Progressives and Conservatives Agree: Single Payer Healthcare Is Inevitable

The new health care legislation is a step toward elimination, by slow strangulation, of private health insurance and establishment of government as the ‘single payer.’”            – George Will, in his weekly newspaper column, Sunday July 11, 2010

Everyone loves to pick on the Affordable Care Act (ACA), and well they should.  This 2,000+ page contraption, this heap of handouts to the special interest lobbyists with a few shiny baubles thrown in to placate the common folk, was not only written by the for-profit health insurance industry but now will be implemented by former WellPoint/Anthem Vice President Liz Fowler who actually penned much of the law in her role as Max Baucus’ chief healthcare counsel for the Senate Finance Committee.  You don’t have to make this stuff up, as emptywheel reported on FireDogLake July 14, 2010, “Former WellPoint VP Liz Fowler to Implement Health Care Oversight”

But what about George Will’s fine whine that the insurance industry faces strangling regulation?  Robert Pear wrote in the New York Times on August 2 that the new law will lead to more regulation of the industry, and “the transition is full of risks and uncertainty for all involved.” If the Obama administration is going to “regulate the industry for the benefit of consumers,” he noted, then “they can’t help but destabilize or disrupt the existing market.”

Wall Street doesn’t like uncertainty.  It detests being destabilized.  Stock analysts are not missing out on this.  The brokerage firm Edward Jones “downgraded the ratings on the stocks of the three health insurers it covers – UnitedHealth Group, WellPoint and Aetna — to ‘sell’ from ‘hold’ late on Friday [7/30]. Those companies are the three largest U.S. health insurers.” (Reuters 8/2/10)

This new blow comes after legendary investor Warren Buffett pulled the plug on WellPoint and United Health, selling all Berkshire Hathaway’s holdings in the insurance giants during the first quarter of 2010 (“Buffett’s Berkshire Disposes Stake in UnitedHealth, WellPoint”)

Speaking in Virginia, former House Speaker and presumed presidential candidate Newt Gingrich said on May 14,

“The employer-based system will collapse because [the ACA] encourages businesses to drop health care coverage and incur the fine. When employees realize the high costs of the health care exchanges, they will demand a nationalized health care system.”

It only gets worse, or better, depending on your perspective.  According to Gingrich, the business community is going to lead the call for single payer Medicare for All.

And well they should.  Gingrich wasn’t making this up.  On May 6, CNN Money released documents showing that “many large companies are examining a course that was heretofore unthinkable, dumping the health care coverage they provide to their workers in exchange for paying penalty fees to the government…  AT&T revealed that it spends $2.4 billion a year on coverage for its almost 300,000 active employees, a number that would fall to $600 million if AT&T stopped providing health care coverage and paid the penalty option.”

Is the Affordable Care Act unaffordable?  Isn’t it at least a step in the right direction?

Those questions can only be answered by considering whether the ACA ends up strengthening or weakening the health insurance corporations. Progressive critics of the bill point out that the new legislation hands over $350 billion in government subsidies to the private insurers while mandating consumers to buy the industry’s shoddy products.  That, combined with a lack of price controls means the ACA could prove to be a bonanza for the corporate stakeholders in the medical-industrial complex.

On the other hand, the changing marketplace is full of perils, even if the conservative icons quoted above are exaggerating them to stir up fear of Socialized Medicine (and maybe scare up some donations).

If we stand back and rest on our laurels, believing that the ACA will save us, then we are doomed. The industry lobbyists are working overtime to take the best parts of the bill and weaken them, while destroying any good that is in the bill (see Wendell Potter in the Huffington Post on July 27, Health Insurers Leaning on State Insurance Commissioners to “Reform” Reform).

We believe that Medicare for All is inevitable in the United States.  It is up to all of us to determine when the inevitable becomes the reality.”

– Representatives Dennis Kucinich (D-Ohio), John Conyers (D-Mich.), and U.S. Senator Bernie Sanders (I-Vt.), statement for Medicare’s birthday, July 29, 2010

If you’re not inclined to believe George and Newt, then how about Dennis, John, and Bernie:  “It is up to all of us to determine when the inevitable becomes the reality.”

The reality is that single payer, Medicare for All, is not inevitable, nor is there any guarantee the ACA won’t bankrupt us while enriching the corporations that lobbied for it.

It reminds me of a slogan we have in Indiana, “Healthcare Reform:  We’re Still For It, and We’re Not Done Yet!”

From California to Vermont, Medicare for All advocates are working for bills to create state single payer systems.  The grassroots are pushing up thru the disappointment of the Affordable Care Act.

Nationally, with the growing recognition that the health insurance giants stand as the greatest barrier to affordable healthcare for all, investors are beginning to see that this is not an industry socially responsible stockholders should be in (Huffington Post May 12, Napalm, Big Health Insurance, and Divestment).

I went to medical school to take care of sick people.  The insurance companies fulfill their fiduciary responsibility to their investors by finding ways not to pay for the care of the sick.  All their innovation and creativity go to this goal of not paying for care.  No other sector in our crazy healthcare system operates under this incentive.

It will take a mass movement, like those for women’s suffrage and civil rights.   It will take a divestment campaign like the one against apartheid in South Africa.  We must keep the pressure up, shine a light on their nefarious deeds, drive down their stock prices, and expose them for what they are: parasitic middlemen who add no value while sucking billions out of our economy.

It is up to all of us to determine when the inevitable becomes the reality.”

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WellPoint Press Conference April 7, 2010

The press conference outside WellPoint headquarters in downtown Indianapolis was a tremendous success.  See the HCHP website for media coverage, including TV.  Here is the text of Dr Stone’s statement:

People ask me, why should WellPoint shareholders vote for the proposal that the company explore returning to its traditional Blue Cross, charitable, not-for-profit mission?

The reasons keep coming out in the newspapers, and let me mention a few from the last 12 weeks.

