Wendell Potter on March 27th, 2010
Now that Congress has taken final action on its health care reform legislation, the reform debate has now shifted to, of all places, Denver.
The NAIC also will play a key role in making sure insurers spend at least 80% to 85% of what they collect in premiums on medical care for their policyholders as the new law requires. The amount insurers pay for care is called the medical-loss ratio (MLR).
This year the NAIC expanded the committee to include 29 consumer representatives from across the country. I was selected to be one of them, representing the Center for Media and Democracy. Like the commissioners, my colleagues and I are vastly outnumbered by the hundreds of insurance industry executives here at the Denver meeting, but at least we have seats at the table.
Wendell Potter on July 30th, 2010
The nation’s biggest insurers — not happy with provisions of the four-month-old health care reform law that would force many of them to spend more of the money they collect in premiums for their policyholders’ medical care — are pressuring regulators to disregard what members of Congress intended when they wrote the law, so that they can keep raking in huge profits for their Wall Street owners. If they are successful, many policyholders will soon be shelling out even more than they do today to enrich insurance company shareholders and CEOs. Billions of dollars are at stake, which is why the insurers and their symbiotic allies are pulling out all the stops to gut a key part of the law that would require them to spend at least 80 cents of every premium dollar they take in for medical care.
Wendell Potter on October 21, 2010
Timing is everything, especially in politics and policy-making. This morning at the NAIC’s fall meeting in Orlando, the commissioners voted to reject all of the insurance industry-backed amendments to the regulations that had been developed in a thoughtful and transparent process at the NAIC committee level.
Today I can say that I am proud to have been one of 28 people selected by the NAIC to represent the interests of consumers this year. The NAIC’s vote this morning is clear evidence that the commissioners listened to us. We didn’t win all the arguments over the past six months — the work the NAIC approved this morning represents a compromise between the interests of consumers and the insurance industry — but we won many of the important ones. The recommendations that will go to HHS will make it easier for insurers to meet the MLR minimums, there’s no doubt about that, but they will also help to ensure that most of what we pay in premiums for health coverage will actually go to pay for medical care, not insurance company shareholders and executives. That is a big victory for consumers.
Stephanie Cutter on November 22, 2010 at 1:11 PM EST
Today, the Department of Health and Human Services issued a new rule called the “medical loss ratio” rule that will require health insurance companies to spend 80 to 85 percent of your health care insurance premiums on making you healthier instead of overhead costs like advertising or executive compensation. Like many other provisions in the Affordable Care Act, the medical loss ratio rule brings a whole new level of transparency to the health insurance marketplace and holds the insurers accountable.
Clap, clap, clap. Take a bow, Wendell. Well done.
Belafon (formerly anonevent)
I’m waiting to see the insurance industry challenge this under the Supreme Court ruling that the job of corporations is to make money for their shareholders. In an earlier era I would consider that foolish, but these days they’ve got 30% of the country that would back them if enrolling required giving up a kidney.
celticdragonchick
I saw Wendell last night on Countdown along with Michael Moore. Very interesting.
O/T
What the fuck is up with North Korea?
Wag
I applaud the new MLR requirements. Now if we could only get close to the MLR for Medicare, which runs around95%, making it by far the most efficient insurer in the country, despite an older, sicker population.
Kay
@Belafon (formerly anonevent):
Except. They were spending 90% or better of each dollar on health care 20 years ago.
The shareholders were all benevolent dumbasses then, or the insurance companies weren’t doing their duty, or they’ve gotten wildly inefficient? Which one?
Culture of Truth
but.. but.. but “Obamacare” is scary
BR
@Wag:
This.
I’m still hoping I’ll be able to move to Canada. Or that California will enact single-payer sometime soon.
Earl Butz
When does this kick in? Last year Cigna raised my company insurance by 43%.
They figured out a long time ago that if you’ve got nukes, you’re one of the winners, and if you don’t, then you’re just another helpless bitch awaiting rape by the United States, China, or Russia. So they got proactive about it. Smart, if you ask me.
ornery curmudgeon
“Take a bow, Wendell. Well done.”
