Earlier today, the Accountability and Administrative Review Committee, chaired by Assemblyman Hector De La Torre, held a key hearing on the headline-grabbing issue of rescissions.
The hearing usefully sought to follow up on the settlements that regulators got insurers to agree to offer to restore coverage to the 6,000 people who had their coverage yanked from them. Here are reports from the Shaya Tayefe Mohajer at the Associated Press and Daniel Weintraub at Healthy Cal. We'll have more soon.
OK, it's not the big health reform bill, or even a comprehensive jobs bill, but it was a portion of a jobs package that would provide big benefits for health care in California.
One in a series of bills on jobs, this emergency relief package, the “American Workers, State and Business Relief Act,” was approved by a vote of 62-36. Much thanks to Senators Barbara Boxer and Dianne Feinstein for their support. It will go to the House of Representatives, who have passed their own version of a jobs bill, before it goes to the President for his signature.
The legislation, (H.R. 4213), has an extension of unemployment and benefits and contains several health-related provisions that are of particular importance to California, including: * Extending the COBRA subsidy from the earlier stimulus bill. For unemployed California families, the average monthly COBRA premium is $1,107. The COBRA premium assistance reduced this cost to $388 per month, and without this benefit, unemployed Californians could lose $720 a month. * Providing help to the state budget through a six month extension of the enhanced Federal Medical Assistance Percentage (FMAP) enacted under the American Recovery and Reinvestment Act, which otherwise would end on December 31, 2010. This extension through June 2011 would provide an increase of $1.5 to $2 billion in federal funding for California's 2010-11 budget. * Delaying a 21.2 percent cut in payments to physicians who treat California's 4,672,923 Medicare beneficiaries and many TRICARE enrollees in California.
The COBRA subsidy will be welcome for California, with our high unemployment rate. And the relief for our state budget is crucial, to help close our deficit and prevent much, much worse budget cuts. The House had passed these elements in other bills, but it's very good news that the Senate has finally acted.
While acknowledging that he has voted for unthinkable cuts, and that there will be awful cuts going forward, the Speaker showed some impressive knowledge and passion about some of the health care cuts proposed in the past year. He talked personally and policy-wise about proposals to cut kidney dialysis, and about other cuts from AIDS drug assistance, and family planning.
And with the elimination of the Healthy Families program which covers over 900,000 children, and the total who would lose coverage under the Governor's proposal is 2.7 million Californians. It's a staggering impact.
And let's not forget: even with *all* the federal funds the Governor has requested, the Governor's proposal would cut over 300,000 Californians from coverage.
Earlier today, thousands of people descended on the Ritz-Carlton in Washington, DC, where America's Health Insurance Plans (AHIP), was having its annual conference. They blocked the streets, wrapped the hotel in yellow police crime tape, and sent a powerful message that Congress should listen to us, not the insurers.
The insurers, both as themselves and through the US Chamber of Commerce, announced multi-million dollar ad buys against health reform.
President Obama is amping up the stakes in the last few weeks. In his road show, he's shown sharper language. He again called out California's biggest insurer: "Anthem Blue Cross just jacked up premiums by nearly 40%. 40%! Anyone's paycheck gone up 40%?" He also references his Congressional opposition: "To Republicans: You had 10 years, what happened?"
As the President said, "The U.S. Congress owes the American people an up or down vote on health care. The time for talk is over. We need to see where people stand."
It’s true, as Jonathan Cohn points out, that the nation’s largest health insurer, Wellpoint, has been “among the most hostile to reform.” And as unearthed by Ezra Klein, at least one investment bank states the reason clearly: “Should health reform fail, Wellpoint would be a primary beneficiary.”
You may not know Wellpoint’s name, but even if you don’t live in my state, you may have heard of their California subsidiary, Anthem Blue Cross. Their rate hikes have been repeatedly spotlighted by the White House, and have been the subject of over a half-dozen inquiries.
The scrutiny comes with the eye-popping rate hikes, and with being the biggest, both in the nation, and in many states like California. But the scrutiny should go beyond the rate hikes to their overall business practices—and the broken health system that rewards bad behavior. To reinforce Ezra Klein’s point, they have perfected a business model based on collecting premiums from the healthy and avoiding as much as possible actually providing coverage to those who are sick.
It starts with their aggressive denial of people with pre-existing conditions—we have many stories of people being denied not just in their 50s but in their 20s, and even for relatively minor issues like heartburn.
Most controversially, Anthem Blue Cross of California had the most number of rescissions in the state, the odious practice investigating patients after a major claim for the purpose of retroactively cancelling a patient’s coverage--even if they have paid months and months of premiums--if they found an inaccuracy on the patient’s application regarding their medical history. They created even more of an uproar when they sent letters asking doctors to turn their patients about unreported pre-existing conditions.
The company also works to ensure that mostly healthy people come to them in the first place. They specialize in cheaper, “bare-bones” plans with high-deductibles or that leave out key benefits. At a recent Congressional hearing, Chairman Henry Waxman of California grilled Wellpoint executives about why the biggest increases were going to more comprehensive plans, including those with maternity coverage, with an effort to shift people into plans where consumer face more financial risk. As the committee staff report indicates:
"Internal documents suggest that WellPoint’s business plan includes moving consumers into less generous plans. This strategy appears to have three components. First, WellPoint’s highest rate increases seem to apply to their most comprehensive insurance plans. Maternity care is a marker for a more comprehensive package of benefits. A chart of proposed rates shows that WellPoint’s highest rate increases apply to the only two product families regulated by the Department of Insurance with maternity coverage. The chart also shows that for the most part, WellPoint proposed lower increases within specific product lines for the versions with higher deductibles than for the versions with lower deductibles."
Anthem uses benefit design, but also marketing, to avoid older folks and get more than its fair share of young and healthy people—also called “cherry-picking.” A classic example is a product like “Tonik,” which is marketed to 19 to 29 year olds, and has higher cost-sharing and omits maternity coverage—the most likely need for coverage for young women. It was perhaps the only insurance product that has been mocked by The Daily Show.
With this and other strategies, the company has been able to send over $525 million from California policyholders to Wellpoint’s Indiana headquarters in just 2009. Wellpoint got over $4.2 billion in earnings since acquiring Anthem in 2004, according to reporting by Lisa Girion of the LA Times. This is despite an agreement with state regulators that the merger would not siphon California policyholder dollars to the out-of-state . Anthem Blue Cross waited out the three years of the agreement, and sent $950 million to the corporate parent the week after.
These practices, yielding these dollars, are why the company has been on the front lines of opposing health reform.
When Governor Schwarzenegger proposed health reform in California in 2007, other insurers were willing (with caveats) to consider living by new rules, like guaranteed issue. As the biggest player in the market, Anthem Blue Cross of California stood alone apart, investing $2 million in an opposition campaign. (My organization and others launched a counter campaign, www.sickofbluecross.com, which continues today).
Other insurers have been ambivalent about health reform, which would mean more potential customers--but that includes sicker patients that they would rather not take, and more accountability and oversight over their operations. Health reform would mean a profound transformation for the industry: insurers competing on cost, quality, and customer service, rather than risk selection and avoiding sick people.
Anthem Blue Cross of California, and its parent company Wellpoint, has internalized the perverse and inequitable incentives of the current, broken individual insurance market: it thrives and profits from the status quo. The only surprise in the investment bank’s analysis that Wellpoint would be a primary beneficiary of reform failing was that it was stated so clearly. The rest of us would be a beneficiary of reform passing, changing the system so such bad practices are no longer good business.
