Forprofit Insurance
Is the Media Protecting Private Insurance?
Published April 05, 2009 @ 08:32PM PT
When Frontline aired “Sick Around America” last week, it was billed as the sequel to T.R. Reid’s “Sick Around the World.” However, although he filmed many of the interviews, Reid fundamentally disagreed with many of the points in the most recent documentary – so much so that he asked that his name be taken off it. The issue at hand was how some of the private insurance talking points were allowed to stand unchallenged. This is sadly beginning to become a pattern, enough that it’s time to ask if the media is more interested in the truth, or in the private insurance companies?
Let’s just say private insurance has had a pretty easy time of it as the future of health care reform has been debated. I’ve lost track of the number of articles written to discuss how cooperative and open they’ve been during discussions with any number of groups. Their willingness to discontinue discrimination on the basis of pre-existing conditions got two rounds of press, months apart, and video of Karen Ignagni, president of AHIP, pledging support for the president’s reform effort was the top story on Mark Halperin’s The Page on the day of the White House summit on health reform. And yes, it is welcome relief not to be fighting the insurance industry every step of the way… yet. But what you never see balancing the discussion is any acknowledgment that cherry-picking health customers and denying care to those who need it is a morally repugnant business practice to begin with. Much has been made about whether an individual mandate requiring all individuals to buy insurance is desirable or needs to be part of any reform, but the necessity of an individual mandate pales in comparison to the importance of a standard minimum benefits package. So of course we might walk away from that think the insurance industry is doing right by reform – after all, there seems to be a moratorium on talking about the fact that we’ve been taken advantage of for so long is partially to blame for us having 47 million uninsured to begin with.
Now we get to Reid’s main objection. The show prominently features Karen Ignagni saying that health insurance for all could be a reality if we do what other countries do and mandate insurance. I’ll let Reid take it from here: “mandating for-profit insurance is not the lesson from other countries in the world… Doctors, hospitals, nurses, labs can all be for-profit. But the payment system has to be non-profit. All the other countries have agreed on that. We are the only one that allows health insurance companies to make a profit. You can't allow a profit to be made on the basic package of health insurance.” So something that’s easily understood from the study of other countries – a minimum set of standard benefits that companies can’t make a profit on is necessary to prevent denial of patient care – instead becomes AHIP’s favorite talking point and, incidentally, one that if implemented would be a surefire way for insurance companies to make more money. Why?
It would perhaps be too cynical to suggest that all the ads for Humana Medicare Advantage plans and Emblem Health and what have you aren’t just to attract new customers but to subtly influence more favorable coverage. After all, PBS is a non-profit television show. But there’s something to said about dominant news stories that evolve out of the pack mentality of conventional thinking. Currently, the “story” seems to be about the sworn enemies of reform coming together in a positive way. That has the thrill and the shock of surprise story – dogs and cats, living together in peace! Pointing out that AHIP is willing to support reforms that increase their bottom line and negotiate away only one or two of their morally questionable for-profit practices is a far more boring story – the insurance industry, up to their old tricks. As long as they can get mileage and subsequently ratings out of this angle, expect to see more stories that consciously or unconsciously defend the vested moneyed interests of private for-profit insurance.
(Photo credit: Shavar on Flickr.)
AHIP's Grand Concession Ain't All That Grand
Published March 25, 2009 @ 03:43PM PT
Yesterday, America's Health Insurance Plans, the trade organization for private insurance, sent a letter to Senate leaders with a new grand bargain: they would willingly give up not only the practice of refusing coverage based on pre-existing conditions, but also to give up the practice of "individual rating" - charging different people different prices based on their medical history or family history - for "community rating" where everyone pays the same price. Although this is a policy point health care reform advocates have long pushed for, I'm feeling blasé about the supposed "concession."
The reaction has been positive, no doubt. Len Nichols of the New America Foundation is pumped and jacked about the offer, saying "[Insurance companies] have never in their history offered to give up risk rating." Senator Jeff Bingaman sees happy days ahead, saying, "It represents a major shift from where the industry was in the 1990s during the last major health care debate." Maybe, but I can't help notice that, as phrased, the insurance company hasn't given up anything essential.
Up until the middle of the last century, community rating was the norm for insurance, and it's still the norm for insurance elsewhere in the world (remember Swiss health care, which runs entirely on private non-profit insurance, only has three pricing tiers, based solely on age). The idea that you'd vary the cost of premiums based on factors like age and health history originally grew up out of financial concerns. Young, healthy people are the desired customers for insurers because they contribute to the plan but don't use a lot of health care - their premiums subsidize older and sicker patients. As a way of attracting more of these desired customers, insurers began offering them lower rates to "reward" their healthiness. What began as a sales tactic has turned into a nightmare. Presuming that you have a pre-existing condition or a chronic disease and manage to be accepted by an insurer, you'll be charged significantly higher rates than an average customer. It's hard to see that this business practice helps anything but the company's bottom line - nakedly so. That makes individual rating and discrimination based on pre-existing conditions the easiest business practices to demonize.
So why aren't I glad to see the end of it? Because it's a rather empty gesture. For one thing, AHIP has made clear that this applies to the individual insurance market only. As bad as it is for individuals, the more dramatic pain comes from small businesses, where if one of your employees comes down with cancer, the entire company's rates will shoot up. It's a practice that's convincing more and more small businesses to drop insurance altogether, and it's not at all addressed in AHIP's offer. Slightly more disturbing, as reported by the Wall Street Journal, insurers "would still have to be able to set different rates according to age, geography, family size and plan design 'to maintain affordability' for many people." Um... I think this means they're still planning to charge different rates for age, but it sounds a lot like still trying to find a way to get younger customers rather than older ones, even if they're no longer fixing prices based on medical history.
