Call it the "Wellpoint Effect." Last month, the giant health insurance company, Wellpoint, announced premium increases for its individual coverage policy holders in California of 25 percent on average and as high as 39 percent. A new survey by the Center for American Progress Action Fund found double digit premium increases for individual policy holders in 11 of the 14 states in which Wellpoint operates. Other reports now document significant rates hikes by other insurers in individual and small group markets across the nation.
President Barack Obama publicly criticized the hikes in a television interview before the Superbowl. His Health & Human Services Secretary, Kathleen Sebelius -- a former state insurance commissioner -- has kept the pressure on, asking the heads of five major health insurers to meet with her this week.
Members of Congress have weighed in, including Senate Majority Leader Harry Reid and House Energy & Commerce Chairman Henry Waxman who held a February 24th hearing on the hikes, including testimony from Wellpoint CEO Angela Braly. Waxman revealed internal company documents showing that Wellpoint paid 39 executives at least one million dollars in 2008, and spent $27 million for 103 executive retreats in 2007 and 2008. Braly blamed the economy and rising medical expenses for premium hikes.
These events occur as Congress seeks resolution on its year-long process to enact comprehensive health reform. The hikes add urgency to the pending legislation's provisions to empower states and the federal government to begin or beef up regulatory oversight of premium increases.
This national attention to local and state premium increases is unusual and unprecedented. In the past 25 years, there has never been a time when premium increases in any state's individual health insurance market have become a national issue. The individual health insurance market is called a "residual market" because it is the last or near-last resource for 13 million Americans who can't get employer coverage and who do not qualify for any public insurance. Individual premium increases become statewide issues, never national.
Until now. The California premium hikes would not have caught national attention were it not for the concurrent timing with national reform. Hence, the "Wellpoint Effect." If national health insurance reform legislation is approved, rate hikes in state and local markets will become nationalized as an issue of ongoing concern. This change will instigate new, formidable pressure on insurers to bargain tougher with medical providers for lower rate increases, and up the ante on insurers' own business practices and behaviors.
This is not the first time a federal health reform initiative focused on a single industry. As President Bill Clinton began his ill-fated reform process in 1993, his point person, First Lady Hillary Clinton, criticized the pharmaceutical industry for drug price increases and threatened imposition of price controls.
While the Clintons did not carry out the threat, the attention was followed by a stunning drop in the rate of drug price increases, lasting several years. This response was dubbed "the Hillary Effect" by industry observers.
A current analog can be seen in Massachusetts where its 2006 health reform law -- the model for Congressional reform -- expanded access for the uninsured, making only feint moves at controlling health costs. Since 2006, Massachusetts has had a non-stop public conversation about restraining health costs, the most robust cost control conversation in any state.
The Legislature and Governor Deval Patrick already approved one cost reform package in 2008. The Boston Globe published an investigatory series on the market power of hospital systems and insurers. Attorney General Martha Coakley released a report spotlighting market concentration as the cause of price increases -- not increases in the volume -- are behind premium increases. Recently, Governor Patrick proposed that the State review and overrule excessive rate hikes by insurers and rate increases between insurers and medical providers.
Pending federal health reform legislation contains no magic bullet to lower the nation's health costs. Instead, as New Yorker writer Atul Gawande observes, it focuses on pilots, demonstrations, a tax on high cost plans, and other mechanisms to shift the cost trajectory.
As in Massachusetts, if national health reform happens, we will witness the launch of a long term, serious national conversation about rising health care costs and what to do about them.
It's the start of the "Wellpoint Effect."
John E McDonough is the Joan H. Tisch Distinguished Fellow in Public Health at Hunter College in New York, and a former staffer on the US Senate Committee on Health, Education, Labor and Pensions.
It is better to move forward and make course corrections along the way than to stand still.
Average Cost per Person by Organisation for Economic Co-operation and Development
Source : http://www.researchrecap.com/wp-content/uploads/2009/07/health.gif
---------------- Per capita costs for the year 2007 ----------------
United States.......... $7,290 .......100% of US per capita cost.
Canada.................... $3,895 ........ 53% of US per capita cost.
France...................... $3,601 ........ 49% of US per capita cost.
Germany.................. $3,588 ........ 49% of US per capita cost.
United Kingdom..... $2,992 ........ 41% of US per capita cost.
Japan....................... $2,581 ........ 35% of US per capita cost.
Using the Canadian model and applying their per capita cost to the US population, we could cover EVERYBODY and SAVE over $3,400 per person per year.
No Fuss. No Bills. Everybody covered.
Simplicity. That's Single Payer.
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The many who are well pay for the few that are sick. No exceptions, no deductables, no co-pays.
