“The new health care legislation is a step toward elimination, by slow strangulation, of private health insurance and establishment of government as the ‘single payer.’”                                                                                                           – George Will, in his weekly newspaper column, Sunday July 11, 2010

Everyone loves to pick on the Affordable Care Act (ACA), and well they should.  This 2,000+ page contraption, this heap of handouts to the special interest lobbyists with a few shiny baubles thrown in to placate the common folk, was not only written by the for-profit health insurance industry but now will be implemented by former WellPoint/Anthem Vice President Liz Fowler who actually penned much of the law in her role as Max Baucus’ chief healthcare counsel for the Senate Finance Committee.  You don’t have to make this stuff up, as emptywheel reported on FireDogLake July 14, 2010, “Former WellPoint VP Liz Fowler to Implement Health Care Oversight”

But what about George Will’s fine whine that the insurance industry faces strangling regulation?  Robert Pear wrote in the New York Times on August 2 that the new law will lead to more regulation of the industry, and “the transition is full of risks and uncertainty for all involved.” If the Obama administration is going to “regulate the industry for the benefit of consumers,” he noted, then “they can’t help but destabilize or disrupt the existing market.”

Wall Street doesn’t like uncertainty.  It detests being destabilized.  Stock analysts are not missing out on this.  The brokerage firm Edward Jones “downgraded the ratings on the stocks of the three health insurers it covers – UnitedHealth Group, WellPoint and Aetna — to ‘sell’ from ‘hold’ late on Friday [7/30]. Those companies are the three largest U.S. health insurers.” (Reuters 8/2/10)

This new blow comes after legendary investor Warren Buffett pulled the plug on WellPoint and United Health, selling all Berkshire Hathaway’s holdings in the insurance giants during the first quarter of 2010 (“Buffett’s Berkshire Disposes Stake in UnitedHealth, WellPoint”)

Speaking in Virginia, former House Speaker and presumed presidential candidate Newt Gingrich said on May 14,

“The employer-based system will collapse because [the ACA] encourages businesses to drop health care coverage and incur the fine. When employees realize the high costs of the health care exchanges, they will demand a nationalized health care system.“

It only gets worse, or better, depending on your perspective.  According to Gingrich, the business community is going to lead the call for single payer Medicare for All.

And well they should.  Gingrich wasn’t making this up.  On May 6, CNN Money released documents showing that “many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government…  AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option.”

Is the Affordable Care Act unaffordable?  Isn’t it at least a step in the right direction?

Those questions can only be answered by considering whether the ACA ends up strengthening or weakening the health insurance corporations. Progressive critics of the bill point out that the new legislation hands over $350 billion in government subsidies to the private insurers while mandating consumers to buy the industry’s shoddy products.  That, combined with a lack of price controls means the ACA could prove to be a bonanza for the corporate stakeholders in the medical-industrial complex.

On the other hand, the changing marketplace is full of perils, even if the conservative icons quoted above are exaggerating them to stir up fear of Socialized Medicine (and maybe scare up some donations).

If we stand back and rest on our laurels, believing that the ACA will save us, then we are doomed. The industry lobbyists are working overtime to take the best parts of the bill and weaken them, while destroying any good that is in the bill (see Wendell Potter in the Huffington Post on July 27, Health Insurers Leaning on State Insurance Commissioners to “Reform” Reform).

“We believe that Medicare for All is inevitable in the United States.  It is up to all of us to determine when the inevitable becomes the reality.”

- Representatives Dennis Kucinich (D-Ohio), John Conyers (D-Mich.), and U.S. Senator Bernie Sanders (I-Vt.), statement for Medicare’s birthday, July 29, 2010

If you’re not inclined to believe George and Newt, then how about Dennis, John, and Bernie:  “It is up to all of us to determine when the inevitable becomes the reality.”

The reality is that single payer, Medicare for All, is not inevitable, nor is there any guarantee the ACA won’t bankrupt us while enriching the corporations that lobbied for it.

It reminds me of a slogan we have in Indiana, “Healthcare Reform:  We’re Still For It, and We’re Not Done Yet!”

From California to Vermont, Medicare for All advocates are working for bills to create state single payer systems.  The grassroots are pushing up thru the disappointment of the Affordable Care Act.

Nationally, with the growing recognition that the health insurance giants stand as the greatest barrier to affordable healthcare for all, investors are beginning to see that this is not an industry socially responsible stockholders should be in (Huffington Post May 12, Napalm, Big Health Insurance, and Divestment).

I went to medical school to take care of sick people.  The insurance companies fulfill their fiduciary responsibility to their investors by finding ways not to pay for the care of the sick.  All their innovation and creativity go to this goal of not paying for care.  No other sector in our crazy healthcare system operates under this incentive.

It will take a mass movement, like those for women’s suffrage and civil rights.   It will take a divestment campaign like the one against apartheid in South Africa.  We must keep the pressure up, shine a light on their nefarious deeds, drive down their stock prices, and expose them for what they are: parasitic middlemen who add no value while sucking billions out of our economy.

“It is up to all of us to determine when the inevitable becomes the reality.”

