Governor Arnold Schwarzenegger and legislative leaders working on universal health care plans find their efforts under attack now from a big insurance company. Likening the Schwarzenegger efforts to the disastrous energy deregulation scheme of the 1990s, Blue Cross has formed the Coalition for Responsible Health Care Reform, a coalition in search of members, with a $2 million budget starting out.
“Unintended consequences do happen,” the insurer says in a newspaper ad. “Other states have tried healthcare reforms like ‘guaranteed issue’ that sounded good. They now have the highest premiums in the country while California has the lowest. Sound familiar? Remember how the rash deregulation of the energy market in California spawned power outages and soaring rates? Let’s not go there again.”
Blue Cross, unlike some other health insurers, essentially cherry picks its clients. It’s gotten some bad publicity over that. I suspect that it will get some more. Under Schwarzenegger’s plan, all Californians would have access to health care.
Is the comprehensive health care issue like the energy deregulation issue? Not so much. There was little airing of the issues beforehand with regard to electric power. The energy bill that passed a decade ago, and which spawned the electric power crisis of 2001, was actually little discussed or publicized. Few members of the Legislature knew what they were voting on, and the scheme passed overwhelmingly. Even Tom Hayden voted for it, to his lasting dismay.
In contrast, the health care issue is being exhaustively discussed, in public. And, foolish as the “deregulation” of energy scheme was, the crisis still could have been averted with timely and decisive action in 2000 and early 2001. Which the consultants working for Blue Cross, being Republicans who backed the electricity deregulation debacle, should know quite well. But that is a story for another column.
Schwarzenegger has done a very good job of splitting the business community in what many had expected to be a solid front of opposition to his or any other comprehensive health care program. Others, such as the Chamber of Commerce and, perhaps, the California Restaurant Association (with which Schwarzenegger had a lengthy private session), may join in the effort against Schwarzenegger’s proposal and the proposals of Democratic legislative leaders Fabian Nunez and Don Perata, which are readily combined, but millions are being ponied up by the lone insurance company.
The California Nurses Association has already been attacking from the opposite end of the spectrum, pushing the so-called single-payer solution. Which even John Edwards rejected for his much praised on the left health care plan. Single-payer was wiped out at the polls in a California initiative campaign several years ago. But the attacks from the left aren’t a real problem.
The Blue Cross campaign may not be a real problem, either. Beginning with a very faulty analogy isn’t good. Being a coalition of one, and one that is readily exposed as a self-interested party, also is not good.
The truth is, people don’t like health insurance companies much. Polling and focus groups show that — as you might suppose simply from talking to people you know — consumers think insurers charge too much money and deliver too little service. And they don’t trust that their coverage will be honored when it counts. Having the opposition charge led by such could be a good thing for universal health care advocates.
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44 Comments
Jonas Blane:It sounds like a good opponent for the Terminator to rough up.
May 25, 2007 - 5:59 am Tim:Health care is much more complex, and personal, than electricity. The probability of the state screwing it up is much greater than it was with electricity.
Folks should be careful for what they ask.
May 25, 2007 - 6:24 am Ann:Health care isn’t screwed up now? lol
May 25, 2007 - 6:32 am Bill Bradley:Tim, with all due respect, the fact that you are asserting that health care is a much more complicated issue than energy tells me you don’t know much about energy.
May 25, 2007 - 6:36 am Ann:Everybody who gets paid says their issue is really super duper complicated. lol
May 25, 2007 - 7:14 am Capitol Boy:The guys doing this campaign aren’t very good. It’s the usual Republican suspects who screw things up.
May 25, 2007 - 7:30 am Kandy Kid:Bill, I am quite pleased you recognize that the energy crisis could have been averted in late 2000. You probably know that Enron and Duke had 4.9 cents/kw long term contract offers on the street that Loretta Lynch and the bungling CPUC refused to allow the utilities to accept because the know-it-all regulators thought the prices were too high!! There is a long paper trail that details how the CPUC thwarted Edison and PG&E’s efforts to sign those long term contracts.
Gray Davis and his Cabinet Secretary were both in the thick of the battle. They followed all-in strategy to blame the generators and the FERC for high prices instead of using their own authority to stabilize the markets by allowing the utilities to use the same long term contracting strategy the state adopted after the utilities ran out of cash. Of course the 4.9 cent/kw deals were gone by then and Californians are still paying about 40% more for electricity than we would had the utilities been allowed to sign those contracts 8 months earlier.
