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.
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.
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
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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 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/:
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.]
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.
Some back story on the Anthem Blue Cross rate hike story...
From little acorns, mighty oaks grow.
We here at Health Access California do lots of things—we work on bills and regulations, we organize rallies and write blog posts, we send out media releases and talk to reporters, we write policy papers and even have staff meetings. We have a twenty-year record of accomplishment and we keep trying to plant seeds for the future.
2005 was a pretty dark year. The year before, we had just barely lost a major health reform ballot fight. The drug companies were spending $80 million to defeat another ballot initiative we sponsored to give low income uninsured real discounts on drugs. If we had a policy idea, we had few hopes the Governor would sign it. The state budget was not pretty. And there were little chance that anything happy for consumers would happen at the federal level.
But even in what seem dark times we do our job, working on consumer protections big and small.
One of the modest victories we had that year was a bill dealing with the individual insurance market, AB356 authored Assemblymember Wilma Chan, chair of Assembly Health and our champion on hospital charging. We remembered AB356 because it provided a very clear warning to consumers who consider declining their employer coverage or COBRA:
"Please examine your options carefully before declining this coverage. You should be aware that companies selling individual health insurance typically require a review of your medical history that could result in a higher premium or you could be denied coverage entirely."
(This is true and horrible but lots of real folks have no idea that the real world of health insurance could be that awful. Maybe more do now, given the attention to health reform, but the horrors of the individual market are not widely known for fokls who haven't been through the issues.)
One of a handful of modest protections enacted in AB356 was a requirement that HMOs and insurers give consumers 30 days notice before increasing their premiums, including the reasons for the increase.
We did not imagine that such notices would yield press coverage, and one day the President of the United States would be highlighting with outrage at the premium increases levied by a health insurer on individual consumers in California—which he knows about and we know about because consumers are now given notice of premium increases as well as the reason offered by the insurer or HMO for the increase.
We just thought it was wrong that insurers could increase premiums for individuals with no notice at all.
We are also mindful that in many other states, consumers still do not get 30 days notice—consumers probably just get a bill with a higher premium with no notice whatsoever and no explanation.
We are looking forward to next week---when Anthem Blue Cross has now cancelled its investor meeting to participate in the hearing by the House Energy and Commerce Committee---and the hearing by the Assembly Health Committee day before on these increases. It should be an enlightening week.
But it shows that sometimes these small bills for sunshine and disclosure can make a difference. All from the very modest requirement that individual consumers be given 30 days notice before their premiums skyrocket.
And did we mention that we think what Anthem Blue Cross is doing is wrong? There is that, too.
We're hearing from a lot of unhappy Anthem Blue Cross customers this week -- there are many, many customers out there who are fed up, to say the least, with the insurer's planned rate hike of up to 39%. Even if the corporation did agree to put it off for a couple of months.
Many of these Californians have also long been dissatisfied with the service provided by Anthem Blue Cross, which seems to play hide-and-seek when it comes time for them to pay up.
The game goes like this: In order to get reimbursement for policyholders' medical expenses, the customers have to seek it out. And seek. And seek. Many aggravating hours and phone calls and faxes later -- and only then -- does Anthem hold up its end of the bargain.
One woman who needed shoulder surgery did her homework in advance, and called Anthem Blue Cross to make certain the procedure would be covered. Yes, it would, she was assured. One surgery later and Anthem said, oops, your share of the bill is $100,000.
A stressful game of hide-and-seek later, and Anthem changed its tune: The insurer agreed to pick up all but $8,000 of the surgery patient's bill.
Another Anthem Blue Cross customer who runs a small business with her husband got hit with a 35% increase -- after double-digit increases in years prior -- and protested by saying she would shop around for a more consumer-friendly insurance company. Lo and behold, Anthem came back with a better offer: a very modest increase.
This game is unfair and simply bad business. So, of course, is notifying folks that, in this economy, they would be hit with a 39% increase -- much higher than inflation and the rise in medical costs.
Unfortunately for Anthem Blue Cross, one of their newly, truly unhappy customers is a well-known radio commentator and former White House cabinet member who is now a professor at UC Berkeley. Now he says he's shopping around.
There are five ways the Anthem Blue Cross rate hike could have been prevented by the health reforms now pending in Congress: 1) Overall cost containment efforts 2) Rate review 3) The group purchasing power of the exchange 4) Subsidies so people don't lose coverage when they lose income 5) Keeping people covered and in the insurance pool to prevent adverse selection
As we followed on Twitter today, Anthem Blue Cross agreed to delay their controversial and large rate increases in the California individual market for two months, from March 1st to May 1, 2010.
This was in response to California Insurance Commissioner Steve Poizner, who asked for the delay to allow time for an outside actuary to review Anthem Blue Cross' rates.
Anthem remains defiant and unapologetic about the rate increase, and says the rates will ultimately be approved.
