Archive for March 2nd, 2010
Jerry Brown, state Assembly turn up the heat on California’s health insurers
Scrutiny of California’s health insurers intensified Thursday with both Attorney General Jerry Brown and the state Assembly demanding more financial information from the industry.
Brown issued subpoenas to the state’s seven largest health insurance companies: Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare.
Brown, expected to announce his candidacy for governor in the next two weeks, said the information will aid an investigation into “possibly illegal” rate increases.
“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said in a statement.
Brown’s subpoenas focus on “pay-for-service” plans. Brown said the same companies were subpoenaed last month for information on their managed care plans.
Patrick Johnston, president and chief executive officer of the California Association of Health Plans, reacted to Brown’s move by sympathizing with public frustration but noting that insurance premiums are driven largely by the “skyrocketing cost of medical care.”
To avoid confusion and delay in supervising health insurance, Johnston said, regulation of the industry should be left to state agencies currently charged with that responsibility – the Department of Managed Health Care or the Department of Insurance.
The Assembly, meanwhile, targeted Anthem Blue Cross for a subpoena Thursday to compel release of information about compensation to its California executives and internal discussions on raising rates.
The action came two days after Anthem Blue Cross President Leslie Margolin and other company executives were grilled by the Assembly Health Committee about plans to raise premiums by as much as 39 percent on hundreds of thousands of Californians.
The Assembly Rules Committee split along party lines on a 6-4 vote to issue a subpoena but to delay service for two weeks, giving Anthem time to voluntarily produce information about executive compensation and internal rate deliberations. Republicans voted no.
Natalie Cárdenas, of Anthem, said the firm had been responsive to a request to produce records for the health committee hearing and is willing to provide supplementary information.
“I don’t see any need to subpoena us for this information,” she said.
Assemblyman Dave Jones, a Sacramento Democrat who chairs the Committee on Health, said that Anthem had “gamed” the system by releasing documents the night before Tuesday’s public hearing.
Republicans accused Jones of grandstanding by seeking issuance of the first Assembly subpoena since 2000.
“I think this is all about running for higher office,” said Assemblyman Ted Gaines, R-Roseville.
Jones countered that lawmakers have a responsibility to protect the interests of up to 800,000 Californians who face a massive rate hike from Anthem.
Insurance rate hikes fan political firestorm
Leslie Margolin, Anthem Blue Cross president, testifies Tuesday at an Assembly Health Committee hearing on her company’s decision to hike premiums as much as 39 percent on hundreds of thousands of Californians. She said Anthem, the state’s largest for-profit health insurer, wasn’t seeking profits beyond what she called slim margins of 2 to 5 percent.
It’s become an annual ritual for Folsom insurance broker Dina Collins, delivering the news to clients that they will have to dig deeper into their pockets if they want the ease of mind that health insurance brings. This year the news was particularly harsh.
“I’ve been in business for 20 years, and I’ve never seen anything like this. I thought it was scary,” Collins said.
While intense scrutiny is being focused on Anthem Blue Cross for proposing rate hikes of up to 39 percent on hundreds of thousands of Californians who buy insurance on their own, other insurers are delivering some equally jolting rate increases.
Last month, one of Collins’ clients received a disheartening notice from her insurer, Health Net: a 37 percent increase, from $394 monthly to $538, that further strains her ability to afford coverage.
Blue Shield subscribers have also been jolted by dramatic increases. In the San Francisco Bay Area, some small business owners complain of increases exceeding 75 percent. One Portola Valley business owner reported seeing premiums for two of his employees jump from $622 a month to $1,093 for a plan with an $1,800 deductible.
“It’s been across the board,” said Collins. “It’s not only Blue Cross. It’s everybody.
A political firestorm
But it’s the Anthem Blue Cross hikes that have drawn increasingly critical attention. The scrutiny boiled over last week as legislative hearings were launched, candidates jockeyed for political advantage and legal paperwork started flying.
