PNHP

The Obama administration supports closed enrollment

The Obama administration supports closed enrollment

Giving Our Kids the Care they Need

By Nancy-Ann DeParle
The White House
July 28, 2010
One important change in the new law is a provision that prevents insurance companies from discriminating against children with pre-existing conditions.
Some state insurance commissioners expressed concern that, without an open enrollment period that was widely communicated, people might wait until their children got sick to enroll them in coverage, causing plans’ costs to increase. And we were concerned when last week, some indicated that insurance companies would choose to stop offering policies for children rather than cover kids with pre-existing conditions.
Today, the Administration is releasing new guidance to health insurance plans to help ensure children get the high-quality care they need. The new FAQ document notes that insurance companies may establish an open enrollment period for children with pre-existing conditions.
http://www.whitehouse.gov/blog/2010/07/28/giving-our-kids-care-they-need

And…

Questions and Answers on Enrollment of Children Under 19 Under the New Policy That Prohibits Pre-Existing Condition Exclusions

U.S. Department of Health & Human Services
July 27, 2010
Question #2: Do these interim final rules require issuers in the individual health insurance market to offer children under 19 non-grandfathered family and individual coverage at all times during the year?
A: No.  To address concerns over adverse selection, issuers in the individual market may restrict enrollment of children under 19, whether in family or individual coverage, to specific open enrollment periods if allowed under State law.  This is not precluded by the new regulations.
http://www.hhs.gov/ociio/regulations/children19/factsheet.html

And…

Insurers back down on child-coverage stance

By Julian Pecquet
The Hill
July 29, 2010
Health insurance plans across the country on Wednesday began to backtrack on their decision to pull out of the child-only coverage market after the Obama administration addressed their concerns about the potential damage to their bottom lines.
The Department of Health and Human Services (HHS) on Tuesday clarified regulations mandating that insurance plans agree to cover sick children. HHS made it clear that plans are free to set up specific enrollment periods for their insurance plans if allowed under state laws.
“We think this policy will ensure that children get the comprehensive coverage they need while avoiding this unintended consequence,” Scott P. Serota, president and CEO of the Blue Cross and Blue Shield Association, said in a statement. “This is consistent with other public and private health insurance programs.”
Karen Ignagni, president and CEO of America’s Health Insurance Plans, followed suit.
“Today’s announcement will help ensure millions of children have access to affordable healthcare coverage,” she said. “For years, structured enrollment periods have been used in the Federal Employees Health Benefits Program, Medicare and in employer-based coverage to minimize disruption for families, seniors and small businesses. Health plans are committed to working with federal and state officials to ensure consumers are aware of all of their coverage options, including how and when they are able to sign up for coverage.”
http://thehill.com/business-a-lobbying/111535-insurers-backing-down-on-child-coverage-stance

A Quote of the Day message earlier this week described how private insurers were getting around the requirement to provide coverage to children with preexisting disorders. The insurers intended to avoid this obligation simply by closing enrollment to new applicants. It is important to understand the counter-response of the Obama administration because it exemplifies just how dysfunctional the private insurance model is that President Obama and Congress chose for us.
From a business perspective, the insurers’ complaint was quite valid. If a child was guaranteed insurance no matter the circumstances, it would be a wise decision to save money by forgoing insurance while healthy, but then purchasing the coverage only when needed. Adverse selection (concentrating high-cost patients within a plan) results in the death spiral of insurance premiums (shutting down the plan because it is no longer economically viable).
The insurers said that they could provide coverage for children with preexisting disorders only if open enrollment periods were established. As an example, December could be set aside as the one month in which a child could enroll for the following year. If the parents decided not to enroll the child that month, they could not change their minds during the next twelve months. If something serious came up, that’s too bad. They should have known better than to gamble with their child’s health.
Whoa! Wasn’t the original intention of the reform effort to be sure that each and everyone of us could have the health care that we need without having to face financial hardship? But now the Obama administration is giving its stamp of approval to a policy that will make access worse, not better.
“Open enrollment” is a business concept that serves the insurance industry well, but it is a very deceptive term. Instead of having open enrollment throughout the year, the insurers have really established the concept of “closed enrollment” for most of the year. From the patient’s perspective, instead of improving access to insurance products, it greatly impairs access – the opposite of what reform was supposed to bring us. We should change the rhetoric to “closed enrollment,” because that’s really what they are promoting.
As expected from the industry, the statements of Scott Serota of the Blue Cross and Blue Shield Association and Karen Ignagni of America’s Health Insurance plans are very supportive of closed enrollment. Of course, it’s in their business interests, even if not in the interests of patients who are shut out.
Suppose we had a single payer national health program – an improved Medicare for all. The concept of closed enrollment totally vanishes since everyone is automatically enrolled.
Imagine a couple of generations from now explaining to someone that there was a time in America that private companies prohibited you from having the insurance you needed because of a quirky rule that closed enrollment for most of the year. Isn’t that weird? I mean… like… enrollment is only once… for life!

