How Is The Healthcare Insurance Industry Doing It?

Stanley Feld M.D.,FACP,MACE

President Obama is refusing to look at reality. I imagine it is hard to see what is going on at ground level when you are at 30,000 feet As long as the traditional media acts as his propaganda machine, he can continue to pursue his agenda for change that most Americans did not anticipate.

Time Magazine published an article filled with disinformation and sound bytes. One article was “How the Stimulus Is Changing America.”

An equally misleading article was entitled “After One Year, a Stimulus Report Card; The article was a report card grading the different programs of the $787 billion stimulus package. President Obama should read the public comments below both articles to see how people feel. He will realize that Americans are not buying his propaganda.

 

The healthcare insurance industry has President Obama just where it wants him. This is the open enrollment season for next year’s insurance policies.

Many states lack the health law authority to regulate healthcare insurance company rates. The healthcare industry is taking advantage of this fact.

“Kathleen Sebelius, the health and human services secretary, at a conference last year. The administration said its general approach was for states to “take a lead role in providing consumer protections, with federal enforcement only as a fallback measure.”

 

President Obama’s health care law has placed the responsibility for healthcare insurance rate reviews on the states.

Insurance commissioners in about half the states say they do not have clear authority to enforce consumer protection and to regulate rates.

“California, Florida, Hawaii, Michigan, Nebraska, Oklahoma, Virginia and Wyoming, among other states, said they did not have authority to enforce federal law.”

At a time when states are fighting the federal government over state rights, thirteen states do not have authority to review proposed health premium increases for most forms of healthcare insurance company coverage. The National Association of Insurance Commissioners also revealed that about a dozen states have limited power to review increases after they take effect.

How have the state governments been in protecting its citizens?

“Meanwhile, state governments that have for years allowed insurers to set premiums virtually at will are gearing up to establish procedures to review rate increases.”

All the state insurance boards would have to do would be to withhold that healthcare insurance company’s licenses. This is not done because of the influence of the healthcare insurance industry’s lobbyists and the fear of legal action by the healthcare insurer.

Our state governments are not protecting its citizens’ interests.

California has had many law suits against the healthcare insurance industry. These suits have been filed by the state, physician groups, and patients. Most of these suits against the healthcare insurer have resulted in large fines against the healthcare insurance industry. However, the actual percentage awarded is small compared to the amount of money the abuse earned the healthcare insurance company.

 

“Sara Rosenbaum, a professor of health law and policy at George Washington University, said this was an awkward arrangement. “The new law creates detailed federal standards for insurance, but takes away consumers right to sue if insurers don’t live up to their obligations,”

 

California insurance regulators just approved Anthem Blue Cross scaled-back rate hikes after a previous increase was canceled amid an uproar over its size. The uproar included a congressional inquiry. Originally, Wellpoint, Anthems Blue Cross’ parent company, wanted a 37% rate hike. It was quite a compromise.

 

“Anthem said it intends to put the new rates — averaging 14% and as high as 20% — into effect Oct. 1 for nearly 800,000 individual California policyholders.”
“Regulators also allowed one of Anthem's nonprofit competitors, Blue Shield of California, to move ahead with rate increases — averaging 19% and as high as 29% — for 250,000 individual policyholders.”

The state regulators are impotent. There is a lack of due diligence, negligence or pure stupidity on the regulators’ part.

Healthcare insurance company executive showed state regulators that the proposed increases meet the requirement that 70% of premiums go for medical care. As a result, the regulators said they could not stop the increases.

Did the regulators study the validity of the deductions for administrative service expenses?

Did these expenses include the enormous executive salaries?

The administrative services expenses are not discussed or available to the public. All one has to do is remember the millions of dollars in salary that Wellpoint’s executives receive are subtracted before the money is spent for patient care. Many receive salary and stock options in the $10 million dollar range.

On Wednesday, a Blue Shield spokesman said the company looked forward to moving ahead with its plan. "We wish the increases were smaller, but the cost of medical care for our members keeps rising dramatically," spokesman Tom Epstein said. "These increases are necessary to cover those costs."

How can that be when physician and hospital reimbursement decreases each year? Administrative service expenses are loaded and ignored by state regulators.

The opinions expressed in the blog “Repairing The Healthcare System” are, mine and mine alone.

Comments

[David Rodgers]

Stan,

You and Brad have to get on "Kudlow!" The work the " Felds" are doing is substantial and tremendous!

DR

[JL Sugden]

The enormous salaries and bonuses of some health insurance executives are shameful and are a PR failure for the insurance industry. However, focusing solely on them allows the real problem to remain hidden. Until we deal with the rapidly increasing cost of medical care, premiums will continue to spiral out of control.
In their most recent survey of health insurance premiums, PriceWaterhouseCoopers illustrated very clearly that 87% of premium costs go to pay medical claims. Only 13% of premiums are allocated to administration, marketing, premium taxes and profits; with profits comprising only 3% of premiums collected.
Compare those margins to other health care related industries like big pharma, device manufacturers, diagnostinc labs, hospitals, malpractice lawyers, and yes, large medical practices.
Insurance premiums are a conduit for the cost of care. Only when we reform the payment system and pay for wellness rather than procedures will insurance premiums moderate.