Anthem Blue Cross President Leslie Margolin was grilled by a state Assembly committee Feb 23. Particularly harsh was Assemblyman Dave Jones, D-Sacramento, who wants to be insurance commissioner.
Angela Braly, president and CEO of WellPoint, Anthem’s parent company, got the same treatment Wednesday from a congressional panel in Washington, D.C., where the Anthem hikes have become a talking point in the national debate over health care.
On Thursday, the Assembly subpoenaed Anthem Blue Cross records, seeking information about executive compensation and internal discussions on raising rates.
The same day, state Attorney General Jerry Brown, who is to announce his candidacy for governor today, issued subpoenas not only to Anthem, but to the other six largest health insurers in California: Aetna Health, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare. Brown cited concerns that the companies were “unjustly raising rates and denying payment of legitimate claims.”
On Monday, Consumer Watchdog filed a lawsuit seeking class-action status against Anthem Blue Cross, alleging that the insurer is forcing subscribers into a coverage “death spiral.” The suit, filed in Ventura Superior Court, accuses Blue Cross of hiking premiums to force subscribers from benefit-rich policies to less expensive coverage with fewer benefits and higher deductibles.
The scrutiny has been welcomed by many, including consumer health care advocacy groups.
“Regulators need to be taking a hard look at what’s behind these increases. Consumers need to know,” said Michael Russo, a health care advocate and staff attorney for the California Public Interest Research Group. “When they say, ‘Trust us. We’re doing everything to keep premiums down,’ it’s really hard to take them at face value.”
But while critics sternly wag fingers at insurers, the companies point elsewhere.
Anthem Blue Cross President Margolin argued the point during two hours of testimony Tuesday before a mostly skeptical Assembly Health Committee. “The more time and energy we devote to looking for someone to blame, the more acute will become the problems we need so desperately to address,” she said.
Patrick Johnston, president of the California Association of Health Plans, said, “It’s inevitable that health plans and other organizations in the field are going to be subject to scrutiny. But it makes sense to examine what drives the cost of health care.”
Hospitals and doctors are demanding more money for their services because of expensive new technologies and pharmaceuticals. Hospitals are passing on the cost of treating the uninsured to those with insurance. Worried about malpractice lawsuits, doctors are ordering more bill-swelling tests.
Such costs eventually are passed on to ratepayers, Johnston said.
Insurers stingy on details
But insurance companies’ unwillingness to disclose information about profits and other financial data or details about the rate-setting process has heightened skepticism that the increases are justified.
“Part of what we don’t know is how they reach different premium hikes for different people. Why is it higher for one person? How are they slicing and dicing?” said Beth Capell, a program manager for Health Access California.
Two state agencies regulate health insurance companies doing business in California – the Department of Managed Health Care, which mostly monitors health maintenance organizations, and the Department of Insurance, which also has oversight of automobile and property insurance.
But state regulators have no pre-approval authority over health insurance rates, unlike premiums for vehicle and property insurance.
Insurance companies must file rate information with the Insurance Department, but most of the information is considered confidential, according to spokesman Darrel Ng.
“The filings made are proprietary. They are not public record, and we don’t publicly acknowledge that we’ve received them,” Ng said.
“We carefully examine every filing made by a health insurer to make sure that it complies with state law, specifically that 70 percent of every premium dollar is being spent on medical benefits,” he said.
An actuary assigned by the insurance commissioner to investigate the Anthem Blue Cross rate hikes, and the subpoenas from the attorney general and the Assembly could elicit some information that sheds more light on health insurance rate decisions.
Anthem Blue Cross says it complies with the law.
Brad Kieffer, a spokesman for Health Net, said the company would not publicly discuss how it sets its rates or any hikes in premiums.
Angry consumers
Meanwhile, Jeanne Morales of Encino had to settle for a cheaper plan with fewer benefits when her insurer, PacifiCare, informed her in January of a 30 percent increase that would have brought her monthly premiums to $2,432 for her and her husband. Just last October, their premiums rose 16 percent.