Energy policy is quite complex, but health care policy is more emotional and transparent to voters. Yet both issues generate plenty of dilatory posturing and they both allow politicians to demonstrate their often profound ignorance of how markets actually work and services are actually delivered.
And Ann, I am not getting paid on either of these issues….
May 25, 2007 - 7:56 am Bill Bradley:I wrote about the long-term power contracts years ago.
May 25, 2007 - 8:15 am Legislator:The better analogy is the legislation in the 90’s that sought to “reform” Worker’s Compensation. As we all remember, the “reform” produced massive overutilization of health care services, frivolous litigation, and an explosion of prices. Business left the state in droves. (b.t.w. - authored by the same Senator Steve Peace who mishandled energy deregulation “reform”)
Arnold (version #1) fixed the 90’s Worker’s Comp “reform” by instituting tough cost-containment measures during his first year in office. Prices fell, carriers returned, and competition flourished.
Now, the Perata/Nunez/Arnold (version #3) healthcare “reform” threatens the same scenario due to the absense of consumer choice and utilization limits in the proposed legislation. If this “reform” is implemented, healthcare prices will take off like a scalded cat. The impacts will be particularly grievous for the small businesses that are responsible for most of the state’s economic growth.
The same old script will play out. Business will chose between raising prices, reducing jobs, or leaving the state. Economic activity will stall. Tax revenues to the state will falter. Budget deficits will balloon….we can Recall what happened to Davis.
May 25, 2007 - 8:26 am Ann:What “absense of consumer choice?”
I smell a lobbyist. One who can’t spell. lol
May 25, 2007 - 8:34 am Bill Bradley:Legislator, you seem to be saying that Gray Davis was recalled because of workers comp.
First off, I don’t recall the changes made to the work comp system in the Davis era having an especially negative effect.
Secondly, and more to the point, work comp had virtually nothing to do with his recall.
He was recalled because of the power crisis and because of the budget crisis, which was caused by the state taking on unsustainable commitments on spending and tax cuts during the dot-com boom which then went bust.
The only real political impact of work comp on electoral politics was giving Schwarzenegger something to talk about that he knew about.
People marveled that he was able to talk about such an esoteric issue in a relatively interesting way.
May 25, 2007 - 9:11 am Hap Hazard:Blue Cross has a history of gaming the system, to use the energy crisis buzz words.
May 25, 2007 - 9:22 am Capitol Boy:I thought Schwarzenegger’s workers comp reforms built on what Gray Davis and John Garamendi did.
May 25, 2007 - 9:33 am EFSullivan:I read recently that there is a move afoot in Washington to eliminate or at least modify the preemption provision of the Federal ERISA law so that states and localities can impose heath care mandates on employers. I don’t know how far such a proposal would get given that Republicans and moderate Democrats might oppose it and Republicans in the Senate would certainly filibuster such a proposal at the urging of their business allies. Then there of course the Presidents veto pen.
May 25, 2007 - 10:11 am Jack Aubrey:Don’t people hate Blue Cross? This is good news for doing something on health.
May 25, 2007 - 10:15 am Capitol Boy:Blue Cross is probably the most controversial of all California health insurers. There are serious questions about dumping patients, denial of coverage, etc.
May 25, 2007 - 10:45 am Bill Bradley:It’s a controversial company. I’ve just skimmed the surface of it.
May 25, 2007 - 11:30 am Hap Hazard:CB - Gray Davis and Garamendi had nothing really to do with the workers’ comp “reforms” of 1989 and 1993. If anyone gets any credit (or would want to), it would probably be Steve Peace, Pete Wilson, Bert Margolin and Pat Johnston. Garamendi spent that time trying to position himself in front of the parade, and Davis was no doubt raising money.
May 25, 2007 - 12:25 pm Carol in Santa Clara:Dear Bill,
May 25, 2007 - 12:26 pm Bill Bradley:Someday you will ask yourself why you expended so much energy trying to defeat single-payer. It is the plan that would give you more and cost you less. It has been unsucessful so far only because of negative and unfair publicity. Get behind it. You will be doing some good in world. Carol
Carol, that’s, um, non-serious.
