Thursday, February 18, 2010

Health Care Updates

Bellantoni (TPM): Anthem Rate Hikes Just Tip Of Iceberg - Premiums Going Way Up In Six More States

Health and Human Services Secretary Kathleen Sebelius today will release a new report showing more dramatic health insurance premium increases are proposed in Connecticut, Maine, Michigan, Oregon, Rhode Island and Washington.

Keying off the Obama administration's recent probe into a planned 39 percent rate hike from Anthem Blue Cross in California, Sebelius will detail large increases in six other states and say that given record insurer profits, health care reform has never been more urgent.

At 11:30 a.m. today, Sebelius will release the report, obtained by TPMDC and titled "Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System."

It finds that Anthem's rate increase (now delayed until May) is "not unique" and that experts say premiums will keep rising.

The report quotes National Association of Insurance Commissioners officials predicting the nation will "see rate increases of 20, 25, 30 percent."

"These massive increases are disturbing examples of the problems that make reforming our health insurance system more important than ever," the report states.

Among its specific findings:

Anthem of Connecticut requested an increase of 24 percent last year, which was rejected by the state.

Anthem in Maine had an 18.5-percent premium increase rejected by the state last year as being "excessive and unfairly discriminatory" - but is now requesting a 23-percent increase this year.

In 2009, Blue Cross/Blue Shield of Michigan requested approval for premium increases of 56 percent for plans sold on the individual market.

Regency Blue Cross Blue Shield of Oregon requested a 20-percent premium increase.
UnitedHealth, Tufts, and Blue Cross requested 13- to 16-percent rate increases in Rhode Island.

And rates for some individual health plans in Washington increased by up to 40 percent until Washington State imposed stiffer premium regulations.

The report finds that "[w]hile rising health care costs is a known problem with our broken health care system, some of the premium increases requested by insurance companies are 5 to 10 times larger than the growth rate in national health expenditures."

It also seizes on an issue the administration has been pushing in recent weeks, saying that while prices went up, so did profits and CEO pay.

"[P]rofits for the ten largest insurance companies increased 250 percent between 2000 and 2009, ten times faster than inflation," the report finds.

More from the report:

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.

These health insurance companies' profits grew even as nominal GDP decreased by 1 percent over this same time period.

And recent data show that the CEOs of America's five largest insurers were each compensated up to $24 million in 2008.

The report lays out the case for reform and specifically how the bills passed by the House and Senate would demand transparency from insurers so they would need to account for administrative costs and profits as well as justify premium increases.

The Anthem hikes also have allowed Democrats and the administration to start up again with the drumbeat for a plan that includes competition.

Members of House Democratic leadership used Anthem as an example yesterday of why health care reform legislation must be completed.

"The situation in California is Exhibit A that we can expect more of the same if we do nothing," said Rep. Chris Van Hollen (D-MD). "There is no sign of things getting any better."

Rep. Loretta Sanchez (D-CA) said since the news broke about Anthem's proposed 39 percent increases, her constituents approach her daily in Orange County and they tell her to "get this done."

President Obama and White House Press Secretary Robert Gibbs also have cited the increases when talking about the plans to finalize health care legislation at the health care summit next week.

The Energy and Commerce Committee plans hearings for next week and has asked Anthem parent company WellPoint's CEO Angela Braly to testify.

Meanwhile, health care reform activists in New York are planning a march across the Brooklyn Bridge Saturday that would culminate in a rally outside of Anthem's headquarters at Broadway and Liberty streets.

"Americans across the country are uniting to send a message to Washington: forget the special interests and get the job done," the group wrote in a planning email.

Public option returns to reform debate Feb. 17: Senator Bernie Sanders explains to Rachel Maddow whether the public option has a realistic chance of being included in the health reform bill despite having been dropped from earlier drafts.

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California's Anthem Blue Cross -- the largest insurer in the nation's largest state -- recently told nearly a million customers that, next month, they'll face premium increases up to 39%. Even those who have come to expect private health insurance companies to tighten the screws on their customers were taken aback. An LA Times editorial noted, "Anthem's actions offer the best argument yet for Congress to complete work on a comprehensive bill without delay."

Today, however, the Obama administration's Department of Health and Human Services is publishing a report called, "Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System." The point is to emphasize that Anthem's back-breaking rate increases are becoming increasingly common nationwide -- the report specifically points to premium increases proposed in Connecticut, Maine, Michigan, Oregon, Rhode Island, and Washington for those buying coverage as individuals because they're not covered by their employers.

Jonathan Cohn explains the structural problems that lead to these rate hikes.

The problem here, as the Blue Cross plans themselves have admitted, is the dysfunctional nature of the individual insurance market. Insurers divide the market up into blocks, then adjust rates to account for the past and projected medical expenses of each block. As the rates go up, healthier beneficiaries leave the block for other policy options, forcing rates even higher for those people who are left.

The problem gets worse when the economy is bad, because people are more eager to find cheaper coverage and more willing to risk going without. It can also get worse if an insurer is trying, deliberately, to isolate and then force out unhealthy subscribers.

How do you stop this cycle? Get everybody covered, either in one pool or a set of smaller pools that are "risk-adjusted" so that this cycle doesn't take place. But to do that, you have to require that insurers stop discriminating against people with pre-existing conditions, mandate all policies provide average coverage, make everybody carry some insurance, provide subsidies for people who can't afford premiums on their own, and implement systemic reforms that will make medical care itself less expensive over time.

