Posted by Wendell Potter on September 28, 2009

There are so many problems with the health care reform bill proposed by Senator Max Baucus (D-MT), chair of the Senate Finance Committee, it is little wonder that members of his committee have proposed more than 500 amendments to fix it. Unfortunately, some of the worst amendments that would make the bill even more of a gift to the health insurance industry are being offered by Republicans. If there is a God in heaven, they will not be adopted. But many other amendments are vital, including those that will make this key bill more like the better bills that have been reported out of four other Congressional committees. All of those bills call for the creation of a public insurance option, which is an absolutely critical element of reform. Without it, all of us who are not eligible for an existing government-run program, like the Medicare and VA programs, will be forced to buy coverage from the private insurance industry, which is dominated by a cartel of huge for-profit companies.

The adoption of an amendment to create a strong public option, supported by Senator Jay Rockefeller (D-WV) and many others on the committee, is certainly job one. But there are many additional fixes that are necessary, including other amendments being offered by Senator Rockefeller. They are so important I have sent a letter to Senator Baucus and the other members of the committee urging them to adopt the Rockefeller amendments that will require private insurance companies to be more honest and transparent in their dealings with consumers and more accountable to federal and state governments that must regulate them. As I note in the letter, without those amendments, insurance companies will be able to continue their most discriminatory practices without either transparency or real accountability. Here is my letter:

September 23, 2009

The Honorable Max Baucus
Committee on Finance
United States Senate
219 Dirksen Senate Office Building
Washington, DC 20510-6200

Dear Chairman Baucus:

As a former health insurance company executive, I am very concerned about the lack of transparency and accountability in the health insurance industry. That is why I urge you to incorporate Senator Rockefeller's Amendments #C12 and #C13 into the America's Healthy Future Act (AHFA), in particular with regard to the need for airtight regulations to protect consumer interests.

As proposed, AHFA will allow insurers to continue many of their most discriminatory practices without either transparency or real accountability: cost-shifting to their most vulnerable members through benefit designs that serve the needs of Wall Street; and rationing of care based on arbitrary opinions about what care is needed. In addition, there is no accountability for insurance companies to provide affordable and comprehensive health care coverage. A requirement that everyone buy health insurance accompanied by subsidies for people with low incomes does not ensure that Americans will have affordable care. The explosive cost growth in Massachusetts after health care reform is a case in point. And, AHFA has no mechanisms to enforce the insurance regulations that are included.

In addition, AHFA designates the National Association of Insurance Commissioners (NAIC) to write key regulations. This is of great concern to me because this proposal delegates to the NAIC, a private organization, with rule-making authority that is generally reserved for an agency of the federal government. Any institution given the authority to define the rules that will determine health insurance coverage for millions of Americans must be completely independent of the insurance industry and have a demonstrated record of putting the concerns of consumers first. The institution must also have the will and the resources to carry out the rulemaking process in a transparent and unbiased manner, with opportunity for input from all interested parties at each stage of the process. Based on its traditional manner of conducting business, the NAIC fails to meet any of these standards. The NAIC does not operate independently of the insurance industry. In fact, the NAIC is a private corporation, funded, in large part, by the insurance industry itself. Without industry dollars, the NAIC would not operate as it does today. In addition, eight of the last 10 NAIC presidents, as well as numerous commissioners, have gone directly from their posts to industry positions, creating the distinct impression that leadership positions at NAIC are mere stepping stones to more lucrative careers in the insurance industry.