The Indianapolis Star on January 16 exposed that WellPoint has been covertly funding U.S. Chamber of Commerce attack ads against health care reform.  WellPoint spent tens of millions on other non-covert lobbying.  Keep in mind that the bill recently passed was largely written by former WellPoint Vice President Liz Fowler in her role as Max Baucus’ chief healthcare legislative aide.

McClatchy Newspapers on February 24:  ”While Anthem Blue Cross proposed a 39 percent rate increase on thousands of its California customers, its parent company gave 39 of its executives more than $1 million each and spent more than $27 million on 103 lavish executive retreats, congressional investigators said.”

The Los Angeles Times on March 10 updated its readers on the ongoing rescission scandal involving WellPoint in California. “Only a small fraction of eligible Californians have benefited from agreements that Anthem Blue Cross made to settle accusations that they systematically and illegally dropped sick policyholders to avoid paying for their care.”  These were people whose insurance coverage was cancelled after they were diagnosed with cancer and other serious conditions.

The Los Angeles Times again, on March 18 reported that in 2007 WellPoint had pledged through its charitable foundation to spend $30 million over three years to help those lacking health coverage, but its tax records and website show it gave only $6.2 million.

Consumer Watchdog reported March 31 that WellPoint sent a message to investors describing how it would simply re-label administrative costs as “medical care” in response to the new health reform law. The message follows revelations that WellPoint, also intentionally padded already huge premium increases in California, just in case regulators demanded reductions.

Also on March 31, Revive Public Relations released the results of its fourth annual national payer survey of hospital executives. Survey results showed a marked decline in WellPoint/Anthem’s reputation, now 2nd worst of all health insurance companies in their study.

And now this week the news of CEO Angela Braly’s 51% salary increase, up to $13.1 million.  The arrogance is overwhelming.  Why wouldn’t shareholders be concerned with the direction this company is heading?

Yesterday afternoon in Bloomington I listened to Allan Hubbard speak on health care reform at Indiana University.  Mr Hubbard, an Indianapolis businessman, served in the GW Bush administration and is a recent member of WellPoint’s Board of Directors.

He made no bones about being a Republican and shared a Republican view on where health care reform should go from here.  At the end of his talk he concluded with this prediction: “My guess is that in 15 years we will have a single payer health plan, Medicare for All.”  He wasn’t saying that gleefully.

He explained that all the health insurance companies do is serve as middlemen between patients and providers, (doctors and hospitals).  He fears that as health care reform moves forward, Congress and the people will turn on them as a way to cut spending.

They (we) should.  The health insurance industry adds huge administrative costs to our system, not to mention the profits they siphon off.  WellPoint is a parasitic middleman that adds no value, but actually increases the cost of healthcare for all of us.

I see the day when socially responsible investors will divest themselves from health insurers’ stocks.

My recommendation is that WellPoint investors look at drastically changing the direction of our company, and not wait for the stock price to plummet once the public figures out that insurance companies should go.

WellPoint Shareholder Proposal – Feasibility of Non-profit Conversion

Below is the text of our resolution that will be included in the WellPoint proxy statement released the first week in April, 2010, with the annual meeting to be held the morning of Tuesday May 18, in Indianapolis.

PROPOSAL NO. 3     SHAREHOLDER PROPOSAL CONCERNING

A FEASIBILITY STUDY FOR CONVERTING TO NONPROFIT STATUS

We have been informed that Robert Stone and Karen Green Stone (husband and wife), Bloomington, Indiana, and Julia Vaughn, Indianapolis, Indiana, collectively the beneficial owners of 53 shares of our commons stock, intend to introduce at the annual meeting the following resolution.  The following shareholder proposal will be voted on at the annual meeting only if properly presented by or on behalf of Mr. Stone, Mrs. Stone and Ms. Vaughn.  In accordance with SEC rules, the text of the proposed shareholder resolution and supporting statement is printed verbatim from its submission.

“Whereas, the United States allows too many people to suffer and die due to lack of adequate health insurance and this is threatening the economic stability of the country; and

Whereas, no country has achieved universal healthcare through for-profit health insurance; and

Whereas, in written statements WellPoint supports “the best healthcare value for our customers” and promises  “to advocate for responsible healthcare reform”; and

Whereas, WellPoint has actively opposed President Obama’s healthcare reform efforts; and

Whereas, WellPoint was a nonprofit insurance company before it demutualized, raised capital through stock offerings, merged with, acquired, and demutualized other nonprofit Blue Cross/Blue Shield companies; therefore be it

Resolved, that the shareholders of WellPoint urge the board of directors to launch a feasibility study for returning to nonprofit status.  This study, conducted at reasonable cost, with results made available to the stockholders, omitting any proprietary information, should be completed within nine months of the 2010 shareholder meeting.

The proponent has furnished the following statement:

Investors are concerned about the effects of runaway health costs on the economy, and the crisis of over 46 million uninsured.  Recent studies show 45,000 people a year die because they lack health insurance (American Journal of Public Health 9/17/09).   Tens of millions more are underinsured, able to afford coverage only through policies with huge deductibles and out of pocket expenses.  The impact of high deductible policies is seen in recent bankruptcy data showing 62% of personal bankruptcies caused by illness and medical bills, but 78% of those declaring bankruptcy for medical reasons had insurance when they became ill (American Journal of Medicine 8/09).  WellPoint has been a leader in marketing high deductible policies, specifically under the Tonik label.

From 1999 to 2008 American health insurance premiums increased 119% while workers earnings and overall inflation rose 30% (Bureau of Labor Statistics).  Businesses cannot continue to afford covering their employees. The Hewitt Associates study “The Road Ahead: 2009” found 1 in 5 employers are planning to drop health benefits in the next 3 to 5 years.  This system is unsustainable.

Studies show 31% of US healthcare spending is attributed to overhead.  In comparison, Medicare runs 3.1% overhead.  Most other developed nations spend less than 10% on overhead (New England Journal of Medicine 8/21/03).  Nations with universal systems spend about half what we spend on a per capita basis and have better health outcomes (Organization for Economic Cooperation and Development).

