What’s Behind Anthem’s Huge California Rate Hikes?

Californians with individually purchased health insurance were rocked last week by news that Anthem Blue Cross was planning to raise rates for some individual policies by 39 percent.  U.S. Secretary of Health & Human Services Kathleen Sebelius has got into the act, demanding an explanation (even though she has no authority over rates in California’s individual market).

Anthem Blue Cross claims that rising medical costs are the culprit, but there’s no way that underlying medical costs are going up at that rate.  California’s individual market must be suffering from adverse selection.

What’s causing it? My speculation is that California’s new regulations on rescission are one cause of the spiral.  I’ve written a long thread on the topic.  Previously, an applicant for individual coverage could lose her policy if she had not told the truth about her health status on her application.  California changed the rules to require the carrier to prove willful misrepresentation by the applicant – even with objective evidence that she had neglected to fully inform the carrier of a condition.  If an applicant “forgets” or doesn’t “understand” what her health condition is, the carrier will not be able to rescind a policy that was written with incomplete information.

I’ve heard from insurance agents that policies with maternity benefits are suffering the biggest increases.  That’s a pretty strong signal of a selection problem.  I wish Anthem Blue Cross would give us the full story.

Somewhere Between Worried and Panicked in Virginia

A blog of the New York Times looks again at state-based moves to protect people from an individual mandate to buy insurance, either from state or national governments. It mentions that the latest state to take up legal language, Virginia, did so in the form of a statue, not a constitutional amendment. That should mean it becomes law much sooner–and could pave the way for a legal challenge, should Congress enact such a mandate.

Larry J. Sabato, a political scientist at the University of Virginia, comments on the movement, and specifically the vote of five Democrats in the Virginia Senate. He reads that as an attempt by the senators to buy political coverage, since “Democrats are somewhere between worried and panicked.”

We should do health care reform. But if what the House and Senate have produced constitutes reform, then reform ought to be dead, and we should start over.

Consumer-driven Care Need Not Be Universal to Work

David Goldhill, on the importance of making patients more conscious consumers of health care:

So many of those who oppose consumer-driven health care use the perfect as the enemy of the good. You’re not going to shop for health care if you’re hit by a bus. That’s not the point. The point is you’re served in a health-care system that’s been tightened up, both from a cost and quality point of view, by the fact that some consumers, for many procedures, are shopping around, and not just on price.

For more, follow the links at The Corner.

States Past Spending Coming Back to Haunt Them

Earlier in the decade, most states’ income exceeded their expenditures and so the states had several options: give it back to the taxpayers, put it into a “rainy day” fund, or spend it. As we know, most of the states decided to spend it. Now that we are in the midst of a significant budget crisis for most states, those decisions are coming back to haunt them, and as a result, states like Arizona are looking to cut very deeply, starting with two key health care programs.

First, the state is looking to eliminate its Children’s Health Insurance Program — a program funded jointly between federal and state governments. The program is expensive and many studies have shown that much of the money is spent in replacing private coverage with state coverage (25 to 50 percent according to a Government Accountability Office study). Arizona is also looking to end the Arizona Health Care Cost Containment System — Arizona’s version of Medicaid. These significant cuts would remake the state’s social welfare system. The moves would also protect the states from additional costs if current versions of federal reform do move forward.

Just Desserts for Pfizer?

There’s a commonly held belief that big businesses hate government intervention. Though there may be an exception here or there, nothing could be further from the truth. The latest installment comes from Kimberly Strassel, who chronicled the maneuverings of Pfizer and other health care companies. She writes about Jeffrey Kindler, who took over as the company’s top executive in 2006.

Fortune 500 execs could stand up for a free market that benefits consumers and shareholders, or hitch their cart to the new Democratic majority. Pfizer’s Mr. Kindler is a case study in the hitch-and-hope mentality—a CEO who became the motivating force behind Big Pharma’s $80 billion “deal” on reform, and industry support of ObamaCare. With that health agenda burning, the choice isn’t looking so grand.

Kindler encouraged the health reform efforts of Washington’s  Democrats, and pushed the industry’s trade group to spend millions of dollars in favor of the plans. In effect, he cut a deal, hoping to secure favorable treatment on importation of drugs and other matters. But the deal may not have any good effects.

“Mr. Kindler and Co. are left with the ashes. Having got this far (with Big Pharma’s help), Democrats are more desperate than ever to pass “something.” It won’t include any upside for drug companies. There is talk instead of “popular” stand-alone legislation, including reimportation, Medicare price controls, and slashing the industry’s 12-year exclusivity on biologics.”

The sad thing about this maneuver is that some of the things Kindler wanted from a deal — that “Congress would “fight against drug reimportation and forgo price controls”–make sense.

