patrick.net

I think you're blaming the wrong party if you're blaming Blue Shield.

Blue Shield is non-profit, so it pays nothing to shareholders. Executive compensation is a very tiny sliver of costs. Administrative expenses eat up about 10%.

ALMOST ALL the money goes to hospitals, doctors, lab technicians, test & drug & equipment makers, etc. Perhaps THEY are they ones gouging the insurance company and their subscribers?

Yeah, the whole system is broken, but by calling this "price gouging" by Blue Shield your missing what's really going on IMO.

Troy says

a person who can’t spell ‘tort’ should stay the fuck out of adult conversations. Tort damages are not a major cost driver of medicine in the US.

Damages were never the supposed cost. It was the likely unnecessary procedures and tests that were done to avoid potential damages ("defensive medicine").

Thing is, Texas already enacted tort reform in 2003. And it had negligible impact on the growth of health care costs in Texas.

I'm all for tort reform, but I'm really sick of people that believe this is a significant factor in health costs, and politicians that pander to their ignorance.

larrypatrickmaloney says

Allow insurance companies to compete in the whole USA.

Competition is great in most markets, but not a panacea. California has 30 million people, more than many countries, and about 20 major health insurers.

How much bigger a test case do you need?

The problem is largely the nature of insurance itself, where market forces don't work because everything is "free". But you have to have insurance, because many conditions will cost half a million or more over a lifetime, but you don't know if you'll be one of those people, so saving half a million makes no sense.

So you're left with a market failure that cannot be fixed by simply making the market freer. Something the "conservatives" still won't admit.

MarkInSF says

Something the “conservatives” still won’t admit.

can't admit, because they've boxed themselves in ideologically

MarkInSF says

Blue Shield is non-profit, so it pays nothing to shareholders. Executive compensation is a very tiny sliver of costs. Administrative expenses eat up about 10%.

Non-profit my ass. Blue Shield is being told right now that they have to stop keeping over 30% of premiums as gravy, and keep "only" 20%.

Yes, they have a motive to collude with hospitals to rape us, because that 20% is 20% of a larger number if BS approves larger payments to hospitals.

But Blue Shield is definitely gouging. Look at the graph. They themselves admit their own costs went up only 19% in the last year.

Blue Shield of CA is a California not-for-profit mutual benefit corporation

https://www.blueshieldca.com/bsc/aboutbsc/fast-facts/index.jhtml

Blue Shield of CA is one of the franchisees (under Blue Shield/blue cross national), independent of the association (and traditionally each other including Wellpoint and Anthem), offering insurance plans within defined regions (California in this case).

In essense, Blue shield of CA has nothing to do with Wellpoint except just a member of the larger association. Wellpoint operates under the Anthem blue cross brand in CA. They are separate organizations and compete with each other.

Financial Summary
Blue Shield earned $9.7 billion in revenue in 2009, an 8.8% increase over 2008. Health benefit spending reached nearly $8.4 billion, a 12.9% increase from the previous year.

Operating income declined to $57 million due to the following factors: high medical expenses for certain products, economic conditions that resulted in an older member population and the subsidized extension of COBRA coverage, plus an investment of $111 million in new information technology systems.

Membership grew by 134,000, to more than 3.5 million. Administrative expense (as a percent of revenue) declined by 0.3%. We continued to receive "A" ratings from AM Best and Standard & Poor's.

https://www.blueshieldca.com/bsc/aboutbsc/annual-report/index.jhtml

The reason for the rate increase has to do with increased health spending cost and flat membership enrollment.

Has anyone checked out this article: http://money.cnn.com/2011/01/07/news/companies/California_blue_shield_rate_hike/
----> note the quote(below) from it that caught my eye

"But responding to this most recent increase the company said, "our individual market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy," the company said.

Despite the steep double-digit hike, the insurer maintained it still expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011."

I'm saying that being a "non-profit" means nothing. They still price-gouge and they still grossly overpay their executives at our expense. They have no motive to lower payouts, only a motive to charge as much as possible until the public finally gets wise and demands a bunch of heads on plates.

Their own site says: "Health benefit spending reached nearly $8.4 billion, a 12.9% increase from the previous year."

So their benefit spending went up 12.9% but they raised my premiums 73.8%. That's simply criminal extortion.

I'm starting to conclude that ultimately there will be a civil war between the mega-corporations who continue to exploit us like this, and the majority, who are being exploited. The government has utterly failed, because it's been infiltrated and taken over by the exploiting corporations to guarantee their profits by law. That article talks about banks, but insurance is very similar.

