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.
Between the flawed PricewaterhouseCoopers study and the scare-seniors attack ads to the secret talking points they’re sending to local insurance offices attacking the public option and Medicare (!), the insurance lobby has clearly shown themselves to be an enemy of reform. Whether trying to torpedo any bill or to give space to the Baucus bill (allowing ConservaDems to say, “Hey, if the insurance industry doesn’t like it…”), they are clearly not the partner the White House made them out to be throughout the process. And it’s interesting that yesterday, Americans United For Change (one of the pro-reform groups) went after the industry on a very particular point – their anti-trust exemption.
As part of the McCarran-Ferguson Act, the insurance industry has an anti-trust exemption that has allowed it to basically enact regional monopolies. Over 94% of all insurance markets in the United States are “highly concentrated.” A few weeks ago, Patrick Leahy and John Conyers introduced a bill to repeal the exemption.
“This legislation would specifically prohibit price fixing, bid rigging, and market allocation in the health insurance industry,” said Conyers. “These pernicious practices are detrimental to competition and result in higher prices for consumers. Conduct that is unlawful throughout the country should not be allowed for insurance companies under antitrust exemption. The House Judiciary Committee held extensive hearings on the effects of the insurance industry’s antitrust exemption throughout the 1980s and early 1990s. It became clear then that policyholders and the economy in general would benefit from eliminating this exemption.
This morning, Senator Schumer is going to say, in light of the insurance industry report warning premiums will rise under reform, Dems should push to revoke the health insurance industry’s antitrust exemption as a floor amendment. This will be at a Senate Judiciary Committee hearing, where Majority Leader Reid is also testifying.” 10 a.m., Dirksen 226, “Prohibiting Price Fixing and Other Anticompetitive Conduct in the Health Insurance Industry.”
I’ll try to monitor that today.
Schumer and others may want to use the threat of the repeal to keep the industry in line. But that’s obviously not working, so they might as well go ahead and do it. There is little justification for allowing insurers to divide up the country into mini-fiefdoms.
UPDATE: On Dylan Ratigan’s show just now, Schumer reiterated his call for repealing the anti-trust exemption and said it would be added to the final bill! “The Justice Department should be allowed to go into Alabama and say that one company shouldn’t be 81% of your market,” he said. Ratigan pushed Schumer on the firewall on the exchanges, which disallows people who get insurance from their employer to sign up, and Schumer endorsed Ron Wyden’s efforts on that, and believed that over time, the exchanges would open up. “I think we will get (repealing) the anti-trust exemption through.”
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.
PricewaterhouseCoopers issued a puzzling statement today about the report they were commissioned to write by AHIP, the health insurance lobby, which showed through some questionable assumptions that insurance premiums would rise faster in the event of health care reform than from doing nothing. The statement could be essentially boiled down to, “don’t look at us!”
America’s Health Insurance Plans engaged PricewaterhouseCoopers to prepare a report that focused on four components of the Senate Finance Committee proposal:
Insurance market reforms and consumer protections that would raise health insurance premiums for individuals and families if the reforms are not coupled with an effective coverage requirement.
An excise tax on employer-sponsored high value health plans.
Cuts in payment rates in public programs that could increase cost shifting to private sector businesses and consumers.
New taxes on health sector entities.
The analysis concluded that collectively the four provisions would raise premiums for private health insurance coverage. As the report itself acknowledges, other provisions that are part of health reform proposals were not included in the PwC analysis. The report stated on page 1:
“The reform packages under consideration have other provisions that we have not included in this analysis. We have not estimated the impact of the new subsidies on the net insurance cost to households. Also, if other provisions in health care reform are successful in lowering costs over the long term, those improvements would offset some of the impacts we have estimated.”
In other words, AHIP made them do it and they didn’t look at any mitigating factors. That’s a pretty definitive backpedal, although you wonder, if this comes out 24 hours after the release of the report, why they took the obvious headache of a job in the first place. This adds to the notion that the AHIP report backfired to an astonishing degree.
Meanwhile, reform supporter and health care expert Jonathan Gruber from MIT posted his own analysis stating that the Finance Committee proposal would lower non-group premiums:
Sizeable premium savings for young. An individual aged 25 at $19,000 in income (175% of poverty) would benefit from tax credits and would save, on average, $685. A higher income young person could always buy a “bronze” plan without tax credits for a savings of $230. Moreover, they could qualify for a catastrophic policy – also known as a “young invincible” policy. This policy would cost on average only $1190, saving them $585 at all income levels.