John Geyman's "Hijacked"

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010

On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)

http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

Comment:

By Don McCanne, MD

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”
–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine

“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”
–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

John Geyman’s “Hijacked”

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010

On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)

http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

Comment:

By Don McCanne, MD

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”
–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine

“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”
–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

Rx on Medicare's Birthday: Expand it to All

By Dr. Quentin Young
The Huffington Post
July 28, 2010

Medicare, one of our nation’s most cherished social programs, turns 45 on Friday.

I was in active medical practice when, on July 30, 1965, Medicare was signed into law by President Lyndon Johnson. The law’s impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

That was only the beginning. Through the years, Medicare dramatically reduced poverty among the elderly. It added new benefits like preventive care. It reduced racial and income-based disparities. It extended its coverage to the severely disabled. It laid the basis for nationwide, comparative health studies that have improved the quality of care for everyone.

In short, Medicare, a government-sponsored program that now covers over 45 million Americans, has been a triumphant success.

However, instead of preparing for a big 45th birthday party, Medicare is facing ominous rumblings from President Obama’s debt commission and not-so-veiled threats from other quarters.

“Medicare’s going broke,” its market-obsessed critics say. “It’s dragging down the economy.”

Such alarms have been sounded about every six or seven years since Medicare’s creation, but in real life it continues to thrive. Either the economy prospers, yielding greater tax revenues, or Congress tweaks the payroll tax by a tiny fraction of a percentage point, and immediately the projected shortfall disappears. (The last adjustment was in 1985, when the rate was increased from 1.30 percent to 1.45 percent.) More progressive taxes are a possible solution too.

While it is true aging baby boomers will make bigger demands on Medicare, again, modest adjustments today will assure its financial solvency tomorrow.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It’s been denied the authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems – and to bring down skyrocketing health care costs at the same time – is to improve the program and, most importantly, to expand it to cover every person in the United States.

That’s right: extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on excess paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

Conventional wisdom suggests we should wait and see how the Obama administration’s health law plays out. But we’ve seen how comparable reforms have fared on the state level: they’ve invariably failed, chiefly because they can’t control costs. Meanwhile more millions suffer and tens of thousands die each year from lack of adequate coverage. Tragically, this picture will not be seriously ameliorated by the new health law.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them, as my colleague Dr. Margaret Flowers did in her recent testimony before the debt commission, to ask Congress to enhance Medicare and to extend it to all.

http://www.huffingtonpost.com/dr-quentin-young/rx-on-medicares-birthday_b_661333.html

Rx on Medicare’s Birthday: Expand it to All

By Dr. Quentin Young
The Huffington Post
July 28, 2010

Medicare, one of our nation’s most cherished social programs, turns 45 on Friday.

I was in active medical practice when, on July 30, 1965, Medicare was signed into law by President Lyndon Johnson. The law’s impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

That was only the beginning. Through the years, Medicare dramatically reduced poverty among the elderly. It added new benefits like preventive care. It reduced racial and income-based disparities. It extended its coverage to the severely disabled. It laid the basis for nationwide, comparative health studies that have improved the quality of care for everyone.

In short, Medicare, a government-sponsored program that now covers over 45 million Americans, has been a triumphant success.

However, instead of preparing for a big 45th birthday party, Medicare is facing ominous rumblings from President Obama’s debt commission and not-so-veiled threats from other quarters.

“Medicare’s going broke,” its market-obsessed critics say. “It’s dragging down the economy.”

Such alarms have been sounded about every six or seven years since Medicare’s creation, but in real life it continues to thrive. Either the economy prospers, yielding greater tax revenues, or Congress tweaks the payroll tax by a tiny fraction of a percentage point, and immediately the projected shortfall disappears. (The last adjustment was in 1985, when the rate was increased from 1.30 percent to 1.45 percent.) More progressive taxes are a possible solution too.

While it is true aging baby boomers will make bigger demands on Medicare, again, modest adjustments today will assure its financial solvency tomorrow.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It’s been denied the authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems – and to bring down skyrocketing health care costs at the same time – is to improve the program and, most importantly, to expand it to cover every person in the United States.

That’s right: extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on excess paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

Conventional wisdom suggests we should wait and see how the Obama administration’s health law plays out. But we’ve seen how comparable reforms have fared on the state level: they’ve invariably failed, chiefly because they can’t control costs. Meanwhile more millions suffer and tens of thousands die each year from lack of adequate coverage. Tragically, this picture will not be seriously ameliorated by the new health law.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them, as my colleague Dr. Margaret Flowers did in her recent testimony before the debt commission, to ask Congress to enhance Medicare and to extend it to all.

http://www.huffingtonpost.com/dr-quentin-young/rx-on-medicares-birthday_b_661333.html

Census data reveal broad differences among states in rates of uninsured

By Lena Sun
Washington Post
Wednesday, July 28, 2010

New census data released Tuesday confirm a huge spread in the rate of uninsured from state to state and the big difference in impact that can be expected as a result of the health-care overhaul recently passed by Congress.

The statistics are for 2007 and show health insurance coverage by state and for each of the country’s roughly 3,140 counties.