I have been struck that I have been more optimistic about the prospect of health reform that others, and I wonder why. My sense of things is based on my trips to DC, conversations with Hill staffers and stakeholders, etc. I know the pitfalls and policy issues, but also understand the commitment that exists in various quarters to seeing this through.
But there's one advantage I also have: I don't watch a lot of cable news. And this is one area where the more you watch, the less you may know. Unless, of course, you get the perspective of from Comedy Central's Daily Show:
This week's right-on Health Wonk Review is by Brad Wright at Wright on Health which includes good links. There's no relation to me, although a post of mine is included in this left-right round-up. It's worth a read.
We in California are blessed to have a lot of leadership in the House of Representatives, starting with Speaker Nancy Pelosi, and including other caucus leaders like Rep. Xavier Becerra.
It was noteworthy that of the three key committees responsible for health care reform, two are headed by Californians: Chairman George Miller of the House Education and Labor Committee, and Chairman Henry Waxman of the House Energy and Commerce Commitee. But as important has been Rep. Pete Stark, Chair of the Health Subcommittee of the House Ways and Means Committee.
Stark was the next senior person in line after Rep. Charlie Rangel stepped aside due to an ethics investigation yesterday, but Stark decided to step aside and allow Rep. Sander Levin to rise to the post today. Stark says he didn't want the job, and wants to continue focusing on health care.
The Fremont Democrat told Bay Area News Group that he prefers to remain chairman of the Ways and Means Health Subcommittee so he can shepherd and implement health-care reform.
"It seems to me we've got a chance in this Congress — maybe, unfortunately, into the next Congress, but over the next three years — the best chance we've ever had to get decent health care reform, and I've been working on that a long time," said Stark, who has served in the House since 1973.
"Quite honestly, the idea of being chair of Ways and Means and running around the country trying to raise money is the last thing I want to do," he added, calling fundraising on behalf of fellow Democrats for the midterm elections "not exactly my long suit."
Stark, 78, was the next-most-senior Democrat on the tax-writing committee after former Chairman Charlie Rangel, D-N.Y., 79, who temporarily stepped aside Wednesday pending the conclusion of an Ethics Committee probe into his corporate-paid travel. House rules said Stark would automatically take the chair unless he declined, or unless House Democrats voted to pass him over.
For health advocates, it is good that he is staying focused on health care. Rep. Stark and his staff have been absolute champions for health care reform, and for making the reform as good as it can be.
He has been innovative in advancing grand reform ideas, and small changes that make a big difference in people's lives. For example, earlier this year, Rep. Stark was heavily involved in making sure people losing their jobs kept their coverage with the help of a COBRA subsidy.
We are proud to continue to work with him as a pivotal leader on health reform, and much more.
In his speech from the East Room of the White House, President Obama made his final argument for a final comprehensive health reform package. He has distilled his argument as such:
1) consumer protections to end the worst practices of the insurance industry. 2) providing individuals and small businesses seeking health coverage with the choice and purchasing power of large employers and the federal government (like what members of Congress has) through a new Health Insurance Exchange, along with affordability subsidies. 3) helping to control health care costs for everyone, to help our balance our family and federal budgets.
From his speech:
Essentially, my proposal would change three things about the current health care system:
First, it would end the worst practices of insurance companies. No longer would they be able to deny your coverage because of a pre-existing condition. No longer would they be able to drop your coverage because you got sick. No longer would they be able to force you to pay unlimited amounts of money out of your own pocket. No longer would they be able to arbitrarily and massively raise premiums like Anthem Blue Cross recently tried to do in California. Those practices would end.
Second, my proposal would give uninsured individuals and small business owners the same kind of choice of private health insurance that Members of Congress get for themselves. Because if it’s good enough for Members of Congress, it’s good enough for the people who pay their salaries. The reason federal employees get a good deal on health insurance is that we all participate in an insurance marketplace where insurance companies give better rates and coverage because we give them more customers.
This is an idea that many Republicans have embraced in the past. And my proposal says that if you still can’t afford the insurance in this new marketplace, we will offer you tax credits to do so – tax credits that add up to the largest middle class tax cut for health care in history. After all, the wealthiest among us can already buy the best insurance there is, and the least well-off are able to get coverage through Medicaid. But it’s the middle-class that gets squeezed, and that’s who we have to help.
Now, it’s true that all of this will cost money – about $100 billion per year. But most of this comes from the nearly $2 trillion a year that America already spends on health care. It’s just that right now, a lot of that money is being wasted or spent badly. With this plan, we’re going to make sure the dollars we spend go toward making insurance more affordable and more secure. We’re also going to eliminate wasteful taxpayer subsidies that currently go to insurance and pharmaceutical companies, set a new fee on insurance companies that stand to gain as millions of Americans are able to buy insurance, and make sure the wealthiest Americans pay their fair share of Medicare.
The bottom line is, our proposal is paid for. And all new money generated in this plan would go back to small businesses and middle-class families who can’t afford health insurance. It would lower prescription drug prices for seniors. And it would help train new doctors and nurses to provide care for American families.
Finally, my proposal would bring down the cost of health care for millions – families, businesses, and the federal government. We have now incorporated most of the serious ideas from across the political spectrum about how to contain the rising cost of health care – ideas that go after the waste and abuse in our system, especially in programs like Medicare. But we do this while protecting Medicare benefits, and extending the financial stability of the program by nearly a decade.
Our cost-cutting measures mirror most of the proposals in the current Senate bill, which reduces most people’s premiums and brings down our deficit by up to $1 trillion over the next two decades. And those aren’t my numbers – they are the savings determined by the CBO, which is the Washington acronym for the nonpartisan, independent referee of Congress.
First, the victory: Kevin Yamamura reports in sacbee.com's Capitol Alert that today the federal appeals court ruled against Governor Schwarzenegger's cuts to health and human services that include Medi-Cal reimbursement rates for hospitals and pharmacists and In-Home Supportive Services wages:
"The Ninth Circuit agreed with lower court decisions that granted preliminary injunctions against the cuts because California did not comply with the federal Medicaid Act. The cuts were contained in budget agreements over the past two years.
The court decisions not only have blocked past budget cuts, but they could also preclude the state from pursuing similar ways of solving its current $19.9 billion budget deficit. Schwarzenegger, for instance, proposed cuts to IHSS to save roughly $950 million in his January budget plan, but court rulings for now suggest that those solutions will be legally difficult to impose.
The court previously determined that under the Medicaid Act the state Department of Health Care Services must set rates "that bear a reasonable relationship to efficient and economical hospitals' costs of providing quality services, unless the Department shows some justification for rates that substantially deviate from such costs.
The Ninth Circuit on Wednesday determined that the state did not conduct the analysis required under the Medicaid Act to consider the impacts of cuts to IHSS wages or reimbursement rates. In the case California Pharmacists v. Maxwell-Jolly, Judge Milan D. Smith wrote that the court now has handed down "multiple decisions" on how to comply with the Medicaid Act.
Schwarzenegger, for instance, proposed cuts to IHSS to save roughly $950 million in his January budget plan, but court rulings for now suggest that those solutions will be legally difficult to impose."
