Anthem Blue Cross withdraws rate hikes, for now...
Thursday, April 29, 2010
California consumers got some relief today. Insurance Commissioner Steve Poizner announced that Anthem Blue Cross of California has withdrawn their rate filings, after a review of an independent actuary has revealed various problems, including arithmetic errors and double-counting.
The rate hikes of up to 39% were controversial, the subject of a white-hot presidential spotlight during the health reform debate.
It's great that California ratepayers got a reprieve from outrageous rate hikes by Anthem Blue Cross of California.
But more than rate relief, this withdrawal of the rate hike proposals show why we need regulators to have active oversight over the insurance industry. This review was done under existing law, which provided very limited authority, and it was still able to find basic problems in arithmetic and double-counting.
Oversight and regulation matter. This shows why more extensive oversight is needed, some of which is in the federal health reform that passed, and additional rate review proposals that are pending at both the state and federal levels.
Federal health reform (and pending state implementation) would create health insurance exchanges, where people buying coverage as individuals could join and benefit from group purchasing to negotiate for better prices and value. There are also pending proposals at both the state and federal levels to have rate review and approval authority, especially in the period before 2014 when the exchange come into full effect. * At the federal level, California Senator Feinstein has a proposal to regulate rates at the federal level, especially for states that don't have a rate review process. * California is one of those states that does not have rate review, but there are pending bills. Assemblyman Dave Jones has a rate approval bill, AB2578. State Senator Mark Leno has a bill for insurers to disclose their rate methodology, SB1163.
We need these continued reforms, so when Anthem Blue Cross resubmits rate hike proposals, there's a process to properly review them.
It's often said that sunshine is the best disinfectant -- and that may well be the case regarding this surprise development: Lisa Girion of the Los Angeles Times reports that two of the nation's largest insurers -- WellPoint and Blue Shield of California -- have agreed to end the practice of rescission.
WellPoint is the Indiana-based parent corporation of Anthem Blue Cross of California, which has grown notorious lately for its proposed 39% rate increase for individual policyholders, and for a story reported last week by Reuters that WellPoint had systematically targeted breast cancer patients for investigations of fraud, and subsequent rescissions.
Some breast cancer patients had their policies yanked from them, or rescinded, as they were mid-treatment.
The announcements also come as Congress and the Obama administration prepare to crack down on rescissions. Said Angela Braly, CEO of WellPoint, the "goal is to make reform work for our members and for the country."
Since 2004, the LA Times says, at least 5,000 Californians had their insurance policies rescinded by the state's five largest health insurers — Anthem Blue Cross, Blue Shield, Health Net, Kaiser and PacifiCare. That includes about 3,500 policies regulated by the Department of Managed Health Care and another 1,600 policies regulated by the Department of Insurance.
Anthem Blue Cross is postponing a rate increase of up to 39% until further notice, executives at parent company WellPoint say. In an article by Duke Hefland of the Los Angeles Times, WellPoint did not give any indication it was backing off the rate hike altogether. Rather, the Indiana corporation said it was responding to the request of regulators, awaiting completion of an independent actuarial review at the California Department of Insurance.
Although consumers with individual policies took the delay -- the second since Anthem Blue Cross notified rate payers their premiums would increase by double-digits -- as a good sign, the insurer only has to give its customers another 30 day-notice before it can implement the rate hikes.
That is, if it passes the test of showing actuaries that the insurer actually spent at least 70% of customers' premium dollars on medical expenses for individual policy holders.
HHS Secretary Kathleen Sebelius wasted no time in sharply admonishing the CEO of WellPoint Inc. for the insurers' practice of dumping breast cancer patients, and refusing to pay for their care.
In a letter sent to CEO Angela Braly, Sebelius reminded the highly compensated executive ($13-plus million last year) that this sort of practice is soon to be outlawed by the new federal health reform law.
"I hope you will consider these women and their families as you work to end this harmful practice," Sebelius wrote.
An exclusive article by Murray Haas of Reuters documents how Anthem Blue Cross routinely and systematically identifies breast cancer cases among its policyholders and pulls their medical coverage out from under them.
