Breaking news: A lawsuit has been filed this afternoon by several Massachusetts health insurers in conjunction with the Massachusetts Association of Health Plans and Blue Cross Blue Shield of Massachusetts (which is not a member of MAHP) to challenge the Mass. Division of Insurance’s action last week rejecting 235 of 274 proposed plan rate increases.
Below is a list of insurers with the number of rate filings rejected (source):
Fallon Community Health Plan – 47 out of 47 rejected
Blue Cross – 19 of 19 rejected
Tufts Health Plan – 36 of 36 rejected
Blue Cross Blue Shield HMO – 63 of 64 rejected
Harvard Pilgrim Health Care – 25 of 26 rejected
FCHP and BCBS-MA are the only named plaintiffs as of the time of this post, but it’s probably a safe assumption that some if not all of the others listed are party to the lawsuit.
over their rights to grossly overpay their executive salaries and refuse to force companies like Partners to negotiate their prices down.
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p>Awkward.
I hope that the judge dismisses their lawsuit.
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p>Every judge is a lawmaker and is a politician in robes. The right wing, in the last few decades, has done a MUCH better job at putting their supporters on the bench than the left wing.
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p>Massachusetts has appointed and not elected judges in state courts. At this time in history, that is a good thing because the judges can keep their jobs without having to raise money from the fat cats to campaign for re-election.
The Big Insurance companies are of course suing the state in a desperate effort to claw on to their huge profits.
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p>And no doubt the CEOs are mostly worried about losing their private jets, 500k bonuses and country club memberships.
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p>Meanwhile the health plan subscribers / taxpayers have to foot the legal bill TWICE. Once for the insurance company lawsuit costs and again for the state’s legal bills. Small businesses and working people screwed again by insurance company greed.
John – While I am not sure about Fallon, I am sure that the other insurance entities listed are non-profits so I am confused by the comment that they are suing to retain their “huge profits”. Could an alternate argument be made that they are suing to receive revenues to provide the mandated level of insurance coverage to all their policy holders. Coverage that is mandated by legislators on Beacon Hill and often has no correlation to services other than to increase cost. An example is the current debate regarding adding accupuncture as a mandated coverage item in MA policies.
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p>I believe that health care is too costly, but to single out the insurance companies and not the providers, hospitals, equipment makers, drug companies, insured and many others as the reason for the high cost will only serve to create time and money consuming lawsuits rather than develop workable solutions to the unsupportable increases in health care costs.
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p>An alternate argument could be made that they are suing to provide revenues to provide the mandated level of insurance coverage to all of their policy holders while maintaining the enormous salaries, bonuses, and perks of their executives and high level managers.
Based on at least one example, a not-for-profit health plan I’m familiar with, there’s some truth in each of the above comments.
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p>It’s not called profit; it’s called “net income”, but it means the same thing, except there just aren’t shareholders and the net income gets plowed back into the business.
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p>At least one of these plans has lost money over the last couple of years even while increasing membership, mainly because a good chunk of revenue is from investments, not primarily because premiums won’t cover costs; there was net income until the latest economic downturn.
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p>Their argument, of course, is that the rate proposals are what is needed to cover costs. However, this is after operating expenses which include salaries, bonuses, and perks. A smaller plan’s executives are comfortably but not extravagantly paid; they wouldn’t have been able to support Charlie Baker’s paycheck, for example.
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p>The insurers are correct in arguing that provider costs are a driver — they would say the primary driver — of health care cost increases. However (as I have suggested before), premium increases have always been the path of least resistance for private insurers, and as long as they weren’t challenged by the state, there was little incentive to put pressure on providers.
I especially like the argument that premium increases have been the path of least resistance. I would tend to agree with you on that point. It is always easier, it seems, to seek to have someone else pay than to find areas to cut within the company. I would also argue that this same holds true for far too many governmental entities – seek revenue increases before reducing expenses. Unfortunately for both the insurance entities and the governmental entities we have reached a point where there is limited available revenue opportunities so it is time to look to ways to do better with less. Never an easy task, but one, unfortunately, that we now find ourselves facing in too many places.
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p>Here’s a plot of the top marginal tax bracket in the USA over time:
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p>You’ll notice that the top rate was 70% in 1981; it’s 35% today. Methinks there’s plenty of room for additional revenue (if we ignore Hauser’s Law). I’d also observe that the federal gas tax has been static since October 1994, despite inflation. That’s a tax which has been effectively cut every single year for the last 16 — raising it to $0.25/gallon would merely bring it to the same inflation-adjusted rate as it was in 1994. And why are we subsidizing people’s bonus rooms and 2 car garages? I’d revise the Sched A so that you get 800 sq ft plus 200 sq ft per dependent (including filer and spouse) — that fraction the home is the fraction of interest that becomes deductible.
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p>But sure, want to cut expenses? I’d start by cutting total military spending 20%. Then I’d eliminate all subsidies for fossil fuel exploration, refinement, and delivery. Cut abstinence only education to $0. Wind down the subsidies for nuclear power. We all know farm subsides are being abused. I’d let Medicare/Medicaid/VA/etc re-import drugs from Canada for savings.
The last six months were just spring training games. Now the real games begin. We can’t get healthcare insurance costs down until we get healthcare costs down.
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p>If the premium increases are justified, let them prove it. If they can, then we all need to turn our attention to the providers (why are their costs going up so much?) and ourselves (why are we less healthy than the rest of the industrial world? Hint: anyone want a mochachinolatte with enough calories for a familiy of four?)
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p>Someone’s got to stop this “add a little more for myself and pass it along to the next guy” cost reimbursement system we’ve got going. If the insurers lack the market clout, or the will, to negotiate effectively with the providers then we need to address that. We could have addressed it with a public option plan that would have had enough clout to use free market principles to address the problem, but …..
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p>This is a system problem, and it’s a big complicated system. But simply letting the system keep running the same old way doesn’t solve the problem.
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p>Not every change is an improvement, but every improvement requires a change.
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p>
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p>But I think three things are the most obvious to me:
1. We eat far more meat per capita than most other nations
2. We consume far more corn syrup per capita than most other nations
3. We use our own power to move our bodies far less distance (per capita) than those in other nations
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p>The first two are dramatically impacted by farm policy; the last one is dramatically impacted by transportation and land use policy. Getting those right takes knowledge, takes many iterations, and takes political courage. We’ve gotten it right (finally and for the most part) with smoking. Getting our ag, land use, and trans policy right will cut our health costs dramatically over the long run — but we’re just not getting it right enough fast enough.
I just took that ONE example because:
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p>a. The Globe had an article on these very kinds of nutritional wonders (http://www.boston.com/business/articles/2010/04/06/chains_roll_out_new_iced_coffee_creations/.
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p>b. getting one of these bad boys combines your Numbers 2 and 3, especially when you get one of these corn syrup and caffeine wonders at the drive-thru window. Hell, for what we all know your Number 1 baddie, meat, just might be in one of these too.
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p>These places deliver calories like tobacco companies deliver nicotine; very efficiently.
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p>The film Nourish (http://www.nourishlife.org/) has all the gory details, and some solutions.
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p>Vote with your fork.
The result was a hanging chad.
if the insurance companies are forced to cover plans that cost them more than they are allowed to collect? Will they go out of business? Will they leave the state? Will they just walk away?
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p>Do the insurance companies make higher profit margins than regulated monopolies like power? (I didn’t look – I don’t know)
Insurance companies come in at #22 for most profitable with 4.6% of their revenues as profit. Utilities come in at #12 with 8.7% of their revenues as profit.
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p>http://money.cnn.com/magazines…
with 2.2% of their revenues as profit.