More and more Americans are falling victim to one of the most insidious bait-and-switch schemes in U.S. history. As they do, health insurance executives and company shareholders are getting richer and richer.
This industry-wide plot explains how health insurers have been able to reap record profits during the recent recession as the ranks of the uninsured and underinsured continue to swell.
It also explains why the insurance industry and its allies are pulling out all the stops to kill a measure in the California legislature that could protect state residents from losing their homes and being forced into bankruptcy if they get seriously sick or injured.
On June 2, the California Assembly passed AB 52, a bill that would give state regulators the authority to reject excessive health insurance rate increases. Similar legislation has been introduced in other state legislatures, but nowhere are the stakes higher than in California -- not only because AB 52 would allow the insurance commissioner to turn down requests for unjustifiably high rate hikes, but also because it would enable the commissioner to reject increases in deductibles as well.
Over the past several years, insurers have been implementing a strategic plan to "migrate" (their term) all of their policyholders out of traditional indemnity and managed care plans into so-called "consumer-driven" plans, which feature high deductibles. They have been luring people into these plans by setting premiums for high-deductible plans lower than HMOs and PPOs, at least initially.
At first glance, these plans appear to be a good deal to a lot of people. Not only are the premiums relatively more affordable, but also the deductibles usually appear to be manageable -- again, at least at the outset.
Insurers are aggressively marketing high-deductible plans, and one of the marketing ploys used by some of the biggest for-profit insurers is the "do-as-we-do" sales pitch. CIGNA and UnitedHealth started a trend in the industry a few years ago of going "full replacement," meaning they forced all of their employees out of their HMOs and PPOs and into high-deductible plans. They want their employer customers to do the same.
I was still serving as head of corporate communications at CIGNA when the company went full replacement. If we wanted to continue receiving subsidized coverage, we had no choice but to leave our HMOs and PPOs and enroll in a high-deductible plan. Many employees, especially those in jobs that paid far less than the executives who made the decision to go full replacement, protested to the human resources department, but to no avail.
One of the rationales for going full replacement is that if employers don't do that, workers who are older or who have chronic conditions requiring expensive care will stay in their low-deductible managed care plans rather than to switch voluntarily to a high-deductible plan -- at least as long as they have that choice.
As young and healthy people happily desert managed care plans for high-deductible options to take advantage of lower premiums, the folks who remain in the HMOs and PPOs will see their premiums skyrocket, eventually making those plans unaffordable for both employers and their workers.
Former California Insurance Commissioner and now Congressman John Garamendi saw this coming several years ago and did his best to halt the growth of high-deductible plans, but he had no real power to do so. He told reporters in 2005, while still serving as insurance commissioner, that high-deductible plans would eventually result in a "death spiral" for HMOs and PPOs. This would happen, he predicted, as insurers and employers initially cherry-picked the youngest, healthiest and richest customers while forcing managed care plans to charge more to cover the sickest patients.
Garamendi, regrettably, was prescient, although probably even he would be amazed at how fast the forced exodus from HMOs and PPOs would be and how soon the day would come when plans with affordable copayments would be a thing of the past.
The industry's long-term strategy is to move all Americans into high-deductible plans, and they're well on their way to achieving that goal. America's Health Insurance Plans, the industry's PR and lobbying group, bragged earlier this month that high deductible plans coupled with a health savings account (HSA) grew 14 percent last year alone.
Many of the people who made that statistic possible undoubtedly had experiences similar to my son, Alex, who was initially enrolled in a Blue Cross PPO. To take advantage of lower premiums, he switched in 2009 to a "consumer-directed" plan with a $500 annual deductible. When that policy came up for renewal at the end of the year, Blue Cross notified him and thousands of other policyholders that their monthly premiums would increase by 65 percent unless they switched to its "Personal Choice Value HSA." Alex couldn't afford to pay 65 percent more in premiums, so he switched to the HSA, only to find out later that he would be facing a tenfold increase in the annual deductible, from $500 in his old plan -- which, by the way was being discontinued -- to $5,000 in the "Value" HSA. On top of that, Blue Cross had also eliminated some of the benefits he had been using in his old plan.