The following remarks were presented at a workshop at a PNHP meeting in Chicago on May 22. Comments and suggestions are invited.

Rather than starting with a tired debate over whether the new health law – the Patient Protection and Affordable Care Act, or PPACA – is a step in the right or wrong direction[1], let’s consider the question at the heart of that debate: Will the reform bill result in the health insurance industry becoming stronger or more vulnerable?

The short answer to that question is that both scenarios are possible. We can then list ways in which we believe the industry may benefit and ways in which they may become more vulnerable.

From this perspective it doesn’t matter where you think the balance lies between them becoming stronger or more vulnerable. All the arguments for them becoming stronger are therefore arguments why we must keep working and growing our movement for single-payer national health insurance – an improved and expanded Medicare for All. All the arguments for vulnerability open up avenues for attack.

There are a variety of ways to make our case against the big health insurers. By criticizing them directly – by drawing attention to inherent problems they cause our health care system and all of us – we aim to weaken them. In their Securities and Exchange Commission filings (Form 10-K), the insurers list bad publicity as a risk to their future stock price, and they take this issue very seriously.

Here, then, are some suggested avenues for confronting the corporations:

1. Direct actions. This can range from old-fashioned letters to the editor to civil disobedience at regional or national corporate offices. Dr. Margaret Flowers and others have engaged in a wide variety of actions, including nonviolent civil disobedience. Kay Tillow (All Unions Committee for Single Payer Health Care) and others occupied the lobby of Humana’s corporate headquarters in Louisville last year; Humana, presumably fearing bad press, refrained from having them arrested. The activists still managed to get media attention that put Humana in a bad light. It was an inspiring action.

2. Shareholder actions. In 2006, my spouse Karen and I bought five shares in WellPoint (Ticker: WLP), which were then selling for about $65 per share, so we could attend the company’s annual shareholder meetings in Indianapolis and “speak truth to power.” You only need one share to attend, and since that time some additional single-payer advocates have acquired shares. Even though WLP is No. 32 on the Fortune 500, their annual meetings each May are typically boring and seldom attended by more than a handful of shareholders. It’s basically a formality. The agenda is simple. The board is introduced and a few of its members are re-elected, some other routine announcements are made, and the CEO makes a brief statement about how great a year the company had and how bright the future looks. At WLP meetings, there has been a time for Q&A once the business part of the meeting concludes, and an increasing number of us have used that time to shine light on the company’s problems and ask difficult questions. There is always some media presence there, and the press sometimes reports on our concerns. Incidentally, the price of admission for WLP is $55 a share today.

3. Shareholder resolutions. There is a long history of shareholder activism, and our own Dr. Quentin Young played a key part in developing this strategy, which I have written about in “Napalm, Big Health Insurance, and Divestment.” In 2008 and 2009, AFSCME and the Connecticut State Employees Pension Fund sponsored what is called a “Say on Pay” shareholder resolution on the WLP proxy, and despite the WLP board’s recommendation to vote against it, it polled over 40 percent in favor both years. That inspired me to write a resolution for this year’s meeting calling upon WellPoint to return to its nonprofit, Blue Cross roots. We successfully placed it on the WLP proxy: “WellPoint/Anthem Shareholders Revolt!” At the May 18 meeting, Say on Pay passed and our resolution received an amazing 9.4 percent of the vote: “30 Million WellPoint Shares Voted: Return to Non-Profit!”

Clearly, the real goal here was not for WLP to return to nonprofit status. The vote on our resolution could only be interpreted as a rebuff to the company’s management and board, and the amount of bad publicity was worth the effort we put into it, and then some. I think there are all sorts of resolutions that one might create aimed at any or all of the other Big Insurance Behemoths. There is a minefield of SEC regulations to navigate [SEC rule 14a-8], and there are those who can help you. A good starting place is this web site.

4. Proxy access. I informed the WLP board that next year I hope to receive a proxy access nomination as a candidate for their board. We will see how that plays out, as the regulations concerning it are still up in the air. More about it can be found in the “30 Million Shares” article linked above. This could generate some interesting stories.

5. The socially responsible investing (SRI) community. SRI is a small but very significant part of the investing world, and the potential impact here is tantalizing. Right now almost all mutual fund companies give some lip service to “corporate responsibility” (e.g. T Row Price) and most offer at least one “socially responsible” mutual fund for interested investors. A look at WLP’s investor list reveals that TIAA-CREF, the financial services company that mainly serves the academic community, is the 12th largest investor in WLP. Twenty different TIAA-CREF funds hold WLP stock, including three as specifically SRI funds. Their “Social Choice Account” holds over $25 million in WLP stock. Currently, as far as I have yet been able to determine, the SRI community doesn’t yet have the health insurance industry on its radar. Up to now they have been interested in whether companies are green, or into tobacco or weapons, etc. Wendell Potter speculates that insurance stocks may actually tend to be OVER-represented in SRI mutual funds because they are nonpolluting companies who up until now have skated by the “screens” used to determine “social responsibility.” There is a huge potential impact here.

