More on rescissions

Friday, April 18, 2008

I wanted to follow up on Anthony's post with some more details about what Gov. Schwarzenegger's administration has laid out as his goals, this year, to tackle the rescission problem.

A quick recap: The state ordered the immediate reinstatement of health coverage for 26 enrollees who had their health policies retroactively cancelled in the past four years by Kaiser, Blue Cross or Blue Shield. Thousands more policies of consumers insured by the three named insurers, Health Net and Pacificare, could also be reinstated after review by an independent arbiter. These retroactive cancellations typically occured after a consumer started using lots of expensive health services -- triggering a second and very, very close look at their application by insurers.

As the system is now, said Daniel Zingale, one of the governor's health policy advisors, "If you use it, you lose it,'' of health coverage. To change this, the governor is supporting the following guidelines and principles to protect consumers:

1) A clear application process, which could help prevent mistakes and omissions
2) If there is no evidence of "willful misrepresentation,'' a policy cannot be rescinded
3) Plans must give adequate notice to consumers about the fact that they are investigating their applications. There would also be an established appeals process for consumers.
4) A prohibition on bonuses, quotas and other incentives for insurance company employees to rescind.

Of course, Zingale pointed out -- and we wholeheartedly agree -- this would all be moot had we passed ABx1 1. With health reform, we would have:

• Guaranteed issue: everyone receives coverage, regardless of pre-existing conditions,
• Guaranteed that everyone was paying into the system so insurers didn't go nuts about NOT being able exclude the really sick and expensive people,
• And guaranteed affordable health coverage and/or subsidies to purchase health coverage for 4 million Californians.

In the absence of that, though, this is a great place to focus reforms that would begin to help consumers feel more secure about the coverage they have.

Labels: BlueCross, Insurers, InTheNews, Rescissions, Sacramento

posted by Hanh Kim Quach | Permalink | 1:18 PM


 

Chaps my hide

Wednesday, April 09, 2008

It's really really annoying to me when people who talk about the "affordabilty'' of insurance only fixate on the premium prices.

And it's especially offensive when we have a person travel from Los Angeles to Sacramento to testify about junk insurance plans -- after having incurred $40,000 costs -- be told that "at least you had insurance.''

As part of an illustration for why we need SB1522 (Steinberg) to organize the individual health insurance market and weed out junk insurance plans, we brought up someone who actually had one of these hospital-only junk insurance plans -- Susan Braig, a former art teacher.

Susan was a conscientious consumer with a modest income. Approaching age 50, she decided she needed to get health insurance after having dropped it briefly in the late-90s during the huge run-up in premium prices. After carefully researching the balance of premium and benefits, she selected the coverage she could afford -- hospital-only, catastrophic coverage through Blue Cross -- the Basic PPO 1000. This has a $1,000 deductible with a $3,500 maximum out-of-pocket, and did not cover doctors visits. After the deductible, 80% of big-ticket services (like surgeries, hospitalizations, etc.) would be covered.

But, Susan rationalized, as many in her predicament might, that she's healthy, never used her insurance before, and could afford the doctor's visits here and there, but that $3,500 was a modest amount to pay if a catastrophic illness befell her.

Well -- shortly after purchasing the policy, she was diagnosed with breast cancer -- and over two years, her credit card debt increased from $5,000 to $45,000.

None of the series of doctors visits, prescription drugs, ultrasounds and lab tests were -- or will be -- covered by Basic PPO 1000. What's worse, it also did NOT count toward her deductible $1,000 deductible.

"Even my chemotherapy treatments were considered "doctor visits'' unless I had the identical treatments an hour from home in a hospital.''

Functionally, Susan is uninsured. This experience has left Susan wondering -- "I'm paying insurance premiums for WHAT?''

So it continues to gall me that the industry makes arguments that the "cost'' of insurance will go up if we weed out plans like Susan's. Up from what? Isn't $40,000 over two years enough already?

Labels: BlueCross, Insurers, Legislation, Underinsurance, YearOfReform

posted by Hanh Kim Quach | Permalink | 4:33 PM


 

That was quick...

Wednesday, February 13, 2008

The reversal of Blue Cross' efforts to drag doctors in as collaborators into their efforts to deny patients coverage is a welcome step. But it's only a step, treating the symptom, not the underlying disease.

First of all, congratulations to Lisa Girion at the Los Angeles Times for her ongoing coverage of her story, and its broad reach and impact. If anything, it shows how the harsh spotlight of national media (including the network news broadcasts and significant print and electronic coverage) can make a difference. While the outrage was consistent from all sides, I was pleasantly surprised that the media prioritized this story accordingly.

Why does this story have such a powerful impact? After all, relatively few people--5% of all Californians--are subject to these shenanigans. That's the number of people--about 2 million--who have coverage by purchasing it as an individual.

By contrast, 19 million have group coverage through their employer. Another 10 million have coverage through a public program like Medi-Cal or Medicare. (The rest--6-7 million--are uninsured.) Through group coverage, the insurers are not allowed to select who they want to cover, and who they don't. The deal with the insurer is that they have to cover the entire group (all the workers at the employer), the healthy and the sick.

In the individual market, the individual has no market power. They are subject to be denied and discriminated by the insurer. So an individual tries to buy coverage, they are subjected to a mulitple-page questionnaire asking you to detail your health history--and any answer can be grounds for denying you coverage, for so-called "pre-existing conditions." People fill out that questionnaire under penalty of perjury.

