Wellpoint: just incompetent?

I’m viewing the latest rumblings in the US health care debate from the confines of a clear but cold Britain, where the big news is that the country is joining the PIGS in entering economic meltdown—or at least being a lot more broke than it thought it was. (PIGS are Portugal, Greece, Ireland & Spain, not farm animals). And yet it appears that health reform is making if not a comeback then at least vigorous palpitations. The reason for this seems to be the strength that the Anthem Blue Cross/Wellpoint premium rises have imbued into the Administration.

Those of you reading THCB over the years will know that I think the individual insurance market is doomed to fail and should be replaced. It has its apologists; for example Cato’s Michael Cannon here criticizes Paul Krugman who explained last Friday why the individual market goes into a death spiral. Michael claims that Mark Pauly’s research shows that the individual market works. What Pauly’s work (and I despair at having to read it again, so this is from memory) tends to show is that insurers are incompetent at charging sick people to the full extent that they cost them, but do charge them roughly three times what they charge healthy people. Pauly also said in Health Affairs that the individual market works pretty well for 80% of the people in it, but he seems to think that screwing the remaining 20% is OK. Coming from a tenured Ivy league professor who’s probably never had to buy health insurance in his life, that was pretty rich. But apparently Wellpoint’s latest performance shows that it’s not OK for much of the other 80% either—hence their dropping out, leading to Krugman’s death spiral.

But Wellpoint has shown its incompetence in three major ways.

Incompetence one. I severely doubt that Wellpoint loses as much money on its individual business as it claims it’s been doing.

The only figure I’ve seen is allegations that it lost $58m on California COBRA customers, and that California’s law extending COBRA to double the Federal period makes it worse for Wellpoint. I don’t understand why it’s been linked to the individual market problems. At least until the 2009 stimulus paid a big chunk of COBRA, very few people accepted COBRA. Those who do accept COBRA are buying back into the group policy they were previously in, which is precisely the opposite of buying an individual policy. (Of course for most people buying a high-deductible policy is way cheaper than group policies they are leaving. Of course that pricing only holds if you are healthy as those individual policies are underwritten and group policies are not).

What we do know, is that medical loss ratios in the individual market are typically much lower (i.e. the insurer keeps more of the money) than in the group market. In 2008 Wellpoint’s MLR in California overall was 79%, meaning that in the individual market it was lower than that (probably below 70%). Of course if you believe Cannon and Pauly, they were losing money in the individual market to buy market share. Cannon quotes Pauly as saying

Wellpoint had tried aggressively to expand its individual business by setting low premiums, and I think realized the underpricing to gain market share did not make sense in a recession, so they put premiums back up where they should be.

That might appear vaguely plausible until you consider what Len Schaeffer, a minor footnote in Wellpoint’s history (OK, OK, the guy who started it) said in an interview with McKinsey a few years back:

But today the most important thing for us is our actuarial data, which helps us price our premiums. As you might guess, pricing is critical. Our analysis showed that the so-called cycle in health insurance—three good years, three bad years—is simply a function of pricing discipline and pricing mistakes. There isn’t any doubt that the companies with the best pricing are less cyclical. In our case, we have no cycles at all.

We found that the most critical information for good pricing wasn’t how many contracts we had but how many people we had—who they were, their age, their gender, and where they lived. Together with regional and local differences in illness types and doctors’ behavior, these characteristics determined what the costs would be. So we gathered more information than anybody else about those things, and this was a huge competitive advantage. Now almost everybody does things that way.

We also make a point of processing claims quickly because we found that faster processing gives you a better idea of your costs and early knowledge about how trends are changing. By monitoring the landscape, we were able to raise or lower our prices before anyone else, which is really important in this business. You never want to sell an underpriced policy.

So either Wellpoint has been lying to the market, its customers, Wall Street and now the Administration in that it doesn’t need these increased premiums to do anything more than pump up its bottom line, or it’s lost that actuarial competence that Schaeffer was so proud about.

Incompetence Two. The history of health insurer profitability over the last decade has been their ability to increase premiums faster than their underlying costs increased. Over the 2000’s medical loss ratios went down as overall health care costs went up. Health insurers were keeping a larger share of a larger number. This was reflected in their profits and stock prices over the decade.

What they failed to do was to make any impact on what was actually going on in the delivery system. And Karen Ignagni herself has repeatedly and correctly said that health insurers are unable to do anything about underlying health care costs. Which leads to the rather obvious question, why are individuals, employers and the government paying them so much money for their services? Isn’t the societal point of paying an intermediary that they improve the situation between providers and end consumers? Doesn’t this mean that they are incompetent?

It does, and their solution (which Ignagni has consistently stretched the truth to defend) is that the taxpayer pays them over the odds to provide services to Medicare and Medicaid recipients.

Incompetence Three? So apparently Wellpoint can’t manage pricing (supposedly what it was good at) and can’t manage providers (something which now it or at least the head of its trade association admits it’s bad at).

Wellpoint has now also shown that it can’t manage PR. So much so that it’s 39% rate increase has breathed new life into the ashes of the health reform debate—a debate that previously produced a bill that would essentially eliminate the individual market where Wellpoint made (or at least where we thought it made) so much money. And this is a health reform bill that it was desperately trying to torpedo by the end of 2009.

With three such incompetencies, you might be wondering what the point of Wellpoint’s existence is? Or what’s going to sustain it, and the massive salaries it pays Braly et al.

But I’ve think I’ve got the answer. You see Wellpoint didn’t understand that the individual market was going to die, and that their first incompetency was an incompetency.

Now Wellpoint is terrified that its individual market bonanza is disappearing, and it’s desperately looking around for an alternative. And someone there remembered that in that reform bill it was dissing not so long ago are billions of dollars in subsidies—which now look pretty good given that all Wellpoint has to give up is an individual business that on which it’s losing money.

But health reform was dead and buried post Scotty Brown. “Hang on”, someone in the Wellpoint war room thought, “what can we do to change that agenda?  Perhaps if the White House had a poster child for health care cost explosions in the absence of health reform?”

“What would happen if we arbitrarily announced a 39% price increase? You know, just to get the music started again?”

I think we have our answer.

84 replies »

  1. “Break up the hospitals and the insurers. All of the mergers in the 90s and 00s have killed competition. Its to easy for 4 hospital chains and 5 insurance companies to, even passivly, agree to inflated prices where they jointly bleed the third party dry.”
    Nate, glad to see you’re agreeing there are excessive profits in insurance and hospitals, and I guess you’re saying those profits have been the result of collusion.
    Anyone in the insurance and hospital groups care to comment?

  2. ExhaustedMD,
    No one said and no one thinks it is easy to be a physician. We all know the hours are long, the training is grueling (more grueling than it has to be, but then when there is so much money at the end of the rainbow people put up with it). We know that if you go into private practice you become a small businessperson to boot, with all the paperwork and management headaches that entails.
    And no one posting here fails to understand that money drives decisions throughout the industry. You might be interested to know that Maggie actually wrote a book called “Money Driven Medicine.” You might read it sometime.
    As for looking behind the speaker at the lobby represented, you could start with yourself. The truth is that physician pay has increased faster than the CPI, faster than GDP, for decades. If you are a primary care physician, you are probably below the average and don’t see it personally, but that doesn’t make it less real.
    You haven’t said anything at all to discredit what Barry, Maggie, Nate or I have said about how physicians help drive up the cost of health care. Because for the most part we’re not using anecdotes in place of established statistics; we are using them in the service of established statistics. You are not.
    Here are the numbers from CMS. You’ll see expenditures on professional services have increased at a rate greater than the growth in GDP throughout.
    And for the record, you did not simply ask Maggie to “restate” her position. You said she was either out of touch with reality or a bold [sic] faced liar, and then suggested that many of us commenting here were the latter. Now, to be fair, Nate does this kind of thing with regularity. But I’m not sure that’s behavior to emulate.

  3. First of all, I read of Nate being threatened to be banned from this blog site in the past for his irresponsible and hostile comments; Maggie made an original statement that I fairly called her on to restate, which; Barry, I assume, had the right to do for her, but I don’t buy his reasoning how it leads to patients being reimbursed.
    As I said before, and at this point do not expect the business model commenters to get, health care was not intended to be a business. Whether or not physicians played a larger role than I believe they did to let it happen, the profit model corrupted the health care process, and just shouting at me I am wrong and continuing the lie to support the agenda here, I won’t agree and hope readers see through the bs you folks are selling.
    You know, you all think it is so easy or clear cut to be a health care provider. Go to med school, or nursing school, osteopathy, whatever program you feel would fit your needs. Oh, but wait, it requires time, energy, sacrifice, and investing YOUR OWN MONEY to accomplish this. Doesn’t fit the business model now, does it!? Yeah, you don’t get the point. I just hope unbiased and objective readers get it. And then get over your bashing. To me, you write like addicts just protecting your turf. Money and/or a product.
    Hey, some doctors actually provide good care, and aren’t watching their wallets first. So, continue to project and deflect. I see through your agenda. It is a shame it took the majority of Americans so long to see that this “health care reform”, as currently presented, is not the answer.
    Look behind the speaker, and see the lobby being represented. It IS about taking out the profit quotient, folks, you just won’t read the majority of commenters here reminding you of that.
    And why this site really isn’t selling responsible health care reform answers. That is my take as I have watched the corruption become logrithmic.
    Politicians directing health care decisions. Does anyone else reading here see the absurdity of this statement?! Pay no attention to the man behind the curtain, that is what they want you to hear!

  4. I’ve enjoyed this thread. ExhaustedMD, if Maggie and Nate and Barry all agree on something you need to take a hard second look at the facts–all of them–before you keep contradicting them.