Absolutely … this sounds like some rare ‘good news.’ Thanks for putting this up.
Kay
@ornery curmudgeon:
He’s just a great, great advocate.
Appealing, persuasive, informed and tenacious.
The Grand Panjandrum
Any chance the state lawsuits that claim the Congress does not have the authority to impose an individual mandate will be successful? This entire process might get blown up by the Roberts Supreme Court.
Belafon (formerly anonevent)
@Kay: What happened is like I said, the job of companies is to give the shareholders more money. It’s not to make a better product. 20 years ago, 10% of earnings going to shareholders may have been just fine, but by the next quarter the stock price would have dropped because there was no increase in profits.
It will be interesting to see how the companies, and shareholders, respond to this rule. This might actually be a time when a monopoly would be a good thing, with this rule and the preexisting conditions rule. Then we’ve backed our way into a version of the Public Option.
Odie Hugh Manatee
@Kay:
The beat part is that is was one of ‘them’ and now he has turned his experience and expertise into effective advocacy for health care.
A well deserved bow indeed.
Dennis SGMM
Not to worry: Fat Tony and the bagmen will hand down a 5-4 decision declaring that the 80% rule hurts the fee fees of those fine corporate persons so it’s therefore null and void.
Bulworth
This seems like a pretty big fechin deal.
Kay
@The Grand Panjandrum:
I think public opinion matters a lot. If the GOP can’t strangle it in the crib, people might get to like it, and you and I both know conservatives have no principled objection to this law, that their opposition is entirely based on political concerns. We know that because most of them backed like measures until they went freaking insane with political ambition and bloodlust.
It’s not fabulous, this poll, but it’s a move in the right direction:
gene108
What will be interesting is to see how much the rate of premium increases will be versus prior years, as insurance companies look to off-set what will be a hit to their bottom line.
I don’t know the in’s and out’s of the HCR bill, but I doubt there’s a cap on insurance premium increases.
Look for a short-term, temporary, and very unpopular side-effect to be slightly higher premium increases, which will be touted as proof of why HCR is a bad idea and needs to be repealed.
The fatal flaw in the bill is it won’t fully kick into effect until 2014, which is plenty of time for people to get frustrated with the growing pains and believe the demagoguery about how bad HCR is and why we need to go back to the old way of doing things.
I think another major flaw of the bill is it doubles down on employer based coverage, rather than creating a system where individuals maintaining their own plans becomes the norm versus employer based coverage being the underlying basis of the system.
PeakVT
@celticdragonchick: Nobody knows what is behind the latest incident. What everybody does know is that as long as China allows it, NK will take provocative actions.
Kay
@Odie Hugh Manatee:
Right? And realization/redemption stories are so appealing.
He’s unimpeachable. Republicans can’t demonize him. He’s this (formerly) mild man who is earnest and decent.
Still, he had to stick with this to get it along and he didn’t get everything he wanted, so he gets huge points for me on work.
gene108
@Earl Butz:
From what I’ve heard, expect insurance premium increases to go up a bit more than in earlier years. For example, instead of a 33% increase you got a 43% increase, as insurers try to off-set lost profits from the medical-loss-ratio rules.
Part of the reason they need to do this is to keep the Wall Street investors happy, with the returns the companies have, so their stock prices don’t plummet. Since CEO compensation is linked to stock prices, there is an incentive to jack up premiums.
Kay
@gene108:
I agree with that. That was a non-starter, though. You were just not going to be able to take away what 94% of white college graduates have in this country, which is federally subsidized employer-provided health insurance.
Pundits alone….Jesus. Imagine.
I think it’s nuts to trade wages for an insurance policy.
geg6
@Odie Hugh Manatee:
Yes. That is exactly why Mr. Potter is one of my personal heroes.
gene108
@Kay:
Yeah…in the end being shackled to an employer plan or an outrageously expensive individual plan – assuming you don’t have pre-existing conditions and can still qualify for it – is a drain on people’s ability to move from job to job and probably hurts employers, by limiting their access to talent based on the benefits they offer.