WellPoint’s reputation has suffered as a consequence of the negative publicity surrounding its efforts to oppose healthcare reform.  This resolution could change that.

The Board recommends a vote AGAINST this proposal for the following reasons:

This proposal requests that our Board of Directors conduct a feasibility study for “returning” the Company to nonprofit status.  As an initial matter, the proposal states that we were formerly a nonprofit entity.  That is not correct. Anthem Insurance Companies, Inc., one of our wholly-owned stock subsidiaries, was until its demutualization in 2001, a “for profit” mutual insurance company organized under Indiana law (although some of the Blue Cross and Blue Shield companies we have acquired since 1993 had been nonprofit entities at some time in their respective corporate histories). Nevertheless, we assume that the fundamental intent of this shareholder proposal is to call for a feasibility study for our conversion to a nonprofit organization.  We are responding to the proposal on that basis.

Converting to a nonprofit organization would result in, among other things, the elimination of the ownership interests of our shareholders.  The Board does not believe that the vast majority of our shareholders desire that result.  Moreover, the Board believes that the process of converting to nonprofit status would be costly and complex.  While it is not clear what transaction structure could be used to accomplish a conversion to nonprofit status, the Board believes that any conversion transaction would require at a minimum that our shareholders receive the fair value of their shares (except for shares held by any shareholders willing to contribute them without consideration as a charitable contribution), which would require, in the aggregate, the payment of significant sums of cash.

The Board believes that our conversion to a nonprofit organization would not be in our best interests or the best interests of our shareholders, employees, customers and members, as well as the communities we serve.  The Board believes that having access to the public capital markets is the best way to strengthen our capital and competitive position, to serve an increasing number of customers and members, and to continue investing in infrastructure, new products and programs that improve the quality of service to customers and members.  As a nonprofit organization, we would not be able to raise capital by selling stock and could not issue stock to pay for business acquisitions.  Without access to the equity markets, the Board also believes that our ability to borrow money to support our operations and fund business investments and business acquisitions would be more restricted and more costly as compared to our borrowings as a for profit stock corporation.  In addition, we would be restricted in our use of stock as part of the compensation plans and programs for our employees, which would likely impair our ability to attract and retain well-qualified individuals to our management team and to set compensation and benefits programs that are consistent with market practice.  Overall, the Board believes that our future growth, new product development and our ability to serve our constituencies would be impaired by the reduced capital that would be available to us as a nonprofit organization.

The proponent of this proposal has not presented any factual information to support the view that converting to nonprofit status would benefit us or our shareholders, employees, customers and members.  On the contrary, for the reasons described above, the Board believes that converting to nonprofit status would not be in our best interests or in the best interests of our shareholders, employees, customers and members.  A feasibility study for converting to nonprofit status would be costly and would distract management and the Board from overseeing our operations and, given the other considerations described above, is unwarranted.

For the reasons described above, the Board opposes the feasibility study requested in the proposal and recommends a vote AGAINST this proposal.  Proxies will be voted AGAINST the proposal unless you specify otherwise.

What Would FDR Do?

I had some face time with Rahm Emmanuel two weeks ago at my friend Owen’s. (Owen’s brother-in-law is the former Chair of the Democratic National Committee.)  Rahm said nothing surprising, but made his points.  He had just finished David Kennedy’s 1999 book Freedom from Fear about WW II, the Depression, and, germane to this conversation, the tremendous compromises involved in forging the New Deal.  Politically, he asserted, if you want to make big changes, you have to choose your battles and win the big ones.  If health reform goes down, then energy, global warming, financial reform, and labor’s legislative agenda are all at risk.  He stayed right on message.

I posed this to him: “Many Democratic politicians, including our Blue Dog Rep. Baron Hill, tell us in private conversations that they believe we have to get to single payer eventually. What advice would you give on how to get there?” Without a blink, he replied it’s “going to be a long haul”, and if we don’t pass this bill it’s going to be even longer.  He asserted that this bill begins building the required infrastructure for any future progress.

Since then, with the loss of the Democrats’ super-majority in the Senate everything is up in the air.  Which brings us back to the recurring question – Should we Kill the Bill?  There has been an incredible amount written in the Progressive community about this.  At one end is Helen Redmond (CounterPunch 12/23) Beware the Progressive Democrat arguing that we can’t trust Sanders, Weiner, or Conyers and that we’ve got to build our movement without any of that unreliable crew (kind of a rough “logical” conclusion, if you ask me).

At the other end is Nate Silver of FIveThirtyEight  (12/16) Health Care: The Elevator Pitch (and a number of other posts) where this bright political analyst makes the case for incrementalism.  Silver also notesI’ve gotten as many nasty comments and e-mails from Democrats on this issue [over the last two weeks] as I have in the past six months from conservatives on all issues. That emotion is a factor in this debate seems self-evident to me.”

All that emotion is evident as the blame is ladled out for Scott Brown’s Senate victory.  Is the message that the country is turning against the Progressives’ urge to legislate change, or that Obama has compromised the hope for change he promised by reverting to Washington business-as-usual and disappointing his base?

The healthcare bill will be at the center of this cyclone, and it’s too soon to say what gyrations the Dems will attempt to push it through.  Our response as single payer advocates should remain unchanged – we have strong, informed positions on the poor policy provisions in the bill.  I think we are best to remain silent on the political strategy (tragedy?) to be pursued.  I see an important distinction between being a pointed, persistent, insistent, carping, kvetching, nagging critic of this bill for policy reasons on the one hand, and joining in the political discussion about the merits of killing the bill on the other.

Let’s not be drawn into the classic Progressive Circular Firing Squad.  Our message is clear.  If the Democrats still manage to pass some form of health reform, they can celebrate, but WE’RE STILL FOR HEALTH REFORM, AND THIS AIN’T IT!

If no bill passes, then we have a different set of problems/opportunities.  If those who predict Republican ascendancy in the ’10 elections are right, then our work is really cut out for us.  Meanwhile, all those who forsook single payer for the allure of the public option are ripe to be brought back into our fold.  Movement building will continue.  Opportunities to form coalitions will appear.  As the business community becomes even more frustrated they will open to our message.