This isn't complicated -- to address the problem, policymakers are going to have to pass health care reform. And given that Maine residents are poised to be especially screwed over by the premium increases, the fact that Olympia Snowe and Susan Collins don't even want reform to get an up-or-down vote in the Senate should be pretty scandalous in the Pine Tree State.

Ezra Klein: Selling insurance across state lines: A terrible, no good, very bad health-care idea

The big Republican idea to bring down health-care costs is to "let families and businesses buy health insurance across state lines." Jon Chait has some commentary here, but I want to simplify a little bit.

Insurance is currently regulated by states. California, for instance, says all insurers have to cover treatments for lead poisoning, while other states let insurers decide whether to cover lead poisoning, and leaves lead poisoning coverage -- or its absence -- as a surprise for customers who find that they have lead poisoning. Here's a list (pdf) of which states mandate which treatments.

The result of this is that an Alabama plan can't be sold in, say, Oregon, because the Alabama plan doesn't conform to Oregon's regulations. A lot of liberals want that to change: It makes more sense, they say, for insurance to be regulated by the federal government. That way the product is standard across all the states.

Conservatives want the opposite: They want insurers to be able to cluster in one state, follow that state's regulations and sell the product to everyone in the country. In practice, that means we will have a single national insurance standard. But that standard will be decided by South Dakota. Or, if South Dakota doesn't give the insurers the freedom they want, it'll be decided by Wyoming. Or whoever.

This is exactly what happened in the credit card industry, which is regulated in accordance with conservative wishes. In 1980, Bill Janklow, the governor of South Dakota, made a deal with Citibank: If Citibank would move its credit card business to South Dakota, the governor would literally let Citibank write South Dakota's credit card regulations. You can read Janklow's recollections of the pact here.

Citibank wrote an absurdly pro-credit card law, the legislature passed it, and soon all the credit card companies were heading to South Dakota. And that's exactly what would happen with health-care insurance. The industry would put its money into buying the legislature of a small, conservative, economically depressed state. The deal would be simple: Let us write the regulations and we'll bring thousands of jobs and lots of tax dollars to you. Someone will take it. The result will be an uncommonly tiny legislature in an uncommonly small state that answers to an uncommonly conservative electorate that will decide what insurance will look like for the rest of the nation.

As it happens, the Congressional Budget Office looked at a bill along these lines back in 2005. They found that the legislation wouldn't change the number of the uninsured and would save the federal government about $12 billion between 2007 and 2015. That is to say, it would do very little in the aggregate.

But those top-line numbers hid a more depressing story. The legislation "would reduce the price of individual health insurance coverage for people expected to have relatively low health care costs, while increasing the price of coverage for those expected to have relatively high health care costs," CBO said. "Therefore, CBO expects that there would be an increase in the number of relatively healthy individuals, and a decrease in the number of individuals expected to have relatively high cost, who buy individual coverage."

That is to say, the legislation would not change the number of insured Americans or save much money, but it would make insurance more expensive for the sick and cheaper for the healthy, and lead to more healthy people with insurance and fewer sick people with insurance. It's a great proposal if you don't ever plan to be sick, and if you don't mind finding out that your insurer doesn't cover your illness. And it's the Republican plan for health-care reform.


Following up on an item from yesterday, Democratic policymakers working on health care reform are facing something of a deadline over the next week.

The White House has said it intends to "post online the text of a proposed health insurance reform package" in advance of the Feb. 25 bipartisan summit, just eight days away. While there's an ongoing possibility that the White House will simply present its own reform package at the event, the goal has been to strike a compromise between the already-passed House and Senate proposals.

Sources on the Hill yesterday suggested inter-chamber talks have borne no fruit of late, making it difficult to see how a final plan would be ready for Thursday -- or even earlier, since the plan would have to be online for a while in advance of the summit.

Greg Sargent reports today, however, that an "endgame" may be in sight.

...House and Senate Dem leaders are in fact edging towards reaching a deal on a health care reform package to take to next week’s big summit, leadership aides tell me, though it remains a steep uphill climb.

The aides also say that Senate Dem leaders are warming to the idea of using reconciliation to fix their bill after the summit -- suggesting an endgame may be taking shape.

It's been widely assumed that the House and Senate had hit a virtually insurmountable snag, and yesterday Robert Gibbs hinted that the White House might step in and forge a compromise of its own to take to the summit.

But leadership aides tell me that while the snag is still serious, there's still a decent chance of an agreement. That would allow Dems to head into the summit with a united front.

Greg characterized the debate over financing -- to go with the excise tax or not -- to be the key sticking point, just as it has been for quite a while. There are, however, some "tweaks" that are being considered, which could expedite matters on the House side, while the appetite for using reconciliation in the Senate appears to be growing.

Christina Bellantoni also reports this afternoon that a final agreement is likely to materialize, if not entirely before the summit, then soon after. Rep. Chris Van Hollen (D-Md.), chairman of the DCCC, said a deal is 90% complete, and that the two chambers are "very close to reaching a final agreement."

It's taken a beating, and it's hardly out of the woods, but health care reform isn't dead.

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