Blue Mass Group

Reality-based commentary on politics.

Deval Patrick campaign triples, then scores on industry blunder

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The Deval Patrick campaign dropped a triple deep into the right field corner last week when his administration drove a health-insurance industry spitball of unjustified rate increases past right-fielder, GOP candidate, and health insurance industry veteran Charlie Baker. The health insurance industry compounded the blunder yesterday, throwing wide of third base by cutting off new coverage to small businesses and individuals and allowing Deval Patrick to score in the ensuing confusion.

The first-inning fireworks give Deval Patrick a dramatic first-inning lead, providing clear and substantive assistance to Massachusetts voters — especially working-class men and women and small business owners — struggling to contain skyrocketing health care costs. Former health insurance executive and leading GOP contender Charlie Baker is now in the unenviable position of defending these outrageous and justifiably unpopular premium increases as he struggles to launch his gubernatorial campaign against a resurgent and energized Deval Patrick campaign.

The auspicious opening to the 2010 campaign season comes on the heels of a bang-up finish to pre-season play, during which the Deval Patrick campaign built momentum through a winning streak of legislative, economic, and political victories.

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  1. Globe on Charlie’s inaction.  They got him when he was part of the HCQCC not fighting against rate caps.

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    p>Plus Patrick scores another win with Blue Cross and Tufts offering coverage with the old rate.  Interestingly enough Harvard Pilgrim still wants to duke it out (interesting).  What does Charlie think about that?  Does he stand with HPHC and fight for 32% increases for individuals and small businesses?  

  2. But they stink – BC/BS lost 150M last year, who is going to bail them out ?

    • Here

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      p>I think this deserves a little more scrutiny:

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      p>

      Maltz added, “Nearly two thirds of our net loss or approximately $95 million is due to our adoption of a more conservative view of existing accounting rules which caused us to write off certain investment assets with a current market value that is below the price we initially paid.” Maltz said the decision was consistent with best practice accounting standards.

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      p>

      • 150M-95M=55M which is still losing money, on gross revenues of 6.7B – how much money will they lose without an increase in premiums ?

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        p>Or will the state pick up their losses, like BofA, CITI or GM ?

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        p>

        • Companies who are losing money do things like:

          • Reduce executive compensation
          • Layoff employees
          • Relocate to smaller and cheaper office space
          • Slash discretionary spending (sales meetings, expense accounts, company-paid travel, etc)
          • Work with major suppliers to reduce costs

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          p>How hard are they pursuing these?

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          p>It seems to me that you are arguing against yourself here. Health insurance premium rates are already far too high, even before these increases. If they are still losing money, and can’t find a way to break even or post a modest profit, then they should fold.

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          p>Somehow, these “market-driven mechanisms” never seem so appealing when high-ranking executives (instead of working stiffs) are on the receiving end.

          • Of course, I would hope they would use the “layoff employees” idea as a very last resort.  I’m certain those claims analysts are already processing hundreds of claims per day, with a pretty stiff and unrelenting quota to meet to ensure productivity.  

          • Mass health reform didn’t look at the cost side of the equation, Administrative costs (at least of BC/BS)  seem to be 10% of their their budget.  I think the 20-35% increase must be coming from somewhere else, which is of course medical costs.

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            p>Health insurance companies do need to watch their administrative expenses and insurance companies (in general) sometimes just pass the bills through, but analyzing bills (and rejecting them) also increases administrative costs.

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            p>I wish the State of Massachusetts had  followed some of  your prescriptions  during the current downturn. How many people get pensions over 100K, or health plans that cost 40K a year.

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            p>

        • 40000 worth.

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          p>This is what happens when you don’t perform, and this is what we want to happen with reform, again this is a direct quote from their 2009 financial report:

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          BCBSMA has already taken steps to improve its 2010 financial results. “Before the downturn even began,” said Maltz, “we took action to reduce our administrative and medical costs which will help improve our financial position going forward.” Maltz specifically pointed to initiatives underway to reduce medical costs by eliminating the overuse, underuse and misuse of health care services that don’t improve patient care but do add unnecessary costs that drive up premiums. Maltz said he is concerned that future regulatory action by state government could negatively affect the company’s 2010 results if premiums that reflect the cost of medical care are not approved.

          • But the Massachusetts market has become monopolistic.

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            p>What should happen if they don’t offer good rates they should go out of business.

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            p>

            • Massachusetts has a great deal of options, probably an area with the most in the country.  The deal is if BC doesn’t run well then HPHC or Tufts or Fallon or Neighborhood and on and on pick up those subscribers.  It’s called competition.  

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              p>People went elsewhere for coverage and BC noticed and is now trying to pull itself out of mismanagement.  If you didn’t notice they had a top level shake up a little while ago.  Not a coincidence.

            • Don’t you read Insurance and Financial Advisor? đŸ˜‰

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              p>

              In February, the House voted 406-19 to support the Health Insurance Industry Fair Competition Act, repealing the exemption. The measure, however, was not among the Congressional chamber’s amendments to a U.S. Senate bill signed into law by President Obama March 23.

    • If they can find ways to survive without soaking small businesses and individuals, they should do so. I suspect that they cannot. If a bail-out is necessary then this demonstrates that the much-ballyhooed “free-market” approach to health care is a dismal and catastrophic failure. It is senseless to “bail out” dinosaurs who will go extinct anyway.

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      p>As I’ve said before, government-sponsored single-payer health care is the only approach that works.

  4. We’d be missing so much fun political theater.

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    p>Oh, and we’d have better health care at far lower cost.

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    p>(We have become a nation of chumps.)

  5. that today’s Lehigh piece notes that Baker was also involved with deregulating hospital prices.

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    p>How is this not a bigger piece of the story? He deregulates their price controls, so they jack up costs, then he goes to Harvard Pilgrim, jacks up rates and triples his salary

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    p>Now he complains about lack of hospital cost transparency as the magic bullet to holding down rising costs?

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    p>The only thing missing here is an investigation into his stock holdings, to see if he’s invested in any pharmaceuticals and medical device companies, just to check if he’s cashing in on both ends.

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