I noted in a previous column that Kaiser Permanente, California's biggest insurer, was part of an industry-led effort to kill AB 52 in the state senate. Kaiser, which pioneered managed care plans in the 1930s, joined the high-deductible bandwagon a few years ago to stay competitive. A substantial percentage of its policyholders are now enrolled in such plans. And like many other insurers, Kaiser is now demanding that many of the policyholders who were enticed into those plans with the promise of lower premiums fork over much more money this year. People throughout California who enrolled in Kaiser's high-deductible plans in years past are facing rate increases of up to 24.8 percent this year, according to the company's filings with the California Department of Insurance.
And once insurers have people locked into these plans, they are free in most states to raise the deductibles to astronomical heights, as Anthem Blue Cross has done in Maine and Indiana.
Earlier this year, many people enrolled in Anthem's plans in Maine, especially it's high-deductible plans, told then-insurance superintendent Mila Kofman that they already were barely able to make ends meet because of what Anthem was forcing them to pay.
Campground owner Mike Stella told Kofman that all of his salary and part of his wife's goes to health insurance. "Another rate increase is probably going to put us over the top," the Portland Press Herald quoted him as saying.
Stella said he and his wife pay nearly $1,000 a month in insurance premiums, and they must spend $17,000 a year -- more than his annual salary -- on premiums and medical care before their Anthem policy starts to cover their costs.
Another small business owner, John Costin of Kennebunk, said Anthem had notified him that the monthly premium for his $30,000-deductible family policy--yes, $30,000--would be going up from $580 a month to $624 this year.
"We ration our health care," he said. "We do whatever we need to for the kids (but) my wife and I delay trips to the doctor. We don't fill prescriptions."
Matters could be even worse for the Stellas and Costins if they lived in Indiana, where Anthem's for-profit parent company, WellPoint, is based. In Indiana, annual family deductibles for Anthem's CoreShare Plan go as high as $50,000. Just stop for a moment for that to sink in. There are not many American families that could spend $50,000 a year out of their own pockets for care and not face bankruptcy. More than half of American families don't even earn $50,000 a year.
So now you see why insurance companies are spending millions of their policyholders premium dollars lobbying federal lawmakers to weaken last year's health care reform bill to allow them to continue marketing these outrageous plans at the same time they're lobbying state lawmakers to kill legislation that would empower regulators to reject excessive increases in rates and deductibles.
By being able to shift more and more of the costs of care from them to American families, they will continue to rack up record profits. Good luck finding a single insurance company executive or shareholder who will express any concern -- or even any interest -- in the lives of millions of people ruined by such greed.
Follow Wendell Potter on Twitter: www.twitter.com/wendellpotter
Analysis: Stimulus ends, state healthcare on life support
Humana won't hire smokers in Arizona
#2- There is a common fallacy that physicians can set their prices any way they want and people can shop for their healthcare as if in a free market. Healthcare in America is one of the most heavily regulated industries and part of those regulations relates to how doctors can charge and bill.
#3- Health insurance was initially intended as a major medical coverage, meaning life's little events were paid out of pocket and insurance covered the big events. We have returned to that model with high copays/deductibles.
#4- Insurance companies are looking to save a buck any way they can. Think sending you to India for that heart surgery is just a fad? Think again. WalMart currently sends its workers comp patients across the country for surgery, flies them home the next morning. It saves money, never mind the risks and discomfort to the patient.
#5- Insurance should not be employer-driven or for profit. Lawyers and accountants should not determine medical policy.
#6- Next time we need emergency services in the middle of the night, how about we call the CEO of our insurance company? They are good at making decisions.
After 4.5 years of development via help from Americans all across the USA ... we are getting closer and closer to launching a robust promotion of a positive campaign of education and communications. If you want to be on the ground floor of one of the United States' most massive grassroots campaigns ever ... focusing on what we WANT ... not on what we don't want ... then go to http://www.medicareforall.org and check it out.
We can and will get Improved Medicare for All via single-payer health care.
It will be better than Medicare:
http://www.medicareforall.org/pages/Improved_Medicare_for_All
Dramatically lower health care costs mean lower labor costs, the basis of more job opportunities in the United States.