  5. Ms. Margalit, It is a proven fact that “splitting up all these hospital conglomerates” (i.e. increasing the number of seperate hospitals) actually increases the absolute total dollars spent as each hospital or facilty now has operating rooms, ICU’s, MRI machines, etc, with capacity that will be filled to cover the cost and generate revenue. Most states now have instituted CON requirements to address this phenomen.
    Exhausted, it is my personal belief that most Doc are confronted with a changing work/financial environment that gives them the feeling of being screwed. However, while they are not the only ones to blame, the providers did sign deals with the “devil” (Networks, hospital, etc) to avoid the unpleasant tasks of finding patients or worrying about being paid or collecting.
    If you don’t like the deals, don’t agree to them. Start your own health plan.
    You may not be receiving 8% increased fee payments, but I’ll bet the time you spend with each patient has declined. I know you think you have to see more patients to offset the low fees you agreed to, but why not consider kicking out the middle man and work directly with the patients instead. Could it be because they are “the ignorant citizens who keep them (politicians) in office”. Perhaps you could treat only the educated patients “I’m not backing off when it impairs patient care”.
    Thanks for listening. LD

  6. ExhaustedMD just to throw your words back at you and maybe shut you up for awhile we have groups/policies that only reimburse the patient, we don’t allow assignment at all for them so every payment goes to the member.
    When presented with proof of your lies do you retract or deny, that is how you gauge the person speaking in front of you

  7. “As for her adding patients to this claim, when do insurers reimburse patients?”
    Every day, they reimburse over a hundred million patients a year. We constantly send checks to patients.
    As little as I care for Maggie’s work it was a case of bad wording, expenditures to providers have gone up every year. I am skeptical it is only 8%. What we pay for a 99213 might be the same or less but what we pay for the newest codes and the number of 99213s that are now 99214 or 99215 has without question gone up.
    “Maybe somebody should look at splitting up all these hospital conglomerates created by a flurry of mergers in the nineties.”
    Break up the hospitals and the insurers. All of the mergers in the 90s and 00s have killed competition. Its to easy for 4 hospital chains and 5 insurance companies to, even passivly, agree to inflated prices where they jointly bleed the third party dry. With technology We don’t need insurers the size of Anthem or United.

  8. Maybe somebody should look at splitting up all these hospital conglomerates created by a flurry of mergers in the nineties. It seems that healthcare costs rate of increase has grown significantly during the same period.
    The only efficiency this mergers brought about is the efficient dictating of prices.

  9. Exhausted MD,
    When Maggie said that insurance company reimbursements to doctors, hospitals and patients have increased 8% per year for the past 10 years, her wording was imprecise. What she meant to say was that insurers’ TOTAL MEDICALCLAIMS costs have increased at that rate, not average reimbursement rates PER PROCEDURE. A good chunk of the medical cost trend is driven by higher prices charged by hospitals, especially those with famous brand names, hospitals that have consolidated into groups and community hospitals that have dominant market shares in relatively isolated geographic areas. Some is related to higher drug and device prices, some to advances in technology, more intensive use of that technology, upcoding, etc. and some to an increase in population and (very) gradual aging of the population.
    While patient demands and expectations are probably a cost driver in areas such as diagnostic imaging, drugs they see advertised on TV and end of life care, the fact is that the dominant share of medical costs are driven by doctors’ decisions to order tests, admit patients to the hospital, prescribe drugs, consult with patients and perform procedures themselves.

  10. Anyone who truly believes that Maggiemahar’s statement I previously challenged is true is either out of touch with reality, or, a bold faced liar. You look any responsible clinician in the face and tell him/her their reimbursements from insurers, private or public, have increased in the past decade for their services, they either will laugh in your face, or, they will curse you out for such a false assumption.
    As for her adding patients to this claim, when do insurers reimburse patients? What, someone here is going to tell me premiums have gone down 8% a year for the past ten years? Really, you are even going to consider saying this?! As to the point of this thread in the first place, as Wellpoint is raising rates 39%!?
    You know what I don’t get? It doesn’t surprise me that people will make such comments, especially at an internet site where there is minimal accountability. It is that others will take something in print as valid, or, have an agenda to sell equal falsehoods and poor premises.
    Perhaps those of you who really are interested in true, honest, and accountable change to health care as it stands now might want to read Linda Stroh’s book “Trust Rules”. The subtitle “How to tell the good guys from the bad guys in work and life” puts the premise in full perspective.
    And we should start with the politicians who claim they are working for you, the citizens they claim to represent as constituents. Oh, I forgot, you all love back room deals and watching Senators who realize they are the crucial votes practice bold faced extortion to allegedly represent their districts and states.
    I don’t know what is more pathetic, these lying politicians, the ignorant citizens who keep them in office, or, the apologists and defenders who seem to only benefit from these slimy deals.
    Remember this simple truism, folks. If someone is knowingly lying to another in front of you, they will probably be lying to you sooner than later! That is, if you tolerate maintaining the relationship with the liar.

  11. The exchanges I have seen generally work out pretty good becuase they eliminate competition and allow for excessive fees. They also allow collusion to eliminate competition from new ideas. Perfect example is what I do. In NV, OH and numerous other states my clients buy Anthem, or other carrier’s, high deductible plans then self fund back down to low deductibles. The carriers HATE it becuase we reduce their premium 30-50%. They don’t have a choice though becuase other carriers offer it, if Anthem disallowed it they would lose a ton of business.
    The only place I have ever been unable to do this is CA. All of the carriers participating in CalChoice disallow it. They have 1-2 crappy plans outside of the exchange they “allow” you to use but they are rated so bad they are worthless. By grouping together and agreeing not to allow this they have protected themselves from innovation.
    Exchanges are a terrible idea that will only increase cost and stifle competition.

  12. I wonder how eager the insurance companies will be to bid on these “exchange” groupings? I assume Obama has incorporated the mandated loss ratios of the Senate Bill, and those don’t leave much margin for error. Offhand, I would think adverse selection and premium collection might be real headaches.

  13. It is “Draft Guidence” on policy. I quote:
    If you haven’t even completed the draft guidence yet then how can the policy be in place? If you read the article it also specifically says some systems were continuing to deny care
    “I don’t gross multiple hundreds of thousands of dollars in income a year.”
    But you are grossing 1 hundred thousand of income? That is more then 90 percent of the population. Why are you better then 90%? I think your overpaid and should have your salary cut to no more then 50K

  14. At the end of the day, I live with my choices and decisions and get the feedback from the majority of my patients that I care and do what is clinically correct.
    With the way some people attack me for what I legitimately offer as how a business mentality has hijacked a profession that does not focus on the “bottom line” first, as capitalism does, it does reveal to me what people are trying to do here and with this alleged “health care reform” agenda.
    Guess you don’t like people who see the real agenda, eh?
    Again, like addicts respond when they are called on their selfish and destructive ways.
    I’m not backing off when it impairs patient care. By the way, I don’t gross multiple hundreds of thousands of dollars in income a year. It is not about the money for what I do for a career.
    How many of the detractors to my position can say that?

  15. Here’s the solution I see as to who’s to blame:
    Everyone make a fist of each hand, then extend each index finger (no the index finger), now cross your arms in front of you and the person on each side is the one to blame. It’s called the “Healthcare Solution Salute”.

  16. “Nothing between the words or lines I am missing, correct? That sentence is so absurd and outlandish”
    I think Dr. Exhausted might want to get some rest. I fail to see what is wrong with Ms. Mahar’s sentence or her comment in general.
    Dr. Exhausted’s comment is incomprehensible. Could he/she? possible rewrite it in a way that someone outside his/her mind can understand what is intended?

  17. “Nice try Peter but you strike out again, as of a year ago it was still the case;”
    This response is a little late but Nate you are misrepresenting the link. It is “Draft Guidence” on policy. I quote:
    “The Department of Health should make clear that no patients should lose their entitlement to NHS care they would have otherwise received, simply because they opt to purchase additional care for their condition;”
    It could not be clearer.

  18. Was just reading insure blog and their review, another one that will be sure to hit part D premium is eliminating the donut hole, not like Medicare is underfunded or anything.
    If compromise is keeping the worst parts of a bill and ignoring everything that has even a slight chance of working are we really better off with compromise?

  19. You’re being awfully insensitive to those who exist only to serve the community. Has no one ever explained to you that “profit” is but “capital,” “dead labor,” as it were, a parasite on the body politic which, rife as it is with internal contradictions, can only result in imperialistic wars and total economic ruin? You’re way off message.

  20. Power and money…
    Don’t you dare come between me and my patient in determining care.
    Don’t you dare tell me what to charge or what you will pay.
    A foolish consistency is the hobgoblin of little minds, adored by little statesmen and philosophers and divines.
    md stands for minor diety

  21. I love providers aka takers. First person I ever met was a OBGYN. Without me making even one comment to him, he smacked me. All down hill from there.
    Providers kill more people in the USA than all the insurance companies, guns, drunk drivers, Michael Vick, and Bernie Madoff combined. Yet, these takers receive over 80% of every health care dollar spent in this country. You would think with this arrangement, where they do not have to worry much about dirty work of getting paid, they would have the decency not to bash the folks signing the checks.
    If you want a better system, put up or shut up. Start your own healthcare system or managed care system or insurance company. Just don’t try and force me (or even tell me) on how to run mine.
    Thanks for listening. LD

  22. Maggiemahar:
    Let me get this straight, so I will repeat your opening comment with spaces to accent the sentence:
    Insurance company reimbursements to doctors, hospitals, and patients have been going up by an average of 8% a year, every year, for the past 10 years.
    Nothing between the words or lines I am missing, correct? That sentence is so absurd and outlandish, I have to ask you what planet you are on to legitimately claim this? And I ask my colleagues reading that above sentence, am I wrong to reply this way?
    By the way, I think people mistake profit for additional income stream above expenses. Profit is about making money and pocketing it for yourself or your company to then thrive further for one’s own interest alone. Making money and then putting it back into the system, or saving it in case there are future losses, is NOT profit, but providing services/product that is about serving the community, not your pocket.
    You gotta love how people try to blur that difference. What an addict would do. Rationalize, project, displace, and deny. The largest type of addiction we see in America, folks. Money, and power. The two elements that have crippled health care. And it is non providers who want to displace the blame onto the very people who are doing the work and effort to support the system. And, my lame colleagues are either too afraid or too lazy to take a stand and shut this garbage up!!!
    And, for that minority percentage of physicians who are profit/money oriented in care providing, they are as much scum as the non-providers trying to feed off the system. Yeah, roaches. The metaphor just gets better every time I write it!