Taking the burden of paying insurance premiums from employers would be a big boost to the economy. Most people already pay a good chunk of their paycheck for insurance plans, so that part of the cost shifting won’t be terrible, as long as the individual market is set up to keep people from being gouged.
The auto insurance, home insurance, and other insurance markets are set up for individuals and I assume the same thing could be done with health care, if we really tried.
I look at this bill as a first step towards a better tomorrow (assuming the GOP doesn’t repeal it by 2014) and hopefully better changes can be made.
Kay
@gene108:
They run into a wall on premium increases, though, on the proposed exchanges, because if the policy isn’t priced “reasonably” the mandate drops out.
Or that’s what I’d argue, successfully, I think, using the statutory language. That “reasonable” ( % of gross) is a necessary condition to “mandate”. If it’s not reasonable, there’s no mandate.
We use that here, on the mandate that unmarried parents purchase health insurance for their minor children, and that’s in place in all 50 states, and has been since the summer of 2007.
JMC in the ATL
As an auditor by training, and an insurance regulator by trade, I’m looking forward to this provision coming online, all in all. At the very least, it should have a negative impact on jurisdiction shopping. It will however, make my job harder as health insurers go into a riskier investment portfolio to maintain performance measures.
JMC in the ATL
@gene108: Health insurance isn’t really insurance, though – it is pooled cost sharing. Well, catastrophic health is real insurance, but the rest isn’t. You can’t really make an apples to apples comparison between health coverage and property and casualty insurance, because the risk experience and pricing structures aren’t the same.
Gin & Tonic
@JMC in the ATL:
This can’t be said enough, and is still understood by almost nobody. I’ve spent most of my career in property-casualty, which is actually insurance, as Edward Lloyd intended. “Health insurance” isn’t insurance, as you point out, it is a pooling of costs.
Davis X. Machina
@Belafon (formerly anonevent): 20 years ago for most of us there were no shareholders, as such. BC/BS were non-profits, and MLR’s in the 90’s were still possible. Anthem/Wellpoint and the other vultures were circling, but had not yet landed.
BTD
An press announcement is not a fact.
I hope it all ends up worth celebrating but determining IF the insurance companies abide by the 80% ratio will be done by whom exactly? And how will they determine it?
Treasury had a nice press release for HAMP too.
Senyordave
This is HUGE. I worked in insurance for many years, and the NAIC is the real deal when it comes to regulating insurance companies. They have the power, because the insurance industry has an antitrust exemption and it is generally the states that regulate them.
It varies by state, but in most states (even red states) the State Insurance Department will actually look after consumers. Of course in Florida this may be different since their governor-elect is a known medicare cheat.
Piece of advice to all: If you ever have a problem with your insurer, threaten to go directly to the State Insurance Department. Then go if the problem isn’t resolved to your satisfaction. The people working in the State Insurance Departments are usually very happy to help, and most of them are not big fans of the companies because they see how the companies will try to screw people (trust me, this is true. The standing joke in my company was the first three objectives of our claims department were dont’t pay claimes, don’t pay claim, don’t pay claims).
Another thing is insurers are ranked by complaints perpolicyholder, and these stats are public and are available online. Our company president directly received complaint summaries, and there was a Sr. VP in charge of resolving these complaints.
Complaints that go to the Insurance Department are taken very seriously by companies, and usually acted upon very quickly.
Karen
@BR:
Yeah Canada is my plan too if Queen Sarah was ever to become Queen Sarah the President.
Yet tons of hate at Huffington Post because the President has done NOTHING.
I know I was insane to even go on the website.
kay
@BTD:
Ah, not true. It’s a press announcement of the rule.
It’s the rule. And it’s only the rule because Potter and 28 other consumer reps showed up and acted as effective advocates.
But let’s dismiss successful advocacy strategy and execution out of hand, shall we? We’re always so successful!
