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.
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 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,
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.
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.
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.
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.
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...
Health reform continues, at federal and state level...
HEALTH ACCESS UPDATE Monday, February 8, 2010
PRESIDENT OBAMA RECOMMITS TO HEALTH REFORM, SCHEDULES BIPARTISAN SUMMIT * In Renewed Push, Obama To Host GOP at White House on CSPAN on February 25th * President Cites Anthem Blue Cross of California Increasing Premiums up to 39% * New Process Launched for Medi-Cal Federal Waiver Input * Other Items: Some State and Federal Budget Dispatches on our Health Access Blog. * Join Us on Facebook! Follow Us on Twitter!
PRESIDENT OBAMA RENEWS HEALTH REFORM EFFORTS: This weekend, President Obama made a couple of pronouncements renewing his call to pass comprehensive health reform. At a meeting of Democrats in a snow-bound Washington, DC, he said, "Let me be clear: I am not going to walk away from health reform," bringing the audience in the hotel ballroom to their feet. "We can't return to the dereliction of duty," Obama said. "America can't afford to wait, and we can't look backward."
On Sunday, he indicated in an CBS interview before the Super Bowl that he would be inviting leaders from both parties to the White House on February 25th to go over the "best ideas" on health reform, to inform the final negotiations in reconciling the House and Senate bills. The meeting, to be televised on C-SPAN, will likely provide a forum for Republican opponents of the current health reform proposals to provide their alternatives, and to point to parts of the proposals where Republican input has already been taken. Under this schedule laid out by President Obama, the expectation of action on health reform would be possibly in March.
ANTHEM BLUE CROSS HIKES PREMIUMS: In stressing the need for reform, President Obama cited the reasons why the status quo is unsustainable, including the premium increases by Anthem Blue Cross in California, the state's largest insurer. The Los Angeles Times, in an article by Duke Hefland, reports that Anthem Blue Cross -- a subsidiary of Wellpoint in Indianapolis -- is increasing premiums 30% to 39% for the second year in a row for California customers of its individual policies.
Increases are set to take effect March 1, policyholders learned last week. In the Feller household in San Rafael, for instance, that makes the family's health care policy more expensive than their mortgage payment. The Fellers will pay 39% more, driving their annual premium up to $19,896; and then there's a 38% increase for their 26-year-old daughter, adding another $1,572 a year to the Feller's bill.
The letter detailing the increase hints at more hikes to come. It says: "Anthem Blue Cross will usually adjust rates every 12 months; however, we may adjust more frequently in accordance with the terms of your health benefit plan."
If you've got a story about your health insurance premium increases, Health Access would love to hear it. Please contact us directly, or visit www.sickofbluecross.com
SHOULD WE PAY FOR PROBLEMS?: In this memorable past week, we found out that health care spending accounted for more than 17% of the nation's gross national product.
Alan Weil, the executive director of the National Academy for State Health Policy, argues that we can bring down the costs of health care through common sense: Simply pay providers less when they mess up. Weil was in Sacramento for a policy discussion sponsored by the Center for Health Improvement and the California HealthCare Foundation. He argues that providers should face monetary penalties not just for so-called "never" events (mistakes "that should never happen") but for mistakes that are perhaps less drastic such as hospital-acquired infections. Weil calls these "a shouldn't-happen-very-often-event."
It makes us think of a recent article by HealthLeaders Media that began with the question, 'Why do hospital teams unintentionally leave more than 30 types of surgical tools or other items inside their patients, a category of hospital error that California officials say is the second most common preventable adverse event in acute care?"
The Legislature is scheduled to consider launching a study of the phenomena later this year. Either way, the Center for Medicare and Medicaid Services plans to no longer reimburse hospitals for the cost of caring for a patient's injuries, such as hospital-acquired infections, resulting from a "retained foreign object."
GETTING THE BALL ROLLING WITH STAKEHOLDER INPUT ON THE MEDI-CAL WAIVER: The process continues to develop a renewal for California's Medicaid waiver with the federal government. This past week saw the beginning of "technical workgroups" with some stakeholders set to give their input to the California Department of Health Care Services on proposed changes to Medi-Cal, which covers 7 million Californians.
With a focus on ensuring that consumer protections are in place for the Medi-Cal patients affected by the federal waiver request, Health Access is one of several organizations represented, with our Executive Director Anthony Wright (awright@health-access.org) sitting on two stakeholder groups: one on local coverage initiatives, the other on the changes to coverage for seniors and persons with disabilities.
These workgroups and a broader stakeholder advisory committee will consider these issues as the state moves toward submitting a final waiver request to the federal government this coming fall. We'll post more on our blog in the near future.
Got suggestions for future Health-Access Update news items, or notes? Please feel free to send them to updates@health-access.org
He noted he is uninsured—by choice. And that he is concerned about the waste and barriers to coverage by insurance companies—and he may have been overcharged—all issues addressed in the health reform bills. Rush said:
I'm not gonna get health insurance. I'm not going to inflate my bill by 35%. This cost me 30% less than had insurance been involved here. There was not one bureaucrat determining whether or not I was gonna get treatment. There wasn't a death panel here.
He seems to be referring that a lot of insurance premium dollars go to costs beyond patient care. That’s why the health reform bills set minimum medical loss ratios—the industry’s term for the money that is “lost” to care, rather than administration, marketing, and profit.