Strassel concludes that business leaders should “try standing up for the free markets and limited government that have always been the foundation of U.S. business. It might work out better.”

Health Care Spending Up; Government’s Share Up

The Kaiser Health News service says that the percentage of the economy going to health care increased to 17.3% last year, by “the largest leap yet.” Perhaps not surprisingly, the percentage of health care paid for by government keeps going up, too. “By 2012, government health care expenditures will top private spending for the first time.”

Health care is a good, but like anything else, if the people who consume it are the same ones who pay for it, consumer and provider discipline will keep costs low. But when the people who consume something are not the ones who pay for it, that discipline disappears.

This is borne out in the comments of one of the authors of a new federal report on spending. Speaking of comparative effectiveness research and investments in information technology, Steve Heffler said, “We do not project that any of those provisions… are going to have a noticeable impact on the rate of growth [of health spending].”

An Agenda for Starting Over

During the House GOP retreat in Baltimore last week, Mr. Obama said that many Republican proposals were incorporated into legislation by the Democratic leadership, including:

• Allowing inter-state purchase of health insurance
• Catastrophic health insurance for young people
• High-risk pools for uninsured people with pre-existing conditions
• Small business health plans
• Incentives for wellness
• Allowing young adults to stay on their parents’ policies

While not every Republican or Democrat would agree with every item on the list, it is a start for a bipartisan discussion.

And to that list, I would add several others that were in the health policy platforms of both Sens. McCain and Obama during the campaign, including agreement on the importance of:

• Targeted financial help for the uninsured
• Incentives for prevention and early treatment
• Coordination of care and disease management
• Greater use of information technology and electronic medical records
• New approaches to “best practices” in treatment

There are serious differences about how to structure the underlying policy on any of these items and whether more power and control go to government or to doctors and patients. But these lists nonetheless could be a start for a bipartisan conversation.

Facing Declining Budgets, Legislators Push Costs on Others

The Wall Street Journal reports on efforts in state governments to expand public programs and the role of states in health care. There’s legislation in at least 11 states to enact a single-payer system, add more people to public programs, or take similar measures.

The article notes that states [having balanced-budget requirements but not a printing press] have had to deal with economic reality: “Before Barack Obama was elected president, much of the focus of a health-care overhaul was at the state level. …. But for now, budget woes are undercutting efforts to add to state-government rolls, and many states are actually cutting health programs.” That should force legislators who want to expand public programs in health to reduce public programs elsewhere. But programs in education, aid to local government, and corporate welfare, have their defenders, too.

With little new money to spend, legislators turn to the next best thing: Forcing other people to spend. So we’ve got laws requiring insurance companies and their customers to pay for treatment for autism, “dependent” children who are 25 years old, and so forth. Legislators are getting some help from one high-profile lobby:

To jump-start some efforts, the American Medical Association plans this spring to roll out a “code of conduct” as a model for its state affiliates to use in pushing for new regulations on health insurers.”We believe there’s going to be a lot of interest in many states,” said the group’s president, James Rohack.

Certainly businesses of all sorts of face regulations. But the amount of regulation, generally, is correlated with the degree to which consumer don’t have other options. The price of hamburgers? Not regulated. The price of electricity, which in most places is available from only one supplier (by law)? Regulated.

The purchase of insurance is highly regulated, more like the electricity model than the hamburger one. For practical purposes, most people have one choice when it comes to insurance. And as with electricity, the lack of choice stems in large part from the law. It’s time to change the law, so that it no longer discriminates against individuals or small groups of people who wish to buy insurance on their own rather than go through an employer or wait for a government program.

The Journal notes that there’s legislation in two states that would give consumers more options, without imposing costs on taxpayers or policy-holders: “In New Hampshire and South Carolina, Republican lawmakers have introduced bills that would allow consumers to buy health plans across state lines.”

So Much for Tort Reform

From the Chicago Tribune:

“The Illinois Supreme Court struck down the state’s medical malpractice law today, saying it violates separation of powers by allowing lawmakers to interfere with a judge’s ability to reduce verdicts.”

At least, from first blush, the majority exercised some measure of sound judicial reasoning:

Justices Lloyd Karmeier and Rita Garman dissented on certain points of the decision and expressed sympathy to providers of medical care, citing President Obama’s recent address to a joint session of Congress that the justices said “admonished” the nation’s collective failure to enact health care reform.

[snip]

Justices in the majority, however, said their decision was not made with health care reform efforts in Washington in mind, saying the “Obama administration’s health care reform efforts are not the backdrop against which we have decided the constitutionality.”

In other words, decide on the basis of your understanding of the law, not of the headlines.

California’s New HMO Regulations

Perhaps the greatest absurdity of California state senator Mark Leno getting his single-payer bill passed in the state senate is that it happened the same month the Department of Managed Health Care announced its new regulations limiting waiting times for HMOs. 