ThresherK
Does MLR include that glossy four-color flyer full of stupid, obvious crap which is eye-rollingly common knowledge to anyone who sees a “To Your Health” segment on the news? Because we get a lot of them from our health insurance co.
jonas
@The Grand Panjandrum: As I understand it, you don’t *have* to buy health insurance. But if you don’t, you’ll pay some higher taxes. What this is is a tax increase — which the government is allowed to enact — that gives you a corresponding tax credit if you show proof that you buy your own insurance. This works out as a kind of “mandate” of sorts, but you’re perfectly within your rights to opt out and pay the higher taxes instead and, for some reason, not insure yourself or your family against illness. You can gripe about the taxes, but you can’t gripe that the government can’t legally raise taxes, or give you a tax credit for purchasing your own health insurance.
Martin
Devil is in the details with these things.
The insurers have been fighting/complaining about definitions of MLR for ever. There’s a zillion loopholes. Want to put billing under ‘medical expenses’? Just put tips to lowering your cholesterol on the back of the bill. Outfits with traditional insurance policies and PPOs as well as HMOs routinely move expenses across divisions. PPO pull in too much profit? Send it over to the medical care group of the HMO and have them expense against it. PPO is back under the limit.
ACA put a lot of new power in regulator hands, but nailing down these rules and ensuring that insurers stick to them is going to be a real rats nest. An encouraging sign is that Justice appears to be really going after medical fraud, but the problem is that they’re understaffed. I’m not sure what fine recovery is as a function of operating costs, but I’d think that hiring in the civil division would be money relatively well spent.
jonas
@gene108: “The auto insurance, home insurance, and other insurance markets are set up for individuals and I assume the same thing could be done with health care, if we really tried.”
Sure, but the cost of fixing cars or repairing homes doesn’t rise by 20% a year because the auto mechanic shop is owned by a huge corporation that pays its CEO $25 million a year. If doctors and hospitals made as much as your local contractor or auto body repairman, sure, we could have a decent market for individual health insurance. As it is, this is such a huge part of our economy and costs have gotten so out of control, that bringing it under some kind of public control — like (still non-privatized) utilities — is really the only option.
kay
@Karen:
I apologize for sending you. I had to. Wendell needs to blog more. He only updates like every two months. He’s not prolific, that guy.
JMC in the ATL
@BTD: By the State insurance departments, using model evaluation methodologies developed by an NAIC working committee. In general, financial analysts will do the ratio testing, independent CPAs and state examiners will do the field testing, and enforcement divisions will refer scofflaws to administrative hearings.
No state wants it’s Insurance Dept making negative headlines. In general, we take our jobs seriously.
Poopyman
@kay:
What, he’s got something better to do?
BTD
@kay:
I’m not dismissing Potter’s work, which has been exemplary.
Frankly, I am criticizing you for celebrating a press release about a rule.
I would hope that by now we have learned that rules of the little people and the big people get to flout them, change them or ignore them.
But by all means, let’s pretend that the rule is what matters, as opposed to enacting the policy the rule is supposed to be stating.
Frankly, this goes back to what I believe is the essential flaw of the “reform” in the health insurance bill – the belief that a regulatory framework work for reform in this area. I simply do not believe that it does.
BTD
@JMC in the ATL:
“No state wants it’s Insurance Dept making negative headlines. In general, we take our jobs seriously.”
That explains so well how insurance companies have been so well regulated over the years.
No offense, but I do not believe that regulatory reform works in this area.
El Cid
@Dennis SGMM:
The Founding Fathers clearly opposed regulations ensuring that insurers used their premiums to do what they say they do.
giltay
It’s an indication of how bad things have gotten in the US when reducing overhead to 15-20% is
seen asa victory (no, actually it is a victory; congrats). Up here in Canada, the overhead is less than 1%. This is the obvious advantage of a single-payer system: you don’t have to spend money on advertising, executive compensation, billing departments, etc.kay
@BTD:
Well, then you don’t admire Potter, BTD, nor do you think his work is “exemplary”.
You think he’s a fool who’s wasting his time, because he doesn’t believe that the rules only apply to little people and big people flout them, or he wouldn’t have spent six fucking months of his life working on this, now would he?
Like Potter, I celebrate successes. I know that’s not hip and cynical enough, but there it is. I think acknowledging them is probably crucial to inspiring people to try.