The numbers do not include the impact on millions of people who lost their jobs and health insurance after the recession began in December 2007.

The 2007 snapshot shows that Massachusetts, which has achieved near-universal coverage, had the lowest rate of uninsured people under age 65, about 7.8 percent. States with the highest rates of uninsured were in the South and West: Texas was at the top, with 26.8 percent, followed by New Mexico (26.7 percent) and Florida (24.2 percent).

In the Washington area, the District had the lowest rate of uninsured, about 11.9 percent, among the three jurisdictions. Maryland’s rate of uninsured was 14.5 percent, and Virginia’s was 15 percent. The data for the insured include those with public or private insurance.

The disparities are even greater at the county level, where Henry County, Iowa, and Plymouth County, Mass., tied for the lowest rate of uninsured in the country, about 6.6 percent of people under 65, with a margin of error of about 1 percent. By comparison, the 14 counties with the highest rates of uninsured were in Texas, with a nearly 50 percent uninsured rate in Kenedy County.

In the Washington region, Montgomery (14.7 percent) and Fairfax (15.1) counties had comparable rates for the number of uninsured; rates were higher for Arlington (19.3 percent) and Prince George’s (20.2 percent) counties.

Under the new law, virtually all Americans will be required to buy health insurance by 2014 or pay a penalty tax. Administration officials estimate that the changes will lead to coverage for 32 million more people, starting in 2014. The law is aimed mainly at people who cannot obtain or afford coverage through a workplace, because their employer does not offer any or because it is too expensive — or because they are unemployed or work for themselves.

The census summary is the only source for estimates of health insurance coverage status for every county. It combines survey data with population estimates and information from aggregated federal tax returns, the food stamp program, and Medicaid and Children’s Health Insurance Program (CHIP) records.

Health Insurers Leaning on State Insurance Commissioners to "Reform" Reform

By Wendell Potter
The Huffington Post
July 27, 2010

The nation’s biggest insurers — not happy with provisions of the four-month-old health care reform law that would force many of them to spend more of the money they collect in premiums for their policyholders’ medical care — are pressuring regulators to disregard what members of Congress intended when they wrote the law, so that they can keep raking in huge profits for their Wall Street owners. If they are successful, many policyholders will soon be shelling out even more than they do today to enrich insurance company shareholders and CEOs. Billions of dollars are at stake, which is why the insurers and their symbiotic allies are pulling out all the stops to gut a key part of the law that would require them to spend at least 80 cents of every premium dollar they take in for medical care.

Wall Street financial analysts are pretty confident the insurers will ultimately have their way with the commissioners and, in so doing, stiff consumers. They have good reason to feel confident: As the Center for Public Integrity reported this week, (and the increasingly irresponsible mainstream media ignored), five of the nation’s biggest for-profit insurers — Aetna, CIGNA, Humana, United and WellPoint — are considering using $20 million of their policyholders’ premiums to set up a new group to influence how government agencies regulate them, as well as to help replace Democrats who voted for reform with more industry-friendly candidates.

Insurers’ Real Goal: Bigger Profits, Higher Stock Prices

The reform law requires that numerous new rules be written to regulate the way health insurers do business, a responsibility that Congress passed on to various federal agencies and the National Association of Insurance Commissioners (NAIC).

Among other things, the law mandates that beginning next year, health insurers must spend at least 80% of what they collect in premiums from small businesses — and also from individuals who can’t get coverage through their employers — on medical care. The minimum for health policies sold to large businesses is 85%. Insurers that don’t comply with the law will have to refund to policyholders and their dependents the difference between the minimums and their actual spending on health care.

As the Center for Public Integrity noted in its report, insurers are especially upset about that provision of the law because it likely will have an adverse affect on their profits if Congressional intent is carried out:

The high financial stakes mean insurers have been pushing hard with state regulators to allow for broader definitions of what constitutes patient welfare expenditures. This issue is ‘probably the most important one right now,’ explains a source.

The stakes are indeed high. One Wall Street analyst recently calculated that if the new law had been in effect in 2009, the largest for-profit health insurance companies would have been required to refund almost $2 billion to their customers for that year alone. But analyst Carl McDonald of Oppenheimer and Co. didn’t appear to be too worried that insurers will ever have to issue many refund checks to their policyholders. He even predicted that the stock prices of for-profit insurers — which now dominate the industry — will shoot up as soon as the NAIC bends to their demands.

“Managed care stocks are valued as if the law will be implemented as written,” McDonald wrote in a May 21 report for investors. When “reform gets reformed,” he added, managed care stocks should get a big boost.

You read that right: “When reform gets reformed.” It’s just a matter of “when,” in McDonald’s opinion, not “if.”

Insurers consider the amount of money they pay in claims to doctors, hospitals and pharmacies to be a loss, which is why they refer to the percentage of premium dollars they spend on care, compared to what they collect in premiums, as the “medical loss ratio,” or MLR for short.

As recently as 1993, the average MLR was 95%. Fifteen years later, after the insurance industry had come to be dominated by a cartel of large for-profit insurers, the average MLR had dropped to around 80%, largely due to pressure from Wall Street investors and analysts. At many insurers, the MLR frequently dips into the 70s or lower — often much lower. Wall Street loves it when that happens.

