After overseeing a company that proposed rate hikes of 39% in the midst of the health care reform debate, Anthem Blue Cross President Leslie Margolin has resigned.

LA Times:

Leslie Margolin led the Woodland Hills-based insurer as it weathered intense criticism this year over planned rate increases of up to 39% for many of its nearly 800,000 individual policyholders. Anthem canceled the hikes after calculation errors were uncovered in its filing.

Anthem parent WellPoint Inc. would not comment on Margolin's departure, saying only in a written statement that she "played an integral role in collaborating with hospitals and providers across the state" and championed innovations to improve patient safety.

Despite WellPoint's denials, there's no question that they've been disappointed in their West Coast operation's failure to boost profits. Margolin has been president for two years, and in that time Anthem Blue Cross has seen profits dwindle, passage of the Affordable Care Act, and a strong movement afoot in California for statewide single payer health insurance.

I suspect Margolin is heading out of the corporate sector to the nonprofit sector to do battle against the rising tide of California OneCare's passage after Jerry Brown is elected Governor.

In a separate statement, Margolin said she was leaving Anthem to lead a private healthcare reform coalition, Transforming Health Care. That group is composed of hospitals, physician groups, health plans, employers and consumer advocates working to improve California's healthcare delivery system, Margolin said in a statement.

It sounds so nice and consumer-friendly, doesn't it? Their website isn't launched yet, but it has this nice transitional statement on a plain page:

TransformingHealthcare.com is a consortium of expertise to improve performance, change, and grow healthcare organizations. This strategic alliance of consulting firms offering complementary services in healthcare. These organizations, most headed by their founders, have small, elite staff with outstanding competence in their specialties. Consultants are selected to create the most appropriate team for the needs of each client.

The list is interesting. From computer consultants to specialists in Sarbanes-Oxley, it's certainly an eclectic bunch. And now they can add Margolin, former president of Anthem Blue Cross.

The White House is lining up the players for implementation of the health insurance reform provisions coming up in September.

Via the Billings Gazette:

HELENA — Liz Fowler, a key staffer for U.S. Sen. Max Baucus who helped draft the federal health reform bill enacted in March, is joining the Obama administration to help implement the new law.

Fowler, chief health counsel for the Senate Finance Committee, which Baucus chairs, will become deputy director of the Office of Consumer Information and Oversight at the U.S. Department of Health and Human Services.

“Liz Fowler is an extremely knowledgeable and dedicated adviser, and while I’m very proud of her new position, she will certainly be missed at the committee,” Baucus said in a statement Tuesday.

Baucus, D-Mont., led the Democrats’ efforts in the Senate the past two years to draft and pass a major health-reform bill, which President Barack Obama signed into law March 23.

Fowler's appointment has fired up a hot discussion about her past association with Wellpoint.

Marcy Wheeler:

This is the kind of “oversight” that resulted in the BP disaster.

And remember Obama’s lobbyist restrictions? The ones that prevent someone from working in the Executive Branch on an issue that they’ve lobbied Congress on for two years? Fowler was not a registered lobbyist; rather, she was the VP of Public Policy and External Affairs. But in any case, it appears that Fowler returned to MaxTax Baucus’ staff on March 4, 2008, so nothing prevents the former VP of WellPoint from writing the “consumer and oversight” rules that are the only thing protecting Americans from policies — like WellPoint’s — that screw consumers.

Marcy is correct: Fowler was not a registered lobbyist, nor was she acting as a lobbyist in her two years with Wellpoint. In fact, if you look over Fowler's entire career, she is a career public servant. One might even argue that private industry and Ms. Fowler were not a great "fit", as noted here:

As far as I have been able to tell, she has spent most of her career in public service. She spent her early years in at Hogan & Hartson, worked for Senator Pat Moynihan, Rep. Pete Stark and Senator Max Baucus, and then later rejoined Baucus and the Senate Finance Committee in 2008.

So what exactly is the problem? She's not a lobbyist; most of her career has been spent in public service; and she was the head of a 20-person team that drafted the Senate Finance Committee version of the reform bill.

Fowler headed up a team of 20-some Senate Finance Committee staffers who helped draft the bill in the Senate. She was Baucus’ top health care aide from 2001-2005 and left that job in 2006 to become an executive at WellPoint, the nation’s largest private insurer.

