Wendell Potter stories from The Center for Public Integrity

OPINION: an outbreak of bipartisanship

Michigan,United States — 2013-06-17T10:34:57-04:00

Folks, there is reason to be hopeful that our lawmakers can put aside their ideological differences every now and then and do what makes sense for constituents.

In fact, last week some of the people we have elected to represent us — at least at the state level — even showed a willingness to put careers at risk by doing what they believe is the right thing.

One of the most contentious issues during state legislative sessions this year has been whether to expand the Medicaid program for low-income individuals and families, as Congress intended when it enacted health care reform three years ago.

The state-level debate was made necessary when the Supreme Court ruled last year that Congress can’t force the states to expand their Medicaid programs, even if the feds will always cover no less than 90 percent of the cost. Medicaid is jointly funded by the states and the federal government.

All of the states in which Democrats control both the governor’s office and legislature were quick to notify the Obama administration that they would take the federal money and expand their Medicaid programs to include families with incomes up to 138 percent of the federal poverty level. But that has not been the case in many of the states where Republicans enjoy a majority in one or both legislative chambers or have a Republican governor.

To date, 20 of those states have said “no thanks” — at least for now. The debate is still going on in seven others. But 23 states and the District of Columbia, including a number of red or purple states, have agreed to move forward with expansion next January.

Advocates of both health care reform and bipartisanship had reason to cheer last Thursday when lawmakers in conservative Arizona passed and sent to GOP Gov. Jan Brewer a Medicaid expansion bill she had endorsed. It would not have passed had several Republicans in both the House and Senate not joined Democrats in supporting the bill during a special session of the legislature.

The other good news Thursday came from Michigan, when after nine hours of debate, the GOP-controlled House approved, on a bipartisan vote of 76-31, a bill supported by Democratic Gov. Rick Snyder to expand Medicaid there.

I learned about it within minutes of the vote, thanks to Twitter. “Medicaid expansion passed!” tweeted Democratic Rep. Rashida Tlaib. “So proud of both my Democratic and Republican colleagues today.”

One legislator, Democrat Brandon Dillon, went so far as to say that Thursday was the first day he’d been proud to be a state rep.

And this from Republican House Speaker Jase Bolger: “This is a great example of cooperation in Lansing leading to the resolution of a difficult issue in a way that keeps the focus on the people of Michigan and what they need.”

It clearly took time for Republicans in both Arizona and Michigan to come around to supporting any part of the federal reform law they have criticized from the beginning.

While many Democrats hold the belief that “health care is a human right,” Republicans had to be persuaded that expansion makes sense from an economic point of view.

Crain’s Detroit Business quoted Republican Mike Shirkey as saying he was a “hard no” initially because of his general opposition to “Obamacare” but that he came around to support the expansion bill after weighing the pros and cons.

“There are perfectly good, legitimate, philosophical reasons to oppose, but a sincere effort to analyze the other sound, definable and measureable reasons to support outweighed those,” he said.

Among those measurable reasons: when more poor people have coverage, hospitals will have less “uncompensated care,” a misnomer because hospitals charge paying customers — and their insurers — substantially more just to cover the cost of care they provide to people who don’t have the means to pay.

Another compelling reason why many Republican lawmakers ultimately supported expansion is that if they didn’t, the federal taxes paid by state residents toward expansion would go to places that did enlarge their Medicaid programs.

As the Arizona bill was on its way to Brewer, she said in a statement that “it will extend cost-effective care to Arizona’s working poor using the very tax dollars our citizens already pay to the federal government.”

It may take a while, maybe even a few years, but I’m betting that lawmakers in the states that are saying “no thanks” now — even “hell no” — will eventually come around, despite what surely will be continued opposition from the Tea Party wing of the GOP. They will figure out at some point that it makes no sense for their fellow Floridians or Texans, for example, to be paying with their taxes for the coverage of folks in Arizona and Michigan.

OPINION: smoothing out Medicaid's 'churn'

2013-06-10T09:51:27-04:00

Bipartisanship is so rare on Capitol Hill these days, especially in regard to health care, that when such comity breaks out, it’s worth reporting.

Around the time the House of Representatives was voting for the 30-somethingth time to repeal Obamacare, two lawmakers from Texas — Democrat Gene Green and Republican Joe Barton — introduced legislation to fix a problem that most folks with private insurance know nothing about. That’s because it only affects the poorest among us who are eligible for Medicaid.

The problem is referred to by policy wonks as “churn.” Because of the way Medicaid is administered by the states, millions of Americans enrolled in the program lose coverage temporarily every year because of often minor fluctuations in their income or even a change of address. Many are removed from the rolls simply because they can’t take time off from work to go to a Medicaid office to re-verify their incomes every three months, which some states require.

It’s called churn because most people who are “disenrolled” — to use insurance industry jargon — are eventually reinstated. Their eligibility for Medicaid never changed. They lost coverage solely because of paperwork requirements or a slight and fleeting bump in pay because of having to work overtime during a given week.

This is unknown in the private insurance world because once you enroll in a health plan, you can stay enrolled in that plan for a year, so long as you keep paying the premiums on time. It doesn’t matter if you move from one street to another or work an extra shift to make a few extra bucks.

But staying covered for a full year under Medicaid is not a given, and the consequences of this churn are costly, and not just for those most directly affected. The situation is costly to taxpayers, too, because of the unnecessary administrative expense. It costs hundreds of dollars per enrollee to verify income multiple times a year and to process all the paperwork involved in reinstating a beneficiary. When you consider that 58 million of Americans are currently enrolled in Medicaid — a number that will grow substantially next year when many states expand coverage under the Affordable Care Act — billions of taxpayers’ dollars are being wasted because of churn.

Those who fare the worst, though, are eligible beneficiaries who get dumped into the ranks of the uninsured.

“Even short gaps in coverage can lead to delay or avoidance of needed care,” says Leighton Ku, director of the Center for Health Policy Research at George Washington University’s School of Public Health and Human Services, who along with colleague Erika Steinmetz studied the effects of churn. They released their findings in a report last month.

They found that gaps in coverage often lead to significant increases in hospitalization for chronic diseases like diabetes, asthma and mental disorders.

“Churning has a pervasive negative impact on health for low-income Americans,” says Margaret A. Murray, CEO of the Association for Community Affiliated Plans (ACAP), an organization representing health plans serving Medicaid beneficiaries, which commissioned the study. “It stymies the efforts of plans serving Medicaid populations to provide consistent, coordinated care. Worst of all, churning interrupts care for many people and forces them to go to an emergency department rather than their primary care doctor because they don’t have the coverage they thought they had.”

The problem will be even more acute when the states’ online health insurance exchanges, or marketplaces, begin enrolling folks this coming October. Most Americans who do not have coverage will be able to shop for it in these exchanges, which the Affordable Care Act requires states to set up. Murray cites research showing that up to half of the 28 million adults with incomes less than twice the poverty level — an annual income of $22,340 for an individual or $38,180 for a family of three — will have income fluctuations that will require them to switch between Medicaid and private coverage offered through the exchanges in a given year.

“This shift in eligibility may trigger a sudden change in plans and provider networks, which can have serious repercussions for the enrollee’s financial and health status,” says Murray.

What ACAP advocates — which Green and Barton’s bill would achieve — is a guarantee of 12 months of continuous eligibility to everyone with Medicaid. At the end of the 12-month period, eligibility would be re-evaluated. That’s what a few states do now for children enrolled in the program and in their Children’s Health Insurance Programs (CHIP).

The idea has also been endorsed by the Medicaid and CHIP Payment and Access Commission (MACPAC). Other advocates include the Children’s Hospital Association, the National Association of Public Hospitals and Health Systems and the National Committee for Quality Assurance.

If Green and Barton’s bill makes it through Congress — no sure bet considering the gridlock that seems to prevail on Capitol Hill — it would save us all a lot of money and give millions of low-income Americans greater peace of mind.

OPINION: the peril of Obamacare's promise

2013-06-03T11:36:09-04:00

Presidents often live to regret some of the words speechwriters put in their mouths. The first President Bush paid a steep price for his ill-advised “Read my lips. No new taxes!” promise in 1988. He lost his bid for a second term.

No doubt President Obama regrets saying, with equal bravado: “If you like your health care plan, you will be able to keep your health care plan.”

That was just plain stupid. For starters, he and his speechwriter either didn’t understand or chose to ignore this reality: for most Americans, whether or not they keep an existing health plan is not up to them or the government. Insurance companies and our employers are the ones making those decisions.

Like most Americans, Obama probably had never heard of terms like “benefit buy-down” and “full replacement.” Insurance company executives use them frequently, but almost never to anyone other than their corporate customers and Wall Street financial analysts.

If the employer-sponsored health plan you have today has fewer benefits or requires you to spend more of your own money for medical care than the plan you had last year — the one you liked but can’t keep — you have been the victim of benefit buy-down, a practice employers have been using for years to limit their share of the cost of providing coverage to workers.

And if you were in an HMO or PPO but found out during open enrollment that your employer has eliminated those options in favor of a high-deductible plan, you have become a victim of full replacement. The health plans you liked were fully replaced by a plan enabling your employer to shift more of the cost of care to you.

So if the President’s speechwriters were paying attention to what has been going on in the health insurance world, they would have found some other way of saying what Obama reportedly meant — that the reform he supported would build on the uniquely American employer-based system while reducing the number of folks without coverage. In other words, people would not have to give up their private insurance and enroll in a government-run plan, even though many consumer advocates believed something like Medicare-for-all would have been a better way to go.

As we get closer to the date when most Americans will be required by Obamacare to enroll in a private health plan if they’re not eligible for Medicare or Medicaid, it’s becoming clear, especially to the president’s critics, that the law will indeed mean that health plans offering the least protection from financial ruin after a serious illness or injury — especially in the individual market — will soon go away. That is unless, as I wrote last week, insurance companies are able to take advantage of loopholes in the law that will enable them to continue selling junk insurance.