But what this recission scandal has revealed is that mistaken answers on that questionnaire can be used against patients--even those who have been paying premiums for months--in revoking their coverage. And Blue Cross is attempting to use their financial power over their network doctors to get them involved in this game of gothcha.

Why has this struck a chord, even though it's a small population?

* Because everybody can imagine being in this situation. Even those with good employer-based coverage know that one day, they'll be: between jobs, working at an employer that doesn't provide coverage, an early retiree, a divorcee, a freelancer, self-employed, starting a new business, or otherwise not have group coverage available to them.

Given the kinds of reasons that people have been denied coverage, it seems that merely living is a "pre-existing condition." And for most people, the idea that they won't have access to coverage--even if they are willing to pay for it--is terrifying.

* This is a core values issue: it strikes right at the heart of the doctor-patient relationship. A doctor should be able to ask about the most sensitive questions--about medical problems, sexual history, drug use--and have the trust to get the most honest answers, in order to be able to provide the most appropriate care.

This places that trust in jeopardy, by having the patient wonder if an ailment he just remembered but forgot on the insurance company application should be withheld from his doctor. It provides a doctor a undeniable conflict of interest, between the patient's best interest to get treated and be covered, and the rules of the insurer who provides the doctor's income stream.

It goes to one of the greatest fears that patients have: that the care provided by doctors is being impacted by profit, rather than medical, considerations.

There will be legislation to address this issue. Some of it will be focused on the issue of recissions.

But the real question is how we can minimize or eliminate underwriting altogether, so that people are not denied for so-called "pre-existing conditions."

* The first is to expand subsidized group coverage as much as possible--through employers, public programs, or ultimately a universal, single-payer health care system, so that insurers are not allowed to pick and choose which individuals they want to cover. They have to cover the *entire* group.
* If there has to be an individual market, it needs to be radically reformed with "guaranteed issue" and other, much stronger oversight over insurers. Clearly there need to be protections against "adverse selection," whether through an individual mandate or other mechanisms, but without guaranteed issue as a starting point, then the individual market is just hopelessly broken.

The health reform that stalled in the California Senate, AB x1 1, would have *both* expanded group coverage, shrunk the individual market, and put those new "guaranteed issue" rules in place. So would the outlines of the Clinton and Obama health reform plans. SB840, pending in the California Assembly but the financing blocked by legislative Republicans, would create one big statewide group insurance pool, and would also address this issue.

As for Senator McCain, his health plan actually wants more consumers to rely on the individual market, and to do away with state consumer protections by allowing insurers to sell across state lines.

This issue of Blue Cross' letters--it's a small story that went big, because it goes to the very heart of the health care debate in this country. Blue Cross' reversal doesn't end the debate... at the national level, it may have helped jump-start it.

Labels: BlueCross, YearOfReform

posted by Anthony Wright | Permalink | 12:21 PM


 

Enough already

After yesterday's scathing LA Times story, Blue Cross has now stopped mailing letters to physicians, enlisting them as Blue Cross surrogates to check the accuracy of applications. The LA Times has the follow up story today.

What I found interesting about the article was Blue Cross' claim that it has sent about 1,000 of these letters out a month previously, and heard nary a whimper. I wonder if physicians just ignored the letter -- threw it out with the other junk mail? Or, conversely, did any patients get dropped as a result?

Labels: BlueCross, InTheNews

posted by Hanh Kim Quach | Permalink | 11:05 AM


 

What we're left with

Tuesday, February 12, 2008

In the rubble of reform, what we have now is Blue Cross -- the state's largest insurer, which was opposed to any change to the status quo -- petitioning doctors to turn in their patients with "pe-existing conditions,'' presumably so Blue Cross can drop them. The story is in the LA Times.

Doctors, fortunately, think this is wrong and are telling the state to step up and smack Blue Cross, calling the request "deeply disturbing, unlawful, and interferes with the physician-patient relationship."

My favorite line in the story, though, is Blue Cross defense of itself:

Blue Cross doesn't always cancel the policies of patients with discrepancies in their applications, (spokewoman) Troughton noted. Sometimes it may offer them another plan, she said.

Right. Like one with a gazillion dollar deductible, where a patient is essentially paying to be uninsured -- paying Blue Cross premiums at the same time they are paying full cost for all their medical services.

Labels: BlueCross, Insurers, Underinsurance

posted by Hanh Kim Quach | Permalink | 11:11 AM


 

Analogies...

Monday, December 17, 2007

Blue Cross, in their undenying opposition to health reform, were the first to make the comparison that health care reform is like "energy deregulation."

For my out-of-state readers, that's an curse word, given the rolling blackouts that resulted.

But I am confused by the comparison. Wasn't the big issue with energy deregulation that it was... deregulation?

Health care is a largely unregulated market now... we let insurers deny people because of pre-existing conditions, employers not offer coverage to their workers, and hospitals and doctors to not disclose cost and quality data.

That would change under these proposals. This is about placing more oversight, not less, over the health industry.

