The National Anthem — And Why we Need Health Care Reform so Desperately

My health insurer here in California is Anthem Blue Cross. When I first opted for it, it was just called Blue Cross. Then, a year or so back, I was notified that an entity called “Anthem” would now be running my insurance policy. I didn’t think much about it at the time. I’ve had the usual problems most people have with their health insurers – confusing bills, co-payments and deductibles that never seem to add up, a bureaucracy that gives every impression of being more interested in fighting me than helping me — but nothing more. 

Now, Anthem Blue Cross is going a step further. It’s raising rates for individual policyholders by as much as 39 percent. That’s fifteen times faster than inflation. So far, my group policy hasn’t been affected but I’m expecting the worst.

Anthem says it has no choice. It says the recession has forced many policyholders to drop coverage because they can’t afford it. So Anthem has to spread its costs over a much smaller pool, which ratchets up the cost of each. In addition, says Anthem, too many of those remaining policyholders have greater medical needs than the average. So Anthem is just doing what it has to do to survive.

This argument sounds logical until you look more closely. First, Anthem and its corporate parent, WellPoint, are enormously profitable. WellPoint’s profits rose to $2.7 billion last quarter. Even if you subtract one-time-only financial maneuvers, WellPoint is still fat and happy, which makes Anthem fat and happy. Everyone is fat and happy except Anthem’s policy holders, who are being skewered.

Anthem’s argument is even more questionable when you consider that Anthem has been among the most aggressive opponents of the health-care bills passed by the House and Senate. If Anthem were sincere about why it’s raising its rates, it would be embracing the legislation. The Senate and House bills would add tens of millions of Americans to insurance pools – thereby spreading the costs over more people and avoiding the very problem Anthem says is now forcing it to raise its rates so much.

Even more troubling is the fact that Anthem obviously believes it can raise its rates by as much as 39 percent without losing every one of its remaining customers with average or even somewhat above-average medical needs. The only way it could possibly raise its rates so high and expect to keep its customers would be if Anthem’s customers have no other choice. In other words, Anthem’s strategy makes sense only if Anthem faces little or no competition from other health insurers. 

I wouldn’t be surprised if this were the case. Insurers, remember, are exempt from the federal antitrust laws. And WellPoint, Anthem’s parent, is the largest insurer in America.

Anthem is a microcosm of what ails our private for-profit health insurance system – the most expensive in the world, whose costs are rising faster than anywhere in the world; a system rapidly becoming unaffordable to more and more Americans, in which insurers are rapidly consolidating into behemoths that have almost no competitors. And a system in which the biggest health insurers are lobbying like mad against reform because they like things just the way they are. They can squeeze the public and the public has no alternative but to pay up.

All this makes Anthem one of he best arguments for reform — which is probably why the President mentioned Anthem today when he emerged from what was billed as a “bipartisan” meeting to talk about health care and jobs.

Obama says he’s open to any new ideas from Republicans for how to control health care costs and expand coverage. The problem is Republicans don’t want to play this game. They don’t care about controlling costs or expanding coverage. They care only about taking back the House and/or the Senate next November. And they believe a means toward attaining this goal is to prevent Obama from achieving a victory on health care. The sooner the President accepts that undeniable fact — and gets the House to pass the Senate’s bill, and then uses the reconciliation process (that requires only 51 votes in the Senate) to deal with any remaining irreconcilable differences between the House and Senate — the better.  

In the meantime, next chance I get I’m switching to another insurer — if that makes any difference at all in what I pay or the service I get, which seems increasingly doubtful. I’m also joining any Tea Party of mad-as-hellers fed up with how Big Insurance, Big Pharma, Wall Street, and much of the rest of corporate America have taken over our democracy.

Originally published at Robert Reich’s Blog and reproduced here with the author’s permission.
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4 Responses to "The National Anthem — And Why we Need Health Care Reform so Desperately"

  1. Guest   February 11, 2010 at 10:42 am

    Thanks for the article and the solution to the problem. i.e. Stop the extortion, stop paying these thugs , rather have no insurance than be abused by these insurance thugs who are currently protected by government.

  2. Curtis Henson   February 11, 2010 at 12:17 pm

    Health insurance is the wrong focus for health care reform. Transparency in the delivery of health care should be first, followed by regulatory monitoring and control, much as we regulate utilities.Trying to control health care through managing insurance, is like placing a big balloon on the end of a hose, when what one needed to do was turn down the pressure at the spigot.

  3. decouple   February 12, 2010 at 12:57 pm

    If Anthem is making so much money, why don’t you start your own insurance company to compete with them? This article only proves that we need better competition in the market. But competition is restricted by state regulations. So the solution is to end state regulations and let the free market lower cost.

  4. FVMactuary   February 15, 2010 at 1:20 pm

    Insurance and “medical services as an entitlement” are the problem, not the solution, especially tax-paid entitlement programs and insurance tied to employment and sequenced in a food-chain hierarchy of cost shifting from government programs that slash reimbursement rates to providers, large private group coverage insurers who continue the cost-shifting through large negotiated discounts, to the individual insurance customers (near the bottom of the food chain) and self-insured individuals (at the very bottom of the food chain, if they are solvent – jumping to the top of the chain if they are indigent). Both branches of this food chain insulate users from the cost of their demands, and extract the costs indirectly from both users and non-users. Nothing about the proposals that Reich touts would change this in any fundamental way, the medical services sector having been captured by the FIRE and Government Entitlement Bureaucracy sectors, who will shape it to their own goals (high ROE or self-preservation and growth in employee head count that grow agency political influence).I’ve concluded that sensible health maintenance support services will have to develop outside of the reach of all of these sectors, since their business models guarantee they will focus (figuratively) on delivering services in ambulances at the bottom of the cliff, after people’s health has been wrecked, not in preserving and maintaining it. After all, there’s much more profitable business (wonderfully expensive and numerous procedures and pharmaceuticals and other gold-plated technologies) demanded there than in the mundane function of helping people overcome the habits and practices that put them over the cliff in the first place! For an elegant exposition of this view, see:”The Health of Nations” by Phillip J. Longman