6. The faith community. As you know, many national religious groups have official positions supporting single payer, and most have offices looking at faith-based investing, which is another way of saying SRI. The Presbyterian Church USA is headquartered in Louisville, and they recognize “Mission Responsibility Through Investment.” I am working with the Rev. David Bos, a Presbyterian minister from Louisville, to gain support for our resolution and the idea of divestment. It will be a slow process, but Rev. Bos has told me that he thinks we can gain their support. Not only are they already on record supporting single payer, they have taken a controversial stand for divestment from some firms doing business with Israel, specifically those involved with building the partition wall in Palestine. Divesting from health insurance companies seems relatively noncontroversial in comparison.

There are so many projects here for PNHP and Healthcare-Now members, so many churches, local and national. I have not had time to pursue any of these possibilities. I think the Methodists, Episcopalians, and the United Church of Christ are real possibilities to reach, not to mention the Quakers and Unitarians. Rev. Bos says that the churches will be watching each other, and so every bit of progress we make with one will help with the others.

7. Public employees (including teachers). Dr. Alice Faryna of PNHP/SPAN-Ohio in Columbus, is the leader here. She has mined data in Ohio on teachers and public employee pension funds. She would love to share her findings and ideas with others around the country. You can contact her by writing to info@pnhp.org. A look at the WLP list again shows a number of state pension funds listed, but many pensions are invested through institutional investors like BlackRock, No.1 on the WLP list.

8. A South Africa-style health insurance divestment campaign. This is the ultimate goal, admittedly ambitious, but potentially so powerful. I’ve discussed it more in the “Napalm – Divestment” article linked above. It will take time and work to build. University endowments hold huge amounts of health insurance stock, but it may not be easy to get that information (another research project for someone). A look at the WLP investor list below shows that most stocks are held in the name of the mutual fund or institutional investor (referred to as “street name”) rather than the ultimate owner of the stock. Getting college students to challenge their university endowment’s holdings could be an avenue to involving a demographic we would love to get involved in the single-payer movement

9. The business community – the sleeping giant. One potential result of these actions might be to gain the attention of businesspeople, the group we have the most trouble reaching and yet have the most to gain from a single-payer system.

As for additional resources on these ideas, I hate to keep pushing my Huffington pieces, but they do cover a lot of the background and include many links to other articles. One other background piece of mine not already cited above is “Fightin’ The Blues.”

To track the Big Insurance Behemoths, and to access loads of data from SEC filings, log onto a site like Yahoo Finance. Click on My Portfolios and set up a list of the large publicly traded insurance companies. Begin exploring all the information. I follow the seven largest, listed here with their name and market “ticker” abbreviation:

UnitedHealth, UNH
WellPoint, WLP
Aetna, AET
Cigna, CI
Humana, HUM
Coventry, CVH
Health Net, HNT

The PNHP web site, of course, has lots of material, e.g. “The Case For Eliminating Private Health Insurance” by Len Rodberg and Don McCanne.

A more recent Los Angeles Times piece, “What do we need health insurers for anyway?” is worthwhile.

That the insurance industry faces a potential “death spiral” remains a potent argument, most recently articulated by Paul Krugman in the New York Times, “California Death Spiral.” From a purer single-payer perspective, Dr. McCanne comments on how health insurance exchanges will risk the death spiral as well, “Health Insurance Exchange? Lessons from California.”

This has become plenty long, but hopefully will serve as a starting point for those interested in going deeper into this unexplored territory. I can’t overemphasize how new this project is, and how it can go in as many directions as we can think of to take it. It has the potential for coalition- and bridge-building, for involving new audiences, and for some old fashioned fun.

Remember: health care reform: We’re STILL FOR IT… and we’re not done yet!

[1] This debate has been and will continue to be contentious and divisive between on the one side PNHP, Healthcare-Now, and others, and on the other the HCAN coalition, many Democratic Congresspeople, etc.

[2] I heard Allan Hubbard speak at Indiana University last April on PPACA. He is a wealthy Indiana businessman, former top Bush administration advisor, and former WellPoint board member, and he spoke from an explicitly Republican perspective on the bill. Near the end he bemoaned the likely medical inflation that would result and predicted [direct quote]: “My guess is that in 15 years we will have a single-payer health plan, Medicare for All.” He explained that we don’t really appreciate what the insurance companies do for us, and that Congress and the people will turn on them as an obvious way to cut spending.

[3] We see this already with Warren Buffett announcing last month that he has sold all his stock in WellPoint and UnitedHealth, a million shares of each. Will they be deemed “too big to fail” is the real question.

As the Blue Cross movement grew in the 30’s, one of the foundational standards established in 1937 was “No private investors should provide money as stockholders or owners.”  There was no concept of pre-existing condition.  Excluding someone from health insurance because they might be likely to become ill (and need to actually use the policy) was felt to be immoral.  Their mission was essentially charitable.

Over the following fifty years the Blues grew dominant, but in late 80’s the marketplace began to change, and many state Blue plans found themselves in trouble.  Blue Cross of California established a for-profit subsidiary in 1994 and that summer the national Blue Cross Blue Shield Association changed its policies so that its licensees could convert to for-profit status and distribute their earnings to those who controlled the company.  Enter WellPoint, under the guidance of Leonard Schaeffer.