Labels: BlueCross

posted by Hanh Kim Quach | Permalink | 3:34 PM


 

Let's hope it's not contagious

Friday, November 30, 2007

The Indianapolis Star has a disturbing story about a new Anthem Blue Cross/Blue Shield plan available to businesses who want to further trim their health care costs. The "Blue Access Hospital Surgical PPO" is being rolled out in Indiana, Ohio, Kentucky, Missouri and Wisconsin.

What's new here isn't the fact that Wellpoint-Anthem-Blue Cross is selling these yucky plans. It's easy to find stripped-down plans like this if you have to buy coverage on your own, without the benefit of an employer negotiating a lower group rate. The difference is the fact that they're offering it to businesses as an "alternative'' that costs as much as 70% less than comprehensive plans.

Stats on the "Blue Access'' plan include:

• DEDUCTIBLES $1,000 to $5,000 (for an individual) and $3,000 to $15,000 (for a family).
• COPAYS (doctor's office) $20, plus half of the total charge. (This, of course, is after you've paid full price for every doctor's visit until the deductible is met).
• COPAYS (hospital) $150 co-pay, plus 20% of the total charge (after the deductible is met).
• COPAYS (generic drugs) $10 in-store, $20 mail order
• OUT-of-POCKET MAXIMUMS $5,000 (individual), $10,000 (family) -- it's unclear from the story if the out-of-pocket maximums would be on top of the deductible, or include the deductible.

Sooooo...... this development makes it even more important that health reform efforts establish a solid "minimum benefit package,'' which includes doctors and hospital care, preventive care, maintenance of chronic diseases, prescription drugs, and other benefits, that would be credited as coverage. It's only a matter of time before more of these types of plans seep into business' open enrollment packets and head westward.

Labels: BlueCross, InTheNews, Underinsurance, YearOfReform

posted by Hanh Kim Quach | Permalink | 11:55 AM


 

Cross-Examining Blue Cross

Friday, August 10, 2007

HEALTH ACCESS UPDATE

REGULATORS CROSS-EXAMINE BLUE CROSS

• Department of Managed Health Care scrutinizes Anthem-Wellpoint merger agreement
• Consumers, doctors, and health advocates raise issues about Blue Cross' practices
• Department will weigh in with final ruling within three months

New on the Health Access WeBlog: SCHIP Reauthorization House and Senate Voter; SCHIP Hypocrisy; Jersey Devils; All the President's Polyps; Budget Battles and Getting Two-Thirds; Uninsured Waits; High Deductibles; Major Kaiser Fine and Consumer Complaints; Coverage: Is It Available, Affordable, and Automatic?; New California Endowment Ads; Affordability; Long Live Prop 56!; New PPO Report Card; Retail vs. Wholesale; More on Blue Cross

A standing room-only crowd crammed into a downtown Los Angeles hearing room on Tuesday to offer more than six hours of testimony about the company and hear Blue Cross of California respond to regulators' questions on whether the company violated any promises the company made when parent Wellpoint Health Systems, Inc. merged with Anthem Inc.

Protestors, including the "Sick of Blue Cross man," demonstrated outside of the Junipero Serra Building before the hearing to call attention to the droves of consumers who have responded to the It’s OUR Healthcare! Campaign’s http://www.sickofbluecross.com/ website.

Blue Cross’ transfer of $950 million to the Indianapolis-based parent company Wellpoint Inc. earlier this year triggered the review of the company’s Undertakings, agreed to three years ago. The Undertakings were intended to protect consumers against the costs associated with merging the insurance giants (including hefty executive salaries and buyouts), meaning that premiums did not increase to cover the merger or that the company spent less money to health care for consumers, that quality of care did not suffer, and the Californians benefited overall from the merger. Regulators hammered on a number of points, including:

• Why was Blue Cross’ dividend Wellpoint this year so much higher than in 2005 and 2006?
• Why are so many providers threatening to leave Blue Cross of California’s network?
• Why is the company aggressively marketing high-deductible plans with fewer benefits, which ask consumers to pay for a larger share of their care, while sending so many dollars out of state?

DEPARTMENT QUESTIONS BLUE CROSS

After a presentation by the Department of Managed Health Care raising questions and reporting on the substance of complaints by consumers and providers, Blue Cross’ California President Brian Sassi first gave a presentation aimed at defending the company’s practices in the three years since the merger.

In a slide that described “What is the value of the merger,’’ Sassi described that Blue Cross has “developed products and services to grow our membership,’’ which now stands at 8.3 million Californians. Those “innovative and cutting edge’’ products Sassi described have attracted 895,000 subscribers in the individual market – the largest share of individual consumers of any other health plan in the state. “We’re working hard to design products for individuals to provide the services they need, without driving up health care costs,” Sassi said.

Blue Cross’ Sassi also defended the company’s $950 million check that was sent to Wellpoint in May, saying that the money was accumulated profits from years “prior’’ to the merger, and because the merger agreement limited the amount of dividends that could be sent to Wellpoint, the company waited until the merger agreement expired. Sassi also boasted that the company spent $11 billion on claims last year and a network of 53,000 physicians and 380 hospitals.

The presentation, however, caused Braulio Montesino, the department’s legal and policy unit chief, to question whether Blue Cross was combining numbers from both their products regulated by Department of Managed Health Care and Department of Insurance. The Department of Managed Health Care, will in a few months, make a final ruling on whether Blue Cross properly followed its merger agreement.

