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.
Jan-99: 20.4%
Nov-99: 15.7%
Jan-01: 23.5%
Feb-02: 12.7%
Jan-03: 3.4%
Mar-05: 14.5%
Mar-06: 16.3%
Jan-07: 16.7%
Jul-07: 1.3%
Jan-08: 12.5%
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.
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Blue cross/blue shield of MAINE stopped getting a gaurantee of profit when it sold itself to Anthem/WellPoint. It is notorius for deneying coverage and not paying bills.
Before Wellpoint BOUGHT Blue Cross/Blue Shield it was a non-profit entity, so why would the State guarantee a profit? Reading for comprehension is a good thing.
It was like a utility it was gauranteed to make its expenses. Now, I think
that it was a good company then. Now, it just sucks! Along with most
health insurance companies it lives for the stock holders and not the
customers.
Your splitting hairs on the non profit to profit comment.
Healthcare, The Gang of Six, Maine Citizens and the Public Option
http://www.hammer2010.com/2009/09/healthcare-ga…
Do we need ANY more evidence, of the Absolute Necessity for a Public Option???…this CEO makes $4700++, spends $10Million on Lobbying, and now proposes MILLIONS in Legal Fees to sue a State, where it was denied an 18% Premium Hike…while only increasing Insureds by 2.4%…PROFIT does NOT Belong in Health Care, except to Hospitals, Doctors and other Actual Providers!!!
If you've seen the movie “The Corporation” you will find it no surprise that these sociopathic entities run by sociopathic CEOs go to these extremes to maximize profits. They are seriously ill addicts and their habits are being fed by Congress and the courts who give them all the rights of living, breathing human beings but few of the obligations. If a burglar breaks through your bedroom window, we'll applaud if you shoot him dead. But if health insurance corporations steal billions and kill thousands, we just shrug. Amazing. They should get the “death” penalty; revoke the corporate charter, seize all assets (including the executives').
If you've seen the movie “The Corporation” you will find it no surprise that these sociopathic entities run by sociopathic CEOs go to these extremes to maximize profits. They are seriously ill addicts and their habits are being fed by Congress and the courts who give them all the rights of living, breathing human beings but few of the obligations. If a burglar breaks through your bedroom window, we'll applaud if you shoot him dead. But if health insurance corporations steal billions and kill thousands, we just shrug. Amazing. They should get the “death” penalty; revoke the corporate charter, seize all assets (including the executives').
How do these insurance companies have the audacity to rob the American people blind like this?
Anthem is a major health insurance provider here in Missouri. Although Blue Cross doesn't want to insure me, after all of the horror stories I've heard while working on the health care reform issue, I don't want them to insure me either. People who pay $5-600.00/month and then have procedure payments denied for a myriad of reasons. Even after the operation or surgery was pre-approved, they nit-pick their way through each billing for pre-op, anesthesia, rehab, meds, etc. After one woman kept calling the name and number on her denial letters to contest them, she started getting letters without any name or number on them! Then there's the number of policy rescissions done when people get really sick.
I am one of the millions of Americans who are years away from Medicare, live and work in a small town but don't get benefits, am willing and able to pay for insurance at a reasonable cost, but am denied coverage although I've never had surgery or a hospital stay. In fact, 80% of uninsured Americans are working families.
After working on the health care issue and discovering the corruption, I am more than willing to trust in the goverment Public Option to be my health care provider. I only hope my health, and everyone else's, holds out until it becomes available. That can only happen if they don't stick the “trigger” on it, so if you've been calling your reps asking them to support the Public Option, be sure and add “without the trigger.”
Why don't the people in Maine put together their own insurance company owned by the people and for the people. To hell with corporate CEO's and all of the lobbying if everything was brought back down to what it's original purpose was it would be cheaper to run and just plain honest and the right thing to do.Think about it. Cut out all the embellishing and waste and just help each other.
I remember when I was little girl and the doctor came to our house when I was sick. My father paid him right away no major overhead to speak of. I was in and out of the hospital a lot too. And my parents were not well off but they paid the bills and I got treated. there was no insurance then that we had.
Anyway just an idea that maybe every state should put together and to hell with profiting from people who are sick. It should be a service for the good of all not the elite.
It seems that the first step in any real revision of the US healthcare system would be to remove insurance companies from the picture altogether. Why do we need an extra layer of highly profitable businesses standing between the consumer and health care providers serving no real function other than to drive up costs? Surely the billions of dollars the public pays to insurance companies for health care would be better spent if it went directly towards health care costs.
