Replies to post #92255 on Tornado Alley (PROG)

[StephanieVanbryce]

Administration Rejects Health Insurer’s Defense of Huge Rate Increases

By KATHARINE Q. SEELYE
Published: February 11, 2010

Anthem Blue Cross, the California health insurance company that was criticized by the Obama administration for raising its premiums, said Thursday that the increases of up to 39 percent were driven by rising health care costs.

But Kathleen Sebelius, the secretary of health and human services, declared the explanation inadequate, especially in light of the profits made by Anthem’s parent company, WellPoint Inc.

“It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options,” she said. Those options, she suggested, were to pay more for coverage, cut back on benefits or join the ranks of the uninsured.

Her comments came on a day when a health care advocacy group reported that WellPoint and the four other biggest health insurance companies had collectively reported a record profit for 2009, even as they covered fewer customers.

In a letter to Ms. Sebelius, Brian A. Sassi, an executive with WellPoint Inc., wrote that the company was “confident that our rates reflect anticipated medical costs and are established consistent with actuarial principles and state law.”

Anthem’s rate increases, set to take effect March 1, have galvanized some Democrats in Washington, including President Obama, who say they provide an example of why Congress needs to break its political logjam and pass legislation to overhaul the health care system.

The report released Thursday said the five biggest insurance companies had an average profit last year of 5.2 percent — for a combined total of $12.2 billion. This was an increase of $4.4 billion, or 56 percent, compared with 2008, according to the report, prepared by Health Care for America Now, a coalition of liberal and labor groups advocating for the passage of an overhaul of the health care system.

The companies are WellPoint, Cigna, UnitedHealth Group Inc., Aetna Inc. and Humana Inc. The data in the report were based on company filings with the Securities and Exchange Commission.

The insurance industry said the report was incomplete. “Comparing the profits of individual companies today to where they were at the bottom of a recession a year ago does not tell the whole story,” said Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the industry trade group.

Historically, Mr. Zirkelbach said, the average profit margin for the industry has been relatively low, 3 percent to 5 percent. For example, he said, if a company made a 2 percent profit last year during the recession and is making 4 percent now, its profits would have increased by 100 percent but the profit would still only be 4 percent.

“For every dollar spent on health care in America, less than one penny goes toward health plan profits,” he said. “Health plan profits are well below other industries within the health care sector.”

David Palombi, a spokesman for WellPoint, said Anthem’s profit margin in California “is in line with, or below, many of its competitors, including our two large not-for-profit competitors.”

WellPoint’s net income for 2009 was $4.7 billion, but Mr. Palombi said that included $2.2 billion resulting from a one-time gain from the sale of an asset.

While the insurance companies posted substantial profits, they said they have had to increase premiums to keep up with the rising costs of medical care.

In her statement, Ms. Sebelius said she was skeptical of this explanation. “High health care costs alone cannot account for a premium increase that is 10 times higher than national health spending growth,” she said.

The insurers said they had also lost some of their healthiest customers, many of whom dropped their insurance during the economic downturn. Mr. Sassi of WellPoint said the loss of these customers had left “an insured pool that utilizes significantly more services per individual than under better economic times.”

But critics say the substantial increase in premiums is contributing to the industry’s profits, as are a host of other practices.

Insurance companies last year continued to try to purge their most costly customers, which are often small businesses with older workers, said Richard Kirsch, national campaign manager for Health Care for America Now.

Another reason for the robust profits, Mr. Kirsch said, is that the companies reduced the percentage of their premiums that they spent on actual medical care and devoted more to administrative costs and profits.

A third factor, he said, is that the insurers continued to attract more customers to public programs like Medicare Advantage, in which the federal government pays private insurers 14 percent more than it pays Medicare to cover the same people.

The report said that the insurance industry’s long-term strategy was to shift responsibility for the care of millions of older, sicker and lower-income customers to taxpayer-supported programs, like Medicaid and the state Children’s Health Insurance Program. Those programs in turn are increasingly hiring the big insurance companies — and paying them — to manage the coverage.

Although the insurance companies lost 2.7 million customers last year during the recession, Mr. Kirsch said, they raised their premiums so much that they still made substantial profits. “This is a business that is recession-proof because they can raise their prices even when they’re losing customers,” he said.

The next step in the health care debate is a bipartisan summit at the White House on Feb. 25.

http://www.nytimes.com/2010/02/12/health/policy/12insure.html

[wbmw]

In a Message to Democrats, Wall St. Sends Cash to G.O.P.

Nice catch, Steph. Obama is doing the unpopular thing and fighting against the corporate machine. Clearly, the idea that he is "in the back pocket of big business" is unfounded, based on the data.

If the Republicans win seats in the 2010 elections due to contributions from big business, it will be a pretty sad reflection of the idea that the American people can be "bought" with enough money to vote against their own best interests.

[StephanieVanbryce]

How the Game is Played, Part 576

A few hours ago Felix Salmon wrote a post about the fate of financial reform in the Senate: [ http://blogs.reuters.com/felix-salmon/2010/02/12/financial-reform-in-the-senate/ ]

Are there really Republicans who would stick their neck out and filibuster a financial-reform bill aimed at reining in Wall Street? Voting against it is one thing, but killing it with a filibuster is surely not a vote-winner anywhere in the US right now.

I mentally shrugged when I read that because the answer is pretty obvious: Republicans will simply portray any Democratic bill not as something that reins in Wall Street, but as a convoluted Beltway boondoggle that puts government bureaucrats in charge of the banking system, kills off credit to Main Street, stifles economic growth, destroys jobs, and shovels money into the hands of favored interest groups. Fox and Rush and the Journal will all sing along, tea partiers will start demonstrating against it, and before long it will get to the point that not only will Republicans filibuster it, but half the Democratic caucus will join in.

In other words, just another day at the office. But no! Apparently I'm still not cynical enough. A few minutes later I was reading Jon Chait's blog, and it turns out that the right-wing "Committee for Truth In Politics" — George Orwell would be pleased by the homage — is already running TV ads that don't merely portray the reform bill as bad for the economy, but specifically as a bailout for Wall Street bankers. The ad has been running in ten states for the past week, according to the Campaign Media Analysis Group. Factcheck.org has the dope here. [ http://www.factcheck.org/2010/02/the-big-bank-bailout-bill/ ]

And that, boys and girls, is how the game is played. Just portray a bill meant to rein in banks as a bill meant to bail out banks and see if the noise machine plays along. If it doesn't, try something else. Maybe suggest that instead of protecting consumers, it will remove consumer protections. Or that instead of regulating derivatives, it will set them free. Simple. Why bother making up complicated lies when simple ones will do just fine?

Here's the ad

AND I repeat ! here is the FACTCHECK! [ http://www.factcheck.org/2010/02/the-big-bank-bailout-bill/ ]

http://motherjones.com/kevin-drum/2010/02/how-game-played-part-576