He also seems concerned about insurance bureaucrats denying care. The health reforms also include independent medical review—a component of a patient’s bill of rights package that has been passed in many states but stalled at the national level until now—so that if an insurer does deny coverage for medically necessary care, patients have the ability to get a third party to review, and possibly overturn, the decision.
His solution to insurance industry abuses is to not get insurance. As a multi-millionaire, Limbaugh had the ability to pay, as he said, just using a credit card.
But for the rest of us, health coverage is not just a good idea, it is essential. It's not an option to be on the hook for thousands (or possibly tens or hundreds of thousands of dollars) if we get sick.
How much did he pay for his short stay? He indicates it’s around the price of a car.
In the first place, you don't need to make $33 million a year or $50 million to afford what happened. I'll put it to you this way. My expenses were less than the cheapest car that you will go out and buy today other than one of these little bubble smart cars. It was five figures less than the average car. Yet for some reason it's immoral for people to have to pay for that. I don't have insurance. "I'm sure he has insurance." No. I pay cash for it and it was less than the price of a car. And just as is the case with a car you could finance your health care coverage. You don't have to come up with the whole lump sum, hospitals, doctors, work with you on this.
As someone who is uninsured, self-pay patient, Limbaugh probably gets charged on average of three times what insurers and public programs pay, for exactly the same service.
That’s because hospitals have a “chargemaster,” or sticker price, for their services that are inflated well beyond the actual cost of providing care. Insurers and public programs, with their market power, have the ability to negotiate the rate down. The uninsured, without that bargaining power, are stuck with the inflated rate.
The cruel irony of our health care system is those with the least are charged the most. In California, the average hospital charge is four times what most insurers pay. I’ve worked with patients who a 3-hour visit to the ER cost $12K; a one-night stay for an appendectomy cost $26K; and people who have racked up six figures in debt. These are the kinds of numbers that force regular middle-income people—however responsible they are—into collections and bankruptcy.
There have been class-action lawsuits about these unfair billing practices, and California and a few other states now cap how much hospitals can charge uninsured within certain incomes. (We have a website, www.hospitalbillhelp.org, to help Californians struggling with high hospital bills.) The Senate health reform places some oversight over hospital pricing policies, which has been a longtime interest of Senator Grassley.
But the ultimate way to prevent this practice of overcharging is to get people into group coverage, where they have the purchasing power to negotiate the best rate. Coverage provides a way for people to share in the risk and cost of health care: even if you are healthy today, you have financial security when (not if) those chest pains, or another ailment, comes upon you, you don’t have the additional shock of a huge bill. And that’s the heart of health reform.
So Rush’s alternative to health reform seems radical: he's not just against health insurance reform, but against health insurance. For most people who can’t absorb a five or six-figure trip to the hospital, that’s a prescription for financial ruin—or worse.
A lot of people say, "Rush, you're really running a risk here of sounding out of touch when you talk about how you can pay for this.”
Yep. Before we agree with those opposing health reform, we should understand what their proposal is.
How will health reform prevent the insurance companies from unjustified rate increases and consumer abuses?
That was one of the main rationale for the public health insurance option, which is still in the House bill and not in the Senate version of health reform. It's not the only mechanism with this goal. Noam Levey at the Los Angeles Times has a good story today focusing on the regulation of insurers in the bills.
It's a topic that has gotten little attention in the media, and so people assume there's little of it in the bill. But the list of new consumer protections is long, both of ones that people have heard of, and ones that people haven't. A partial list of new or improved insurance regulations (compared with the status quo in California) includes:
* Rescissions prohibited on day one. (Thousands rescinded in CA; Settlements with insurers have been negotiated but regulations and legislation stalled.) * No denials or discriminatory pricing based on pre-existing conditions. (Hundreds of thousands denied in CA now.) * No denials or discriminiatory pricing based on gender. (Just banned in CA to go into effect next year.) * A limit of any pricing difference based on age of 3:1 from the oldest to the youngest on a 3:1 basis. (No limit in CA now; practially the pricing difference on age is 9:1) * The establishment of a basic benefit package for all health coverage (Some mandated benefits in CA now, but not even all the basics in Department of Insurance plans: there's not even a requirement in CA that coverage include both doctor and hospitals) * A minimum actuarial value for all plans, and labeling of products based on their comprehensiveness. (No minimum in CA, and lots of "junk" plans that pay out very little are sold in CA) * Standardized definitions between plans of product services (CA health plans are not consistent even within a company over what counts for a "deductible," for example.) * No arbitrary annual caps on coverage (No limits in CA on Dept. of Insurance plans.) * A maximum cap on out-of-pocket costs of $5000 or $6000--and less for lower-income families--so even a plan with higher cost-sharing will at least prevent bankruptcy (No limits in CA on Dept of Insurance plans.) * No cost-sharing for preventative services. (No regulations in CA.) * Minimum medical loss ratio so that money goes patient care rather than administration and profit. (Existing MLRs exist at DMHC and DOI, defined differently. Legislative efforts in CA to increase the MLR have stalled.) * Regulatory review of insurance rate increases. (No process now; CA legislation stalled.)