Banning junk insurance is a good thing for consumers, but making such policies unlawful — as Obamacare will do — means that people who are currently enrolled in them will have to find health plans that offer real coverage by January 1 of next year.

Obama’s speechwriters should have been thinking ahead to the day when Obamacare will protect us from buying the equivalent of snake oil. If they had, they might have understood why the president didn’t want to promise folks they could keep existing plans.

The advantage that Obamacare’s critics have is that many people who buy junk insurance don’t realize they’ve been paying good money for almost nonexistent coverage — that is, until they wind up in the hospital after getting sick or hurt. And because most Americans stay relatively healthy and injury free, those who are in junk plans can go years without testing the limits of their coverage.

States are starting to disclose how much insurers plan to charge for the policies they sell through the online health insurance marketplaces beginning Oct. 1, and so far, we are seeing little evidence of the “rate shock” some politicians and insurance executives were predicting earlier this year. But it won’t be long before people who are enrolled in plans with the skimpiest benefits will find via cancellation notices from their insurers that their plans won’t be available next year. Some inevitably will find that premiums for more comprehensive coverage — which many undoubtedly will insist they don’t need or want — will be considerably higher than what they were paying for junk.

That’s all the president’s political opponents will need to claim, with some justification, that Obama made a promise he didn’t keep when he was trying to sell the public on the need for reform. The president’s speechwriters better be thinking now how to get him out of the trap they set for him four years ago.

OPINION: a cynical search for loopholes

2013-05-29T17:20:14-04:00

There is an age-old tradition in this country: if you don't like a law and can't get rid of it, look for a loophole.

That's what some companies that don't want to comply with an important Obamacare requirement have done, and it appears they've hit pay dirt.

The provision of the law mandating that all new insurance policies must cover certain "essential" benefits will take effect January 1, 2014. From that date forward, all polices offered on the online insurance marketplaces in every state must cover ten categories of benefits that range from prescription drugs and lab services to hospitalization and maternity and newborn care.

The sponsors of the law hoped the provision was among those that would all but eliminate the need for Americans to file for bankruptcy because of medical debt.

The United States is alone among developed countries in having medical debt as the leading cause of bankruptcies, even among people who have health insurance. That's because a lot of the policies being sold today have such limited benefits, high deductibles and annual and lifetime coverage limits that many people realize after a serious illness or injury that their policies provide little help in paying medical bills.

"No longer will American families be a car accident or heart attack away from bankruptcy," said Senate Majority Leader Harry Reid in response to the Supreme Court's decision last June upholding the constitutionality of the law.

But as reported by the Wall Street Journal last week, corporate loophole hunters have invalidated Reid's statement, which honestly was an overstatement even then. While Obamacare will make affordable coverage available to millions of Americans for the first time, several million others — primarily low and middle-income workers — will still be left out.

According to the Journal, regulations written by the Obama administration pertaining to employers are being interpreted by health insurance benefits consultants as applying only to small businesses that buy coverage for their employees in the state online marketplaces. Those marketplaces, also called exchanges, were created for employers with up to 100 workers and individuals who cannot get coverage through the workplace.

So the good news is that anyone buying coverage through a state exchange will have the assurance of knowing that their policies will cover essential benefits and have lower deductibles than many policies being sold today.

The bad news for millions of others, however, especially those who work in low paying jobs at places like chain restaurants, retailers and nursing homes, is that many of the consumer protections that apply to policies bought through the exchanges will not apply to them. The adequacy of their coverage will depend on how much money their employers are willing to devote to health insurance.

We'll probably never know, but I suspect the language in the law pertaining to employer-sponsored coverage was written in a purposefully ambiguous way by lobbyists for insurance companies that have found selling inadequate coverage quite profitable. Some of the biggest insurers, including Aetna, Cigna and UnitedHealthgroup, bought companies several years ago that specialize in so-called limited-benefit plans. You can be certain they would try to protect their investments, especially considering that limited-benefit plans typically have high profit margins. That's because the insurance companies that sell them never have to pay out much in claims.

And that's why so many Americans filing for bankruptcy because of medical debt actually have insurance. According to a 2009 study by Harvard researchers, 78 percent of people who listed medical debt as the leading reason for their bankruptcy filings had insurance.

Those researchers found that medically related bankruptcies have been rising steadily-from 8 percent of bankruptcies in 1981 to 62 percent in 2007. Also growing steadily during that timeframe was the number of underinsured Americans.

The Commonwealth Fund recently estimated that approximately 30 million Americans are enrolled in policies that do not offer adequate protection. The organization's Biennial Health Insurance Survey of 2012, released last month, found that 46 percent of adults between the ages of 19 and 64-an estimated 84 million people-did not have insurance for the full year or were underinsured and consequently unprotected from high out-of-pocket costs. Two of five adults reported that they had problems paying their medical bills or were paying off medical debt.

In response to a question last month about the implementation of the reform law, President Obama said, " ... in a country as wealthy as ours, nobody should go bankrupt if they get sick." Regrettably, because of loopholes in Obamacare that undoubtedly will be exploited by employers more concerned about the bottom line than the health of their employees, that will continue to be little more than an aspiration for years to come.

OPINION: hidden influence-peddling in Washington

2013-05-20T16:13:49-04:00

I was not among those who believed the Supreme Court’s Citizens United decision would open the floodgates of corporate money to influence elections and public policy. While the decision enables corporations to call for the election or defeat of federal candidates, those expenditures have to be reported and few corporations will take the risk of losing customers by getting involved in politics so publicly.

The reality is, the floodgates have been open for years, and the attention focused on Citizens United has actually been helpful to corporations, because it has diverted the public’s attention away from the deceptive yet perfectly legal ways corporations are able to deploy enormous sums of money to advance their political agendas.

The mainstream media, meanwhile, seems to willfully ignore what corporations and other moneyed interests do to get what they want in Washington. That was certainly the case last week after National Journal reporter Chris Frates disclosed how America’s Health Insurance Plans, the insurance industry biggest PR and lobbying group, funneled hundreds of thousands of dollars to a longtime ally with a better reputation to pay for an industry-serving communications campaign. The only media outlets I could find that picked up the story were The Huffington Post, Bloomberg Businessweek and ABC News online.

As Frates’ investigation uncovered, AHIP in 2011 gave the National Federation of Independent Business $850,000 to finance an effort to persuade Congress to repeal a provision of Obamacare that will actually help many uninsured people afford coverage. NFIB is a nonprofit that calls itself the voice of small business but which I know from my days in the insurance industry has often been a voice for my former bosses.

Insurers are delighted that Obamacare will require most Americans to buy coverage from them beginning January 1. That was one of their health care reform goals, along with making sure reform did not include the creation of a public option to compete with private companies. And insurers love the fact that the federal government will be sending them billions of dollars every year to help subsidize the coverage of low-income Americans who would otherwise be unable to afford their premiums.

Knowing that insurers would be getting a windfall in new revenue from all of that, drafters of the Affordable Care Act included a provision that would impose a tax on some policies insurers sell to help finance the expanded coverage that insurers will benefit from. Sounds reasonable, right?

Well, not if you are the CEO of a health insurance company who cares more about meeting Wall Street’s profit expectation than the health care needs of Americans.

But even health insurance executives know they’re not viewed as positively as small business owners. If AHIP spent that $850,000 in a way that could easily be traced to the insurance industry, the campaign to get the tax repealed would be considered — rightly — as self-serving. So AHIP needed a trusted partner with a better reputation to try to get the job done, and the NFIB was more than willing to sign on and take the money.

Exactly how the NFIB spent insurers’ money will likely never be known, but there is a good chance most of it went to set up and finance the operations of an outfit called the Stop the HIT Coalition. (HIT stands for Health Insurance Tax.) That’s the group that is fronting for the industry to get the tax repealed.

The NFIB, one of the organzations that challenged the constitutionality of the Affordable Care Act, undoubtedly was willing to partner with AHIP because insurers say they will pass the tax along to their small business customers instead of absorbing it as a cost of doing business or as goodwill from getting the additional business guaranteed by Obamacare. Rather than push back against the insurers, the NFIB clearly saw this as a new reason to attack and weaken the law.

Frates discovered this back channeling of money by looking at tax returns filed by both AHIP and the NFIB. It turns out the $850,000 from AHIP was the second largest contribution the NFIB received in 2011. To put that into context, the NFIB offers small business memberships for $180, so AHIP’s money (which comes from premiums insurers charge their customers), was equivalent to 4,722 small business memberships.

Other than the reporters at the Center for Public Integrity, Frates — who last year broke the story that AHIP funneled more than $100 million to the U.S. Chamber of Commerce in 2009 and 2010 to pay for an anti-reform advertising campaign — is one of the few Washington reporters investigating how corporations and trade associations hide the money they spend to influence Congress. As a result of this lack of media interest, Americans remain in the dark about how big special interests are able to control what happens in the nation’s capital. And Citizens United has nothing to do with it.

OPINION: ObamaCare myths and realities

2013-05-13T14:06:40-04:00

The House of Representatives is expected to vote for the 40^th time this week to repeal ObamaCare, not because anyone believes the 40^th time will be the charm, but because the exercise will enable Republican freshmen to vote for repeal and brag about it during their campaigns next year.

Those lawmakers probably won’t tell their constituents that two of the most important provisions of the law they profess to hate were actually Republican ideas the Democrats embraced in hopes of getting bipartisan support for reform. The first such provision is the requirement that all Americans not covered by a public plan like Medicare or Medicaid must buy coverage from a private insurance company. The second provision: establishment of state health insurance marketplaces (called exchanges in the law) where private insurers compete online for customers.