They may be right. As pointed out in Marc Lifsher in the Los Angeles Times, the only real authority the Commissioner has is on an related issue, which is whether Anthem Blue Cross was abiding by a 70% "medical loss ratio" requirement--whether 70% of premium dollars were going to patient care, rather than administration and profit. (That requirement was increased from 50% to 70% by former Insurance Commissioner John Garamendi in his last year before becoming Lt. Governor. Federal health reform would increase that requirement to around 85%.)
If nothing else, the delay provides two months of rate relief for many California consumers. Hopefully, the inquiry and attention will provide more information about how Wellpoint and Anthem Blue Cross determines their rates. As the blogger Karoli has noted, increases by Anthem Blue Cross at this level are not uncommon--what is new is that the rates are spotlighting the need for reform, showing their need to be stronger oversight on insurers at exactly the time we are debating what rules they should be under.
But even today's events just reinforce the need for health reform--both the federal health reform bills, and state legislation to put in place more insurance oversight and rate review. Anthem Blue Cross' behavior continues to be the clearest case for why such reforms are needed (more is available at http://www.sickofbluecross.com/).
Here's the statement from Anthem Blue Cross executive Brian A. Sassi:
“Earlier today, Anthem Blue Cross agreed to a request by the California Department of Insurance to postpone a rate adjustment for individual members in California by two months to allow the Department additional time for review. To avoid confusion for our members, this delay will impact all Anthem individual members regulated at either the state Department of Insurance or the Department of Managed Health Care. We welcome the regulatory review and are confident that our rates reflect anticipated medical costs.
“Anthem filed these rates with the appropriate regulators in November of 2009. They are actuarially sound and in full compliance with all requirements in the law. The rate adjustments have been reviewed by an independent expert.
“Our decision to agree to postpone the rate adjustment does not change the underlying issue. All health plans are in the same situation in trying to deal with the steadily increasing medical costs in the delivery system, which are not sustainable. We are also experiencing a higher proportion of healthy individuals choosing not to enroll, leaving an insured pool that utilizes significantly more services. We need to refocus the health care reform debate toward steps that will improve quality and control the underlying medical costs, which is driving the high cost of coverage.
“We understand the impact any rate adjustment has on our members and their ability to continue to carry health insurance. And we are committed to driving quality and reducing costs in the health care system and improving the lives of the Californians we serve and the health of communities all across the state. Members will be receiving a letter shortly that describes these changes in detail and whom to contact for additional information.”
Anthem makes the point that this is a "re-review" of rates filed in November 2009. But that only points out that we need more aggressive rate review to start with, like the legislation that Assemblyman Dave Jones and others have advanced in the legislature in recent years.
Anthem also continues to make the two-point justification of their rates, that it reflects medical costs the impacts from the economy. It's not clear that's the whole story. Medical inflation has only been around 9% this year, nowhere near there 25-39% increases.
And while it may be true that people are dropping coverage, leaving a smaller--and typically sicker--pool to cover, that's something that would be addressed by health reform. After all, health reform would provide subsidies so premiums would not go above a percentage of a family's income; so if you lost a job or income, you wouldn't lose coverage. That not only helps the family, but prevents the adverse selection that leads to higher premiums.
Even if the rate increase is ultimately approved, the next two months can be useful in getting a better and deeper understanding of the issues involved, and what new rules need to be put in place, especially in the individual insurance market.
The plight of millions of Californians who are uninsured was front and center at the annual Insure the Uninsured Project conference held Wednesday in Sacramento, where hundreds of advocates, state officials and health industry professionals gathered to discuss what’s next for federal health reform.
“Timing is everything,” one panelist declared -- and indeed that proved to be the case during talk of industry abuses that continue to underscore the need for rate regulation and broader reform. The recent widely publicized move by Anthem Blue Cross to raise rates by up to 39% on individual policies was cited frequently by speakers as evidence that federal health care reform must move forward.
Anthem Blue Cross has been at the center of a whirlwind of criticism from President Obama on down. On Wednesday, the subsidiary of Indiana-based WellPoint continued to attract sustained attacks at the conference by consumer advocates, state legislators and even industry representatives.
Assembly Health Committee Chair Dave Jones (D) announced a hearing for February 23, saying he would demand justification for the hefty rate increase from executives of Anthem Blue Cross and of the industry in general. Jones noted that WellPoint pulled in $2.4 billion in profits last year, and that the 39% increase follows years of double-digit premium increases by the company.
State Senator Mark Leno (D), who touted his bill for a single-payer system, said he would join Jones in backing legislation to consider imposing disclosure rules and rate regulation on health insurance plans. Jones said he also planned to continue his push for legislation to require more transparency from the industry and place caps on out-of-pocket costs for consumers.
Several panelists spoke of the deep divides between Democrats and Republicans, expressing hopes that those divides could be bridged by reason.