The article describes the predicament of how to describe what's in the bill. At one level, we appreciate the significant insurance oversight in the bills that goes well beyond our current framework, but will it be sufficient?
Here's two lines from the article that sum it up:
"In any other year, these changes would be cause for a White House signing ceremony with bands and fireworks," said William Vaughan, health policy analyst for Consumers Union.
Like any regulatory framework, however, this one has holes.
Some of the holes are specific and have been identified. As Brian Leubitz of Calitics reports, a majority of the California Congressional delegation--led by Reps. Jackie Speier and Susan Davis, former state legislators that sponsored state consumer protections that Health Access sponsored and/or supported back when--wrote to their leadership to fix a concern about provisions that would make it easier for plans to be sold in one state from states with weaker patients' rights law.
Other holes are one about degree--is it enough? And that's why we need to push hard in conference committee to make it better.
For example, California's Senator Dianne Feinstein has been championing a “rate authority” amendment that would beef up the rate review sections of the bill. Health Access California joined several groups in support of her proposal. We'll see how that effort fares.
We hear Senator Majority Reid's "Manager's Amendment" will include a higher medical loss ratio, incorporating a popular amendment by Senator Al Franken.
But that suggests an issue in other provisions: what is enough? I am pretty sure that the minimum actuarial values proposed in the bills are too low, especially in the Senate. There are those who defend a lower actuarial value, as providing consumers a choice of a lower premium product, even if it provides a lower value. I would argue that a product that ends up only covering on average only 60% of a patient's health expenses shouldn't be called coverage--as a someone said on Twitter, that's just splitting the bill.
But even the mere fact of having a standard on actuarial value, on out-of-pocket costs, on other issues, is a major reform. Would it have been worth it to pass a minimum wage, even if the wage were to be set lower than was really needed? Or does it provide some protection to get rid of the worst abuses, and provide a policy construct for the future? Or it the standard that is set so low as to be meaningless?
Either way, we need to continue to press for strengthened insurance oversight.
Final thoughts: When focusing on a public option and on regulatory oversight, the LA Times article neglects a third strategy regarding insurer accountability regarding insurance company abuses and unjustified rate increases, by using government as a regulator, a negotiator, and a competitor. Without the competitor of a public health insurance option, there needs to renewed focus on the other two strategies.
The strategy of negotiation should merit attention. The new health insurance exchanges are seen as a way to bring individuals and small businesses together, to get both the efficiencies and group purchasing power of large purchasers. The combined Senate bill includes Senator Kerry’s “active purchaser” language--which is similar to the House—to allow the exchange to negotiate with health insurers for the best possible price. Large employers and purchasers typically get better rates and insurers have less overhead and profit. The House is even stronger in this regard, and that’s what we hope can come out of conference committee. It’s another piece of the effort to control costs.
The key point is that these accountability strategies are not either/or. Given that no consumer protection is airtight, there is a need to try multiple efforts to provide the security that families so desperately need. That's why, in addition to the provisions in the bills, and the improvements being attempted, we need to continue to work for a public health insurance option, even if we doesn't get included in this package.
Stinking badges: Pseudo-public meetings at the NAIC
Monday, December 07, 2009
On Friday, two intrepid Health Access staffers took a field trip to San Francisco to venture into the wilds of the National Association of Insurance Commissioners which was holding a “public” forum on health care reform, as part of their regular quarterly conference that moves around the country.
We thought this was important to do since the Senate version of federal reform gives the NAIC considerable responsibility in implementing health reform. We joined colleagues from AARP and Consumers Union, organizations that have worked closely with NAIC over the years on the regulation of Medi-Gap and Medicare Advantage policies.
So what did Health Access observe?
First, to get into the “public” forum, each of us was required to put $650 on our credit cards: the staff promised that this would be refunded if we dropped off our “official” badges. We put our badges in a drop box after 5pm on Friday. We will let you know if we get charged or not.
What kind of public meeting is that requires consumer advocates to present their credit cards to get in? Well, it’s not a public meeting. It's a private trade association advantaging the insurance industry it purports to regulate.
Second, we picked up the list of attendees: no surprise: page after page of insurance company representatives, at least one Pharma representative, lots of lawyers (presumably for insurers), and brokers.
Third, the attorney who presented an “impartial” analysis to the Insurance Commissioners called the Obama health care team the “Taliban”—and no one but no one challenged this characterization or even seemed to take it amiss—except of course for the Health Access team and our other consumer colleagues.
Fourth, our colleagues from AARP and Consumers Union, who were invited speakers, asked for “transparency” and public process. What was plain is that lots of the work of NAIC is done in conference calls in between quarterly face to face convenings that move around the country. Some of the commissioners or their staff said that they would try to provide notice so that there could be public input.
Good grief! In California, when important regulations are under development, there is plain statute requiring notice, the opportunity for the public to participate, an obligation for regulators to respond to comments, and a cop on the beat to enforce these requirements: the Office of Administrative Law. For instance, when the Department of Managed Health Care substantially rewrote the timely access regulations in late 2006 and gave only 15 days (over Christmas) for the public to respond, the Office of Administrative Law tossed out the regulations and forced DMHC to start over again.
But at NAIC, consumers are apparently at the mercy of whatever the Commissioners determine constitutes adequate notice and adequate public process.
When considering health reform, the NAIC should consider some reforms of itself.