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Every hospital, clinic and doctor use the same billing form.
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You negotiate with the drug companies with the buying power of 480 million Americans.
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Insurance companies are regulated and can not charge more than 10% of billing.
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At the end of the day, this is what will bring health care costs in line with the rest of the modern world. Of course this will mean lay offs in the drug and insurance industry, but the rest of the economy can get back ot work.
The health care reform is only difficult and perplexing when you dismiss the best and most obvious solution as too upsetting to the (already unacceptable) status quo. There is no logic to it, nor there is any compassion -- but logic and compassion are not welcome in the Corporate States of America.
It has prove to work over and Over and OVER Again.
But we are just too dumb to recognize that.
No government funding should go to private systems.
All 300 million people in the US could begin receiving Free Public Option health care this year 2010 and it would save $1trillion dollars every year from the $2.6trillion spent last year.
National sales taxes instead of insurance could pay for free Public Option healthcare and medications for everyone who wants to use it no restrictions, no insurance, no copay’s, free period.
Employers could optout of paying for or being involved with health care which employees would receive for free from the Public Option.
Everyone who receives government funded health care from any source anywhere in the US whether it be Medicare, Medicaid, all states, cities, school systems everything, all employees from the President, legislators, and the lowest pay scale workers would receive Free Public Option care which would cut governments costs for health care in half.
Only a Free Public Option which eliminates insurance companies and uses sales taxes to pay for care, and eliminates the for profit private care providers by using government hospitals, can produce these drastic cost savings.
Veterans Government Health Care is producing better health outcomes for Vets than civilian patients are receiving anywhere else in the country, at any price, including Mayo, Cleveland Clinic, Medicare, anywhere and VA’s costs are a fraction of private care’s.
http://www.washingtonmonthly.com/features/2005/0501.longman.html
Free Public Option or Private Option you choose
I've been a Democrat for 40 years and am committed to progressive ideas but....if there is a mandate that I have to buy health insurance I will:
1. immediately leave the Democratic Party
2. cancel my health insurance
3. fight until my dying day the right to decide whether I buy for health insurance or not.
This proposed mandate is a poison pill. The Republicans and every other American political party will for decades point to the Democratic Folly of mandated health insurance. For many, many years it will be broken party and may never recover.
Michael Imlah
Costs go into a DeathSpiral without it.
With it, costs go down for the country and everyone is covered.
That is what every civilized country does, except the USA.
Our current proposal will reward insurers that pay excessive fees to doctors, hospitals, drug makers, and such by allowing them to keep more of the money received as profit. They will also be allowed (therefore required by their shareholders) to collude with other industry participants to ensure maximum price increases that will not result in further action from Congress. We are essentially dooming ourselves to pay as much for health care in the future as the country is willing to accept.
Can these issues be fixed? I sure hope so. Do I believe the corrupt Congress that gets lobbied more by the health care industry than any other industry will actually fix things instead of just grabbing some bribes? Not in the slightest.
1. They have government-sanctioned monopolies in 43 states. (Exempt from US anti-trust laws.)
2. Despite (1) they have no pricing regulation or oversight.
3. They price fix. In NY, Wellpoint paid $10 million on price-fixing charges brought by Cuomo. http://www.lawyersandsettlements.com/case/price-fixing-case-will-cost-wellpoint-10-million-to.html
4. The AMA is suing, accusing Wellpoint, among others, for cheating providers on reimbursements.
Public option! Federal regulation of the industry to replace the current state by state structures. Then let them compete. Bet the 36% operating overhead of for-profit insurance companies would wither in the face of true competition.
They are not stupid. They're against the bill because they know that federal entry will lift the veil.
1. Get rid of HMOs
2. Single Payer
3. Hills-Burton standards
I believe that health care reform IS needed, but I am not nearly as certain that the bill currently under consideration should be classified as reform. To mandate that all citizens buy insurance without the commensurate public option, or better, the Swiss system of having all base policies be non profit, would seem to benefit the insurance industry as a whole at the cost of taxpayer support.
Whatever else they may be, the insurance companies aren't stupid. Their decision to make these nearly outrageous increases just prior to the health care reform vote is no accident. They WANT this bill. It's in their best interest. What other industry in America is in the position of a guaranteed federal profit of 20% on every product they produce? Utility companies are privately operated but highly regulated, they manage on less than 8% profit, why do insurance companies deserve over twice as much?
Overhead on Medicare is around 3%, from a purely practical point of view medicare for all would be an immediate 17% savings across the board. The decisions are being made based on politics (and behind the scenes corporate trade offs) rather than rational thought and open debate. Not a good way to do things in general, but especially not a good way to run a government. I had higher hopes for the Obama administration than this..