An afternoon panel of stakeholders was tasked with discussing what shape federal health reform may take. Some snippets included:
--John Arensmeyer of Small Business Majority said including provisions to make insurance affordable was absolutely necessary for small businesses to be able to hire quickly. -- Pat Johnston, head of the California Association of Health Plans, said cost-containment initiatives both on base health costs, and including efforts by health plans to cut back their average 12% overhead costs, would be “a vast improvement over the status quo.” -- Elizabeth McNeil of the California Medical Association said requiring health reform to offer the same level of benefits that members of Congress have would win over the public. -- Anthony Wright, executive director of Health Access, advised conferees to offer support to their representatives in Washington and suggested that, with vocal constituent backing, a comprehensive reform package could pass Congress in March, by Easter break.
Judging from reports by several speakers, the death of health reform is way premature, and the discussion was a reminder of its necessity and urgency, given the severity of the health crisis here in California. The Anthem Blue Cross rate hikes is just a symptom of the situation.
We've long had issues with Anthem Blue Cross of California--both their practices and policy positions. That's why we launched http://www.sickofbluecross.com/, to document these issues and collect stories of aggrieved Californians.
Anthem Blue Cross of California has gotten lots of attention in the past few days, due to its controversial increases of up to 39% for their customers in the individual insurance market, as first reported by Duke Helfand of the Los Angeles Times, who has followed up with reporting the fallout.
* President Obama cited--multiple times!--these rate increases on California consumers as one reason why he is continuing to pursue comprehensive health reform.
* Insurance Commissioner Steve Poizner is investigating the increases, according to the Sacramento Bee. It's indicative of how little oversight California currently places on these rates that the Insurance Commissioner is going to contract with an outside actuary to see if Anthem Blue Cross is complying with existing law.
* California's two Senators have weighed in as well, urging action and review at the state level. As the San Francisco Chronicle reports, Senator Boxer urged state Attorney General Jerry Brown to investigate the proposed rate increases and Feinstein asked state Sen. President Pro-Tem Darrell Steinberg, D-Sacramento, to introduce legislation to regulate rates.
* Assemblyman Dave Jones, the chair of the Assembly Health Committee and someone who has long carried a bill on rate regulation, is holding his own hearing on health insurance rates on February 23rd.
* Others, like Jonathan Cohn at the New Republic, have refuted Anthem's explanations on the large increases, and explained why this situation would be prevented--or at least ameliorated--under health reform.
All of these government officials are right to question the premium spikes by California's largest insurer. While we know health costs grow at a rate higher than inflation, they are not growin anywhere near 20%, 30%, or 39% in the past year. However good it is to have this scrutiny now, the point is we need this oversight on a regular basis, and that's why we need health reform.
Anthem has been a longstanding opponent of health reform. Just a few months ago, Anthem Blue Cross was sending anti-health reform messages to their customers. Their new notices--about their premium increases--is the strongest message to date about why we urgently need health reform.
Consumers who buy coverage as individuals have no bargaining power, and are at the mercy of the big insurance companies. The benefits of health reform is to provide consumers with the power of group purchasing, so we all can get better rates for health coverage. Health reform would also put in place rate review, so insurers would have to justify their rate increases much more than they do now in California.
Health Access California will continue to host www.sickofbluecross.com, that contains more background of Anthem Blue Cross of California's anti-consumer record, and is collecting stories of people's experience with the insurer.
Maybe this is how we get some rate review after all.
U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius today sent a letter to Anthem Blue Cross of California urging it to publicly justify its premium hikes for its California individual market customers--hikes that are as much as 39 percent.
Here's the letter:?
February 8, 2010
Leslie Margolin President, Anthem Blue Cross
Dear Ms. Margolin,
One of the biggest pressures facing families, businesses and governments at every level are skyrocketing health insurance costs. With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39 percent. These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.
Your company's strong financial position makes these rate increases even more difficult to understand. As you know, your parent company, WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.
I believe Anthem Blue Cross has a responsibility to provide a detailed justification for these rate increases to the public. Additionally, you should make public information on the percent of your individual market premiums that is used for medical care versus the percent that is used for administrative costs. Policy holders in the individual market deserve to know if their premium increases would be invested in better medical care or insurance company overhead costs like salaries, profits, and advertising. I am aware that the State of California is investigating this matter, and urge Anthem Blue Cross to cooperate fully. In the meantime, I will be closely monitoring the situation.
At a time when health care costs are a critical threat to families as well as the nation's economy, I hope you appreciate the urgent nature of this request. I look forward to your prompt reply.
Sincerely, Kathleen Sebelius Secretary of Health and Human Services
If you have been impacted by this premium increase, visit www.sickofbluecross.com, and tell your story to us...
It's not like Captain Renault is going to burst into Anthem Blue Cross' boardroom and announce he's "shocked!...shocked!" to see more consumer-gouging taking place.