On Tuesday, Yamamura writes of a different outcome in court regarding the governor's cuts: This time a judge ruled Schwarzenegger's line-item vetoes to reduce funding for several programs were constitutional:
"In a 3-0 decision, Justice J. Anthony Kline wrote that the challenge failed to show that Schwarzenegger had overstepped his executive authority in further reducing expenditures during last July's budget revision. The case, St. John's Well Child and Family Center v. Schwarzenegger, called into question seven line-item vetoes worth $288 million, cutting programs ranging from the Office of AIDS to Healthy Families.
Last year's situation was unique because lawmakers and Schwarzenegger approved the budget act in February, four months early. Because of a further drop in revenues and voter rejection of budget solutions, state leaders had to solve for a new $24 billion deficit last summer.
The language of the July budget revision contained reductions of the budget act, whereas normally the summer budget agreement spells out how much money the state will spend on each program. Governors have the ability to use their line-item veto on "appropriations." Democrats and social service groups claimed that the July reductions did not qualify as appropriations."
It's not just Anthem Blue Cross behaving badly to customers of individual policies in California.
Here's a recent column by David Lazarus of the Los Angeles Times about a 50-year-old father who is a cancer patient who's convinced that his insurance company, Health Net, wants him to die. Health Net paid for the first round of the man's cancer treatment, but when the cancer spread, they declared the company changed its rules and deemed that same treatment "experimental" -- and no longer covered by insurance.
The tale is even more compelling when you hear the patient talk about it in his own words. For the audio version of Lazarus' report, go to KCET's "SoCal Connected."
One thing is true: Evidence of the need for health reform is growing -- case by case, as consumers speak out, one after another.
Anthem Blue Cross continues to be in the white hot spotlight over its 39% premium hike. Just consider the breadth of inquiries closing in on Anthem:
Angry, outspoken consumers. Anthem has about 800,000 individual policy holders in California, many of them now calling for a public option or a consumer walkout on Anthem.
The Assembly Health Committee Chair Dave Jones, who has long pushed a bill to regulate rates for health insurers. Watch for AB 2578 to be heard later this month. Assemblyman Jones is also seeking subpoena power to get more information from Anthem Blue Cross.
Insurance Commissioner Steve Poizner has appointed an independent actuary to evaluate Anthem's premium increases, especially to see if their policies meet minimum loss ratio standards.
Attorney General Jerry Brown has subpoenaed financial records and other documents from Anthem and California's other top health insurers to investigate whether rates are being raised unfairly.
Congressional subcommittee members, including Rep. Henry Waxman (D), held a hearing last week to demand that executives from Anthem's parent corporation, WellPoint Inc., justify the rate increases -- effectively making Anthem Exhibit A for the case for health care reform and insurer regulation.
Consumer Watchdog, which has filed a lawsuit in Ventura, accusing Anthem of closing certain "blocks of health insurance business" to new business without offering comparable options, thereby ensuring that rates rise for those stuck in those policies. Duke Hefland writes in the Los Angeles Times that "plaintiff Randy Freed, 55, of Santa Barbara County, and his wife, Donna, were left with higher premiums and no options to shop around.
President Obama has repeatedly cited the 39% hikes as cause for substantial health reform, kick-starting the health reform legislation in Congress.
And tomorrow, on Wednesday, March 3, U.S. Health and Human Services Secretary Kathleen Sebelius is hosting what she is billing as a conversation with top executives of WellPoint, Aetna, CIGNA and the Health Care Service Corporation. The topic: How do the companies justify their double-digit premium increases and what can be done to keep them in check?
The scrutiny is warranted. The question is what will come of it... both in terms of information, and in terms of reform.
Health reform is moving forward, with a schedule of the prospective votes: The House may consider the Senate health reform proposal on March 19, along with (or soon afterwards) a package of improvements needed to get the 216 votes. The Senate would consider those changes beginning on March 26, backing up to Easter weekend. (The changes would be through a majority-vote "micro-reconcilation" process--remember the main bill passed by 60 votes, but the budget-related changes needed to reconcile the bills only need 51 votes--just the situations for which the reconcilation process was intended.
That's the process. On the policy, President Obama sent a letter to the Congressional leadership about what he took away from the summit. It continues the commitment to move forward with health reform, but with some nods to the ideas of the Republican opponents:
Dear Speaker Pelosi, Senator Reid, Senator McConnell, and Representative Boehner:
Thank you again for the time, energy, and preparation you invested in last Thursday’s bipartisan meeting on health insurance reform. I have always believed that our legislative process works best when both sides can discuss our differences and common goals openly and honestly, and I’m very pleased that our meeting at Blair House offered the American people and their elected representatives a rare opportunity to explore different health reform proposals in extraordinary depth.
The meeting was a good opportunity to move past the usual rhetoric and sound bites that have come to characterize this debate and identify areas on which we agree and disagree. And one point on which everyone expressed agreement was that the cost of health care is a large and growing problem that, left untended, threatens families, businesses and the solvency of our government itself.
I also left convinced that the Republican and Democratic approaches to health care have more in common than most people think.
For example, we agree on the need to reform our insurance markets. We agree on the idea of allowing small businesses and individuals who lack insurance to join together to increase their purchasing power so they can enjoy greater choices and lower prices. And we agree on the dire need to wring out waste, fraud and abuse and get control of skyrocketing health care costs.
But there were also important areas of disagreement. There was a fundamental disagreement about what role the oversight of the health insurance industry should play in reform. I believe we must insist on some common-sense rules of the road to hold insurance companies accountable for the decisions they make to raise premiums and deny coverage. I don’t believe we can afford to leave life-and-death decisions about health care for America’s families to the discretion of insurance company executives alone.
No matter how we move forward, there are at least four policy priorities identified by Republican Members at the meeting that I am exploring. I said throughout this process that I’d continue to draw on the best ideas from both parties, and I’m open to these proposals in that spirit:
1. Although the proposal I released last week included a comprehensive set of initiatives to combat fraud, waste, and abuse, Senator Coburn had an interesting suggestion that we engage medical professionals to conduct random undercover investigations of health care providers that receive reimbursements from Medicare, Medicaid, and other Federal programs.
2. My proposal also included a provision from the Senate health reform bill that authorizes funding to states for demonstrations of alternatives to resolving medical malpractice disputes, including health courts. Last Thursday, we discussed the provision in the bills cosponsored by Senators Coburn and Burr and Representatives Ryan and Nunes (S. 1099) that provides a similar program of grants to states for demonstration projects. Senator Enzi offered a similar proposal in a health insurance reform bill he sponsored in the last Congress. As we discussed, my Administration is already moving forward in funding demonstration projects through the Department of Health and Human Services, and Secretary Sebelius will be awarding $23 million for these grants in the near future. However, in order to advance our shared interest in incentivizing states to explore what works in this arena, I am open to including an appropriation of $50 million in my proposal for additional grants. Currently there is only an authorization, which does not guarantee that the grants will be funded.
3. At the meeting, Senator Grassley raised a concern, shared by many Democrats, that Medicaid reimbursements to doctors are inadequate in many states, and that if Medicaid is expanded to cover more people, we should consider increasing doctor reimbursement. I’m open to exploring ways to address this issue in a fiscally responsible manner.
4. Senator Barrasso raised a suggestion that we expand Health Savings Accounts (HSAs). I know many Republicans believe that HSAs, when used in conjunction with high-deductible health plans, are a good vehicle to encourage more cost-consciousness in consumers’ use of health care services. I believe that high-deductible health plans could be offered in the exchange under my proposal, and I’m open to including language to ensure that is clear. This could help to encourage more people to take advantage of HSAs.