A similar story played out in Indiana where the local Blue Cross began by merging with surrounding state plans and then “de-mutualized” to become a publicly traded company.  Their initial stock offering in late 2001 raised $1.7 billion, which only fed the acquisition and for-profit conversion rampage, culminating with the mother of all insurance mergers when WellPoint of California and Anthem of Indiana came together in 2004 to create the largest health insurance company in the country, with 34 million lives covered. Today one American in ten carries their card, and WellPoint is number 32 on the Fortune 500.

Corporate headquarters moved to Indianapolis, under Anthem’s Larry Glasscock, whose bonus was $42.5 million for closing the deal.  WellPoint’s Leonard Schaeffer retired with a package valued at $337 million.  Wasichu.

In 2005 my wife Karen and I bought five shares of WellPoint stock so we could make the hour’s drive up to Indianapolis for the company’s annual meeting and “speak truth to power.”  Last year I warned the WellPoint board that I would be coming back in 2010 with a shareholder resolution to change the direction of the company back toward its Blue Cross, charitable, non-profit roots.

We beat the odds and were successful in placing our resolution on the proxy ballot.  The proxy was sent to all shareholders last week, to be voted on at the annual meeting May 18.

People ask me, why should WellPoint shareholders vote for a proposal to radically change the course of the company?

The reasons are being published every day. Going back just 12 weeks:

The Indianapolis Star on January 16 revealed WellPoint to be covertly funding U.S. Chamber of Commerce attack ads against health care reform.  WellPoint spent tens of millions on other non-covert lobbying.  Keep in mind that the bill recently passed was largely written by former WellPoint Vice President Liz Fowler in her role as Max Baucus’ chief healthcare legislative aide.

McClatchy Newspapers on February 24:  ”While Anthem Blue Cross proposed a 39 percent rate increase on thousands of its California customers, its parent company gave 39 of its executives more than $1 million each and spent more than $27 million on 103 lavish executive retreats, congressional investigators said.”

The Los Angeles Times on March 10 updated its readers on the rescission scandal dogging WellPoint in California. “Only a small fraction of eligible Californians have benefited from agreements that Anthem Blue Cross made to settle accusations that they systematically and illegally dropped sick policyholders to avoid paying for their care.”  These were people whose insurance coverage was cancelled after they were diagnosed with cancer and other serious conditions.

Consumer Watchdog reported March 31 that WellPoint sent a message to investors describing how it would simply re-label administrative costs as “medical care” in response to the new health reform law. The message follows revelations that WellPoint, also intentionally padded already huge premium increases in California, in case regulators demanded reductions.

I could cite hundreds more, and now this week the news of CEO Angela Braly’s 51% compensation increase, up to $13.1 million.  Their arrogance is overwhelming.  Why wouldn’t shareholders be concerned about where the company is heading?  It’s not like WellPoint even pays any dividends, while it has plenty to spend on its executives and lobbying.

Last Tuesday I heard Allan Hubbard speak on health care reform at Indiana University.  Mr. Hubbard, an Indianapolis businessman, served in the GW Bush administration and is a former Director on WellPoint’s Board.

He made no bones about being a Republican and shared a Republican view on where health care reform should go from here.  At the end of his talk he concluded with this prediction, “My guess is that in 15 years we will have a single payer health plan, Medicare for All.”  He wasn’t saying this gleefully.

He explained that all health insurance companies do is serve as middlemen between patients on one hand and doctors and hospitals on the other.  He fears that as health care reform moves forward, Congress and the people will turn on them as a way to cut spending.

They (we) should.

The health insurance industry adds huge administrative costs to our system, not to mention the profits they siphon off.  WellPoint is a parasitic middleman that adds no value, but actually increases the cost of healthcare for all of us.

I see the day when socially responsible investors will divest themselves from health insurers’ stocks.

My recommendation is that WellPoint investors support a drastic change in direction for the company, and not wait for the stock price to plummet, for the health insurance bubble to burst.

Check your pension plan and mutual funds.  If you own any WellPoint (WLP) stock, vote FOR PROPOSAL NO. 3, SHAREHOLDER PROPOSAL CONCERNING A FEASIBILITY STUDY FOR CONVERTING TO NONPROFIT STATUS. TIAA-CREF is the 12^th largest holder of WellPoint stock.  If you’re invested with them, tell them what you think. If you have any affiliation with a university, ask them about their endowment holdings. Does your faith tradition have a policy for socially responsible investing?

Polls in 2008 and 2009 consistently showed over 60% of the public favoring a single payer plan.  The public option polled over 70% approval well into the Fall. Have those people gone away?  No, but they (we) are disappointed, discouraged, and weary.  They (we) look back and say, “I wrote letters, made calls, went to rallies, and some of us were even arrested.  And what did we get?   Tens of millions of Americans forced to buy private insurance with our tax dollars subsidizing the premiums, a huge transfer of wealth from taxpayers to shareholders.”

People ask me what I think about the new healthcare bill.  My reply:  “Healthcare reform:  We’re STILL FOR IT… and we’re not done yet.”

Money talks, like Arianna’s Move Your Money campaign.  Let’s speak to the insurance behemoths in language they understand.