Finally, if what passes Congress is some version of the Obama or Baucus plan, community rating and pre-existing conditions will be off the market for most uninsured anyway, since individuals would be purchasing their coverage through a National Health Exchange which would require community rating as a pre-requisite for participation. To quote General Zod, "We have all of this without you. You cannot bargain with what you do not possess."
The goal throughout all of this is to show that AHIP are good players and build support for their main objectives - an individual mandate forcing everyone to buy their products and push back on the public competitor. WSJ quotes the Cigna CEO, who makes the connection explicit: "I think that if we as an industry are willing to make substantial changes, then the need to have a public plan is extremely questionable." I suppose I would agree with that. But if the concessions offered by AHIP remain as they currently are - largely superficial gestures that allow them to have their cake and eat it too - then the questioning of the necessity of a public competitor is just as superficial.
"We Have Brought This Upon Ourselves"
Published March 07, 2009 @ 07:59PM PT
(Programming note: I don’t ask for a lot. No name-calling, no cussing, no hijacking a comment thread with an unrelated topic. And your feedback – so go on ahead and submit a question for next week’s debate, OK?)
Karen Ignani, president of America’s Health Insurance Plans, made some waves at the White House summit on health care on Thursday. When called on by the president, she didn’t ask a question so much as pledge her support, saying, “We understand we have to earn our seat at the table.” It’s a good line (she used it once earlier at the same event), but doesn’t say much about the depth of private insurance’s willingness to be partners throughout the process of health care reform. And it sounds positively shallow compared to the heartfelt words of John Sinibaldi.
Sinibaldi is a “health underwriter,” selling insurance primarily in the small business and individual market. He’s also a frequent contributor to The Health Care Blog. And his post from yesterday deserves to be read in full. It can be summed up in one word – accountability.
We have brought this upon ourselves, because we (the industry, maybe not each of us individually) have ignored what folks want in favor of what WE want. The industry has ignored calls for more efficient claims and billing, lower bloat, curtailing outrageous CEO and executive salaries, and a more reasonable approach to return on investment. Our industry has ignored any attempt at out-of-the-box thinking to get reasonably priced health insurance to most low-wage Americans, instead focusing on miscommunications to get Americans to buy into what the industry wants ("High Deductible Health Plans are good for you. We don't care if you can't afford the deductible. Now accept that fact and shut up.") Most of all, our industry has simply ignored an ever-louder clamor for us to get our act together. Instead of focusing on a long-term vision for the future of the industry (one that actually includes the very consumers to whom we sell products), the health insurance carriers have instead bellied up to the short-term trough of immediate reward (executive compensation, shareholder value, golden parachutes).
It takes a lot of courage to be able to look into the mirror and say, “We bear responsibility. It’s time to do our part.” But as much as the insurance companies are showing that they’re willing to be part of the discussion, they have not shown much willingness to be part of the solution. Behind the nice words from AHIP, we also have a ramped-up defense of Medicare Advantage, an experiment that has not worked. If I’m going to pay you 12% more for the same level of coverage, you better have something else going for you—like Michael Jordan’s personal endorsement. Similarly, I’m hearing a lot from conservatives in Congress about how private insurance couldn’t be expected to compete with a public coverage program. I’ve heard lip-service about experiments with new ways of delivering health care that could improve quality, like the medical home, but no attempt to actually implement it unless a major client like IBM offers to walk without it. What I haven’t heard – and it takes a truth-teller like Sinibaldi to say it - are four simple words that you’d hope every American entrepreneur would say when faced with a competitive challenge.
“We can do better.”
Better for our customers. Better for our innovation in ways that delivery a quality product and doesn’t just pad the stock price. And yes, better for the country by accepting the challenges of new regulation and new competitors instead of fighting them, and then showing determination to win on the new playing field. I don't have much sympathy for companies that made obscene profits and then whine to the refs at the first sign that they'll merely have to make surprising profits.
That’s why it’s hard to take anything AHIP says seriously right now. They’re all words, and no heart.
(Photo credit: merfam on Flickr.)
Health Care Summit Round Up
Published March 05, 2009 @ 10:36PM PT
Summits are where photo-ops are made more often than policy. The mere gathering of a group of most of the stakeholders in health care reform – those likely to support it, those likely to oppose it, and those likely to be persuaded one way or the other – does not guarantee success, despite Sir Ted Kennedy’s movingly optimistic statement. But there are always tea leaves to sift through – so let’s start sifting!
This summit was different had many more insights into where the stakeholders are coming from, thanks to the White House livestreaming the breakout sessions on the new site healthreform.gov. In the past, these haven’t been televised and barely covered by pool reporters – if you weren’t in the room, you’d have no idea if the discussion was productive or not. Judging from the one I watched, moderated by newly-minted health care czar Nancy-Ann DeParle, these were incredibly productive. For one thing, it demonstrated who has conversant with the issues and who was not. Max Baucus? Very conversant and somewhat long-winded. Henry Waxman? Decent, but he completely misdiagnosed the problem of regional variance for Medicare (clearly, he never saw this map.)
The surprise for me was Billy Tauzin, formerly a Republican Congressman but now the head of PhRMA, whose comments had nothing to do with prescription drugs. Instead, he gave an incredibly moving story about his own battle with cancer, and how he could’ve prevented it entirely if he’d taken more responsibility and gotten himself decent preventative care. He also acknowledged that our system’s approach to preventative care is fundamentally flawed. “We don’t have a health care system today,” he said. “We have a sick care system.”
