Matthew Holt

Well, point-less?

OK, so it’s a terrible and stolen pun but Wellpoint’s recent history is getting more and more bizarre. First they become the poster child for the recissions scandal (even if not the worst offender)—which eventually helped push the “evil insurer meme” which helped health care reform along its way.

Then they helped kill Arniecare, and tried hard to kill Obamacare, all the while being a fringe member of the AHIP coalition which actually wanted health reform. And they managed to both showcase a bizzaro interview with CEO Angela Braly and then ended up pouring gasoline on the fire dying embers of health reform in late February, early March by their crass mismanagement of their individual market business —which apparently required increases of 39% despite their alleged excellence at accurate market pricing.

Now we have a new article from Reuters who are zeroing in on the actual way that Wellpoint went after cancer patients with the aim of figuring out if there was any reason to cancel their coverage. It’s pretty unsavory stuff, but everyone knows from Lisa Girion’s reporting that this stuff was going on with all California insurers and most everyone else who could get away with it.

But is there anything new in this report? Well I guess the most interesting data is the date. The recission scandal blew up in March 2006. Here’s a cool article written by little ol’ me about it in my then column in Spot-on.

We all kind of assumed that this stuff was going to stop when all the plans agreed to behave better, as they all, including Wellpoint, did in California (with the exception of Blue Shield) by the end of 2007

What Reuters found in the long version of their report (which is tough to find online BTW and well worth looking at) is that the naughty stuff continued all the way up until last year. In fact misrepresentation is now not the reason for one of the worst cancellations—it was apparently failing to answer a question to a letter that apparently wasn’t received.

Technically, rescission was not the reason Relling lost her health insurance, according to correspondences with the company she provided to Reuters. Rather, it was canceled because she did not answer letters from her insurance company requesting information about her employment history.

Relling says the letter was sent to an address which she hadn’t lived at it for some time, and she never even saw it until recently. When she brought this information to WellPoint’s attention, she said, the company ignored her.

This really doesn’t pass the sniff test. If that information was really important—as it clearly was to the patient—surely Wellpoint has other ways of tracking it down, and finding out the truth. And this happened in the middle of 2009.

You might imagine that with the spotlight on them, Wellpoint would figure out a way to do better. As I have noted numerous times, it’s not like the result of all this has been them doing a fabulous job restricting health care costs for their employer and individual clients.

So this really does beg the question, societally, what exactly is the point? George Soros said this about Goldman Sachs today in the FT. Just read it and think about the role of Wellpoint in today’s system. Do they remind you of Goldman?

Whether or not Goldman is guilty, the transaction in question clearly had no social benefit. It involved a complex synthetic security derived from existing mortgage-backed securities by cloning them into imaginary units that mimicked the originals. This synthetic collateralized debt obligation did not finance the ownership of any additional homes or allocate capital more efficiently; it merely swelled the volume of mortgage-backed securities that lost value when the housing bubble burst. The primary purpose of the transaction was to generate fees and commissions

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dannyinchoate but earnestPaoloPeterTim Recent comment authors
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Peter
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Peter

“When Wal Mart rolled out their $4 generic program we steered out customers there for the best deal. When others followed me changed our drugs plans once again. When Giant Eagle started giving away free antibiotics we notified our members so they knew. Now that Wal Mart if the cheapest on Generics again we once again direct people to the best value.”
Gee Nate, your clients must live in a cave with no contact to the outside world. How would they survive without you.

Nate
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Nate

Not sure why I feel like picking a fight with you tonight, must be cause the cavs are playing so crappy. “What does Wellpoint (or for that matter his little company) do to add any value to society?” Innovation and flexibility. Decisions and reactions I do on a quarterly basis would take Congress years if not decades. We try out new ideas and modify/improve them on the fly. We are also considertably more efficient at finding value then politicians will ever be. When Wal Mart rolled out their $4 generic program we steered out customers there for the best deal.… Read more »

Nate
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Nate

“As for the role of insurers–Wellpoint et al helping spciety with DM programs. You really are making me chuckle there Nate. Go bacak and read the Len Schaeffer interview referenced on THCB where he says that they stricturally can’t do anything to change care patterns–which Karen Ignagni says too.” I know a journalist or blogger reporting on something always knows more then the people actually doing it Matt but this was pretty interesting read in my email this AM, I know I know it doesn’t work as you told us all but boy it just seems so believable. I know… Read more »