We doubt that anyone is surprised to see Anthem Blue Cross seizing the day and aggressively hiking fees in California -- again -- for individual policy holders.
Never mind that containing costs of health coverage has been a major part of the national conversation for a year now. What matters to Anthem's parent corporation, Wellpoint, located in Indiana, is that the conversation is now down to a hushed whisper, thanks to the Party of No in Washington D.C.
And when it comes to reading political tea leaves, "no" means "yes" to Anthem Blue Cross, which for the second year in a row is increasing premiums by 30 to 39 percent. For Century City podiatrist Mark Weiss, 63, that means his and his wife's annual health insurance bill rises from $20, 184 to $27,336. Wow.
Weiss, who has been a member of Blue Cross for 30 years now, thinks "it's just unconscionable." So do a whole lot of other people -- who need to continue speaking up about it.
Imagine this: When Anthem Blue Cross of California denies you coverage because of your preexisting condition, it not only gets to shun you as a customer, but it still gets to take your money.
He makes yet another case for deep, comprehensive reform of health care in America, which allows insurance companies such as Anthem Blue Cross to profit coming and going.
And here’s how Lazarus closes his column --with a conclusion one can hardly disagree with:
“When it comes to healthcare, there’s apparently no limit to how absurd things can get.”
It’s heart-wrenching to see the long scars, some still deep red, crisscrossing the scalp of 19-year-old Penelope DeMeerleer, who has half a head of thick blond hair and the other half practically mapping out her medical history of 44 brain surgeries.
But don’t feel sorry for Penelope. That’s not what she’s after today at Tuesday’s Health Care for America Now protest in Sacramento. Today, she’s taking on the role of an articulate, proud, sign-waiving activist for real, meaningful health care reform in one of HCAN’s rallies against the insurance industry’s heavy-handed influence on health reform in Washington.
Hundreds of people supporting strong health care reform showed up for protests and “die-ins” in Sacramento, San Francisco, Los Angeles, Santa Ana and San Diego. Some even staged a “crime scene” with actors and yellow tape (saying “It’s a crime to deny care”) to illustrate the raw mortality statistics: In the U.S., one uninsured person dies every 12 minutes, and 45,000 uninsured die every year.
In Sacramento, across from the State Capitol, Penelope doesn’t play the part of a victim. Except for the dire financial consequences, hers is a story of triumph over insurance executives who tried to screen her out as a hopeless, helpless case – in effect, rationing care by insisting she’d never be able to walk or talk and would likely live life “as a vegetable,” she says.
But Penelope’s mother found a doctor who believed she’d improve and wanted to make her better. So in a way, Penelope illustrates what happens when the insurance companies don’t win after deeming patients’ medical conditions too grave (and expensive) to treat.
Penelope was born with a rare congenital disease called hydrocephalus, characterized by the inability of spinal fluids to drain properly. The way it usually works is that spinal fluid moves up the spine, to the brain, and drains back down. In Penelope’s case, the fluid travels up to the brain, and gathers there, causing swelling.
She needs a surgically implanted cerebral shunt to help the fluid drain back down and regular monitoring to make sure it is working properly. Such shunts are a medical device not much improved since their development in the 1960s, and about half of all shunts fail within two years, requiring further surgery to replace them.
In the last quarter-century, the survival rate for people with Penelope’s condition has improved dramatically, to 95 percent. Intellectual disabilities related to hydrocephalus have dropped significantly – by half. Penelope is a bright, well-spoken young woman who understands and accepts her need for continued care, but she does not accept the financial burden insurance companies put on her family.
Holding a hand-lettered sign that said, “We have insurance and jobs and we still can’t afford our co-pays!” Penelope and her mother said her insurance cost $700 a month when she was a baby, and then went up to $1,200 a month, roughly equal to a mortgage payment.
Penelope’s mother, Pam Tuohy-Novinsky, says: “We pay our co-pays, we pay taxes, we are middle-class, hard-working people. But for 19 years, we’ve been getting deeper in debt to insurance companies just to keep her alive.”
And Tuohy-Novinsky’s convinced that keeping Penelope alive was not what the insurance company had in mind. “In the beginning, Blue Cross-Blue Shield said they expected her to die. They seemed to want her to die…,” Tuohy-Novinsky said, as other activists milled around with signs, buttons, petitions and banners demanding insurance reform. “I believe health care is a civil right -- and this is a civil rights protest.”
The practices and policies of Wellpoint/Anthem BlueCross...
Today, Tuesday, October 6th, Californians will protest the practices of Anthem Blue Cross of California, owned by Wellpoint.
Along with over 100 events around the country, these protests are escalating. The California events will be in front of their offices right before or around lunchtime in Los Angeles, San Francisco, Sacramento, Santa Ana, and San Diego. There's more information at the California website at Health Care for America Now!, at http://hcanca.org/
For more about the problematic practices--and policy actions--of Wellpoint and Anthem Blue Cross, visit http://www.sickofbluecross.com/.