CONSUMERS, ADVOCATES AND PROVIDERS COMMENT

Regulators heard testimony from dozens of members of the public. Physicians talked about the gradual deterioration of Blue Cross’ reimbursement rates – which in many cases are now lower than Medicare rates, which allow providers to break even. While providers acknowledged a tightening of the belt among all insurers, they said Blue Cross was the worst offender.

“The fact is that Blue Cross has crossed through the line,’’ said Ron Nagel, a pediatrician who has been a Blue Cross provider for 20 years. “What message is Blue Cross sending me when the new vaccine reimbursements are barely 10% above my cost. What message is Blue Cross sending me when they reimburse $58 to see a newborn in a hospital and $28 the following day? This is insulting."

Janet Stephens, an Anaheim nurse who spoke at a morning press conference, also told regulators about her struggles with Blue Cross. When she first subscribed, her premiums were $252 a month. Now her premiums are $589 a month for a plan with a $1,500 deductible and a separate $500 prescription drug deductible.

Stephens has cashed in on her home equity and sold household items to help pay off her outstanding $4,000 bill at the pharmacy – whittled down from $8,000. Her co-pays have increased ten-fold.“I’m facing the dire medical and financial consequences as (Blue Cross) seeks to pay for its lucrative merger,’’ she told the Department of Managed Health Care.

Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights questioned both the amount of money that Blue Cross sent out of state and questioned the company’s decisions to retroactively rescind coverage for consumers who made expensive claims.

Anthony Wright of Health Access California questioned statements by Sassi, and challenged that the “innovative’’ product design Blue Cross talked about meant plans with low premiums but skinny benefits. Advocates oppose these plans because they segment the market, driving healthier consumers to lower-priced plans, while driving up the cost of the more comprehensive plans that are used by sicker subscribers.

Advocates also dislike these low-premium, low-benefit plans, because often, consumers believe they are buying coverage, only to find that their coverage scarcely covers their health care needs when they need it. Health Access also advocated that many of the undertakings be extended, and that money be returned to California.

Resoundingly, though, while many who testified spoke of magnitude of Blue Cross’ anti-consumer behavior, the company was not alone. Other insurers were also guilty – to a lesser degree – of denying care, denying claims for reimbursement, promoting low-premium, low-benefit plans and other unseemly practices.

Blue Cross, however, did seem to organize a number of consumers and insurance brokers to testify on their behalf. Consumers in rural counties in the Central Valley commented on how Blue Cross agreed to provide coverage and cultural/linguistic access to their communities when other plans did not. Insurance brokers talked about the popularity of Blue Cross plans and how they have stretched to meet the “needs’’ of consumers.

Regulatory hearings typically last two to three hours at most. Tuesday’s hearing, which was scheduled to run five hours stretched to more than six hours with no breaks in testimony. A retired Wellpoint executive in the audience commented on how he had never seen as much interest from the public on a regulatory hearing.

Read coverage of the hearing in the LA Times here.

Labels: BlueCross, Updates

posted by Hanh Kim Quach | Permalink | 1:41 PM


 

Crossing the street, crossing the state

Wednesday, August 08, 2007

We are still recovering from the all-day, standing-room-only hearing yesterday. The LA Times' Lisa Girion stayed through to the bitter end, and provides a report, along with some great pictures.

As part of the It's Our Healthcare campaign's http://www.sickofbluecross.com/ effort, we had a colleague dressed up as "Sick of Blue Cross Guy," complete with fistfulls of (our) cash. Here, an ACORN member leads some chants before the hearing. More to come...

UPDATE: Here's a video:

http://video.nbcsandiego.com/player/?id=140998

Labels: BlueCross, InTheNews

posted by Anthony Wright | Permalink | 11:41 AM


 

Blue Cross in the spotlight

Tuesday, August 07, 2007

The Department of Managed Health Care will have its hearing later today on the practices of Blue Cross of California, especially after the Anthem-Wellpoint merger in 2004.

With the It's Our HealthCare coalition, we launched www.SickOfBlueCross.com, and collected many consumer stories of BlueCross' bad behavior. At the hearing tomorrow, also working with the Foundation for Taxpayer and Consumer Rights, we'll have some of those stories, at a 9:30am press conference before the hearing.

In order to fix these issues, consumers need to get the attention of both regulators and legislators: regulators, to place oversight over Blue Cross with the rules currently in place, and legislators, to pass health reforms that fundamentally change the system.

We submitted extensive comments last week. We'll give a full report from that press event and from inside the hearing after the festivities.

Labels: BlueCross, DMHC, YearOfReform

posted by Anthony Wright | Permalink | 6:39 AM


 

Blue Cross crossing the line..so doctors are too...

Monday, July 23, 2007

LATimes reveals that Blue Cross has unilaterally reduced reimbursement rates for physicians -- in some cases, even lower than Medicare rates.

Blue Cross calls the rates "sustainable,'' but physicians report it doesn't cover costs. The doctors are at the insurance giant's mercy, though, given the huge number of enrollees Blue Cross brings with them. (I'm surprised none of the doctors took the opportunity to kvetch about the $950 million that the company recently sent to its parent in Indianapolis).

With such aggravating dealings with insurers, its no wonder that some physicians are just bypassing insurance companies altogether, according to this Ventura County Star story.