Here are the real lessons learned as we look back to the Iowa caucuses last January, from our vantage point looking out on the chaos this January:

  1. As much as we had hoped that this was a historic opportunity to make drastic, needed changes in our healthcare system, there really wasn’t the support to go all the way to single payer.  We can second guess Obama and Rahm forever, but I don’t believe there ever was a chance in hell that Evan Bayh, much less Lieberman or Ben Nelson would have ever voted for single payer.
  2. We should look again at a strategy of incremental reforms, a strategy that has been fruitful for many movements.  That is a longer story to explore later.
  3. No matter how hard we try to predict the future, we will always be surprised. Remember that even if single payer had passed in the full glory of HR 676 without amendment, we would have to defend it, improve it, and deal with its unintended consequences.  This work will never end.

How can we ever hope to win?  As Bill Moyers asked David Corn on his PBS show January 8, “Have people been so politically abused that the will to fight for democracy, the political will has been dissipated? “

Will it first take campaign finance reform, to break the grip of the big money? Where will that movement come from?  What other options do we have?

There is no better issue to organize around than universal health care.  In the environmental movement we learned the word NIMBY – Not In My Back Yard. Sometimes people distain NIMBY’s, but many a NIMBY activist has started locally before coming around to a global perspective.  Healthcare is everyone’s back yard, front yard, and right inside the house.  Our issue’s not going away, even if some politicians do.

We will stay in this fight for the long haul.  There is no real alternative except to quit.  When I get discouraged, I turn to one of the original crusading journalists and a real hero, IF Stone (no relation):

The only kinds of fights worth fighting are those you are going to lose, because somebody has to fight them and lose and lose and lose until someday, somebody who believes as you do wins.  In order for somebody to win an important, major fight 100 years hence, a lot of other people have go to be willing – for the sheer fun and joy of it – to go right ahead and fight, knowing you’re going to lose.  You mustn’t feel like a martyr.  You’ve got to enjoy it.

One of the great joys of being in HCHP/PNHP has been the joy of meeting and working with so many wonderful people.  I’m in this for the long haul and look forward to seeing you all many more times in the years to come.  And I can’t wait to see what’s going to happen next.

Fightin’ The Blues

On a cold and rainy December 2, while the Senate in Washington was slogging along debating health reform, a remnant troupe of public-option supporting Organizing for America stalwarts stood outside the corporate headquarters of WellPoint, Inc. in the center of downtown Indianapolis.  Minutes before their demonstration started, three single payer activists slipped in and out of the WellPoint office dropping off a shareholder resolution for next May’s annual meeting.

WellPoint, also known as Anthem or Blue Cross, is the perverted spawn of what was once a charitable venture known as Blue Cross/Blue Shield of Indiana.  From the 40’s up into the 90’s Blue Cross of Indiana was like all the other Blues around the country, non-profit with a charitable mission.  Its board of directors included physicians, hospital administrators, labor and community leaders, and it existed to serve the needs of patients.  But the healthcare market had become increasingly cutthroat, and in the aftermath of the Clinton Health Plan’s crash and burn, there was a huge consolidation in the industry.  Doctors went from solo or small group practices into larger and larger groups.  Hospitals that had been independent since their founding merged and national chains of for-profit hospitals grew powerful and predatory.

The most significant consolidation of all happened in the insurance industry, yet it is the least understood and appreciated.  Health insurance was once predominately state or regional non-profit Blue Cross plans or other regional non-profits, and a few national for-profits.  Now there are nine major national health insurers dominating the country.  They are for-profit, beholden not to their customers but to their shareholders.  Like most consolidated industries, they don’t compete head to head in most markets, but rather divide up the markets and crush smaller local competitors.  Did I mention that the insurance industry is exempt from federal anti-trust laws? The American Medical Association’s 2007 report “Competition in health insurance: A comprehensive study of U.S. markets,” found that in the majority of areas studied, a single health insurer dominated the market.  So much for competition.

The field these behemoths compete on is in Washington, DC. They can buy and sell Senators and dominate regulatory agencies.  More on that later after we come back to the story in Indiana.

In the early 90’s the Hoosier Blue Cross leadership decided that the future looked bleak for non-profit health insurance.  They began a series of maneuvers to radically restructure the company.  They took off the gloves.  Goodbye to a charitable mission.  Goodbye to being tax-exempt.  Hello Wall Street.

Blue Cross became Anthem turning a non-profit into a mutual company.  This set the stage for demutualization and a public stock offering (IPO).  In 2001 Anthem announced its intention to convert from a mutual insurance company to a stock corporation and filed its demutualization proposal with the Indiana Department of Insurance.  By this time Anthem had already completed a frenzy of mergers and acquisitions of Blues in Colorado, Connecticut, Kentucky, Maine, New Hampshire, Nevada, and Ohio. None of policyholders in those states had any say in this matter. Just days after the Indiana Department of Insurance commissioner approved Anthem’s demutualization proposal, Anthem announced that its IPO had yielded $1.7 billion.

Now came the mother of all mergers.  Blue Cross of California had been following a similar path beginning with their demutualization in 1993 and subsequent acquisition of Blues in Missouri, Georgia, Virginia, and Wisconsin, as well as acquiring the health divisions of Massachusetts Mutual, and John Hancock, among others. They changed the corporate name to WellPoint. In 2004 Anthem and WellPoint merged, becoming the largest health insurer in the US with 34 million lives covered.

The $20.8 billion merger created a cornucopia of compensation for executives of both parent companies.   Not only did Anthem’s Indiana CEO Larry Glasscock receive a $42.5 million dollar bonus on top of his base salary of $3.7 million, other top Hoosier executives pocketed $4 to $16 million dollars each.  The CEO of WellPoint in California, Leonard Schaeffer, retired on a package valued at $337 million.  I am not making this up.