It's worth noting that the Senate Finance Reform committee version was certainly included in the Senate version of what ultimately became the Affordable Care Act, but so too were provisions from the Senate HELP Committee's version. Harry Reid, as you might recall, combined pieces of both to make the Senate bill, and that version included a watered-down, ineffective public option which was ultimately stripped away from the final version because Joe Lieberman wanted to punish liberals more than he wanted to see people have access to health care.

Liz Fowler didn't take out the public option. She didn't kill it. And she didn't lobby against it. Is it possible that she simply has a different policy opinion from others? Or that she actually doesn't have a different opinion but made a calculation about what was possible with this Senate Finance Committee?

Health care, whether it's government-run single payer or covered by private insurers, is one of the most complex areas of public policy there is. Implementation of the Affordable Care Act needs policy wonks at the helm. If Liz Fowler is anything at all, she is a policy wonk, one who has earned a doctorate and a law degree, and who has spent her entire career in the policy area of health care.

Seems like a natural choice to me. Don't forget she also worked for Pete Stark (an ardent single payer advocate). Why does the Wellpoint 2 years carry more weight than the Stark/Moynihan? Because it fits the narrative or because there's evidence of malfeasance? If there's evidence, where is it? A difference of opinion over policy does not mean corruption is afoot.

Something to consider, anyway.

Shareholders were restless at today's WellPoint meeting. Some were there to deliver a petition to WellPoint asking them to return to their foundation of quality health care as a non-profit organization. Others were there to protest the approval of executive pay increases. Others were there to protest rate increases for small employers.

Bucky Bush, investment manager and brother of George H W Bush was also there as a long-time board member. About an hour into the meeting, he collapsed.

MSNBC:

The brother of former President George H.W. Bush collapsed during health insurer WellPoint Inc.'s annual meeting Tuesday morning, abruptly ending a gathering that had grown testy with criticism from some shareholders.

William H.T. Bush, 71, was taken to Methodist Hospital in Indianapolis and admitted as a precaution, a company spokeswoman said Tuesday afternoon. She added that he was alert and that doctors were evaluating his health.

Bush has served on the company's board of directors since 2004. He was sitting with other directors during a question-and-answer session when he moaned and leaned to his right side about an hour into the meeting. WellPoint officials cleared the room and called for help.

In what might be one of the more ironic twists to this story, the emergency room doctor who rushed to Mr. Bush's side was Dr. Rob Stone, director of Hoosiers for a Commonsense Health Plan, an organization advocating for a statewide publicly financed, privately administered single payer health plan. Dr. Stone has been an outspoken WellPoint critic and fierce spokesman for single payer health care.

The abrupt end to the meeting left many shareholders and interested parties frustrated, too.

Some shareholders were not happy WellPoint adjourned its meeting so soon after Bush became ill. Julia Vaughn, who represented the consumer group Citizens Action Coalition at the meeting, implored Braly to continue as several people attended to Bush, who was laying on the floor.

"I don't think Angela is a nurse," Vaughn shouted while WellPoint officials tried to clear the room.

After the meeting, Vaughn led a protest outside WellPoint's headquarters. About 70 people gathered to listen to a singer and some speakers. Many held signs asking for a single-payer health system and warning passers-by that for-profit health insurers are "Hazardous to your Health."

At any rate, it appears that Mr. Bush is going to be all right. I somehow doubt he will become a fan of single payer health care, though. Shareholders of WellPoint might be all right, too, since their shares are up a few cents as I write this.

After last week's very, very bad week for Wellpoint, it seems they've turned a corner with regard to rescissions. Maybe. Their carefully-phrased press release quietly posted yesterday has some hopeful signs.

WellPoint, Inc. (NYSE: WLP), the nation's largest health insurer, announced today that it will implement federal legislation regarding individual market rescissions effective May 1. This is well ahead of the effective date contained in the legislation. WellPoint is the first insurer to implement the provision. This move builds on WellPoint's leadership in the early implementation of reform by extending coverage to dependents up to age 26.

Rescissions, while rarely used, are one process insurers employ to reduce fraud and protect members. The standard contained in the federal legislation requires insurers not to rescind policies except in cases of fraud or intentional misrepresentation of material fact.