Two physician groups are asking patients to pay cash and deal with the insurance companies on their own. Patients who can afford it (one woman paid $3,600 out of pocket) think it's worth it.

If Blue Cross keeps it up, they'll end up writing their own obit.

Labels: BlueCross, InTheNews

posted by Hanh Kim Quach | Permalink | 7:43 AM


 

Been Blue Crossed?

Tuesday, July 10, 2007

It's Our Healthcare campaign is launching a brand new website www.SickofBlueCross.com to combat the largest opponent of health reform.

Labels: BlueCross

posted by Hanh Kim Quach | Permalink | 2:16 PM


 

No maternity! No new drugs! Buy now!

Wednesday, June 27, 2007

It's rare when a company advertises what its products don't do. Except if you are Blue Cross.

Saw another newspaper ad by Blue Cross yesterday trying to place some doubt onto health reform. Oddly, the pitch was the insurer wanted to "continue to provide consumers more choice and flexibility, and keep premiums affordable--for example offering plans without maternity coverage for seniors and plans that cover only generic drugs."

Let's look past the false statement that places their "premiums among the lowest in the country." California actually ranks in the middle of the states in terms of health care costs.

Some of their products may have a lower premium that others, but are we comparing similar products? Is it really a more "affordable" product if it doesn't cover as much, and sticks you with the bill later? So if your next ailment requires a new drug, rather than one where a generic is available, that plan would be immediately unaffordable.

More importantly, by charging some people less, it means that others get charged much more. Blue Cross, who wants to charge women of child-bearing age more than the rest of us, might want to think they get off easy. My wife, who endured a 48-hour labor, might disagree. (The fact that they chose to illustrate this ad with a young mother, father, and baby is even more galling.)

Despite all the carping about the mandated benefits in California, Blue Cross says they specialize in "giving consumers more innovative coverage options than anywhere else in the country." Choice isn't a virtue if the choices are bad ones--and in this situation, for both for the individual consumer and the system as a whole.

Labels: BlueCross, Insurers, YearOfReform

posted by Anthony Wright | Permalink | 5:04 PM


 

Heartburn by Blue Cross

Tuesday, June 26, 2007

I spoke in front of Congress of California Seniors today at their 30th Anniversary Convention in Long Beach, and got a laugh in my presentation by saying off-hand that "living over 50 is a pre-existing condition." But the truth may be worse...

Last week, in response to my op-ed about young graduates falling off of coverage, I got an E-mail from a 27-year old Ph.D. student denied for Blue Cross' "Tonik" product, because of a high cholesterol test.

Today, health policy-obsessed blogger Ezra Klein posts a letter to Blue Cross by a 28-year old denied for coverage for the pre-existing condition of... heartburn.

(In a similar vein, Lt. Governor John Garamendi also spoke today, and lambasted Blue Cross of California as a "lying bunch of thieves.")

Labels: BlueCross, GuaranteedIssue, Insurers, OtherBlogs

posted by Anthony Wright | Permalink | 8:03 PM


 

Gov spends QT with insurers

Monday, June 25, 2007

Gov. Arnold Schwarzenegger told health insurers, "I need you,'' Friday at the industry's convention in Las Vegas.
Noteably, he said he wouldn't support a system where insurers would "go away'' -- a not-so-veiled reference to SB840 (Kuehl), the Legislature's universal, single-payer legislation.

Another thing Arnold said that irks health advocates:
"My plan also reforms some of the state's regulation that now stand in the way of your industry being able to offer lower-cost products to employers and individuals.''
The Translation: Let's get rid of "pesky mandates'' like mammograms and other cancer screenings, preventive care for children, treatment of osteoporosis. If we don't cover health care, health coverage will be cheaper.

The guv also said that while he didn't support "artificial means'' to bring down costs, he believes plans need to play a role in being "efficient, cost-effective, and focused on quality." This emphasis on efficiency and quality -- and insurers reponsibility to assure that -- goes further than what the guv said in January when he unveiled his health reform plan.

Lastly, the guv praised a number of health plans EXCEPT Blue Cross, who are "on board'' with his notion that people shouldn't be denied coverage because of pre-existing conditions. Blue Cross has put $2 million so far into defeating health reform efforts in the state -- which obviously is annoying the gov.

Watch his remarks and read the transcript here.

Labels: BlueCross, GuaranteedIssue, Schwarzenegger, YearOfReform

posted by Hanh Kim Quach | Permalink | 1:07 PM


 

Out of the mouths of Blue Cross

Monday, June 11, 2007

In this health reform debate, people have been talking about the term "medical loss ratio," which is the term for how much money is spent on patient care, rather than administration, marketing, and profit. It's clearly a Wall Street term: How much money is "lost" to patient care? It shows the inverted priorities of an unrestrained industry.

It suggests that whatever insurance companies (or other companies) say to regulators, it is also important to see what they say to investors.

So I thank Don McCanne, of California Physicians Alliance and the Physicians for a National Health Plan for pointing the following comments by Wellpoint executives, the owners of Blue Cross of California.

He has for years sent out an invaluable "Quote of the Day" on health policy, along with his own commentary and analysis, all in his admirable and unyielding quest for universal, single-payer health care. And here's just another nugget, which really doesn't need comment:


Bank of America Health Care Conference
June 1, 2007
WellPoint, Inc.