Even larger premium savings for older individuals. A person age 60 with income at $19,000 (175% of poverty) would save, on average, $7890. A person at age 60 with income at $40,600 (375% of poverty) would continue to benefit from tax credits and would save, on average, $4100. Even at a high enough income level to not benefit from tax credits, older persons purchasing a bronze plan would save about $2800.
• Also large premium savings for a family. A family with income at $38,000 (175% of poverty) would save, on average, $8550. That same family with higher income could buy a “bronze” plan without tax credits at a savings of $2430 over current non-group prices.
Gruber doesn’t reveal his modeling, and he doesn’t totally grapple with the effect of a weakened individual mandate, but at least he doesn’t openly distance himself from his own analysis. And presumably, a bill with a public option included would have the potential to lower these premiums even more.
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.
The big story from the weekend is that AHIP, the lobby for the insurance industry, waved around a study from Price Waterhouse Coopers (the Oscar people) claiming that, as a result of the Senate Finance Committee bill, health insurance rates will rise $4,000 faster by 2019 than if there were no bill at all. This study was summarily typed up by the Washington Post and the New York Times, though neither of them pointed out that the essential truth of this story is that the health insurance industry is saying they will rise insurance premiums faster if the Democrats pass health care reform.
That’s not so much news as a threat.
It also appears to be a threat at variance with the facts. For instance, the report left out the subsidies that would make insurance more affordable to anyone making up to 400% of the federal poverty level. Also, the report simply claims that the excise tax on insurance companies would just raise premium prices instead of causing employers to restructure their health plans and purchase less costly coverage.
And the list of strange assumptions goes on. Plenty of experts, including the CBO, don’t think health care providers will simply charge private insurers more to make up for declining revenue from Medicare. The experts could all be wrong, but PriceWaterhouseCoopers doesn’t even acknowledge this belief let alone explain why it might be wrong. Indeed, nowhere in the document does the firm reveal its methods, which is interesting since–unlike CBO or even, say, a private outfit like Lewin–PriceWaterhouseCoopers is not particularly known for this sort of modeling.
This just appears to be a bogus document to try and scare Congress into removing the tax on high-end insurance plans. The Senate Finance Committee described it in that way today.
“This report is untrue, disingenuous and bought and paid for by the same health insurance companies that have been gouging too many consumers for too long as they stand in the way of reform yet again. Now that health care reform grows ever closer, these health insurers are breaking out the same, tired playbook of deception to prevent millions of Americans from getting the affordable, accessible care they need. This report is pitching some seriously flawed analysis that nobody’s buying as it excludes all the provisions that will actually lower the cost of coverage – tax credits, grandfathering for existing policies, increased enrollment in private coverage and administrative savings from a more efficient mechanism for purchasing coverage. It’s a health insurance company hatchet job, plain and simple.”
The best face you can put on this is that the weakening of the individual mandate by the Finance Committee means that less Americans will have health insurance coverage, shrinking the risk pool and driving up costs. But as we’ve relentlessly documented, an insurance industry making billions in profits doesn’t have to actually raise their prices in exchange for being forced to take all comers. Anyway, experts have shown that the industry could easily cherry-pick individuals and weed out the sick to maximize profits. And they will try and use the insurance exchanges to do it:
Despite reforms prohibiting discriminatory practices, insurers would still have powerful incentives to cherry pick low-cost people and mistreat/shoo away high-cost people. While the reform bills include a risk-adjustment mechanism to reallocate dollars within the exchange(s) from insurers with lower-cost enrollees to insurers with higher-cost enrollees, that mechanism would likely fail to capture all the adverse selection effect, and insurers would have strong incentives to undermine the rules and deceive federal/state regulators trying to counteract the perverse incentives [...]
…what it tells us is that the insurers are counting on lots of younger, healthy people being forced to pay premiums, so they won’t be stuck with just older/sicker people with higher costs. [AHIP is] implicitly confirming that the scheme focuses insurers’ incentives on attracting the young and discouraging the old. These same incentives will be driving the industry whether the number of uninsured is 25 million or 17 million (as projected for the House bills).