At the close of 2009, hope is gone that we will see universal health coverage come out of this Congress.  Single payer advocates like myself never really believed it might come this time around, but couldn’t help but get our hopes up.  It remains to be seen whether any bill that passes will end up being an incremental step in the right direction, but it won’t be a slippery slope.

Our Hoosier “Democratic” Senator Evan Bayh has distinguished himself as a hindrance to any reform bill that is not in the best interests of the hometown insurance company.  Although he and his wife Susan proclaim no conflict of interest, she sits on the WellPoint board.  Her compensation for serving on that board, as reported to the Securities and Exchange Commission, is $330,000 a year, more than twice Evan’s salary of $160,000 as a senator.

Progressives disagree about how to proceed from here.  I spoke with T R Reid a few weeks ago in Boston.  He is the author of the PBS Frontline Sick Around the World and a new book,  The Healing of America. He makes a strong case for getting to universal care while keeping the private insurance industry, although he makes it clear that no nation has achieved universal care using for-profit companies.

Can universal health care be accomplished within our system of for-profit insurance companies?  I’ve always favored the single payer approach, which seems more feasible to me than taming the insurance behemoths.  Reid thinks we’ve got to consider the taming approach, so some of us decided to put that idea to the test, in the form of a shareholder resolution.

We delivered the resolution on that dark and rainy day.  Now we await word about whether the SEC will require WellPoint to include it in the proxy for the annual meeting.  It is a long shot, to be sure.  But if Congress won’t take on the insurance industry, then someone has to.  Here is our resolution, couched in the language our legal advisors recommended and adhering to all SEC requirements:

SHAREHOLDER RESOLUTION

Whereas, the United States allows too many people to suffer and die due to lack of adequate health insurance and this is threatening the economic stability of the country; and

Whereas, no country has achieved universal healthcare through for-profit health insurance; and

Whereas, in written statements WellPoint supports “the best healthcare value for our customers” and promises  “to advocate for responsible healthcare reform”; and

Whereas, WellPoint has actively opposed President Obama’s healthcare reform efforts; and

Whereas, WellPoint was a nonprofit insurance company before it demutualized, raised capital through stock offerings, merged with, acquired, and demutualized other nonprofit Blue Cross/Blue Shield companies; therefore be it

Resolved, that the shareholders of WellPoint urge the board of directors to launch a feasibility study for returning to nonprofit status.  This study, conducted at reasonable cost, with results made available to the stockholders, omitting any proprietary information, should be completed within nine months of the 2010 shareholder meeting.

Supporting Statement:

Investors are concerned about the effects of runaway health costs on the economy, and the crisis of over 46 million uninsured.  Recent studies show 45,000 people a year die because they lack health insurance (American Journal of Public Health 9/17/09).   Tens of millions more are underinsured, able to afford coverage only through policies with huge deductibles and out of pocket expenses.  The impact of high deductible policies is seen in recent bankruptcy data showing 62% of personal bankruptcies caused by illness and medical bills, but 78% of those declaring bankruptcy for medical reasons had insurance when they became ill (American Journal of Medicine 8/09).  WellPoint has been a leader in marketing high deductible policies, specifically under the Tonik label.

From 1999 to 2008 American health insurance premiums increased 119% while workers earnings and overall inflation rose 30% (Bureau of Labor Statistics).  Businesses cannot continue to afford covering their employees. The Hewitt Associates study “The Road Ahead: 2009” found 1 in 5 employers are planning to drop health benefits in the next 3 to 5 years.  This system is unsustainable.

Studies show 31% of US healthcare spending is attributed to overhead.  In comparison, Medicare runs 3.1% overhead.  Most other developed nations spend less than 10% on overhead (New England Journal of Medicine 8/21/03).  Nations with universal systems spend about half what we spend on a per capita basis and have better health outcomes (Organization for Economic Cooperation and Development).

WellPoint reported its third quarter 2009 medical loss ratio at 81.1%.  Medical loss ratio is the percentage of premiums that actually pays for care, and thus corresponds to 18.9% of premiums for overhead and profit.  Although this is good for WellPoint’s profitability and share price, it supports the argument that for-profit health insurance is a major reason for the discrepancy in overhead expenses between the US and other countries.

WellPoint’s reputation has suffered as a consequence of the negative publicity surrounding its efforts to oppose healthcare reform.  This resolution could change that.”

I’ll keep you posted on our progress.

Dr Rob

Is the House Bill Better Than Nothing – Continued again…

 

One of my professors years ago was a round little man who liked to warn us, with a twinkle in his eye, “Making predictions is very difficult, especially predictions about the future.”  Will a bill pass, in what form, and then what will the long term implications be?  It’s hard to predict.

The incomparable Dr John Geyman, former president of PNHP, makes another strong case [below] that whatever bill this Congress is able to pass will likely set the cause of single payer healthcare back because it “would leave in place an inefficient, exploitive insurance industry that is dying by its own hand, even as [the bill] props it up with enormous future profits through subsidized individual and employer mandates.”

But below that, Sam Stein writing in the Huffington Post reveals the Goldman Sachs analysis for the health insurance behemoths is that no reform would benefit them the most, and if we end up with a version close to the House bill, that would cause the industry the most financial difficulty.

It is clear that many of the supporters and opponents of the bills, both in Congress and the general public, are clearly deluded, and single payer is what has them flummoxed.

On the Left I keep talking to supporters of the public option who claim to be “single payer at heart”, and they believe that whatever passes will be the camel’s nose under the tent, the slippery slope to single payer.  Seems delusional. If only they are right….

Speaking of the Right, many of them also believe that any bill this Democratic Congress will pass will become the same camel’s nose, the same slippery slope to socialism.  Could they be right, too?

There is still work to do. The handwriting was on the wall Saturday 10/31 when anti-abortion Democrats had enough political oomph to get their Stupid Amendment debated and passed while the Progressive Caucus couldn’t muster enough support to bring either the Kucinich or Weiner Amendments to the floor.

No matter what happens, one thing is certain:  we have to continue to build our movement.  Next time around we have to get all those Representatives and Senators who voted for reform this time, to vote for real single payer reform.  And that would prove the delusional ones were right after all.