Angela Braly, President and CEO, WellPoint, Inc.:

Let me conclude with a few investment considerations for you to take away from this presentation. Health-care costs continue to rise at a faster pace than overall inflation and are now projected to comprise approximately 20% of the gross domestic product by 2016. We believe that our strategic plan positions us very well to address this continued rise in health-care expenditures as we bring a superior value proposition to the marketplace and a strong voice in the community that helps in advocating a choice-based private health-care market.
The health insurance sector is continuing an era of consolidation. Back in 1995, the ten largest companies enrolled just 27% of the market, whereas today, the ten largest plans have about 52% of the market. Considering the investments required to effectively compete in new areas like consumer-directed health-care and comply with ever-changing regulations, many smaller plans are deciding to leave the industry or partner with larger plans to improve their competitive position.

WellPoint has a consistent track record of delivering on our financial promises to Wall Street and we expect this to continue. With our projected earnings of $5.54 per share for 2007, our compound annual EPS (earnings per share) growth rate will be 22% over a six-year period.
So in summary, we believe that WellPoint is a compelling investment opportunity with strong growth prospects, and I hope that you agree.

Wayne DeVeydt, EVP and CFO, WellPoint, Inc.:

I think one of the questions that I will get from many of you over the near term will be my philosophy, and I want to make sure everybody in this room understands and on the webcast that I’m fully committed to the 15% earnings per share growth and believe that that is sustainable for not only the near term, but the longer term.

Unidentified Participant:

We think it’s a compelling opportunity as well for investment and we appreciate very much you coming out, especially on such short notice. Congratulations on your promotion, both of you.

http://insurancenewsnet.com/article.asp?n=1&neID=20070601560.2_b27102f26f3269f2

Labels: BlueCross, Insurers, InTheNews, OtherBlogs

posted by Anthony Wright | Permalink | 12:34 PM


 

Questions for next week...

Friday, June 01, 2007

Two business articles in the LA Times raise more questions than answers:

* So will grocery workers avoid a strike and get better access to health care in this next round of contract negotiations? There's a blackout on negotiations, but the article seems positive. In particular, there seems to be agreement on reducing the waiting times for new hires and their children to get coverage to six months (from the current waiting times as long as 18 or 30 months).

* So what issue caused the finance chief of BlueCross to be dismissed? If someone is whacked on the Sopranos, you kind of wonder if it is for doing something *especially* wrong, or maybe for doing something something right.

Labels: BlueCross, Employers, Insurers, InTheNews

posted by Anthony Wright | Permalink | 11:13 PM


 

$950 million is real money...

Monday, May 28, 2007

No sooner do we try to tease out the profit motives of BlueCross in opposing new rules and oversight, than we find that the stakes are even higher than we think.

Lisa Girion at the LA Times has the scoop:


State regulators are investigating whether a $950-million dividend Blue Cross of California sent to its Indianapolis-based parent violates an agreement the companies made to limit such payments to keep premiums down and maintain the quality of healthcare benefits, officials said Friday.

Officials said the parent, healthcare giant WellPoint Inc., should have taken no more than $141 million out of California. They called the higher amount excessive, particularly as Blue Cross, which serves more than 7 million state residents, has continued to raise premiums. The state Department of Managed Health Care also is considering expanding its probe to determine whether there are any other potential violations of the three-year agreement, part of a deal to win the agency's approval for a corporate marriage that created the nation's largest health benefits provider.

Cindy Ehnes, director of the Department of Managed Health Care, said she was shocked to learn of the $950-million payday for WellPoint, whose total profit last year was $3.1 billion on $57 billion in revenue.


The merger of Wellpoint and Anthem in 2004, creating the nation's largest health insurer, was controversial, for everything from massive executive payouts, to the question of whether it would truly help patients, not just profits. Then-Insurance Commissioner Garamendi extracted a series of "undertakings," or conditions that the new insurer would have to agree to, in order for the merger to be deemed in the public interest and approved.

The question is whether California BlueCross ratepayers are paying inflated premiums to finance the business expenses and profits of the parent company, Wellpoint.

Normally, the state doesn't look at such information. But the Department of Insurance (and the Department of Managed Health Care) used the merger as a leverage point to place some oversight over BlueCross' behavior. But that authority to keep BlueCross in check has a three-year expiration date.

Let's see how the regulator use this authority. Let's make sure that health reform includes additional oversight over insurers that won't expire.

The undertakings are here. Here's Blue Cross' 2005 report on its compliance with the undertakings.

Labels: BlueCross, CostContainment, Insurers, InTheNews, YearOfReform

posted by Anthony Wright | Permalink | 2:12 PM


 

What is BlueCross afraid of?

Friday, May 25, 2007

More BlueCross blog backlash: Juls Rosen at Working Californians posted her response to the BlueCross ads at dailykos.

At Calitics, dday agrees with our post that there will be a backlash against BlueCross:

"There couldn't be a more reviled corporate entity around these parts than Blue Cross, the team who systematically tried to throw any sick person off their rolls and reduce any effort to get them to actually pay for medical treatment, which after all is their entire job. ... If Blue Cross is the face of health care status quo, I'd say change is a-comin'.

In a comment, Calitics guru Brian Leubitz asks, "WTF are they so scared of?" It's an important question, and the answer suggests that $2 million in opposition might be a down payment.