For all these reasons, as well as my inside knowledge of how easily insurance companies circumvent existing regulations, I support Senator Rockefeller's Amendments #C12 and #C13 to AHFA, which will:

  • Create a grant program for state insurance departments to help them better enforce market rules and protect consumers.
  • Establish a federal role for private health insurance oversight and provide resources for the Department of Health and Human Services to hire expert staff to carry out these functions and coordinate with state regulators.
  • Require health insurance plans to disclose clear, accurate, and timely information on their policies and practices to ensure that they do not circumvent new federal health insurance regulations.
  • Add needed transparency requirements such as: establishing fair grievance and appeals procedures by health insurers; clarifying information for health professionals and freeing up time for patients by establishing transparency standards relating to reimbursement arrangements between health plans and providers; and requiring advance notice of plan changes so consumers get what they pay.
  • Establish America's Health Insurance Trust, a nonprofit, independent, consumer-driven organization that will evaluate and give ratings to all health insurance products offered through the National Health Insurance Exchange. Annual insurance product ratings will be based on factors such as affordability, adequacy, transparency, consumer satisfaction, provider satisfaction, and quality.
  • Ensure that ombudsman offices in each state are open to consumers at all stages of the appeal process to allow for early intervention and increase the likelihood of successful appeals.

Health insurance reform requires that we not only create strong new consumer protections. It also requires that those rules be effectively enforced. American families and businesses must have health insurance that is accountable to them, not to Wall Street.

Thank you for your consideration.

Sincerely,
Wendell Potter, Senior Fellow on Health Care, Center for Media and Democracy

Cc: All Members of the Senate Finance Committee

I would also like to acknowledge the thoughtful work of 14 current and former members of the NAIC consumer liaison program who have expressed similar concerns to the Senate Finance Committee about giving rule-making authority to the NAIC. I was inspired by their letter, which is available here, and used some of their points in my own letter to Chairman Baucus. I'm grateful for their input.


Wendell Potter is a Senior Fellow at the Center for Media and Democracy based in Madison, Wisconsin.

Comments

I Would like to know if Mr. Potter knows of price fixing among the BIG 7 , healthcare providers. If so, has he testified to this to Congress? This alone would be a violation of the Taft- Hartley Act, and could be a possible remedy to this whole mess.

Price-fixing is a violation of the Sheran Act. The Taft-Hartley Act is a labor law (designed to curb the power of the unions given by New Deal Legislation).

Please publicize the details of "how easily insurance companies circumvent existing regulations" (quote from today's Salon article). I consider publicaion of this information to be critical to passage of a public option.

You are in a unique position to make this happen. The stakes are huge. Given the consequences, a tell-all from a CIGNA executive would make "The Informant!" and "The Insider" pale in comparison.

Thanks so much for your efforts. But - detailed facts trump generalities any day.

What is needed is an INDEPENDENT emergency adjudication board capable of PROMPTLY overriding insurance company "death panel" denial and delay decisions! This board would be staffed by independent medical professionals. One of the "triggers" for the establishment of a public option would be that should the amount of and egregiousness of "death panel" reversals exceed a certain threshold, the government could then petition the courts for the company to be placed in receivership and stockholder equity wiped out! Under these circumstances, the stockholders would now have a direct stake in the company operating for the common public good and interest!

It really is unbearable -- sickening -- to think of how this Finance Committee Insurance Corporation Greed Enhancement Bill will just shovel perpetual cash to the Wealthcare Corps.

I'm sending the following to The Ed Show. Dear Ed, Wonderful whistleblower Wendell's new Baucus Bill Needs Urgent Care is an immediate emergency MUST-read. Your viewers should read it and, after weeping, phone Chairman Baucus demanding politely but urgently that he support a true Competitive Public Choice (no triggers, no co-ops) and funded regulations with teeth. Email The White House too.

The shock and woe that the toothless Baucus Hog-Trough Bill could clearly make things much much worse is chilling. Whew. I can not bear it.

America needs more honest people like Mr. Potter. Thank you for your honesty. Any help in stopping this legalized theft will help all of us. If government is going to do anything then it should help in the one thing that effects every citizen of the country. HEALTHCARE!

Thank you, Mr. Potter, for all your thoughtful work on behalf of real health care reform. I appreciate your excellent letter backing Senator Rockefeller's ammendments to the Baucus/gang of six bill. That bill, however, is an obscenity, that represents no kind of reform in the sense that it might benefit the American people whatsoever, and it has at its core the most absurd premise that there could be any sort of bipartisan support for any kind of real reform. The democrats need to accept that there will be no bipartisan support for anything that constitutes reform and move on even under threats of insurers and their lobbyists.