There are provisions that were added to the legislation that shouldn’t have been. That’s why my proposal does not include the Medicare Advantage provision, mentioned by Senator McCain at the meeting, which provided transitional extra benefits for Florida and other states. My proposal eliminates those payments, gradually reducing Medicare Advantage payments across the country relative to fee-for-service Medicare in an equitable fashion (page 8). My proposal rewards high-quality and high-performing plans.
In addition, my proposal eliminates the Nebraska FMAP provision, replacing it with additional federal financing to all states for the expansion of Medicaid. Admittedly, there are areas on which Republicans and Democrats don’t agree. While we all believe that reform must be built around our existing private health insurance system, I believe that we must hold the insurance industry to clear rules, so they can’t arbitrarily raise rates or reduce or eliminate coverage. That must be a part of any serious reform to make it work for the many Americans who have insurance coverage today, as well as those who don’t.
I also believe that piecemeal reform is not the best way to effectively reduce premiums, end the exclusion of people with pre-existing conditions or offer Americans the security of knowing that they will never lose coverage, even if they lose or change jobs.
My ideas have been informed by discussions with Republicans and Democrats, doctors and nurses, health care experts, and everyday Americans – not just last Thursday, but over the course of a yearlong dialogue. Both parties agree that the health care status quo is unsustainable. And both should agree that it’s just not an option to walk away from the millions of American families and business owners counting on reform.
After decades of trying, we’re closer than we’ve ever been to making health insurance reform a reality. I look forward to working with you to complete what would be a truly historic achievement.
Assemblyman John Perez of Los Angeles was sworn in as Speaker this afternoon.
His eloquent speech described his journey to be one of the most powerful people in California. It also started to outline procedural reforms, especially around the budget process. It's worth reading:
In addition to focusing on solving our budget crisis and creating jobs, I want this to be a year of reform, real reform!
I envision a three pronged attack.
There are reforms the people in their wisdom must vote on.
For example, I believe that California’s budget should be approved by a simple majority, just like 47 other states and the federal government. As history has shown time and again, if the people lose confidence in the majority party, that party will soon find itself in the minority.
There are reforms the legislature can adopt in a bipartisan, bicameral way—and we will be finalizing some of those proposals in the next couple days.
However some reforms must be made immediately.
I’ve already announced that the budget will not be written behind closed doors in Big 5 meetings. A full budget committee and subcommittee process will ensure all members get to participate and there is time for public input and independent review of the proposals.
Hearings will be held around the state so that everyday Californians have the opportunity to look us in the eye and tell us how our budget proposals will affect their lives. And more importantly, they will have the chance to offer new ideas to us.
We will broadcast our budget hearings and deliberations on the web and where possible on TV. Posting information on the Internet will make it easy for Californians to view the budget, see our proposals for themselves and evaluate the impact on their lives.
Now I’m a big believer in technology, but sometimes we need to limit its reach. Another essential reform we must make immediately is to limit the use of certain technology on the floor and in hearings.
Starting today, text messages from lobbyists are banned while we’re on this floor or in committee doing the people’s business. Californians expect us to pay full attention to the issues and to each other -- and they deserve to know who is involved in the debate. They need not worry that special interest lobbyists are secretly sending messages of opposition or support to us as we deliberate.
At each of these levels – with the voters, with our Senate colleagues and in our own house, we must work together to produce a package of reforms that each and every one of us can be proud of and that allow us to serve our constituents better.
As we and others continue to push for health reform at the federal level, Dan Weintraub, now of the New York Times, asks why some California legislators are continuing to also advance a single-payer proposal. But why wouldn't health reform advocates continue to educate people about this reform?
When President Obama signs a health reform package, while it will be a major advancement, it won't end the conversation on health reform, at either the state or federal level.
California OneCare is releasing an ad-a-day for 365 days in support of single-payer and SB810. The first ad features is Senator Mark Leno, continuing this year as the author of SB810, having taken the torch from Senate Sheila Kuehl last year. On the night that Jay Leno returns to the venerable talk show, we're happy to spotlight Senator Mark Leno reiterating his support of the venerable health reform:
We look forward to continuing our efforts, on parallel tracks and multiple ways, to improving the health care system for all Californians.
ANTHEM BLUE CROSS RATE HIKES SPUR MOVEMENT ON HEALTH REFORM IN CA AND DC * Rate Hikes Draw Scrutiny; CA's AB 2578 Rate Regulation Bill Gains Momentum * Deep Details from D.C. Hearing with Anthem Blue Cross/Wellpoint CEO * DMHC Holds Hearing on So-Called "Discount Health Card Plans" * Health Access to Help Represent Consumers at Natl Assn of Insurance Commissioners
* Read Our Health Access Blog! Join Us on Facebook! Follow Us on Twitter!
NEW MOMENTUM FOR HEALTH REFORM: A real life and timely example of what needs fixing--in the form of the actions of Anthem Blue Cross of California--can spur momentum for needed reforms of the broken health care insurance market. In Washington, DC, the rate hikes by California's biggest insurer have become Exhibit A in the fight for comprehensive health reform. President Obama even adopted, as part of his proposed unveiled a week ago Monday, a proposal by California Senator Dianne Feinstein for additional federal rate authority to review and reject increases, where appropriate.
These rates were also brought up in the much-commented on White House bipartisan health reform summit this past Thursday. Legislative leaders, including Speaker Nancy Pelosi of California, continue to press to pass a major reform with the goal of completing work before Easter. This would involve the Senate bill--which had already passed the Senate by a 60-vote supermajority--and some changes and improvements done through "reconciliation," which is the purpose of that majority-vote procedure.
RATE REVIEW TO GET A REVIEW: Back in California at the Assembly Health Committee's informational hearing on the rate increases planned by Anthem Blue Cross, Chair Dave Jones (D) cited Anthem's upcoming premium hike of 39% as reason to move aggressively forward with his AB 2578. The bill would allow the Department of Insurance as well as the Department of Managed Health Care to regulate rate increases. Assemblyman Mark Leno (D) is principal co-author. According to Assembly procedural rules, the first date it can be heard in committee is Tuesday, March 23rd.
CONGRESS RELEASES SOME OF THE ANTHEM DOCUMENTS: The Congressional subcommittee of the House Energy and Commerce Committee (chaired by California Rep. Henry Waxman) holding a hearing last week on Anthem's rate increases released a lot of in-depth financial information about WellPoint, Anthem Blue Cross' parent corporation. We've got links and details on the Health Access blog for the wonkish and curious.
SPEAKING UP FOR CONSUMERS AT THE NAIC: This past week, sixteen consumer representatives were named to regularly attend the National Association of Insurance Commissioners--including Health Access and other state-based consumer organizations throughout the country. Health Access' Elizabeth Abbott, was selected by NAIC as one of the official consumer representatives appointed to advise state insurance commissioners and their national organization on health policy and market regulation. The designation of consumer representatives is designed to ensure consumer protections and good public policy are adopted in regulations and policies drafted by the NAIC which often serve as a template for state regulators. Health Access sees this appointment as particularly well-timed to influence state-based and national health care reform efforts with this influential association, which has some specific tasks under the pending health reforms.
In addition to the four years Ms. Abbott has worked for Health Access, she has considerable experience as a long-time federal employee with the Social Security Administration and most recently as the Centers for Medicare and Medicaid Services (CMS) Regional Administrator for the western states and the Pacific Territories.