Senator Joe Lieberman's latest argument against the public health insurance option struck me strange:
"This is a radical departure from the way we've responded to the market in America in the past," Lieberman said Sunday on NBC's "Meet The Press." "We rely first on competition in our market economy. When the competition fails, then what do we do? We regulate or we litigate. ... We have never before said, in a given business, we don't trust the companies in it, so we're going to have the government go into that business."
"What does he think Social Security is? Or Medicare? Or public fire departments?"
To be fair, his list includes responsibilities that the private industry largely shuns (there's no market for private fire protection), or which the government is the main provider and private industry is a structured alternative (Medicare Advantage) or a supplement (private retirement plans).
The model for the public health insurance option is one where the government isn't the sole provider, but is one among a range of options. One analogy used by Senator Schumer is public universities, UC-Berkeley being an excellent option alongside private colleges like Stanford. But even there, the public health insurance option is not going to be subsidized like the UC system (although less so, as the protests this week show), nor as dominant in terms of being the real and only option for so many Californians.
Maybe a better analogy for Senator Lieberman is public broadcasting, which he has strongly supported over his years (at least when he was a Democrat). Public radio and television stands alongside traditional private radio and television stations as one of several options. Yes, public broadcasting gets a small subsidy, but it's tiny compared to its overall budget. It has been structured with different incentives, and thus has been able to respond to market failures: for example, specializing in educational children's television programming and informational documentaries all of which were unique until the explosion of cable channels; even now, it is an important launching pad for programs. In radio, it has focused on in-depth news, and there's nothing like it on the dial.
There's been a lot of onlinecommentary about how the public health insurance option, given all the compromises to come and already made, may not be worth it. We need to still advocate for a public option that has strong negotiating power, that is national in scope, and begins on day one. But even if it is not available to everybody on day one, or doesn't save all the money that a stronger version does, I do think there are other reasons for it. With a different structure and accountability that the private insurers, it has the real potential to innovate in areas of market failures: Maybe it specializes in really doing the best possible treatment and management of asthma, diabetes, and obesity. Maybe it figures out new ways to provide access to rural populations. Maybe it is just a "safe harbor" for people against continued abuses by private insurers--much like PBS is a safe harbor for parents against TV commercials.
There are many other important issues as well in the health reform debate, from affordability to employer responsibility. But the public health insurance option continues to be a key concept worth fighting for, even with some of the compromises made.
I had to laugh out loud in my sedan while listening to the local NPR affiliate station recently. Think of it as an absurd, tragic-comic commentary on the present state of our health care delivery system. It was a blurb of no more than 5-10 seconds paid for by the underwriter of the local broadcast. A prominent managed health care plan touted its name, followed by a marketing slogan intended to attract more consumers:
". . . where doctors take extra time to get to know each patient."
In our current health care system, that's not standard, that's a selling point.
As we start the Senate debate on health reform, some key items about the health reform that passed the House of Representatives:
Politico's Jonathan Allen and Patrick O'Connor has the scoop on some of the behind-the-scenes back-and-forth around the House of Representatives, which highlights at least three California Representatives, starting with Representative Dennis Cardoza. The article points out an interesting footnote, that the last two Democratic votes for the bill were Californians, Rep. Maxine Waters (who waited to be the deciding vote #218) and afterwards, Rep. Loretta Sanchez.
Health Access supports H.R.3962, as we wrote in our letter supporting the health reform measure. Our letter does mention areas that we agree, and areas where it could improve. What it doesn't mention is the anti-abortion Stupak amendment, which was added on the day of the vote. It's an overreach, going beyond extending the current federal prohibition against federal funding of abortions, to impact any private health plans offered in the exchange.
The amendment is bad in its policy, but also in its politics. The House bill was a very good bill, in most cases better than in Senate counterpart. But the Stupak amendment is a major exception to that rule, and this makes it harder to rally aggressive support for the other House provisions.
There are other issues with the House bill that need to be worked out in a conference committee. Lisa Girion at the Los Angeles Times has an important story about how provisions in health reform might undermine state-based consumer protections. Health Access, which sponsored many of those HMO patients' rights in the past two decades, is working with Senators and members of Congress to point out the issues, so that national health reform serves as a floor, not a ceiling, for consumer protections. Luckily, as the article indicates, some of our members of Congress, from Susan Davis to Jackie Speier to John Garamendi, were heavily involved in the state passage or implementation of those protections, and so have a base of knowledge and passion on this issue.
Not too many years ago, Fresno County workers received their medical coverage for free as a benefit for working for the county. Now, the Bee says, these county workers will likely dig deeper into their slim pockets for another 9% to 19% to cover the costlier premiums.
Workers across California are expected to see coverage increases this open-enrollment season. It makes you wonder how the state’s economy is ever supposed to recover when people have less and less money in their paychecks to cover the basics.
It’s the proverbial vicious cycle: Businesses are selling fewer goods and services because consumers have less money to spend. Premium hikes from our ever-more-expensive current health care system come along, and consumers have even less to spend. Businesses suffer evengreater losses and...well, you get the picture.
Autism is a difficult condition to treat but there are at least some treatments, including intensive behavioral therapy, that increase the odds that a child will be able to lead a more normal and productive life. Intensive behavioral therapy such as applied behavioral analysis is no picnic for either the child or the parents and demands extensive efforts on the part of parents as well as skilled intervention of certified practitioners.