One of the first states to set up such a marketplace was Utah, among the reddest of states, which had its exchange up and running months before ObamaCare was enacted. Starting this fall, Americans everywhere will be able to shop in Utah-like marketplaces for coverage effective January 1, the date the GOP-inspired requirement to have health insurance kicks in.

The reason Republicans once liked health insurance exchanges is that in theory they will facilitate choice and competition, which should bring down the cost of coverage. If the exchanges work as planned — and as ObamaCare stipulates — consumers will be able to make apples to apples comparisons among health plans and pick the one that seems to offer the best value.

Based on news out of Oregon last week, there is reason to believe that the theory is holding up and that consumers will indeed benefit from price transparency that until now had never been available to the layman.

Health insurers in Oregon were required to tell the state last week how much they planned to charge for the policies they would sell this coming fall on “Cover Oregon,” the name of the state’s exchange.

As reported in the Oregonian, when the state insurance department published the insurers’ proposed rates in a chart, some of companies that had planned to charge the highest rates wasted no time in saying said they had made a serious mistake and would quickly revise their offerings with lower rates.

The charts were made available online Thursday. Within 24 hours at least two insurers asked for a do-over, according to the newspaper. One of the companies promising to resubmit new rates was Family Care Health Plans, which had said it would charge $422 a month to cover a 40-year-old non-smoker in Portland, two and a half times as much as another insurer said it would charge for the exact same policy.

Another insurance company, Providence Health Plan, said that, oops, it had made a mistake in its cost projections and would reduce its planned rates by 15 percent. A spokesman for Family Care blamed its sky-high rates on overly pessimistic underwriters and said that, upon reflection (and after seeing what competitors planned to charge) it would cut its rates even more than 15 percent.

For years, insurance companies have been able to charge essentially whatever they wanted because there has been no organized marketplace for individuals and small business and no requirement that insurers provide information in a way that would enable us to make truly informed decisions. One of the most popular provisions of ObamaCare changes that by requiring insurance carriers to provide plan descriptions in a standardized format and in language we can understand. They also have to tell us how much our monthly premiums will be and provide examples of how much we’ll have to pay out of our own pockets if we get sick — or pregnant.

ObamaCare critics have charged that the rates insurers will be charging on the exchanges will be much higher than what insurers charge today because of other consumer protections in the law, such as the one that makes it unlawful for insurance companies to refuse to sell someone a policy because of a pre-existing condition.

While it’s possible that some people will have to pay more — especially those with low-benefit, high-deductible plans that are soon to be abolished — most folks who have to buy coverage without an employer’s help will likely pay less, thanks to income-based tax credits that will be available for the first time. As the Oregonian noted, at least half the people who buy coverage on the state’s exchange will qualify for a tax credit. And they’ll be able to determine quickly how much the tax credit will reduce their premiums simply by providing income information on the exchange website.

Americans in every state can look forward to these GOP-inspired consumer benefits and protections and the very real possibility of lower premiums, assuming ObamaCare goes forward. Which, of course, it won’t if House Republicans’ 40^th attempt to repeal ObamaCare does indeed prove to be the charm.

OPINION: health reform to be political fodder in 2014

2013-05-06T00:09:01-04:00

Will the implementation of some of the most important provisions of ObamaCare this fall and next year result in the “train wreck” Senate Finance Chairman Max Baucus (D-Mont.) predicted a few days ago?

No. But you can be certain that there will be no shortage of political candidates and high-powered political spin doctors who will be working relentlessly between now and the 2014 midterms to convince us that it will be.

ObamaCare — even though it already has reduced the number of uninsured Americans by several million and has limited price gouging by insurance companies — represents the best hope that many Republicans will have of maintaining or boosting their majority in the House and possibly retaking the Senate.

Think about it. The economy seems to be on the right track. Just last week the stock market reached record highs and the jobless rate fell to its lowest point in four years. The war in Iraq is over and most American troops are scheduled to be out of Afghanistan by the end of next year. The GOP appears to have lost the advantage to Democrats on gun control and immigration, and abortion and gay rights are no longer the reliable campaign wedge issues they once were.

That leaves ObamaCare and “big government spending” as just about the only issues that remain for right-leaning candidates, barring any unforeseen domestic or global calamity. But if their campaigns against ObamaCare next year are as successful as their campaigns against it were in the 2010 midterms — and the White House and supporters of the law are once again asleep at the switch — GOP candidates might not need anything else to talk about to take both houses of Congress.

When Barack Obama was inaugurated in January 2009, there was wide support for health care reform, and Republican strategists knew it. They realized they might be able to turn reform into a winning issue for their candidates by mounting a campaign to make people afraid of what the Democrats might try to do. So just as Congress was beginning preliminary work on what eventually became the Affordable Care Act, GOP message guru Frank Luntz persuaded his clients to condemn whatever the Democrats proposed as a “government takeover of health care.”

Even though the bill that ultimately became law was anything but a government takeover, GOP lawmakers and candidates never missed an opportunity to insist that it was. Luntz’ sound bite was repeated hundreds of times in floor speeches by Republican members of Congress in the hours before the House voted on its version of the bill on November 7, 2009.

Their fear-based campaign worked so well to influence public opinion that GOP candidates have never stopped using the “government takeover” meme, which is why the perception of ObamaCare as being exactly that has become a reality for millions of Americans.

When you consider the inadequate job that the White House and the President’s supporters have done in explaining how the law benefits just about every one of us — and never letting us forget why reform was necessary in the first place — it’s little wonder Republicans see opportunity once again.

There no doubt will be glitches when the online health insurance exchanges go live on October 1 for the relatively small percentage of Americans who will use them to shop for coverage because their employers don’t offer health insurance as an employee benefit. The exchanges will work just fine for the vast majority of people, but there will be some who will have complaints. You can expect the law’s critics to give every one of them a voice in their effort to create the impression that the exchanges are a disaster and that the government can’t do anything right.

Similarly, some people who have been paying relatively low premiums for what they don’t realize is junk insurance will be upset when junk insurance is outlawed next year. Because real insurance costs more than junk, some invariably will complain about having to pay higher premiums for coverage that will actually be there if and when they need it.

You can also expect that a fair number of folks will squawk when the requirement to have health insurance kicks in on January 1. And you can bet that the opponents of the law will be aided, unwittingly in most but certainly not all cases, by the media. Just as local TV reporters tell us about the drivers who crash into each other instead of the rest of us who get to our destinations unharmed, the media will focus on the glitches. And they’ll interview far more complainers than happy campers.

I’m betting that Frank Luntz and other Republican strategists have already been hired to craft the sound bites to use against Democrats next year. If the Democrats and consumer advocates who support ObamaCare are not at work developing their own strategies to counter the coming barrage of misleading spin, the GOP will have an excellent chance of controlling Capitol Hill after the next elections.

OPINION: insurers hiding political spending

Cigna Corporation — 2013-04-29T09:47:40-04:00

If you have private health insurance, it’s almost certain that a portion of the premiums you pay every month is used to support political agendas that are not in your best interests. But good luck finding out how much of that premium money your insurance company spends to influence public opinion and public policy.

While all companies are required to report their federal lobbying and Political Action Committee expenditures, that money is just a fraction of what they often spend in the political arena to protect their profits. Millions more — probably billions more — are spent secretly every year by corporations and their trade associations to shape policy discussions and actions. Corporate America is determined to preserve that secrecy.

Among my responsibilities when I worked at Cigna was the administration of the company’s PAC. The money we doled out to state and federal candidates every year was not huge, but a lot of thought went into determining who got checks. The lion’s share each year would usually go to Republican candidates, but influential Democrats also benefited. In 2012, Cigna’s PAC reported contributing a total of $213,000 to 73 Republicans and 41 Democrats.

That’s pocket change compared to the $3.09 million Cigna says it spent lobbying lawmakers last year in both Washington and state capitals. And it’s also a fraction of what CIGNA probably spent through its trade associations and other groups to influence how you think about health care policy issues and how lawmakers vote on them.

We don’t know how big the total is because there are no laws or regulations requiring corporations to report those expenditures. But there is a growing movement among shareholder groups to force companies to disclose this kind of spending because it may dwarf what they invest in lobbying and direct contributions to candidates.

That undoubtedly was the case during the health care reform debate. The trade group America’s Health Insurance Plans, for which Cigna is a leading dues-paying member, funneled more than $100 million in 2009 and 2010 to the U.S. Chamber of Commerce to finance the Chamber’s advertising and PR campaign aimed at defeating reform. This “backchannel spending,” which the National Journal uncovered by poring over IRS tax filings, enabled insurers to state publicly that they were backing reform while spending millions in policyholder premiums as part of an industry-wide stealth campaign to kill it.

Most of the $100 million came from “special assessments” contributed by Cigna and other AHIP member companies over and above their regular membership dues. We’ll never know how much of that $100 million came from Cigna, though, because corporations are not obligated to disclose such spending, and they have rebuffed calls that they do so voluntarily.

Among those pressuring companies to be more forthcoming is Rob McGarrah of the AFL-CIO’s Office of Investment. The union owns shares of stock in many companies, including Cigna, and is asking them to provide shareholders and the public with a more complete accounting of spending to influence public policy.

McGarrah was unsuccessful in persuading Cigna to disclose “special assessments” on behalf of AHIP and other groups, so the AFL-CIO submitted a shareholder resolution that would compel the company to report indirect funding of lobbying through trade associations and tax-exempt organizations, such as the American Legislative Exchange Council, which drafts “model legislation” to protect business interests.

At Cigna’s annual meeting of shareholders last Wednesday, Cigna shareholder Tom Swann spoke on behalf of the AFL-CIO’s resolution.

“Transparency and accountability in corporate spending to influence public policy are in the best interests of Cigna shareholders,” Swann argued.

But as expected, the resolution failed; Cigna had encouraged shareholders to vote against it — as the Chamber of Commerce is urging all companies facing such resolutions to do.