Nate
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Nate

20-25%
Are you talking about term life there Danny or the AFLAC policy your dad sold you?

danny
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danny

~~20-25% of premiums are broker commish in ind mkt – real high, will def get cut in 2011

Nate
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Nate

they might not want to change it but even less do they want to pay for it. What it would do to the cost of insurance is far worse then what excuse they will come up with for allowing carrier to continue. Government is taking over funding healthcare for a large portion of this country. Just like Medicaid and Medicare once the bills start comming due they will want to push people off and lower their cost.

Paolo
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Paolo

“no pre-ex won’t last. That portion will be reworked before 2014.”
That’s actually the only provision in the law that no politician wants to change. Good luck.

Nate
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Nate

ideally, and this is what I love about self funded, nothing should be in the premium. If you want to load 15% commission into a rate you need to increase the rate 1.18 to 1.23 depending how the carrier does the math. No are you not only paying your broker $x you are also paying premium tax on his compensation which makes no sense. Being the leach on society I am, like Matt says, I personally try to never collect any commission. On almost all of our business we sell the rates net them charge our fees outside of the… Read more »

Barry Carol
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Barry Carol

Nate – That was very helpful information regarding the broker commissions. I appreciate it. With respect to the application fee, once insurers can no longer use pre-existing conditions for underwriting but can still use age, smoking status and the like, won’t it be much easier for brokers to determine who has the most competitive rate for a given benefits package, deductible, network, etc.? If so, couldn’t an application fee or maybe a consultation fee that the broker would collect and keep make sense if the commission percentage is forced lower? It’s the individual market where this is probably going to… Read more »

Nate
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Nate

mail order isn’t green, I ride my block down the street and get them from this guy standing behind 7/11

inchoate but earnest
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inchoate but earnest

Would someone kindly give the mail order Rx outfit that Nate has clearly mismanaged his contract with a call & tell them to please, PLEASE ship him his refill overnight? At the rate he’s typing/foaming at the keyboard, he’s bound to break the blessed internet before lunchtime tomorrow.

Nate
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Nate

I agree 100% Paolo, no system is perfect and there is always a couple really smart people with to much time on their hands. It is a very slipperly slope when your talking insurance versus speeding for example. Right now public plans have fraud rates around 10%, that is way to high and not sustainable. Once you get even close to that amount the incentive for others to cheat gets to be to great and the whole thing collapses. Private insurance has 1/10th the fraud public plans do becuase they have pre-ex, rescission, and other methods to protect against it,… Read more »

Paolo
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Paolo

Just because some people don’t pay taxes, it doesn’t mean that we should abolish all taxes. Just because some people commit crimes, it doesn’t mean we should have no criminal laws. Similarly, just because some people may avoid the insurance mandate, it does not mean we cannot get rid of rescission and medical underwriting. As long as there are reasonable enforcement efforts, we can live with some small degree of non-compliance and fraud, just like we do with every other field of law. The real question is whether the guarantee of always being able to get health insurance is worth… Read more »

Barry Carol
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Barry Carol

“they also use to charge a fee just to apply, people complained about that to.” Nate – Minimum medical cost ratio rules take effect next year. Insurers will be required to spend at least 80% of premiums on medical claims for individual and small group members and 85% for large group members. Broker commissions are the big swing factor in this. Perhaps you could tell us how much broker commissions are now as a percentage of the premium in the individual and small group market or, at least, what the range is. It seems that bringing back an application fee… Read more »

Nate
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Nate

“There is no gaming as all are automatically covered and all are required to pay for coverage.” Peter read and digest my other comment about liberals inacting outcomes without giving any thought at all to how you actually achieve those results. Lets look at the current reality, of the 4X million uninsured around 20 million are already eligibile for free government insurance and don’t enroll. Medicare has provisions and consiquences for people that don’t enroll when they are suppose to. Medicare Part D had even harsher consiquences and both of those are much cheaper then what the new healthcare is… Read more »