Prior to enactment of health care reform last March, about the only people who knew anything about the MLR, much less paid any attention to it, were insurance company executives, shareholders and analysts. The MLR is of particular interest to them because the less money an insurer pays out in claims, the more is available for profits and to pay executives and to cover insurers’ overhead. That overhead includes premium dollars spent on efforts to attract healthy policyholders and to exclude or dump sick ones.

Insurance Company Lobbyists Launch Into Overdrive

Members of Congress wanted to be sure insurers spent considerably more on medical care than on outrageous CEO compensation and overhead. But under the category of “no good deed goes unpunished,” they included language in the reform law that will allow insurers to reclassify some of their overhead expenses as medical expenses, so long as the money is used to “improve quality.” The problem is that the new law doesn’t explain what that means. Congress gave the NAIC the responsibility of deciding which expenses will qualify for reclassification. That’s why the insurers have been conducting a PR and lobbying campaign to influence the commissioners that is every bit as intense, sophisticated, multipronged and deceptive as the one it conducted to influence members of Congress.

Unlimited Funds Being Spent to Weaken Health Care Reform

To be able to meet the minimum MLRs without breaking a sweat, insurers, as you might expect, are trying to persuade the commissioners to let them reclassify just about all of their administrative costs as medical expenses. And they are not just lobbying the commissioners. They are also trying to get friendly governors and members of Congress to lean on the commissioners. One large insurer, using a tactic the industry often uses, provided one friendly freshman Democratic senator with a set of talking points that they encouraged him to use in drafting a letter to the NAIC leadership supporting the industry’s wish list. The insurer also asked him to persuade several of his colleagues to co-sign the letter.

As Senator Jay Rockefeller (D.-West Virginia), chair of the Senate Commerce, Science and Transportation Committee, wrote in a letter of his own last week to his state’s insurance commissioner, Jane L. Cline, the current NAIC president:

It is clear that health insurance companies are sparing no expense to weaken the new law and the protections it promises to America’s consumers… Health insurance companies and their allies have been furiously lobbying the NAIC to write the medical loss ratio definitions in a way that will allow them to continue doing business as they did before the passage of health care reform. The resources health insurance companies are throwing into their effort to weaken the medical loss ratio law appears almost limitless.

Rockefeller is right. The resources they are spending are, for all practical purposes, limitless: the pot of money they use for such things is replenished every month when policyholders send in their premiums.

As Rockefeller pointed out, the administrative expenses insurers are claiming really and truly are quality improvement expenses include money they spend to:
— Process and pay claims;
— Create and maintain their provider networks;
— Update their information technology systems to code medical conditions and process claims payments;
— Protect them against fraud and ot
her threats to the integrity of their payments systems; and
— Conduct “utilization review” of paid claims to detect payments the insurers deem inappropriate and retroactively deny them.

At least one insurer has been so confident that the NAIC would do whatever the industry demanded that it began reclassifying expenses before the ink from President Obama’s signature was even dry. WellPoint told analysts and investors in the spring–before the commissioners had even held their first meeting on the subject — that it already had begun reclassifying $500 million worth of administrative expenses, an action that had the effect of immediately and automatically increasing its MLR by nearly two percentage points.

Falling Back on Fear-Mongering

As it did during the debate on reform, the insurance industry is resorting to fear-mongering to get its way. Insurers and their allies have been trying to scare the commissioners into thinking that insurers will stop devoting resources to some worthwhile activities like disease management programs and health plan accreditation if they can’t reclassify them as medical expenses. One of the industry’s symbiotic allies, the National Committee for Quality Assurance, which accredits health plans, has joined the insurers in making multiple pleas to the commissioners to permit the reclassification of accreditation expenses. Of course they have: The NCQA charges insurers a boatload of money (money that comes from policyholders, of course) to accredit their health plans. In 2008, the NCQA’s revenues topped $30 million. More than $700,000 of that went to pay the organization’s president, Margaret O’Kane, that year. (If you ever wondered why the U.S. has the most expensive health care system in the world, just listen in to one of the NAIC’s MLR conference calls. Every special interest that owes its existence to our uniquely American profit-oriented system joins the calls every week trying to persuade the commissioners to write the regulations in such a way that its revenue stream and profit margins will not be negatively impacted.)

The reality is that the fear-mongering is, as usual, not based on any factual evidence. Insurers will not stop developing and offering disease management programs if their costs are not reclassified. That’s because good disease management programs that actually do benefit individual health plan enrollees with chronic conditions such as asthma, diabetes and heart disease also typically reduce insurers’ expenses. As a former insurance company insider, I know that insurers will not offer a disease management program in the first place unless executives have been persuaded that it will either generate additional revenue or reduce costs — or do both.