  23. “Same goes for clinicians, or any representative individual working in one of the segments of the health care sector.”
    True. For some reason a surprising number of physicians by dint of being physicians seem to believe that fact qualifies them to make policy pronouncements on healthcare policy.

  24. jd’s comments are spot on.
    Insurance company reimbursments to doctors, hospitals and patients have been going up by an average of 8% a year, every year, for the past 10 years.
    That is what is driving health care inflation–the underlying cost of care.
    The cost of care has been sprialing for two reasons: prices have been climbing, and as jd says we are using (and over-using) more high-tech agressive, intensive treatmetns.
    When American health care providers are compared to European health care providers you will find that our doctors “do more.”
    Americans undergo more surgeries than the citizen of any other country in the world– and the nmber has been climbing rapidly in recent years, with no improvement in outcomes. (See the June 1 New Yorker article by Boston surgeon ATul Gawande.)
    Our hopsital stays are not as long as in some European countires, but as Dartmouth’s Elliot Fisher puts it: “More happens to you while you are there”– more tests, more prcoedures, and you see many more specialists.
    In general, Americans undergo many more diagnostic tests using cutting edge equipment than in other countires.
    Yes, we do many more ceasarians, and many more bypasses and angioplasties (See this WSJ article on how many unnecessary angioplasties we do )
    We do PSA tests to try to diagnose early-stage prostate cancer, and then a great many men undergo treatments that they don’t need. (The vast majority would die of something else before the prostate cancer ever caused symptoms.)
    PSA tests are no longer done in many Euoprean countires.
    They respect medical evidnece, and when the medical evidnece showo benefit, they don’t do it.
    As the WSJ article on angioplasties points out, we tend to ignore medical evidence.http://online.wsj.com/article/SB10001424052748703652104574652401818092212.html
    When it comes to end-lf-life care, we tend to prolong the process of dying. Dr. Steve Schroeder talks about going into an ICU in another country and finding it almost empty. Where are the train wrecks? he asks (referring to patients on the edge of death, being kept alivein an ICU). The residents look down at their shoes . . until finally one speaks up: “You (Americans) don’t know when to stop!
    IN the U.S. we have built many ICUs for newborns– and in order to pay for them, we use them.
    Newborns in teh U.S. are far more likely to end up in an ICU– a few years ago Health Affairs published a story about the over-use and harm done to newborns.
    I could go on . . .
    Most of this over-use of high-tech expensive medicine is driven by the provider. Few new mothers demand that their new baby be placed in an ICU. They want the baby with them. Reserach shows that providers, not mothers, generally recommend the Cesarians.
    Providers popularized angioplasties–though now patients ask for them as a “quick fix.” But they wouldnt’ be asking for them if providers had done so many (unncessary) angioplasties, promoting them as a quick fix for angina (which they are but in most cases they don’t reduce the odds of death by heath attack).
    Once the patient is in the hospital, very few demand a battery of tests, or to see 10 or more specialits.
    They are told, you need this test; you need to see this doctor.
    As Dr. Don Berwick, president of the Institute for Health CAre Improvement puts it: We have overbuilt our healthcare system, and having created excess capacity, we have to use it.”

  25. it will drive the cost through the roof. Those are the only remaining ways to limit utilization. Lifetime is a concern for expensive treatment, what stops a hospital from giving someone an ICU bed for 5 years strait?
    The more immediate concern will be the annual out of pocket, perfect example of people that have no idea what they are doing screwing things up.
    OOP is calcualted on member liability. We the payor have no way of knowing if the doctor collects it or the member pays it. You can have a provider over treat someone to a rediculous degree and never bill the patient for any of it. They are happy cause the provider is into the carriers pocket 100% and the employee doesn’t care becuase it never cost them anything. They have completly eliminated any member liability, one of the largest contributors to inflation to start with.
    Those two provisions alone with increase cost 50% in a matter of a couple years. We have spent a ton education people on the need to use generic, if we arerequired to pay brand at 100% with no cost sharing why would anyone fill a generic anymore?

  26. Remind me sometime to tell you about the Austin orthopedist who named his yacht “Whiplash.”
    Any idea whether the elimination of annual and lifetime limits will affect the availability of reinsurance?

  27. While we’re awaiting an authoritative overview of Obama’s new proposal, here are a few tidbits from the White House summary: “. . . all Americans who can afford insurance will have the responsibility to purchase it.” Waiver if premiums would exceed 8% of income, or family income falls below $18,700. Those under 30 may elect a “low-cost catastrophic plan.” No “public option.” The word “subsidies” is studiously avoided, but they will be provided (no details in summary.) Insurers will not be permitted to decline applications on the basis of “pre-existing” conditions. Exchanges will be created for individuals and small employers. I haven’t perused the section on federal involvement in rate-setting. No Public Option: Waaagh!

  28. If only it was limited to questionable medical necessity. About 10 years ago in Southern CA one of my adjusters got suspicious about a provider billing for out patient surgeries or some sort of treatment. Unlike a number of carriers and other payers we assign adjusters to specific groups so they get to know the members and the plan, some of that value we don’t add Peter. She noticed an unusual number of people seeing the same provider group. Normally this wouldn’t raise flags with an auto-adjudication system but she was curious and looked into it further. Eventually it was determined they where recruiting patients, not performing the service, and pay them a cut. We had clear evidence which you would think we could take to the police and have people arrested, not even close. It took years before they ever got in any legal trouble and then it was minor and limited to the owners of the facilities. To protect our plan we denied all claims from the provider from them forward, for which we caught hell, not only from the member that was pissed they weren’t getting their kick back but also from the provider. There is such a feeling of entitlement that even when we made clear we knew what they where doing, would never pay them another cent, and had turned all our info over to the police they kept on doing it. It went on for a few more years till they were finally shut down.
    If we can’t easily deny non necessary care obtained under illegal pretense without being threatened with lawsuits and complaints to the DOI how do we even start to question the border line legit care? Providers and individuals feel they are legally entitled to what ever payment they want from employers and carriers and our politicians have helped foster that belief. Obama’s populist proposal today saying the government is going to have rate setting authority being a perfect example.

  29. If you include the concept of “monetary self interest” in the definition of “profit,” I am quite at a loss to imagine how you remove “profit” from health care.
    Here’s the problem: Let’s say you are a claims examiner for Cigna or Aetna. You are looking at reams of bills from a certain provider. You know from past experience that this provider bears watching. You are convinced that that many of the procedures are overpriced and/or unnecessary. The procedures in question do not fall within any of the limitations or exclusions of the policy of insurance. You don’t know, and really don’t care, whether the impetus for these procedures derives from the patient or provider. You just know you’re being hosed down. So what do you think you’re going to do? You’re not a doctor, and the question at hand turns on medical judgment. You consult with someone within your network who does have the requisite level of expertise, and he or she agrees with you. So that leaves you with the choice of paying the dam thing or getting into a nasty dispute with the provider. From past experience, you know how that is going to turn out. You are going to be “roasted” for coldly denying medical care, for the most contemptible of reasons, to a deserving patient. So you pay the dam thing. If you’re handling Medicare claims under contract, of course, you don’t get into all this. You just check the arithmetic, maybe, and cut the check.
    Appealing to providers to exercise self-restraint on these issues is not only a waste of time, but a confession of sappiness. Unnecessary and overpriced treatment will continue until some mechanism is created whereby they can effectively be challenged.

  30. Margalit, I don’t have hard numbers to show right now but based on my years of paying attention to this I’d say that unit cost is at least two-thirds of the problem. Utilization factors in at least two ways: a preference for more intensive/expensive interventions when simpler, older, cheaper and roughly as effective ones are available. And that happens in part because of unit cost. The increased rate of cesareans in the US over Europe is an example.
    If you look at some utilization measures (bed days per thousand, primary care visits) we of course have lower numbers than other nations. It isn’t about utilization per se, but utilization of the most expensive stuff (in questionable circumstances) which is made more expensive by the lack of controls on unit cost.
    And all of this is enabled by the confused trust the public places in providers and to a lesser extent suppliers (pharma, devices) to act in the public interest, joined with a lack of understanding of how insurance works, an entitlement attitude towards care for the insured, etc.

  31. jd, I don’t quite understand your argument. Either suppliers are pushing costs, or rather prices, higher or Americans are pushing demand, therefore utilization, higher because they will not be denied, which one is it? Or is it both?
    Every statistic I have seen indicates that Americans are not using more health care services than people in other countries. They are just paying multiples of what other countries are paying. So why would managed care be a good solution?
    I also don’t think that Medicare and the private insurers suffer from the same problems. Medicare cannot control costs because the government is selling out to supplier side lobbyists. Private insurers are not controlling costs because they have an escape valve in the form of unfettered ability to raise premiums and reduce coverage.
    The way I see it two things need to happen simultaneously. The government needs to stand up to suppliers and cut reimbursements for products and services in a smart way, not across the board. Primary care must be protected. The second thing that needs to happen is a “public option” for the exact same reason that the President originally mentioned. It will keep the private insurers “honest”.
    If we do all that and it still turns out that this country cannot afford to support the same levels of care as the Europeans, which I find preposterous, then it will be time to discuss managed care. Not now.
    Tom, I think I understand Nate rather well, and I think Nate is mostly right on the money when he replies to me. I’m not sure about “kerpumpalump”, but I would prefer that the Nate style insurance notion would just go away, and Nate knows that.
    I’m not sure that people in this day and age can be either Jeffersonian or Hamiltonian, unless in the very strict interpretation of small versus big government, but that would leave out the essence of both great men.