“At the time, I thought it was getting out of hand,” Morales said. “I had toyed with the idea of getting new coverage or dropping. But there aren’t many good options out there.”
Her only option, she said, was to downgrade to a policy with lower premiums, higher co-pays and diminished coverage.
“I was totally annoyed. It isn’t just Anthem Blue Cross. … I think all of them should be under fire. I think it’s outrageous,” Morales said.
“We regulate so many things in this county,” she said, “and the fact that we just can’t get any regulations in the insurance industry is beyond belief.”
Jerry Brown, state Assembly turn up the heat on California’s health insurers
Scrutiny of California’s health insurers intensified Thursday with both Attorney General Jerry Brown and the state Assembly demanding more financial information from the industry.
Brown issued subpoenas to the state’s seven largest health insurance companies: Aetna Health, Anthem Blue Cross, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare.
Brown, expected to announce his candidacy for governor in the next two weeks, said the information will aid an investigation into “possibly illegal” rate increases.
“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said in a statement.
Brown’s subpoenas focus on “pay-for-service” plans. Brown said the same companies were subpoenaed last month for information on their managed care plans.
Patrick Johnston, president and chief executive officer of the California Association of Health Plans, reacted to Brown’s move by sympathizing with public frustration but noting that insurance premiums are driven largely by the “skyrocketing cost of medical care.”
To avoid confusion and delay in supervising health insurance, Johnston said, regulation of the industry should be left to state agencies currently charged with that responsibility – the Department of Managed Health Care or the Department of Insurance.
The Assembly, meanwhile, targeted Anthem Blue Cross for a subpoena Thursday to compel release of information about compensation to its California executives and internal discussions on raising rates.
The action came two days after Anthem Blue Cross President Leslie Margolin and other company executives were grilled by the Assembly Health Committee about plans to raise premiums by as much as 39 percent on hundreds of thousands of Californians.
The Assembly Rules Committee split along party lines on a 6-4 vote to issue a subpoena but to delay service for two weeks, giving Anthem time to voluntarily produce information about executive compensation and internal rate deliberations. Republicans voted no.
Natalie Cárdenas, of Anthem, said the firm had been responsive to a request to produce records for the health committee hearing and is willing to provide supplementary information.
“I don’t see any need to subpoena us for this information,” she said.
Assemblyman Dave Jones, a Sacramento Democrat who chairs the Committee on Health, said that Anthem had “gamed” the system by releasing documents the night before Tuesday’s public hearing.
Republicans accused Jones of grandstanding by seeking issuance of the first Assembly subpoena since 2000.
“I think this is all about running for higher office,” said Assemblyman Ted Gaines, R-Roseville.
Jones countered that lawmakers have a responsibility to protect the interests of up to 800,000 Californians who face a massive rate hike from Anthem.
Insurance rate hikes fan political firestorm
Leslie Margolin, Anthem Blue Cross president, testifies Tuesday at an Assembly Health Committee hearing on her company’s decision to hike premiums as much as 39 percent on hundreds of thousands of Californians. She said Anthem, the state’s largest for-profit health insurer, wasn’t seeking profits beyond what she called slim margins of 2 to 5 percent.
It’s become an annual ritual for Folsom insurance broker Dina Collins, delivering the news to clients that they will have to dig deeper into their pockets if they want the ease of mind that health insurance brings. This year the news was particularly harsh.
“I’ve been in business for 20 years, and I’ve never seen anything like this. I thought it was scary,” Collins said.
While intense scrutiny is being focused on Anthem Blue Cross for proposing rate hikes of up to 39 percent on hundreds of thousands of Californians who buy insurance on their own, other insurers are delivering some equally jolting rate increases.
Last month, one of Collins’ clients received a disheartening notice from her insurer, Health Net: a 37 percent increase, from $394 monthly to $538, that further strains her ability to afford coverage.
Blue Shield subscribers have also been jolted by dramatic increases. In the San Francisco Bay Area, some small business owners complain of increases exceeding 75 percent. One Portola Valley business owner reported seeing premiums for two of his employees jump from $622 a month to $1,093 for a plan with an $1,800 deductible.