In its 2012 Political Contributions and Lobbying Activity Report, Cigna stated that the total dues it paid to AHIP was $837,377, including “any special assessments” it might have paid last year. But the company has refused to say how much of that was in the form of special assessments, and it has not disclosed how much it paid AHIP during the height of the health care reform debate in 2009 and 2010 when the trade organization was sending millions to the Chamber of Commerce. Cigna CEO David Cordani acknowledged that the company contributed special assessments to AHIP to pay for the Chamber’s advertising, but he would not say how much.

Although the resolution failed this year, the AFL-CIO and other like-minded investors are not throwing in the towel, and the Chamber is well aware of that. This coming Thursday, the Chamber’s Center for Capital Markets Competitiveness and its “Workforce Freedom Initiative” is inviting corporate executives to a meeting “to discuss the economic value of union-backed shareholder activism to investors and employers.”

You can rest assured that plenty of money in special assessments will go to the Chamber in the months and years ahead not only to influence public policy but to beat back attempts to get corporations to be more transparent and accountable. That’s just the way things work.

OPINION: Vermont law illuminates claims statistics

Vermont,United States — 2013-04-22T09:52:12-04:00

When you’re shopping for health insurance, wouldn’t it be great if you could find out every insurer’s claim denial rate? And how much each one spent on lobbying and advertising — and how much they paid their CEO?

You can now find all of that information and more if you live in Vermont, thanks to a law that was enacted last year at the urging of the Vermont Public Interest Research Group.

In compliance with that law, the insurers that do business in Vermont have just disclosed data they’ve been able to keep secret for years. And that information should come in handy when Vermonters begin shopping for coverage at the state’s online health insurance exchange in October.

With just 626,000 residents, Vermont is the second smallest state in terms of population (only Wyoming has fewer people), and it has only three major health insurers — Blue Cross Blue Shield of Vermont, MVP Health Care and Cigna, the company I used to work for.

Blue Cross Blue Shield of Vermont is by far the biggest and the only one based in the Green Mountain State. MVP is headquartered in New York, and Cigna, the for-profit company among the three, is based in Connecticut.

Which of the trio do you think denied the most claims on a percentage basis in 2012?

If you guessed the for-profit company, as I did, you would be right. But even I was shocked to see how Cigna compared with its competitors, especially Blue Cross.

Of all the claims submitted to it last year by health care providers and policyholders, Blue Cross denied 7.6 percent. Cigna denied 21 percent. MVP was in the middle at 15.5 percent.

Since Vermont is a pretty small state, chances are pretty high that all three companies have the same doctors and hospitals in their provider networks. One would have to wonder why Cigna felt it necessary to deny more than one of every five claims submitted by those doctors and hospitals while Blue Cross denied only one of every 13.

Most of the claims denied by all three companies were categorized as “administrative,” meaning they were denied because a provider presumably used an incorrect procedure code or made some other clerical error when submitting their claims for payment. It defies reason to think that the doctors and hospitals in Vermont submitted inaccurate claims to Cigna at almost three times the rate they did to Blue Cross.

One of the things you need to know about the private health insurance business is that insurers make a lot of money when they delay paying a claim. I would be willing to bet that many — if not most — of the claims the Vermont insurers denied were eventually paid. When an insurance company delays paying a claim by days, weeks or months, it can take advantage of “float.”

The longer you can delay paying a claim, the more investment income you can make on the premiums you take in from your policyholders. And investment income is especially important to for-profit insurance companies because it contributes significantly to the bottom line. Shareholders and Wall Street financial analysts like that, even though much of the money on which the investment gains were made should have been paid to health care providers.

The data reported by the insurers is consistent with recent claim denial rates in California. A California Nurses Association analysis of 2010 data submitted by insurers to the California Department of Managed Care showed that Cigna’s claim denial rate was 39.6 percent. Aetna’s denial rate, by contrast, was 5.9 percent.

The Vermont disclosures showed that Blue Cross and MVP spent far more money lobbying state officials last year — $258,347 and $55,366, respectively, than Cigna, which spent only $9,141. But Cigna spent much more lobbying federal officials: $1.59 million. MVP spent $160,000 lobbying in Washington. Blue Cross of Vermont spent nothing, although the Chicago-based Blue Cross Blue Shield Association, which represents all of the country’s Blues plans, spends a lot on lobbying every year, as does America’s Health Insurance Plans, of which Cigna and MVP are members.

Cigna, a much bigger company than the other two, reported paying its CEO $3,970,833 in total compensation last year, compared to $1,250,000 for the CEO at MVP and $587,184 at Blue Cross. And Cigna was especially generous in paying its nine board members: $3,199,855. Board members at Blue Cross earned a combined $246,632. MVP did not pay its board members anything.

The one area in which Blue Cross Blue Shield of Vermont spent much more than the others was advertising and PR. The company spent $743,968 for marketing last year in Vermont, compared to $516,358 for MVP and $66,849 for Cigna.

Cigna notified the state earlier this year that it would not seek to sell policies to individuals and small businesses on Vermont’s exchange, leaving that part of the marketplace to Blue Cross and MVP. But Cigna will still have at least one big client in Vermont — the state of Vermont. Cigna has had a contract for several years with the state to provide coverage to state employees. If I were one of them, I would ask for an explanation of those high claim denial rates.

OPINION: 'limited benefit' plans are no real bargain

2013-04-15T06:00:02-04:00

Among insurance executives, Aetna CEO Mark Bertolini has been among the most vocal in warning of “premium rate shock” when major provisions of Obamacare kick in on January 1.

"We've done all the math, we've shared it with all the regulators, we've shared it with all the people in Washington that need to see it, and I think it's a big concern," Bertolini told his company’s big shareholders and Wall Street financial analysts in New York last December.

If Aetna does, in fact, hike premiums by more than 100 percent for some of its customers, as Bertolini suggested at the meeting, no doubt part of that money will go to covering his shockingly lucrative paycheck.

While many Aetna employees were lucky to get two percent raises last year, Bertolini’s compensation nearly quadrupled. That’s right, quadrupled.

Aetna disclosed in a filings last week with the U.S. Securities and Exchange Commission that Bertolini’s total compensation in 2012 was $36.36 million, up from $9.7 million in 2011. If you include the $11.1 million in stock awards he was given that will vest later, his 2012 total jumps $47 million.

Bertolini’s “pay shock” so angered many current and former Aetna workers that several of them posted scathing comments on the Hartford Courant’s website.

“All Aetna employees should be picketing outside the office building in protest of this disgrace,” a former Aetna employee wrote. “What kind of leader gives his employees 2% while his earnings nearly quadruple???? Totally selfish.”

One of the reasons Bertolini mentioned “premium rate shock” to his company’s investors undoubtedly is that Aetna won’t be able to continue selling some of its most profitable health plans next year—the ones that have relatively low premiums but such limited benefits that they’ll actually be banned next year.

Since 2005, when it bought a firm that specializes in limited benefit plans, Aetna has been a major marketer of policies that provide such coverage — coverage so skimpy that former Connecticut Attorney General —and now U.S. Senator— Richard Blumenthal once called an Aetna limited benefit policy “virtually worthless.” Blumenthal was concerned that folks who had bought the policies “were led to believe they had significantly more coverage than they actually had."

Often called ‘junk insurance’ by consumer advocates, limited benefit plans typically have an annual cap of $1,000 to $15,000 and have significant restrictions on specific types of care, especially hospitalizations. But the marketing materials for these plans seldom draw attention to what is not covered.

As a consequence, many people have been shocked to find that they are on the hook for hundreds of thousands of dollars in hospital care they thought would be covered by their insurance policy.

One Aetna policyholder, Lawrence Yurdin of Austin, Tex. told The New York Times in 2009 that he and his wife had been forced into bankruptcy because of unpaid medical bills totaling nearly $200,000, even though he had what he thought was adequate insurance. As the Times reported, the brochure the Yurdins were provided indicated that their policy covered up to $150,000 a year in hospital care. Deep in the fine print, however, was language that excluded nearly all of the care Yurdin received for a heart condition at an Austin hospital.

It turned out that that $150,000 was for room and board. Coverage for “other hospital services”—which included just about everything else, including expenses incurred in the operating room—was capped at $10,000.

As the Times noted, “Aetna would have paid for Mr. Yurdin to stay in the hospital for more than five months — as long as he did not need an operation or any lab tests or drugs while he was there.”

Beginning January 1, Aetna and other companies that have made millions of dollars in profits from such plans, including Cigna, where I used to work, will no longer be able to sell them, thanks to the consumer protections in Affordable Care Act. Policies will have to provide decent coverage for hospitalization and other “essential benefits,” and the annual and lifetime caps will be banned. Insurers will also have to provide information in plain language about what is covered and in a format that will enable consumers to make apples-to-apples comparisons among plans.

Aetna CEO Bertolini probably was thinking of the thousands of people who are currently enrolled in limited benefit plans when he warned of premium rate shock. And he has a point. The premiums for such plans are low compared to policies that actually cover medical care doctors and nurses provide to cure you once you’ve been hospitalized. It’s not unreasonable to think that Aetna would charge its existing limited benefit customers more for real insurance—maybe even twice as much. But because insurers market limited benefit plans to low income workers, most likely will qualify for subsidies to help them pay the premiums.

Indeed those people might be shocked when Aetna tells them how much they’ll have to pay for a plan that is not “virtually worthless.” But at least they will be saved from the kind of shock that Lawrence Yurdin experienced when he realized that the money he had been paying Aetna in premiums—some of which went to pay Mark Bertolini’s salary—was not enough to keep him out of bankruptcy court.

OPINION: Obamacare's help for small business

2013-04-08T06:00:02-04:00

With April 15 approaching, some small business owners who provide health coverage to their workers are not going to be as indebted to Uncle Sam as they have in years past, thanks to Obamacare. That’s right, thanks to Obamacare.