  32. ExhaustedMD,
    Being a clinician has real but limited value in the policy debate. If there is a debate about food safety in meatpacking plants, should only meatpackers be listened to? I, for one, would be keen to hear what people versed in the public health data have to say, as well as people who can tell me about the cost of various safety regulations versus the expected benefit.
    I would expect the meatpackers, in general, to not want very much to change and in general to be motivated to support things that make their lives easier, with less onerous restrictions, and higher pay. Same goes for clinicians, or any representative individual working in one of the segments of the health care sector.
    Maybe rude to write. But, rude has its place at times.
    You and I, of course, transcend our industry roles. 😉

  33. Exhausted, of course it is about money. Unless you and your clinical colleagues are willing to work for free, the rest of us have an unpredictable chance of needing a lot of money on very short notice. It is that simple. Sorry.
    Kaplan, Nate and Margalit mostly talk past each other: the term “insurance” means completely different things to each of them. I wish we had a term for “social insurance” that doesn’t have the word “insurance” in it: I think that would help a lot. That way Nate could say “I prefer insurance” and Margalit could say “I prefer kerpumpalump” and they wouldn’t be trapped by the vocabulary problem. This notion “being rich is evidence of desert” is deeply ingrained into our essentially Calvinistic culture. Spelling flames are unseemly and unhelpful.
    Vikram, Nate did answer your question. He’s more a Jeffersonian small-r republican and it looks like you’re more a Hamiltonian small-r republican. He’s defending the Jeffersonian vision of the republic.
    paolo, universical healthcare “is” whatever the government says it is.
    matthew, I don’t know how much wellpoint makes on what, but I think #2 & #3 are spot on.
    Oh shoot — I could’ve just waited for jd 😉

  34. It remains flummoxing that so much vigor and vitriol is spent chastising the private or public provision of insurance, as though the problems we have in either area exist in a vacuum, or are due solely to “corporate greed” in one case or “liberal idiocy” in the other.
    The reality is that providers and suppliers of care are pushing costs ever higher, and the failure of our combined private-public financing system is its inability to muster sufficiently effective countermeasures. This is true for Medicare as much as for WellPoint (less true for the VA, but that is another story).
    Our financing mechanism fails to control costs in part because (as was pointed out) it was not originally designed to. Medicare, far from being sui generis as Nate implies, basically copied the payment approach of private indemnity insurance of the time.
    Efforts to get away from this indemnity system towards managed care, or towards tightly controlling allowed charges, or towards a system that rewards efficiency rather than quantity, have all failed to keep cost growth sustainable. And they have failed ultimately due to the same forces: Americans have become convinced that they should get whatever care they want, when they want it, and no “bean counter” or “government bureaucrat” or other administrative person with an eye on cost and quality should get in the way. Massive Fail.
    Of course, Americans have been nurtured to maintain this belief: by providers (on a personal level in the form of physicians and nurses) who rail against managed care; by liberals who rail against managed care and cuts in Medicare; by conservatives who rail against use of comparative effectiveness and other measures that smack of government interference, and lately even against any cuts in Medicare.
    If you dig deeper, it is clear that the public is totally muddled, and simply sides with the providers on most issues, because providers (especially doctors) are who the public trusts.
    That means that the public ends up endorsing or not resisting the provider and supplier lobbies acting in their own parochial (and short term) interests. Medicare payment fix? Dead. Health plan efforts to stop the growth in hospital fees? Failed, usually before they even begin. Restrict the Medicare formulary similar to the VA? Over their dead bodies. You could go on, and on, and on. Health plans using small network products to create better leverage to lower costs? Groups don’t buy them because their employees don’t like them.
    It isn’t that managed care initiatives like disease management, utilization management or network management don’t do anything, it’s that they collectively lower the medical cost trend from 20% a year to 7% a year. Still not sustainable.
    And so ExhaustedMD’s comment is in a sense right and in a sense naive:
    “Take out the profit element, and I like my metaphor, watch the roaches of greed scatter for cover and look for other ‘food’ sources to nourish themselves.”
    The roaches of greed will see you coming to take away their profit element, and they will whisper into the ears of their patients that you want to take away their healthcare, indeed, that you are coming to jeopardize their very lives. They will whisper into the ears of congress that anyone who votes against their profits (I mean, their fair wages and freedom to practice business) will feel the wrath of the public and be cut off from campaign contributions. But of course, they will generally say it nicely, because, hey, they’re all on the same side against those damn middle men and bureaucrats.

  35. Reading threads like this give new meaning to Shakespeare’s line: “full of sound and fury, signifying nothing.” You know, commenters, the longer your comments, especially the run on sentences that take almost a full screen to pan down to get to your next paragraph, make people like me just pan to the next comment.
    By the way, all this pontificating about statistics and business expounding just reinforces what is WRONG with health care. It is just about money to most of you. And that is why the system, and a good many of you, are going nowhere positive.
    As most of you aren’t clinicians anyway.
    Maybe rude to write. But, rude has its place at times.

  36. And what does the National Health Service claim with respect to one’s preferences with respect to physicians? Not much, based on what I’ve been reading.

  37. Yes, archon41, with private medical insurance in Great Britain you have more choice in selecting your specialist and hospital. At least that’s what the insurers claim:
    The other selling point is that you get an “en-suite room with a TV and other home comforts.”
    In other countries like France, Netherlands, and Switzerland you get to choose your doctor even with public insurance. You don’t always get the single room though. Getting a single room with privacy seems to be a major selling point of private insurance across Europe.

  38. Nice try Peter but you strike out again, as of a year ago it was still the case;
    Imagine that iberals making promises to win votes then not following through, what a shock.
    Nice to see public pressure was able to fix this constraint of freedom, to bad so many people had to die at that hands of this government regulation in the first place.
    Vikram; every time I respond to a post from you or Peter

  39. Is it true that, in Great Britain, you are permitted to select a doctor of your choice, if you have private health insurance? Sounds like a good deal to me.

  40. Nate, since you are out in full force, do you mind answering my old question to you- when did you last have to defend the Republic?
    This is the question I asked when you mentioned that consitution is full of responsibilities including responsibility to defend the Republic.

  41. “If you receive non approved treatment, even if you pay 100% of the cost yourself, they cut off your approved treatment and related care.”
    Nate, as Peter pointed out this is no longer the case, and even when it was the case, nothing prevented a rich person from seeking any treatment he/she wanted outside the NHS with a private provider and/or outside their country.
    People all over the world receive reasonable treatment through public health systems and get as much luxury treatment as they can afford outside those systems. The notion that universal health care forces anyone to do anything is just a scare tactic.
    “Your education reference is a perfect example of what happens when you count on the government to provide something. Millions of kids are subjected to an education worse then none at all.”
    My education reference was an example of how, even in this country, public systems don’t prevent people with money from doing whatever they want with it, including getting their own education and health care.
    It also seems that you are a proponent of dismantling the public school system. If you wanted to make an international comparison to see how well that works you could use … Somalia?

  42. “Actually Paolo they do. If you receive non approved treatment, even if you pay 100% of the cost yourself, they cut off your approved treatment and related care.”
    Well Nate, actually you’re about 2 years off:
    And look at who opposed the change charging it creates a two tiered system – those lofty Conservatives.
    You might want to look at the dollar limits as well under the old rules:
    “Until now, Nice would not approve drugs that cost more than £30,000-48,000 for a year of good quality life.”
    How terrible!!!, only about $60,000 to $96,000 a year. Yes, save us from NHS like care. Tell me what U.S. insurance companies will pay for non-approved drugs?

  43. Well, Nate, at least you have made clear the philosophical foundation of your analysis by explaining to us that “If I am rich I deserve to live longer then someone who is not.”
    Since wealth is the measure of social worth, I suppose victims of Bermie Madoff’s fraud “deserve” to lose their homes and health care overnight, Saddam Hussein didn’t deserve to die, and every 8 year old who dies from a treatable illness gets what he or she deserves.
    Why even bother wasting considerable time and energy on analysis of the insurance industry, or any other segment of healthcare, when your premise pre-ordains your conclusions. Just stay with rich people “deserve” to live and poor people “deserve” to die–it is much simpler, and makes your point more effectively.
    I’m just not sure how to explain to my children that I’m fortunate to be rich enough to deserve to live (at least for a few more years), but in light of the trends I doubt when they are my age that they, or any of their friends, will be similarly deserving.

  44. One of the subtexts here seems to be that, with a nice Public Option and the government bringing its formidable underwriting skills to bear, we wouldn’t have to worry about whether premiums were sufficient to pay claims.
    If Wellpoint has any sense whatsoever, they are planning to withdraw, to the extent possible, from the individual market altogether, at least in California. What possible relevance does it have that they may see the “individual mandate” as a peachy idea?
    So. . .we subsidise for the indigent health care comparable to the care most employees now receive through their employer, then turn around and buy a private policy for ourselves. Got it.

  45. “The NHS does not prevent a rich British person from going to a private British doctor or hospital and spending all the money he wants on as much health care as he wants.”
    Actually Paolo they do. If you receive non approved treatment, even if you pay 100% of the cost yourself, they cut off your approved treatment and related care.
    Your education reference is a perfect example of what happens when you count on the government to provide something. Millions of kids are subjected to an education worse then none at all. Billions are wasted to provide it.