This short video on Wellpoint, produced by www.SickForProfit.com, features a California woman who is denied care by the health insurer, and also focuses on a Wellpoint court case against the entire state of Maine:
"This is one for the people," said plaintiff Herbert "Les" Greenberg. The judge "could not understand what Blue Cross did not understand about the law, which is clear on its face."
The award might be small change for Anthem, whose corporate parent, WellPoint Inc., netted $2.5 billion last year.
According to a Times analysis published Feb. 18, Anthem sold thousands of policies that were intended to be safety nets for the sick, jobless and uninsurable at premiums that exceeded state-issued rates. At the time, Anthem said it had erred and pledged to make amends. And Anthem did mail out refund checks. But Greenberg, an investment lawyer, said the $12 check he got fell far short of what he believed he was owed.
It's not easy to get Blue Cross to answer for their policy or their practices. Here's a good video (done by an iPhone) of the San Francisco protest earlier this week, which also got featured with a photo in the New York Times. It features video of Patrick Romano and audio of Linda Leu, both of Health Access California and the national Health Care for America Now campaign.
If you live in California, you’re probably familiar with WellPoint, the biggest insurer in the nation, and their California subsidiary, Anthem Blue Cross - the biggest insurer in the state.
Chances are, many of you reading this are also aware of how WellPoint/Anthem Blue Cross have implemented an aggressive policy aimed at covering only the healthy and doing everything in their power to avoid covering those deemed a “high-risk,” because of so-called “pre-existing conditions.”
But did you know that WellPoint and its subsidiary have also been engaged in an aggressive campaign effort to derail national health reform? Just last month, it was reported that Anthem Blue Cross sent an e-mail to millions of their subscribers littered with false information and outright lies about the House Health Reform Bill, H.R. 3200.
The people of California are fed up. We’re tired of the big insurance companies spending big money to undermine the real reform we so desperately need. Join us on Tuesday September 22nd in Los Angeles and San Francisco as we stand up to California’s most notorious private insurance company.
Los Angeles: What: “Big Insurance: Sick of It” Rally Where: Anthem Blue Cross, 801 S. Figueroa St., Los Angeles When: Tuesday, September 22, 2009 at 11:00 am
San Francisco Bay Area: What: “Big Insurance: Sick of It” Rally Where: Anthem Blue Cross - 2 Embarcadero Center, San Francisco, CA When: Tuesday, September 22, 2009 at 11:30 am
Why WellPoint and Anthem Blue Cross? Wellpoint is the biggest insurer in the nation. Anthem Blue Cross of California, its subsidiary, is the biggest insurer in California, with 6.8 million customers relying on it for coverage. Starting with a “robo-call” campaign in April, Anthem Blue Cross urged subscribers into action to help defeat health reform. More recently, Wellpoint called subscribers and urged them to write letters to Congress per instructions on its fake “grassroots” website. Wellpoint has 33.5 million subscribers — who likely are unaware its CEO is on the record as favoring “profits over people.” Wellpoint & its Anthem Blue Cross of California are the insurer most aggressively opposed to health reform:
In just the first six months of 2009, Wellpoint spent nearly $3 million lobbying Capitol Hill against health reform, targeting the public option that would give them competition in the marketplace.
Just last month, Anthem Blue Cross sent E-mails to California subscribers with false information attacking H.R.3200, the House version of health reform.
California’s Attorney General is investigating complaints that Anthem Blue Cross violated labor law in telling their employes to play politics by attending town halls as opponents of health reform — and signing sample letters to their Congressmen urging the defeat of health reform.
This is not a new role for them. In 2007, Anthem Blue Cross & Wellpoint were the leading opponent to the health reform push of Governor Schwarzenegger, spending over $2 million on a deceptive ad campaign against the proposal.
In Sacramento, they consistently oppose not just big comprehensive health reforms, but even small, specific, common-sense bills at the state legislature. They oppose bills to: stop insurers from charging women more than men; require labeling of insurance policies so consumers know what they are buying, stop insurers from the unfair practice of yanking coverage of people who get sick, make maternity coverage standard in policies, and place a limit on out-of-pocket costs for customers.
Wellpoint and Anthem Blue Cross aren’t just the leading opposition to health reform; they and their anti-consumer practices are the reason we need health reform so urgently.
They are one of the most aggressive companies in denying people coverage for so-called “pre-existing conditions.”
They had the largest cases of rescissions, where insurers retroactively yank people’s coverage away from them after medical bills come in. In February 2009, California fined Anthem Blue Cross $1 million for yanking coverage of 2,330 customers who submitted medical bills. It took the $1 million fine to get Anthem Blue Cross to actually cover those medical expenses that customers paid for when they bought coverage.