We have been troubled about how DMHC has handled autism claims: a number of cases were referred to independent medical review and the independent medical reviewers found that peer-reviewed science justified the treatment as medically necessary. HMOs than asserted that the care was being denied because it was not a covered benefit rather than on grounds of medical necessity.
Independent medical review was one of the victories consumers won in the HMO Patient Bill of Rights, sponsored by Health Access California and signed into law in 1999. Consumers who are denied care on the grounds that it is not medically necessary can appeal to an independent panel of medical experts who determine whether the science and the particular circumstances of the patient justify the care. (Some treatments work but not for the particular patient.)
There are some flaws in California law with respect to independent medical review. One of them is made obvious by the autism case: independent medical review deals only with determinations of medical necessity, not with whether something is a covered benefit. In some instances whether something is a covered benefit is clear: the coverage does not include durable medical equipment so wheelchairs are not covered. But other times the line between a covered benefit and a determination of medical necessity is murkier: does someone need more than the normal regimen of physical therapy after breaking a leg either because the injury is worse than usual or the individual has diabetes so recovery is delayed? Are the additional physical therapy visits a covered benefit question or a medical necessity determination? The autism question falls into this category as well: the HMOs allege that it is not a covered benefit; the consumer side said the care is medically necessary and a denial violated the Mental Health Parity Act.
Another flaw in the California law with respect to independent medical review is that appeals are not automatic: consumers must push forward at each step, first filing a grievance, then seeking an independent medical review. In this case, a number of very determined parents pushed even further---by filing a lawsuit with the help of Consumer Watchdog. It is an important case and one we will watch carefully as it progresses.
The big news today is that Senator Majority Leader Harry Reid is moving forward with a merged bill that includes a public health insurance option (with a provision for states to "opt-out" of having one if they choose).
I am well aware that the issue of the public option has been a source of great discussion in recent weeks. I have always been a strong supporter of the public option. While the public option is not a silver bullet, I believe it is an important way to ensure competition and to level the playing field for patients.
As we’ve gone through this process, I’ve concluded, with the support of the White House and Senators Baucus and Dodd, that the best way forward is to include a public option with an opt-out provision for states. Under this concept, states will be able to determine whether the public option works well for them and will have the ability to opt-out. I believe that a public option can achieve the goal of bringing meaningful reform to our broken system.
It will protect consumers, keep insurers honest and ensure competition and that’s why we intend to include it on the bill that will be submitted to the Senate for consideration. We have spent countless hours over the last few days in consultation with Senators who have shown a genuine desire to see reform succeed, and I believe there is strong consensus to move forward in this direction.Today’s developments bring us another step closer to achieving our goal of passing a bill this year that lowers costs, preserves choice, creates competition and improves quality of care.
Some other points from the 10-minute press conference:
* Reid said he had the votes to "move to this bill & start legislating." That suggests that he has 60 votes on motion to proceed--but he gave no guarantee he can break a filibuster.
* Reid's best line was that he was "always looking for Republicans [to vote with us].. there're just a little hard to find.. [The number of] moderate Republicans are extremely limited.. I can count them on 2 fingers."
* When he was asked about affordability and subsidies, Reid said the bill was a meld of the HELP and Finance proposals.
* Sen. Reid didn't mention, and not one reporter asked, about merged bill's reqs for employer-based coverage--which is how half of US gets coverage now. There's concern that the Senate version is leaning toward the Finance "free rider" proposal rather than the much better HELP version.
While the U.S. Senate tries to merge the HELP and Finance measures and the House tries to blend the products of three committees (Ways and Means, Education and Labor, and Energy and Commerce), we have been looking at what we would need to do here in California to implement health reform if it is enacted at the federal level.
While the proposals differ in specifics, all of them have an important role for the states in continuing to regulate key aspects of health insurance as well as having either the option or the obligation to operate an “exchange” at the state level.
In particular, as we read the Senate Finance proposal, we were struck by the repeated reliance on the National Association of Insurance Commissioners (NAIC). California is unique in having two regulators for health insurance: the Insurance Commissioner and the Department of Managed Health Care. It is the Insurance Commissioner, currently Steve Poizner, who participates in NAIC, not the DMHC.
Yet most of health insurance in California is regulated by the Department of Managed Health Care. The numbers vary year by year but roughly out of the approximately 20 million Californians with private health insurance, about 80% have products regulated by DMHC and about 20% by DOI. For the 2-2.5 million who buy insurance as individuals, the split is closer: it is usually 60/40, with DMHC sometimes having the majority and other years DOI having the majority of covered lives.
As readers of this blog know from our fights to improve health insurance for those Californians who buy their own coverage, DOI products are much less comprehensive than DMHC products. Insurers regulated by DOI sell hospital-only coverage or coverage that covers three doctor visits, two days in the hospitals, and a few generic drugs and that counts as health insurance at DOI. Of course, the premiums are lower for such junk than for real insurance that actually covers basic health services.
