Jon Muller canceled his insurance policy after more than 20 years as a Farm Bureau member because of legislation that could leave thousands of Iowans like his sister uninsurable. -promoted by desmoinesdem

Last night, I sent the following letter to Governor Kim Reynolds urging her veto of Senate File 2349, a bill that in effect grants a monopoly to a partnership between the Iowa Farm Bureau Federation and Wellmark Blue Cross/Blue Shield. This letter does not get into all the negative implications of the bill, but it’s a start.

I’m no expert on whether vetoing this bill is politically expedient or not. But I am fairly certain the damage will be vast, and far beyond what anyone supporting this bill ever contemplated.

Roughly 46,000 Iowans who buy individual health insurance policies through Wellmark Blue Cross/Blue Shield will face an average rate hike of 8.5 percent this year, instead of the 11 percent Wellmark requested. State Insurance Commissioner Susan Voss announced on Friday that she had approved a smaller rate increase, in part because of reviews conducted by two actuaries who said Wellmark’s request was excessive. A law enacted in 2010 required an independent actuarial review whenever an insurer’s proposed premium hike exceeds the medical inflation rate.

According to the Des Moines Register, Voss said in a January 28 press release

that her department would look into whether the company has appropriate levels of reserves. She said the department also would examine how Wellmark’s dominant position in the Iowa market affects Iowans.

“We’ve heard the concerns of Wellmark’s customers,” Voss said.

“We think the time is right for a careful professional analysis of these two additional areas. We gained valuable insights from the extended review just completed that allowed us to arrive at the appropriate level of permitted rate increase. Learning more facts on these points will be useful in future considerations of rate adjustments.”

Wellmark has a near-monopoly on the individual health insurance market in Iowa. The company is the provider for more than 70 percent of Iowans who purchase their own health insurance.  

Thousands of Wellmark Blue Cross/Blue Shield customers learned late last year that their health insurance premiums would go up by 11 percent in 2011. Yesterday state Insurance Commissioner Susan Voss received reports from two actuaries who found that rate hike to be too steep:

Close to 46,000 Iowa policyholders under age 65 will see an increase in their base premium rate of 10.8 percent, effective April 1, 2011, if approved. Another 3,000 basic and standard policyholders will receive an increase of 11.3 percent. Approximately 2,500 Blue Transitions policyholders will receive an increase of 15 percent.

The company raised rates by 18 percent in May of 2010. […]

Lewis & Ellis Inc., of Overland Park, Kan., said Wellmark’s proposed rate increase is too high. They recommend a 7.5 percent instead of the proposed 10.8 percent increase.

The Insurance division’s in-house actuary is recommending a 9 percent increase.

Tom Alger with the Iowa Insurance Division said the reports will weigh heavily in Voss’ decision about whether Wellmark will get the rate increase it wants.

Voss also presided over a public hearing yesterday, at which an attorney for Wellmark defended the rate hike, and some customers asked Voss to reject the insurer’s proposal. But a rate increase of 7 percent or 9.5 percent would still be unaffordable for many customers, and there are other problems too:

State Rep. Janet Petersen, who last year pushed legislation requiring the hearings and the independent actuarial review, called the recommendations a small victory.

The Des Moines Democrat noted that even if Wellmark is denied permission to raise its base rates as much as it wants, it still can impose big increases for people who shift into new categories, including as they age.

For individuals and families who buy their own health insurance, Wellmark has a virtual monopoly in Iowa. Giving Americans the option of buying into Medicare would not instantly make health insurance affordable, but it might constrain the excessive rate increases from companies like Wellmark.

Until this morning, I would have considered myself the blogger least likely to defend the right to smoke. Because of the many health risks associated with secondhand smoke, I strongly supported the Iowa Smokefree Air Act adopted in 2008, as well as the Iowa Department of Public Health’s decision to enforce that ban in all restaurants. I had no sympathy for smokers who whined about “Big Brother Democrats and Turncoat Republicans” and called the public smoking ban “Soviet” or “fascist.” I knew restaurant and bar owners who challenged the smoking ban in court were wasting their time and money.