CRACKDOWN ON "DISCOUNT" PLANS: Health Access and several of our coalition partners (including the California Pan Ethnic Health Network [CPEHN], Health Rights Hotline, and the Health Consumer Alliance) testified before the Department of Managed Health Care (DMHC) in Oakland on February 22 regarding new regulations concerning so-called Discount Health Plans.
Many consumer advocates generally favor the new DMHC regulations because of the strict new requirements laid out governing the actions of these so-called discount health plans operating in California. DMHC has received over 1,000 consumer complaints regarding the deceptive practices engaged in by more than 150 plans selling what they portray as “comprehensive health insurance.” However, many of these companies do not offer a valid discount off the price from a known network of providers. After consumers buy this “discount card” for $25 to even $100 a month, they find that the doctors do not accept the card, do not provide a discount, or would have granted the same or an even greater discount for free based on other affiliations such as churches, unions, automobile clubs, or fraternal organizations.
DMHC has ordered 8 of these companies to “cease and desist” operations in the state, and are establishing requirements and consumer protections for those companies who want to do business in the state. The discount companies were at the public hearing in force claiming these proposed regulations are an unfair restriction on their ability to do business in California and an infringement of their free speech rights. DMHC will take all comments under advisement and release new regulatory language within the next several months. We urge organizations who have members under this predicament to contact us,
Among the many who were transfixed by the 2010 Vancouver Winter Olympics, I even took in the cheesy features celebrating Canadian culture.
Given the debate about health reform here in the states, there is some synergy in having the premier event focused on fitness spotlighted Canada, with their heralded single-payer health system.
The USA-Canada hockey game today, decided in sudden overtime after a literally last-minute goal in regulation time, was amazing. On Twitter, it was also a time for North American trash-talking.
Canadians made their evident pride show, not just about their hockey, but for their health system. An example: "I can't hear you over my free health care." Many American Twitterers were willing to take the Canadian health system, as either the victor's spoils or a consolation prize.
Congratulations to Canada on their win, and to the underdog U.S. team for winning silver and making it a thrilling game. There will be a rematch in four years, in 2014. Coincidentally, that's when the major health coverage expansions are scheduled to take place in the pending federal health reforms. It's a pretty different, uniquely American reform, but it does bring us closer to Canada in dramatically reducing the number of those who find themselves without coverage.
Hopefully, any 2014 rematch of this great Canada-USA hockey game won't feature jibes about our number of uninsured. Hopefully, that rematch will feature *both* countries with near-universal health care.
I just arrived back from Washington, DC, and I have a sober, realistic, and detailed sense that comprehensive health reform can pass in the next several weeks. It's not a forgone conclusion, but it's helpful. Now it's about vote-counting.
Representative Dennis Cardoza, Democrat of California, typifies the speaker’s challenge. The husband of a family practice doctor, he is intimately familiar with the failings of the American health care system. His wife “comes home every night,” he said, “angry and frustrated at insurance companies denying people coverage they have paid for.”
But as a member of the centrist Blue Dog Coalition, Mr. Cardoza is not convinced that Mr. Obama’s bill offers the right prescription. It lacks anti-abortion language he favors, and he does not think it goes far enough in cutting costs. So while he voted for the House version — “with serious reservations,” he said — he is now on the fence.
“I think we can do better,” Mr. Cardoza said of the president’s proposal.
We were proud that all of the California members of the House Democratic caucus supported the House health reform late last year. But there's a reason, given the particularly acute problems in California's health care system: Fewer employers offering coverage to their workers. Public programs facing budget cuts. And a broken individual market that has been spotlighted in the past few weeks for double digits rate increases and much more.
Nowhere is the health care crisis more severe in California than in the Central Valley, which would benefit most from the proposed reforms, such as the subsidies for low- and moderate-income families to afford health care.
Californians should be clear with our entire Congressional delegation about the desperate need for reform, and work to get every member to vote for the final health reform package.
Trying to stay informed on the progress of health care reform can be a tricky. Even a consumer of mainstream media must be saavy enough to figure out which talking heads or commentators are biased -- and then figure out how to block that bias.
That's the only way to really obtain a true picture of what transpired. And if you want, you can declare the winners and losers yourself -- if that's your game.
But if you're lacking the time to view a replay of the summit, and want a straight-forward analysis of what actually transpired -- beyond the talking points of each caucus and the obvious props of the Republicans --here's a good place to go: Paul Krugman's column in the New York Times.
Yesterday, President Obama's bipartisan health reform White House summit reinforced the need and urgency for health reform, to provide security and stability for those with coverage, and to provide affordable choices for those lack it. We had specific reports and reactions on the Health Access Twitter feed, at www.twitter.com/healthaccess.
The systemic health care problems in California came up repeatedly, showing the need for reform in general, and for stronger oversight and regulation of insurers in particular. This should not be a partisan issue: we were pleased to work with Governor Schwarzenegger on health reform in 2007, especially after we got key protections on affordability and other issues.
So we were disappointed yesterday when so many Republican leaders wanted to delay reform and start from scratch, rather than move ahead with the reforms that Californians desperately need.
We are also dismayed that legislators here in California are seeking to remove existing consumer protections, or repeal regulations even before they are passed.
Two specific efforts were spotlighted in the last 48 hours:
* One bill introduced yesterday would prohibit California from implementing the pending health reform--or any other health reform. It's clearly unconstitional. But on the day of a bipartisan summit to figure out areas of agreement, the amendment vividly portrays the GOP opposition to not just this reform, but any reform. The measure would prevent any regulation of the insurance industry--including preventing denials of coverage for pre-existing conditions.
* The major "reform" that Republicans pushed during the summit and through the year is the concept of selling health insurance across state lines. A California bill on the subject was defeated in committee earlier in the week.
Let's be clear: Allowing insurers across state lines would eviscerate all California consumer protections, allowing insurers from other states with much weaker regulations to sell substandard products.
If an insurer or HMO is licensed in another state and a consumer needs recourse, how would the consumer complain? By calling the insurance commissioner in another state? How would the consumer even know where to call? This measure effectively eliminates all enforcement against health insurers and HMOs.
California provides many consumer protections because of a long history of abuses by HMOs and health insurers. Other states provide few or none. Here's a list of the protections that Californians would likely lose by allowing plans licensed from out-of-state:
California Consumer Protections: Process/Financial
1. Fiscal Solvency Requirements (on Insurers, HMOs, medical groups, etc.) 2. Network Adequacy 3. Independent Medical Review 4. Grievance and Appeal Procedures, including urgent appeals 5. Right to Sue an HMO 6. Standards for Utilization Review 7. Reasonable person standard for emergency care 8. Right to a second opinion 9. Public disclosure of criteria for denial of care 10. Timely Access (48 hours for urgent care, doctor's visit within 10 days, etc) 11. Language Access 12. Continuity of care 13. Protection against balance billing for out of network emergency care 14. HMO Help Line: 24/7, 365 days a year
Which consumer protection should Californians go without? Grievance and appeals procedures? Right to a second opinion? Language access?
California Consumer Protections: Benefit Mandates (partial list)
1. Mental Health Parity (1999) 2. Contraceptive Coverage (1999) 3. Diabetes supplies (1999) 4. Prescription drugs: cover medically necessary drugs if drugs covered 5. Cancer screening: “all generally medically accepted cancer screening tests” 6. Drive-through labor and delivery 7. Same-day mastectomy 8. Prostate screening 9. Cleft palate 10. Pap smears 11. Mammograms 12. Well child care
Which benefit mandate should Californians go without? Mammograms? Well child care? Cleft palates? Diabetes supplies?
