The Alan Katz Health Care Reform Blog

Health Care Reform From One Person's Perspective

Posts Tagged ‘Steve Poizner’

Bashing Insurance Companies May Be Fun, But Avoids the Real Issue

Posted by Alan on March 1, 2010

That health insurance carriers were ascending to the throne of political piñata in the health care reform debate has been apparent for some time now. Last July President Barack Obama began referring to health care reform as health insurance reform. A couple of weeks later Speaker Nancy Pelosi described insurance companies as “almost immoral” for opposing the creation of a government-run health plan. That insurance companies were to be cast as the villains was pretty much inevitable. People like and trust hospitals and doctors much more than health insurance carriers. And pharmaceutical companies, while profiting far more from health care than medical carriers are a bit removed from people’s daily experience. The reality is the only group Americans trust less when it comes to health care reform than insurance companies are Republicans in Congress.

Compounding the situation the health insurance industry has had atrocious timing. America’s Health Insurance Plans (AHIP), the industry’s trade organization, released a report warning that health care reform plans being considered by Congress would dramatically increase medical insurance premiums for many Americans. The message was hardly welcomed by Congressional Democrats, but what infuriated them was the timing. The Senate Finance Committee was about to vote upon the closest lawmakers had come to a bipartisan agreement (meaning at least one Republican voted for it. The vitriol the report inspired went far beyond its substance.

Then there’s the timing of recent rate increases in the individual health insurance market. While Anthem Blue Cross’ individual market increase first captured the public – and lawmakers’ attention – it’s now clear several carriers have levied double-digit premium increases in multiple states in both the individual and small business market segments. Many political observers believe that these rating actions breathed new life into flagging reform efforts.

But the 24-hour news channels and other media along with their innumerable pundits need fresh meat. Their job is to keep people watching (or reading) so the commercials don’t run together. There’s only so many ways you can use “insurance company” and “venal” in the same story before it gets old. Insurance company bashing will continue, but there are signs that serious attention may be given to aspects of America’s health care system reform beyond insurance markets.

Consider: Daniel Weintraub is one of California’s most respected journalists. In addition to reporting for and providing opinion pieces to the Sacramento Bee he maintains an excellent blog on health care issues, HealthyCal.org. In the past, Mr. Weintraub has been hard on insurance carriers. Nor is he a fan of the health care status quo in this country. So it must have been a surprise to even him when he wrote a post that makes clear that bashing health insurance companies is not the same as enacting meaningful health care reform.

Mr. Weintraub begins his post citing the political travails California insurance companies face in the state today, ranging from separate investigations by Attorney General Jerry Brown and Insurance Commissioner Steve Poizner to a host of legislative hearings led by lawmakers who, like the Attorney General and Insurance Commissioner, are seeking higher office in this election year.

While noting the entertainment value of this spectacle and recognizing that “it might actually produce information relevant to the health care debate,” Mr. Weintraub makes clear that “health insurance company profits and administrative costs remain a relatively small factor in driving the cost of coverage skyward. The biggest reason that health insurance is getting more expensive,” he continues, ”is that health care is getting more expensive.”

The post includes a useful pie chart describing national health expenditures as broken down by the US Centers for Medicare and Medicaid Services. Of the $2.3 trillion on health care Americans spent in 2008, $159 billion (approximately seven percent) “went to private insurers after deducting all the costs they pass through to the doctors, hospitals and other health care providers.” Put another way: “health care costs nearly doubled between 1998 and 2008, increasing by 96 percent. If we had eliminated private insurance companies in 1998, and assuming they provide no benefit in managing costs, health spending still would have increased by 83 percent during that decade.”

None of this means that health insurance companies and their behavior should be ignored nor their misdeeds forgiven. But as Mr. Weintraub notes, “when this election year is over and the current political bash-fest comes to an end, the core costs of health care will still be there, and chances are they will still be rising.”

That a respected journalist is noting that attacks on health insurance companies are diverting attention from other serious issues with America’s health care system is significant. But he’s not alone. According to Politico.com, Warren Buffett is advising President Obama “to scrap the health care bill and start over” because the legislation “does not focus on controlling costs.” (He went on to say that he’d vote for the Senate bill as opposed to maintaining the status quo).

President Obama and his allies will argue that their legislation does attack rising costs – and they have some evidence to back their claim. But few could honestly say it goes far enough. And while good starts are important, the question is whether the Administration and Congress have the political will to follow-up with meaningful cost containment measures.