Not only does the article expose the appalling practice of how Anthem Blue Cross uses an algorhythm to search its computer databases for breast cancer cases, it reveals ways in which the WellPoint Inc. subsidiaries actually block breast cancer patients from getting help.
Read it here. Women who'd paid their premiums faithfully and on time suffered dearly .
The callousness of WellPoint and Anthem Blue Cross of California calls for thorough, immediate investigation, prosecution, penalties and the stiffest of regulation.
In a statement released today, Health Care for America Now, a partner of Health Access and a national grassroots coalition working toward successful implementation of health reform, reacted to the appalling news that the 14 Blue Cross Blue Shield Plans owned by WellPoint Inc. have been systematically targeting women stricken with breast cancer:
In a remarkable 4,200-word account published today, Reuters reported that WellPoint developed and used computer software to automatically trigger fraud investigations of breast cancer patients so the insurer could search for phony excuses to dump them. WellPoint is the nation’s largest health insurance company with 33.7 million members, most of whom are in Blue Cross plans in California, New York, Georgia, Kentucky, Maine, Connecticut, Indiana, Wisconsin, Nevada, New Hampshire, Colorado, Missouri, Ohio and Virginia. Meanwhile, WellPoint’s board is rewarding Angela Braly, WellPoint’s CEO, for this behavior. The company paid Braly $13.1 million in 2009, up 51 percent from the year before.
HCAN released the following statement from Ethan Rome, the group’s executive director:
“WellPoint’s Blue Cross-Blue Shield companies’ disregard for human life to maximize profits is immoral and outrageous. The Reuters report shows an unconscionable pattern of denying needed health care to line the pockets of wealthy executives and shareholders.
“Today’s disclosure provides more evidence of why Congress needed to pass national health reform in the first place, and it also shows why we need to curb the extraordinary influence of insurance companies so they don’t interfere with enforcement of the new law. We need the forthcoming federal regulations to shine a light on the insurance companies and hold them accountable for their bad practices.”
ASSEMBLY HEALTH COMMITTEE LAYS CRUCIAL GROUNDWORK FOR HEALTH REFORM * CA Assembly Health Moves Several Bills to Line State Up With Federal Health Reforms * Groundwork is Laid for a State-Run Exchange, Expanded Medi-Cal, High-Risk Pool * AB 2244 Passes, Protects Kids from Discriminatory Pricing Based on Health Status
In a "deadline" week, the California Assembly Health Committee on Tuesday passed a package of health care consumer protection measures, which lay down some basics for making federal health reform real in California.
CHILDREN FIRST, PLEASE: One prominent bill was AB 2244, by Assemblyman Mike Feuer (D). The bill, sponsored by Health Access on behalf of its coalition members, "phases in several key provisions for children," Feuer told the committee.
The rollout of the Patient Protection and Affordable Care Act signed by President Obama on March 23 begins with children. Insurers will no longer be able to deny coverage to children with pre-existing conditions, and they will also have to rescind pre-existing condition exclusions for children already covered by their family policies.
AB 2244 goes beyond federal law in not just preventing denials, but limiting discriminatory charges for "pre-existing conditions" for children as well. The bill phases in "modified community rating" so that insurers are limited to charging plus or minus 20% for a child's health status. The price difference would be phased to plus or minus 10%, and then to no different charges allowed by 2014.
The bill had the support of the Congress of California Seniors, Consumers Union, the 100% Campaign, the California School Employees Association and others. Speaking out in opposition were the California Association of Health Plans and the California Association of Life and Heallth Insurance Companies, saying they believed AB 2244 was "premature."
The opposition by insurers was not a surprise. Just days after Obama signed the landmark law, insurance companies tried to interpret the new rights for children very narrowly. Not so, said the feds. This woule take the next step. In the Assembly Health Committee, the vote was pretty clear: "11 Ayes" and 6 "Nos". The measure now goes to the Assembly Appropriations Committee.