Mr. Potter, I know you acknowledge that reform demands a public option and that mandatory enrollment in private insurance is a flawed plan. I wonder if you will consider my idea, which is rougly this. Allow anyone under 65 to buy Medicare by paying premiums. My idea is to charge something over the true cost (as determined by the Congressional Budget Office and/or the GAO) for those who can afford it, I think about 20%, to help supplement premiums for those of lower incomes where it could be combined with tax credits to make it affordable. Expanding the Medicare system would avoid the creation of a brand new bureaucracy where an efficient one already exists. I would buy this in a minute for myself. There's still a role for private insurers to offer Medicare supplements as they do now.

I tend to agree with another commenter that a sanction for repeated abuses by a for-profit insurer, might be liquidation and conversion to non-profit status, which would be a step toward getting non-profits into the competitive mix. That's a pretty strong incentive to shareholders to keep the place clean.

Don't be too sure that if everyone who wants it...could purchase Medicare, will solve the current problems. Here is a recent article from NoQuarterUSA.net:

Total Medicare claims denied in one year: 475,566

The entire report can be viewed here: AMA 2008 National Health Insurer Report Card

Again, I am all for reform. And it is up to the American people to decide on what type of reform is best. But what I don’t like is misinformation, and un-truthfulness.

When people bring up their concerns about a Government takeover of health care, or rationing, or the dreaded death panels, they are scoffed at. Yet, looking at the Medicare denial rates, they deny more patients then seven top commercial health insurers.

So, perhaps the next time Obama puts down private insurance companies for denying claims, or scoffs at those concerned about rationing, or being denied under a public option, someone can point out to him that Medicare is one of, if not the worst, offender?

And while they are busy denying coverage to thousands of people, Medicare is running around willy-nilly overspending by the hundreds of millions of dollars.

According to their own auditors, Medicare knowingly overpays for almost everything it buys. Examples include:

– $7,215 to rent an oxygen concentrator, when the purchase price is $600.

– $4,018 for a standard wheelchair, while the private sector pays $1,048.

– $1,825 for a hospital bed, compared to an Internet price of $1,071.

– $3,335 for a respiratory pump, versus an advertised price of $1,987.

– $82 for a diabetic supply kit, instead of a $47 price on the Web.

Last year, the Health and Human Services Department tried to replace its archaic fixed-price fee schedule for 10 commonly purchased products with a competitive bidding program in 10 cities. The department said the program could save Medicare $125 million in a single year, or $1 billion if adopted nationwide. But Congress stepped in to stop it.

But Congress stepped in to block it….

Interesting! Help me put your "facts" in perspective. As a percent of total Medicare claims submitted in one year what does the 475,566 claims denyed represent? How does that figure compare with the total number of claims denyed (1) in the private sector as a whole and (2) Medicare Advantage Plans administered by private insurance companies?

With respect to overspending by Medicare on the services listed in your examples, in what year did they occur? What role did lobbyist have to block or reduce payments to private firms providing the listed medical appliances? What role, votes on record shown separately by Republican, Democra and Independent, did congress play to block Medicare administrators from obtaining competitive bids on commonly used medical products?

You are spot on saying "What I don’t like is misinformation, and un-truthfulness." Please provide the information requested and we will go on from here. Thank you!

Dear Mr. Potter,

Thank you for walking away from the dark side and for your efforts to bring healthcare to the people. I have found that the best disinfectants are light and heat. You have done as much as anyone to shine a light on those who have put their pleasures above our necessities. Now it is time to bring some heat. I think you should callenge our lawmakers to do what you have done. Invite them to spend a day at a "cattle call for care" as you have done. Maybe, just maybe, the heat they recieve will help them to see the light as well. Keep fighting the fight. When all Americans know the name of Wendell Potter maybe then we will have true reform. I thank you for your service, and for your sacrifices.

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