However, Wellmark Blue Cross Blue Shield is going too far with its new personnel policy on tobacco use. Beginning on June 1,

The insurer will “require applicants to assert that they are tobacco-free in order to be considered for a position,” said Rob Schweers, spokesman for Wellmark, which employs approximately 1,600 people in Des Moines and another 200 throughout the rest of the state.

Wellmark is asking existing employees to stop using tobacco by Oct. 1. The new policy also prohibits any smoking during work hours, including scheduled breaks and during lunch.

The Des Moines Register quotes Schweers as saying the company wants to provide “incentive for people to quit [smoking], which will result in a healthier, more productive work force.” If Wellmark wants to pay for counseling or nicotine patches or other support for smokers trying to quit, I’m all for it. Nicotine is highly addictive, and many people need extra support to stop using it. But smoking is still legal in private homes and many outdoor spaces, and employers should not try to control how employees live when they’re not at work. Yes, smokers cost employers more in health care costs, but so do people who eat unhealthy diets or engage in other risky (but legal) behavior.

According to the Register, several other large employers in central Iowa ban smoking during working hours, including lunch breaks, but don’t prohibit their employees from smoking during private time. Wellmark has not yet threatened to fire employees who don’t quit smoking by October 1, but apparently, they would have the legal right to do so. Peggy Huppert of the American Cancer Society said violating that organization’s policy on tobacco use is grounds for termination.  

Approximately 80,000 Iowans will face substantial health insurance premium hikes beginning May 1. An independent review has confirmed the “need” for Wellmark Blue Cross and Blue Shield to raise rates by an average of 18 percent. The higher rates were intended to go into effect on April 1, but last month Governor Chet Culver ordered a delay pending an review of the matter. The Des Moines Register reports today,

[Iowa Insurance Commissioner Susan] Voss said in a memo to Culver that Wellmark’s losses supported “the need for the rate increase” based on two separate actuarial analyses conducted by INS Consultants, a Philadelphia actuary. The group also found that the insurance division’s rate review process is actuarially “acceptable” and “reasonable” compared with INS’s methodology.

Birny Birnbaum, head of the Center for Economic Justice, a nonprofit consumer advocacy group in Texas, said it’s unlikely that INS would disagree with the rate increase.

“While INS is technically independent, there is no way the firm would contradict and embarrass the agency which hired the firm,” Birnbaum said Monday. “If INS were to contradict the insurance division, it would likely not be hired in the future by the Iowa Insurance Division or any other insurance regulator.”

Speaking to the Register, State Representative Janet Petersen touted legislation passed during the 2010 session, which is intended to give consumers more information and warning regarding health insurance premium increases. After the jump I’ve posted some key points from Senate File 2201 and Senate File 2356.

These bills contain a lot of good provisions but probably won’t solve this particular problem for many Iowans. Wellmark dominates the insurance market in this state. Giving people a few weeks to shop around won’t magically allow them to find a better deal. In addition, health insurers can still exclude coverage for pre-existing conditions until 2014. The only real choices Wellmark’s individual customers have are: 1) pay a lot more, like my family, or 2) downgrade to a policy that’s less comprehensive and/or involves higher out-of-pocket costs for medical care.

Iowa House Republican leader Kraig Paulsen showed his creative side yesterday, finding a way to blame Democrats for Wellmark’s rate hikes:

Paulsen pointed out that the Democrat-controlled Legislature has voted in recent years to impose several health insurance mandates, such as coverage of cancer clinical trials and prosthetics.

“It’s indisputable that those add to rates. That’s just the way it works,” he said.

Health insurance mandates drive up costs for Iowans, Paulsen said.

“Mandates aren’t necessarily requirements that insurance companies sell something. They’re requirements that purchasers buy something,” he said.

One legislative proposal would have allowed state-regulated health insurance companies to provide mandate-free coverage “for those who want a less comprehensive product,” Paulsen said.

That idea by House Republicans failed, as did a proposal to study allowing out-of-state insurers to offer policies in Iowa, which could help Iowans find cheaper policies, he said.

