Tag Archives: Baucus Plan

The Health Insurance Industry’s Latest Double-Cross

Just in case anyone thought they couldn’t go any lower, the insurance companies have made yet another sleazy move in the ongoing battle over health care reform. This morning, their industry shill group announced a new “report” warning  that the proposed reforms would raise a “typical family’s” health insurance premiums by as much as $4,000 over the next ten years.

The report, issued by American Health Insurance Plans (AHIP), is a particular stab in the back to President Obama and Senate Finance Committee chair Max Baucus. Both have spent recent month’s assiduously kissing the insurers’ gold plated butts, in exchange for their “co-operation” on health care reform. The Baucus bill is already a giveaway to the health insurance industry: By requiring millions more Americans to buy private health insurance plans, it stands to shovel even more money into their coffers, while posing little government regulation and no competition from a public plan.

But that still wasn’t enough for the insurance companies. As the Los Angeles Times reports, health insurers have concluded that Baucus bill doesn’t do enough “to draw young, healthy people into the insurance pool. Industry analysts predict that by postponing and reducing penalties on those who fail to buy health insurance, it would attract less-healthy patients who would drive up costs.” In other words, some of the new policy-holders might actually require insurance companies to pay for some health care in exchange for their bonanza of new premiums. That, of course, might chip away at their profit margin, whch would never do–so their only option is to raise already sky-high insurance premiums even higher. Or so they say.

Here, via Fox News, are some stats on the poor, starving health insurance executives who could be forced to  prostrate themselves for the good of the general public. Poor guys. Give ’em a break.

Health Insurers’ Executive Pay (2008)

Axis Capital Holdings Limited
John R. Charman
$41.6 M

W. R. Berkley Corp.
William R. Berkley
$29.2 M

Aetna
Ronald A. Williams
$24.3 M

MetLife
C. Robert Henrikson
$20.8 M

Chubb Corp.
John D. Finnegan
$20.1 M

American International Group
Martin J. Sullivan
$14.7 M

Everest Re Group
Joseph V. Taranto
$14.6 M

Commerce Group
Gerald Fels
$13.2 M

Prudential Financial
John R. Strangfeld
$12.9 M

Cigna
H. Edward Hanway
$12.2 M

Wellpoint
Angela Braly
$9.8 M

Coventry
Dale Wolf
$9 M

Health Net
Jay Gellert
$4.4 M

Humana
Michael McCallister
$4.7 M

United Health Group
Stephen J. Hemsley
$3.24 M

Source: The Corporate Library, SEC filings

The LA Times reports that “industry officials said they intended to circulate the report on Capitol Hill and promote it in advertisements.”  What this means is another well-funded effort to scare the public, along the lines of the original “Harry and Louise” ads against the Clinton health care reform. (Those ads were funded by AHIP’s predecessor.) These scare tactics are designed to distract people from the most obvious means of reducing health care costs, which is to kick the bloodsucking insurance companies out of the system altogether–or, barring that, to take a slice out of  their fat profits.

We Geezers Got Our Single-Payer Plan. Now Go Get Your Own.

I’ve written many times about  how Americans have been set up for a fake intergenerational conflict over supposedly scarce health care resources. The purpose of this phony competition is to distract us from the fact that the resources wouldn’t be so scarce to begin with if we reduced the profits of the insurance and drug industries.

It’s an old bait and switch tactic, and the mainstream media have fallen for it hook, line, and sinker. So instead of talking about greedy pharmaceutical companies that gouge people for drugs they need to survive, or greedy insurance companies that let people die to keep up their share prices, we’re all talking about the greedy old farts on Medicare who don’t want their services cut to pay for younger people’s insurance.

The latest take on all of this, as described in over the weekend in the New York Times, pits the old (over 65) against the not-so-old (50-64). The article focuses on the conflict within AARP, which has spent several decades hitting people up for membership the day after their 50th birthdays, and now includes members from both these warring age groups:

Its 40 million members are split about evenly between those who have access to Medicare, the federal government’s health program for the elderly, and those who are too young to be eligible for such benefits. The younger members, or those between the ages of 50 and 64, sometimes face terrible choices in the private insurance market, with age and declining health status making premiums high and benefits poor. But members 65 and older get among the most secure medical benefits in the country, and many are in no mood to share.

So this is what it’s come to, in the American health care system: Sickly 60-year-olds just trying to hold out until they can get their Medicare cards. Cranky old folks hoarding their Medicare benefits against the encroaching middle-aged mob. People eyeing each other suspiciously across the 65-year age divide, fearing and resenting one another.