  46. “This will most likely lead to me being called cold and heartless then to a meaningful debate but here it goes…”
    Nate, you are not cold and heartless. You simply don’t understand what universal health care is. The NHS does not prevent a rich British person from going to a private British doctor or hospital and spending all the money he wants on as much health care as he wants. Nor does the British government prevent its subjects from going wherever they want in the world to get treated. The same is true of other universal health care systems like France, Germany, Switzerland, and Italy, where excellent private health care providers (and insurers) co-exist with the public system.
    There is nothing wrong with rich people demanding better treatment than for the average person. What is wrong is that some non-rich people get no treatment at all and die from preventable diseases.
    In this country, every person has a right to access some basic level of education through the public school systems, or through charter schools, or in some cases through government vouchers. This doesn’t prevent rich people from going to better private schools.

  47. Channeling your inner Ezra Klien here Matt;
    “According to you they have to give guaranteed issue to everyone whatever their health status at the same price in the individual market.”
    Not true at all I very clearly said they underwrite in a band which is no where close to the 8 to 1 you claimed. Or was it 7 to 1? Facts and accuracy don’t seem very important in debates with you. I even gave specific examples of what those bands are in a number of states. If your going to contribute something to me try to be even close to accurate.
    “That is the case (more or less) in the small group market but not in the individual market.”
    Under HIPAA law if you lost your group coverage and exhausted COBRA or it was not an option you are guaranteed the right to buy a HIPAA policy with the cost not to exceed 170% according to the links I gave you, links to the actual state statuate by the way.
    “You though are seeming more and more intellectually challenged,”
    I thought the name calling was a no no? I’ll be the bigger man this time, morally not girth. Hard not to rattle off a couple demeaning marks when someone is under yoruskin isn’t it?
    “But by all means keep telling us about the MRMIB high risk pool with its 7,000 enrollees–that is SO relevant.”
    If you have 800,000 members generally speaking 160,000 of them wil account for 80% of your total claims. If 4% of those are the sickest of the sick and guaranteed to incur maximum claims that does skew the entire block. Using numbers I can multiple in my head if 7000 people had $500,000 in claims that is 3.5 billion. Divide that by the 800,000 people in the pool and that is $4,375 in premium per year per person just to pay those claims.
    If that is to high then lets say they only have $100,000 in claims that alone still increases premium for everyone $875. When premium is only $4000 a year that represents a 22% increase just to cover the MRMIB.
    So Matt 22% increase is SO not relevant? This is what happens when you don’t understand the math that goes into calculating rates, you make silly comments like 7000 high cost individuals don’t effect a pool.
    “My point in the original piece is that the individual market cannot work in the long run as is,…And that requires health reform.”
    It is because of health reform that the individual market cannot work. Prior to poorly thought out reform the individual market was sustainable. Eliminate the cost shifting and the individual market is still sustainable. This is the truth you hide from. It is reform that is broken not our healthcare system.
    The problem is 5% of the population is not insurable. This has been the same problem since Medicare was passed. Every time government has had a chance to address this 5% they have passed and instead messed with the 95% of the system that worked. Taking care of the 5% is a cost, it wouldn’t generate money they can spend elsewhere or hand out in ear marks. Taxing and natinalizing the 95% brings in billions annually they can redirect or extract bribes with. That is why Medicare ignored the catostrophic insurance seniors wanted and Medicaid pushes people back on employer or private insurance.

  48. Interesting question Margalit. It could have effects but I am not sure how long the positive effects would last.
    If you bought a whole life healthcare policy that covered 100% of NEEDED care nd paid your monthly premium on time it would be an extremely efficient policy. Efficency being a measure of administrative cost realitive to healthcare bought.
    It would be very similar to life insurance. Actuaries can tell with great certainity when someone will die. As long as you have enough of these people in a pool any varations wash out and the policies are very competitive.
    Where this falls apart though is you can only predict cost on what we know today, so you could design a policy today that covered today’s treatment but it would have to exclude any future treatments that cost more then what is available today. For a 5 year policy that would be ok with most people. Majority of people today would buy a 40 year policy fully aware of that cluase but demand the new expensive treatment 30 years from now.
    Becuase of that I don’t think you could manage the long term risk in such a way that you could insure it in a manner acceptable to the policy holder.
    You could possibly do it with a scheduled benefit plan but not a defined benefit. Scheduled benefit plans pay a specified amount for a condition or treatment. Where as the typical benefit plan pays for the service without the reimbursement being set. This would be an interesting concept, like critical illness plans globalized. To be successful you would need the policy holders to excert sufficient pressure on providers to constrain cost. Personally I think this is possible as it worked for 180 years prior to Medicare and still works today for healthcare not covered by insurance.
    It would be easy to determine the probability someone gets cancer or hospitalized, current fair cost for treatment today, then an inflationary factor then translate that to a monthly premium.
    You could do this on a flat rate for current to 65 in which case your premium today would sky rocket but 40 years from now be attractive. Side note I would be a little scared of insurance companies sitting on that many reserves, could distort the investment market. Billions of dollars and nothing to do for 40 years…no thanks
    You could do an escalting premium that in theory should rise at a rate equal or close to the inflationary factor built into the scheduled benefits. You would need to front load the premium today a little bit for the increased cost at the end but itwouldn’t be bad.
    Not sure what you would do about changing health and the elimination of the moral hazard. If I can buy a till 65 policy when I am 22 and in shape and lock in the price I can let myself go and get fat and complacement. This would drastically change the risk without the ability of the carrier to change the rate.
    After all that I don’t think it would work unless done strictly on catostrophic claims. I don’t see a way to relieve individuals of personal responsibility for small claims and make it work long term.
    I would ask if turnover is always bad. Years ago when my company use to be much bigger we did things a certain way, large national carriers came along and did it better and took most of our business. STepping outside of myself this was a good thing, they did a better job. Last few years I have figured out how to beat the large national carriers so now I am taking business from them. Turnover is a necessity of competition and compeition is what we are missing, if anything I think we should look how to make turnover easier.
    Turnover would be easier of individuals took more responsibility for their own care. If you are going to completly relieve people of that responsibility then you might be better off with a lifetime insurer to manage them, but your starting with a terribly flawed system. This all sorta leads back to what is an insurance company, do they finance the delivery of care by transfering risk or is it their duty to manage our health. I think a system where managed care companies are not the insurance company would be more efficient and successful. Managed care, to me, seems more a function of providers then bean counters. Let providers provide care and bean counters count beans.
    This will most likely lead to me being called cold and heartless then to a meaningful debate but here it goes…
    If I am rich I deserve to live longer then someone who is not. take a deep breath before taring into me.
    Cleveland Clinic runs ads in Clevleand that says something to the effect that every one deserves the best care in the world, this just isn’t true or even possible. They can’t send their jet to pick up every patient. We can’t have the best specialists in the world treat every patient. Not all care is cost effective and we don’t have unlimited resources to spend, that means that 1 in a million shot of working treatment is not available to your average person. Under certain political ideologies the answer is to eliminate or outlaw that treatment for everyone. This is short sighted.
    Rich people fund research that hopefully trickles down to the common person. New discoveries and procedures lead to new ideas which eventually are refinded so they are affordable to all.
    Over charging rich people for care that is unlikely to work pays for respources that would not otherwise be available to the poor or average person.
    Where we got in trouble is telling poor people and average people they are entitled to the same treatments as everyone else. It’s not true. I prefer our system of allowing people to buy what they can pay for a lot more then the NHS model of not letting anyone have it. Our politicians screwed this up trying to make people think we are all equal. Our constitution entitles us to equal opportunity not equal outcomes.

  49. I am loathe to get in the middle of what appears to be a personal issue between Matthew and Anthem, but I did want to note a couple of things:
    “What we do know, is that medical loss ratios in the individual market are typically much lower (i.e. the insurer keeps more of the money) than in the group market.” – the statement in parenthesis is not a valid conclusion. MLRs are lower for individual market typically because costs are higher, not profits. For better or worse, a big chunk of those higher expenses is for sales & marketing expenses, especially commissions to external brokers.
    I also don’t find it hard to believe that Wellpoint might lose money in some of its lines of individual business — being the insurer of last resort (without an accompanying mandate) virtually assures that there will be losses. Those losses end up getting subsidized by other lines of business, and there is only so much of a surcharge for this that can be borne by the other segments of the market before those customers leave. The requirement to be insurer of last resort is a hidden tax on Wellpoint’s other customers.
    The rage against insurers’ profits also amuses me. While there may be some insurers with unseemly profits — I’m not sure who they are, but I’m willing to concede that some may exist — the larger carriers are making more like 2-5% on average, hardly windfall profits. And, as another poster noted, virtually everyone in the health care system is making profits. I don’t hear many calls to put doctors on government salaries to wipe out their “profits.”
    Similarly, the “surprise” that insurers can’t control the costs in the health care system reminds me of Captain Renault’s surprise that there is gambling going on at Rick’s. Insurance was supposed to be protection against unforseen expenses, providing financing, as another poster noted. That insurers have developed techniques like utilization review, provider networks, and disease management illustrate that they do work to control costs. But they do not control introduction of new technology, proliferation of number and types of providers (all of whom bill patients), and lifestyle factors like the growth of obesity and diabetes. Nor can they stop Medicare and Medicaid from shifting costs to private patients, as has been steadily growing for the part 40 years. So, yes, they can & do try to control costs for their populations, but the country & the health care system have these confounding influences. Certainly we could finance via a single payer instead of the private sector, but our experience with public programs does not give good confidence that these would do anything but add to the already shocking national debt.
    Lastly, to Margalit’s question — My guess is that if the risk pool was stable & thus more predictable, premiums would indeed be lower. I know some carriers have looked at more of a lifetime pricing kind of approach, similar to how whole life insurance is priced. The problem always comes back to uncertainty about how to price for the future inflation, and the likelihood that younger people would never pay the extra for protection 30+ years out.
    This turned out to be much longer than I expected — apologies.