The NAIC undoubtedly will allow insurers to reclassify expenses associated with disease management programs that have been proven to actually improve the health of enrollees. Most of the 28 consumer representatives to the NAIC, of whom I am one, believe that that would be an appropriate reclassification. In the spirit of compromise, we also are not pushing back against the reclassification of some information technology expenses and part of insurers’ spending on so-called “nurse hotlines” as long as insurers can prove that the money spent in those areas improves the health of their individual health plan enrollees.

Insurers Hoodwinking Vendors

We consumer representatives strongly oppose the reclassification of most of the other expenses insurers’ are lobbying for, including expenses related to accreditation, because they are by their very nature administrative in nature. This is not to say that accreditation, for example, is not a worthwhile expense. It is or employers wouldn’t demand that insurers obtain accreditation as a condition of doing business with them. That will continue regardless of how accreditation expenses are classified.

The NCQA and other industry allies, including vendors that develop and implement disease management programs for them (yes, insurers outsource much of that work) should realize that they are being hoodwinked by insurers in this fight. The truth is that, despite what insurers are saying, it is more likely that expenses related to disease management programs and accreditation and other worthy administrative activities will be reduced or eliminated in the future if they are reclassified.

Here’s why and here’s what will happen: Reclassification of these expenses will temporarily boost insurers’ MLRs by a few percentage points, as shareholders know and expect. But over the course of time, shareholders will demand that insurers reduce their MLRs to just barely meet the new law’s minimums. I know this will happen because I spent 10 years handling financial communications for one of the country’s largest insurers. There was relentless pressure on company executives to find ways to reduce the MLR (read: spending on medical care). If they failed to do so, many shareholders would head for the exits. I once saw the stock price of a large competitor lose 20% of its value in a single day when the company reported as part of its quarterly earnings that its MLR had gone up a little more than 1% compared to a previous quarter.

Big Insurers Spend Policyholder Money on Big Lobbying

It is worth noting, by the way, that the insurers that have been the most vocal on this issue are the five biggest for-profit insurers, the same ones that reportedly are about to divert $20 million of policyholders’ money to pay for a massive new PR, lobbying and political action campaign. With the exception of a few Blue Cross plans not yet owned by WellPoint, the nonprofits have been largely silent. That’s because they don’t have to answer directly to Wall Street. At least not yet.

What this means is that the pressure from investors on for-profit insurers to reduce their medical spending after the new MLR regulations go into effect next January 1 will be just as intense as it is today, if not more so. Insurance commissioners and the industry’s unwitting allies need to understand that any administrative expenses that are reclassified as medical costs will be an easy target for cutting by insurance company bean counters in the future. And the more overhead that is reclassified as medical spending, the more capacity is freed up on the administrative expense side of the MLR equation for executive compensation and profits. Both will soar if insurers have their way with the commissioners.

So far, the commissioners who have been spending the most time on the MLR issues have rejected many of the items on the insurers’ wish list, but insurers know that every commissioner, including those who haven’t spent a minute on the MLR conference calls, will have a vote before the NAIC’s recommendations go to the U.S. Department of Health and Human Services later this summer for final adoption. So please contact your state insurance commissioner and tell him or her to give top priority to the interests of consumers, not insurers and their allies. This is too important not to get involved. Commissioners will be doing a great disservice to their constituents if they fall for insurers’ disingenuous arguments. If they do, the real winners in this fight will be insurance company executives and their Wall Street masters. If they win this, that cartel of profit-driven corporations will be more firmly in control of our health care system than ever before.

Health Insurers Leaning on State Insurance Commissioners to “Reform” Reform

By Wendell Potter
The Huffington Post
July 27, 2010

The nation’s biggest insurers — not happy with provisions of the four-month-old health care reform law that would force many of them to spend more of the money they collect in premiums for their policyholders’ medical care — are pressuring regulators to disregard what members of Congress intended when they wrote the law, so that they can keep raking in huge profits for their Wall Street owners. If they are successful, many policyholders will soon be shelling out even more than they do today to enrich insurance company shareholders and CEOs. Billions of dollars are at stake, which is why the insurers and their symbiotic allies are pulling out all the stops to gut a key part of the law that would require them to spend at least 80 cents of every premium dollar they take in for medical care.

Wall Street financial analysts are pretty confident the insurers will ultimately have their way with the commissioners and, in so doing, stiff consumers. They have good reason to feel confident: As the Center for Public Integrity reported this week, (and the increasingly irresponsible mainstream media ignored), five of the nation’s biggest for-profit insurers — Aetna, CIGNA, Humana, United and WellPoint — are considering using $20 million of their policyholders’ premiums to set up a new group to influence how government agencies regulate them, as well as to help replace Democrats who voted for reform with more industry-friendly candidates.

Insurers’ Real Goal: Bigger Profits, Higher Stock Prices

The reform law requires that numerous new rules be written to regulate the way health insurers do business, a responsibility that Congress passed on to various federal agencies and the National Association of Insurance Commissioners (NAIC).

Among other things, the law mandates that beginning next year, health insurers must spend at least 80% of what they collect in premiums from small businesses — and also from individuals who can’t get coverage through their employers — on medical care. The minimum for health policies sold to large businesses is 85%. Insurers that don’t comply with the law will have to refund to policyholders and their dependents the difference between the minimums and their actual spending on health care.