“It’s been across the board,” said Collins. “It’s not only Blue Cross. It’s everybody.
A political firestorm
But it’s the Anthem Blue Cross hikes that have drawn increasingly critical attention. The scrutiny boiled over last week as legislative hearings were launched, candidates jockeyed for political advantage and legal paperwork started flying.
Anthem Blue Cross President Leslie Margolin was grilled by a state Assembly committee Feb 23. Particularly harsh was Assemblyman Dave Jones, D-Sacramento, who wants to be insurance commissioner.
Angela Braly, president and CEO of WellPoint, Anthem’s parent company, got the same treatment Wednesday from a congressional panel in Washington, D.C., where the Anthem hikes have become a talking point in the national debate over health care.
On Thursday, the Assembly subpoenaed Anthem Blue Cross records, seeking information about executive compensation and internal discussions on raising rates.
The same day, state Attorney General Jerry Brown, who is to announce his candidacy for governor today, issued subpoenas not only to Anthem, but to the other six largest health insurers in California: Aetna Health, CIGNA, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare. Brown cited concerns that the companies were “unjustly raising rates and denying payment of legitimate claims.”
On Monday, Consumer Watchdog filed a lawsuit seeking class-action status against Anthem Blue Cross, alleging that the insurer is forcing subscribers into a coverage “death spiral.” The suit, filed in Ventura Superior Court, accuses Blue Cross of hiking premiums to force subscribers from benefit-rich policies to less expensive coverage with fewer benefits and higher deductibles.
The scrutiny has been welcomed by many, including consumer health care advocacy groups.
“Regulators need to be taking a hard look at what’s behind these increases. Consumers need to know,” said Michael Russo, a health care advocate and staff attorney for the California Public Interest Research Group. “When they say, ‘Trust us. We’re doing everything to keep premiums down,’ it’s really hard to take them at face value.”
But while critics sternly wag fingers at insurers, the companies point elsewhere.
Anthem Blue Cross President Margolin argued the point during two hours of testimony Tuesday before a mostly skeptical Assembly Health Committee. “The more time and energy we devote to looking for someone to blame, the more acute will become the problems we need so desperately to address,” she said.
Patrick Johnston, president of the California Association of Health Plans, said, “It’s inevitable that health plans and other organizations in the field are going to be subject to scrutiny. But it makes sense to examine what drives the cost of health care.”
Hospitals and doctors are demanding more money for their services because of expensive new technologies and pharmaceuticals. Hospitals are passing on the cost of treating the uninsured to those with insurance. Worried about malpractice lawsuits, doctors are ordering more bill-swelling tests.
Such costs eventually are passed on to ratepayers, Johnston said.
Insurers stingy on details
But insurance companies’ unwillingness to disclose information about profits and other financial data or details about the rate-setting process has heightened skepticism that the increases are justified.
“Part of what we don’t know is how they reach different premium hikes for different people. Why is it higher for one person? How are they slicing and dicing?” said Beth Capell, a program manager for Health Access California.
Two state agencies regulate health insurance companies doing business in California – the Department of Managed Health Care, which mostly monitors health maintenance organizations, and the Department of Insurance, which also has oversight of automobile and property insurance.
But state regulators have no pre-approval authority over health insurance rates, unlike premiums for vehicle and property insurance.
Insurance companies must file rate information with the Insurance Department, but most of the information is considered confidential, according to spokesman Darrel Ng.
“The filings made are proprietary. They are not public record, and we don’t publicly acknowledge that we’ve received them,” Ng said.
“We carefully examine every filing made by a health insurer to make sure that it complies with state law, specifically that 70 percent of every premium dollar is being spent on medical benefits,” he said.
An actuary assigned by the insurance commissioner to investigate the Anthem Blue Cross rate hikes, and the subpoenas from the attorney general and the Assembly could elicit some information that sheds more light on health insurance rate decisions.