Mike Roach, owner of Paloma Clothing, a women’s clothing store in Portland, Oregon, is among them. He is one of several hundred thousand small employers who have taken advantage of a provision of the reform law that provides a substantial tax credit to companies that offer health insurance to their employees. And not only is Roach able to save money, now that he’s offering coverage, he’s no longer losing valued employees to large department stores that have long provided benefits as a recruitment tool.

Roach had always wanted to offer coverage to his 12 employees but had found the premiums too steep. He said the message he kept getting from insurance companies was, “We don’t really want your business, but we will do business with you as long as we can gouge you.”

Small businesses like his have always had to pay considerably more for the same coverage as large employers. At big companies with hundreds or thousands of workers, insurers’ and employers’ risk is spread across a much larger “pool” of people. A few employees getting sick or injured in a given year at a big company would have a negligible effect on the risk pool.

Not so at a shop like Roach’s with just a dozen workers. Small business owners pay more because underwriters at insurance companies know that if just one worker at a small business gets sick, the insurer could wind up losing money on the account. Small businesses also lack the bargaining power of large firms.

As a consequence, more and more small companies have dropped coverage in recent years while big employers have continued to offer it.

“Not offering health insurance puts a small business like ours us at a distinct disadvantage,” said Roach, “especially when you consider that we are competing to have the best employees we can have to provide the best customer service against crack competitors like Nordstrom’s.”

So when he heard that the Affordable Care Act makes tax credits available to small employers that offer coverage, he talked with his accountant, who told him that the tax credits would make coverage affordable—not cheap, but affordable—for the first time.

Another motivation: his store manager was considering taking a job with a competitor that offered benefits.

“We didn’t want to lose her, and she didn’t want to quit,” Roach said, but her husband had just lost his job. She needed to work for a company that offered coverage.

Roach decided to go for it. He now pays about $29,000 in premiums for his workers, but he has received tax credits that have averaged $5,000 over the past two years. And he’ll save even more next year.

Under the law, small businesses that employ fewer than 25 people whose average wages are less than $50,000 get a tax credit equivalent to 35 percent of the employers’ contribution to the workers’ premiums. It will go to 50 percent starting next year.

Also next year, companies with fewer than 100 employees will be able to buy coverage through the online health insurance marketplaces (referred to as exchanges in the ACA). This should make polices even more affordable because the exchanges will pool the purchasing power of small businesses together. And starting next year, insurers will no longer be able to dramatically increase small business health insurance premiums because an employee got sick or older or because the business hired more women, who historically have been charged more than men.

Companies with fewer than 50 employees will not have to offer coverage, but Roach says he believes many if not most will do so once the exchanges are up and running and more employers learn of the tax credits.

“I would really encourage every business to take a serious look at it because if you can do it, you’re going to have a better workforce,” Roach said. “The employees you’re going to have are going to feel better about coming to work. They are more likely to stay with you, and they’re probably going to be more productive because they’re not going to have to worry as much about access to health care.”

Most small employers that provide coverage typically offer only one type of plan because offering multiple options increases administrative costs. That, too, will change, thanks to the exchanges, meaning that employees like Mike Roach’s will eventually be able to choose among competing plans just like employees at many large firms. The effective date of that change was originally scheduled to be January 1, 2014, but the Department of Health and Human Services is considering delaying it for a year. Even if it is delayed, though, many small business employees already are getting employer-subsidized coverage for the first time. And companies like Paloma Clothing are finally on a more level playing field with their bigger competitors.

OPINION: industry pushes high-deductible insurance plans

2013-04-01T09:41:26-04:00

Those accustomed to obtaining health insurance through the workplace and choosing among different types of policies may be in for a rude surprise.

Increasingly, employers of all sizes are eliminating choice and offering only high-deductible plans — euphemistically referred to in the insurance world as consumer-directed health plans or HDHPs.

The looming shift has nothing to do with Obamacare or even the widely held belief that certain types of health plans will encourage people to give up costly bad habits like smoking. It is about profit.

The trend appears to be irreversible. Within the next few years, most Americans not only will find that the plans they’ve been enrolled in for years are no longer available, but that they will also have to pay much more out-of-pocket for medical care.

There were many reasons why I left my job in the insurance industry, but near the top of the list was the expectation that I be, for all practical purposes, a snake oil salesman. If I were still in the business, I would be part of an industry-wide campaign to persuade employers, policy makers and the general public that high-deductible plans are the new silver bullet.

Not only will HDHPs reduce health care costs, according to the campaign propaganda, forcing people into them will cause them to lead healthier lifestyles.

That’s the hype. And the hype is necessary to obscure the real reason insurers and employers are herding more and more of us into HDHPs: they’re perfect vehicles to shift more of the cost of care from them to us.

Even in 2008, the last year I worked for an insurance company, my colleagues in the sales division were encouraging employers to go “total replacement,” which means eliminating all choices except high-deductible plans. Insurers have long used proprietary “studies” supposedly proving that making people pay more out of pocket for medical care will “incentivize” them to lead healthier lives.

As a new survey of employers by the benefits consulting firm Towers Watson shows, my former colleagues have been very successful.

Of the large employers surveyed by Towers Watson, 15 percent already offer nothing but account-based high-deductible plans. That’s nearly double the number of employers that had gone total replacement just three years ago. Towers Watson predicts that by this time next year, one of every four big employers will have dumped everything but HDHPs.

In a report about its most recent survey, Towers Watson contends “account-based health plans can be an important strategy for… facilitating the shift toward greater accountability from employees and more consumer-like behavior in their purchase of health care.”

Translation: forcing employees to shell out more of their hard-earned pay for medical care will make them switch from cigarettes to carrot sticks.

So, is there any evidence that’s really happening at companies that have gone total replacement?

No, according to a recent peer-reviewed study funded by the U.S. Department of Veterans Affairs and the Robert Wood Johnson Foundation.

As lead researcher Jeffrey T. Kullgren of the University of Michigan told me, he and his research colleagues wondered if it might be possible that associations between HDHP enrollment and healthy behavior could be due to healthier people volunteering to enroll in HDHPs because of the lower premiums and their lower likelihood of needing health care services.

“If this were the case,” Kullgren said, “then associations between HDHP enrollment and healthier behaviors should exist only among people who could self-select into that type of plan, and not among those who were less able to choose their plan.”

Kullgren and his research colleagues used nationally representative data to explore the relationship between HDHP enrollment and smoking among U.S. adults. After controlling for other factors, they found that associations between HDHP enrollment and smoking are only found among adults who could choose an HDHP, and not among adults who could not choose their plan.

Yes, it is true, as insurance companies contend, people in HDHPs smoke less, but it is not because they were forced into more-skin-in-the-game HDHPs. It is because HDHPs attract more nonsmokers than smokers to start with.

Kullgren’s research shows that when a company goes total replacement, smokers continue to puff away. The results are also consistent with findings from the RAND Health Insurance Experiment of several years ago that showed there were no lower rates of unhealthy behaviors among individuals who had been randomly assigned to plans with high levels of cost-sharing.

“Our findings suggest that offering only an HDHP to employees with the expectation that this will reduce rates of unhealthy behaviors like smoking — as a growing number of employers are now doing — may not have its intended effects,” Kullgren and his colleagues wrote.

If, despite Kullgren’s findings, the trend toward total replacement continues unabated, as it most assuredly will, it will not be because HDHPs make us behave any differently. It will be because insurers and employers know they can use them to shift more of the cost of care to us.

OPINION: gaming Obamacare to benefit the few

2013-03-25T11:03:46-04:00

We’re just a bit more than six months away from when Americans will have to begin making decisions about purchasing health insurance, but, according to a survey released last week, more than two-thirds of people who are currently uninsured don’t have much of a clue how Obamacare will affect them, including the fact that coverage will soon be mandatory.

On October 1, as required by the law, states must have online insurance marketplaces (known as exchanges) up and running so their residents can shop for coverage. Some states will be operating the exchanges on their own, but most have decided to either partner with the federal government to operate them or have the feds do all the work.

After October 1, the next most important date Americans need to know about is January 1, 2014. That’s when the mandate to have coverage goes into effect.

Making sure Americans become aware of that mandate and sign up for coverage before the end of the year will be an enormous undertaking, which is why Obamacare also includes a provision authorizing a broad range of organizations to serve as “navigators” to educate people about the law’s requirements and help them find plans that meet their needs.

The law states that entities eligible to be navigators — and to receive government grants to do the navigating — include “ trade, industry, and professional associations, commercial fishing industry organizations, ranching and farming organizations, community and consumer-focused nonprofit groups, chambers of commerce, unions, resource partners of the Small Business Administration, other licensed insurance agents and brokers, and other entities” the Feds deem capable.

In the past, agents and brokers have largely had the marketplace all to themselves because there have been no other formally recognized “navigators” to help people decide what kind of insurance policy makes the most sense for them. The agents and brokers have made a good living as middlemen between consumers and insurance companies because the insurance companies they represent pay them a commission for every policy they sell.

As you can imagine, agents and brokers are not happy that all those other organizations will be able to help folks “navigate” the health insurance world. And so they are trying to get laws passed at the state level that for all practical purposes would make it difficult, time consuming and expensive for any of those other groups to qualify as navigators.

The agents and brokers initially tried to get a committee of the National Association of Insurance Commissioners to adopt language to protect their interests. When that committee rebuffed them, they began pleading their case to another NAIC committee and also directly to state lawmakers.

As a result, bills are being introduced all over the country that might as well be described as the “Agent and Broker Income Protection and Enhancement Act.”