’m saying that being a “non-profit” means nothing. They still price-gouge and they still grossly overpay their executives at our expense.

Exactly right. There is really no such thing as a "non-profit".

So their benefit spending went up 12.9% but they raised my premiums 73.8%. That’s simply criminal extortion.

This is the essence of it. MarkSF and SFAce, how do you explain that? To me it looks simply like exploitation, blamed on Obamacare.

Break even operations? Are you kidding? I just can't tell who is joking anymore.

Blue Shield had to be forced to reduce their gross margin from over 30% down to 20% as of Jan 1st to comply with the new laws, and they still have not complied yet AFAIK.

You know how much money 30% of thousand-dollar premiums from millions of people is every month? It's a giagantic rushing waterfall of human blood being slurped up by Blue Shield executives.

It’s a giagantic rushing waterfall of human blood being slurped up by Blue Shield executives.

Tell us how you really feel, Patrick.

BTW, this time I am kidding with you. The other stuff from me here was serious. We have to fix healthcare.

Why would the new insurance commissioner have to propose emergency regulations to force the insurers to spend at least 80% of premiums on health care then?

http://www.californiahealthline.org/articles/2011/1/4/jones-proposes-plan-to-enforce-medicalloss-ratio-regulations.aspx

Note also that the legally required payouts for individual policies like mine are lower than the payouts for groups. They can keep more from people like me, because as an individual, I can't hire a lobbyist or threaten to take 1000 employees elsewhere.

Where is their balance sheet? I can't find it online. Are their numbers secret because they are "non-profit"?

There is just no way to justify a 73% increase in my premium from one year to the next. Why don't they spell out the numbers and tell us exactly where the money is going and how they arrived at 73%?

Medical loss ratio is meaningless anyway as long as Blue Shield gives the green light to hospitals to charge ridiculous fees so that the 20% is 20% of higher "medical costs". What we really need is a cap on premiums.

It doesn't work. It starts at the "Company profile search" page. When I enter Blue Shield it just shows me some data about their registration with the state. When I then click on "Annual statements" it sends me back to the initial "Company profile search" page.

It's a loop. No useful info. Where's the balance sheet?

It works. I just looked at it. look at the drop down menu on the left of the registration screen.

This premium-hike stuff might also be part of the strategic political battle, in addition to the tactical nature of getting premium rises. Blue Shield competes with Kaiser here in California, and Kaiser probably loves ACA since they own the care side too and AFAICT are free to game the MLR as much as they want.

Kaiser is the place that was laying out how ACA was so similar to the 1993 Chafee plan:

http://www.kaiserhealthnews.org/Stories/2010/February/23/GOP-1993-health-reform-bill.aspx
http://www.kaiserhealthnews.org/Graphics/2010/022310-Bill-comparison.aspx

PPACA didn't require BCBS to not price premiums based on gender until 2014 but they're doing it now. Wonder why.

Or it could be that the CA Blue Shield is in a death spiral.

CA has a larger uninsured population than other states. Healthcare costs were beginning the expected rise as aging populous needed the more expensive end of life care. Younger people (50s and 60's) are developing diabetes, heart disease, etc. Costs and therefore premiums started rising.

I didn't notice that Patrick had an $8k deductible. So he has catastrophic care. It's going to be a big problem if the premiums get so high that all the healthy people walk away totally. Then, the pool just has unhealthy people (adverse selection) & it will be impossible to cover the costs.

artistsoul says

Then, the pool just has unhealthy people (adverse selection) & it will be impossible to cover the costs.

In 2014 we will get the mandated (and subsidized entry of millions of people into better programs), assuming the Republicans don't destroy government over this 2011-2013 (not likely) or take over completely in 2012 (entirely possible).

Most families will basically have government-subsidized health insurance, with the subsidies being $500/mo for a family of 4 earning $66,000 per year.

How we're actually going to pay for that subsidy is an open question.

Isn't repeal of Obamacare job 1 for republicans? House votes on this 1/12. So they don't get it done until a new Senate and/or president in 2012. Something to watch.

Troy says

How we’re actually going to pay for that subsidy is an open question.

We are just going keep stacking up debt of course.

The US pays twice as much for healthcare as the rest of the industrialized world per person, for worse results:

http://en.wikipedia.org/wiki/Health_care_system#Cross-country_comparisons

So there's huge potential for cost savings in simply peeling the insurance/hospital leeches off our collective body.

That means following the lead of countries like Germany and Japan, which are very rich but do not allow doctors and hospitals to bill infinite amounts of money.