Their decision is still limited to individual policies, which is progress, but not complete progress. Rescissions happen in the group market, too. I hope they plan to extend this May 1st effective date to all of their insureds, also well within the effective date contained in the legislation. While they're at it, they could end pre-existing conditions exclusions early, too. That would make them true leaders.

And, just as I was writing this, I received information that United Health has decided to follow Wellpoint's lead.

Still, we're going to have to watch them. This snippet gave me a bit of a start:

Democrats, in letters to seven insurers on Tuesday, said the companies should implement the rescission ban immediately and institute independent, third-party reviews of any decisions to drop coverage.

UnitedHealth "is aggressively seeking outside vendors and will be instituting independent, external third party review in the near term," the company said.

An independent, third-party reviewer who receives payment from a company to conduct a review may not be so independent. I'd feel much more comfortable if these reviews were done by government reviewers. This is, by the way, why it's so critical that financial reform have that consumer agency. People need a pathway that doesn't involve appealing to agencies on corporate payrolls, in my opinion.

The Plum Line: White House versus Wellpoint

The Moderate Voice: Ramblings of a Fake American

The Aristocrats: Dark, Dark Place

DownWithTyranny!: Screw Greenpeace, can't we at least pretend that the upcoming energy "reform" bill does more good than harm?

Media Matters Action Network: Huh? American Family Association says the military is run by "fundamentalist Muslims and homosexual activists"

Bob Cesca's Awesome Blog!: Worse than those stupid plastic balls

Time for Kathleen Sibelius to step in again. This time Wellpoint leads the way by targeting key groups of insureds for fraud investigations. Their first experiment appears to be women diagnosed with breast cancer.

Via Reuters:

The women all paid their premiums on time. Before they fell ill, none had any problems with their insurance. Initially, they believed their policies had been canceled by mistake.

They had no idea that WellPoint was using a computer algorithm that automatically targeted them and every other policyholder recently diagnosed with breast cancer. The software triggered an immediate fraud investigation, as the company searched for some pretext to drop their policies, according to government regulators and investigators.

Once the women were singled out, they say, the insurer then canceled their policies based on either erroneous or flimsy information. WellPoint declined to comment on the women's specific cases without a signed waiver from them, citing privacy laws.

h/t Wonk Room

This type of behavior has been smacked down before and now has the force of the new health care reform law to do it again. You'd think insurers would get the message, right?

Not so much. This morning I received a report of an employer conducting a "dependent eligibility audit." This isn't the first time I've heard of these, but this one is particularly ugly. For obvious reasons, I've removed names and the identity of their employer.

...I am pretty sure my family is currently being targeted by [my spouse's employer] and Aetna because of my child's recent [redacted for privacy] diagnosis. Just a month after his Dx we received a notice in the mail letting us know that we were being "audited" by the health insurance co to make sure that [my child and I] were actually legally related to [my spouse] and eligible for health benefits. We were asked to fax in copies of our marriage certificate and IDs and our child's birth certificate...We did. HR confirmed it.

...Today I got a call saying that we still haven't sent in the requested paperwork and are in immediate danger of being dropped from the health plan. And they claim to have no record of the paperwork we sent in.

This press release from HRAdvance is pretty clear about why these "dependent eligibility audits" are taking place:

[Section 2712] of the PPACA prohibits the rescinding of health insurance for any reason other than ‘fraud' and ‘intentional misrepresentation of material'. Proving that an employee has committed fraud can be extremely difficult, and will only become more challenging in the future. "A dependent eligibility audit provider who can assist in those efforts will be key to success," states Brennan Clipp, Senior Vice President of Sales at HRAdvance.

Simply stated, these audits are intended to build a database of people they can target for fraud or misrepresentation if they should be diagnosed with anything from acne to hives to breast cancer later on. This person's report of the supposed non-receipt of sensitive documents bothers me, too. It makes me wonder why documents faxed from the same machine wouldn't always reach their intended recipient, particularly in light of the specific circumstances.

The good news? They're pushing the limits and the edges early, giving Sec. Sibelius a great foundation to slap them back like she did when they started rumbling about not covering children with pre-existing conditions.

The bad news? We're all going to have to watch out for each other every step of the way, because they're doing this to people through their employers, causing them to fear for their jobs if they get caught in one of the insurance company's "algorithms".

In response to the uproar over their announcement of 39% rate hikes, Anthem has announced they will delay the rate increases until after California officials complete their investigation:

Anthem Blue Cross will postpone by two months a massive rate hike that was set to take effect March 1 pending the results of an outside review launched last week at the behest of California Insurance Commissioner Steve Poizner.