I don’t defeat things that are already defeated.
I’m sorry you don’t like my assessment of political reality, but that’s what it is.
May 25, 2007 - 12:38 pm California Nurses Shum:Bill,
Here’s political reality: the people of this country are begging for a solution to the healthcare crisis that is making us sick and poor.
This health care crisis has largely been caused by the heartless insurance companies that take one-thrid of every care dollar for “overhead”. Not even the mafia takes 30%!
The only solution to solve this crisis is by replacing bad-actor insurance companies with a national (or statewide) non-profit fund that will pay private doctors and hospitals. We go frm 30% overhead to maybe 3%, saving hundreds of billions of dollars a year.
You call it the single-payer model; we call it guaranteed healthcare; neither of us can deny that some version of the system is working well in every other industrialized nation in the world.
Bill, not one of the insurance-first proposals bieng thrown out by hack politicians around the country will satisfy the American people’s need for changes in our healthcare economy. Some sort of national health plan on the single-payer model is inevitable; the question is, how many patients have to die before we get there.
May 25, 2007 - 1:23 pm Jeff:Actually what Blue Cross says is true. States that passed laws mandating that insurance companies must provide coverage did see rates skyrocket, to the surprise of no one who understands economics. If you can get coverage when illness befalls you, why pay for it before.
Insurance is based upon many paying so that they will be covered when something bad happens but actually having those things happen to only a few. Allowing people get insurance after the worst happens makes no sense. Blue Cross and every other insurer cherry picks because consumers are allowed to cherry pick. Those who believe they are most likely to need benefits are most motivated to buy insurance and those who are healthiest are more likely to forgo it.
Schwarzenegger’s plan aims to stop everyone from cherry picking by including the “must purchase” provision that needs to go hand in hand with “must cover.” But Democrats have not been so forthcoming on this count and their constituencies from the left have complained of the very real expense and poor coverage that many would face. That’s the reality in the health insurance world and I face it myself.
If you want to do one thing where there seems to be agreement, begin regulations that mandate insurers would have to spend 85% of premiums on actual care. 15% of health premiums is still a huge amount of money but a recent Mercury News article said Blue Cross pays out but 51% in care in its individual insurance PPO’s. I am paying for that gouging.
By the way you’re right that the bad deregulation law didn’t have to be the disaster it was. I’ve never seen such incompetence.
May 25, 2007 - 2:32 pm richard locicero:Sure you want to slam Blue Cross Bill. That puts you and the gang at CALITICS on the same side! I’m confused.
May 25, 2007 - 2:56 pm richard locicero:As far as the “Deregulation of power” bill no amount of so-called “Competence” would have been able to lipstick on that pig. I note that a similiar plan drove Montana into recession and one of Governor Sweitzer’s more popular iniatives is a RE-regulation bill now before the legislature there.
May 25, 2007 - 2:59 pm Bill Bradley:The electric power dereg scheme was badly done.
BUT it could have been fixed before it became a crisis.
May 25, 2007 - 3:13 pm Bill Bradley:Jeff, somehow I really don’t think that Blue Cross wants to help do heath care right in California …
Here’s the thing.
A very controversial company is going to have a rugged time convincing people not to deal with a widely acknowledged crisis.
Of course they want to maximize their profits.
But they aren’t selling luxury handbags. They are selling health care. And to the extent that they get in the way of the provision of health care, they are in trouble.
May 25, 2007 - 3:17 pm Bill Bradley:Shum represents the nurses union, the California Nurses Association.
Shum, let’s have a major political reality check here.
As you recall, last fall I stopped covering your union’s political reform initiative. Which ended up getting about 20% or so of the vote. As you know, that was not because I hated the initiative. It was because I judged that it had no chance of winning and I had too much else to do. AND because the campaign was not being used in an educational way.
I met with your people on the initiative. But instead of it being what I expected, an equal opportunity offender highlighting potentially serious problems with the political system as a whole, it turned into an adjunct of Phil Angelides’ gubernatorial campaign, and was used essentially to attack Schwarzenegger.
As I told you all beforehand, I’m fine with that, as long as it’s balanced out for both parties.