Rob

THE AFFORDABLE HEALTH CARE FOR AMERICA ACT (HR 3962):ENOUGH REFORM TO SUCCEED?

by John Geyman

As we know, the House passed its health care reform bill on October 29, 2009  after many months of contentious debate. By a narrow margin, 220-215, the 1,990 page, almost 20 pound bill was passed. It laid out the most liberal health care reform that might be expected out of Congress this year, since any bill that may clear the Senate will certainly be more restrictive.

In order to answer our question as to the value of the House bill, we need to re-state the original major goals of reform: (1) contain skyrocketing costs of health care and health insurance; (2) expand access to care by including everyone; and (3) improve the quality of care.

At a gross cost of $1.055 trillion over ten years, the House bill would do some good things, including reduction of the uninsured by up to 30 million; helping many Americans to pay for insurance through government subsidies; helping small business to provide coverage to their employees; expanding Medicaid and community health centers; establishing a new Center for Comparative Effectiveness Research to study and recommend the most effective treatments; initiating limited reforms of the health insurance industry, such as termination (four years hence) of its common practice of denying coverage based on health status and pre-existing conditions; phasing out government overpayments to private Medicare Advantage plans; revoking a decade-old anti-trust exemption for insurance companies; and creating a new long-term care program (CLASS ACT) to supplement Medicaid and/or private long-term care insurance.

However, the negatives far outweigh the positives, and adopting this bill would delay real reform for years to come. Despite a chorus of accolades about the bill by its supporters, even comparing it with the historic importance of Social Security and Medicare, this monster bill instead bears the heavy imprint of corporate stakeholders who themselves are largely responsible for out-of-control health care costs. After months of lobbying and campaign contributions to legislators crafting the legislation, their multiple conflicts of interest and political compromises, this bill ends up being a bailout for the insurance industry and a bonanza for stakeholders in the medical industrial complex.

Here are some of the major problems with the bill:

•  It will not “bend the cost curve” for many reasons—with the exception of a provision that the government negotiate drug prices with manufacturers (as the VA does so effectively), there are no real restraints on the prices of health insurance or health care services; insurers have already warned that premiums will continue to surge in future years; perverse incentives would remain in the system to continue providing large amounts of inappropriate and unnecessary services, especially by specialists in more highly reimbursed areas; and recommendations based on studies by the new Center for Comparative Effectiveness Research could not be used to mandate coverage or reimbursement policies.

•  As the crisis in declining access to care only grows (with already 46 million uninsured and at least another 30 million underinsured), expansion of Medicaid, subsidies, and limited restrictions on insurers would not take place for four more years. And as many states struggle with their deficits during the recession, access and benefit levels available to patients on Medicaid will be seriously jeopardized in many parts of the country. Meanwhile 45,000 Americans are dying each year as a result of being uninsured—one every 12 minutes.

•  Because of a number of small-print provisions in the bill, bought by industry interests and crafted by their representatives, we would see a growing epidemic of underinsuranceamong the newly insured. These are some of the reasons: low requirements for actuarial value, the proportion of health care costs that insurers are required to pay for care (probably ending up as low as 65 or 70 percent when further compromises are made with the Senate); restricted levels of benefits to be covered (the minimal essential benefits package would be in four tiers, has yet to be developed, and we can expect that it will fall far short of all necessary care); in a last-ditch effort to pass the bill and assuage pro-life legislators, new anti-choice language was added by the Stupak amendment that would deny coverage of abortion care to millions of women; and coverage shortcomings of private plans already in force will be grandfathered in without reform.

•  Even after the expenditure of more than $1 trillion, the bill would still leave some 18 million Americans uninsured.

•  The public option, diminished as it has been to the point where it could only include 2 percent of Americans by 2019, would not have enough market clout to “keep the insurers honest.” The Congressional Budget Office (CBO) has already concluded that the public option would not offer real competition to private insurers, and that its premiums would even have to be higher than private premiums. It would not be available until 2013 through the new Health Insurance Exchange, and then only to the uninsured and some employees of small businesses without coverage. Moreover, such Exchanges have no track record of success. After 15 years of experience in California, that Exchange failed, mostly due to lack of pricing power and adverse selection by attracting sicker enrollees.

•  The CBO has projected that rising insurance costs could mean that middle-income families would spend 15 to 18 percent of their income on premiums and co-payments.

This bill would not reverse the unraveling of the employer-sponsored insurance system because of rising health care costs that outpace the rest of our economy; despite subsidies to small business, employer-sponsored insurance would remain unsustainable.

This bill would only add to the already large burden of complexity and bureaucracy, together with their additional costs. At the same time, it would forego savings of some $400 billion a year that could otherwise be achieved through a simplified, more efficient single-payer system.

So in sum, this bill, while well intentioned, is fatally flawed. It would not effectively address the three major system problems demanding urgent reform, and would delay real reform by letting much of our population falsely think that reform is at hand. It would leave in place an inefficient, exploitive insurance industry that is dying by its own hand, even as it props it up with enormous future profits through often subsidized individual and employer mandates.

The most fundamental single question about how to reform our health care system should be whether or not we abandon our multi-payer, mostly investor-owned financing system or move to a not-for-profit single-payer system, Medicare for All, which this year’s political process has carefully kept off the table. The lesson of history in this country tells us that, as long as we retain private health insurance at the core of our health care system, we can never achieve universal access to affordable, comprehensive high-quality care.

John Geyman, M.D. is Professor Emeritus of Family Medicine at the University of Washington, past President of Physicians for a National Health Program, author of a number of books on health policy, and a member of the Institute of Medicine.

Goldman To Private Insurers: No Health Care Reform At All Is Best

Sam Stein
First Posted: 11-12-09 05:12 PM   |   Updated: 11-13-09 12:02 AM

A Goldman Sachs analysis of health care legislation has concluded that, as far as the bottom line for insurance companies is concerned, the best thing to do is nothing. A close second would be passing a watered-down version of the Senate Finance Committee’s bill.