Do you think people of different generations look at each other this way in Paris? Or in London, or Dusseldorf, or Adelaide, or Kyoto, or Ottawa? Of course they don’t. That’s because in those countries, EVERYONE HAS MEDICARE. In most of them, everyone has Medicare that’s better than our Medicare. They all carry around the same little card in their wallets–the one that shows their membership in their country’s national health service. And you know what they have to do to get that  card? They have to be BORN. That’s it. No age restrictions. No waiting periods. No physicals or tests or worries about pre-existing conditions. And no premiums to pay.  

I am more than sympathetic toward the plight of people in their 50s and early 60s. I know my own body started to give me trouble at about 55, and I don’t know what I would have done if I hadn’t had a job with health insurance. I’ve recently written about how the Baucus plan screws people in that age group by permitting insurance companies to discriminate against them. But the solution to these problems isn’t cutting Medicare benefits for people over 65–it’s giving Medicare benefits to people under 65. If everyone loves Medicare, and everybody’s just waiting and hoping and biding their time until they can sign up, why not let them do it now?

Some proponents of an incremental approach have actually suggested just this–opening up Medicare to ages 50 through 65, with some financial contribution from enrollees. And many single-payer advocates, myself included, have simply called for “Medicare for All.” Since single-payer health care systems deliver better care for 20 to 40 percent less money, there would be no need to cut services to any generation.

So as a member of the over-65 crowd and a card-carrying Medicare recipient, here’s what I have to say to younger Americans: We’ve got our single-payer plan. Go get your own. And since we’re not into intergenerational warfare,we will help you.Remember, we’re all in this together.

How the Baucus Plan Screws Older People

As I wrote yesterday, there are aspects of the Baucus health care reform plan that don’t bode well for Medicare recipients. But the people who stand to get screwed most by the plan are those who aren’t old enough to qualify for Medicare, but are still old enough to be discriminated against by insurance companies.

For several months, the Columbia Journalism Review has been publishing analyses of the Massachusetts health care system, which in many ways serves as a model for the current national health care reform–a “canary in the coal mine” for the rest of us. The state mandates that all residents have health insurance or face a tax penalty. And while it does provides some regulation of private insurers, it doesn’t bar them for “age rating”–setting different premium rates based on age. This doesn’t apply to most working people who are covered by group plans through their employers, at group rates. But for the self-employed and early retirees–who numbers are growing since the recession began–the costs can be devastating. CJR cites reporting by Kay Lazar in the Boston Globe, which found:

State law allows insurers to charge older people up to twice as much as younger people for the same coverage. In other states, the disparities can be even greater. One result is that more older people choose less comprehensive plans. Data from the Commonwealth Choice program, which offers state-approved private insurance, show that as enrollees grow older, more choose cheaper and less comprehensive coverage.

The main solution that’s been proposed for this problem is to make it “easier for self-employed people and retirees who are 50 to 64 to be exempted from a stiff tax penalty if they can’t afford insurance.” So rather than force insurance companies to stop discriminating on the basis of age, the state may begin “allowing” 60-year-olds to live without health insurance. So much for the great Massachusetts universal coverage model.

All of the major health reform plans that have been floated in Congress allow age-rating, and the Baucus plan endorses disparities even higher than those in Massachusetts. As the New York Times reports:

Under Senator Baucus’s plan, insurers would be permitted to charge older people five times more for their health insurance premiums than younger people. That proposal, first circulated in a Finance Committee policy options paper last spring, is a significant departure from the approaches put forth by three House committees and the Senate Health, Education, Labor and Pensions Committee. Those bills would only allow insurers to charge older people twice as much as younger ones….

According to AARP, the lobbying organization for older Americans, the number of uninsured adults between 50 and 64 grew to 7.1 million in 2007, an increase of 36 percent over 2000. Among the main reasons for the increase: higher premiums demanded of older, sicker people seeking coverage in the individual insurance market.

Supporters of the Baucus plan and the other half-measure Congressional health reform proposals made a big deal of the fact that insurers won’t be able to turn people away, or charge them more, because they have pre-existing conditions. In other words, they can’t discriminate against sick people. They also, of course, cannot discriminate on the basis of race, ethnicity, gender, and the like. This means that the only form of discrimination that will remain legal is age discrimination.

This is, of course, another sop to the insurance industry, which worries about the effect on its profit margin if it has to insure everyone. As the Times notes:

By allowing insurers to charge so much more for older, often sicker people, “You’re just using age as a proxy for health status,” said Uwe Reinhardt, an economics professor at Princeton University. He estimates that Senator Baucus’s age-rating plan would allow insurers to cover roughly 70 percent of the additional risk they’d take on by being required to accept all comers, regardless of health.