As the Center for Public Integrity noted in its report, insurers are especially upset about that provision of the law because it likely will have an adverse affect on their profits if Congressional intent is carried out:

The high financial stakes mean insurers have been pushing hard with state regulators to allow for broader definitions of what constitutes patient welfare expenditures. This issue is ‘probably the most important one right now,’ explains a source.

The stakes are indeed high. One Wall Street analyst recently calculated that if the new law had been in effect in 2009, the largest for-profit health insurance companies would have been required to refund almost $2 billion to their customers for that year alone. But analyst Carl McDonald of Oppenheimer and Co. didn’t appear to be too worried that insurers will ever have to issue many refund checks to their policyholders. He even predicted that the stock prices of for-profit insurers — which now dominate the industry — will shoot up as soon as the NAIC bends to their demands.

“Managed care stocks are valued as if the law will be implemented as written,” McDonald wrote in a May 21 report for investors. When “reform gets reformed,” he added, managed care stocks should get a big boost.

You read that right: “When reform gets reformed.” It’s just a matter of “when,” in McDonald’s opinion, not “if.”

Insurers consider the amount of money they pay in claims to doctors, hospitals and pharmacies to be a loss, which is why they refer to the percentage of premium dollars they spend on care, compared to what they collect in premiums, as the “medical loss ratio,” or MLR for short.

As recently as 1993, the average MLR was 95%. Fifteen years later, after the insurance industry had come to be dominated by a cartel of large for-profit insurers, the average MLR had dropped to around 80%, largely due to pressure from Wall Street investors and analysts. At many insurers, the MLR frequently dips into the 70s or lower — often much lower. Wall Street loves it when that happens.

Prior to enactment of health care reform last March, about the only people who knew anything about the MLR, much less paid any attention to it, were insurance company executives, shareholders and analysts. The MLR is of particular interest to them because the less money an insurer pays out in claims, the more is available for profits and to pay executives and to cover insurers’ overhead. That overhead includes premium dollars spent on efforts to attract healthy policyholders and to exclude or dump sick ones.

Insurance Company Lobbyists Launch Into Overdrive

Members of Congress wanted to be sure insurers spent considerably more on medical care than on outrageous CEO compensation and overhead. But under the category of “no good deed goes unpunished,” they included language in the reform law that will allow insurers to reclassify some of their overhead expenses as medical expenses, so long as the money is used to “improve quality.” The problem is that the new law doesn’t explain what that means. Congress gave the NAIC the responsibility of deciding which expenses will qualify for reclassification. That’s why the insurers have been conducting a PR and lobbying campaign to influence the commissioners that is every bit as intense, sophisticated, multipronged and deceptive as the one it conducted to influence members of Congress.

Unlimited Funds Being Spent to Weaken Health Care Reform

To be able to meet the minimum MLRs without breaking a sweat, insurers, as you might expect, are trying to persuade the commissioners to let them reclassify just about all of their administrative costs as medical expenses. And they are not just lobbying the commissioners. They are also trying to get friendly governors and members of Congress to lean on the commissioners. One large insurer, using a tactic the industry often uses, provided one friendly freshman Democratic senator with a set of talking points that they encouraged him to use in drafting a letter to the NAIC leadership supporting the industry’s wish list. The insurer also asked him to persuade several of his colleagues to co-sign the letter.

As Senator Jay Rockefeller (D.-West Virginia), chair of the Senate Commerce, Science and Transportation Committee, wrote in a letter of his own last week to his state’s insurance commissioner, Jane L. Cline, the current NAIC president:

It is clear that health insurance companies are sparing no expense to weaken the new law and the protections it promises to America’s consumers… Health insurance companies and their allies have been furiously lobbying the NAIC to write the medical loss ratio definitions in a way that will allow them to continue doing business as they did before the passage of health care reform. The resources health insurance companies are throwing into their effort to weaken the medical loss ratio law appears almost limitless.

Rockefeller is right. The resources they are spending are, for all practical purposes, limitless: the pot of money they use for such things is replenished every month when policyholders send in their premiums.

As Rockefeller pointed out, the administrative expenses insurers are claiming really and truly are quality improvement expenses include money they spend to:
— Process and pay claims;
— Create and maintain their provider networks;
— Update their information technology systems to code medical conditions and process claims payments;
— Protect them against fraud and other threats to the integrity of their payments systems; and
— Conduct “utilization review” of paid claims to detect payments the insurers deem inappropriate and retroactively deny them.

At least one insurer has been so confident that the NAIC would do whatever the industry demanded that it began reclassifying expenses before the ink from President Obama’s signature was even dry. WellPoint told analysts and investors in the spring–before the commissioners had even held their first meeting on the subject — that it already had begun reclassifying $500 million worth of administrative expenses, an action that had the effect of immediately and automatically increasing its MLR by nearly two percentage points.