They hike rates without justification. Some 80% of individual policy subscribers in California got premium increases of up to 39% in the past year — just as the recession was tightening its grip on people’s household budgets. In fact, Anthem Blue Cross has decided to target the “individual” policy market aggressively in California because it is the least regulated and offers the highest profits. More than a third — about 3 million — of its policies sold in California are the less-regulated individual policies.
They aggressively engage in “cherry-picking,” an insurance industry practice that markets coverage to young, healthy people and avoids those who may need medical care. They market “skeleton” or “junk insurance” with bare-bones coverage for consumers, leaving consumers with significant debt, even after paying premiums.
Anthem Blue Cross and Wellpoint choose profits over people. Wellpoint CEO Angela Braley told shareholders, “We will not sacrifice profitability for membership.” Braley’s executive salary? Upwards of $10 million annually, plus stock options and benefits.
Wellpoint and Anthem Blue Cross of California needs to stop using our premium dollars to oppose health reform, and to stop the practices that make health reform so necessary in the first place.
It looks like Anthem Blue Cross of California is willing to be the bad guy again in the national debate. As Ben Smith in Politico writes and excerpts, they have sent a mass E-mail to their subscribers, making false charges and repeating scare tactics about health reform proposals.
With a 33 million customer list, insurance giant Wellpoint is now actively fueling the misinformation campaign against health insurance reform and America’s Affordable Health Choices Act. In a recent email to customers, California insurer Anthem Blue Cross, a Wellpoint subsidiary, attacked the bill on key fronts.
Myth: The House bill will cause “tens of millions of Americans to lose their private coverage and end up in a government-run plan…”
Fact: Actually, according to non-partisan Congressional Budget Office (CBO), private insurance coverage will expand by 16 million under reform. And under the House bill, no one can ever be forced onto the public health insurance option. The only way someone would be in the public plan is as a result of their own individual choice...
Myth: The House bill will limit “customers' choices of the products they can purchase and how they can purchase health coverage…"
Fact: The heart of the House bill is actually to create MORE choice and MORE options – and to help more Americans afford those options. If you have a private insurance plan now, the House bill:
* provides competition to help make your plan more affordable,
* ends the insurance company practices of discrimination based on age, pre-existing condition, or a newly discovered illness,
* ends copays for preventive care, caps what you pay out-of-pocket, but eliminates yearly or lifetime cost caps on what insurance companies pay, and
* requires a minimum set of benefits to help protect you from the fine print in a flimsy plan.
If you need to purchase health insurance, the bill creates an Insurance Exchange, providing one-stop shopping where you can compare and find the best and most affordable plan for you. All those using the Insurance Exchange will have a range of choices – various private plans, and the public plan.
Myth: The House bill will increase the “premiums of those with private coverage by imposing new mandates and coverage requirements.”
Fact: The House bill promotes competition—designed to make your private insurance premiums more affordable—and offers affordability credits to those who need them. The bill’s minimum benefit requirements (the so-called “coverage requirements” under attack) are modest (less than the average benefit offered today), will NOT lead to increased premiums, and are designed to protect Americans from insurance company whims and fine print.
Furthermore, the bill contains numerous provisions to lower your costs, with caps on what you pay but not what insurers cover, no copays for your preventive care, and ending discrimination against you for getting sick or having a pre-existing condition...
For more health insurance reform myth busting, please click here.
In this Wall Street Journal story from yesterday, Wellpoint's CEO is appallingly frank:
In calls with analysts and investors, WellPoint executives have stressed that it is working to keep its more-profitable business and that the customers leaving tend to be costlier ones. "We're keeping good members and healthy lives that we had been concerned about [losing] in the past," Ms. Braly told analysts last month.
Translation: "Awesome. We won't have to spend money paying for sick people.'' (This is how Sarah Palin thinks the market should work?)
The story, however, touches on a familiar trend throughout the insurance industry -- the loss of employer-sponsored plans. Since 2001, the percentage of firms offering coverage has slipped nearly 10% in less than a decade to 59%.
Nevertheless, Wellpoint increased premiums yesterday to placate investors and as a result expects about 150,000 more business members (on top of the 189,000 business members they've already lost this year) to drop coverage.
Sidenote: Of course, we can expect the number of employers that would drop coverage to *increase* if McCain/Palin win office, as their plan allows insurers to run amok and tax businesses for providing this basic benefit to workers, making the individual market (least efficient, most expensive) more attractive.
Anthem Blue Cross offered *all California hospitals* a piddling $11.8 million to settle a class action lawsuit that was filed after the hospitals were left with millions in unpaid medical bills (not to mention the patients who also suffered financially, emotionally and health-wise) when Blue Cross retroactively cancelled patients' coverage, according to the Sacramento Business Journal.
$11.8 million might sound like a lot, until you consider that the state fined the company $10 million over 1,770 rescissions made since 2004. The hospitals' suit covers a longer time frame.