Attacks on the health insurance industry will continue. Every drama needs a villain and in this particular theater, carriers are the bad guys. But that folks like Mr. Weintraub and Mr. Buffet are calling out politicians for failing to more fully address the most critical issue undermining America’s health care system – runaway medical costs – is an encouraging sign.

Posted in Barack Obama, Health Care Reform, Healthcare Reform, Politics | Tagged: , , , , , , , | 2 Comments »

Phishing for Brokers

Posted by Alan on June 5, 2009

This blog focuses on health care reform. But it’s also read by a lot of agents around the country, many of whom are in California. In light of a very unusual warning issued by California Insurance Commissioner Steve Poizner I thought it appropriate to borrow the blog for one post to spread the word.

According to the Commissioner, scam artists are calling licensed insurance agencies representing themselves as DOI personnel. Claiming the agents’ licenses are about to expire, they request credit card and other information in order to expedite payment of a penalty fee. They are not DOI personnel and no penalty is due.  They are simply thieves who take the money and sell or misuse the credit card information. Producers receiving this call should immediately contact your local law enforcement agency.

According to Molly DeFrank, Deputy Press Secretary at the California Department of Insurance’s Communications Office, the scam first came to light on May 29th. At least three brokers are known to have fallen victim to the scam, but there may be others.

Brokers in other states should be careful as well. It is unlikely this scam is solely a California broker problem. And as the California DOI’s warning is disseminated, the thieves are likely to look for easier (meaning, less informed) victims.

And now back to our regularly scheduled blog.

Posted in Insurance Agents | Tagged: , , | Comments Off on Phishing for Brokers

Health Care Reform’s Chicken and Egg

Posted by Alan on December 13, 2007

In the context of health care reform, the chicken and egg conondrum is accessibility and affordability. Which comes first?

Access advocates note that decreasing the number of uninsured will reduce the “hidden tax” imposed when the cost of uncompensated care is shifted to those with coverage. Affordability proponents point out that until coverage is affordable, too few will be able to obtain and use it.

The tension between access and affordability is one of the reasons Governor Arnold Schwarzenegger and the Legislative Leadership are having such a hard time producing a health care reform package for California. Governor Schwarzenegger is seeking to increase access by requiring all residents to obtain coverage. Speaker Fabian Nunez is attempting to assure coverage is affordable by creating an exemption to the Governor’s coverage mandate if the cost of premiums and out-of-pocket expenses exceeds 6.5 percent of a family’s income.

The chicken and egg debate is also a feature of Democratic presidential campaigns, too.  Senator Hillary Clinton attacks Senator Barack Obama for presenting a health care reform plan that fails to achieve universal coverage while Senator Obama questions how Senator Clinton plans to force Americans to buy coverage they can’t afford.

So which comes first? Access or affordability? As I’ve posted several times, I believe affordability has to come first. Newsweek’s Robert J. Samuelson makes a strong case for why. Writing in the magazine’s December 10th issue, Mr. Samuelson takes to task politicians who focus exclusively on expanding coverage. “Everyone believes in adequate health care; people should have it when they need it. Politicians cater to these beliefs. But the intellectual and even moral laziness of this approach results in an invisible abdication of political responsibility. We are letting the unchecked rise in health spending automatically determine national priorities.”

The need for controlling health care costs is clear (and has been the topic of many a post on this blog). Mr. Samuelson cites three key facts:

  • At $2 trillion dollars, health spending already accounts for about 16 percent of the gross domestic  product. By 2030 it could exceed 25 percent. This saps resources away from other priority items.
  • We currently tax young people to pay the costs of seniors. Older Americans (65 years and over) account for an eighth of the population and a third of all health spending. By 2030 they could account for 20 percent of the population and close to half of medical spending. Americans under age 64 by-and-large pay those costs.
  • No one has demonstrated the ability to control costs The average cost of providing benefits to Medicare beneficiaries rose 8.9 percent a year from 1970 to 2005. During the same period, spending on Americans with private health insurance rose 9.8 percent. The slight difference, Mr. Samuelson notes “may reflect cost shifting. When Medicare imposes price controls, doctors and hospitals increase prices for privately insured patients).

 These trends are unsustainable. Unless medical costs are constrained, spending on health care is crowding out what’s available for other critical tasks. “We are letting the unchecked rise in health spending automatically determine national priorities,” is how Mr. Samuelson puts it.

The problem, he notes, is that “[t]he politics of health care rests on a mass illusion: most Americans think that someone else pays for their care.  Workers with employer-provided insurance believe that their companies pay. Retirees and the poor think that the government … pays. No one has an interest in controlling spending, because everyone believes it burdens someone else.”