In the real world of the politics of protecting consumers, what does it mean that California has two regulators? Well, it depends. When Pete Wilson was governor vetoing HMO consumer protections left and right, we were grateful to have Insurance Commissioner John Garamendi for four of those years. When Gray Davis signed the 21 bills that made up the HMO Patient Bill of Rights and created the Department of Managed Health Care, headed by Daniel Zingale, while Insurance Commissioner Chuck Quackenbush was taking questionable contributions from insurers, we thought more fondly of DMHC than DOI.
The two departments try to work together—and as would be expected, sometimes and on some issues that works better than other times and other issues.
If health reform is enacted at the national level, and we are doing everything in our power to make that happen, then implementation will occur under a new Governor and new Insurance Commissioner—so it is hard to say whether we will be happy or sad about the prospects for implementation. But what is certain is that winning health reform at the national level is only the first step in making sure that consumers are protected.
Lots of movement in the last few days on health care reform, in both the Senate and the House of Representatives. There's been a clear back-and-forth in both houses, focused on the public health insurance option, and on the savings it generates that allows for better affordability subsidies for low- and moderate-income families.
The general gist is that Speaker Pelosi, representing California well, is working to see if she has the votes to have a health reform that includes a strong public health insurance option (which would start off-the-bat paying providers at 5% higher than Medicare rates)--which in turns allow the reform to provide more financial assistance to low- and moderate-income families. It's important that our Congressmembers hear from constituents that that's the option they want to vote on in the next week or so.
In the Senate, Senate Pro Tem Harry Reid is seeing if he can pass health reform (which means not have a Democratic-caucusing Senator vote to filibuster the bill) include a version of the public health insurance option at all, as he seeks to merge the Senate HELP bill, which has one, with the Senate Finance version, which doesn't. The kind of compromise that has been talked about is an "opt-out" version where a national plan starts on day one, but states can opt-out of it.
Of course, anything in these bills will eventually need to be negotiated between the House and the Senate, so what we are really arguing about is the contours of the final discussion, rather than the final product.
Today several Democratic Senators said that the AHIP report released on the eve of the critical vote in Senate Finance makes the case for health insurance reform, pointing to the need for the public option and for the insurance market reforms.
We agree—and point to p. 13 of the study by PriceWaterhouseCoopers paid for by AHIP. It shows that the almost all of the alleged increase in premiums would result from the health insurance reforms. Why? Two reasons: first, because insurers would be required to sell insurance to everyone, including people who actually need health care, and second, because insurers would be required to cover most of the cost of care (AHIP uses an average or “actuarial value” of 65%).
In California, more than 2 million individuals buy health insurance as individuals---but we estimate that as many as 400,000 are denied coverage because of medical underwriting. And one individual can pay 15 or 20 times as much for the same health insurance product as someone who is younger and healthier---if the older, less healthy individual can get coverage at all.
Shockingly, in many states, individuals are sold so-called insurance where more than half the premium dollar goes to overhead and profits—and less than half goes to paying for health care. This was the case in California until former Insurance Commissioner John Garamendi pushed through regulations supported by Health Access requiring that health insurance products spend at least 70 cents out of every premium dollar on health care. This eliminated a number of insurance products in the California market of minimal value.
The AHIP study ignores the affordability provisions of Senate Finance proposal: Jon Gruber, MIT, who did the modeling for California health reform, offers an insightful perspective---with the subsidies provided in Senate Finance, almost everyone who gets insurance as an individual would spend less on premiums and get more in terms of health benefits than in the current market.
We still have lots of worries about affordability in the Senate Finance proposal—we have supported HR 3200 in part because HR3200 does a job of assuring affordability and decent benefits. But the bill that was voted out of Senate Finance today is a better bill than what they started with. And there is more to do...
Much has been made of the insurance industry's ostensible support for the concept of health reform, but these tensions have been present. They have always been actively opposed to the public health insurance option. They were reluctant to embrace some regulations, like modified community rating, and still opposed others, like minimum medical loss ratios.
In California in 2007, their ambivalence was clearer, since it showed in the different plan's positioning: we had our biggest health insurer, Anthem Blue Cross of California (owned by Wellpoint), actively opposing health reform--as the company has been doing this year as well. But there seemed to be possibility that the industry was split, and some insurers--like HealthNet, or California-based nonprofit plans like Kaiser and BlueShield--were willing to live under another set of rules, and to be supportive of health reform.
But it was always a stretch to call them the "good guys," because even with these plans, what they wanted for their support was so much, it was less than helpful. In return for getting rid of underwriting and screening people for "pre-existing conditions," they wanted an individual mandate, so people wouldn't wait until needing care to buy coverage. It's a revolutionary change to their business model, and fair in concept.
But their demands were a problem: they wanted a strict mandate. This means they wanted no or little exemptions, and a strict enforcement mechanism. They opposed not just the public plan option, but additional regulation.
In order to do away with denying people for "pre-exisitng conditions," the insurers want virtually everyone to get covered to best share the risk and costs of health care. In order to do that, Governor Schwarzenegger proposed a mandate but with not anemic help for people to afford their coverage. While fine for those insurers willing to be supportive, that obviously was a problem for consumer, labor, and community groups, which were successful in increasing the financial assistance that low- and moderate-income families would get--although some differed on whether it was enough.