Patrick, How about voting with your feet. Admittedly, the most you can probably knock off is ~$200/month (and then the SOBs decide to raise rates the next year, once they have ensnared you ). My choice for you and your family (after 'shopping' at healthcare.gov) would be Aetna Managed Choice Open Access Value 8000. I like it as the deductible is waived for the first five doctor and specialist visits (there is a $50 co-pay). Seems to be kinder/gentler catastrophic coverage. YMMV on the prescription drug benefit. Premiums should be $200 less per month (right?!)

American could go the route of Germany & Japan. Probably we will have to. But know that with that choice we have to adopt their standards of care including wait times, their views on death (how far they intervene) and about 30% of us have to go on a major ass diet to get the same outcomes. I can say that we can't afford to continue to do things as we are now.

APOCALYPSEFUCK says

Anyone of us is free to buy a hospital, of course, and fire whoever doesn’t please us or double our lifespans and frequency of sex to 10-100 times a day, etc. That Freedom is what makes America great!

Ah, if it were only that EZ.

justme says

So their benefit spending went up 12.9% but they raised my premiums 73.8%. That’s simply criminal extortion.

This is the essence of it. MarkSF and SFAce, how do you explain that? To me it looks simply like exploitation, blamed on Obamacare.

I don't know. I also have blue shield, which I pay myself being self employed. They raised the premium about a year ago. Then a few weeks ago I got something in the mail saying it was going up, then another letter a week later saying oh, by the way it's actually going up more, effective March 1.

Even after that, my premium has "only" gone up by 74% over the 5 years since I've been with them. (~12% increase per year).

It's getting the the point I wonder why I bother paying. My only real experience with the system 10 years ago pretty much convinced me the system is all about doing as much as possible, even if is obviously not effective, and extracting as much money as possible. (3D imaging CT scan didn't come out? Oh, well, we'll still bill your insurance CO $1,200.) Maybe I'll just ditch my motorcycle, and self-insure.

artistsoul says

Or it could be that the CA Blue Shield is in a death spiral.

Yes. A lot of the insured are perfectly healthy people that are disgusted by the costs of insurance. More every day. And that makes the pool of insured the more expensive cases. Rinse and repeat.

MarkInSF says

Maybe I’ll just ditch my motorcycle, and self-insure.

I'll be paying $222/mo in March for the $4500 plan.

It's got free preventative annual checkups (& labs I think) and no lifetime limit now, so ~$2000/yr actual cost.

I had a trip to the ER two years ago that I was billed $5000 for. Actual out-of-pocket cost was ~$600, that was with the $1700/yr deductible plan, when it was under $200/mo.

MarkInSF says

MarkInSF

Wow, how cool is this? I agree with MarkInSF! :)

Well, kind of...

The point Mark makes is where to point the blame. Maybe the Dr's, and nurses, and not necessarily the Non-profit Blue Shield.

I don't want to defend any of these parties.

The truth is, the reason health care costs have gone up, is because the Govt. has subsidized the industry over the past 50 years.

Medicare, Medicaid, Social Security payments are issued by the govt. to Hospitals and Dr's. The Govt. has done a piss poor job of identifying fraud, over-payments, etc.

Additionally, the Hospitals can play all sorts of games when sending the bill to these Govt. programs.

The bills are always paid by the Govt.

I know this, because I've helped write software for Hospitals that does the payment requests to govt. programs and insurance companies. You wouldn't believe the games they play to get double billing, and over payments through. It's a true racket.

If you just turn off the spigot, the hospitals will be forced to stop these practices.

larrypatrickmaloney says

The truth is, the reason health care costs have gone up, is because the Govt. has subsidized the industry over the past 50 years.

Any form of rent-seeking is going to see great gains over the past 50 years. More consumer surplus means more money to shake down, regardless of gummint.

But yeah, the insurance subsidies in the ACA are a very troublesome thing w/o actual cost controls.

Cost controls require 'death panels' and 'rationing' etc so are better done by a heartless insurance company rather than politicians I guess.

I can see the reform as a solid first step towards Single Payer. Like DADT, sometimes it takes 20 years to get to where you want to go, ya know?

MarkInSF says

the system is all about doing as much as possible, even if is obviously not effective, and extracting as much money as possible. (3D imaging CT scan didn’t come out? Oh, well, we’ll still bill your insurance CO $1,200.)