...and don't forget the $950 million in our premium dollars that the company sent *out of California* to its parent.
Blue Shield and Blue Cross settle on rescissions...
Thursday, July 17, 2008
Big day on rescissions. I was in Los Angeles, testifying before the LA County Commission on Insurance in support of SB840, health reform, and specific pending legislation on recissions--after all there are no less than four bills, sponsored by Assemblymembers De La Torra, Deleon, Hayashi, and Lieu, that include a number of reforms.
I thought I was providing the most up-to-date information, but a lot happened.
The Capitol Weekly and The Los Angeles Times reports on two major settlements, with Blue Shield to restore coverage to 450 rescinded patients and pay a $3 million fine, and Blue Cross to restore coverage to 1770 patients and pay a $10 million fine. Earlier settlements were already reached with Kaiser, HealthNet, and Pacificare, albeit with smaller fines and numbers of people impacted, given their market share.
We'll need to watch over the Department and the insurers to ensure their goals are reached for these consumers:"guaranteed issue coverage, a process for full monetary losses and no back premiums owed," as Department of Managed Health Care Director Cindy Ehnes had identified in the LA Times.
It's good that there has been a focus on getting these folks coverage as soon as possible, even as other court and other proceedings continue. The question is what laws can help moving forward so we radically reduce or eliminate these practices once and for all. The ideas pending include: * providing a independent review of all rescission cases; * standardizing the underwriting proccedings; * shortening the time frame where a patient can be rescinded; * eliminating bonuses paid to employees who rescind more patients; * protecting family members' coverage when a family member is rescinded; and * setting standards for brokers due diligence.
Finally, at the federal level, Congressman Henry Waxman and the House Committee on Oversight and Government Reform held a hearing on the subject, featuring testimony from several rescinded patients, a representative of the insurers, and from California, Secretary Dale Bonner, which oversees the DMHC. It put a federal spotlight on the issues, hopefully helped in getting some attention on these issues in a new light, maybe helped serve as an impetus for these settlements, and sets what being "a regular" may mean.
I wanted to follow up on Anthony's post with some more details about what Gov. Schwarzenegger's administration has laid out as his goals, this year, to tackle the rescission problem.
A quick recap: The state ordered the immediate reinstatement of health coverage for 26 enrollees who had their health policies retroactively cancelled in the past four years by Kaiser, Blue Cross or Blue Shield. Thousands more policies of consumers insured by the three named insurers, Health Net and Pacificare, could also be reinstated after review by an independent arbiter. These retroactive cancellations typically occured after a consumer started using lots of expensive health services -- triggering a second and very, very close look at their application by insurers.
As the system is now, said Daniel Zingale, one of the governor's health policy advisors, "If you use it, you lose it,'' of health coverage. To change this, the governor is supporting the following guidelines and principles to protect consumers:
1) A clear application process, which could help prevent mistakes and omissions 2) If there is no evidence of "willful misrepresentation,'' a policy cannot be rescinded 3) Plans must give adequate notice to consumers about the fact that they are investigating their applications. There would also be an established appeals process for consumers. 4) A prohibition on bonuses, quotas and other incentives for insurance company employees to rescind.
Of course, Zingale pointed out -- and we wholeheartedly agree -- this would all be moot had we passed ABx1 1. With health reform, we would have:
Guaranteed issue: everyone receives coverage, regardless of pre-existing conditions,
Guaranteed that everyone was paying into the system so insurers didn't go nuts about NOT being able exclude the really sick and expensive people,
And guaranteed affordable health coverage and/or subsidies to purchase health coverage for 4 million Californians.
In the absence of that, though, this is a great place to focus reforms that would begin to help consumers feel more secure about the coverage they have.
It's really really annoying to me when people who talk about the "affordabilty'' of insurance only fixate on the premium prices.
And it's especially offensive when we have a person travel from Los Angeles to Sacramento to testify about junk insurance plans -- after having incurred $40,000 costs -- be told that "at least you had insurance.''
As part of an illustration for why we need SB1522 (Steinberg) to organize the individual health insurance market and weed out junk insurance plans, we brought up someone who actually had one of these hospital-only junk insurance plans -- Susan Braig, a former art teacher.
Susan was a conscientious consumer with a modest income. Approaching age 50, she decided she needed to get health insurance after having dropped it briefly in the late-90s during the huge run-up in premium prices. After carefully researching the balance of premium and benefits, she selected the coverage she could afford -- hospital-only, catastrophic coverage through Blue Cross -- the Basic PPO 1000. This has a $1,000 deductible with a $3,500 maximum out-of-pocket, and did not cover doctors visits. After the deductible, 80% of big-ticket services (like surgeries, hospitalizations, etc.) would be covered.
But, Susan rationalized, as many in her predicament might, that she's healthy, never used her insurance before, and could afford the doctor's visits here and there, but that $3,500 was a modest amount to pay if a catastrophic illness befell her.