The insurers tried to be helpful in arguing for more resources--but not at all in recognizing other trade-offs. When the level of subsidies is capped, either explicitly (President Obama has a target costs for health reform around $900 billion over 10 years) or implicitly by the amount of money that it is politically feasible to raise, then they need to recognize that there needs to be some additional security that consumers aren't forced to buy a product that is too expensive: exemptions, more stringent oversight and regulation, and/or competition from a public health insurance option. They oppose those elements, however. As Ezra Klein notes, they aren't even willing to support taxes to help fund the subsidies to buy their product.
The notion that they are willing to abandon their business model is significant--it's one of the truly revolutionary aspects of health reform, that we will move to a system where not only can you not be denied for a pre-existing conditions, but people start to pay based on what they can afford, rather than how sick they are. And insurers would then compete on cost and quality, rather than how effectively they acan avoid sick people. That said, even those insurers willing to play ball have really offered the bare minimum of what the new rules they are willing to play by are.
I hope the AHIP effort does encourage policymakers to increase subsidies so more people can get the coverage they need and want--but that it also strengthens the spine of policymakers' anti-AHIP efforts at greater insurer oversight, cost containment, the public health insurance option, and other important elements that should be included in health reform.
The Governor's legislative actions on health, in full...
Monday, October 12, 2009
HEALTH ACCESS UPDATE Monday, October 12, 2009
HEALTH BILL ROUNDUP: GOV SIGNS KEY MEDI-CAL IMPROVEMENTS, VETOES MOST CONSUMER PROTECTIONS AND INSURER REGS * Signed Bill To Draw Down Over $2.3 Billion in Federal Matching Funds for CA Hospitals and Children’s Coverage; Additional Legislation Needed
* Signed Measure To End Gender Discrimination in Premium Pricing
* Vetoed Bills Would Have Prevented Rescissions; Require Maternity, Mental Health Services; Give Communities Notice Before ER Closures
Governor Arnold Schwarzenegger signed and vetoed over 700 bills yesterday, including several of interest to California's health care consumers.
Governor Schwarzenegger’s actions on end-of-year legislation was mixed for health care consumers. He signed some key proposals to maintain and improve the Medi-Cal program, from getting more federal funds to improving hospital reimbursements, to helping prevent balance billing of Medi-Cal patients, to extending a program for people with disabilities who are working.
But the Governor sided with the insurance industry to veto most of the consumer protections before him. He did sign a key measure to stop women from being charged more than men for premiums, but vetoed other insurance regulation measures to prevent coverage from being rescinded, and ensure that key services, like maternity, mental health and other treatments, are covered.
Here are some of the highlights of the health bills. All bulleted bills were supported by Health Access California.:
MEDI-CAL IMPROVEMENTS, INCLUDING MORE FEDERAL FUNDS
Perhaps the biggest health news was the Governor’s signing of a measure to draw down $2.3 billion in federal funds to increase Med-Cal reimbursement rates as well as support children’s coverage.
* AB 1383 (Jones): HOSPITAL DIVIDEND FEE: would, per federal approval, impose a coverage dividend fee on hospitals for the purpose of drawing down federal funds for increased reimbursement and children’s coverage expansion. SIGNED.
There is more work to do on this issue. In the Governor’s signing message, he indicated the need for additional legislation to implement the change.
With a tough budget year, a struggling health care system, and Medi-Cal rates that are some of the lowest in the nation, AB1383(Jones) is especially urgent given the enhanced match under the economic stimulus period of the American Recovery and Reinvestment Act.
Other bills that improved the Medi-Cal program included:
* AB 1142 (Price): PROOF OF ELIGIBILITY: To prevent "balance billing" of Medi-Cal patients, would require hospitals, as soon as they have proof of a person’s Medi-Cal eligibility, to provide all information regarding that person's Medi-Cal eligibility to all other providers. SIGNED.
* AB 1269 (Brownley): DISABLED WORKERS: Would allow, to the extent that federal financial participation is available, workers with disabilities who are otherwise eligible for Medi-Cal but are temporarily unemployed to elect to remain on Medi-Cal for a period up to 26 weeks. SIGNED.
KEY CONSUMER PROTECTIONS
The Governor vetoed most of the key health care bills on the Governor's desk would provide consumer protections for patients and needed oversight over health insurers, but signed some notable exceptions.
The biggest surprise was the Governor's signing of AB119(Jones), to ban gender discrimination in the pricing of health policies.
Bills that were vetoed included regulations of insurer rescissions, and mandating key benefits like maternity care and mental health services. These were high-profile issues that have been significantly discussed in the national health reform debate, and included in the major health reform proposals in Congress, like H.R. 3200. The bills included:
* AB 119 (Jones): GENDER RATING: to prohibit insurers from charging different premium rates based on gender. SIGNED
A few bills addressed the controversial insurance company practices of retroactively denying coverage, or rescissions.