A study put together by Goldman in mid-October looks at the estimated stock performance of the private insurance industry under four variations of reform legislation. The study focused on the five biggest insurers whose shares are traded on Wall Street: Aetna, UnitedHealth, WellPoint, CIGNA and Humana.

The Senate Finance Committee bill, which Goldman’s analysts conclude is the version most likely to survive the legislative process, is described as the “base” scenario. Under that legislation (which did not include a public plan) the earnings per share for the top five insurers would grow an estimated five percent from 2010 through 2019. And yet, the “variance with current valuation” — essentially, what the value of the stock is on the market — is projected to drop four percent.

Things are much worse, Goldman estimates, for legislation that resembles what was considered and (to a certain extent) passed by the House of Representatives. This is, the firm deems, the “bear case” scenario — in which earnings per share for the top five insurers would decline an estimated one percent from 2010 through 2019 and the variance with current valuation is projected to be negative 36 percent.

What the firm sees as the best path forward for the private insurance industry’s bottom line is, to be blunt, inaction.

The study’s authors advise that if no reform is passed, earnings per share would grow an estimated ten percent from 2010 through 2019, and the value of the stock would rise an estimated 59 percent during that time period.

The next best thing for the insurance industry would be if the legislation passed by the Senate Finance Committee is watered down significantly. Described as a “bull case” scenario — in which there is “moderation of provisions in the current SFC plan” or “changes prior to the major implementation in 2013” — earnings per share for the five biggest insurers would grow an estimated ten percent and the variance with current valuation would rise an estimated 47 percent.

The report, a Goldman official stressed, was analytic not advocacy-based. Their job was to provide a sober assessment of the market realities facing private insurers under various versions of health care reform.

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“If no reform at all happens you would see the largest rise in EPS,” a Goldman official acknowledged. “But what we are doing is just analyzing what the stocks would do under different scenarios.”

The study does note on the front page that the firm “does and seeks to do business with companies covered in its research reports.” Those companies include Aetna, Wells Point and United Health.

In the context of the current health care debate, the findings provide a small window into the concerns that have driven the private insurance industry’s opposition to reform legislation. Simply put: health care reform is going to hurt their bottom line. No less a prestigious voice than Goldman Sachs is telling them so.

Some insurers, in the end, will be hit harder than others. CIGNA is the lowest of the big five, for instance, because it does little business providing insurance plans to Medicare patients, individuals and families buying health plans directly, or small employers that offer health plans to their workers.

In addition, some reforms are going to hurt the industry more than others. Regulatory changes — such as prohibiting the prejudice against consumers with pre-existing conditions — will have an impact across the board, as will the funding cuts to Medicare Advantage.

Overall, Goldman calculates the probability of reform passing Congress at 75 percent. Though the limitations of Goldman’s political prognostications were on full display earlier in the document:

By mid-late October, we expect a cloture vote (60 votes) to bypass a potential filibuster followed by several weeks of debate over proposed amendments on the Senate floor (with a similar process under way in the House). If both the Senate and House are able to pass legislation (perhaps before the Thanksgiving recess), a House-Senate conference negotiation should produce combined legislation for final approval (perhaps by mid-December).

 

Is the House bill better than nothing (continued)

 

More comments from worthy commentators – Jonathan Cohn, a highly respected single payer advocate and writer, in The New Republic writes about why we should support the bill and urge its passage in the Senate, and Dennis Kucinich discusses why he voted against the House Bill.  For commentary from HCHP’s own Dr Aaron Carroll, check out his blog http://mdcarroll.com/.

The House Bill Is “Worse Than Nothing”? Really?

  • Jonathan Cohn November 9, 2009 | 1:47 pm
    Marcia Angell, M.D., is one of the nation’s most well-respected experts on health care issues. And with good reason. A board-certified pathologist who also trained in internal medicine, she’s a former editor of the New England Journal of Medicine and senior lecturer at Harvard Medical School. Her writing credits include The Truth About Drug Companies and an award-winning article at TNR on the same subject. (She co-wrote that with Arnold Relman, a distinguished physician, writer, and intellectual in his own right.)

Angell is a well-known advocate for single-payer health care: If it were up to her, she’d simply expand Medicare to cover everybody. This is not, of course, the kind of health care reform we’re going to get this year. Instead, we will–if we are lucky–get something that looks like the bill that passed the House of Representatives on Saturday night.

Angell is not impressed, as she explains today at the Huffington Post:

Is the House bill better than nothing? I don’t think so. It simply throws more money into a dysfunctional and unsustainable system, with only a few improvements at the edges, and it augments the central role of the investor-owned insurance industry. The danger is that as costs continue to rise and coverage becomes less comprehensive, people will conclude that we’ve tried health reform and it didn’t work. But the real problem will be that we didn’t really try it. I would rather see us do nothing now, and have a better chance of trying again later and then doing it right.

I’m a longtime single-payer supporter myself. If Angell could get her way, I’d be thrilled. But Angell can’t get her way.

Blame the composition of the U.S. Senate, where North Dakota has the same representation as California. Blame the power of special interests like the drug industry, which virtually own large swaths of Congress. Blame public opinion, which remains stubbornly skeptical of big government even as it cherishes programs like Medicare. Or blame somebody else. The numbers in Congress simply don’t provide enough support for anything remotely approaching single-payer. Just look at how hard it is to pass a scaled-back public insurance option.

To Angell–and to others on the left, as my colleague John Judis notes today–this is reason for ditching the whole effort. But what, really, would that accomplish? The immediate impact would be to undermine Obama and his allies in Congress, creating the (accurate) impression they are incapable of passing major legislation. The Democratic Party would lose seats at the midterms and then, quite possibly, suffer even bigger setbacks two years hence. That’s not exactly a recipe for progressive revival.