To find out exactly how much is wasted through the involvement of private insurance companies you need to look beyond the profits of those companies to the bottom line numbers before insurance companies deduct costs. Any assumption that private companies are naturally more efficient than government fails to consider all the inefficacies created by conflicts of interest as insurance companies not only insure consumers but also offer malpractice insurance against the consumer.
Healthcare is not an option but rather a basic necessity that in any healthcare system the consumer ultimately pays for. The bottom line question in the US seems to be whether we allow huge disparities in the quality and availability of healthcare between rich and poor or whether we offer one standard of care to everyone. Many of those who can afford healthcare are extremely concerned that the quality of their healthcare might be undermined if they have to subsidize those who canât afford it. Some are extremely fearful and angry at the thought that they might receive something other than the best healthcare money can buy. This leads one to wonder about the character of people who would so easily deny others the same healthcare that is so important to them.
I am an American currently living in Thailand where the cost of medicines, doctors and hospitals is roughly a tenth of what it is in the US. Same drugs manufactured by the same drug companies. The same if not better level of healthcare provided by doctors who have often spent time working in US hospitals. Better access to the latest, state-of-the-art diagnostic equipment such as MRIs. If private hospitals in Thailand can offer the same and sometimes better level of care to patients at a fraction of the cost in the US and still be highly profitable, what does this say about the efficiency of the current US healthcare system?
The best thing that can be said about health care “reform” so far is that people are getting an education. Of course I want a good health care system. My personal preference is a single payer system which combines both the medicare-like Canadian type, where the government acts as an insurer, AND a V.A.-like one like Great Britain has, where the government employs the doctors. Having both would be a great starting place, as the building of government clinics and hospitals (the second type) would take a long time, and this way could be done gradually… in the meanwhile, both systems would give flexibility and a chance to evolve how we would like things to work.
But I digress from the current bill. The features in it are so bad it would be a disaster if passed. PLEASE don't support it. I don't want to go to jail for 5 years for willful evasion of paying for pay insurance. I'm also getting up there in years, and if I sustain a broken hip, I want a hip replacement! Yes, there's lots we lose with this bill.
On the other hand, if the Kucinich amendment is put back in as it should be–since it passed out of committee with bipartisan support–that might fix everything!! It would allow states to set up their own single payer plans, which is how Canada evolved its system.
I am 77 years old and have been an LCSW social worker for Hospice for the last l8 years of my employment before retiring. I am appalled at the unneccessary death and sufffering that I now see in the For Profit Health Care Industry. When health care became for profit and Lobbyists were introduced into the system, I knew that our Democracy was slipping away and that many people were being duped. A Public Option or even better, Universal Healthe Care is the only way to fix a rotten, broken system.
I have held an individual health insurance plan with Anthem for 7 years or more. Two weeks ago I received a notice that my rates were going up 32% beginning with my bill due 1-1-10. THIRTY TWO PERCENT, immediately of course. So much for “notice.” I already have a high deductible, and rarely see a doctor because I already can't afford to do that (because of my high premiums.) I am fairly sure this is a direct result of what COULD happen to Anthem when the so-called health insurance reform goes into effect. My opinion? They should hang Anthem up by its toes and make it stop gouging healthy people.
I have held an individual health insurance plan with Anthem for 7 years or more. Two weeks ago I received a notice that my rates were going up 32% beginning with my bill due 1-1-10. THIRTY TWO PERCENT, immediately of course. So much for “notice.” I already have a high deductible, and rarely see a doctor because I already can't afford to do that (because of my high premiums.) I am fairly sure this is a direct result of what COULD happen to Anthem when the so-called health insurance reform goes into effect. My opinion? They should hang Anthem up by its toes and make it stop gouging healthy people.
I hope they all die. It is not just a job, it is corrupt. anthem employees are no different than whores and drug dealers. they will get what they deserve
Wellpoint is at it again! They are closing down their Richmond call center and outsourcing it to the Phillipines. While unemployment is at an all time high, and Wellpoint is making RECORD PROFITS, they are trying to save a buck by leaving hundreds unemployed and taking their business to another country.
there are so more good tips which is help people!
In February 2010, California insurance regulators asked Anthem Blue Cross to delay controversial rate increases of as much as 39% for individual policies. Obama administration asked the Anthem to justify these raises but they didn't have an answer at that time.
car insurance agent
so.. whatâs Senator Snowe planning on doing to protect her constituents from these practices? Would her fellow rethugs consider it un-American for state governments to defend themselves in court when their corporate masters demand that they role over? I enjoy your work. Maybe Digby can visit here also. You are getting an FDL Recommend…………
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