The new regulations will require that telephone calls be returned within 30 minutes; that health professionals be available 24/7; that appointments with general practitioners take place within ten days, or 15 days for specialists.  

There are standards that a single-payer plan could not hope to achieve.  Indeed, California’s current government-run health plans can’t achieve them.

The new regulations are a result of years of negotiations between HMOs, the government, and self-styled “consumer advocates”, who lobby for laws and regulation friendly to trial lawyers.  Indeed, Anthony Wright, ED of Health Access California, the “statewide health care consumer advocacy coalition” is actually listed on the DMHC’s press release as “sponsor of the original 2002 law.”  (Can you imagine the outrage if Pfizer or Eli Lilly were listed on a government press release as “sponsor” of a law concerning prescription drugs?)  According to Cindy Ehnes, Director of the DMHC, “Californians are literally sick of having to wait weeks to see a doctor.”

Well, I’m sure they are.  But what of the poor Califorians enrolled in Medi-Cal, our Medicaid program? Only 11 percent of cardiologists in Los Angeles accepted Medicaid patients, and the highest accepting specialty was dermatologists: 58 percent.

Lengthy waits for medical services, as doled out by government bureaucrats, are characteristic of so-called “universal” health care.  In my home country of Canada, we don’t measure waiting times in days, but in months – over four months, to be precise, according to The Fraser Institute’s 2009 annual survey of waiting lists for twelve specialties in each of Canada’s ten provinces.

Read more here.

Halfway to Government Control

For a while I’ve been saying that governments in the U.S. purchase roughly half of all health care. Soon I can remove the “roughly.” From the Wall Street Journal:

“For the first time, government programs next year will account for more than half of all U.S. health-care spending, federal actuaries predict, as the weak economy sends more people into Medicaid and slows growth of private insurance.”

[snip]

Public funds accounted for 47% of the $2.34 trillion of national health spending in 2008, the last year for which figures are available. The federal Centers for Medicare and Medicaid Services estimates in a paper to be published Thursday in the journal Health Affairs that the proportion will rise to 50.4% by 2011. Last year, the federal actuaries had predicted the 50% mark wouldn’t be reached until around 2016.

Health Care Debate is Politicized? You Don’t Say

The Saint Louis Post-Dispatch recently published an AP story (”States seeking to ban mandatory health insurance,” by David A. Lieb) on the effort of legislators in over 35 states to enact something akin to the Freedom of Choice in Health Care Act, which would serve as a firewall to state-based laws that would force people into government-run health care.

The article contains this gem: “The moves reflect the continued political potency of the issue for conservatives, who have used it extensively for fundraising and attracting new supporters.”

As opposed to leftists, who have used efforts to impose a massive scheme of health care taxes, subsidies, and regulations with only the high-minded good of the American people in mind. Sure.

Not so say they don’t have true believers. But come on, they’re using it for fundraising and attracting new supporters, too.Fortunately, they’re not getting broad public support. As the same story notes, “A USA Today/Gallup poll conducted the day after the Massachusetts vote found that about 55 percent of respondents – including a majority of self-described independents – favored putting the brakes on the current health care legislation.”

Smackdown in Dallas

OK, I’ll admit to writing a sensationalized headline once in a while, but it’s for a good cause: To mention an event that should bring together two very different “conservative” approaches to health care. Michael F. Cannon of the Cato Institute puts it this way: ““‘Father of HSAs’ John Goodman Plays Host to ‘Father of the Individual Mandate’ Mitt Romney”. Romney will speak at a luncheon on Thursday, March 18, 2010. Click through for details.

I thought the announcement was generous in its description of Romney’s record on health care policy: “In 2006, Romney proposed and signed into law a private, market-based reform that ensures every Massachusetts citizen will have health insurance, without a government takeover and without raising taxes.”

A Path to Rational Health Care Reform

With health “reform”  of the congressional variety stalled at the moment, it’s a good idea to look back at some alternatives. Last year, Nina Owcharenko of The Heritage Foundation laid out three principles that should guide reform: tax equity when it comes to the purchase of insurance; state-based reform rather than national solutions, and sound financing of public programs.

Centralized Health Care Impedes Battle Against Cancer

“Five-year survival rates for all cancers diagnosed from 1996 to 2003 also increased to 66%, compared with just 50% in the mid-1970s.” That’s the good news, say Tomas J. Philipson and Paul Howard, both of the Manhattan Institute. They attribute the gains to improved treatments, which come from “robust public financing of basic cancer research combined with a market-driven reimbursement system that rewards private firms for bringing these valuable new treatments and diagnostics to market.”

That progress is threatened, however, by the heavy hand of government. We might start looking like Europe, where “centralized government funding for cancer care and price controls on new medicines have slowed the battle against cancer.”