A Banner Week for Big Insurance, Part II: Medicare Advantage

The so-called Baucus bill is a gift to the insurance industry in more ways than one. As I wrote earlier, it hand-delivers to the private insurance companies a whole new customer base that is government-mandated and government-subsidized. And if offers no competition in the form of a public option.

In addition, the Baucus plan preserves the Medicare Advantage program, which is one of the insurance industry’s most overt rip-offs of the public purse. As most Unsilent Generation readers will know, Medicare Advantage (MA) plans offer managed care run through private insurers, paid for by the federal government. In recent years, MA plans have come under increasing fire for their hard-sell tactics to elderly Medicare recipients, shoddy coverage, and rip-offs of the Medicare system. “Competition” from the private plans was supposed to reduce growth in Medicare spending–but in fact, they cost the government more. Recent estimates say that the government pays 14 percent more for those enrolled in Medicare Advantage vs. those in traditional Medicare. Eliminating these overpayments could save the government $177 billion over the next ten years.

Republicans (and at least one Democrat, Bill Nelson of Florida), are already complaining about the Baucus plan’s proposed cuts to MA plans. But the Baucus plan doesn’t eliminate Medicare Advantage, and might not even do it much harm. It simply introduces a new formula for calculating payments to private insurers who offer MA plans. As Tim Foley writes:

Medicare Advantage plans–private HMOs paid for by the feds at 114% the rate for a regular Medicare beneficiary but with no better health outcomes–would keep their overpayments until 2014, at which point they’d be paid the “weighted average” of all the Medicare Advantage plans combined. In layman’s terms, they’d still be getting paid more than traditional Medicare, albeit possibly less than the 14% extra they get now.

This change is rendered even more meaningless by the fact that the Obama Administration had already announced, back in April, its plans to begin incrementally cutting back on overpayments to Medicare Advantage–something it doesn’t need legislative approval to do.

Nonetheless, the insurance industry is pulling out all the stops to protect every cent they make through Medicare Advantage plans. They spent the spring and summer trying to plant astroturf on the issue by luring old people to “community meetings” (with free lunch and door prizes) where they were encouraged to “join the fight” to save the plans.

Now the insurance industry lobby group AHIP (America’s Health Insurance Plans) is offering up reports claiming that Medicare Advantage plans are especially helpful to the poor and people of color–an idea that has already been widely debunked. Cuts to MA, the report says, will hurt the most vulnerable elders.

In response, Pete Stark, (D-CA), chair of the House Ways and Means Health Subcommittee, issued a statement:

AHIP’s reports attempt to portray taxpayer overpayments to MA plans as indispensable for low-income, minority Medicare beneficiaries, when the opposite is true. These overpayments to private insurers increase premiums for all Medicare beneficiaries to pad the pockets of insurance companies….

Any report commissioned by Jay Gellert – the CEO of HealthNet and Chair of AHIP – should be taken with a healthy grain of salt, especially one claiming that beneficiaries are being helped.  Under his leadership, HealthNet has been fined hundreds of millions of dollars for illegally rescinding people’s health coverage when they get sick.

Baucus Bill: No Public Option

As expected, Senator Max Baucus released the full text of a health reform bill that was noteworthy primarily for what wasn’t there: the bill is minus a public option. As long predicted here, the legislation includes “co-ops” and “exchanges,” which are similar to the federal health employees health care plan. And Medicare Advantage stays, albeit at lesser rates.

And in return for this sellout on the most meaningful planks of health care reform, the Baucus plan has gotten…so far, not one single, solitary Republican vote.

Kaiser Health News provides a concise summary:

Senate Finance Committee Chairman Max Baucus today unveiled a health care bill that would require most individuals to have health insurance. Insurance companies could not deny health coverage based on a pre-exisiting medical conditions or place yearly or lifetime limits on coverage.

People who earn as much as 133 percent of the federal poverty level ($14,440 for an individual, $29,400 for a family of four) would be eligible for Medicaid, the government insurance program for the poor. The measure includes a health insurance ‘exchange’ where people could buy insurance and a system of health care “co-ops” rather than a government-run health insurance plan. Subsidies would help low-income workers purchase health insurance and small businesses would receive tax credits to help offset the cost of providing coverage.

The bill is projected to cost $856 over 10 years. It would be paid for with an excise tax on high-end health insurance policies, lower payments to the Medicare Advantage program and with fees on medical device manufacturers, clinical labs, drug makers and health insurance companies. Baucus negotiated the plan with five other finance committee members – including three Republicans – but no one in the GOP has endorsed the package.