Take the measure introduced recently in the Missouri legislature by Rep. Christopher Molendorp — who happens to own the Christopher Molendorp Insurance Agency in Raymore, Mo. Like most of these bills around the country, Molendorp’s would establish restrictive licensure requirements that all would-be navigators would have to meet. And it would prohibit navigators who are not licensed agents or brokers from providing any advice to individuals or employers about specific plans or pointing out which ones might be better or worse than others.

This clearly is not what Congress intended, but the Affordable Care Act gives states fairly wide latitude to set up the navigator programs within their jurisdictions.

In fact, Jay Angoff, a former Missouri insurance commissioner who served as head of the Office of Consumer Information and Insurance Oversight at the Department of Health and Human Services, says bills like Molendorp’s would be a disservice to consumers.

“The beauty of the exchange system is that, if it works, you don’t have to use an agent,” Angoff said during a recent panel discussion on how states are implementing Obamacare. “You can go directly to the Internet, you don’t have to use an agent. If you want to use an agent, you can, but you don’t have to. I would hate for exchanges to build in the extra expense that requires people to use an agent that raises the price of insurance to be more than it should be based on the electronic system.”

But that is exactly what will happen if bills like Molendorp’s are enacted. Agents and brokers are hoping that the bills will even make it unlawful for people to buy coverage on the exchanges without first going through a licensed agent or broker.

Consumer groups are working at the state level to keep the bills from passing, but agents and brokers have a lot of clout in many state legislatures. If the consumer groups lose, premiums of policies purchased through the exchange will be much more expensive than necessary.

OPINION: reform will help level premium costs

2013-03-18T10:30:15-04:00

Recently I was one of three witnesses to testify before a House committee hearing on whether the cost of health insurance will be higher or lower for people who cannot obtain it through their employer when important provisions of the Affordable Care Act go into effect in a few months.

I cited studies that indicate the overall cost of coverage — premiums plus out-of-pocket obligations — will be lower. The others on the panel — Douglas Holtz-Eakin, who was director of the Congressional Budget Office during the Bush Administration, and Christopher Carlson of the actuarial firm Oliver Wyman, cited their own studies that indicate costs could be higher for some young adults who have benefited over the years from the prevalent insurance industry practice of charging older people up to 10 times as much as they charge younger folks.

Insurers will not be able to do that much longer. Beginning January 1, they’ll be prohibited from charging someone more than three times as much for insurance as anyone else for the same policy.

Congress would have been better served, in my opinion, if the witness list had included Jim Elder, a retired small business owner from Florida who I interviewed last week as I was preparing for my testimony and this column.

He would have been a better witness than all three of us combined, hands down. That’s because his story would have served as a real-world reminder of just how unaffordable — and even unavailable — health insurance has become for average middle-class Americans who have done nothing wrong other than get sick.

Jim Elder might not be a widower today had premiums for the health insurance coverage he was providing for his family and his employees not become so unaffordable after his wife was diagnosed with breast cancer that he had no option but to drop coverage for everybody.

Elder became a victim of a common but little known practice in the health insurance business called purging. That’s a term insurance executives use behind closed doors (and during conversations with shareholders and Wall Street financial analysts) to describe what they do to small businesses after an employee or dependent gets sick: jack premiums up so high that the employer either has to shift far more of the cost of coverage to workers or stop offering coverage altogether. In many cases, they are not offered a policy at any price.

Purging explains why far fewer small businesses offer health insurance to employees than a decade ago. And it’s one of the reasons I decided to leave my insurance company job. I couldn’t in good conscience continue working for an industry in which coverage for life-saving medical care was priced beyond the ability of millions of Americans to pay for no reason other than to meet profit goals.

Jim Elder’s wife, Leslie, died an untimely death at age 63 last summer, uninsured and facing foreclosure because no insurance company was willing to sell the Elders an affordable policy because of her age and, ultimately, her serious but treatable illness, Hodgkin’s lymphoma.

I learned of the Elders from a CNN report that described the nightmarish roller coaster they were on. Until Leslie got sick, they had what they thought was good medical coverage with stable premiums. Soon after her initial cancer treatments, they had no coverage at all because Elder Auto Repair was purged by Jim’s insurer. And in between: skyrocketing insurance premiums, high deductibles and stacks of unpaid medical bills. The Elders had to deplete their IRA and savings account to pay for Leslie’s care and were ultimately forced into foreclosure.

The Elders could not find affordable health insurance, and from the industry’s perspective, it’s easy to see why: insuring Leslie would not have been profitable. This is the dilemma we face as Americans, as we try to balance the demands of a health insurance industry driven by money against the needs of friends, family and loved ones who require insurance to survive and be productive citizens.

I know firsthand that insurers are eager to avoid the expense of providing coverage for people who, because of their age and health status, might need costly medical care. In a 2009 policy paper, America’s Health Insurance Plans, the industry’s biggest trade group, acknowledged that almost a third of people in Leslie’s age group were denied coverage every year.

One of the reasons for the congressional hearing was the industry’s massive PR and lobbying campaign to try to get Congress to change Obamacare so that states can decide how much insurers can charge people based on age. That would enable them to maintain the very profitable status quo. By restricting the amount insurers can charge older Americans, however, the Affordable Care Act will foil their attempts to deny coverage to people they want to avoid by charging exorbitant premiums. People who need medical care the most. People like Leslie Elder.

This new restriction is one of the most important consumer protections in the reform law. It would be a tragedy if Congress guts it.

OPINION: taking advantage of Medicare Advantage

2013-03-14T11:54:41-04:00

Facing government cuts to one of their cash cows—private Medicare plans—health insurance companies have launched a multi-pronged campaign, financed by the customer premiums, to persuade Congress to keep the cuts from going into effect next month.

The industry’s big PR and lobbying group, America’s Health Insurance Plans, is deploying the tactics I described in Deadly Spin to scare seniors into believing that if the federal government stops overpaying insurers that offer Medicare Advantage plans (the private alternative to the traditional government-run Medicare program) seniors will “pay more, get less and lose choices.”

“U.S. Health Insurers Launch TV War Over Medicare Advantage Cuts,” read the headline of a Reuters story last week when AHIP’s ads started running.

At issue is a 2.3 percent cut in payments to Medicare Advantage plans by the Centers for Medicare and Medicaid Services (CMS) that are scheduled to go into effect on April 1.

The industry’s campaign, of course, conveniently leaves out the fact that the government has been overpaying private insurers for years and that the cuts being proposed starting next month are part of a broader effort to put a stop to those overpayments.

Members of Congress inserted a provision in the Affordable Care Act to reduce the overpayments by $200 billion over the next several years. The 2.3 percent cut would be in addition to that.

It makes little sense for the government to overpay private insurers in the first place, but that is exactly what’s been going on for several years. During the administration of George W. Bush, which supported the privatization of the Medicare program, Congress passed legislation to provide incentives to insurers to offer private plans to compete with traditional Medicare. This enabled the plans to offer richer benefits than traditional Medicare at little or no additional cost to beneficiaries while also making a tidy profit.

It’s little wonder that the number of people enrolled in Medicare Advantage plans has increased rapidly. About one of every five Medicare beneficiaries are now enrolled in private plans. When the government enables you to offer plans with vision and dental benefits, lower copayments and discounts on gym memberships, all at no additional cost, you’re going to be able to lure a lot of seniors from traditional Medicare.

An agent for Humana Inc., one of the biggest Medicare Advantage companies, told me a few years ago that, thanks to the sweet deal insurers have been getting from the government, his job of enrolling healthy seniors in Humana plans was “like shooting fish in a barrel.”

AHIP’s campaign to kill the cuts includes intense lobbying on Capitol Hill as well as other tactics to influence public opinion, like paying for a survey to bolster its case that seniors are happy with their MA plans.

AHIP hired a polling firm to survey 800 seniors, half of whom were enrolled in MA plans and half in traditional Medicare. The result, according to AHIP: “Seniors in Medicare Advantage are as satisfied with their plans as seniors in traditional Medicare.”

AHIP clearly hopes no one pays close attention to the survey. If you do, you’ll see that people enrolled in traditional Medicare were actually more satisfied with their coverage (92 percent satisfied/very satisfied with 5 percent unsatisfied) than people in MA plans (90 percent satisfied/very satisfied with 7 percent unsatisfied).

AHIP did not disclose the full results of the survey or the methodology used by the polling firm, North Star Opinions, used. I asked for it, but no one has gotten back to me.

AHIP’s CEO, Karen Ignagni, has been quoted as saying that the MA program will go into a “tailspin” if the proposed cuts go into effect. She predicted that many people enrolled in MA plans will see their premiums go up and their benefits reduced and that many of them will actually be dropped by their MA insurers. That’s because some —if not many— of the private insurers will desert the market if the profit margins decrease on their MA business.

I can attest that that could indeed happen. Cigna, one of the companies I used to work for, used to operate private Medicare plans in several markets but left all but one several years ago, affecting more than 100,000 seniors, after the government adjusted payments to insurers. Aetna and a number of others insurers dumped thousands more. Shareholders were not happy that the business would be less profitable than before.

AHIP may have a hard time convincing the current Congress to take pity on insurers. Last week the Government Accountability Office released a report estimating that CMS overpaid private insurers between $3.2 billion and $5.1 billion from 2010-2012. Chances are, though, that far more people will see AHIP’s TV campaign than an obscure GAO report. And people won’t even know that insurers are behind the campaign. That’s because AHIP is using one of its front groups, the Coalition for Medicare Choices, as the sponsor of the campaign.

Insurers don’t want you to know they’re spending your money to mislead you in order to protect profits. Can’t blame them for that.

OPINION: Congress, lies and statistics

2013-03-04T06:00:01-05:00

One of the reasons Americans are still confused about the Affordable Care Act is the ongoing misrepresentation of the law by members of Congress who voted against it. This obfuscation isn’t confined to what the law actually does or doesn’t do, but also to what impact it might have on the federal deficit in years to come, as a vocal critic of the law demonstrated last week.