MAKING MEDI-CAL AVAILABLE TO MORE CALIFORNIANS: AB 1595, authored by Dave Jones (D) lined California's income eligibility requirements right up with the new federal law. Under federal reform by January 2014, Medi-Cal, which is administered by the Department of Health Care Services, will offer Medi-Cal coverage to all adults who earn up to 133% of the federal poverty levels -- even adults without children. The income ceiling would be $14,404 for individuals and $29,326 for a family of four.
Funding for the expansion of Medi-Cal will come from Washington, which will provide 100% of the cost of newly eligible starting in 2014 for the first three years. Then the percentage starts to taper off a bit so that, by 2020, the federal government is sending 90% of the cost of newly-eligible Medi-Cal patients. Health Access is in support of the measure, which passed out of committee with 10 votes. Also in support are the 100% Campaign, the Western Center of Law and Poverty, and the American Federation of State, County and Municipal Employees.
THE CALIFORNIA PATIENT PROTECTION AND AFFORDABLE CARE ACT: Assembly Health Committee members adopted Speaker John A. Perez's central bill, AB 1602, which is more or less the leader of the package. AB1602 "makes several sweeping changes," said Perez (D). Among them are creating the California Health Benefit Exchange, where individuals and small businesses can purchase health care coverage. The measure also prohibits group of individual health care plans from establishing lifetime or unreasonable annual limits of the dollar value of benefits. Carriers will also be required to provide preventative services, outlaws denying people coverage for pre-existing conditions and extends dependent coverage to young adults up to age 26. "Let's be clear," Perez told the committee. "Federal health reform is now the law of the land and California will implement it fully." He described the bill as "by necessity a work in progress as we still need an enormous amount of guidance" on implementation from the U.S. Department of Health and Human Services. The bill won 12 votes in its favor.
MATERNITY COVERAGE, ONCE AGAIN: California insurers have been dropping maternity coverage steadily for years now. Just four or five years ago, 82% of policies [CLARIFIATION: offered in the individual market] included maternity coverage and now only 19% do. Arguing in favor of AB 1825, Assemblywoman Bonnie Lowenthal (D) said, "We can't wait another four years to see what happens." She presented AB 1825 for her colleague, Assemblyman Hector De La Torre, who authored the bill. Health Access, the California Medical Association and many other groups supported the bill, which requires every individual or small group health insurance policy to cover maternity services. Insurers had been dropping the coverage from plans in an effort to make them more affordable and sell more policies. Several organizations, however, have criticized this practice as part of an overall trend of gender discrimination by insurance companies. AB 1825 passed with 12 "aye" votes and 6 "nos."
ASSEMBLY HEALTH COMMITTEE PASSES BILLS ALIGNING STATE WITH HEALTH REFORM * CA Assembly Health: Kids in Medi-Cal Won't Be Forced to Re-Enroll Every 6 Months * Hospital Fee Funding Deal to Draw Down More Federal Funds Seeks an Extension * Mental Health Parity Bill Passes in CA Assembly Health -- as It Already Has in DC
HEALTH REFORM CONTINUES IN THE STATE CAPITOL: The California Assembly Health Committee on Tuesday passed a number of measures that align the state's policies closer with provisions outlined in the landmark federal health reform law.
CONTINUOUS KIDS COVERAGE: Foremost, the committee, chaired by William Monning (D), voted to pass AB 2477 to allow children on Medi-Cal to stay covered for a year before their families would have to renew eligibility paperwork. A proposal by the Governor would have required families to renew their children's coverage every six months, with the impact that some parents would miss their deadlines and the children would no longer be covered. The proposal is one of the governor's ideas for saving the state money--at the expense of the health of Californians.
Assemblyman Dave Jones (D), sponsor of AB 2477, a bill supported by Children Now and the 100% Campaign, Health Access, and other coalition partners, wrapped up his arguments in favor of the measure by saying simply, "Vote for our kids!"
Since the historic federal law signed by President Obama requires states to maintain the same level of eligibility they had before the federal reform passed, California risked losing substantial federal funds if it adopted Schwarzenegger's proposal. Semi-annual eligibility review would have posed an unfair burden on families struggling in the recession, frequently on the move and working primarily to put food on the table, Jones said.