Obama’s Health Care Speech: Too Little,Too Late

As the summer has waned in an atmosphere of misinformation and recrimination, so too have hopes for real health care reform. Many people have by now sadly come to the conclusion that the moment for such reform has come and gone. In this context, Obama’s inspiring speech tonight was simply too little and too late.

It may just be that Obama, using the Democratic majority as a hammer, can achieve some limited change for the better. If so, that change most likely will be built on a base set forth by the Baucus plan announced yesterday, further embellished and/or weakened in the joint House-Senate conference that will draft a final bill. That final bill will be such a study in compromises that most people in America won’t notice any change at all–which is pretty much the point, as Obama himself admitted tonight.

Obama tonight eloquently defended the need for a public option, only to kick it to the curb, insisting that it is “only one part of my plan”–and one open to further tinkering and dilution. He promised the American people: “If you can’t find affordable coverage, we will provide you with a choice.’’ The “choice,’’ however, could be any one of a number of things—co-ops or exchanges accompanied by tax breaks, with special subsidy programs or perhaps expanded Medicaid to pick up the slack for the poor. One thing is clear: It won’t be a challenge to the private insurance industry. Obama said flatly, “I have no interest in putting insurance companies out of business.”

Giving the speech was brave. But its politics remains a muddle. The core problem here is the Obama administration’s inability to project a vision for real change or take an ideological stance that might have some populist appeal. The only time Obama reached toward that ground tonight was when he quoted Teddy Kennedy’s belief that health care is a human right–something the president himself apparently couldn’t bring himself to say in his own words. Instead, the administration has dawdled in a swamp of tehnocratic mumbo jumbo, leaving ideology, once again, to the Right.

In the end, the model here is not the lawmaking carried out by Teddy Kennedy–or Teddy Roosevelt, John Dingell’s father, Harry Truman, LBJ, or anyone else Obama cited tonight. The model is Obama’s own wishy-washy credit card legislation enacted earlier this year, which sands down some of the freemarket’s hard edges by outlawing its most outrageous abuses, and otherwise lets business go on as usual. This approach seems destined to become the hallmark of the Obama administration–and as I predicted months ago, the final health care reform bill will undoubtedly bear this stamp:

Under a propaganda blitz heralding sweeping reform, we get legislation that reins in some of the very worst abuses, while making no significant change at all to the underlying flawed system. So, for example, we may see insurance companies required to provide coverage in spite of pre-existing conditions–something Obama referred to in his AMA speech, with moving references to his mother’s own battle with cancer. We might see what the President called “more efficient purchasing of prescription drugs,” which presumably means more power to haggle with Big Pharma over drug costs, as well as speeding up approval of generics. We will see health care providers given incentives for more cost-effectiv–and, we can hope, better–treatment. These things are not meaningless, and they will provide a modicum of help to some struggling Americans. But they do virtually nothing to strike at the basic American system of health care for profit. And at the same time, they offer only a fraction of the savings a single-payer system could offer.

What to Look for in Obama’s Speech Tonight

First, nothing specific. Here’s how the BBC reports it this morning:

When asked if Americans will find out in his speech whether or not he is willing to sign a healthcare reform bill without a public scheme, he said:

“Well, I think the country is going to know exactly what I think will solve our healthcare crisis.”
Mr Obama said the speech will be directed at the American people, as well as members of Congress…..

“The intent of the speech is to, A, make sure that the American people are clear exactly what it is that we are proposing,” Mr Obama said.

“And B, to make sure that Democrats and Republicans understand that I’m open to new ideas, that we’re not being rigid and ideological about this thing, but we do intend to get something done this year.”

Second, some version of the Baucus plan seems likely to survive. Mitch McConnell, the Senate Republican leader, is softening opposition to the idea of of “reform” –if it’s the “right” reform. That means spending less money, which means cutting existing benefits in Medicare and elsewhere. Remember–Republicans apparently think we are over-insured!

Meanwhile in the House, the Blue Dog leader Mike Ross says he’s flat out against a public option. There are 52 Blue Dogs. In addition, Pelosi,with her stated insistence on a public plan, is beginning to look isolated as part of the leadership caves on that issue. Steny Hoyer, House Majority leader, indicates he won’t insist on the public option.
What’s likely to survive as pivotal in the final plan will be the “exchanges,” which, in fact, are modeled on the federal employees health benefit plan. It will be through these exchanges that insurers will be required to meet certain standards, including accepting everyone with or without pre-existing conditions. Pricing will be left to the insurance companies.

In the end, my guess is Baucus will carry the day with details of a weak bill hammered out in conference.