  50. Nate, I agree that Universal participation is a must. I just disagree with the methods proposed for enforcing it and with the inequitable spread of the burden across populations.
    Those people that are living successfully without insurance are not living successfully without health care. Some may be paying for small stuff, but taxpayers are paying for the rest. It’s not really fair.
    In the hundreds of years preceding Medicare, there were very few expensive ways to effectively address disease. Science and technology advances have created means to improve and extend life that are beyond the means of self pay for the vast majority. Saying that people should live within their means, when it comes to health care, translates into the non-rich having to die younger from completely curable/preventable causes. This is not like cars and food. Your life is not threatened by the lack of caviar and a BMW. Shouldn’t the much touted sanctity of life, in other circumstances, be a factor in health care policy?
    Finally, I have a question regarding calculation of premiums (it’s a real question, not a debate point). If the insurer knew that most insureds would stay with the plan until, say, they turned 65, instead of the huge turnovers we have now, would that affect the premiums? If so, would they be higher or lower?

  51. Nate–you are flat out wrong, as usual
    In the California individual market insurers ALWAYS underwrite and have the ability to charge different amounts or not offer insurance at all to applicants. The only thing they can’t do (as they can in other states) is to deny certain types of coverage (e.g. we won’t cover your kidneys) in advance. And this is not in theory, the numbers I’m telling you are from quotes issued to me by Blue Shield. According to you they have to give guaranteed issue to everyone whatever their health status at the same price in the individual market. That is the case (more or less) in the small group market but not in the individual market.
    This is relevant as at no point have I been talking about the small group market at all. Neither has Wellpoint. It’s the individual market they’re been doing the 39% (and 25%) price increases.
    You though are seeming more and more intellectually challenged, and seem to be convoluting more and more irrelevancies into your “analysis”.
    But by all means keep telling us about the MRMIB high risk pool with its 7,000 enrollees–that is SO relevant.
    My point in the original piece is that the individual market cannot work in the long run as is, and that’s why Wellpoint wouldn’t be too upset to get out of it–provided it gets a share of government subsidies instead for people buying insurance via the exchange.
    And that requires health reform.

  52. Why cannot these blocks, these stones, these worse than senseless things understand that, to keep the system from imploding, we must create a massive entitlement for the Obama Faithful?

  53. “but it is hard to imagine that individual mandates, mandatory enrollments, and a public option would make us worse off.”
    No No and Yes. No one thought Medicare and Social Security would be the disaster they are headed to be. The problem is mandatory enrollments and individual mandates should have been passed at the same time COBRA and HIPAA passed and created the problem. A system that allows true underwriting of the risk can sustain. A system that requires Universal participation can sustain. A system where the politicians pass only the mandates that fit into 30 second sound bites likely to increase their chance of getting reelected will fail every time.
    Medicare, Medicaid, Indian Health are all public options, our government has never proven capable of running a sustainable insurance program. Politics and one sided greed will destroy them every time.
    “For insured patients, there is little incentive to constrain demand.”
    This ignores the millions of people who live successfully now without insurance and lived without it for hundreds of year prior to Medicare. The general public is quit capable of living within their means if they are required to live within their means. Its when politicians set up a table of free handouts that things get skewed.
    “Meanwhile, the most likely solutions to the arms race–collusion (e.g. allocating markets) or monopolization (through consolidation) –replace one set of inefficiences for others.”
    Why ignore the obvious and turn a blind eye to history? Independent hospitals competing against each other worked for decades until Washington allowed to much consolidation in the insurer market. Technology today allows for efficient operation of 10,000 insurers as much as 1,000. Cap market share for both insurers and break up the health organizations. It will leave some issues with rural care but competition would solve the urban cost crisis.
    “procedure-based payments to physicians encourage unnecessary procedures”
    This is only a problem when the person receiving the care isn’t paying the bill. Cars, housing, electronics, and almost everything else in our life is priced this way. While there will always be a sucker the majority of Americans deal just fine.
    “What I said was that underwriting meant that the same policy varied in price by a factor of up to 7 to 1”
    Actually Matt you said 8 to 1 and even at 7 to 1 you’re still wrong. CA law does not allow you to charge one person $700 and another $100 if they are the same age, sex, and zip code.
    How do you jump from an argument about individual underwriting then as an argument use small group underwriting? Your talking two completely different sets of laws and rates then bash me for the clarity of my argument?
    Your exact words;
    “I can assure you from personal experience that variations in rates charged in the indiv insurance market in California for exactly the same coverage based on health status vary by more than 3 to 1–more like 8 to 1.”
    You know what you say before stays above your new comments right?
    CA law does not allow a carrier to sell one person a policy at $60 and the same person with conditions $420. It doesn’t happen. Rom your writing I can’t even tell what your trying to say. What are basically identical benefit policies? That throws up a major red flag when someone is trying to make your argument and starts with “they are basically the same”. Either it is the same policy or it isn’t. Do you consider a policy with $100,000 lifetime max basically the same as one with unlimited if all the co-pays, deductibles, and co-insurance are the same? Are you even talking about two policies from the same carrier? One PPO and the other POS?
    It sounds like in your zeal to propagandize you compared the cost of your small group reform group policy to both the cost of the lowest priced carriers individual plan with no underwriting load and then finally to the price of the highest cost carrier’s fully loaded individual plan. And to all shock and amazement they came out with a 7 to 1 spread, a completely meaningless analysis but makes your political point.
    If you want to argue then do it right, what does the same carrier charge for the same policy to a healthy person and the maximum loaded person and finally the state HIPAA plan? It is not 8 to 1, or 7 to 1 or would you like to claim 6 to 1 now?

  54. It seems the debates are about preventative health care for all, and specific procedures for some, OR, if you have enough for current health care, then standard all encompassing health care for you. We can’t seem to have both in the debate we’ve mired ourselves in.
    I like to address the other side of the issue. If unemployment were less than two percent, and the average wage was at least 30k a year, then wouldn’t the only issue be on preventing insurance companies from charging too much? If that amazing dream (2% or less unemployed) came true, would this issue have come up at all? Only people who wanted to increase taxes would be looked at with scrutiny, and Americans would be able to afford ANYTHING as individuals. It would be our choice, so screw this debate, screw the BS going on, and stop following the press and pressident in turning your nose so you may follow them down into this idiotic on-going perpetual BS arguement, and focus on taking back market share from the imports!!!!!!!!!!!!

  55. Perhaps Hugo would be gracious enough to make some of his theoreticians available to us. They’re light years ahead of us on this stuff, you know.

  56. “This blog devotes 10 times more space to bashing the health insurance industry than it does to bashing the hospital industry or the less enlightened elements of organized medicine,…”
    10x’s? Matthew will have to account for that. Actually I’m pretty even when it comes to healthcare villains, even the general public who say they want “reform” as long as it won’t cost them enything.
    If you perceive insurance gets most of the blame it’s because health insurance adds impediments and frustration to healthcare, either when people need to use it or when they are trying to get it – without adding any value. It’s why most people hate the IRS, they can’t perceive value for the money demanded, and especially if taxes were to rise 6% – 10% compounded each year (not even including a Wellpoint like 39% hike). If insurance wants the position of profitable/bonused gatekeeper then it’ll need to do a much better job of adding value.

  57. “Peter there is a difference between buying an insurance policy before you have claims where rates are calculated on the potential probility of you having claims and being forced to cell a policy to someone who is already sick and further forced to sell that policy at an artifically low price.”
    And where oh where did you interpret me saying I wanted to give people the ability to wait until they’re sick before contributing to healthcare? The “artifcally” low price is only in the minds of private insurance as they attempt to carve the sick market into pockets of profitable risk groups. As I said, the risk doesn’t go away just because an insurance company doesn’t want it. If we continue to break off the sick “them” and the well “us” we will never get close to system wide costs controls because we will always find a way to transfer the risk to someone elses books.
    “It must be something associated with Liberalism that doesn’t allow you to tell the difference between a subsidy and insurance.”
    Yes Nate, always the old conservative standby “liberal” word to bolster your argument. It must make getting through the day easier when you can box ideas and people into “liberal” or “conservative”.
    Actually insurance companies undestand “subsidy” very well when they want the government to remove the risk and the hard lifting to guarantee profits and bonuses.

  58. Gary, dont worry about getting Nate to learn how to spell, it’s hard enough getting him to comprehension 101.
    Nate now seems to believe that pre-issue underwriting in the Calif individual market doesn’t exist. What I said was that underwriting meant that the same policy varied in price by a factor of up to 7 to 1, and that Pauly showed it averaged at 3 to 1. And of course those are in the cases when policies are actually offered–which is frequently not the case.
    Nate instead wondered off into the world of the laws concerning the MRMIB high risk pool–which is for (a few of) the people who HAVE ALREADY BEEN DENIED COVERAGE. Sometimes Nate’s “expertise” on health insurance is really worth laughing about
    However as Nate’s so keen on “reading” let me refer him to this long piece from 2006
    In it I wrote this about some 2004 numbers:
    “Here’s the actual math from my “marginal” case for basically identical benefit policies in California ($2,500 deductible). Remember that my “group” was kicked out of the PacAdvantage buying group, making me eligible for HIPAA guaranteed issue. What happened was that my $220 monthly premium for the group policy via PacAdvantage became a $110 premium for a healthy individual. The alternative if I’d failed underwriting (and I did with one of my applications) was a $400 premium with a higher deductible for the HIPAA guaranteed-issue non-underwritten plan.
    In previous years the gap between the “healthy” price and actual underwritten price I was offered care for—when they found my history of knee surgery—was even greater ($60 vs $420 if memory serves me right).”
    By the way at the same time a friend who does have a chronic illness was quoted over $1,000 a month for the same high deductible policy by Blue Shield.
    But Nate needs to understand that $420 is 7 times $60, not 37% more than $60.
    Everything Nate is discussing is about people AFTER they’ve got into either the individual market or are one of the very very very few in the high risk pool.
    However about 30% of the individual market turns over EVERY year, and as Nate points out that number is increasing as costs increase and young healthy’s drop coverage. So the reality is that a huge number of people are impacted by underwriting.
    But why should worry about that issue which impacts the 2 million Californians in the individual insurance market when Nate can argue about the laws governing California’s MRMIB high risk pool that has all of 7 thousand people in it.
    It is though worth pointing out for anyone left reading Nate’s blather that he’s spending his time looking a a teeny tree and ignoring the huge forest around it.