With the committee in agreement, AB 2477 now moves to the Assembly Appropriations Committee, where its fiscal impact on the state will be assessed.
MENTAL HEALTH PARITY: Assembly Health Committee members also voted to pass a bill by Assemblyman Jim Beall (D) to require health plans to cover mental illness as they do physical illness. Current California law dictates that only serious mental illnesses be covered, and Beall's AB 1600 extends coverage to other mental illnesses as well.
Again, the provision mirrors what President Obama signed into law. Beall argued that failing to cover mental conditions, including substance abuse and drinking alcohol to excess, cost California's health care system, government and industry too much money in lost productivity and late intervention.
Beall said the bill will also correct some of the discriminatory practices of health insurance companies, which argued that AB 1600 would cost too much money. Health Access' legislative advocate said the bill is consistent with federal health reform, which would also extend mental health parity to the small group market and the individual insurance market by 2014. AB 1600 heads next to the Assembly appropriations committee.
EXTENSION OF PROVIDER TAX ON HOSPITALS TO DRAW DOWN MORE FEDERAL FUNDS: The Assembly Health Committee also considered a measure, AB1653 (Jones), to extend for another six months a three-year deal struck with hospitals through which they pay fees in order to draw down additional matching federal funds.
Lawmakers voted in favor of the measure, which was supported by several hospital associations and is needed to help hospitals cover the voluminous cost of caring for the uninsured in emergency rooms.
The current hospital fee arrangement, which is still pending at the federal level, would collect $2.3 billion a year in order to attract $1.1 billion in matching funds from Washington. Noone spoke up in opposition to the measure, which will next go before the Assembly Appropriations Committee.
KEEP UP THE FIGHT: Many other bills are scheduled for votes in the next week, and insurance companies are already sending in their letters of opposition, on everything from rate regulation to limits on charging children with pre-existing conditions.
ALERT: SEND YOUR ORGANIZATIONAL LETTERS OF SUPPORT: These bills need organizational letters of support ASAP. Please send letters to the bill's author, the chairs of the relevant Health Committees, Senator Elaine Alquist and/or Assemblyman Bill Monning, and members of the relevant policy committee that will review the legislation.
Insurers are sharing their wish-lists with the Legislature, and so we need consumer, community, and constituency organizations to voice the people's view. Submit letters in support of these specific bills, listed on our website. Contact Health Access for sample letters on some of these bills.
Today, we welcomed back Elizabeth Abbott, who spent the last several days in Denver, at the meeting of the National Association of Insurance Commissioners. She represents Health Access California as a consumer representative to this group of insurance regulators that meet quarterly, one of two dozen consumer advocates amidst a sea of insurance industry lobbyists.
HISTORY & HELP: OBAMA SIGNS COMPREHENSIVE HEALTH REFORM BILL; ASSEMBLY MOVES SWIFTLY ON COMPANION HEALTH REFORM BILLS FOR CA
* Historic Bill to Provide Immediate Help to Californians, This Year * CA Assembly Revives Rate Regulation Bill, With Support from Consumers * Unfair Practice of Rescissions To Get Independent Review Under Assembly Bill * Bill to Undo Schwarzenegger Cut of Breast Cancer Program Moves Forward * Federal Reform Movement Gives New Momentum to Previously Stalled CA Bills
Read Our Health Access Blog! Join Us on Facebook! Follow Us on Twitter!
HISTORY: President Barack Obama signed historic health reform legislation yesterday, legislation that will provide security and stability to those with coverage, and new, affordable options for those that don't. When fully implemented in 2014, the bill has the potential of reducing the number of uninsured Americans by 32 million, and preventing people from becoming uninsured due to a loss of income, being between jobs, or due to health status.
