames the public option as "the grand compromise," which it is.
I am a film and video editor, stand-up comedian, and blogger. My editor resume is here. A sample of my stand-up is here. The blog is what you're reading right now. Wasn't that easy?
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