  59. Yeah, I thought that’s what you guys were saying. One person’s profit equates to another person’s loss of value, whether we’re talking about health care, communications, transportation, housing, food or whatever. Seems like such a loss, especially when you factor in collateral waste like marketing, advertising, etc. We really need some Deep Thinkers to come up with a better way.

  60. Good point, Bret.
    And no, archon41, I don’t think that insurance is the only health care segment in which profits and public interest conflict. As our system is structured, it might be hard to find a segment in which there is not a conflict.
    For example, the medical arms race among hospitals results from rational profit motives but causes socially wasteful expenditures. Meanwhile, the most likely solutions to the arms race–collusion (e.g. allocating markets) or monopolization (through consolidation) –replace one set of inefficiences for others.
    Similarly, procedure-based payments to physicians encourage unnecessary procedures (or expensive procedures in place of less expensive medicine).
    And, of course, the other side of the equation–consumer incentives–offers no help to market forces either. For insured patients, there is little incentive to constrain demand. For uninsured, preventative care is too expensive, so even more expensive emergency care (if available) becomes primary care.
    So…no simple answers, but it is hard to imagine that individual mandates, mandatory enrollments, and a public option would make us worse off.

  61. So is insurance the only segment of the health care system placed by the profit motive into irreconcilable conflict with the interests of the state?

  62. “The question though is whether short run reelection motives are a good proxy for public interest in the long run, and the history of the past 234 years pretty clearly shows that they are not”

  63. Margalit is absolutely correct. The notion that there is something inherently unjust about charging young healthy people more than is necessary to cover short run assumes that they will always be young and health and would receive no benefit from a semblance of health care security as they age. I suppose you could argue that instead of charging a premium to healthy groups you could simply advise them to be sure to save enough when they are young to cover a twenty-fold increase in premiums when they are older. Because of the intrinsic human characteristic to underestimate future risks, virtually no one would follow this advice and, of course, by the time they enter the needy group, the increase will be closer to fifty-fold as health care costs continue to outstrip inflation. We could also repeal social security, as it is also provides an untoward subsidy to the old and infirm.
    I also agree that demonization of the insurance industry has been overdone (although it may be a political necessity). There is no reason to expect insurers to do anything other than to try to maximize profits. The question though is whether short run profit motives are a good proxy for public interest in the long run, and the history of the past 25 years pretty clearly shows that they are not. In the absence of a public mandate, open enrollment, and minimum benefits requirements, it makes sense for payors to compete for healthy subscribers and it is far easier than controlling costs. In many markets, insurers can’t effectively control costs, because hospital consolidations have reduced or eliminated their bargaining power. (The Massachusetts Attorney General’s Office just released a report discussing this issue).
    Unfortunately, demonization and soundbites are the primary currency of political discourse–death squads, anyone?–and the health plan lobby has hardly limited itself to reasoned debate.
    P.S. — “your” does not mean “you’re,” and “cell” does not mean “sell.”

  64. Margalit do the math, your not even close to being correct, private insurance doesn’t balance out like that at all

  65. It’s not subsidy Nate, it’s true financing.
    The young and healthy folk are not going to have to pay small fortunes when they get old and sick, if they pay a bit more than they have to, when they are young and healthy.

  66. Peter there is a difference between buying an insurance policy before you have claims where rates are calculated on the potential probility of you having claims and being forced to cell a policy to someone who is already sick and further forced to sell that policy at an artifically low price.
    It must be something associated with Liberalism that doesn’t allow you to tell the difference between a subsidy and insurance. Matt is struggling with it as well.

  67. How very true. Only the deranged are incapable of perceiving the awesome efficiencies to be realized by replacing the insurers with absolute, total governmental control over the apportionment of health care and the determination of provider pricing. My heart sings to think of it.

  68. Peter, I have no problem with a reasonable amount of government intervention in health care but of course reasonable people often disagree about what is “reasonable.” As for the “crazies” you mention, my point is that the same “crazies” who object to any form of government intervention often object to private, voluntary intervention, like when a paternalistic employer tells them that they must carry health insurance or use a provider network that the employer judges to be more efficient. Or when a well-informed physician tells them that he doesn’t want to prescribe a drug that was advertised on TV because it might kill them. Once you accept this view of the world, you will realize that demonization of the insurance industry is out of control. This blog devotes 10 times more space to bashing the health insurance industry than it does to bashing the hospital industry or the less enlightened elements of organized medicine, or those consumers who should know better but are in denial about the realities of American medicine (e.g., more care is not always better than less care). Our health care system may stink, but there is plenty of blame to go around.

  69. “If your a healthy person you are now not only paying for the statistical risk that you get sick or hurt but also paying a substantial premium to cover the known cost of the person already sick or hurt.”
    And when the healthy person gets sick the other healthy people will pay partly for his health costs – isn’t that what shared risk is? What a terrible situation. Healthcare is not about separating winners from losers, it’s about providing healthcare in a world where the risk is the risk, whether an insurance company holds it or not. You forgot to mention that all these people, sick or healthy, are paying the cost of a mismanaged, over-costed, overutilized, for-profit system.

  70. The large insurers will tell you that the medical cost ratio on their COBRA business is in the range of 150%-200% of premiums collected. United, to name one, told investors that COBRA members now account for about 2.5% of their total commercial (as opposed to Medicare and Medicaid) members, up from a bit less than 2.0% before the COBRA subsidy was passed as part of the stimulus package. Wellpoint’s experience is similar. While it may not sound like much, the 50 basis point increase in the percentage of commercial members in the COBRA block is a meaningful contributor to the insurers’ rising medical costs as there is plenty of adverse selection within this group. I’m especially disappointed with the recent rhetoric from Secretary Sebelius. As a former Insurance Commissioner in Kansas, she should know better.

  71. “In that case, shouldn’t we, as a nation, explore a different way to pay for healthcare to exclude “financing” costs?”
    Margalit if you really want to throw your money away that bad just write me a check and don’t further screw up our healthcare system. It is far more efficient to have multiple companies compete to offer the best service for the lowest financing cost then to go single payor. Medicare, Medicaid, and SS are proof of this. Medicare has never in its life leveled cost nor has Medicaid.
    Matt there is a reason people who aren’t involved in insurance in detail shouldn’t comment on it. Who denied that there is risk pooling going on? This is why the system is unsustainable. Poorly designed pooling. You seem to grasp the very basics so let’s build on that. If I sick person cost 20 times more then a healthy person but by law the carrier can only charge a spread of 3 to one or even 8 to 1 what is the minimum premium for a healthy person? CalChoice small groups are rated .9 to 1.1, in NV it goes .85 to 1.55, and most states are roughly between or around those. The spread for individual is also very tight.
    So politicians in all their brilliance pass these laws thinking it will be sustainable because they don’t know any better. If your a healthy person you are now not only paying for the statistical risk that you get sick or hurt but also paying a substantial premium to cover the known cost of the person already sick or hurt.
    The healthiest of people are hit the worst percentage wise, young healthy mail would pay a premium exceeding that of his entire risk. That is why they drop out. Once they drop then the next class of healthiest people see their cost again increase and they drop out. This then gets further compounded by people who choose lower premium plans and self insure the low risk. This happens with both individuals and small groups. That is why I am so busy selling high deductibles to small groups, it is cheaper to avoid the premium and assume the risk because the cost of the coverage is in no way commiserate to the risk. My clients cut their premium 20-50% by buying a high deductible yet paying those claims only cost them 10-30%.
    No one argues pooling happens but insurers where forced to pool in a poorly designed fashion that can not sustain its self. Anthem going forward needs to drastically increase premium because those 20 to 1 utilizers are keeping their insurance while the 1 to 3 premium payors are dropping coverage or buying high deductibles. It’s simple math how the rate increase compounds when you lose your positive cash flow customers.
    Are assurances like assumptions?
    “I can assure you from personal experience that variations in rates charged in the indiv insurance market in California for exactly the same coverage based on health status vary by more than 3 to 1–more like 8 to 1.”
    CA state law caps MRMIP at 37.5% above the market rate. Some more facts you can’t seem bothered to read up on before commenting;
    Coverage is delivered through 4 carriers, guess who one of them is…
    2007 pilot reform limits subscribers to 36 months on the plan at which time they are moved into private individual coverage, all carriers selling individual policies must guarantee coverage to former MRMIP subscribers.
    The Guaranteed private coverage must offer same benefits as MRMIP at a price no more then 10% above MRMIP premiums, that takes us to 47.5% Matt where do you get to 800%?
    HIPAA rates can not exceed 170% of that for a person of similar age and location, again Matt no where close to 800%.
    Next up there is no such thing as CalCOBRA coverage, that is a law that allows individuals to extend other policies. Carriers have to file rates by block of business so someone that used CalCOBRA laws to buy a guarantee issue individual HIPAA or conversion policy are in the same block as those normal individuals that bought the same policy. Federal and State laws require those individuals be treated the same as far as premiums. See how much things change when you have the facts right?
    The 39% applied to a very small part of the market as well, less then 25% of Anthem individual clients who are less then 10% of their total clients who are less then 30% of the market. Way to blow things out of proportion Left.
    So now that you have been given the education explain to us all how Anthem can maintain a block of business where the sickest people are guaranteed coverage by law, consume 2000% more care yet can only be charged 170% of normal premium.
    I have meet a number of people in life that laugh when they don’t understand something, it’s a way to deflect and cover up they have no idea what the person is talking about. I imagine you laugh at most of my health insurance related post.