Jeff Sessions of Alabama, the senior Republican on the Senate Budget Committee, recently asked the nonpartisan Government Accountability Office to look decades into the future and let him know if the reform law will cut the deficit over time, as President Obama says it will.

The GAO got back to Sessions last week with budgetary simulations showing that the ACA will indeed reduce the deficit if it’s implemented as Congress intended.

Probably anticipating that answer, Sessions asked the GAO to do an alternative simulation showing what might happen if the law isn’t implemented as Congress intended. What would happen, in other words, if future lawmakers repeal all of the cost-saving and revenue-generating provisions of the law or phase them out?

It doesn’t take an army of actuaries to figure out that if the parts of the law expanding coverage go forward, but the parts that pay for it or that reduce spending do not, Obamacare will add to the deficit.

Within hours of getting the report, Sessions accused President Obama of misleading the country. Obamacare, he said, will add a whopping $6.2 trillion to the deficit.

What Sessions was doing was engaging in a practice common in politics and propaganda—“statisticulation.” If you haven’t come across that word before, check out How to Lie with Statistics by Darrell Huff, a classic that’s as relevant today as it was when first published in 1954.

“Misinforming people by the use of statistical material,” Huff wrote, “might be called statistical manipulation; in a word: statisticulation.”

Statisticulation is an apt description of what the senator was doing with the GAO report. He was disclosing only the data that would support his assumptions. The truth is that it would take a scenario in which future Congresses repealed or phased out the deficit-reducing sections of the law—or all of them failed completely—for the $6.2 trillion addition to the deficit to be realized. And even if all that happened, that $6.2 trillion, which came from Sessions’ staffs’ calculations, not the GAO report, would be spread out over 75 years. That’s right. Three-quarters of a century.

Sessions did not disclose the GAO simulation showing that Obamacare will lead to a decline in the deficit over the same time frame if it is implemented as Congress intended, with the cost-cutting and revenue-generating provisions intact.

The GAO report stated that, “The primary deficit declined 1.5 percentage points as a share of GDP over the 75-year period in this (GAO’s Baseline Extended) simulation.” But somehow those words didn’t make it into Sessions’s disclosure. He disclosed only the alternative simulation. And he made certain to disclose it several hours before the GAO made the report available to the press and the rest of the world.

As a result, several reporters became accomplices, wittingly or unwittingly, to the Sessions nonsense.

“Obamacare will increase the long-term federal deficit by $6.2 trillion, according to a Government Accountability Office (GAO) report released today,” said the conservative National Review Online. No surprise there.

But there was this from The Hill: “The Senate Budget Committee’s top Republican said a new government report shows that President Obama’s healthcare law will add $6.2 trillion to the deficit over the next 75 years.” The story quoted Sessions as saying that the report “reveals the dramatic falsehoods that were used to push [the bill] to passage.”

It was not until the 5^th paragraph that we learned that apparently no one at The Hill had seen the actual report yet: “’The GAO will release its report later Tuesday,’ according to Sessions’s staff.”

Among the few in the media who cried foul was Dr. Aaron E. Carroll, director of the Center for Health Policy and Professionalism Research and associate director of Children’s Health Services Research at Indiana University School of Medicine. He wrote in a post on The Incidental Economist web site that Sessions’s selective disclosure represented “a worst-case-scenario” that would only come to pass “if (1) we left in all the spending, (2) all of the cost control measures utterly failed, and (3) we removed all of the revenue streams/taxes. If you do that, then the bill raises the deficit $6.2 trillion over 75 years.”

Carroll noted, however, that it would take “an actual act of Congress” for that scenario to play out.

“Many of the taxes and cost control measures will only go away if people like Sen. Sessions actually vote to strip them from the ACA,” he wrote. “We won’t see these worrisome results because of the law. We’ll see them if Congress changes it.”

The GAO report noted that even under the most optimistic simulation, the country’s spending on health care is not sustainable over the long haul. More will have to be done in the future. But the ACA, if done right, is a start.

OPINION: Health insurance 'producers' about to be on life support

Oklahoma,United States — 2013-04-29T14:42:23-04:00

A recent story out of Oklahoma shows just how vital investigative journalists are—and how health insurance agents and brokers may be anything but vital in just a matter of months.

For decades, many individuals and small business owners have sought out the help of agents and brokers — known as “producers” in the insurance world — to help them find coverage for themselves, their families and their employees.

People have had to do this because, until recently, the information provided by insurance companies about their policies has been incomprehensible. Producers — they’re called that because they “produce” business and, consequently income, for insurance companies — have been the middlemen many of us have relied upon to interpret benefit plans and advise us on what to buy.

As a result, our premiums are higher than necessary because insurance companies pay agents and brokers a lot of money in commissions to “produce” the business they want: young and healthy people who are not very likely to need much medical care. And insurance companies pass along the cost of those commissions to policyholders.

The need for producers’ services diminished earlier this year when an important provision of Obamacare kicked in. Insurance companies can no longer get away with descriptions of plans so complicated you need a third party to decipher. They now have to provide prospective customers with information in simple language and in a format that enables us to make apples-to-apples comparisons among various health plans.

The producers’ world will be rocked even more on October 1 when the states’ online health insurance marketplaces — or “exchanges” — will be up and running as mandated by the reform law. And this is where that Oklahoma story is so enlightening.

Oklahoma is one of 26 states to tell the federal government it has no interest in operating its own exchange. As a result, the U.S. Department of Health and Human Services will operate it (and the 25 others) with no help from state officials. Seventeen states and the District of Columbia will operate their own exchanges and seven will partner with the federal government.

Oklahoma officials indicated initially that, even though they didn’t care all that much for Obamacare, they would nevertheless accept several million dollars from the federal government to help build the state’s exchange. A few weeks later, however— after hearing from conservative critics of the reform law and from agents and brokers — Gov. Mary Fallin and Insurance Commissioner John Doak, both Republicans, did a 180 and said “no thanks.”

Curious about what led to their change of heart, reporters at The Oklahoman filed an open records request. The state eventually complied and, months later, handed over thousands of emails and other documents that show just how much pressure Fallin and Doak received from President Obama’s political opponents and from insurance agents and brokers worried about preserving their handsome incomes.

A number of emails from producers complained that they would not be able to “maintain a level playing field” if the exchanges did what they are intended to do: provide consumers for the first time with the tools and data they need to make informed decisions about buying health insurance.

One Tulsa producer’s candor attracted the reporters’ attention enough to make it into The Oklahoman story verbatim. He complained in an email that:

“Buying direct via an Exchange will cost the consumer less than through an agent or broker. Unless Comm. Doak and our friends in the State Legislature can design a state Exchange that requires accessing broker services before an applicant can purchase health insurance, our profession is doomed.”

In other words: “Can you believe what Obama and his cronies are trying to do here? They’ve figured out a way for consumers to buy coverage without going through us, and people will be able to pay less than they’re paying now because they won’t need us. You’ve got to fix this! If you don’t, people will catch on right away that they don’t really need middlemen anymore, we won’t make as much money, and we won’t be able to contribute as much to the campaigns of our friends in the State Legislature. Rig this thing or we’re all doomed!”

It’s clear that when certain constituents and ideological compatriots talk, politicians listen. Doak announced later that he was returning $54 million the state had received to set up an exchange in Oklahoma. He apparently decided that the state wouldn’t be able to design the exchange without following certain guidelines from the federal government. And that was just unacceptable.

The irony is that by letting the Feds run the Oklahoma exchange, Fallin and Doak and the producers’ friends in the legislature will have no power to even try to rig things so that brokers can continue to get their piece of the pie. Maybe it’s time for those producers to consider another line of work, or at least other lines of business, like car insurance. The health insurance cash cow is about to run dry.

OPINION: drug firms say no to rebates, despite billions in new revenue from Part D

2013-02-18T06:00:01-05:00

If you watched President Obama’s State of the Union address last week, you might have missed the scheme he unveiled that will lead to the ruination of the Medicare prescription drug program, destroy pharmaceutical companies’ incentive to develop new life-saving medicines and even imperil our country’s economic growth.

I know I missed it.

Fortunately, the top PR guy at the drug companies’ big trade association in Washington quickly issued a press release to clue us in on what the President is really up to and what will happen if he can follow through on his pledge to curtail Medicare spending by reducing “taxpayer subsidies to prescription drug companies.”

Here’s what Matthew D. Bennett, senior vice president of communications and public affairs at Pharmaceutical Research and Manufacturers of America (PhRMA), wrote within hours of the speech:

“The President’s proposal to tamper with a program that works well would not yield any benefit for seniors. Instead, analysts have projected that the President’s scheme would harm Part D’s competitive dynamics, yielding higher premiums, more restrictive access to medicines, and diminished research on the next generation of medicines.”

So what is Bennett so worked up about? The White House said after the speech that the President intends to ask that drug makers help the government cover the prescription costs for a group of Americans referred to as “dual eligibles.” Of the approximately 50 millions Medicare beneficiaries, about a fifth are also eligible for Medicaid because of their low incomes.

Before the Medicare Part D drug program was created in 2006, the pharmaceutical industry paid rebates to the government to help pay for those folks’ medications. The rebate program ended when Part D went into effect and the dual eligibles’ drug coverage was switched from Medicaid to Medicare. As a result, taxpayers are paying more now than before, even though drug companies are getting billions of dollars in revenue they never had before Part D was created. So the President will be asking Congress to reinstate the rebates, which the nonpartisan Congressional Budget Office says would save billions of dollars in government spending every year. That’s because even though dual eligibles comprise only 20 percent of the total number of people enrolled in Medicare, they account for almost a third of total Medicare spending.