Come on, Mr. Paulsen, who ever anticipates needing prosthetics someday, or being in a position to benefit from a cancer clinical trial? Anyway, that cancer clinical trial bill passed both the Iowa House and Senate unanimously. Also, allowing out-of-state insurers to sell policies here would spark a “race to the bottom” in terms of consumer protection.

Share any relevant thoughts in the comments.

The House of Representatives approved a bill to repeal the insurance industry’s exemption from anti-trust laws today by an overwhelming margin of 406 to 19. All 253 Democrats present were joined by 153 Republicans in voting for H.R. 4626, the Health Insurance Industry Fair Competition Act. Representative Tom Latham of Iowa’s fourth district voted with the majority, but Steve King disgraced the fifth district again by voting no (roll call here).

The anti-trust exemption has helped health insurers to avoid meaningful competition in most markets. Price-fixing is wonderful for corporate profits but doesn’t help consumers obtain affordable insurance coverage. The anti-trust exemption is one reason insurers have been able to jack up premiums by far more than the rate that medical costs are increasing (and many times the overall rate of inflation). Wellmark Blue Cross Blue Shield, which controls about 70 percent of the health insurance market in Iowa, recently announced rate hikes averaging 18 percent for about 80,000 individual policy-holders. Many of those policies (including my family’s) will see premiums go up by 22 percent as of April 1.

How many of King’s constituents will be forced to downgrade their coverage or drop their insurance because of this rate increase? How many Iowa businesses will suffer because their customers have less disposable income to spend on other goods and services? I’ve come to expect outrageous votes from King, but I’m curious to hear how he will justify his vote to keep consumers at the mercy of colluding insurance companies. I will update this post when I see an official statement from him.

A press release from the Democratic Congressional Campaign Committee noted that King has received $53,835 in campaign contributions from the insurance industry. (That number appears to have come from Open Secrets site.) I posted the full text of the release after the jump.

The White House issued a statement yesterday supporting the Health Insurance Industry Fair Competition Act. It’s unfortunate that the the Obama administration didn’t fight to get this provision in the larger health care reform package, but passing it as a stand-alone bill would still be a step forward.

Quite a few Senate Republicans are on record claiming to support repealing the insurance industry’s anti-trust exemption. Senate Majority Harry Reid should bring this bill to a vote as soon as possible. I suspect that if it reaches the floor, Senate Republicans will be as afraid to vote against it as the majority of House Republicans were today.

UPDATE: The Associated Press reports that prospects for this bill “are dim in the Senate.” If that turns out to be correct, it’s yet another reason rank and file Democrats should stop giving to the Democratic Senatorial Campaign Committee.

Meanwhile, David Dayen notes that before the anti-trust exemption bill passed, “there was also a motion to recommit, which would have essentially stopped the bill in its tracks, and 165 Republicans voted for that, along with 5 Democrats.”

Iowa’s own Tom Latham was among the 100-plus Republican cowards who voted for the procedural motion to stop the bill, then for the bill once the blocking attempt had failed.

How does a 15 to 20 percent increase in one of your household’s major expenses sound to you? About 80,000 Iowans (including me) better get used to the idea:

About 80,000 Iowans who buy their own health insurance through Wellmark Blue Cross Blue Shield will pay an average of 18 percent more this year, the largest increase in four years.

The state’s largest health insurer will begin notifying the individual policyholders this week of the increase.

Rising health care costs are driving the premium increases, said Rob Schweers, a Wellmark spokesman. Premium increases, which take effect April 1, range between 10 percent and 25 percent, the company said.

It’s the largest average annual increase since 2006, Wellmark data show.

Last year, Wellmark raised insurance rates for individual policyholders by an average of 9.3 percent.

This year’s increases “are a combination of medical cost inflation and increased usage,” Schweers said. “Also, people are getting sicker as a population. There are more chronic diseases.”

Premiums tend to be more volatile for individual policies than for those bought by employers and other large groups, which can negotiate for lower rates and spread risk among employees and members.

