The President’s weekly message this week has generated more attention than a lot of the others, because it features him taking his hardest edge yet against the health insurance industry – the kind of message that progressives have wanted him to deliver for some time now.
This is the unsustainable path we’re on, and it’s the path the insurers want to keep us on. In fact, the insurance industry is rolling out the big guns and breaking open their massive war chest – to marshal their forces for one last fight to save the status quo. They’re filling the airwaves with deceptive and dishonest ads. They’re flooding Capitol Hill with lobbyists and campaign contributions. And they’re funding studies designed to mislead the American people.
Of course, like clockwork, we’ve seen folks on cable television who know better, waving these industry-funded studies in the air. We’ve seen industry insiders – and their apologists – citing these studies as proof of claims that just aren’t true. They’ll claim that premiums will go up under reform; but they know that the non-partisan Congressional Budget Office found that reforms will lower premiums in a new insurance exchange while offering consumer protections that will limit out-of-pocket costs and prevent discrimination based on pre-existing conditions. They’ll claim that you’ll have to pay more out of pocket; but they know that this is based on a study that willfully ignores whole sections of the bill, including tax credits and cost savings that will greatly benefit middle class families. Even the authors of one of these studies have now admitted publicly that the insurance companies actually asked them to do an incomplete job.
It’s smoke and mirrors. It’s bogus. And it’s all too familiar.
Later on in the address, the President mentions the insurance industry’s anti-trust exemption, once again raising the possibility that it would be repealed in this round of reform.
And they’re earning these profits and bonuses while enjoying a privileged exception from our anti-trust laws, a matter that Congress is rightfully reviewing.
The House Judiciary Committee will actually tackle this issue in the coming week, by marking up the “Health Insurance Industry Antitrust Enforcement Act of 2009,” a bill that would repeal the exemption, on Wednesday. John Conyers, the chair of the Committee, said, “These abuses are plainly illegal in other industries, and it does not make sense, when Congress is working so hard to bring meaningful reform to the market in health insurance, that health insurers should continue to be exempted from federal antitrust oversight.” And Nancy Pelosi expressed support for the measure at her press conference on Thursday. I’d say the chances of repeal being inserted into the final health care bill have gone up to at least 50/50.
The White House has been nudging in the direction of painting the insurance industry as a villain in this debate for several weeks now. But this is a full frontal assault, clearly in reaction to the flawed industry reports and attack ads designed to scare seniors that we’ve seen this week.
Of course, if the niceties have ended and the deals faded, then the President could actually make insurers REALLY uncomfortable through actions and not words, by supporting competition for them through a public option and demanding its inclusion in any bill.
The Senate HELP Committee held a very interesting hearing on health insurance gender discrimination. It has not been a subject that has come up much in the current debate, but for women often paying twice as much as men for the same insurance coverage, it’s crucial. Marcia Greenberger of the National Women’s Law Center described it as being a woman equaling a “pre-existing condition.” Legislation in both chambers of Congress would eliminate gender discrimination and mandate certain treatments and procedures specific to women for all health care coverage.
At Thursday’s hearing, many women had examples of individual policies that require women to pay more than men in some states, including Idaho, where insurers who issue individual policies can use age, sex, geography and whether a client smokes as factors in determining premiums. Some women attended the hearing wearing T-shirts that said, “I am not a pre-existing condition.” [...]
The committee also heard from women such as Peggy Robertson of Colorado, who read a letter from her insurance company. Robertson testified that because she’d already given birth via cesarean, when she tried to get an individual policy in Colorado, her insurance company considered it a pre-existing condition and wouldn’t insure her unless she could prove she’d been sterilized.
That “put me on the edge of my chair,” said the chairwoman of the committee, Sen. Barbara Mikulski, D-Md., calling it “offensive and morally repugnant.”
Yes, we’re talking about coercing sterilization in the United States of America. Courtesy of the insurance industry.
As we’ve read about in recent weeks, procedures like maternity care and mammograms are often not covered by insurers; the latter has become a major factor in the New Jersey Governor’s race, as the Republican nominee Chris Christie wants to allow insurers to drop coverage for mammograms. Greenberger added additional facts in her testimony:
Our research included an extensive analysis of gender rating, the practice under which insurers charge men and women different premiums for coverage. We found that in the individual insurance market, women can pay dearly because of this rampant practice. At age 25, for instance, women are charged as much as 45% more than men for coverage, and at age 40 they are charged as much as 48% more than men. Even with maternity care excluded, the variations in the differentials totally undermine any claim that these differences are actuarially driven.
For instance, we found that the best-selling health plans in Phoenix , Arizona charged a 40-year-old woman anywhere from 2% to 51% more than a 40-year-old man for identical coverage. In Lincoln , Nebraska a woman of that age was charged anywhere between 11% and 60% more than a man.
I don’t see how it is acceptable to give an industry that practices routine discrimination against the majority of Americans – whether it’s the sick, the elderly, or women – expanded power and a monopoly on a large market in the name of “reform.”
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.
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.
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.