I’m not clear on your strategy here, in any event. The best approach would be to sit out the administrative rulewriting process and wait for proof of enforcement, before the rule is written?
Jesus. That’s genius. Why didn’t he think of that?
BTD
@kay:
If Wendell Potter thought, as you apparently do, that that was enough, then you would have a point.
But of course that is NOT true. Wendell Potter was one o fthe strongest proponents for a public insurance program to “competitively regulate” the private health insurance market.
You seem to want to pretend that you speak for Wendell Potter. I do not think you do at all. Indeed, Wendell Potter’s exemplary work is, in large measure, dedicated to demonstrating the FAILURE of regulatory reform efforts in this area.
As for your rant about “sitting out,” well if you think pointing out that the rulemaking process is not enough is sitting it out, then go with that if you like.
I’ll continue with my “sitting it out” while you celebrate and pretend that it is enough.
There are many like you regarding the housing crisis. Unfortunately, too many of them work in the Treasury Department.
kay
@BTD:
Baloney. I posted the man’s words, on this rule.
Please show me where I claim Potter endorsed the whole approach. You can’t, because I didn’t.
I read his blog. I posted most of it, including his qualifications on the success. Forgive me, but I think he’s more credible on regulatory reform in health care than you are.
Davis X. Machina
@jonas:
We encourage behaviors by providing tax advantages all the time.
The mortgage interest deduction alone this year will save me at least as much as the putative penalty under the mandate. And my owning a house — more accurately, borrowing money to own a house — is probably not as unambiguous a social good as my not walking about unensured….
BTD
@kay:
Of course he is more credible than me and you on the issue of regulatory reform.
I think this post badly misses the mark in explaining Potter’s views on the subject.
He said A LOT more than you link to on the subject.
As I said before, you seem to think you are fairly representing his views in this post and in this comment thread. In my opinion, you are not.
kay
@BTD:
Please show me where I wrote “this is enough”.
Too, BTD, I didn’t ask you to jump in. I simply acknowledged that someone effective did. Why that makes you so angry is sort of interesting, but ultimately irrelevant, because you’re not on the consumer board, he is.
Midnight Marauder
@kay:
Probably because he’s not a do-nothing clown like BTD.
kay
@BTD:
It isn’t a post about his “views on the subject”.
It’s a post that uses his actual blog posts about a vitally important administrative rule, and his role in enacting it. It’s all he’s writing about in health care.
The MLR was discussed here endlessly during the debate, by eemom and many others, and I’ve been following the rule-writing process. I should NOT post on that, BTD? Why the hell not?
burnspbesq
@BTD:
Believe what you want. I prefer facts, and the facts are that state regulation of the insurance industry works well most of the time.
BTD
@kay:
Do I seem angry to you? Does everyone who disagrees with you get the “why are you so angry” treatment? Turn about being fair play, I suppose I should be asking why you are getting so angry with me for challenging your views?
Anyway, let the defense of kay and the insults of me begin because, you know, that is how constructive discourse works.
In the meantime, here is what Wendell Potter said in September 2009:
If I recall correctly, the Baucus bill contained the MLR of 80% that we are discussing.
BTD
@burnspbesq:
Well, since you have given yourself the power to declare what “the facts” are, I suppose you always win these discussions don’t you?
JMC in the ATL
@BTD: Insurance regulators can only regulate within our purview, like any regulatory body. My job is monitoring solvency. When was the last time that you heard about an insurance company going under and policy holders being left out in the cold? It happens so seldom as to be negligible.
Again, I do have to point out that health insurance isn’t actually insurance – it is pooled cost sharing. This, combined with the imvolvement of DHHS, Medicare, etc., makes it’s regulatory environment pretty unique.
BTD
@kay:
You correctly write whatever you choose to write about.
My question is why would you not want me to do the same thing in comments to your post – to wit, discuss issues relevant to your post?
Now, if you are asking me what I would have liked you to do in terms of how to write this post, I would have said something like – ‘I think it is great to celebrate this step, but understanding that Wendell Potter believes that the regulatory structure is inadequate for reform and that a public insurance option is needed. I think that would be especially fair considering Wendell Potter was one of the main proponents for a public insurance program precisely because he distrusted regulatory reform.”