  72. “Here’s a news flash: the all-power insurance companies are not as powerful as you may imagine. They can’t force healthy individuals to buy insurance if they don’t want it nor can they force large, wealthy corporations like Google to share risk if they prefer to be self-insured or experience rated. Nor can they force doctors and hospitals to practice medicine more efficiently if they don’t want to do that.”
    Skeptic, are you advocating the “government” get involved in healthcare? Are you prepared to combat all those “keep the government out of my healthcare” crazies? If you want government to do all of the above hard stuff and more then why should we pay insurance companies and their investors profits/bonuses to do simple accounts payable/accounts receivable bookkeeping

  73. What we really need is a Ministry of Health Care Equalization, staffed with intellectuals like Margalit and Peter.

  74. Nate, Most of your comments are incoherent and/or laughable, but I’ll give you one little bit of explanation. Mark Pauly wrote a piece looking at the individual insurance market in Health Affairs 2007
    The full piece is subscription only here
    but let me quote the abstract:
    “Analysis of new data on the relationship between and premiums and coverage in the individual insurance market and health risk shows that actual premiums paid for individual insurance are much less than proportional to risk, and risk levels have a small effect on obtaining coverage.”
    The difference between the highest and lowest premiums charged (to those with different risk profiles) was about 3 to 1. Whereas the cost to the insurer between those profiles was of course much higher–a sick person costs probably 20 times more than a healthy one. Pauly’s conclusion was that, in general, the data showed that risk pooling therefore was going on and that the individual market was more or less OK. I agree with him on the data and disagree on the conclusion.
    You seem to doubt his data. I can assure you from personal experience that variations in rates charged in the indiv insurance market in California for exactly the same coverage based on health status vary by more than 3 to 1–more like 8 to 1.
    In addition, I’m about 90% certain that Calif COBRA still leaves people on the employers group plan, (that’s what the fact sheet I referred to claims and I think it’s what my favorite HR person told me) unless in the case you mention when the employer has gone out of business. But in any event people buying Cal COBRA coverage are not the only ones that the large increases cover and they’re a tiny part of the market.

  75. I’ll keep saying this until I am shown wrong, or, the system considers the position fairly valid and tries it out: take out the profit quotient to the process in health care expenditures, and watch the system gain sizeable equilibrium, with time of course.
    You read observers of the health care system who have been around for more than 40 years, and I think they pin it well why it has failed on a few points: the development of government systems Medicare and Medicaid that first wrote basically blank checks to clinical providers and other health care participants, technology allies moreso; physicians who lost their vision as first and foremost stallwarts to directing public health and wise leaders in the general community, to instead focused on making money; and, idiots, and there is no other word for these characters who insisted on this process, who claimed that patients are instead “clients” or “customers” and thus changed the health care environment to a business model.
    So, to me at least, it comes down to money first. Take out the profit element, and I like my metaphor, watch the roaches of greed scatter for cover and look for other ‘food’ sources to nourish themselves.
    I know it is not simply about money, but that is the sizeable element that could stabilize the system first. It also is about prevention, realism, and expectation, but, we’ll get to that later, hopefully.
    As far as I am concerned, people who refute zealously what I am saying are first protecting their own interests, and that is usually their cash flow needs.
    Deeds, not words, define us. I defy anyone who argues otherwise to state for the record that if they truly champion for responsible and appropriate change, they are not looking over their shoulder at their bank accounts simultaneously.
    Board Certified physician for more than a decade.

  76. “Insurance companies are finance companies that level risk and cost. It adds to the cost of healthcare it doesn’t reduce it.”
    Hmmm…. In that case, shouldn’t we, as a nation, explore a different way to pay for healthcare to exclude “financing” costs?
    Single payer would be better suited to “level risk and cost”, as opposed to private payers and their different lines of business that seem designed to “level” as little as possible.

  77. I agree with Matt that commercial insurance companies have utterly failed to control health care costs. But this begs the question: if insurance companies are ripping us off and if controlling costs (while improving quality) is as simple has Matt implies, why do so many employers, unions, non-profit organizations, school districts, etc. continue to go along with this racket? It isn’t just helpless self-employed individuals who continue to rely on health insurance companies to retain risk and/or administer benefit plans. The problem with the standard narrative on the Wellpoint story as told by the Obama Administration, the left-wing media, etc. is it attributes all market failures in health insurance to the greedy, all-powerful for-profit insurance industry. Here’s a news flash: the all-power insurance companies are not as powerful as you may imagine. They can’t force healthy individuals to buy insurance if they don’t want it nor can they force large, wealthy corporations like Google to share risk if they prefer to be self-insured or experience rated. Nor can they force doctors and hospitals to practice medicine more efficiently if they don’t want to do that. Yes, I know the Democrats’ pending health care reform legislation will solve all of these problems, or if that falls short we can always go single-payer. Yeah, right.

  78. The best commentary I have read about the Wellpoint rate increase was on the Covert Rationing Blog. It’s a bit cynical, but totally believable.

  79. You would be well advised to read something before spewing your propoganda, otherwise it is to easily dismissed.
    “What Pauly’s work (and I despair at having to read it again, so this is from memory) tends to show is that insurers are incompetent at charging sick people to the full extent that they cost them, but do charge them roughly three times what they charge healthy people.”
    Incompetence is following the law? That is an interesting philosophy there Matt. You advocate that Anthem should disregard State and federal law and charge people a premium commensurate to their risk? I actually agree with you but doubt that is what you meant. I think your trying to spread more of your magic liberal pixie dust where unlimited healthcare is free and in gratitude everyone votes for Democrats from here to eternity, well at least till the bill comes then you blame the right for not taxing enough.
    “But apparently Wellpoint’s latest performance shows that it’s not OK for much of the other 80% either”
    Another interesting argument as it is the adoption of liberal ideology that leads to the death spiral, everyone is becoming of the mind set that if insurance cost more then the claims you expect to have then drop it and wait till you need it. That is not a failure of Wellpoint it is a failure of comprehension by the purchaser and of government for forcing Wellpoint to sell policies to people that wait till they have expected claims greater then their premium. But hey why discuss the real problem when you can score political points?
    “Incompetence one. I severely doubt that Wellpoint loses as much money on its individual business as it claims it’s been doing.”
    Information readily available as it is filed with the state and posted online every year. You can also easily pull it out of their SEC filings. Instead of doing 5 minutes research and knowing for sure, and having actual data to back up your point just throw it out there, great thing about propaganda you don’t need to research it or even be right. FYI Matt your wrong, as we have all seen they must file any rate increase request and those request are then audited by the state insurance commissioner, Are you claiming the DOI of CA is in bed with Wellpoint to the detriment of the public? If this is true it is a much bigger scandal then your baseless arguments here, why not run with those? Maybe because they have no legs and would be dismissed out of hand?
    One reason COBRA extension is linked to individual markets it because it is a carrier requirement not an employer requirement. A little reading would make that clear Matt. Reading your suppose to do before you attack them not after. Federal COBRA falls on the employer where as Cal COBRA and the extra 18 months is a carrier requirement. AB 1401 also had this gem;
    “AB 1401 requires conversion plans to conform to standardized benefits and rates. The benefits differ depending on whether or not the health plan markets individual & family coverage in California. If the health plan participates in the individual & family market, it will be required to offer as a conversion plan one of the two products it offers under HIPAA, pursuant to all provisions of the Act.”
    If an employer goes out of business the individual now has HIPAA rights, have any businesses gone under or stopped offering insurance in CA Matt? Who do you think elects those policies? The healthy people that pay more in premium then they have in claims?
    You don’t read Huff Post and Hava Volterra do you? She made the same ridiculous claims a couple days ago, almost verbatim. Why don’t you people ever look anything up?
    Here are the results to an interesting, and easy, analysis a CA broker did;
    “Well guess what? They were the cheapest company in California before this rate increase, and they will stilll be among the top after it.”
    How can Anthem sustain a block of business if they are that under priced?
    “In 2008 Wellpoint’s MLR in California overall was 79%, meaning that in the individual market it was lower than that (probably below 70%).”
    This is interesting Matt. According to HSC Section 1378 Admin cost can’t exceed 15-25% and we know Anthem doesn’t have a 5%+ – 15%+ profit margin so how is it probably below 70%?
    “Which leads to the rather obvious question, why are individuals, employers and the government paying them so much money for their services?”
    Are you serious Matt? Why do I pay 2 times the cost of my house in interest with a mortgage? Mortgage companies don’t make my house any cheaper. GMAC doesn’t make the price of cars cheaper. Credit Cards don’t make my purchases cheaper. Do you not even know what the word insurance means? Insurance companies are finance companies that level risk and cost. It adds to the cost of healthcare it doesn’t reduce it. If you and your clowns in government wanted insurance companies to lower healthcare cost you wouldn’t outlaw rationing, wouldn’t have implemented any willing provider, or passed all the underwriting limitations you have. What a stupid argument to question the cost containment ability of a company after you spent 15 years outlawing them from containing cost.
    ““What would happen if we arbitrarily announced a 39% price increase?”
    How much has our debt increased under Obama? How much will our taxes increase to pay for it? We are 7months away from seeing exactly what happens when your ideology increases taxes and debt by far more then 39%.
    One final question, when the average increase is only 25% why do you only point out the 39% increase a minority of the population will receive? When we talk tax increases should we tax your increases for the top 1% and spew on how that will effect the poor?

  80. Perhaps we must await the genetic and societal evolution of the New Progressive Man to sweep aside reactionary resistance to the “golden mean,” an egalitarian mediocrity, as it were, in health care, by replacing the greed-driven insurance cartels with single payer nirvana.

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