[Originally published in the Huffington Post 4/12/2010]

For more information, go to Hoosiers for a Commonsense Health Plan.  To read the text of the resolution, go to the HCHP blog.  View TV coverage of the 4/7 press conference in Indianapolis.

Rob Stone MD practices emergency medicine in a community hospital in the Hoosier Heartland.  A gardener, a grandfather, and a teacher, he is the Director of Hoosiers for a Commonsense Health Plan and on the board of Physicians for a National Health Program.

I posed this to him: “Many Democratic politicians, including our Blue Dog Rep. Baron Hill, tell us in private conversations that they believe we have to get to single payer eventually. What advice would you give on how to get there?” Without a blink, he replied it’s “going to be a long haul”, and if we don’t pass this bill it’s going to be even longer. He asserted that this bill begins building the required infrastructure for any future progress.

Since then, with the loss of the Democrats’ super-majority in the Senate everything is up in the air. Which brings us back to the recurring question – Should we Kill the Bill? There has been an incredible amount written in the Progressive community about this. At one end is Helen Redmond (CounterPunch 12/23) Beware the Progressive Democrat arguing that we can’t trust Sanders, Weiner, or Conyers and that we’ve got to build our movement without any of that unreliable crew (kind of a rough “logical”conclusion”, if you ask me).

At the other end is Nate Silver of FIveThirtyEight (12/16) Health Care: The Elevator Pitch (and a number of other posts) where this bright political analyst makes the case for incrementalism. Silver also notes “I’ve gotten as many nasty comments and e-mails from Democrats on this issue [over the last two weeks] as I have in the past six months from conservatives on all issues. That emotion is a factor in this debate seems self-evident to me.”

All that emotion is evident as the blame is ladled out for Scott Brown’s Senate victory. Is the message that the country is turning against the Progressives’ urge to legislate change, or that Obama has compromised the hope for change he promised by reverting to Washington business-as-usual and disappointing his base?

The healthcare bill will be at the center of this cyclone, and it’s too soon to say what gyrations the Dems will attempt to push it through. Our response as single payer advocates should remain unchanged – we have strong, informed positions on the poor policy provisions in the bill. I think we are best to remain silent on the political strategy (tragedy?) to be pursued. I see an important distinction between being a pointed, persistent, insistent, carping, kvetching, nagging critic of this bill for policy reasons on the one hand, and joining in the political discussion about the merits of killing the bill on the other.

Let’s not be drawn into the classic Progressive Circular Firing Squad. Our message is clear. If the Democrats still manage to pass some form of health reform, they can celebrate, but WE’RE STILL FOR HEALTH REFORM, AND THIS AIN’T IT!

If no bill passes, then we have a different set of problems/opportunities. If those who predict Republican ascendancy in the ’10 elections are right, then our work is really cut out for us. Meanwhile, all those who forsook single payer for the allure of the public option are ripe to be brought back into our fold. Movement building will continue. Opportunities to form coalitions will appear. As the business community becomes even more frustrated they will open to our message.

Here are the real lessons learned as we look back to the Iowa caucuses last January, from our vantage point looking out on the chaos this January:

1. As much as we had hoped that this was a historic opportunity to make drastic, needed changes in our healthcare system, there really wasn’t the support to go all the way to single payer. We can second guess Obama and Rahm forever, but I don’t believe there ever was a chance in hell that Evan Bayh, much less Lieberman or Ben Nelson would have ever voted for single payer.

2. We should look again at a strategy of incremental reforms, a strategy that has been fruitful for many movements. That is a longer story to explore later.

3. No matter how hard we try to predict the future, we will always be surprised. Remember that even if single payer had passed in the full glory of HR 676 without amendment, we would have to defend it, improve it, and deal with its unintended consequences. This work will never end.

How can we ever hope to win? As Bill Moyers asked David Corn on his PBS show January 8, “Have people been so politically abused that the will to fight for democracy, the political will has been dissipated? “

Will it first take campaign finance reform, to break the grip of the big money? Where will that movement come from? What other options do we have?

There is no better issue to organize around than universal health care. In the environmental movement we learned the word NIMBY – Not In My Back Yard. Sometimes people distain NIMBY’s, but many a NIMBY activist has started locally before coming around to a global perspective. Healthcare is everyone’s back yard, front yard, and right inside the house. Our issue’s not going away, even if some politicians do.

We will stay in this fight for the long haul. There is no real alternative except to quit. When I get discouraged, I turn to one of the original crusading journalists and a real hero, IF Stone (no relation):

“The only kinds of fights worth fighting are those you are going to lose, because somebody has to fight them and lose and lose and lose until someday, somebody who believes as you do wins. In order for somebody to win an important, major fight 100 years hence, a lot of other people have go to be willing – for the sheer fun and joy of it – to go right ahead and fight, knowing you’re going to lose. You mustn’t feel like a martyr. You’ve got to enjoy it.”

One of the great joys of being in PNHP has been the joy of meeting and working with so many wonderful people. I’m in this for the long haul and look forward to seeing you all many more times in the years to come.