Now let’s stick with the Angelides question.
Angelides was your union’s candidate for governor.
He backed your single-payer idea when he was trying to scoop up credulous liberals as he eked out his primary win over the much more electable Steve Westly.
But in the general election, he was suddenly neutral on single-payer.
Yet your union kept banging on Schwarzenegger publicly about single-payer, while giving your own candidate for governor a free ride.
You may be able to cite some isolated statement urging Angelides to get back on board single-payer, but I am quite sure that I am not forgetting the rally or picketing to get your Democratic candidate for governor behind your health care plan.
Single-payer is simply not going to happen now. It’s not part of the central debate that is happening in California. I have a ton of things to cover.
May 25, 2007 - 3:30 pm Jeff:Bill,
I don’t for a minute think that Blue Cross is primarily concerned about other than maximizing profits. But that doesn’t mean that we should ignore things that are a problem in a reform plan if Blue Cross happens to bring them up. There likely will be plenty of specious nonsense out of Blue Cross that will deserve such treatment.
I believe their goal will be to preserve the status quo and would especially dislike the 85% mandate. That would necessitate a different way of doing business. How can you increase profits under such a system? You could lower what goes to administration. You can increase your enrollment. Or you could pay for more health care with corresponding increases in premiums, but that might interfere with enrollment. The incentives in such a system are much better for society than those that exist now.
It seems like insurers would have to try to find the ideal point between rationing, which helps them keep prices down which customers like, and the resistance to rationing, which could lose them customers. And that rationing vs price battle is something every health care system faces.
May 25, 2007 - 4:25 pm Ann:We can’t trust a company like Blue Cross. Everything they say will be deceptive.
May 25, 2007 - 4:59 pm Jeff:Then we can trust Blue Cross to be deceptive. Don’t trust, verify.
May 25, 2007 - 5:40 pm Bill Bradley:Hmm, which American president quoted that telling Russian proverb?
May 25, 2007 - 10:56 pm Ann:Reagan. Zzzzz.
May 25, 2007 - 11:30 pm Lou Ohls:This controversy will ultimately turn out to be irrelevant. We voted $3 billion taxpayer dollars for stem cell research, which will ultimately make private sector multi-millionaires. We subsidize 8 figure contracts for sports celebrities after taxing citizens for arenas. The winner of American Idol probably got more votes than the winner of the 2008 Presidential election will get.
May 26, 2007 - 6:14 am Bill Bradley:While this squabble is entertaining, there is no evidence of leadership in problem solving. So long as we refuse to confront our own issues, unintended consequences will dominate however this plays out.
Does anyone sense a need for a little culture change?
So you’re saying I should write about American Idol instead, because nothing is actually happening in politics?
May 26, 2007 - 8:17 am Robert:This is a Rob Stutzman special. He’s the zealot public relations “expert” who helped lead Arnold off a cliff. Why are you being so nice to him? You bitch slapped him out of the game before. Do it again.
May 26, 2007 - 8:55 am richard locicero:I knew Bob Shrum back in the day when he was one of the top debate coaches in the country (at BC) and no one could best him in an argument. Problem is he’s conducted his political campaigns much the same way and they’re not forensic tourneys.
I see he and Joe Klein are in a spat over Shrum’s kiss and tell book which may be the best set of sour grapes since Ed Rollins spilled the beans.
May 26, 2007 - 9:25 am JN:Bill, this sort of half-assed incrementalism is the reason Democrats can’t win anymore. The claim that “single-payer can’t win” could become a self-fulfilling prophecy. And just like the Congressional Dems sold out the voters by rolling over on the Iraq war, some California Dems and their lapdog pundits may be poised to sell out the public on healthcare.
I love how you attack the person from the nurses group with ad hominems, but don’t address the issues he raises, instead ranting about Prop 89. Relevance, please?
And he (she? what’s a Shum?) is right in saying it’s a question of how many people have to die before we implement a system like others that are already working in the rest of the industrial world.
So, you could keep snuggling up to the powerful insurance companies, or you could start advocating for a solution that will really save lives.
May 26, 2007 - 11:43 am Bill Bradley:What total, dishonest nonsense on your part.
The CNA campaign for single-payer last year was BS. It also was very small, as the NWN video of the frankly half-assed “big” rally for it demonstrated.
