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Cylinsier
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Joined: 29 Sep 2008
Posts: 13229
Location: Oh shi-
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 Posted: Fri Feb 19, 2010 10:39 am Post subject: The Lesson of Anthem Blue Cross |
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http://www.nytimes.com/2010/02/19/opinion/19fri1.html
| Quote: | Clients were understandably furious when Anthem Blue Cross, the largest for-profit health insurer in California, announced huge rate increases for people who buy their own insurance: an average increase of 25 percent, and a 35 percent to 39 percent rise for a quarter of the purchasers. The move also provided a textbook example of why the nation badly needs comprehensive health care reforms.
The reform bills stalled in Congress would put a brake on such out-of-scale premium increases by broadening the pools of insured people to keep average premiums low by setting up competitive insurance exchanges and by starting to rein in the cost of medical care that is driving up premiums everywhere.
Private insurers in several other states also have sought and won double-digit increases for policies sold to individuals. In one striking case, a Blue Cross Blue Shield plan in Michigan sought a 56 percent average increase in premiums for individually bought policies but settled for 22 percent in a compromise with regulators.
If the increases go through in California, where regulators have limited powers to control rates, Anthem’s enrollees would have to choose between paying the higher price, moving to lower-cost policies, perhaps with a high deductible, switching to another insurer if they can find one to take them, or dropping coverage entirely.
The nation’s largest health insurers reported substantial profits last year over all, but Anthem claims it lost money on the individual market in California. Its parent company, WellPoint Inc., attributed the need for the huge rate increase to a changing mix of customers as the recession forces many people to cut back on expenses.
The company says that healthier customers, gambling that they won’t need much care, are disproportionately dropping Anthem coverage or choosing not to enroll. The less healthy are staying with Anthem, where their higher medical costs are driving up premiums.
WellPoint will be asked to justify the increases at hearings in Congress and the State Legislature. California’s insurance commissioner is investigating whether Anthem will be meeting regulations to spend at least 70 percent of its premium revenues on claims.
It’s hard to know which conclusion would be worse: that Anthem is trying to fleece its individual customers or that Anthem’s rates are actuarially justified by its increasingly unhealthy enrollment pool.
The salient point is that the reform bills pending in Congress could almost certainly prevent this problem from developing. The bills would require everyone to buy health insurance (many with government subsidies). That would create large pools to spread the risk over both healthy and sick enrollees and keep average premiums low. On new insurance exchanges, people who buy their own insurance could benefit from group purchasing power and could choose from an array of policies. Competition among insurers on the exchanges is expected to help keep premiums down.
How about the Republicans’ health care proposals?
They would only address a small part of the Anthem problem. The Republicans reject the idea of mandates to spread the cost of care and instead call for ways for people dissatisfied with their insurer to buy cheaper coverage elsewhere. That could help relatively healthy people but would do nothing for the chronically ill or anyone with pre-existing conditions. They would be stuck in their health plans. State high-risk pools for sick people, another Republican solution, almost always have high premiums and would not provide a safe haven from rate increases in private plans.
Unless Congress passes comprehensive reform, we should expect many more Anthems in our future. |
There is one good thing about this: it makes it very easy to determine who is a moron. If someone says we don't have a health insurance problem in this country, they are a moron. Rush Limbaugh? Total moron. Here's the proof.
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dick
Journeyman
Joined: 28 Jan 2009
Posts: 3134
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| Posted: Tue Mar 02, 2010 11:31 am Post subject: |
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Neither the watchdog group or the plantiff seem very confident in this case.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/03/02/BALO1C98VB.DTL
| Quote: | A consumer group filed a lawsuit Monday against Anthem Blue Cross, accusing the insurer of raising rates to force members into policies with higher deductibles and lower benefits.
Consumer Watchdog accuses Anthem of violating state law by failing to offer policyholders comparable coverage and minimize rate hikes after the company directs customers to alternative plans when closing out existing plans.
San Rafael resident Mary McNamara Feller, a plaintiff in the suit, which was filed in Ventura County, said she had to do something after Anthem last month proposed raising rates on the policy covering her and her husband nearly 39 percent to $1,658 a month.
She said the company offered her the option of switching to a policy with a higher deductible and skimpier benefits by a specific deadline, but also told her she could stay in her current policy. The company notified her of the enormous premium increases in her plan after the deadline had passed.
"It just seems like there's no end in sight," said Feller, 56, adding that she experienced a similar increase last year. "The way Blue Cross handles this is by forcing plan members into plans that increasingly put people at risk financially. ... It's no longer just about us. It's about 800,000 people who don't have any recourse."
Anthem, which is owned by WellPoint Inc., has come under state and federal scrutiny for hiking the rates of its 800,000 individual policyholders, or those not covered through a group plan, by as much as 39 percent. The increases were scheduled to take effect Monday, but the company agreed to delay them until May 1 to allow the state time to investigate.
California authorities have little power over rates, but Consumer Watchdog's lawsuit relies on a 1993 state law that requires an insurer to offer enrollees a comparable alternative plan.
The suit accuses Anthem of forcing older and sicker members, who are unable to switch carriers, to pay higher and higher premiums until they accept inferior coverage or drop coverage altogether.
"Either way, Anthem wins," said Jerry Flanagan, Consumer Watchdog's health policy director.
Anthem officials said they had not seen the lawsuit and could not comment.
This is not the first lawsuit filed over Anthem's rate hikes. On Feb. 11, Burlingame attorney Ron Galasi, an Anthem customer, filed a lawsuit in San Mateo County Superior Court, accusing the insurer of unfair competitive business practices.
"I want to show this corporation, whether we win or lose, we're not going to let them walk over us anymore," Galasi said.
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