Falling Back on Fear-Mongering

As it did during the debate on reform, the insurance industry is resorting to fear-mongering to get its way. Insurers and their allies have been trying to scare the commissioners into thinking that insurers will stop devoting resources to some worthwhile activities like disease management programs and health plan accreditation if they can’t reclassify them as medical expenses. One of the industry’s symbiotic allies, the National Committee for Quality Assurance, which accredits health plans, has joined the insurers in making multiple pleas to the commissioners to permit the reclassification of accreditation expenses. Of course they have: The NCQA charges insurers a boatload of money (money that comes from policyholders, of course) to accredit their health plans. In 2008, the NCQA’s revenues topped $30 million. More than $700,000 of that went to pay the organization’s president, Margaret O’Kane, that year. (If you ever wondered why the U.S. has the most expensive health care system in the world, just listen in to one of the NAIC’s MLR conference calls. Every special interest that owes its existence to our uniquely American profit-oriented system joins the calls every week trying to persuade the commissioners to write the regulations in such a way that its revenue stream and profit margins will not be negatively impacted.)

The reality is that the fear-mongering is, as usual, not based on any factual evidence. Insurers will not stop developing and offering disease management programs if their costs are not reclassified. That’s because good disease management programs that actually do benefit individual health plan enrollees with chronic conditions such as asthma, diabetes and heart disease also typically reduce insurers’ expenses. As a former insurance company insider, I know that insurers will not offer a disease management program in the first place unless executives have been persuaded that it will either generate additional revenue or reduce costs — or do both.

The NAIC undoubtedly will allow insurers to reclassify expenses associated with disease management programs that have been proven to actually improve the health of enrollees. Most of the 28 consumer representatives to the NAIC, of whom I am one, believe that that would be an appropriate reclassification. In the spirit of compromise, we also are not pushing back against the reclassification of some information technology expenses and part of insurers’ spending on so-called “nurse hotlines” as long as insurers can prove that the money spent in those areas improves the health of their individual health plan enrollees.

Insurers Hoodwinking Vendors

We consumer representatives strongly oppose the reclassification of most of the other expenses insurers’ are lobbying for, including expenses related to accreditation, because they are by their very nature administrative in nature. This is not to say that accreditation, for example, is not a worthwhile expense. It is or employers wouldn’t demand that insurers obtain accreditation as a condition of doing business with them. That will continue regardless of how accreditation expenses are classified.

The NCQA and other industry allies, including vendors that develop and implement disease management programs for them (yes, insurers outsource much of that work) should realize that they are being hoodwinked by insurers in this fight. The truth is that, despite what insurers are saying, it is more likely that expenses related to disease management programs and accreditation and other worthy administrative activities will be reduced or eliminated in the future if they are reclassified.

Here’s why and here’s what will happen: Reclassification of these expenses will temporarily boost insurers’ MLRs by a few percentage points, as shareholders know and expect. But over the course of time, shareholders will demand that insurers reduce their MLRs to just barely meet the new law’s minimums. I know this will happen because I spent 10 years handling financial communications for one of the country’s largest insurers. There was relentless pressure on company executives to find ways to reduce the MLR (read: spending on medical care). If they failed to do so, many shareholders would head for the exits. I once saw the stock price of a large competitor lose 20% of its value in a single day when the company reported as part of its quarterly earnings that its MLR had gone up a little more than 1% compared to a previous quarter.

Big Insurers Spend Policyholder Money on Big Lobbying

It is worth noting, by the way, that the insurers that have been the most vocal on this issue are the five biggest for-profit insurers, the same ones that reportedly are about to divert $20 million of policyholders’ money to pay for a massive new PR, lobbying and political action campaign. With the exception of a few Blue Cross plans not yet owned by WellPoint, the nonprofits have been largely silent. That’s because they don’t have to answer directly to Wall Street. At least not yet.

What this means is that the pressure from investors on for-profit insurers to reduce their medical spending after the new MLR regulations go into effect next January 1 will be just as intense as it is today, if not more so. Insurance commissioners and the industry’s unwitting allies need to understand that any administrative expenses that are reclassified as medical costs will be an easy target for cutting by insurance company bean counters in the future. And the more overhead that is reclassified as medical spending, the more capacity is freed up on the administrative expense side of the MLR equation for executive compensation and profits. Both will soar if insurers have their way with the commissioners.

So far, the commissioners who have been spending the most time on the MLR issues have rejected many of the items on the insurers’ wish list, but insurers know that every commissioner, including those who haven’t spent a minute on the MLR conference calls, will have a vote before the NAIC’s recommendations go to the U.S. Department of Health and Human Services later this summer for final adoption. So please contact your state insurance commissioner and tell him or her to give top priority to the interests of consumers, not insurers and their allies. This is too important not to get involved. Commissioners will be doing a great disservice to their constituents if they fall for insurers’ disingenuous arguments. If they do, the real winners in this fight will be insurance company executives and their Wall Street masters. If they win this, that cartel of profit-driven corporations will be more firmly in control of our health care system than ever before.

Private insurers cause health care heartbreak

Letters to the Editor
Herald Leader (Lexington, KY)
Tuesday, Jul. 27, 2010

As a dedicated activist for single-payer health care, it has become crystal clear to me that the private, for-profit health insurance companies are the biggest detriment to having a health care system in the United States that is comparable to the rest of the developed nations of the world.