Blue Cross blues: A review of their "coalition" website is clear about the many reforms that they oppose. The shocking reality is that the practices that consumers hate about insurance companies are actually legal:
* denying to sell people coverage because of their age or health status;
* cherry-picking, using different rates and marketing to avoid people who actually need care;
* diverting premium dollars from patient care to administration, marketing, and profit;
* selling scaled-back plans with limited benefits and high cost-sharing that don't cover much;
* raising rates without explanation or justification.

They are directly attacking the proposals on the table, by the Governor, the Senate President Pro Tem, and the Assembly Speaker, all of which would set new rules and oversight to prevent at least some of these practices.


Health Access California is advocating for new or stronger rules on all these fronts, as well as for SB840, which would radically reduce the role of BlueCross and insurers in general. But even the new rules and reforms that are close to a consensus between the legislative leaders and the Governor would still change the business model that BlueCross relies on.

Two examples:
* The ad directly attacks "guaranteed issue," since BlueCross wants the ability to continue to deny people because of their health status. It's a lot more profitable to sell coverage only to people who won't file claims.
* The website directly attacks setting a "minimum medical loss ratio" meaning that 85% of the premium dollar would go to patient care, rather than adminstration, marketing and profit. The fact that this is a common element of the plans of Schwarzenegger, Nunez, and Perata give BlueCross hearburn: BlueCross HMO has only 78.9% go to patient care; individual who buy the BlueCross PPO only have 51% of their premium dollar go to patient care.


How much money is at stake for BlueCross, the biggest of the California insurers? This San Jose Mercury News article tries to answer (boldface is mine):

How much money Blue Cross makes in California can be difficult to discern, but financial reports that the company files with the state give strong indications about its profitability. In 2005, it sent more than $500 million in profits to parent company WellPoint - the nation's largest health insurer - from its California HMO business alone, which has about 4.5 million members. It reported profits of 10 percent - more than double the HMO profits of HealthNet and Pacificare, Blue Cross' largest for-profit competitors.

Blue Cross' margins on so-called preferred provider plans (or PPOs) - which are subject to less state oversight - are much larger. Documents from a Department of Insurance hearing last year pegged profits for such plans at an average 18 percent, compared with 5 percent for competitor HealthNet. For plans sold to individuals, Blue Cross' profits averaged 27 percent, compared with 15 percent for HealthNet.

No wonder BlueCross likes the status quo, and seeks to block any change, including the ones in discussion now. The comparison to Enron becomes more and more apt.

(Thanks to Matt Ortega at Its Our Healthcare! for re-imagining the BlueCross logo.)

Labels: BlueCross, Insurers, OtherBlogs, YearOfReform

posted by Anthony Wright | Permalink | 2:33 PM


 

The BlueCross backlash begins...

There's a little coverage of Blue Cross firing their first shot at health reform--of the type Blue Cross probably didn't want.

Bill Bradley at New West Notes is dismissive of the ads, and agrees with my assessment not only is the energy analogy wrong, but that the ads may backfire for Blue Cross.

Mike Zapler at the San Jose Mercury News points out the ads were made by the same firm behind the "Harry and Louise" ads of the early 90s. He also reports on the Governor's reaction.

Laura Kurtzman at the AP and Tom Chorneau at the San Francisco Chronicle also report that the response of us at Health Access California was joined by the California Medical Association, calling the ads “abominable.”

Labels: BlueCross, InTheNews, OtherBlogs, YearOfReform

posted by Anthony Wright | Permalink | 10:31 AM


 

More fact-checking, from Fresno to Albany...

Thursday, May 24, 2007

Another study that explodes BlueCross' stunning assertion about the "affordability" of the California individual insurance market.

Bottom line: If you are 20 and never had a health issue ever, you can probably get a good deal in California. But if you are older and/or and in less-than-perfect health, California becomes less "affordable," quickly. In New York, with guaranteed issue, access to coverage is ensured, and the standard rate for a comprehensive package may be more expensive for some, it is less expensive for others.

The study: A national study in 2001 by the Kaiser Family Foundation, authored by Karen Pollitz and Richard Sorian at Georgetown University, and Kathy Thomas, had seven hypothetical applicants, from a 24-year old waitress with hay fever, to a 36-year old with knee surgery 10 years ago, to a 48-year old breast cancer survivor, apply for insurance. They applied to 19 insurers and HMOs in eight markets, including Fresno, California.

The result: Only 10% of application were accepted as "clean" offers--35% were either rejected, and over half (53%) were offered with a premium increase or a benefit limit.

The California conclusion: Carriers in Fresno (and Indiana) had more frequent rejections and premium surcharges than insurers in other markets. On average, applicants were offered coverage only about half of the time in Fresno, compared to about two-thirds of the time in other communities. Applicants in Fresno had surcharges apply 58% of the time, compared to 25%-39% in the other markets.

So any "rate" listed for California ignores how many people are rejected, and how many get a different and higher rate, due to their age and health status.

Comparison with New York: Blue Cross also slams guaranteed issue states, including New York, for having the highest rates in the nation. As a born and bred New Yorker, I hate to break it to them--everything, including insurance, costs more in New York.