What drug companies are really worried about, of course, is that bringing the rebate program back would reduce their profits a little bit. But it’s not as if these companies can’t afford to pitch in to help bring Medicare costs down. Reuters estimates that drug makers take in about $300 billion a year in the United States alone. When you consider that the profit margins for pharmaceutical companies are among the highest in the corporate world, that translates into serious cash going into the pockets of investors. Pfizer’s most recently reported profit margin, for example, was 24.7 percent. Astra Zeneca’s was 22.5 percent. Exxon’s, by comparison, was a measly 9.98 percent. Insurance companies somehow make do with 5 or 6 percent or less.

A Wall Street analyst told Reuters that reinstituting the rebate program could cost the drug companies 2 to 7 percent in profits. I added up the 2012 profits of nine of the biggest drug makers and came up with about $60 billion. Even if they had to give up 7 percent of that to help the government pay for prescriptions for the sickest and poorest of the Medicare population, they would still have profits of more than $55 billion. And that’s just for nine companies.

That sounds pretty good. But over the next few months, you can expect to hear that the sky will fall if Congress goes along with the President’s “scheme” —which is probably unlikely anyway because of all the buddies that PhRMA has on Capitol Hill. Just last week I noted that the drug makers have spent more than any other industry over the past several years lobbying Congress, just to keep something like this from ever happening.

Here’s more of Bennett’s spin on the President’s scheme, which gives us a hint of the talking points we’ll be hearing from PhRMA and its friends about the dire consequences of asking drug makers to sacrifice a few bucks to help save a program that they benefit from:

“R&D (in the pharmaceutical industry) is critical to the country’s long term economic growth and to important medical advances that improve quality of life. Biopharmaceutical sector R&D investment should be fostered, not singled out for destructive policies."

And this: “The President has again proposed to upend the successful Medicare Part D prescription drug program by imposing government price controls on it.”

What the President really should be proposing to “upend,” in my view, is the stranglehold PhRMA has on Washington. We’ll see later this year if that’s even remotely possible.

OPINION: Big Pharma's stranglehold on Washington

2013-02-11T06:00:01-05:00

It’s no surprise that American corporations spend billions of dollars each year on lobbying, trying to gain favorable treatment from legislators. What some may find a bit unnerving is the industry that’s leading the pack in these efforts.

You might think our nation’s defense and aerospace companies, which have legions of hired guns on Capitol Hill, are the leaders. Or perhaps Big Oil, which is perpetually fighting with environmentalists and consequently needs friends in Washington to block what it considers onerous legislation or regulations.

In both cases, you’d be wrong. It’s actually the pharmaceutical industry that spends the most each year to influence our lawmakers, forking over a total of $2.6 billion on lobbying activities from 1998 through 2012, according to OpenSecrets.org. To get some perspective on just how big that number is, consider that oil and gas companies and their trade associations spent $1.4 billion lobbying Congress over the same time frame while the defense and aerospace industry spent $662 million, a fourth of Big Pharma’s total.

(Number two on the OpenSecrets list, by the way, was my old industry, insurance, which spent $1.8 billion. Although health insurers were among the biggest spenders, the list also includes property and casualty and auto insurers.)

The huge sum of money our nation’s drug makers lavish on Congress each year begs the question, what are they seeking in return? Surely it has something to do with the fact that our nation’s legislators turn a blind eye as pharmaceutical companies engage in predatory pricing practices while enjoying exclusive rights to manufacture drugs for 20 years or more. All at the same time that drug costs and drug price inflation are among of the main drivers of health care costs for individuals and families and threaten the fiscal health of our public health care programs.

To get some idea of the impact of all this on the American health care consumer, it is instructive to compare drug prices in the United States to those in other countries, where governments set a limit on price increases. While it’s not news that U.S. residents pay more for the same drugs as our foreign counterparts, what is not as well understood is how that gap grows ever larger each year as drug companies around the world dig ever deeper into the pockets of sick Americans to bolster their profits and meet earnings expectations of Wall Street analysts.

Each year, the Canadian government’s Patented Medicine Prices Review Board releases a study analyzing drug prices around the world, and according to that study prices in the United States have risen an average of 8 percent a year from 2006 through 2011, while drug prices in Canada have remained flat. The impact that has on the divergence in pricing for the U.S. health care consumer is considerable.

Back in 2006 for example, U.S. consumers paid about 70 percent more than our northern neighbors for prescription drugs still on patent, according to the Canadian board. Five years later, in 2011, that difference had surged to 100 percent. And with drug price inflation in the United States hitting 11 percent in 2011, that gap will undoubtedly grow ever wider in the future.

The influence that Big Pharma has purchased by lobbying our nation’s legislators has an impact that touches virtually every American. Not only does it affect health insurance premiums, but it also impacts the solvency of our Medicare system, which was expanded in 2006 to include a prescription drug benefit. That was good news for Medicare beneficiaries, of course, but even better news for the pharmaceutical industry. That’s because the industry’s friends in Congress (and the White House at the time) went along with Big Pharma’s demand that Medicare not be allowed to negotiate pricing with drug makers to make medicines more affordable to beneficiaries.

So not only did drug makers get a huge new revenue stream from taxpayers, but they pulled a fast one on us. Insurers and hospitals and even the Department of Veterans Affairs can bargain with drug makers to get better deals on prices. But, incredibly, not the Medicare program.

The Congressional Budget Office estimates that the government could save $112 billion over the coming decade if Congress reconsidered its 2006 gift to drug makers and gave Medicare the ability to negotiate prices.

Remember that the next time you hear a politician say that the only way to keep the program from going broke is to cut benefits and raise the eligibility age for Medicare from 65 to 67.

In the weeks ahead, in addition to keeping an eye on how health insurers will be seeking to weaken the consumer protections in ObamaCare so they can keep meeting Wall Street’s profit expectations, I will explore the many problematic issues that Congress’ hands-off attitude toward the pharmaceutical industry has on the American health care consumer — both on pricing and on drug makers’ reluctance to invest in new drugs that don’t have blockbuster appeal.

OPINION: favors for special interests

2013-02-04T06:00:01-05:00

If you wonder why we spend more money on health care than any other country but have some of the worst health outcomes, you need look no further than the halls of Congress to figure out why that is.

And you need look no further back than the recent “fiscal cliff” drama for compelling proof of how decisions are often made, not based on protecting the public’s interest and bringing costs down, but on protecting the profits of pharmaceutical companies, insurance firms and other special interests that grease the palms of our elected officials.

Drug makers have long had cozy relationships and outsized influence on lawmakers in Washington. That’s why ObamaCare barely touches that industry. Big Pharma essentially blackmailed members of Congress and the White House by threatening to bankroll a huge PR and lobbying campaign to kill health care reform if serious consideration was given to allowing Medicare officials to negotiate for lower drug prices.

We hear constantly from lawmakers about how unsustainable the Medicare “entitlement” program is, yet when they had a chance to make a difference in how much Medicare has to shell out to drug makers, they looked the other way. Taxpayers could save billions of dollars a year if Medicare didn’t have to pay so much for drugs, but drug companies have much more clout on Capitol Hill than taxpayers.

So much clout that one big drug company—Amgen—was able to get language quietly inserted in the fiscal cliff bill that will cost the Medicare program millions of dollars.

Buried deep in the legislation is language that delays long-proposed price restraints on a class of drugs used to treat kidney dialysis patients. That paragraph allows Amgen to sell one of its high-priced drugs, Sensipar, with no government controls for two more years—at a cost to the Medicare program of an estimated $500 million.

As reported first in The New York Times, this Congressional gift to Amgen, which employs 74 lobbyists in Washington, came just two weeks after the company pleaded guilty in a federal fraud case. It’s likely the public would never have been aware of the company’s windfall if its CEO hadn’t reported it right away to Wall Street investment analysts, the stakeholders most dear to publicly traded companies like Amgen and the insurance companies I used to work for.

The language apparently was inserted in the fiscal cliff bill by Amgen’s friends on the Senate Finance Committee, Democrats as well as Republicans. The company has been very generous with campaign contributions over the years to several committee members, including Orrin Hatch (R-Utah) and committee chair Max Baucus (D-Mont).

Speaking of insurance companies, they, too, made out like bandits in the fiscal cliff bill.

My former colleagues rarely miss an opportunity to talk about the importance of “choice and competition” to consumers.

“Health plans are committed to working with policymakers to make coverage more affordable, promote choice and competition, and maintain a strong safety net for our nation's most vulnerable populations,” Karen Ignagni, president of America’s Health Insurance Plans, said in a recent statement. Ignagni went on to make several suggestions about changes policymakers should make to ObamaCare before important consumer protections kick in on Jan. 1, 2014.

And —surprise—lawmakers took some of Ignagni’s suggestions. Language inserted in the fiscal cliff bill at the 11^th hour by friends of the industry that will actually reduce “choice and competition” is all the proof we need that the $10.2 million AHIP and 11 big insurers gave to federal politicians between 2010 and 2012 is turning out to be a pretty good investment.

The truth is that the major insurers dominating the so-called marketplace have for years been systematically eliminating their smaller competitors, either by forcing them out of business or by acquiring them. There are far fewer managed care companies today than there were when I first began working for the industry in the 1980s.

In an effort to create more competition, consumer-friendly lawmakers inserted a provision in ObamaCare to make federal dollars available through loans to groups hoping to set up nonprofit co-op health plans in every state.

Insurers tried without success to get that provision stripped out of the final bill, and they have been working relentlessly since the bill was passed to get regulations written in such a way to make life more difficult for the co-ops.

Despite their efforts, 24 groups survived the application process and were awarded the start-up loans. Up to 40 other groups were in the process of applying when the friends of the industry got language slipped into the fiscal cliff bill to eliminate all future loans. This means that people in more than half the country will not be able to enroll in a nonprofit co-op come Jan. 1.

Yes, crony capitalism is alive and well in Washington. We’re all paying a high price for it.