* AB 2 (De La Torre): INDEPENDENT REVIEW OF RESCISSIONS, to create an independent review process when an insurer wishes to rescind a consumer's health policy, create new standards and requirements for medical underwriting, and requires state review before plan approval. Also raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history. VETOED (See attached veto message) * AB 730 (De La Torre): POSTCLAIMS UNDERWRITING PENALTIES: Would increase and direct fines on insurers unlawfully engaging in rescissions and post-claims medical underwriting. VETOED (See attached veto message) * AB 108 (Hayashi): RECISSION TIME LIMIT: Would make clear a 24-month time limit in which insurers have to rescind, cancel, or limit individual health care policies or charge higher premiums because of fraud once a consumer’s application is approved. SIGNED (See attached signing message)
The Governor largely vetoed virtually all the bills that required that health insurance include key benefits, so patients who have been paying premiums don’t find themselves without needed coverage or care. They included:
* AB 98 (De La Torre): MATERNITY COVERAGE, to require all individual insurance policies to cover maternity services. VETOED (See attached veto message)
* AB 244 (Beall): MENTAL HEALTH PARITY, to require most health plans to provide coverage for all diagnosable mental illnesses. VETOED (See attached veto message)
Other coverage benefit mandates that were vetoed included SB 158 (Wiggins), for cervical cancer screening of the human papillomavirus vaccination (See attached veto message); AB 56 (Portantino) for mammographies (See attached veto message), and AB 513 (de León) for breast-feeding consultation (See attached veto message). One insurer benefit mandate that was signed was SB 630 (Steinberg) for cleft palate reconstructive surgery.
Other pending consumer protections regarding providers included:
* AB 171 (Jones), on DENTAL CREDIT CARDS - Would prohibit dentists' offices from offering high-interest loans to patients while they are under the influence of anesthesia. Would also prohibit dental offices from charging lines of credit before services have been rendered. SIGNED
* SB 196 (Corbett): HOSPITAL/ER CLOSURE NOTICE: Requires public notice of hospital closure or reduction/elimination of emergency medical services. VETOED (See attached veto message)
It's the Governor's deadline day for signing or vetoing bills, and crucial health reform bills are being held hostage under a veto threat over the unrelated issue of water.
Several key health measures hang in the balance today, Sunday, October 11th, the deadline for Governor Arnold Schwarzenegger to sign or veto over 700 bills on his desk. The legislature considered many bills of importance to health care consumers this year (a full list is available at http://www.health-access.org/item.asp?id=158), and many of them made it to the Governor's desk.
It's outrageous that the Governor is taking bills on health and other key areas as hostages in order to extract concessions on unrelated water issues. California consumer and patients will literally pay a price if the Governor follows through on his veto threat. One measure would draw down over $2 billion in desperately needed federal funds for California 's hospitals and children's coverage. Other consumer protection bills would stop women from being charged more than men, help prevent coverage from being rescinded, and ensure that key services, like maternity and mental health are covered.
We'll see what happens later today. Here are some of the highlights of the health bills on the Governor's desk.
FEDERAL FUNDS FOR CALIFORNIA :
With a tough budget year, a struggling health care system, and Medi-Cal rates that are some of the lowest in the nation, there’s an opportunity to draw down over $2 billion in federal matching funds. AB1383(Jones) is especially urgent given the enhanced match under the economic stimulus period of the American Recovery and Reinvestment Act. A veto of this act would be a direct loss of money for both California ’s hospitals and for children’s coverage.
* AB 1383 (Jones): HOSPITAL COVERAGE DIVIDEND FEE - Would, per federal approval, impose a coverage dividend fee on hospitals for the purpose of increased reimbursement and children's coverage expansion.
KEY CONSUMER PROTECTIONS:
Several important health care bills on the Governor's desk would provide key consumer protections for patients and needed oversight over health insurers. These are high-profile issues that have been significantly discussed in the national health reform debate, and included in the major health reform proposals in Congress, like H.R. 3200 which also prevents rescission of coverage, gender discrimination, or coverage that doesn't include such basic benefits as maternity care and mental health.
But any reform measure that emerge from Congress will take years to implement -- and California has the opportunity to provide this relief to consumers quickly, and to start the transition to a reformed and improved health system.
Four selected consumer protection bills awaiting the Governor's action are:
* AB 119 (Jones): GENDER RATING, to prohibit insurers from charging different premium rates based on gender. * AB 2 (De La Torre): INDEPENDENT REVIEW OF RESCISSIONS, to create an independent review process when an insurer wishes to rescind a consumer's health policy, create new standards and requirements for medical underwriting, and requires state review before plan approval. Also raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history. * AB 98 (De La Torre): MATERNITY COVERAGE, to require all individual insurance policies to cover maternity services. * AB 244 (Beall): MENTAL HEALTH PARITY, to require most health plans to provide coverage for all diagnosable mental illnesses.
EVEN CONSENSUS BILLS:
While some of these bills are contentious, there are some consumer protections that have a clear consensus and yet still face a veto—for a second year in the row. AB 171 (Jones), to prevent growing abuses of dental credit cards, passed with unanimous bipartisan votes in the Senate and Assembly, and with the support of both consumer advocates and the California Dental Association. Last year, an earlier version of this bill was blanket-vetoed by the Governor in a similar fashion, over unrelated budget issues, despite the bills’ broad support.
* AB 171 (Jones), on DENTAL CREDIT CARDS - Would prohibit dentists' offices from offering high-interest loans to patients while they are under the influence of anesthesia. Would also prohibit dental offices from charging lines of credit before services have been rendered.
This could be the second year in a row that this common sense consensus measure is vetoed over unrelated issues.
All the bills on this list are supported by Health Access California and other consumer and community organizations, and will be updated regularly and available at www.health-access.org. We'll post a report, on the blog, Twitter, Facebook, etc, when we know what happens...
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.