I have been exposed to thousands of heartbreaking stories and situations over the last two years; all unnecessary had we had a universal health care system without Wall Street-obligated private insurers.

Bruce Barry, a professor of management and sociology at Vanderbilt University, said it best: “Health insurance in a civilized society is a collective moral obligation, not a discretionary consumer good. It’s somewhat analogous to national defense: We strive to safeguard everyone from the unpredictable consequences of an unforeseen tragedy, not just those who can find room in their household budgets to pony up for defense spending.”

The private, for-profit insurance companies are evil, cruel and socially destructive. They are a parasitic middleman when they take your insurance dollar and suck out as much as they can (up to 31 percent) for administrative expenses. I have asked hundreds of people to give me one positive benefit that the private health insurers create for the individual health care consumer. So far, no one has been able give me an answer.

Medicare celebrates its 45th birthday July 30. This popular, publicly funded, privately managed single-payer system is the answer to let all our citizens exit the misery of our current health care system.

Bill Mahan
Lexington, KY

http://www.kentucky.com/2010/07/27/1364805/letters-7272010.html#ixzz0uuB7r8OU

John Geyman's "Hijacked"

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010
On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.
On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:
• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.
(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)
http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”
–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine
“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”
–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

John Geyman’s “Hijacked”

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010

On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)

http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”

–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine

“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”

–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

Private insurers shut doors on children with preexisting disorders

Insurers to Comply With Rules on Children

By Robert Pear
The New York Times
March 30, 2010

Under pressure from the White House, health insurance companies said Tuesday (March 30) that they would comply with rules to be issued soon by the Obama administration requiring them to cover children with pre-existing medical problems.

“Health plans recognize the significant hardship that a family faces when they are unable to obtain coverage for a child with a pre-existing condition,” said Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group. Accordingly, she said, “we await and will fully comply with” the rules.

The White House immediately claimed victory.

In a Twitter message, Robert Gibbs, the White House press secretary, scored the tug of war as “Kids 1, insurance 0.”

http://www.nytimes.com/2010/03/31/health/policy/31health.html?_r=1

And…

Some insurers stop writing new coverage for kids

By Ricardo Alsonso-Zaldivar
Philly.com
July 27, 2010

Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems – a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

The major types of coverage for children – employer plans and government programs – are not affected by the disruption. But a subset of policies – those that cover children as individuals – may run into problems. Even so, insurers are not canceling children’s coverage already issued, but refusing to write new policies.

In Florida, Blue Cross and Blue Shield , Aetna, and Golden Rule – a subsidiary of UnitedHealthcare – notified with the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.

(Blue Cross and Blue Shield of Florida) vice president Randy Kammer said the company’s experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.

“We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims,” said Kammer. “Guaranteed issue means you could technically buy it on the way to the hospital.”

Kammer said the company did not make the decision lightly. “We were looking at all our other individual policy holders who pay a lot for coverage, and we didn’t think it was fair to give them that kind of an increase to benefit a small population that receives a greater advantage than they do,” she said.

http://www.philly.com/philly/business/personal_finance/072710_no_new_kid_coverage.html

Comment:

By Don McCanne, MD

In several speeches about the Patient Protection and Affordable Care Act, President Obama extolled the immediate end of insurers denying coverage to children with preexisting conditions. He was wrong. His miscalculation stems from the fact that he seemed to trust the insurers to do the right thing for patients instead of continuing to place their own business interests first.

Although the insurers can no longer reject a child with preexisting disorders, they can close the plan to new enrollees. As a business decision, that is what many are doing. A social good is not part of their business model.

Although White House press secretary Robert Gibbs scored this as “Kids 1, Insurance 0,” it’s really “Insurance 1, Kids disqualified.”

That the insurers placed business first should come as no surprise to anyone. AHIP’s lobbyist Karen Ignagni continued with the “await and comply” position on the regulations that former WellPoint vice president Liz Fowler is helping to write. Compliance is easy for them when the rules are written to support the insurers’ business model.

Proving that the private insurers have learned nothing, Blue Cross and Blue Shield of Florida vice president Randy Kammer repeats the long held position of private insurers that they didn’t think that it was fair to increase premiums for all of the policy holders merely “to benefit a small population that receives a greater advantage” than the rest of the policy holders. Because it interferes with their business model, they refute the fundamental principle that the primary purpose of health insurance is to transfer funds from the many willing who are healthy to the few who have greater health care needs.

The exchanges won’t be in effect until 2014, and yet we’re already seeing this sterile, perverse behavior on the part of the insurers. Denying children with health care needs the right to buy insurance is only the bare beginning. There is absolutely no way that the regulators can preempt the negative impact of the unlimited innovations that insurers will introduce, especially after the insurance exchange infrastructures are solidly in place.

Businesses do what businesses have to do. Voters need to do what voters have to do. We have to eliminate the private business intermediaries and establish our own public insurance program that has a social mission of patient service.