We wish those who support allowing out-of-state insurers to avoid these regulations would be explicit about what existing consumer protections they would like to effectively repeal. Their proposal would effectively eliminate all of them.
President Obama is hosting a bipartisan White House summit on health reform today, six hours long to be broadcast on C-SPAN.
Among the participants will be four key California leaders, all Democrats from the House of Representatives: Speaker Nancy Pelosi, Chairman Henry Waxman, Chairman George Miller, and Congressman Xavier Becerra.
Two California-specific notes about the Republican participation in this summit:
* State Senator Tony Strickland will be introducing a bill today to prohibit California from implementing the pending health reform--or any other health reform. It's clearly unconstitional. But on the day of a bipartisan summit to figure out areas of agreement, the amendment vividly portrays the GOP opposition to any reform, including any regulation of the insurance industry, including preventing denials of coverage for pre-existing conditions.
* The major reform that Republicans will push is the concept of selling health insurance across state lines. A California bill on the subject was defeated in committee yesterday. Let's be clear about what such a proposal would do: it would obviate all California consumer protections, allowing insurers from other states with much weaker regulations to sell substandard products.
Hopefully, there will be better ideas, and more willingness to move ahead on desperately-needed health reform, at the summit today.
Among the most compelling findings, according to the majority report (emphases added):
* "Internal company documents appear to call into question WellPoint’s assertion that increasing profits was not a factor in the proposed rate increase. On October 7, 2009, Cindy Miller, WellPoint’s Executive Vice President and Chief Actuary, received an e-mail from a senior corporate actuary, Barry Shane. In this e-mail, Mr. Shane wrote that a premium rate increase averaging 23% would “return CA to target profit of 7 percent (vs. 5 percent this year).” The actual rate increase sought by WellPoint averaged 25%.
* "Internal company documents appear to call into question WellPoint’s assertion that the 25% average rate increase is necessary... On October 24, 2009, Mr. Shane, the actuary, e-mailed Mr. Sassi, the head of WellPoint’s individual market division, that WellPoint executives needed to “reach agreement on a filing strategy quickly – specifically in the area of do we file with a cushion allowed for negotiations/margin expansion, or do we file at a lower level that maintains margin, but does not allow for negotiation.” It appears that WellPoint elected to file with “a cushion.” In an October 21, 2009, presentation to the WellPoint Board of Directors, Mr. Sassi identified the “Key Assumptions” in the pricing for the individual market in 2010. This slide differentiated the “2010 Rate Ask” from the “2010 Plan Rate Increase.” According to the slide, WellPoint’s “Rate Ask” would be 25% to 26%, while the “Rate Increase” the company assumed in its “2010 Plan” was just 20.4%.
* "Internal documents suggest that WellPoint’s business plan includes moving consumers into less generous plans. This strategy appears to have three components. First, WellPoint’s highest rate increases seem to apply to their most comprehensive insurance plans. Maternity care is a marker for a more comprehensive package of benefits. A chart of proposed rates shows that WellPoint’s highest rate increases apply to the only two product families regulated by the Department of Insurance with maternity coverage. The chart also shows that for the most part, WellPoint proposed lower increases within specific product lines for the versions with higher deductibles than for the versions with lower deductibles."
In response to questions from Congressional Representatives, Anthem Blue Cross executives offered little relief or explanation to California consumers for either their problematic practices or policy positions. The new documents begin and highlight some of the main unanswered questions: Why are the hikes so much larger than the rate of medical inflation? Are they targeting the increases to certain products or people?
And why are they opposing the health reforms that address their stated reasons for the rate hikes?
Angela Braly, the CEO of Wellpoint, the parent company of Anthem Blue Cross, used her answers to offer her critique of health reform. But the testimony of Anthem Blue Cross confirms the need for health reforms and greater insurer oversight, at both the state and federal level. Health reform would provide help so people would not lose coverage when they lose income, and provide subsidies so premiums never go over a certain percentage of income. The reform would not just help people with direct help, but keep healthy people covered and in the pool, preventing the adverse selection that Anthem decries.
Not to Anthem or Wellpoint's liking, health reform would also provide new rules to ensure that insurers justify large increases and reject those without reason. Insurers should not be allowed to unilaterally raise rates without a reason, or to target rate increases for specific people or products.
Let's not forget that they opposed not just the current federal reforms, but also was aggressive against state reform here in California. It was their practices and policies a few years ago that we described in this video from http://www.sickofbluecross.com/:
Back the California Legislature, a collective sigh of relief wafted from around the Capitol this week as the Assembly and Senate wrapped up their work on mid-year budget cuts.
Meeting the deadline for the eighth special session set by Gov. Schwarzenegger -- yes, that was eight in one year -- Assembly members and state senators advanced a range of "budget solutions."
For now, they avoided the uproar that followed the Legislature's acquiescence to Schwarzenegger's harsh budget cuts last year on health and human services programs. Many advocates, commentators and members of the public pointed out that those were exactly the kinds of programs California families need to survive this punishing recession. The Senate and Assembly appropriately delayed discussion of the proposed health and human services cuts and eliminations until June, after the governor's May revision of his proposed budget is released.
Let's hope that come June, their wisdom holds.
For a brief but detailed overview of the mid-year budget cuts that did pass, see the California Budget Project's analysis at http://www.cbp.org/
WellPoint says the rate increases are a result of medical inflation and healthier policyholders dropping coverage. But the thousands of pages of WellPoint documents we have reviewed tell another story.
They tell a story not about costs, but about profits … not about increasing coverage, but about reducing benefits to policyholders … not about removing barriers to coverage, but about erecting new ones … not about covering more people who have illnesses, but about cutting them off and seeking out new customers who are healthier and wealthier.
The documents also tell a story of potential huge, new premium rate increases still to come.
* WellPoint says that its rate increases have nothing to do with increasing company profits. But an internal company e-mail says that its rate increase would “return CA to target profit of 7 percent.”
* WellPoint says that its rate increases are absolutely necessary. But its internal company documents describe a plan to build in “a cushion” to “allow for negotiations.” The company told its board of directors that its average “rate ask” would be 25%, but that its final “rate increase” would be only 20%.
* Other documents raise the possibility that WellPoint may have manipulated its actuarial assumptions to keep its medical loss ratio, a key measure reviewed by California regulators, “flat.”
* The documents we have reviewed show WellPoint is proposing its highest increases on its more generous plans. At the same time, it is actively developing new products, called “downgrade options,” that reduce benefits for its policyholders.
As we will hear from the witnesses on our first panel, this “purging” process cuts coverage for WellPoint policyholders when they need it most: when they get sick.
And the WellPoint documents point to a future of even higher rate increases. WellPoint told Committee staff that WellPoint voluntarily capped its maximum rate increases at 39%. If WellPoint had not done this, some policyholders could have faced rate increases of over 200%.
One question we asked is where does all of this money go. We have learned that in 2008, WellPoint paid 39 senior executives over $1 million each. And the company spent tens of millions of dollars more on expensive corporate retreats. During 2007 and 2008, WellPoint spent $27 million on 103 executive retreats. One retreat in Scottsdale, Arizona cost over $3 million...
