HEALTH PLANS: Insurers getting lambasted

First, 24 hours after being shamed in the LA Times, Wellpoint has backed down on getting docs to check up on whether their patients should have their insurance recisionned (is that a word?). It’s good to know that someone’s setting insurance policy in this country even if perhaps Lisa Girion wasn’t actually elected to the job!

Then it gets announced that the AG of New York state (traditionally a post filled by a  kick-ass hungry Democrat, these days Andrew Cuomo) is going after UnitedHealth sub Ingenix and a whole raft of insurers it works with on price fixing/reimbursement rate manipulation. What particular part of a health plan’s business practices Cuomo is going after it’s hard to tell. There’s usually plenty of choice!

But it is clear that if anything gets done about health care in the next cycle, insurers are front and center in the politicians sights.

And if you think this is just me talking, check out libertarian Arnold Kling, who for some strange reason manages to get his stuff on the op-ed pages of the WSJ. He basically agrees with me.

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5 replies »

  1. Let’s blame the insurance companies, it’s easier than taking any personal responsibility. How about the lawyers, the AMA, and the providers? There will always be the usual suspects, but maybe it’s time for the truth: You’re not big boned, you’re fat because you make bad lifestyle choices and when your health goes south it’s someone else’s fault. Want the truth? Read ‘You Have an Ugly Baby’ http://www.amazon.com/You-Have-Ugly-Baby-unpleasant/dp/1419681974/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1203170120&sr=1-1

  2. Again, if the reimbursement is going down to doctors and patients while the co-pays, deductibles and premiums are all rising one must ask “where’s the money?” We do not need health care reform…we need health insurance reform.

  3. Re: “A UHC model like in MA, or proposed in CA”
    The MA Plan is on its way to going down in flames (as it should).
    Exhibit A: MA Connector Proposes CommCare (the state subsidized HMO policies) Premiums and Copay Increases
    Exhibit B: New report issues scathing critique of Gruber’s methodology for the individual mandate
    Health reform activists here in Massachusetts are suffering from extreme burnout and seriously low morale, so thanks jd for your comment – it helps me feel just a bit better: “Insurers may be inviting legislators to fashion a very short leash, and a collar with the spikes turned inward.” I love it the mental picture, as I know the faces of many of the MA insurance industry CEOs…!!
    (One of our problems in getting any meaningful system reform out of the starting blocks here in MA, is that the lege leadership is bought-and paid-for by the healthcare-medical-industrial-complex, and the rank and file leges largely behave like underlings all to willing to march to the leadership beat.)

  4. Scratch that last sentence. I don’t think it’s too late, in that I don’t think single payer has a realistic chance of passing in the foreseeable future. However, what could very well happen is that a multi-payer UHC model would be more punitive and severe in its treatment of insurers.
    Insurers may be inviting legislators to fashion a very short leash, and a collar with the spikes turned inward.

  5. What Cuomo is going after is the alleged practice of skewing the data that establishes “reasonable and customary” rates. Insurers pay a set percentage of these rates for out of network providers. While insurers have some control over contracted rates, they have no direct control over the reasonable and customary rates, because they are supposed to be set by whatever is typical for the area. Whatever formula is used to set that is going to be complicated, and it’s easy to see why people on both sides have an incentive to game it.
    Here is what I don’t understand about insurers: the individual market is broken, why not admit it and become a force for reform? A good part of the flack the industry gets is from horror stories in the individual market (recissions, aggressive underwriting to screen out candidates, high premiums due to the fact that the healthy tend not to bother with this market, unclear policies that leave people uncovered for things they though they were covered for, etc.). The best thing the insurance industry could do is say: we don’t want to do these things. We don’t want to be chasing doctors to see if people lied when they applied for insurance. We don’t want to reject people for insurance. We don’t want to have brokers who sell complicated, unclear policies that seem better than they are. We don’t want to have the healthy skip out, leaving a smaller pool to bear the risk.
    If you think insurers can’t afford to say this, you’re wrong. A UHC model like in MA, or proposed in CA or in the Edwards and Clinton plans would not have an appreciable impact on profits. You could design it to raise revenue and lower margins, with no impact on investor’s rate of return. Also, the individual market is less than 10% of most insurers’ business. If it disappeared tomorrow, from the big insurers’ point of view, business would pretty much go on as usual. Many states require insurers to offer individual insurance, so they can’t just leave. But if they stay, they have to do this stuff to prevent the line of business from becoming a financial drain. So why not ask the states to change the rules? Universal health care on a multi-payer model isn’t just in insurers financial interest, it is in their interest as a matter of public image and survival.
    Some insurers finally are coming around to this view, but it is taking a long time and may be too late for them.