Hey, it could be worse: about 700,000 Anthem Blue Cross customers in California will see an average rate increase of 25 percent in May, and many of those will see their insurance premiums go up 35 to 39 percent. The rate hike cannot be justified by increasing medical costs alone. According to California’s insurance commissioner, medical costs in that state have gone up about 10 to 15 percent.

The U.S. inflation rate in 2009 was about 2.7 percent, by the way. Many people have seen their wages decrease during the recession.

Not many businesses can get away with increasing prices for goods or services by many times the rate of inflation year after year. The health insurance industry is different because most of their customers have no place else to go. In most parts of the country, one or two insurance companies dominate the market. Wellmark controls about 70 percent of the market in Iowa, for instance. Wellmark customers may not be able to find another insurance company willing to cover them, especially if they have any pre-existing conditions.

Aren’t you glad Republicans and cowardly Democrats “saved” us from “government-run” health care in the form of a public health insurance option?

The Des Moines Register’s editorial board cited the insurance premium hikes as evidence that the U.S. needs comprehensive health care reform with a “public option.” I couldn’t agree more, but the events of the past few months give me zero hope that Congress will approve any decent health care legislation.

Eight Democratic senators are urging Majority Leader Harry Reid to include a public option in a new health care bill that could be passed using the Senate’s budget reconciliation rules. Bills passed that way are not subject to a filibuster and can pass with 51 votes, or in this case 50 votes plus Vice President Joe Biden. Some bloggers are asking activists to contact Senate Democrats to get them on board with this effort. If you are so inclined, feel free to contact Senator Tom Harkin’s office. He was a vocal advocate of the public option last year. Frankly, I don’t feel like wasting my time anymore. If 50 Democratic senators were committed to passing a good health care bill through the reconciliation process, Reid would have been working on that option six months ago.

More important, if President Barack Obama had been interested in passing a strong health care bill, he would have been pushing for reconciliation all along instead of cutting backroom deals with industry while his spokesman praised efforts to find a bipartisan compromise in the Senate. It was obvious last summer that Republicans like Chuck Grassley were just stringing out the process with a view to killing reform.

The White House summit that Obama is convening next week looks like nothing more than a photo-op to me. I can’t see what good can come out of that other than PR for the president.

Share any relevant thoughts in this thread.

UPDATE: More than a dozen Senate Democrats have signed on to passing health care reform with a public option through reconciliation.

LATE UPDATE: We received a letter from Wellmark on February 23 informing us that our premiums will go up 22 percent as of April 1, 2010.  

Health and Human Services Secretary Kathleen Sebelius issued reports on Friday detailing the problems with the “health care status quo” across the country. You can find the reports at HealthReform.gov. The report for Iowa is here, and I’ve also posted it after the jump. Among other things, it shows the percent increase in family health insurance premiums since 2000 and the percentage of uninsured Iowans.

A couple of points jumped out at me:

• Choice of health insurance is limited in Iowa. Wellmark BC and BS alone constitutes 71 percent of the health insurance market share in Iowa, with the top two insurance providers accounting for 80 percent.11

Iowa is not unusual in this regard. Most insurance markets in the United States are dominated by one or two companies. My family’s Wellmark premiums went up 10 percent this year alone. Speaking of which, the annual salary of Wellmark’s CEO has “nearly doubled” in the past five years to about $2.5 million.

• Choice is even more limited for people with pre-existing conditions. In Iowa, premiums can vary, within limits, based on demographic factors and health status, and coverage can exclude pre-existing conditions or even be denied completely.

I know a family in Des Moines who were unable to purchase health insurance at any price because the mother has a thyroid condition. They are now covered through the father’s employer, but if he loses his job they will have no health insurance options.

Two more reasons why we cannot settle for health care reform without a public option, or with a fake public option. I was glad to see several House Democratic caucuses affirm that they will fight any health care bill lacking “a real and robust public option that lives up to our criteria”.

Click “there’s more” to read the whole report, with supporting footnotes.

Yesterday, the Des Moines Register published a review of the movie Sicko.  It was written by the business editor, David Elbert, and just for good measure he brought along Cliff Gold, a vice president of Wellmark Iowa, to provide running commentary.  You can probably already guess the general tenor of their remarks.