Big Insurance and its Bag of Tricks
The ink may have dried on the federal health care reform bill, but the health insurance industry isn’t packing up its bag of tricks and going quietly into the night. Instead, insurers actually appear to be stepping up their attempts to game the system, seeking to exploit the window of opportunity before new rules and regulations take effect. They’re scheming to (a) inflate their rates, (b) kick customers with health issues off their rolls, and (c) employ creative accounting to reclassify costs, all in the interest of maximizing short-term profits.
WellPoint, the country’s biggest health insurance conglomerate (operating subsidiaries in 14 states under the Anthem and/or Blue Cross and Blue Shield brands), isn’t satisfied with picking just one of these strategies. Instead, it has chosen (d): all of the above. For example:
- WellPoint’s California subsidiary, Anthem Blue Cross, sought rate hikes of up to 39 percent in California this spring. The proposed hikes produced serious blowback, making the company a poster child for health reform in the final months before passage of the reform package in late March. California regulators employed an independent actuary to review WellPoint’s filings, and the review found serious errors (all in the company’s favor) that showed the company’s request was completely unjustified.
- WellPoint has earned itself a barrage of negative publicity recently over reports that the company used a computer algorithm that targets women diagnosed with breast cancer for reviews and cancellations of their coverage. ((Waas, Murray, “Corrected: WellPoint routinely targets breast cancer patients,” Reuters, April 23, 2010, http://www.reuters.com/article/idUSTRE63M5D420100423))
- And, more quietly, WellPoint’s accountants have been busy reclassifying costs from the administrative category to the health expenses category. This is significant because one of the elements of reform that takes effect next year, in 2011, is a requirement that companies spend at least 80 percent of premium dollars on actual health costs in the small group and individual markets, or rebate the difference to customers. By simply reclassifying costs that would normally be considered administrative costs, WellPoint can skirt the intent of the new rule to nominally meet the requirement without actually reforming its “deny and discriminate” business model.
Luckily, small business owners–a key voice in the reform debate and among the most severely impacted by WellPoint’s bad practices–aren’t taking all this lying down. Small business owners across the Main Street Alliance network are continuing their fight to hold the big insurance companies accountable and make sure business owners, their employees, and the communities they serve can get good health coverage without breaking the bank.
The state of Maine has been a battleground of the health care fight for years, and Maine small businesses are used to facing off with Anthem of Maine (another WellPoint subsidiary). Meet Melanie Collins, owner of Melanie’s Home Childcare in Falmouth and a leader with the Maine Small Business Coalition and Maine People’s Alliance.
Collins traveled to Washington, D.C. three times over the past year to join other small business owners in the fight for health care reform. She met with Members of Congress, stood with Senate leaders at a DC press conference, and marched in the front line of a column of thousands of people protesting Big Insurance outside the annual conference of America’s Health Insurance Plans (AHIP), the industry’s lobbying arm.
Collins is continuing her organizing work back home in Maine, where insurer Anthem filed a lawsuit against the state ((“Insurer Fights Maine Regulator on Premiums,” Wall Street Journal, April 2, 2010, http://online.wsj.com/article/SB20001424052748704059004575127533188447508.html)) for denying its 2009 request for an 18.5 percent rate increase for individuals. Collins and other Maine People’s Alliance leaders packed the courthouse at a hearing on March 19 to demonstrate against Anthem’s suit, and on April 22 a Maine Superior Court judge issued a decision ruling in favor of the state–and Anthem customers. ((“Court Upholds Anthem Rate Hike Denial,” Maine Public Broadcasting Network, April 22, 2010, http://www.mpbn.net/Home/tabid/36/ctl/ViewItem/mid/3483/ItemId/11874/Default.aspx.))
It isn’t known yet whether Anthem will appeal the decision. Either way, the company has already requested a new increase of 22.9 percent ((“Anthem requests 22.9% rate hike,” Bangor Daily News, January 7, 2010, http://www.bangordailynews.com/detail/134245.html)) for a pair of individual plans that cover over 10,000 people, so this fight isn’t over.
Collins is no stranger to Anthem’s antics. When Maine launched its new Dirigo Health Agency in 2003, Collins was excited to enroll for the new DirigoChoice health plan (a public-private partnership administered at the time by Anthem). Collins contacted Anthem, but was repeatedly steered away from DirigoChoice and back toward Anthem’s all-private plans. Collins persisted, and when she finally got past Anthem’s smokescreen, she recounts, “The Dirigo office informed me that I’d probably qualify for a substantial subsidy. As it turns out, I did qualify and the price was about 80 percent less than Anthem’s comparable coverage!”
It seems Anthem didn’t want Dirigo to succeed because the new program created real competition for Anthem’s own line of private insurance products. As if to underline this point, Anthem announced its decision not to renew its contract to administer Dirigo with only a month’s notice, apparently hoping the program would be forced to fold. But Dirigo lives on… and so does a conviction among many Mainers that Anthem doesn’t have their best interests at heart.
“As a small business owner, I care about my customers–the kids I care for and their families,” Collins says. “Does Anthem care about its customers? I don’t think so. My business is built on trust–but Anthem has broken our trust repeatedly.”
Eyes Wide Open
As the implementation battles over health reform continue to unfold, Collins says it’s important to keep a bright light shining on Anthem, WellPoint, and the rest of the insurance industry. “We’ve got to keep watching the insurance industry like a hawk,” she says, “because we know companies like Anthem and WellPoint will do everything in their power to defend their profits and shirk their responsibilities to small businesses and communities across America.”