IMMEDIATE HELP: At the signing ceremony, the President emphasized the immediate benefits of the reforms. For Californians in 2010, the health reform will:
1. Prevent people from being denied coverage based on “pre-existing conditions.”
- Soon, people who are uninsured due to a pre-existing condition will be able to buy insurance through a special insurance program. Right now, Californians are left in a lurch: our state has a small, underfunded "high-risk pool" that currently has a waiting list--even though it is estimated that over 400,000 have been denied coverage due to health status. - Within 6 months of passage, no new health plan will be able to discriminate against children with pre-existing conditions. - In a few years, no insurance plan will be able to deny coverage to anyone for pre-existing conditions.
2. Provide people with more security, by outlawing the worst insurance company abuses. Insurance companies will:
- No longer be able to cancel insurance coverage retroactively when you get sick. Over 6,000 Californians had their coverage rescinded in the past several years, and health reform would end the practice of rescission. - No longer be able to put lifetime limits on the dollar value of benefits - No longer be able to place co-payments or cost-sharing on key preventive benefits
3. Provide real relief to young adults and their families, to seniors, and to small businesses. Health reform will:
- Allow young adults up to age 26 to stay covered on their parents’ insurance - Reduces prescription drug costs for seniors. Seniors whose spending falls into Medicare’s prescription drug donut hole will have hundreds of dollars of immediate help and the entire coverage gap will be eliminated over time. - Gives subsidies to small businesses. Small businesses choosing to offer coverage to workers will receive a tax benefit of up to 35% of premiums.
SENATE RECONCILIATION: The effort to improve health reform began today as well, as the Senate start to debate a package of "reconciliation" improvements that were passed by the House of Representatives. They are expected to vote on the package before the end of the Easter recess at the end of the week.
NO MORE EXCESSIVE RATE HIKES: It didn't take long for federal health care reform to spur movement of related, complementary legislation in the California Capitol. The combination of President Obama signing the historic health care reform bill this morning and, back in California, continuing outrage over Anthem Blue Cross' rate hikes and the company's sending profits to out-of-state corporate parent WellPoint, Inc., provided new momentum to a bill for rate increase reviews.
Assemblyman Dave Jones (D), the previous chair of the Assembly Health Committee, had tried twice before with versions of this bill, AB 2578. Supporters hope the third time is the charm. Under the leadership of new chair Assemblyman William Monning (D), the Assembly Health Committee members moved the bill on to the Assembly Appropriations Committee, the next stop in the legislative process.
It remains to be seen whether the Governor likes the idea of installing rate review on for-profit and non-profit insurers. But one thing is sure: Legislators from all over California have been hearing from plenty of constituents unhappy about the profiteering bad behavior of Anthem Blue Cross and other insurers.
One consumer who attended the hearing just to speak up for himself as an individual testified that his health insurance premium had ballooned from $600 a month to $1,100 a month in just nine months. Such wild rate hikes may be the insurers’ way of purging aging baby boomers and others they calculate may soon need their benefits – and replacing them with new customers buying less generous plans.
AB 2578, co-authored by Assemblyman Mike Feuer (D) and supported by Health Access California, California Labor Federation, Consumer Watchdog, Consumers Union, would extend the kind of regulation that Proposition 103 requires for auto and other policies to health insurance policies.
The bill would fill a need left unfilled by federal health reform. Although Sen. Dianne Feinstein (D) worked with President Obama to try to insert rate regulation in the federal bill, procedural process rules prevented that from happening. Rather, the federal bill requires that insurers spend at least 85% of the consumer’s premium dollar on health and medical expenses, keeping only 15% for administrative expenses.
As it stands now, AB 2578 would trigger a review for rate increases over 7%, conducted by the Department of Insurance or the Department of Maernaged Health Care. In recent years, insurers have imposed double-digit premium increases on consumers annually, so that the average policy in California expanded in cost by 130% since 1999, Jones said.
Speaking out in opposition to the legislation was the Chamber of Commerce, the California Association of Health Plans, the California Medical Association, Health Net and Anthem Blue Cross. Assemblymembers Anthony Adams, Ted Gaines and Audra Strickland voted against the bill.
RESCISSIONS TO GET INDEPENDENT REVIEW UNDER BILL: The Assembly Health Committee also voted in favor of passing AB 2470, authored by Assemblyman Hector De La Torre (D), out of committee.