Ultimately, what this hearing will show is that the current system is absolutely unsustainable. If we fail to pass health reform, insurance rates will skyrocket and health insurance will become so expensive only the most healthy and the most wealthy will be able to afford coverage.
We may be getting closer to the tipping point toward rate regulation of health insurance policies -- or so it seemed during Tuesday's Assembly Health Committee hearing on the steep premium hikes planned by Anthem Blue Cross.
Chair Dave Jones (D) led committee members in an informational inquiry into the "astonishing and troubling" plan for Anthem Blue Cross customers to pay up to 39% more (and in some cases, even more than that) for individual health insurance plans in just 60 days' time.
Originally, the corporation had notified customers that their monthly bills would jump in less than 30 days, but Anthem Blue Cross agreed to postpone the hike to allow time for elected representatives to question executives. The company still intends to impose the increases.
WellPoint Chief Executive Angela Braly is scheduled to appear before the subcommittee only a day before President Obama is to bring Democratic and Republican leaders together for what the president hopes will be a fruitful summit on national health care reform. The president's own proposed plan included rate regulation -- and he, on numerous occasions has cited the Anthem increased costs in California as evidence of the need for health care reform.
California has long given health insurance companies a great deal of latitude in operating in the individual market. Anthem Blue Cross executives on Tuesday told the Assembly Health Committee that state Insurance Commissioner Steve Poizner had no issues or questions about the now-controversial 2010 rate increases when Anthem reported its intent to the Department of Insurance last November.
But Anthem executives got a tongue-lashing on Tuesday by California assembly members.
Declaring the rate increase a hardship on California families at a time of economic peril and joblessness, Jones emphatically asked Anthem President Leslie Margolin and Vice President James Oatman: "Have you no shame?"
"The question is disappointing to me," Margolin replied, and then offered to work with legislators to help drive down costs, particularly those resulting from mistakes by hospitals and doctors.
Jones refused to take the offer seriously. "This is from a company that fought tooth and nail in 2007 when Gov. Schwarzenegger was pursuing health reform for exactly the reasons that bring you here," Jones said. "The record leaves me considerably doubtful of what the motives are."
Oatman testified that Anthem Blue Cross had calculated that, with the costly premiums, it would lose 250,000 of its 800,000 individual policy holders in 2010. It also anticipates picking up 250,000 new customers by going after a younger, healthier demographic. Anthem's share of the individual policy market in California has been growing and it is now the largest in the state.
Oatman said "utilization" by existing customers had gone up in 2009, leading consumer advocates such as Beth Capell of Health Access California to charge that the steep premium increases may be a tool for the practice of "churning" older, more care-seeking customers out by burdening them with unsustainable cost increases.
"Anthem Blue Cross is emblematic of the broken health care system we have," Capell said, noting that, since 2007, Health Access has been collecting consumer stories and complaints at sickofbluecross.com. "They deliberately churn, they aim for higher cost-sharing, skinny benefits and ... ultimately contribute to bankruptcies."
Oatman downplayed the hardship on households by characterizing the individual market as a temporary stop for people between jobs -- or, "a residual transitioning marketplace."
Assemblymember Mary Salas (D) said, "There's going to come a time when no one will be able to afford your product. This makes it very, very clear to me that we have to have national health care reform."
The executives fielded some rapid-fire questions about Anthem Blue Cross' profits, and how much money it sends out of state to the parent corporation, WellPoint Inc. in Indiana. They refused to disclose the salary ranges of top executives, saying the information was private, and they were fuzzy on numbers sought by Assemblyman Hector De La Torre (D): amounts spent in 2009 on marketing, lobbying, penalties for wrongfully denying claims, staff to investigate consumer records in order to rescind policies, and so on.
Unfortunately for company executives, the hearing occurred on the same day as the Los Angeles Times published an analysis of the company's regulatory filings that showed that $525 million in Anthem Blue Cross earnings last year were shipped back to Wellpoint. The article supplied many other damning figures to lawmakers, such as the stunning amounts transferred to Blue Cross affiliates in other states.
When the two entities merged in 2004, California leaders worried that the out-of-state, for-profit WellPoint would suck profits from California rather than invest in providing the health care coverage consumers thought they were buying.
WellPoint has 8 million customers signed up with Anthem Blue Cross in California, which is WellPoint's most profitable entity nationwide. It operates in 14 states.
As my colleagues witnessed the Assembly Health Committee hearing on the Anthem Blue Cross rate hikes, and prepare for the Congressional hearings in DC (where I am this week), it's good to remember that this isn't the first time that Anthem Blue Cross has been in the spotlight.
As we note on the website www.sickofbluecross.com, they happen to sell the only insurance product worthy of mockery in an entire segment of The Daily Show, back in 2005.
Targeted to 19- to 29-year olds, Tonik was a prime example of how Anthem Blue Cross of California has been aggressive in its business model to collect premiums from young and healthy people and avoid people who actually may need care.
[Small note: beyond its mockery of Anthem Blue Cross, the segment has perhaps the best health policy chart I have seen, accurately explaining the reasons young people may not have coverage. Despite the notion of "young invincibles," the chart shows that few of the uninsured are "too extreme" and that the main reasons are that many young people are "too poor" or "too sick." Appropriately, health reform would resolve that by preventing denials for pre-existing conditions, and providing subsidies so coverage is not more than a percentage of income.]
There's a lot going on, from the President releasing a new health reform proposa, to the investigations on Anthem Blue Cross, to the state budget, to the action at adminstrative agencies like the Department of Managed Health Care and the Board of Pharmacy.
Here's a quick snippet of some must-read links:
* The President announced his compromise health plan today. Here's the link to the plan. More analysis to come.
* An LA Times article by Shane Goldmacher about the Governor making last minute appointments to the Board of Pharmacy to help gut drug labeling regulations.
* More on the bad behavior of Anthem Blue Cross of California: * Duke Helfand at the LA Times on Commissioner Poizner finding over 700 violations by Anthem Blue Cross. * Lisa Girion at the LA Times reports that Anthem Blue Cross of California has provided more than $4.2 billion in profit to its parent, Wellpoint.
According to various sources, President Obama is slated to post a compromise version of a comprehensive health reform on the White House web site today at 10am East Coast time--7am Pacific.
The big news so far is that the President's package includes a stronger rate regulation component--a response to the Anthem Blue Cross of California rate hike that he has put such a spotlight on in the last week. (Here's the Los Angeles Times story. The New Republic's The Treatment has some analysis, including by yours truly.)
The President is basically adopting a proposal by Senator Dianne Feinstein for a rate authority that would not just review rates, but have the ability to reject them if they were excessive or unjustified.
Both Senator Boxer and Senator Feinstein were working on language for stronger rate regulation well before the Anthem Blue Cross rate hikes came to light, because this isn't a new issue either in California or the country as a whole.
In our state and most of the United States right now, insurers can unilaterally raise rates without justification--especially for individual families and small businesses with little market power. The pending health reform bills already would have provided indirect relief, from the group purchasing power of the exchanges, to the requirement that insurers needed to justify their rates--that by itself was more than what California has now.
So the health reform has several components that can slow the growth in health premiums, but rate authority provides the opportunity for intervention, to ensure that ratepayers actually see the savings.
As part of a larger reform that provides guaranteed issue, community rating and risk adjustment, rate review and regulation would not just check against unwarranted rate hikes, but such increases being used to target certain products or people.