Anthem Blue Cross says it complies with the law.
Brad Kieffer, a spokesman for Health Net, said the company would not publicly discuss how it sets its rates or any hikes in premiums.
Angry consumers
Meanwhile, Jeanne Morales of Encino had to settle for a cheaper plan with fewer benefits when her insurer, PacifiCare, informed her in January of a 30 percent increase that would have brought her monthly premiums to $2,432 for her and her husband. Just last October, their premiums rose 16 percent.
“At the time, I thought it was getting out of hand,” Morales said. “I had toyed with the idea of getting new coverage or dropping. But there aren’t many good options out there.”
Her only option, she said, was to downgrade to a policy with lower premiums, higher co-pays and diminished coverage.
“I was totally annoyed. It isn’t just Anthem Blue Cross. … I think all of them should be under fire. I think it’s outrageous,” Morales said.
“We regulate so many things in this county,” she said, “and the fact that we just can’t get any regulations in the insurance industry is beyond belief.”
Rancho Cordova-based insurer launches medical marijuana coverage
Stephen Gasparas, left, sorts bags at his iCenter medical marijuana collective’s Redding dispensary earlier this month. The Humboldt County resident, 39, says he makes more than $100,000 a year for also overseeing dispensaries in Arcata and Mill Creek.
A Rancho Cordova-based insurer Monday launched what it calls the first nationally available insurance coverage designed specifically for the medical marijuana industry.
Only 14 states allow use of medical marijuana today, but Statewide Insurance Services is nonetheless offering coverage in all 50 states.
“Given the growth in the industry, I think it’s only a matter of time” before other states allow medical marijuana, said Mike Aberle, a commercial insurance agent with the local firm and national director of its Medical Marijuana Specialty Division.
He added: “Now that we can offer (services) in all 50 states, we can start the minute they go legal, without delay.”
Aberle said the nationwide program covers “all aspects of the industry,” including medical marijuana dispensaries (MMDs for short), workers’ compensation, general liability, auto insurance (motor vehicles used to transport product), equipment breakdown/damage, property/product loss (including pot spoilage) and operations related to marijuana growing.
The door for dispensaries and commercial insurers opened in 1996, when California voters approved Proposition 215, which allows physicians to recommend cannabis for treatment of cancer, anorexia, AIDS, chronic pain, spasticity, glaucoma, arthritis, migraines or “any other illness for which marijuana provides relief.”
The number of dispensaries started to spike dramatically last year when the Obama administration said it would not arrest marijuana growers and sellers who abide by state laws. Previously, federal officials prosecuted them.
Some in the medical marijuana industry estimate there are now more than 2,000 dispensaries statewide.
Aberle began the process of forming Statewide’s MMD unit in 2007. Since then, the Rancho Cordova company has provided insurance to clients in California, Colorado, New Mexico and Rhode Island.
Aberle said he started ramping up the national program last year.
He said premiums range from about $650 annually up to $25,000 a year, with numerous variables affecting price. Typical policies have annual premiums in the $1,000- to-$4,000 range.
Max Del Real, a lobbyist with California Capitol Solutions in Sacramento, characterized Statewide’s national program as a milestone in an industry that needs insurance protections for everyone in the distribution chain, from growers of medical marijuana to those who use it.
“It’s very big, especially right now with public safety. Safety protocols need to be put into place,” he said.
Del Real has represented dispensaries and other segments of the medical marijuana industry throughout California, and he said growers remain the most unprotected group.
“How do we move out of residential areas and into commercial and industrial space?” he asked. “A lot of people are trying to get their minds around the cultivation of medical marijuana.”
Del Real said governments throughout California have to decide numerous issues, such as whether they will require insurance for dispensaries.
“There is a big thing of catching up going on,” he said. “Each community is passing its own laws, and that becomes problematic.”
The growth of MMDs came so fast that some California cities – including Placerville and Los Angeles – have drafted ordinances and moratoriums to halt new openings.
Mike Aberle