But I do not presume to tell you how to write your posts.
And I will write my comments.
And so the discussion goes.
BTD
@JMC in the ATL:
“It’s regulatory environment is pretty unique.”
I completely agree. Indeed, in large measure, this is my point.
kay
@BTD:
I wasn’t commenting on Wendell Potter and the public option, BTD.
I want to be clear. I cannot follow and post on the rulewriting process, unless I include that Wendell Potter said in 2009 that a public option was crucial?
How’s this: “While Wendell Potter said the public option was crucial while he was lobbying for a public option, he now says consumers had a victory in the rule-writing process”.
I would suggest that it’s you who is naive, not me.
kay
@BTD:
I think you should post whatever you want about Wendell Potter and the public option. I think it’s sort of silly that you think his advocating for a public option negates his specific claim of success here, and was somehow not disclosed.
He’s an effective advocate. That’s what he does. He works.
When he loses (like he did in 2009), he moves on. I’m simply glad he’s around.
David in NY
Where does BTD get the idea that a rule makes no difference? I mean, that’s just legal nihilism. Why bother with rules against murder, they don’t seem to stop murderers? Laws and stuff are just rules that we enforce as best we can. Better than not having them. Sheesh.
BTD
@kay:
I do not think I called you naive. If I did, my apologies.
What I did say, and what I think is that discussing the health insurance bill, regulatory reform and Wendell Potter’s actions and views with regard to it without mentioning his strongly expressed view that regulatory reform without a public option was a bad idea is not to treat the issue fairly. That is my view of the subject.
When the health insurance bill was in doubt, Jacob Hacker endorsed passing the bill. This was important mostly because Hacker was a strong proponent of the public option, considered its intellectual father. It would have been silly to ignore Hacker’s views on the public option when discussing Hacker’s endorsement of the bill.
Similarly, Wendell Potter endorsed passage of the bill. Again his strongly expressed views on the public option were rightly cited.
In my view, discussions of this issue should put this all in the full context.
Obviously, you do not agree with me.
No harm done.
BTD
@kay:
It does not negate the success, but it more properly place the success in its proper context.
At least it does in my opinion. Clearly you disagree with that.
kay
@JMC in the ATL:
Or, “we didn’t enforce the 80% rule because it wasn’t written yet”.
I really don’t think you have to apologize for non-enforcement of a non-existent rule, but I’m not a real stickler :)
BTD
@David in NY:
Enforcing rules matters. Of course part of that process is the making of the rules.
My point was that rules that are not enforced are not particularly significant.
BTD
@kay:
This comment raises an interesting question – to wit, are you stating Potter has “moved on” from the public option?
That would be news. Do you have a basis for making that statement?
kay
@BTD:
Had he qualified his post on the success on this rule with his view on the public option, I would have included that.
Instead, he qualified it with other concerns he has specific to the rule, which makes sense if you’re following this, because that’s where he is.
He didn’t, so I didn’t. I would just suggest, BTD, that your “context” could be construed as more heavy-handed and opinionated than just letting it be. The only difference would be, you’d be tilting it your way.
BTD
@kay:
Perhaps. Then again, I think you more than tilted it your way.
Anyway, I hope no hard feelings. Just expressing my views.
kay
@BTD:
Jesus.
He sat on a board for six months, rulewriting on a law that doesn’t include a public option. He’s following the process.
In fact, the public option “option” doesn’t come into play until 2014, and I would assume health reform activists would take it up (beginning) then, at the state level.
Will he be in that? Hell, I don’t know. I certainly hope so. I’ll be sure and let you know, but I’ll put it in “context” back to 2009.
chopper
@BTD:
does the pope drop a deuce in a wooden room? jesus man, take a valium or something. ‘angry man on the internet’ just isn’t that becoming.
wazmo
C’mon folks, get real-rules don’t mean squat unless they’re enforced-and if necessary, prosecuted. Look at what happened in subprime.