Mr. Samuelson’s solution: “People need to see and feel health costs.” But he recognizes “most Americans do not want to face the difficult political, economic and moral issues posed by unchecked health spending …. The impulse is to blame some unpopular villain (drug companies, insurance companies) and to focus on a simpler problem — say, the uninsured.”

He warns that failing to address the issue of costs makes meaningful health care reform impossible. “The present politics of health care aims to camouflage [health] costs and skew the choices.”

What’s interesting is that there’s actually a broad consensus among policy makers that affordability is central to comprehensive reform. The health care reform packages put forward by the Governor, the Democratic Leadership and the Republican caucus all include cost containment features. It’s a primary focus of California Insurance Commissioner Steve Poizner. It’s a central focus of the California Association of Health Underwriters’ Healthy Solutions plan.

Yet for the past 11 months in California medical cost containment has been an afterthought in the negotiations. Politically, access comes first. Without tackling affordability, however, paying for that access will break the bank.

Posted in Arnold Schwarzenegger, California Health Care Reform, Health Care Reform, Healthcare Reform, Politics, Presidential Election | Tagged: , , , , , | Comments Off on Health Care Reform’s Chicken and Egg

Everyone Lives in Glass Houses

Posted by Alan on December 11, 2007

America’s health care system encourages a hunt for scapegoats. It’s expensive and bureaucratic. Some people don’t have it and those who do fear losing it. While there’s a lot that works in the current system there are also real problems with it. And those problems are challenging — just ask Governor Arnold Schwarzenegger and the Legislative Leadership who have been trying, so far in vain, to “fix” what they call California’s “broken system” for eleven months now.

Where’ there’s problems like these, Darth Vadar must be near at hand. That’s just the way we think in this country. So it’s not surprising that some folks sincerely believe the biggest problem with America’s health care system is for-profit insurance and pharmaceutical companies. This group would include, among others, Michael Moore and Physicians for a National Health Program. Those who believe profits is the root of all health care evil point to the fines imposed by the California Department of Managed Health Care on Blue Cross of California, a subsidiary of for-profit WellPoint, Inc. for recinding coverage as proof.

Yet non-profits have demonstrated an equal ability to earn fines. Just ask Blue Shield of California and Kaiser, to name two (for rescission and patient dumping problems, respectively). So some scapegoat the entire industry and conclude only the government can manage health care.

If so, how do you explain the more than half a billion dollars apparently misspent by the State Compensation Insurance Fund? That’s the findings of an audit, released today by California’s Insurance Commissioner, Steve Poizner. According to the Los Angeles Times, Commissioner Poizner’s report showed that over the past 10 years, the government-run workers’ compensation insurance company spent in excess of $500 million “for outside marketing help that often provided ‘minimal services ….'”

The Times article describes the “scathing” audit as painting “a picture of an obscure rogue operation with more than $22 billion in assets, little oversight, minimal public checks and balances, and indiscriminate spending with little attention until recently from top state officials ….” The State Fund, responding to the report, admitted to “serious shortcomings” in the way it managed its responsibilities in the past.

What does an agency managing workers’ compensation have to do with health care reform? First, it demonstrates that even state agencies managing insurance operations can do wrong. This undermines the conclusion of those who claim the profit-motive is the root of all health care evil.

Second, lawmakers tend to use the State Fund as a template for managing state health care programs. Like the State Fund, the Managed Risk Medical Insurance Board is a five person state board which operates out of the limelight and with relatively minimal oversight. Unlike the State Fund, there’s not been a single whiff of scandal in the way MRMIB operates its programs, which includes Healthy Families, Access for Infants and Mothers, and the state’s high risk insurance pool. I know some of the board members. They are trustworthy individuals of high integrity.

The point here, however, is not the virtuousness of MRMIB versus the State Fund. Nor is it that one state agency’s misdeeds means no state agency can be trusted any more than the questionable actions of a particular carrier means that health plan is thoroughly corrupt. On the contrary. Like humans, state agencies can do great things — and bad things. So can insurance companies, whether they’re for-profit or not.

The first point here is that no one — and no entity — is perfect. All of them operate in glass houses. People and organizations make mistakes. These are to be punished and corrected, not ignored. But they shouldn’t damn the entire organization and its kind. After all, Darth Vadar is fictional character. Scapegoating accomplishes nothing. It only distracts from the real issues we need to address.

Posted in California Health Care Reform, Health Care Reform, Healthcare Reform, Single Payer | Tagged: | 1 Comment »