Though an insurance industry spokesman testified that firms have cleaned up their act since the Los Angeles Times first wrote a series of stories exposing the practice of insurers' rescinding policies once patients incurred medical expenses, De La Torre said the Department of Insurance has been less than forthcoming with information to support that statement.
Insurers also stated that the new federal health reform prohibits rescission immediately, and eventually moves to a guaranteed issue market--and so the bill is unnecessary. De La Torre welcomed the federal law, but said that the bill would provide the regulation to implement the new federal reform. In addition, state regulators have been too slow in coming up with their own regulations that they promised to unveil a year ago this month.
Stalled last year, De La Torre said the bill was needed because consumers were vulnerable to insurance company abuses in the four year window until the federal reform phases out denials for "pre-existing conditions" in the individual market altogether. It is in the individual market that the recissions -- fully 6,000 of them between 2004 and 2009-- took place in California. In only 5% of those cases were consumers compensated, said De La Torre.
Arguing against the bill was the California Association of Health Plans, the Chamber of Commerce, California Life and Health Insurance Companies.
EVERY WOMAN COUNTS, REALLY! -- Assemblywoman Noreen Evans (D), challenging the Schwarzenegger Administration over an unapproved cut of public breast cancer prevention and treatment services, ushered through the committee a bill that states the Legislature's intent to reverse the governor's decision.
Evans, who earlier held a hearing and orchestrated a Capitol steps bakesale to call attention to the cuts and raise money (about $3,800) for the program, reiterated that the Administration was specifically told "no" -- it could not go through with the cutbacks -- but it did so anyway.
The governor needs the Legislature's consent to make the kinds of changes to the program that it did starting in January of 2010. Breast cancer screenings were scaled back to just women 50 and above, eliminating the service for those who previously could access it starting at age 40. Experts testified that many deadly, aggressive breast cancers tend to show up before age 50.
The governor also unilaterally froze enrollment in the "Every Woman Counts" program for the first six months of this year in order to save money. Again, the Legislature had said no to this proposal last June. The bill passed out of Assembly Health on Tuesday, and will pick up details about its funding (through the tobacco tax provided by Proposition 99 ) before it moves to the next commitee, Evans said.
NEW MOMENTUM EVIDENT ON HEALTH INSURANCE REFORM: President Obama's signing of the federal health reform legislation clearly gave a boost to bills to shape up California's insurance industry practices. Supporters spoke about the importance of a fresh era of transparency and consumer protection.
Also speaking in support of AB 2578, Assemblymember Mary Salas (D) said: "This bill is so important at this historic moment."
President Obama today signed comprehensive health care reform into law... and this evening, the Senate is taking up a package of improvements. Hopefully, those improvements will be passed and the President will sign them within the next week.
Here in California, the Assembly Health Committee today was considering important improvements as well.
* The Assembly Health Committee just passed Assembly Bill 2578 (Jones and Feuer). AB 2578 requires that prior approval be obtained before health insurance rates are increased. HMOs and health insurers would need to receive approval from the Department of Managed Health Care (DMHC) or the Department of Insurance for proposed rate increases. Rates requiring approval include premiums, co-payments, and deductibles.
The majority of the committee members voted for the bill, but the vote total is not final, as some Members may add on their votes later in the hearing. AB 2578 is supported by individuals, families and business that have been victims of dramatic health insurance rate increases and organizations such as the California Labor Federation, Consumer Watchdog, Health Access, California Public Interest Research Group (CALPIRG), Consumer Federation of California, and Consumers Union.
* As I write this, the committee is reviewing AB2470 (De La Torre), to regulate the practice of rescissions, the retroactive denial of coverage. This is something that is barred in the national reform signed today, except for proof of fraud and "intentional misrepresentation." Assemblyman De La Torre welcomed the new health reform, but stated there was a need to provide details to how the federal law is implemented, and that's what the law would do.
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
* Read Our Health Access Blog! Join Us on Facebook! Follow Us on Twitter!