Well -- shortly after purchasing the policy, she was diagnosed with breast cancer -- and over two years, her credit card debt increased from $5,000 to $45,000.
None of the series of doctors visits, prescription drugs, ultrasounds and lab tests were -- or will be -- covered by Basic PPO 1000. What's worse, it also did NOT count toward her deductible $1,000 deductible.
"Even my chemotherapy treatments were considered "doctor visits'' unless I had the identical treatments an hour from home in a hospital.''
Functionally, Susan is uninsured. This experience has left Susan wondering -- "I'm paying insurance premiums for WHAT?''
So it continues to gall me that the industry makes arguments that the "cost'' of insurance will go up if we weed out plans like Susan's. Up from what? Isn't $40,000 over two years enough already?
The reversal of Blue Cross' efforts to drag doctors in as collaborators into their efforts to deny patients coverage is a welcome step. But it's only a step, treating the symptom, not the underlying disease.
First of all, congratulations to Lisa Girion at the Los Angeles Times for her ongoing coverage of her story, and its broad reach and impact. If anything, it shows how the harsh spotlight of national media (including the network news broadcasts and significant print and electronic coverage) can make a difference. While the outrage was consistent from all sides, I was pleasantly surprised that the media prioritized this story accordingly.
Why does this story have such a powerful impact? After all, relatively few people--5% of all Californians--are subject to these shenanigans. That's the number of people--about 2 million--who have coverage by purchasing it as an individual.
By contrast, 19 million have group coverage through their employer. Another 10 million have coverage through a public program like Medi-Cal or Medicare. (The rest--6-7 million--are uninsured.) Through group coverage, the insurers are not allowed to select who they want to cover, and who they don't. The deal with the insurer is that they have to cover the entire group (all the workers at the employer), the healthy and the sick.
In the individual market, the individual has no market power. They are subject to be denied and discriminated by the insurer. So an individual tries to buy coverage, they are subjected to a mulitple-page questionnaire asking you to detail your health history--and any answer can be grounds for denying you coverage, for so-called "pre-existing conditions." People fill out that questionnaire under penalty of perjury.
But what this recission scandal has revealed is that mistaken answers on that questionnaire can be used against patients--even those who have been paying premiums for months--in revoking their coverage. And Blue Cross is attempting to use their financial power over their network doctors to get them involved in this game of gothcha.
Why has this struck a chord, even though it's a small population?
* Because everybody can imagine being in this situation. Even those with good employer-based coverage know that one day, they'll be: between jobs, working at an employer that doesn't provide coverage, an early retiree, a divorcee, a freelancer, self-employed, starting a new business, or otherwise not have group coverage available to them.
Given the kinds of reasons that people have been denied coverage, it seems that merely living is a "pre-existing condition." And for most people, the idea that they won't have access to coverage--even if they are willing to pay for it--is terrifying.
* This is a core values issue: it strikes right at the heart of the doctor-patient relationship. A doctor should be able to ask about the most sensitive questions--about medical problems, sexual history, drug use--and have the trust to get the most honest answers, in order to be able to provide the most appropriate care.
This places that trust in jeopardy, by having the patient wonder if an ailment he just remembered but forgot on the insurance company application should be withheld from his doctor. It provides a doctor a undeniable conflict of interest, between the patient's best interest to get treated and be covered, and the rules of the insurer who provides the doctor's income stream.
It goes to one of the greatest fears that patients have: that the care provided by doctors is being impacted by profit, rather than medical, considerations.
But the real question is how we can minimize or eliminate underwriting altogether, so that people are not denied for so-called "pre-existing conditions."
* The first is to expand subsidized group coverage as much as possible--through employers, public programs, or ultimately a universal, single-payer health care system, so that insurers are not allowed to pick and choose which individuals they want to cover. They have to cover the *entire* group. * If there has to be an individual market, it needs to be radically reformed with "guaranteed issue" and other, much stronger oversight over insurers. Clearly there need to be protections against "adverse selection," whether through an individual mandate or other mechanisms, but without guaranteed issue as a starting point, then the individual market is just hopelessly broken.
The health reform that stalled in the California Senate, AB x1 1, would have *both* expanded group coverage, shrunk the individual market, and put those new "guaranteed issue" rules in place. So would the outlines of the Clinton and Obama health reform plans. SB840, pending in the California Assembly but the financing blocked by legislative Republicans, would create one big statewide group insurance pool, and would also address this issue.
As for Senator McCain, his health plan actually wants more consumers to rely on the individual market, and to do away with state consumer protections by allowing insurers to sell across state lines.
This issue of Blue Cross' letters--it's a small story that went big, because it goes to the very heart of the health care debate in this country. Blue Cross' reversal doesn't end the debate... at the national level, it may have helped jump-start it.
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.