Perhaps Angell and those who agree with her that this would be a constructive failure–that eventually growing frustration with our health care system will help us elect even more progressives and pass more ambitious reforms. Well, maybe. But that’s an awfully big chance to take. Progressives said the same thing when the Clinton health care plan failed and, before that, when efforts to pass universal coverage under President Richard Nixon collapsed. If anything, the conversation about health care reform has drifted the opposite direction over that span of time. You could plausibly claim that the reforms on the table today are more or less what moderate Republicans were proposing under Clinton, just as the Clinton reforms were not that far removed from what Nixon himself wanted in the early 70s.

And what would happen in the meantime? According to the Congressional Budget Office, the House bill would mean about 36 milion people get health insurance, reducing the number of uninsured by around two-thirds. People who had pre-existing medication conditions would, finally, have the ability to get insurance just like the employees of large companies do. The insurance would not always be as generous as it should be, but the government would prohibit lifetime caps, place some limits on out-of-pocket spending, and establish a basic benefits package that makes sure all policies cover a broad range of services.

The studies–which, I know, Angell has seen–suggests tens of thousands of people* die or go bankrupt every year because they can’t afford to pay their medical bills. Countless more suffer. The House bill wouldn’t stop such hardship altogether. But it would reduce it significantly–arguably, by as much as any single piece of domestic legislation since the Great Society. Surely that qualifies as something more than “a few improvements around the edges.”

The House bill would do many other things, too, familiar to the readers of this space–from the creation of a public plan to the creation of pilot programs that would begin to change the way we deliver medical care. And while it wouldn’t do nearly enough to make health care less expensive–the drug industry, among others, remains a source of untapped savings–the House bill certainly wouldn’t cause the cost of medicine to go up even more quickly. If anything, it’ll cause the cost to go up a bit more slowly.

As I’ve argued repeatedly, the House bill is not close to perfect. Neither is its Senate counterpart. But we don’t pass perfect laws in the U.S. We pass imperfect ones and then do our very best to improve them over time.

It happened that way with Social Security and Medicare. It can happen that way with comprehensive health care reform, too. But only if we do something, rather than nothing.

*Note: I originally wrote “millions” of people die or go bankrupt every year. That’s rather overstated. It would be more accurate to say “tens of thousands,” as I’ve now rewritten, although one could plausibly argue it’s more like “hundreds of thousands” depending on your definition of “medical-related bankruptcy.” In any event, thanks to reader “adsprung” for correcting my error–and for reminding me that I should read over my blog entries a little more carefully before hitting “publish.”

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Congressman Kucinich addresses vote on H.R. 3962

Congressman Dennis Kucinich after voting against H.R. 3962 addresses why he voted NO, stating:

“We have been led to believe that we must make our health care choices only within the current structure of a predatory, for-profit insurance system which makes money not providing health care. We cannot fault the insurance companies for being what they are. But we can fault legislation in which the government incentivizes the perpetuation, indeed the strengthening, of the for-profit health insurance industry, the very source of the problem. When health insurance companies deny care or raise premiums, co-pays and deductibles they are simply trying to make a profit. That is our system.”

“Clearly, the insurance companies are the problem, not the solution. They are driving up the cost of health care. Because their massive bureaucracy avoids paying bills so effectively, they force hospitals and doctors to hire their own bureaucracy to fight the insurance companies to avoid getting stuck with an unfair share of the bills. The result is that since 1970, the number of physicians has increased by less than 200% while the number of administrators has increased by 3000%. It is no wonder that 31 cents of every health care dollar goes to administrative costs, not toward providing care. Even those with insurance are at risk. The single biggest cause of bankruptcies in the U.S. is health insurance policies that do not cover you when you get sick.”

“But instead of working toward the elimination of for-profit insurance, H.R. 3962 would put the government in the role of accelerating the privatization of health care. In H.R. 3962, the government is requiring at least 21 million Americans to buy private health insurance from the very industry that causes costs to be so high, which will result in at least $70 billion in new annual revenue, much of which is coming from taxpayers. This inevitably will lead to even more costs, more subsidies, and higher profits for insurance companies – a bailout under a blue cross.”

“By incurring only a new requirement to cover pre-existing conditions, a weakened public option, and a few other important but limited concessions, the health insurance companies are getting quite a deal. The Center for American Progress’ blog, Think Progress, states, ‘since the President signaled that he is backing away from the public option, health insurance stocks have been on the rise.’ Similarly, healthcare stocks rallied when Senator Max Baucus introduced a bill without a public option. Bloomberg reports that Curtis Lane, a prominent health industry investor, predicted a few weeks ago that ‘money will start flowing in again’ to health insurance stocks after passage of the legislation. Investors.com last month reported that pharmacy benefit managers share prices are hitting all-time highs, with the only industry worry that the Administration would reverse its decision not to negotiate Medicare Part D drug prices, leaving in place a Bush Administration policy.”

“During the debate, when the interests of insurance companies would have been effectively challenged, that challenge was turned back. The ‘robust public option’ which would have offered a modicum of competition to a monopolistic industry was whittled down from an initial potential enrollment of 129 million Americans to 6 million. An amendment which would have protected the rights of states to pursue single-payer health care was stripped from the bill at the request of the Administration. Looking ahead, we cringe at the prospect of even greater favors for insurance companies.”

“Recent rises in unemployment indicate a widening separation between the finance economy and the real economy. The finance economy considers the health of Wall Street, rising corporate profits, and banks’ hoarding of cash, much of it from taxpayers, as sign of an economic recovery. However in the real economy – in which most Americans live – the recession is not over. Rising unemployment, business failures, bankruptcies and foreclosures are still hammering Main Street.”

“This health care bill continues the redistribution of wealth to Wall Street at the expense of America’s manufacturing and service economies which suffer from costs other countries do not have to bear, especially the cost of health care. America continues to stand out among all industrialized nations for its privatized health care system. As a result, we are less competitive in steel, automotive, aerospace and shipping while other countries subsidize their exports in these areas through socializing the cost of health care.”

“Notwithstanding the fate of H.R. 3962, America will someday come to recognize the broad social and economic benefits of a not-for-profit, single-payer health care system, which is good for the American people and good for America’s businesses, with of course the notable exceptions being insurance and pharmaceuticals.”