If it was serious, it would have focused on its own Democratic choice for governor. Angelides was for it in the primary, to try to win over credulous libs. Then he was neutral in the general.
Did CNA work to get its candidate for governor back in line on health care? It did not.
If and when single-payer is a real prospect in California, I’ll deal with it.
Meanwhile, go bug somebody else. Like your purported proponents.
May 26, 2007 - 11:49 am Ann:These people are pests. They’ll never get it.
May 26, 2007 - 12:01 pm Bill Bradley:It is irritating.
You have people who totally deny historical fact and political reality.
Until they are called on it.
At which point they disappear.
Then another deluded person emerges to spout the same stuff.
May 26, 2007 - 12:13 pm Bill Bradley:There is some psychological syndrome at work.
May 26, 2007 - 12:16 pm Capitol Boy:The extreme ideologues are ever among us.
May 26, 2007 - 12:35 pm Bill Bradley:On both far sides of the spectrum.
May 26, 2007 - 1:40 pm terence:Jeff wrote: Allowing people get insurance after the worst happens makes no sense. Blue Cross and every other insurer cherry picks because consumers are allowed to cherry pick. Those who believe they are most likely to need benefits are most motivated to buy insurance and those who are healthiest are more likely to forgo it.
*******************
Well said Jeff. Much more eloquent than my rantings.
*** ******
If a claim is submitted for a condition suspected to be chronic, obtain the medical records. What treatment was offered for this condition in the months prior to the day the application was signed?
Note carefully the questions on the application.
Using the information gathered in the investigation, note the answers on the application and determine if the responses to the questions were not truthful. Was there a material misrepresentation?
If there was such a material misrepresentation, then rescission is appropriate. But lacking such, the calim should be approved.
A man bought coverage for he and his wife. Blue Cross rescinded because the wife had had an abnormal pap smear and had a claim for follow-up care.
However, the man did not know of the abnormal pap, nor was his wife questioned…nor did any question on the application deal with the pap .
A man went for kidney dialysis and gave the history of his chronic alcoholism. As the treatment began 35 days after the policy became effective, Blue Cross rescinded. However, investigation by the Dept of Insurance revealed that the man was never questioned about his health history. There was no misrepresentation . If the question is not asked, then there can be no misrepresentation! The policy had been issued with no application!
A chiropractor suggested to his patient, a young mother, that she should take her child to an ENT for the breathing problem and earaches the child had been having. Blue cross rescinded because they mother did not mention that she had conversed with chiropractor
about her child (who was never seen by the Chiropractor) . Blue Cross rescinded. Further investigation by the Dept of Insurance revealed that the conversation took place 17 months prior to the day the application was signed, and the child had never received treatment for any ear or breathing problems.
Blue Cross spent 16 months investigating the health history of My Clancy. They requested the Dr’s chart four times, and each time the package of papers never made it from the mail room to the desk of the claims examiner. Finally, at the urging of the dept of insurance, the records were requested a fifth time and delived by UPS directly to the Claims Department.
History described many chronic conditions–high blood pressure, severe arthritis, cataracts, skin cancer.
Blue Cross rescinded. Further investigation by the Dept of Insurance revealed that the Dr’s chart had been in the hands of Blue Cross since the day the application was received. The chart had been attached to the application at the time it was originally submitted. The claims examiner was unaware of this fact because the application was never reviewed! They accused Mr Clancy of stating a lie without determining the structure of his supposed lie.
It is well founded practice that if the complete chart is furnished with the application the underwriter is charged with the responsibility to review the material and determine eligibility for coverage. If underwriter approves, then the claims department is put in the impossible position of stating : “Had we known of these preexisting conditions, our underwriter would not have issued coverage .” Blue Cross did not agree with the analysis of the dept of insurance.
For a least two decades, the California Insurance Code has contained specific regulations that forbid such claims actions. But the Dept of Insurance never saw a pattern of abuse. Blue Cross was never reprimanded or fined for these abusive practices.
And they continued these practices up to the time the lawsuit were filed in Spring of 2006.
I do not believe new rules are required. I believe that the dept of insurance can readily enforce the rules on the books today by frequent examinations of the claims at Blue Cross.
May 28, 2007 - 8:39 am