As we know, Assemblyman Dave Jones has attempted to advance a rate regulation bill at the state level, but face a heavy opposition campaign.
Suddenly, whether at the state or federal level, the political prospects for this issue has markedly improved from a mere month ago.
It’s been likened to inviting electrocution by waving around a five iron on a golf course during a lightning storm.
Anthem Blue Cross’ revelation of plans to hike rates by up to 39% (and as we have found out, more) has caused quite the stir. It has galvanized a range of influential elected officials, who followed President Obama in pointing to the example Anthem is setting as evidence that substantial health care reform is needed.
Next week promises the potential of fireworks, as Anthem Blue Cross officials face the scrutiny of questioning from California Assemblyman Dave Jones (D), chair of the Assembly Health Committee; actuaries representing California Insurance Commissioner and gubernatorial candidate Steve Poisner; Congressmen Henry Waxman, Bart Stupak and other members of the Energy and Commerce Subcommittee on Oversight and Investigations.
Adding fuel to what the Wall Street Journal called “an (escalating) firestorm between the Obama administration and health insurers” U.S. Health and Human Services Secretary Kathleen Sebelius released a paper examining double-digit increases or proposed increases in six states.
The report, transparently titled "Insurance Companies Prosper, Families Suffer" contains strong material to support the resurrection of health reform legislation, which next week will be the focus of a bipartisan meeting called by President Obama.
The point of the report is that the problem isn't just one company, or one state. Here’s an excerpt:
Recent economic data show that profits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation.12,13 Last year, as working families struggled with rising health care costs and a recession, the five largest health insurance companies – WellPoint, UnitedHealth Group, Cigna, Aetna, and Humana – took in combined profits of $12.2 billion, up 56 percent over 2008.14 These health insurance companies’ profits grew even as nominal GDP decreased by 1 percent over this same time period.15 WellPoint accumulated more than $2.7 billion in profits in the most recent quarter alone.
Two upcoming conferences of note for advocates for health and human services:
The California Working Families Policy Summit 2010, on February 25th, will feature Keynote Speaker Secretary of Labor Hilda L. Solis, a former California Congresswoman and state legislator. It will also include a taped message from First Lady Michelle Obama.
It is free, although there is a charge for the luncheon. You can register for the conference online at http://www.ccrwf.org/ or download the agenda and mailing or faxing it with payment if it applies. The early registration deadline is Friday, February 19 and registration closes on Friday, February 22.
The California Budget Project 2010 Conference, "The 3 Rs: Recession, Recovery, Reform: What's in Store for California?" on March 25th, features the health policy-obsessed Washington Post reporter, commentator and blogger Ezra Klein, a native Californian.
Sign up by February 20 to attend CBP's one-day public policy conference at the early bird price of $90. Sign up online or by faxing or mailing the form in our conference brochure.
While we have presented at past versions of these conferences, we aren't this year, but we encourage your attendance regardless... We are simply posting these because they provide good, solid information, and they are are worth your time.
New accountability for so-called discount health plans: Key hearing in Oakland on Monday!
Thursday, February 18, 2010
HEALTH ACCESS UPDATE Friday, February 19, 2010
DMHC PROPOSES REGULATION ON SO-CALLED "DISCOUNT HEALTH PLANS" * CA Department of Managed Health Care cracks down on wild west of unlicensed products * Discount health plans are not health insurance, but some pay premiums thinking they are. * Many provide less benefit than a pizza coupon: illusory discounts with phantom providers * Health Access argues in favor of real discounts, real networks, and real notices
* DMHC HEARING on new consumer protections: MONDAY, February 22nd, in Oakland
* Other Items: Updates on Federal Health Reform, Anthem Blue Cross rate hikes, State Budget Issues, and much more on our Health Access Blog. * Join Us on Facebook! Follow Us on Twitter!
The California Department of Managed Health Care has now embarked on the formal process to regulate so-called "discount health plans." This will begin with a public hearing at the Elihu Harris State Building, 1515 Clay Street in Oakland at 11:30 am on Monday, February 22, 2010 and it is expected that industry representatives, advocates, and consumers will all give testimony on this regulation. The specific language can be seen at DMHC’s website at http://www.dmhc.ca.gov/. Interested persons or organizations may also submit written comments to the Department on their website by 5:00 pm on Monday, February 22.
The Department has reacted to many industry abuses where so-called discount health plans marketed a discount health card as real, comprehensive health insurance—which it is not. Some of the documented abuses are:
* Consumers are charged high fees and co-payments by discount health plans ($25 to over $1000 per month) which are of questionable value for that money
* Discount health plans advertise what turns out to be a phantom network of doctors, hospitals, and clinics that allegedly offer discounts to cardholders. However, these providers often are unaware they are part of discount health network and are reluctant to provide services.
* Consumers pay a monthly premium for a discount health card that is billed as a dollar deduction or “percentage off”—but is often no more than or even as great as other discounts commonly given to consumers for free, such as AAA, religious groups, or fraternal organizations.
* In most cases in health care, the value of the discount is illusory because there's no set price of the service to begin with. Many "billed charges" for doctor and hospital care are multiple times what insurers and government programs pay, so a discount off that "sticker price" is still inflated.
* However, the most insidious impact on these consumers is that they believe they have purchased true health insurance that provides some peace of mind; however, they find they are spending good money for a largely worthless product.
DMHC has undertaken to put discount health plans through a rigorous licensing process to establish requirements and test screening and oversight guidelines to separate what may be legitimate businesses from outright fraud artists. They have, for example, · Prohibited from marketing as health insurance · Required the discount health plan to maintain a public website with a complete and accurate directory of all providers by specialty and geographic location · Required plans to provide a toll-free customer assistance call center number and disclose availability of interpretation services for languages other than English where calls must be answered within 5 minutes · Required to offer bona fide discounts tied to the established Medicare fee schedule
Health Access has previously supplied significant policy guidance to the Department in drafting the language of this regulation. Consequently, with some changes, consumer advocates generally support the language in this version of the regulation.
Health Access and many of consumer allies will be present at the upcoming public hearing to support the Department’s strong language to rein in the most egregious abuses in this industry. ORGANIZATIONS AND INDIVIDUALS ARE INVITED TO JOIN US IN SUPPORT OF THE REGULATIONS AT THE MONDAY FEB 22nd OAKLAND HEARING.
If you have questions, or need further information, please contact Elizabeth Abbott at Health Access at (916) 497-0923 or via email at eabbott@health-access.org.
U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius announced that states are able to claim enhanced funds for Medicare Part D drug payments. This should allow California to get $680 million additional money from the federal government.
This decision could mean an additional $160 million more if the enhanced Medicaid match--which the states get through December 2010 due to the American Recovery and Reinvestment Act--is extended by Congress for an extra six months. The House has passed such an extension in both its health reform bill and its jobs bill as well.
After some unfair and harsh statements, Governor Schwarzenegger struck an appreciative tone: “Today’s announcement shows that our bipartisan efforts for a more fair and equitable relationship with the federal government are paying off. Together, state legislative leaders and our Congressional delegation, especially Senators Feinstein and Boxer, have been working to bring California more of the federal dollars we are owed. These funds are important, and while we still have more work to do, I appreciate the commitment of the Obama Administration in responding to our requests for these much-needed funds that are owed to our state.”
This doesn't solve our state budget crisis, but it certainly helps.
with a background as a consumer advocate and community organizer on many issues, including health issues for the last ten years in California and New Jersey.