NEW MOMENTUM FOR HEALTH REFORM: A real life and timely example of what needs fixing--in the form of the actions of Anthem Blue Cross of California--can spur momentum for needed reforms of the broken health care insurance market. In Washington, DC, the rate hikes by California's biggest insurer have become Exhibit A in the fight for comprehensive health reform. President Obama even adopted, as part of his proposed unveiled a week ago Monday, a proposal by California Senator Dianne Feinstein for additional federal rate authority to review and reject increases, where appropriate.
These rates were also brought up in the much-commented on White House bipartisan health reform summit this past Thursday. Legislative leaders, including Speaker Nancy Pelosi of California, continue to press to pass a major reform with the goal of completing work before Easter. This would involve the Senate bill--which had already passed the Senate by a 60-vote supermajority--and some changes and improvements done through "reconciliation," which is the purpose of that majority-vote procedure.
RATE REVIEW TO GET A REVIEW: Back in California at the Assembly Health Committee's informational hearing on the rate increases planned by Anthem Blue Cross, Chair Dave Jones (D) cited Anthem's upcoming premium hike of 39% as reason to move aggressively forward with his AB 2578. The bill would allow the Department of Insurance as well as the Department of Managed Health Care to regulate rate increases. Assemblyman Mark Leno (D) is principal co-author. According to Assembly procedural rules, the first date it can be heard in committee is Tuesday, March 23rd.
CONGRESS RELEASES SOME OF THE ANTHEM DOCUMENTS: The Congressional subcommittee of the House Energy and Commerce Committee (chaired by California Rep. Henry Waxman) holding a hearing last week on Anthem's rate increases released a lot of in-depth financial information about WellPoint, Anthem Blue Cross' parent corporation. We've got links and details on the Health Access blog for the wonkish and curious.
SPEAKING UP FOR CONSUMERS AT THE NAIC: This past week, sixteen consumer representatives were named to regularly attend the National Association of Insurance Commissioners--including Health Access and other state-based consumer organizations throughout the country. Health Access' Elizabeth Abbott, was selected by NAIC as one of the official consumer representatives appointed to advise state insurance commissioners and their national organization on health policy and market regulation. The designation of consumer representatives is designed to ensure consumer protections and good public policy are adopted in regulations and policies drafted by the NAIC which often serve as a template for state regulators. Health Access sees this appointment as particularly well-timed to influence state-based and national health care reform efforts with this influential association, which has some specific tasks under the pending health reforms.
In addition to the four years Ms. Abbott has worked for Health Access, she has considerable experience as a long-time federal employee with the Social Security Administration and most recently as the Centers for Medicare and Medicaid Services (CMS) Regional Administrator for the western states and the Pacific Territories.
CRACKDOWN ON "DISCOUNT" PLANS: Health Access and several of our coalition partners (including the California Pan Ethnic Health Network [CPEHN], Health Rights Hotline, and the Health Consumer Alliance) testified before the Department of Managed Health Care (DMHC) in Oakland on February 22 regarding new regulations concerning so-called Discount Health Plans.
Many consumer advocates generally favor the new DMHC regulations because of the strict new requirements laid out governing the actions of these so-called discount health plans operating in California. DMHC has received over 1,000 consumer complaints regarding the deceptive practices engaged in by more than 150 plans selling what they portray as “comprehensive health insurance.” However, many of these companies do not offer a valid discount off the price from a known network of providers. After consumers buy this “discount card” for $25 to even $100 a month, they find that the doctors do not accept the card, do not provide a discount, or would have granted the same or an even greater discount for free based on other affiliations such as churches, unions, automobile clubs, or fraternal organizations.
DMHC has ordered 8 of these companies to “cease and desist” operations in the state, and are establishing requirements and consumer protections for those companies who want to do business in the state. The discount companies were at the public hearing in force claiming these proposed regulations are an unfair restriction on their ability to do business in California and an infringement of their free speech rights. DMHC will take all comments under advisement and release new regulatory language within the next several months. We urge organizations who have members under this predicament to contact us,
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.
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
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 (firstname.lastname@example.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 email@example.com
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.