More jobs. Better health. Show your card and get care.
No more major medical bills. http://www.medicareforall.org/pages/Costs_-_No_Major_Bills
Americans living and working in other countries already know the peace of mind of health-care-for-all systems.
http://www.medicareforall.org/pages/Testimonials
Ours will be the best. See this side-by-side chart ...
http://www.medicareforall.org/pages/Best
- Bob the Health and Health Care Advocate
Ok I just have one problem with this article. The author assumes that the Insurance companies are raising premiums totally out of greed. Can he document just how much profit these "greedy" insurers are actually making. I hear a lot of assertions but not facts.
Essentially, as you know, what the high deductible plan means is that healthy people don't have medical coverage unless, and until something catastrophic occurs. This is unacceptable, and amounts to a giant step backwards.
Again, thanks for bringing greater public awareness to a topic that isn't discussed nearly enough.
The high deductible medical plan was put in to hopefully make health care provider pricing be competitive and drive prices down. The promise was by making the consumer pay for health care, the consumer would have the time to shop around and get the best price. In order to get business, providers would lower prices. There was a promise of "tools", price information available to consumers so they could shop more easily.
When the plans first came out, the tools were just as important as the high deductible plan design. The tools failed. They are not there. I'm not sure why. The pricing of how health care was delivered did not change which was the goal of high deductible health plans. Basically, nothing changed on the PPO plan, no tools, no transparency, instead, the only thing that changed was raising the deductible.
I would like more information on the original concept of the high deductible health plan and why the experts think it has failed to change the pricing of healthcare.
Health insurance brings no value to the table.
Yet Obama protected these parasitic middlemen and threw the people
to the wolves.
How many working people, even middle class, can pay a $30,000 deductible?
One illness or accident and some people will go bankrupt.
What happens with a second accident or illness?
Sooner or later, the national health care debate will probably be moot.
Too many of the have nots will demand health insurance.
It just might take too long for those already suffering today.
*****Or the sheeple are so stupid....they will do without health insurance while the rich spit in their faces....you never know.
The Right Wing enablers did everything they could to allow insurance companies free reign to charge whatever they want for healthcare insurance, including proposing the Mandate, which is a gift for insurers.
Obama shouldn't have taken the Public Option off the table at the onset, to be sure, save for the fact that he KNEW you Right Wing insurers were going to go nuclear on the whole concept of HCR, and prevent anything from happening to reform healthcare insurers whatsoever.
So, due to the d oghsit manipulations of the Right Wing, HCR is less than ' as desirable ' as we might have hoped. And in the meantime insurers are raising rates as fast as they can in retaliatory fashion, in a last ditch attempt to grab as much money as they can, before we can put the screws to them by regulating them, and halt their financial crimes against this country. Mr. Potter, an ex health insurance company executive whose conscience finally got the best of him, is kindly now in the business of exposing the insurance company's efforts to thwart our efforts at Reform, and he knows what he's talking about... You might want to listen, so you understand why premiums are $1,000.00 / month and higher, and not just bandy around false and unfounded accusations.
Now, this is President Obama's fault... HOW ??
More to follow. -ralph
I pay reasonable taxes and no additional health care premiums. None. When I am ill, I do not have to think about it: I go to my doctor - a doctor I chose. If my doctor says I need tests, he schedules them, and I get them. If I need a specialist or a second opinion, I get them. If I need emergency treatment, I go to the nearest hospital, and no one inquires about my financial health before I get treatment, drugs or operations.
Despite anything you have been told to the contrary, I get exceptional care. And while perhaps some brand-new, cutting-edge treatments or equipment might not be available to me simply for the asking, if I had to pay US health care rates, I could not afford them anyway. At least here, I am assured of excellent, modern care, regardless of the size of my paycheck.
Universal health care is the only sane option.
73 Fans.
-ralph
Why is it that insurance companies already set prices for what they will pay for procedures and there isn't a "no frills" insurer undercutting them? Because it's not really a market like the one for air travel - Jet Blue instead of Blue Cross?