The industry appears to want it both ways: they want to force everyone to buy their insurance, while cherry-picking the healthiest members of the uninsured for themselves, and sacrificing nothing in profits – in fact increasing them.
The Senate Finance bill doesn’t give them every single thing they want, so they’ve decided to go to war with it.
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.
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.
Dawn Smith, the brain tumor victim who’s struggles to get CIGNA to cover her treatments have become national news, is headed to the headquarters of CIGNA CEO Ed Hanway in Philadelphia, to get some answers on why she was denied coverage. She is live-blogging the trip and has some video on her site as well.
Health Care For America Now has transformed the main homepages of UnitedHealth, CIGNA and WellPoint into virtual crime scenes, and they are mobilizing people to visit the headquarters of all these corporate bad actors with yellow police tape and declare them actual crime scenes. There are dozens of events in over 60 cities scheduled.
It is true that these events, scattered throughout the country, have been organized by health care advocacy groups. Of course, throughout the month of August, corporate front groups organized around town hall meetings, busing in folks from out of town and preparing them with talking points and rules to disrupt the events. Yet, in the eyes of the traditional media, only one of these two actions are seen as authentic:
For several months, HCAN—a national coalition of religious groups, community organizations, unions, senior citizen groups, health care professionals, and consumer advocates—has been organizing polite demonstrations, rallies, and public forums, trying to put faces on an industry that has spent multiple millions of dollars lobbying against reform, while angry protests at town meetings swelled August’s big national story. On Sept. 22, HCAN sponsored about 150 demonstrations at various insurance company headquarters around the country. The Los Angeles Times did not bother to report about the several hundred demonstrators at WellPoint’s California subsidiary office, located a few blocks from the newspaper’s office. Nor did The Philadelphia Inquirer note those who descended that day on CIGNA, nor The New York Times those outside UnitedHealth in midtown Manhattan.
The HCAN rallies did attract print and broadcast coverage in dozens of cities, but most reporters treated them as isolated local events rather than components of a nationally coordinated protest (its slogan, “Big Insurance: Sick of It”) and a burgeoning grassroots movement [...]
With Congress debating extensive health care reform, and companies like CIGNA, WellPoint, and UnitedHealth major protagonists, the organizers supposed that their protests would dramatize the exorbitant profits of the insurance industry and the imposing compensation they pay top executives (UnitedHealth’s Hemsley made $57,000 per day last year) while millions of Americans go without insurance or bankrupt themselves with medical bills.
HCAN was mistaken.
“At a certain point,” Indianapolis Star senior editor Jenny Green told us, the demonstrators are “not adding to the debate. They’re just one side saying exactly what you’d expect them to say.”
Her colleague, Greg Weaver, the Star’s deputy public service editor for business, maintained that the raucous town meetings of August, dominated by conservative activists shouting down Democratic Congressmembers, were newsworthy because they “are more of a public forum where you have many sides of the debate, whereas at the [HCAN] protest [at WellPoint CEO Bray’s house] you have only one side of the debate.”
“I did not think the protest at [Cigna CEO] Hanway’s house was news,” Philadelphia Inquirer business reporter Jane Von Bergen told us. “It was a staged event. It wasn’t real news. I avoid them. I can’t stand them. They don’t add anything. They don’t teach anything. If they go to his house, we don’t learn anything more about the health care debate.” The protest was “too manufactured,” said Von Bergen. “Just a bunch of people going blah-blah-blah.”
By contrast, said Von Bergen, who covered the rowdy town meeting in August where right-wing activists confronted Sen. Arlen Specter, the news value of that event was “readily apparent.” “It involved public figures”—members of Congress. So political reporters picked up the story.
Isn’t Hanway a public figure? we asked. He’s well known in the business community, she said, but not among the general public—a condition that HCAN is trying to change, but can’t do if the media won’t cover their events.
This is a revealing set of quotes, showing the true orientation of corporate-run media. They are willing to blind themselves to the corporate front groups who organize town hall meetings, but call demonstrations of insurance companies “staged events.” This is not the work of a neutral arbiter in the debate; it looks more like one class is being protected while the other is being savaged.
I don’t know what the value of street protests are in the digital age. But I certainly know they have little value if they go unreported. Apparently such protests can get coverage, but only if they feature people with tea bags attached to their hats and guns in their side holsters.