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Battle in Seattle Over Insurance Company Profits

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The HMO and insurance industries have spent a breathtaking $768,864,642 since 2007 on federal lobbying to influence public policy and elected officials, according to data collected by the Center for Responsive Politics and reviewed by Health Care for America Now. In 2010 they have not let up, despite passage of the new health reform law. They're now trying to undermine the law with intense pressure on state officials to water down the federal provisions and interfere with their implementation.

As we all know, the insurance industry mounted a massive campaign to defeat health care reform and maintain their stranglehold on our health care. But after they lost, they turned their attention to undermining the new law so they can continue their obscene profiteering, their unconscionable denials of care and their shameless practice of giving CEOs jaw-dropping pay packages.

The top five companies reported a record $12.2 billion in net earnings last year. That's huge. And the top executives at 10 for-profit companies have pocketed nearly $1 billion in compensation in the last 10 years. That's staggeringly huge. As a group they received a 167 percent pay raise in 2009 while average American workers saw wages grow about 2 percent. That's offensively indefensible.

Led by the Washington-based trade group America's Health Insurance Plans, the $892 billion-a-year health insurance industry laundered $20 million through the U.S. Chamber of Commerce this year to blanket the airwaves with anti-reform TV ads. The Chamber has since announced a $75 million campaign against pro-reform members of Congress running for re-election in November. Insurance companies also are considering spending another $20 million to create their own front group to attack reform supporters and elect pro-industry lawmakers.

The insurance companies are now coordinating a lobbying assault on regulators. Activists are fighting back and we can all help.

This weekend, more than 1,000 insurance lobbyists and executives are expected to converge in Seattle to pressure the National Association of Insurance Commissioners (NAIC) to undercut important new rules intended to control costs and make health insurance more affordable for families and businesses. The new health reform law includes a provision (medical-loss ratio) that requires insurance companies to spend on patient care at least 80 percent of health plan premiums collected from individuals and small employers and 85 percent of premiums paid by large employers. The insurance companies are trying to protect their profits and divert premium dollars away from patient care by having non-medical costs, such as lobbying, profits, executive pay and administration, defined as "medical" under this new regulation.

The insurance lobbyists will be met by scores of activists, because the stakes in this fight are high. Simply put, the battle over the medical-loss ratio is the new health care reform fight, and if the health insurance companies win, we lose. If they win, they'll be able to deny people needed care and call the administrative costs of that denial "medical care" under the new law.

In a powerful letter to the NAIC president in July, Senator Jay Rockefeller of West Virginia, chairman of the Senate Commerce Committee, urged the insurance commissioners not to succumb to the pressure applied by the industry.

"It is clear that health insurance companies are sparing no expense to weaken this new law and the protection it promises to America's consumers," Rockefeller said. "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 reform. The resources health insurance companies are throwing into their effort to weaken the medical-loss ratio appear almost limitless."

Unlike federal lobbying disclosure rules, health insurance companies aren't required to reveal what they are spending to influence state insurance commissioners, but the numbers are high. In New York alone, the health insurance industry has spent $10,602,387 on lobbying since 2007, according to an HCAN review of data maintained by the New York State Commission on Public Integrity. No figures are readily available on how much money health insurers spend on lobbying in 49 other state capitals.

This gap in reporting is troubling because this lobbying assault on the NAIC is new. This category of state officials--insurance commissioners--has never been subjected to a nationally coordinated pressure campaign to use their state authority to block implementation of consumer protections enacted by Congress. The NAIC is due to make its recommendations soon--perhaps even this weekend--to the U.S. Health and Human Services Department.

That's why these massive lobbying expenditures must be disclosed. The public has a right to know how much the insurance companies are spending to protect their excessive profits and outrageous CEO pay by changing the intent of the medical-loss ratio established by Congress.

The health insurance industry wants to expand the definition of allowable medical expenses to include costs that are not directly related to the delivery of care and have not historically been classified as medical. Instead of reducing costs and improving the efficiency of their operations, they simply want to change how certain expenses are classified so they don't really have to alter business practices. Already, WellPoint, the nation's largest private health insurance company by enrollment and operator of Blue Cross plans in 14 states, has reclassified $500 million in administrative costs as medical expenses. The amount of money riding on the outcome of this battle is huge. If the new law had been on the books in 2009, the six largest for-profit health insurance companies would have been required to refund $1.9 billion for that year alone.

The medical-loss ratio standards in the Affordable Care Act are critical to curbing the worst of the health insurance industry's consumer abuses, controlling rising premium costs, increasing the value of premiums paid by private and public customers, and reining in the profiteering of health insurance companies. If the lobbyists are thwarted and rules governing medical-loss ratios, rate review and other consumer protections are implemented as intended, the health reform law will hold accountable an industry that abuses millions of customers when they need health benefits the most.

We can all join the fight to hold the insurance industry accountable by demanding that they disclose how much they spend to lobby the NAIC and other state officials. Their unbridled efforts to protect the status quo must be stopped.

Cross posted at the NOW!Blog

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