The increase, sharply criticized by a top Obama administration official, could impact as many as 800,000 California customers who purchased individual premiums to pay 39 percent more for coverage.

In a conference call with reporters Saturday, Poizner, a GOP gubernatorial candidate, said he reached an agreement with Anthem Blue Cross to delay the start of the rate hike until May 1.

"These are huge, massive rate increases, very concerning to me and my team," Poizner said.

In a letter he sent last Monday to Angela F. Braly, president and chief executive of Anthem's parent company, WellPoint, Inc., and Larry C. Glasscock, WellPoint's chairman, Poizner said the an "outside actuary" will determine if the rate hikes are excessive and if Anthem Blue Cross was spending 70 cents of every dollar on premium medical care as required by state law.

"If we find that their rates are excessive, I will use the full power of my office to bring these rates down," Poizner’s letter stated.

He told reporters Saturday that the actuaries were "instructed ... to review the rates with a fine-tooth comb" and if "they find that these rate increases were unwarranted, I will immediately take action to get Anthem Blue Cross to follow the law and lower their rates."

From McJoan at DK:

The Obama administration has already sent a sternly-worded letter to Anthem Blue Cross over the company's excessive rate increase for individual policy holders in California. How excessive? Up to 39 percent. But that's not all. Anthem Blue Cross and Blue Shield also informed their customers that they are changing their practice of adjusting rates annually, and as of now are reserving the right to raise premiums basically whenever they feel like it.

You got that? They want to do exactly what the credit card companies were doing.

There's little beyond sternly-worded letters that the administration can do, other than something like maybe advocating strongly for some kind of legislative remedy, say in the form of serious competition to private insurers in the form of a robust public option for health insurance. But there's something Congress can do, and that's put the insurers on the hot seat and investigate. From the Speaker's blog, The Gavel:

As Secretary Sebelius pointed out, WellPoint [parent company to Anthem Blue Cross/Blue Shield] reported a staggering $2,740,000,000 in profits for the fourth quarter of 2009 alone – eight times more than the last quarter of 2008 – and more than $4,750,000,000 for all of 2009. In fact, the company reaped these record profits even as it lost more than 1.4 million members.....

Today, Energy and Commerce Committee Chairman Henry Waxman and Subcommittee Chairman Bart Stupak announced that the Subcommittee on Oversight and Investigations will hold a hearing on February 24th regarding the premium rate increases.

The hearing, conveniently, will be held on February 24, the day before the bipartisan White House healthcare summit.

John Conyers and some allies on the House Judiciary Committee have come up with a fabulous way to get the insurance industry in line - by threatening to remove their anti-trust exemption.

Many people don't know that the insurance industry, under the McCarran-Ferguson Act of 1945, has a broad anti-trust exemption that facilitates regional monopolies. The Act allows states to regulate the insurance business instead of the federal government, but also allows that, as long as the state regulates the industry, federal anti-trust laws would not apply.

As a result of this exemption, states have seen markets for health insurance where one or two companies predominate. In the state of Maine, Wellpoint controls 71% of the market. In North Dakota, Blue Cross controls 90%. Using the Herfindahl/Hirschman Index, a metric for market concentration, a 2007 study by the AMA found almost every health insurance market in the United States is highly concentrated.

This edition of the study analyzed 313 MSAs. This compares with 292 metropolitan areas in the 2005 study, 84 in the 2003 study, 70 in the 2002 study, and 40 in the 2001 study.

In terms of market concentration (HHI), the study found the following:

In the combined HMO/PPO product market, 96 percent (299) of the MSAs are highly concentrated (HHI>1,800), applying the 1997 Merger Guidelines.

In the HMO product market, 99 percent (309) of the MSAs are highly concentrated (HHI>1,800), applying the 1997 Merger Guidelines.

In the PPO product market, 100 percent (313) of the MSAs are highly concentrated (HHI>1,800), applying the 1997 Merger Guidelines.

Here's the AMA study. Paul Rosenberg has a lot more on this.

