Congressional hearings reveal WellPoint’s true intentions
According to Ms. Braly’s (CEO of WellPoint) testimony, “Another dynamic in our current challenging economy is that a higher proportion of healthy individuals move to lower cost coverage, such as coverage with a higher deductible, than in more robust economic times.”
Internal documents suggest that WellPoint’s business plan includes moving consumers into less generous plans. This strategy appears to have three components. First, WellPoint’s highest rate increases seem to apply to their most comprehensive insurance plans. Maternity care is a marker for a more comprehensive package of benefits. A chart of proposed rates shows that WellPoint’s highest rate increases apply to the only two product families regulated by the Department of Insurance with maternity coverage.
The chart also shows that for the most part, WellPoint proposed lower increases within specific product lines for the versions with higher deductibles than for the versions with lower deductibles.
Second, WellPoint is developing new products, called “downgrade options,” to promote to consumers facing the high rate increases. In one e-mail, David Shea, the Vice President for Individual Pricing, states: “Jim has asked Bryan to price 5-6 downgrade options to be made available in conjunction with the upcoming rate action.” In another internal e-mail, Mr. Curley, the Regional Vice President and Actuary, proposed that WellPoint “create 5-6 CA look- alike plans for CA with a benefit or two removed to create a downgrade option upon renewal.”
WellPoint also introduced a completely new product line called CoreGuard, advertised to have “some of our lowest monthly rates” and a “higher percentage of member cost-sharing in exchange for lower premiums.” One of the CoreGuard plans has a $20,000 deductible for a family for in-network services and a separate $20,000 deductible for non-network services. On top of that, a family can spend an additional $15,000 for co-payments for non-network services. Enrollees can be liable for another $4,500 in prescription drug costs. This adds up to a potential $59,500 out-of-pocket maximum for a family, who are still liable for the cost of drugs not on the formulary and maternity services.
Third, company officials discussed scaling back benefits for existing plans. In an e-mail, Mr. Shea states: “During our Plan review this morning Brian was mentioning that, in CA in the past, we mitigated rate increases by introducing product changes for existing members. We brought up the introduction of new products but he wanted to pursue existing product changes.” In another e-mail, Mr. Curley described scenarios that would produce a 6% to 10% reduction in benefits for four plans. The options included raising deductibles in three of the four plans and adding 25% coinsurance payments.
Via Committee on Energy and Commerce
Therein lies the crux of the issue.
Yes, we can be deeply offended that – according to committee chairman Henry Waxman (D-CA) – 39 WellPoint executives are earning more than $1 million a year while the company apparently blew $27 million in fancy retreat experiences. It hurts to see these people living it up while their customers are being crushed under the heavy burden that is being placed on them for the privilege of having health care insurance.
However, as some simple math reveals, this is just not the core issue. While it might make us angry, putting all our focus on this will not fix the grave problems we face.
No doubt, some of the 39 executives at WellPoint making more than a million a year actually make well more than a million a year. So let’s say the offensive executive compensation plans add up to $100 million a year. Add to that the $27 million blown on good times at the company retreats and, for good measure, let’s kick in a bit more to round it out at $150 million.
The 39% premium increases in California alone affect approximately 800,000 people. If WellPoint were to take the $150 million and rebate every penny of it to each of its affected policyholders in California, it would save each of these individuals $188 a year or about $16 a month.
I’m not suggesting that that $188 wouldn’t be better spent in the pockets of WellPoint’s customers. What I am saying is that with California’s individual policyholders making monthly premium payments heading into – and in many cases exceeding – the four digits, this is not about saving sixteen bucks a month.
What this is about is WellPoint doing everything in their power to push customers out of policies that aren’t paying off for the company and into benefit programs that produce very little in the way of actual benefits.
As the house committee did, let’s take a look WellPoint’s new product line entitled “CoreGuard”. The program provides huge deductibles up to and exceeding $20,000 a year with additional annual co-payments up to $15,000. Drug co-pays can reach of $4500 a year. Of course the premiums are going to be dramatically lower – but why would the average American family ever buy such a program? They’re going to be bankrupt long before they hit the deductible.
Rep. Waxman put his finger right on the problem in yesterday’s hearing. Referring to the documentation WellPoint provided the committee, Waxman said –
They tell a story not about costs, but about profits … not about increasing coverage, but about reducing benefits to policyholders … not about removing barriers to coverage, but about erecting new ones … not about covering more people who have illnesses, but about cutting them off and seeking out new customers who are healthier and wealthier (emphasis added.)
Via House Energy & Commerce Committee
And there it is. The health insurers already know that the numbers no longer add up for them when it comes to providing insurance to middle class America. They know very well that their future lies in providing products to the wealthiest in America who will not be satisfied with the inevitable government payer system that will be provided to the average American – or whatever alternate system we might come up with to replace private health insurance as the primary payer in our national health care system.
The question that remains is how long will it take the rest of us to catch up with what the health insurance companies already know? If the private insurance model is to eventually exist to service the wealthy – and it will -what is going to happen to everyone else?
I think we know. In the absence of any planning to create any new approaches to the problem, the sole remaining option will be a single-payer government system. That’s an inescapable fact and its time for those emotionally stuck in the era of the ‘Red Menace’ to start dealing with it.
Would it not be wise to get over the ideological debates and begin planning for this inevitable eventuality? Or would we prefer to find ourselves caught flat-footed when the current system collapses leaving most of us in a real pickle until government can gear up to take it over or create some alternative system is created to handle medical coverage for Americans?
The insurance industry is speaking to us and they are coming through loud and clear. They can no longer make money insuring the middle class and that becomes truer with each passing day.
Too many of us are not listening.