Tuesday, March 2, 2010

Where the Roads Meet

After two serious stabs at solving the health care puzzle in the last two decades, Americans are like weary travelers looking for a place where the roads meet and they can put down roots and stop wandering aimlessly.

The roads to that desired spot are labeled cost control, rate regulation, common sense and self-restraint.

In order to examine this issue, the National Association of Insurance Commissioners, Kansas City, Mo., held a press conference on February 26. During the conference, NAIC President and West Virginia Insurance Commissioner Jane Cline, NAIC Secretary-Treasurer and Oklahoma Insurance Commissioner Kim Holland, and NAIC Health Insurance and Managed Care Committee Chair and Kansas Insurance Commissioner Sandy Praeger discussed the federal health reform proposals.

Cline started the discussion by noting that compromise is not easy and state regulators want to find a middle ground. But in order to find that ground, according to the discussion, there are a number of points that need to be examined more carefully.

Oklahoma’s Holland said that the backlash over the Public Option proposal raised as part of the recent health care plan advocated by President Barack Obama highlights the vast differences of health care markets among states. “We are a very diverse country where a one-size fits all approach is very difficult to implement.”

Common Threads

But according to the dialogue, while each state has its own particular way of handling health care and very particular needs, there are some threads that are common to all states.

For instance, Kansas’ Praeger warned that if companies were able to operate regionally rather than file with the state of domicile, they would gravitate to the states with the least protections. There would also be cherry picking of healthy consumers and adverse selection where the sick would end up in state plans.

And, while states might be amenable to allowing certain standards to be established for rate setting, they must be able to retain that authority, she added. When it was noted that only 29 states have that oversight, Praeger responded that while file and use states such as Kansas don’t formally have oversight, they work with companies on rates and can deny or negotiate rates that they maintain are excessive.

Common Sense and Restraint

The comments of both reflected the need for common sense and restraint. Kansas’ Praeger said that while health insurers can be hammered and there is a lot of room for improvement, health care costs can also be hammered and more personal responsibility is needed.

And Holland explained that in Oklahoma any mandate must be analyzed from both a clinical and cost perspective to keep down political hyperbole and focus on the high rates of the uninsured.

Common sense and restraint can bring us so far, but it won’t get Americans to that point on the map where they need to be. Cost control will move us a little further along as they indicated.

Chicken or Egg

But the question then becomes which costs are we controlling: the rising cost of premiums or the rising cost of the actual care? An ancillary question is whether those costs are justified or can be pared to reasonable levels: something approximating the inflation rate plus a reasonable level of profit.

America’s Health Insurance Plans, Washington, recently addressed the issue in response to an uproar over California Anthem Blue Cross’ request for a 39% premium hike. The company was called out by Kathleen Sebelius, Health and Human Services Secretary and a former NAIC commissioner from Kansas. It was also challenged by California Insurance Commissioner Steve Poizner who got the carrier to delay the increase until an independent actuary can review the rates proposals.

Anthem responded that the request is actuarially sound and in full compliance with the law.

And, in responding to the issue, AHIP’s President and CEO Karen Ignagni, called for a stop to “the politics of vilification” and a focus on “real health care reform.” She says that the real culprit is the underlying costs and that carrier requests reflect the true problem.

Her statement refers to Fortune 500 which AHIP cites as saying puts the health plan industry profits at 2.2%, 35th on its list of profits by industry sector.
I think she is correct in saying that big progress can be made in tamping down the actual costs. But one also wonders what is the range of the average on that statistic and whether some companies are making large profits while others are sustaining big losses.

And one can’t help but wonder how Anthem Blue Cross would react if one of its employees said that the cost of living had risen and that employee wanted a 39% pay hike.

The Other Piece

Cost is just one part of the issue of health care coverage in the United States. The other piece of the discussion is keeping promises. A premium is paid and services can be reasonably expected to be rendered.

California’s Poizner is alleging over 700 violations of state law by Anthem Blue Cross including 277 violations of failure to pay claims in 30 days and 66 violations of misrepresenting facts or policy provisions to insureds.

The rate hike problem is not limited to California but is nationwide. In Maine, for instance, a hearing is scheduled Insurance Superintendent Mila Kofman to hear comment on proposed rate increases for MEGA Life and Health and Anthem Blue Cross Blue Shield products.

Whatever the reason for our injured health care system, cost, unreasonable utilization by insureds or rates from carriers, unless we find common ground, Americans will continue to wonder aimlessly looking for health care coverage that we can settle down with.

The Result of Inaction

In Pennsylvania, Insurance Commissioner Joel Ario sounded a warning when he said that states alone can’t solve the problem and federal intervention is needed. Citing his own state’s adultBasic insurance program, he said that “If we didn’t adjust the adultBasic premium and benefit package, a portion of individuals enrolled in the program would have lost coverage.

“People who come to adultBasic have been without coverage and so are generally in need of costly care. With our limited funding, we either had to increase costs or drastically cut benefits, as opposed to the modest changes we chose to make for enrollees. The cuts we’re instituting are only sufficient to allow the available funds to cover costs for the current enrollees.”

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