WellPoint, also known as Anthem or Blue Cross, is the perverted spawn of what was once a charitable venture known as Blue Cross/Blue Shield of Indiana.  From the 40’s up into the 90’s Blue Cross of Indiana was like all the other Blues around the country, non-profit with a charitable mission.  Its board of directors included physicians, hospital administrators, labor and community leaders, and it existed to serve the needs of patients.  But the healthcare market had become increasingly cutthroat, and in the aftermath of the Clinton Health Plan’s crash and burn, there was a huge consolidation in the industry.  Doctors went from solo or small group practices into larger and larger groups.  Hospitals that had been independent since their founding merged and national chains of for-profit hospitals grew powerful and predatory.

The most significant consolidation of all happened in the insurance industry, yet it is the least understood and appreciated.  Health insurance was once predominately state or regional non-profit Blue Cross plans or other regional non-profits, and a few national for-profits.  Now there are nine major national health insurers dominating the country.  They are for-profit, beholden not to their customers but to their shareholders.  Like most consolidated industries, they don’t compete head to head in most markets, but rather divide up the markets and crush smaller local competitors.  Did I mention that the insurance industry is exempt from federal anti-trust laws? The American Medical Association’s 2007 report “Competition in health insurance: A comprehensive study of U.S. markets,” found that in the majority of areas studied, a single health insurer dominated the market.  So much for competition.

The field these behemoths compete on is in Washington, DC. They can buy and sell Senators and dominate regulatory agencies.  More on that later after we come back to the story in Indiana.

In the early 90’s the Hoosier Blue Cross leadership decided that the future looked bleak for non-profit health insurance.  They began a series of maneuvers to radically restructure the company.  They took off the gloves.  Goodbye to a charitable mission.  Goodbye to being tax-exempt.  Hello Wall Street.

Blue Cross became Anthem turning a non-profit into a mutual company.  This set the stage for demutualization and a public stock offering (IPO).  In 2001 Anthem announced its intention to convert from a mutual insurance company to a stock corporation and filed its demutualization proposal with the Indiana Department of Insurance.  By this time Anthem had already completed a frenzy of mergers and acquisitions of Blues in Colorado, Connecticut, Kentucky, Maine, New Hampshire, Nevada, and Ohio. None of policyholders in those states had any say in this matter. Just days after the Indiana Department of Insurance commissioner approved Anthem’s demutualization proposal, Anthem announced that its IPO had yielded $1.7 billion.

Now came the mother of all mergers.  Blue Cross of California had been following a similar path beginning with their demutualization in 1993 and subsequent acquisition of Blues in Missouri, Georgia, Virginia, and Wisconsin, as well as acquiring the health divisions of Massachusetts Mutual, and John Hancock, among others. They changed the corporate name to WellPoint. In 2004 Anthem and WellPoint merged, becoming the largest health insurer in the US with 34 million lives covered.

The $20.8 billion merger created a cornucopia of compensation for executives of both parent companies.   Not only did Anthem’s Indiana CEO Larry Glasscock receive a $42.5 million dollar bonus on top of his base salary of $3.7 million, other top Hoosier executives pocketed $4 to $16 million dollars each.  The CEO of WellPoint in California, Leonard Schaeffer, retired on a package valued at $337 million.  I am not making this up.

At the close of 2009, hope is gone that we will see universal health coverage come out of this Congress.  Single payer advocates like myself never really believed it might come this time around, but couldn’t help but get our hopes up.  It remains to be seen whether any bill that passes will end up being an incremental step in the right direction, but it won’t be a slippery slope.

Our Hoosier “Democratic” Senator Evan Bayh has distinguished himself as a hindrance to any reform bill that is not in the best interests of the hometown insurance company.  Although he and his wife Susan proclaim no conflict of interest, she sits on the WellPoint board.  Her compensation for serving on that board, as reported to the Securities and Exchange Commission, is $330,000 a year, more than twice Evan’s salary of $160,000 as a senator.

Progressives disagree about how to proceed from here.  I spoke with T R Reid a few weeks ago in Boston.  He is the author of the PBS Frontline Sick Around the World and a new book,  The Healing of America. He makes a strong case for getting to universal care while keeping the private insurance industry, although he makes it clear that no nation has achieved universal care using for-profit companies.

Can universal health care be accomplished within our system of for-profit insurance companies?  I’ve always favored the single payer approach, which seems more feasible to me than taming the insurance behemoths.  Reid thinks we’ve got to consider the taming approach, so some of us decided to put that idea to the test, in the form of a shareholder resolution.

We delivered the resolution on that dark and rainy day.  Now we await word about whether the SEC will require WellPoint to include it in the proxy for the annual meeting.  It is a long shot, to be sure.  But if Congress won’t take on the insurance industry, then someone has to.  Here is our resolution, couched in the language our legal advisors recommended and adhering to all SEC requirements:

SHAREHOLDER RESOLUTION

Whereas, the United States allows too many people to suffer and die due to lack of adequate health insurance and this is threatening the economic stability of the country; and

Whereas, no country has achieved universal healthcare through for-profit health insurance; and

Whereas, in written statements WellPoint supports “the best healthcare value for our customers” and promises  “to advocate for responsible healthcare reform”; and

Whereas, WellPoint has actively opposed President Obama’s healthcare reform efforts; and

Whereas, WellPoint was a nonprofit insurance company before it demutualized, raised capital through stock offerings, merged with, acquired, and demutualized other nonprofit Blue Cross/Blue Shield companies; therefore be it

Resolved, that the shareholders of WellPoint urge the board of directors to launch a feasibility study for returning to nonprofit status.  This study, conducted at reasonable cost, with results made available to the stockholders, omitting any proprietary information, should be completed within nine months of the 2010 shareholder meeting.