Yes, that seems to be the core of the problem. I also agree with larrypatrickmoloney that subsidizing unreasonable billers just encourages them to do more of the same. And I agree that single-payer is the ultimate solution. Insurance companies have a strong interest in pumping up medical bills so that they can take their 20% of a larger number.

larrypatrickmaloney says

The truth is, the reason health care costs have gone up, is because the Govt. has subsidized the industry over the past 50 years.

There is the small matter of increases in treatments that seems to have slipped you mind. Prior to 1960 which is conveniently 50 years ago many conditions that are commonly treated today were death sentences. There was no treatment, people simply died. Many other conditions were debilitating, people were simply left to manage the best they could. Most medical technology used today didn't exist. Average lifespan has increased something like 20 years in those 50 years. You may not care about living those extra 20 years, but I sure do. Words of wisdom from a bumper sticker I once saw "Ass, gas, or grass nobody rides for free".

larrypatrickmaloney says

I know this, because I’ve helped write software for Hospitals that does the payment requests to govt. programs and insurance companies. You wouldn’t believe the games they play to get double billing, and over payments through. It’s a true racket.

Can you provide some concrete examples of how common billing scams work?

larrypatrickmaloney says

I know this, because I’ve helped write software for Hospitals that does the payment requests to govt. programs and insurance companies. You wouldn’t believe the games they play to get double billing, and over payments through. It’s a true racket.

Looks to me like you just confessed to being a willing accomplice to defrauding the government.

Great job on the CBS-5 interview yesterday, Patrick.

The link is on the front page news section but should also be here, I think.

http://sanfrancisco.cbslocal.com/2011/01/06/california-federal-officials-vow-to-fight-blue-shield-rate-hike/?source=patrick.net#ad_1

cool interview. I hope it makes a difference.

From: http://www.healthcare.gov/law/provisions/preventive/index.html
Under the Affordable Care Act, you and your family may be eligible for some important
preventive services —which can help you avoid illness and improve your health—at no additional cost to you.
Definition preventive services: Routine health care that includes screenings, check-ups, and patient counseling to prevent illnesses, disease, or other health problems.
Supposedly, older plans are grandfathered in and don't have to include these services. Patrick, can you confirm if this is the case with your plan? I would have assumed the same for my (job related) insurance, but I got a letter recently that seems to indicate preventive care would be included. It may be the case that Aetna just decided to drop the co-payments for these services to be ACA compliant.
Nice job on the interview, BTW. You are a one man PIRG.

At least they are still writing policies for you! Here in Virginia and many other states insurers have stopped writing "child only" policies since they can not turn down children based on pre-existing conditions. I have complained to the insurance board and my representivies to no avail.

Yes, I'm pretty sure it's pointless to complain to your representatives, because they don't actually represent you. They represent corporations like the insurers who provide re-election campaign cash.

Insurance companies blocked the one thing that would fix our system, a public option:

http://en.wikipedia.org/wiki/Public_health_insurance_option

If you had the option to join Medicare, we would not even need to have this discussion. But the insurers whipped up tea party hysteria about the public option and managed to twist the healthcare bill to protect their profits above our health, so we're all fucked for now.

It's time to DEMAND a public option.

issue H1Bs for doctors from India and China... of course over AMA (American Medical Association)'s dead cold body
:-)

Good idea! Increasing supply will actually reduce costs.

Too bad most government programs increase demand through subidies, just raising prices and accomplishing exactly nothing except extra profits for the well-connected.

Rates are approved by government. This is just the price increases that are justified in order to cover all the "preexisting" and other benefits.

If you think rates are high, ask the federal officials as to why they approved the hikes. Also ask Obama why he decided to pass the healthcare bill that doubled the healthcare costs in one year.

Good idea! Increasing supply will actually reduce costs.
Too bad most government programs increase demand through subidies, just raising prices and accomplishing exactly nothing except extra profits for the well-connected.

exactly what I meant to say. Thanks Patrick.

ChrisLosAngeles says

Rates are approved by government. This is just the price increases that are justified in order to cover all the “preexisting” and other benefits.

Not in California. The insurers can charge whatever they want here and the insurance commissioner can do nothing about it.

Even BS doesn't claim the price increases have anything to do with the healthcare bill. They're just doing it because they can.

ChrisLosAngeles says

If you think rates are high, ask the federal officials as to why they approved the hikes. Also ask Obama why he decided to pass the healthcare bill that doubled the healthcare costs in one year.

Again, that's just not true. Federal officials do not approve hikes. It's all "free market" in theory, but a pay-or-die monopoly in reality. Obama's big mistake was in not going far enough: he should have:

1. Insisted on a public option to privide at least a little compeition.
2. Insisted on premium caps.