But from this study, the hypothetical consumers applied for health insurance in Albany, New York--all got coverage. They all would have been sold a standard policy at a standard rate without any exclusion riders or other coverage penalties for their health conditions. The average premium for our single applicants in Albany was $4,104 per year--only slightly higher than the average premium ($3,996 a year) quoted to many applicants in less regulated markets.

In short, costs in New York, with "guaranteed issue" and "community rating" were similar to those in unregulated states, on average (recognizing that in other states, some paid more and some paid less). But everybody had access to comprehensive coverage, which is not the case in California, despite what BlueCross says.

Labels: BlueCross, GuaranteedIssue, Insurers, OtherStates, Research

posted by Anthony Wright | Permalink | 3:44 PM


 

"Unintended consequences" of BlueCross' ad campaign

In opposing reforms to prevent them from denying Californians coverage, Blue Cross is bringing up the energy crisis, but the analogy might backfire.

Newspapers and even this blog have already chronicled BlueCross' bad behavior in the marketplace, and their overall opposition to any health care reform.

Now they have launched a $2 million-plus ad campaign, under the name "Coalition for Responsible Healthcare Reform." (The LA Times' Political Muscle covers it here.) Blue Cross should be ashamed, spending millions to retain their ability to deny coverage to Californians.

The ads say "Remember how the rash enery deregulation of the energy market in California spawned power outages and soaring rates? Let's not go there again."

But if the energy crisis is the analogy, then Blue Cross is Enron, taking advantage of an unregulated California market and leading to a blackout of coverage for millions. But even the now-disgraced Enron never had the gall to run ads arguing that they should be allowed to continue to manipulate the market.

Because there are so few rules on insurers now, Californians are concerned now they are one job change or life event away from facing a blackout of coverage. We have over 6 million Californians in a coverage blackout. Frankly, we have tolerated deregulation for too long: new and fair rules would increase the security that Californians have now with their coverage, so they are not denied because of their health status.

BlueCross' ad campaign may backfire with the public. They won't believe BlueCross, and they will make it clear to Californians what we can win with health reform.

DOING A FACT CHECK: I think Californians know better than to believe Blue Cross and their misleading statements, especially the absurd notion that buying health coverage as an individual is affordable now. Their ad won't persuade most Californians that individual insurance is affordable now, from a 50-year old woman in the Bay Area, to anybody that takes a handful of prescriptions a year.

Blue Cross' price comparisons matches apples and oranges. It's different products, different people, and different states:
* The list price in many states does not include the significant mark up for age or those who have even minor health issues.
* The states with "guaranteed issue" are Northeast states which started with higher costs of living and higher insurance costs generally.
* Finally, you can't compare a product that actually covers you when you are sick, to one that will not.

We'll have more later in the day.

Labels: Affordability, BlueCross, InTheNews, OtherBlogs, OtherStates, YearOfReform

posted by Anthony Wright | Permalink | 11:01 AM


 

Cutting the strings...

Monday, May 14, 2007

The Assembly just passed AB1324 (De La Torre), which clarifies that insurers can't rescind coverage if the policy holder had completed applications in good faith.

The bill attempts to address a rash of instances, uncovered in the LA Times, where Blue Cross cancelled patients' coverage after expensive claims were made, leaving them uninsured and on the hook for hundreds of thousands in treatments.

About 6,000 patients later joined together in a class action suit against the insurer, and have been joined by doctors and hospitals.

On Friday, Blue Cross agreed to change its policy on how it decides to cancel coverage.

AB1324 passed on Monday on a bipartisan vote. Seven Republicans, including Bill Emmerson and Alan Nakanishi who are both members of the Assembly Health Committee, voted in favor of the bill.

Labels: BlueCross, Insurers, Legislation

posted by Hanh Kim Quach | Permalink | 1:24 PM


 

Are they saying they were wrong?

Friday, May 11, 2007

Blue Cross now says it's no longer going to willy-nilly cancel people's insurance policies when they have a suspicion that policyholders didn't disclose *everything* about their health history since they were 1.

Now, the health insurance giant says it will ask policyholders when they see a problem with their applications before deciding to cancel their policies.

It's nice to see, now, that Blue Cross believes in the presumption of innocence unless proven guilty.

Not only are they going to make applications easier to understand, they're saying that if applicants made an honest mistake, then the insurance company will continue the patient's insurance.

Is Blue Cross saying they were wrong to unilaterally -- and without notice -- cancel patients' policies while they were in the middle of expensive medical treatments?

Not quite. With 6,000 former policyholders suing the company, it was getting kind of expensive.

Their 180-degree change in policy isn't quite the stunning admission I would have hoped for, but I'll take it.

Labels: BlueCross, Insurers, InTheNews

posted by Hanh Kim Quach | Permalink | 12:34 PM


 

Why they gotta be that way?

Wednesday, May 02, 2007

Here's an interesting story in the LA Times this past weekend that highlights the inefficiencies in our current health system.

Blue Cross-Blue Shield health plans have agreed to pay $128 million to more than 900,000 physicians who charged that the Blues systematically paid them for less expensive procedures than the ones that were performed.

In addition to the $128 million settlement, the physicians will also have about $49 million in legal fees.

Rather than paying $172 million on the back-end, why didn't the Blues (and other health plans that were initially sued and settled) not pay the right amount in the first place, saving themselves and physicians the expense, energy and stress of going