Supporting Statement:

Investors are concerned about the effects of runaway health costs on the economy, and the crisis of over 46 million uninsured.  Recent studies show 45,000 people a year die because they lack health insurance (American Journal of Public Health 9/17/09).   Tens of millions more are underinsured, able to afford coverage only through policies with huge deductibles and out of pocket expenses.  The impact of high deductible policies is seen in recent bankruptcy data showing 62% of personal bankruptcies caused by illness and medical bills, but 78% of those declaring bankruptcy for medical reasons had insurance when they became ill (American Journal of Medicine 8/09).  WellPoint has been a leader in marketing high deductible policies, specifically under the Tonik label.

From 1999 to 2008 American health insurance premiums increased 119% while workers earnings and overall inflation rose 30% (Bureau of Labor Statistics).  Businesses cannot continue to afford covering their employees. The Hewitt Associates study “The Road Ahead: 2009” found 1 in 5 employers are planning to drop health benefits in the next 3 to 5 years.  This system is unsustainable.

Studies show 31% of US healthcare spending is attributed to overhead.  In comparison, Medicare runs 3.1% overhead.  Most other developed nations spend less than 10% on overhead (New England Journal of Medicine 8/21/03).  Nations with universal systems spend about half what we spend on a per capita basis and have better health outcomes (Organization for Economic Cooperation and Development).

WellPoint reported its third quarter 2009 medical loss ratio at 81.1%.  Medical loss ratio is the percentage of premiums that actually pays for care, and thus corresponds to 18.9% of premiums for overhead and profit.  Although this is good for WellPoint’s profitability and share price, it supports the argument that for-profit health insurance is a major reason for the discrepancy in overhead expenses between the US and other countries.

WellPoint’s reputation has suffered as a consequence of the negative publicity surrounding its efforts to oppose healthcare reform.  This resolution could change that.

I’ll keep you posted on our progress,

Rob

]]> http://pnhp.org/blog/2009/12/13/fightin-the-blues/feed/ 0 http://pnhp.org/blog/2009/11/20/the-continuing-debate-is-this-bill-better-than-nothing/ http://pnhp.org/blog/2009/11/20/the-continuing-debate-is-this-bill-better-than-nothing/#comments Fri, 20 Nov 2009 15:12:55 +0000 Rob Stone MD http://pnhp.org/blog/?p=952

]]> http://pnhp.org/blog/2009/11/20/the-continuing-debate-is-this-bill-better-than-nothing/feed/ 0 http://pnhp.org/blog/2009/05/29/people-get-ready/ http://pnhp.org/blog/2009/05/29/people-get-ready/#comments Fri, 29 May 2009 16:09:17 +0000 Rob Stone MD http://www.pnhp.org/blog/?p=301 “People get ready, there’s a train a’comin’, Don’t need no ticket, you just get on board.”
- Curtis Mayfield

“If not now, If not now, tell me when?”
- Carrie Newcomer

….The closing songs sung by Carrie Newcomer at the Affordable Healthcare For All Rally on Monument Circle, across from WellPoint’s headquarters, May 20, 2009

Jim Mitchiner from PNHP Michigan arranged for me to speak to the House of Delegates at the annual meeting of the Michigan State Medical Society this April. There I met David Share, a physician working for Blue Cross of Michigan, which is still an independent non-profit insurance company like all the Blues were less than 20 years ago. They can’t turn down anyone with a pre-existing condition. Their board is made up of consumers and providers whose average annual compensation is under $50 thousand a year, compared with over $300 thousand per year on the WellPoint board. They support 42 free clinics throughout the state. It’s what the Blue Cross brand used to stand for. The idea of calling for WellPoint to re-mutualize was born.

Think globally and act locally. Some years ago I realized that we could do both by taking our message to one of the state’s largest employers, WellPoint based in Indianapolis. Starting as a non-profit state-based Blue Cross program like all the others, Blue Cross of Indiana de-mutualized in the 90’s. It went from non-profit to for-profit, raised a ton of money with a Wall Street stock offering, and started a rampage of mergers and acquisitions. In 2003 they merged with WellPoint, better known as Blue Cross of California, and became the largest health insurer in the country. For closing that deal, CEO Larry Glascock got a $42.5 million bonus. The HQ remained in Indiana, but WellPoint stayed as the name of the new company.

My wife Karen and I bought 5 shares (WLP, currently about $45 a share) a few years ago just so we could go to the annual meeting. Other members of our PNHP affiliate Hoosiers for a Commonsense Health Plan had stock as well, and a tradition was born. We have annually harangued them about recission, Medicare Advantage, Ingenex,and many other scandals – they are an easy target.