The point is that the concentration of the health insurance market among regional monopolies leads to higher costs for consumers, almost by definition. What the legislation by Conyers (D-MI), Hank Johnson (D-GA) and Diana DeGette (D-CO) would do is end that anti-trust exemption for health insurers, allowing for enforcement in all of these highly concentrated markets. The Senate has companion legislation:

“This legislation would specifically prohibit price fixing, bid rigging, and market allocation in the health insurance industry,” said Conyers. “These pernicious practices are detrimental to competition and result in higher prices for consumers. Conduct that is unlawful throughout the country should not be allowed for insurance companies under antitrust exemption. The House Judiciary Committee held extensive hearings on the effects of the insurance industry’s antitrust exemption throughout the 1980s and early 1990s. It became clear then that policyholders and the economy in general would benefit from eliminating this exemption.

“The legislation we introduced today is intended to root out unlawful activity in an industry grown complacent by decades of protection from antitrust oversight. In doing so, we aim to make health insurance more affordable to more Americans. I want to thank my friend Senator Leahy for his leadership on the bill and for working with the House on this joint introduction.”

Many of the actions taken by the insurance industry over the years simply violate federal law. Repealing their anti-trust exemption would force the industry to end their criminal ways or face punishment. As a companion to insurance regulations designed to lower prices for consumers, but perhaps without the kind of enforcement necessary to maintain it, I couldn't think of anything better. And if nothing else, this legislation is a powerful whip to keep the industry in line as they try to extract more perks from the health care bill. Combine this with the multiple investigations into industry practices from Dennis Kucinich, Henry Waxman and others, and you have real pressure on the industry for the first time in a while.

Good for John Conyers.

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All day I've been hearing how stupid Max Baucus was to release his plan this week which is basically the same bill he leaked back in June. Chuck Todd was wondering why he took so long to produce nothing new. Suddenly the lead Baucus Dogs' bill isn't the be all and end all.

Todd and Andrea Mitchell were saying that Baucus still has a role, but he screwed up by taking so long. He lost his leverage. We'll see, but it was fascinating watching the media turn on the the king of the gang of six.

And now it appears that Liz Fowler has her hand in the Senate Finance bill.

Max Baucus' plan had the name of Liz Fowler, a former WellPoint VP who now works for the Finance Committee, in the metadata. When you have WellPoint personnel instrumental in writing the laws, you get little provisions like this:

Interstate Sale of Insurance. Starting in 2015, states may form “health care choice compacts” to allow for the purchase of non-group health insurance across state lines. Such compacts may exist between two or more states. Once compacts have been formed, insurers would be allowed to sell policies in any state participating in the compact. Insurers selling policies through a compact would only be subject to the laws and regulations of the state where the policy is written or issued.

This is something that conservatives have been begging to do for years. Even the most outgunned conservative on a talking head debate can vomit up "let people take their insurance across state lines to increase competition!" It sounds reasonable. But there's a very good reason why it would quickly turn into a nightmare, and you can see it in the examples of Delaware and South Dakota.

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Consumer Watchdog jumped on this today, claiming that this race to the bottom could be expanded...read on

Now Baucus is saying he'll go it alone without Republican support. So why was there a delay if that's the case? Grassley has been acting like an ass the whole time.

Max Baucus is getting serious. Just a few hours before President Obama is scheduled to address a joint session of Congress, the Finance Committee chairman announced that the committee would be moving forward with a health care reform bill - with or without the GOP.

The announcement followed a morning meeting with the so-called Gang of Six. A source with knowledge of the situation said that Baucus told the two other Democrats and three Republicans that he will be putting out a "Chairman's Mark" by the middle of next week whether he has Republican support or not. (A Chairman's Mark is a bill written by the chairman of the committee.)

Amanda Marcotte understands what's happening. I only wish the media would do their job.

It’s obvious that people who show up screaming about how they want the government out of their Medicare and who go into a faint because they heard that the health care bill has no provision to ban abortion aren’t people that you can respond to in any way. They can’t compromise or understand the concept. They’re too busy struggling against reality itself.

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It’s the people who are putting corporate profits ahead of human lives who need to explain themselves. They’re the ones who should be asked why corporate profits count more than lives. They’re the ones who should be asked why working class citizens should be forced to decide between paying for an insurance bill or paying their rent in order to make sure that no insurance company executive goes without a fresh supply of yachts and fancy cars. They should be forced to explain why insurance company executive yachts count more than your ability to avoid homelessness, or your ability to have a perfectly treatable illness actually treated.