We needed something new this year in order to keep their attention and that of the media. I wrote an Op-Ed for the Indianapolis Star published 5 days before the meeting/rally with my critique of the company, including my dismay that our shareholder dollars were being spent trying to influence the healthcare reform debate. I noted “Last month the Sacramento Bee reported that in California WellPoint was making 3 million computer generated phone calls a week to try to influence the debate on reform. BusinessWeek magazine‘s headline called them ‘Robo-Calls.’ In 2007 the company spent $2 million on a publicity campaign to sink Governor Schwarzenneger’s proposal for a state universal care system.”

I concluded with:

“I fear that the for-profit insurance industry in America is the biggest barrier to achieving affordable universal coverage.

“With that in mind, I have a proposal for the board to consider – For the good of the company and the good of the country, I propose that WellPoint re-mutualize. That WellPoint return to its not-for-profit Blue Cross roots and spin back off all the state Blues that it acquired over the last 15 years.

“Give up this grand effort to become a behemoth astraddle the insurance market – you have only become a dinosaur.”

Having that published in the state’s largest newspaper, the stage was set for May 20. At 8 AM five of us were seated in the meeting room, and when the time came, I read my statement. Other members of thegroup shared their concerns, most notably that Susan Bayh’s position on the board, with her husband Evan in the Senate as it considers healthcare legislation, has the appearance of a huge conflict of interest. No one outside of our group spoke, except, of course, for the talking heads of the CEO and Chairman of the Board.

At 11 AM, under a clear blue sky in the center of town, Monument Circle, we opened our rally with folk singer Carrie Newcomer. We had 150 people decked out with signs and our blue Medicare For All T-shirts. My comments focused on the for-profit insurance gang being the biggest threat to meaningful reform. We closed with more music, and then 75 of us marched to Senator Bayh’s office a block away. The march made for particularly good TV footage. Thirty of us were able to get into his office and spent a surprisingly good hour with his chief of staff, as the Senator was in DC.

Should WellPoint return to non-profit status and is that part of our PNHP mission and message? In Indiana it’s an effective way to put our local insurance behemoth on the spot, and to get the media to spread our message that the insurance giants are the real enemy of healthcare reform. For those of you in Minnesota (United Health), Kentucky (Humana), Connecticut (Cigna and Aetna), California (HealthNet), Maryland (Coventry), or wherever, the strategy will be different. Confronting the local face of the for-profit health insurance industry has been a successful approach to raising awareness in our state, motivating our supporters, and putting the insurance gang on the defensive.

We’ll be back at WellPoint again next year. We’re all looking forward to it.

People Get Ready, performed by Carrie Newcomer 5/20/09

If Not Now, Tell Me When, written and performed by Carrie Newcomer

Right now the insurance gang is controlling the debate, with big headlines about how they will give up a few of their most egregious behaviors and accept a modicum more government oversight as long as we mandate that everyone become their customer. And, most importantly, don’t let the Socialists have their way and allow a Medicare-like “public option.” They cry that it would be unfair competition to ask the for-profit insurance companies to go up against a government run plan.

If they think the government can do so much better than they can, why don’t we listen to them? Let’s go ahead and put everyone in a government plan!

The strategy from the industry and their Republican allies is obvious – appear to offer a series of compromises, but draw the line to prevent any government plan. Wrap it all up in a big package and proclaim that we’ve got a uniquely American solution to our problem: a huge system of taxpayer subsidies to the insurance industry, with no mechanism to control costs, because there are too many big money interests who don’t want to see real cost control. They are happy to expand access to insurance because it makes good business sense to create more customers.

The strategy of Obama, the Democrats, many labor leaders, and “progressive” groups like Health Care for America Now is equally clear. Let’s offer a compromise plan with many complex features, all of which need to be clarified and debated, and hope that we can get the whole thing through Congress intact, including the public option. This is a strategy for failure. The public option will be the part that gets compromised out.

Many prominent progressives like Paul Krugman and Jacob Hacker have argued that the public option is the key to the whole reform process. The public option will constrain the rapacious insurance companies. The public option will be popular and efficient. The public option will be, at its best, a slippery slope to a single-payer plan. Never mind that critics have pointed out that if the public plan is enacted, the insurance companies will find ways to game the system again. Never mind that the Right has recognized the slippery slope argument, and that is why they are so adamantly against it.

This calls for an obvious change in the Democrats’ strategy. Up to now they have tried hard to keep the voices for single payer out of the debate. They have reassured the Republicans that single payer isn’t even “on the table.” If they want to have a chance to get the public option through Congress, it’s time for a new strategy. Time to play the single-payer card.

Purely from a strategic perspective, the president should put single payer back on the table and start explaining to the people all the advantages of Medicare for All. Then, when the going gets tough in the trenches of Congress, they can compromise and settle for the public option, and a muscular enough public option that it could serve as a model (a slippery slope) for an eventual single-payer system.

Of course, maybe once the single-payer cat is out of the bag, the weight of logic and public support will just push the insurance gang right out of the way.