Anthem: The Poster Child for Reform

[Winter_123]

Even though it is clear that Sebelius and Obama are totally oblvious to some of the underlying factors, one must nevetheless concede that frigging Anthem might as well have painted "kick me" on the back of insurance carriers. Sheesh, guess what Obama will be harping on at his little bipartisan lecturette coming up which is really a dog and pony show for the public to showcase how Republicans don't get it. Couldnt those idiots have held off a little longer and let the pending bill become more dead. I guess not. Geniuses that they are.

It took a lot of work to get the public to hate Obamacare more than the current system. Don't underestimate how the idiots of the world can tip that balance back again very easily. Not asking for anything more than a little better sense of timing. Not trying to argue that if they want/need a rate increase they should not go for it but good gawd have some sense of the political atmospherics last month, this month and next at a minimum.

The best response to Anthem Blue Cross' premium hikes: comprehensive healthcare reform - latimes.com

 

[sman]

I agree, the timing couldn't have been much worse.

If I'm Anthem, I'm shouting from the rooftops to compare our rates with those of our competitors for comparable products. As discussed before, I believe this gets them more in line with the other carriers in California.

 

[moonlightandmargaritas]

I'm more than a little surprised that our friend al3 can't fix this up for the good people of the State of California...

After all, according to him, he single-handedly desegregated the South in the 60s. This should be a piece of cake by comparison, no?

 

[YouGotMyMoney]

That is hilarious!

 

[Dave020]

Anthem might as well have painted "kick me" on the back of insurance carriers. Sheesh, guess what Obama will be harping on at his little bipartisan lecturette coming up which is really a dog and pony show for the public to showcase how Republicans don't get it. Couldnt those idiots have held off a little longer and let the pending bill become more dead. I guess not. Geniuses that they are

Many are assuming that Anthem wants the pending bill or some provisions of it to be dead. Everyone is working from that assumption, and it may be incorrect. I can assure you that they have looked at what they need and what every sentence of both bills would mean to them (good or bad or both). There may, in fact be some genius at work here. Change the assumption and look at it a different way.

Interestingly...

If I'm Anthem, I'm shouting from the rooftops to compare our rates with those of our competitors for comparable products.

Yet Anthem, with the exception of answering Sebelius, has been strangely quiet on this issue and has taken no real position to defend itself or actions. The Sassi letter does not really mention that competitive issue, but explains loss of healthy subscribers, number of uninsured increasing, HIPAA and MediCal risk costs and, rather oddly (or perhaps not), the need for reform.

We think....

...the timing couldn't have been much worse.

Or, perhaps the timing couldn't have been better. Healthcare reform has been DOA for the last several weeks. Once Brown won, the reform itself left center-stage in favor of jobs, war, and other topics. It was a minor topic of "compromise and something in the future" before the LA Times ran the article. Now it is again at the forefront. Meaning it is very much back alive and breathing (albeit now a bi-partisan issue).

If we assume that Anthem and other large health carriers wanted no part of reform, then the timing would be very bad, indeed. But, if we assume that Anthem and the other large carriers know exactly what components in the healthcare reform will be of value to them, pushing it back on the table might not be a case of bad timing at all.

The article Winter posts above says that the best response to Anthem is healthcare reform. Now, I am pretty sure that the power-that-be at Anthem are not candidates for the Special Olympics. They don't pull the trigger on something like this without knowing all of the consequences. So it's either bad timing or a ploy to push healthcare reform back into the spotlight. At this point it is conjecture, but I don't believe that they are so mentally challenged as to incur the wrath and not defend their position.

Not asking for anything more than a little better sense of timing. Not trying to argue that if they want/need a rate increase they should not go for it but good gawd have some sense of the political atmospherics last month, this month and next at a minimum

Again, change the assumption from that to one of the already-changing political atmosphere. If an insurer wanted to make sure healthcare reform did not go on the back burner, this is a good way to do it as demonstrated by the level of response.

It's all in the numbers for California (and probably translates equally across the nation).

1. Anthem insures about 800,000 on IFP in CA. They have about 40% of the total market. They are the largest carrier in CA yet that number is not huge considering...

2. Healthy subscribers are dropping IFP coverage daily due to economic factors and rate increases. This leads to....

3. California has an average of 6,000,000 uninsured. That number is increasing daily with people dropping coverage (and healthy ones especially because of cost).

4. Anthem insures less the 10% of the total potential IFP market (about 8.5M) and there are those 6,000,000 bodies out there to pay premiums and pool risk.

5. Expanding the pool by the 6,000,000 at their current market share would increase the number of insured subscribers from 800,000 to just under 3,000,000.

6. A fully insured population (by mandate) would reduce the defaults on payments for care and allow better cost control for medical services (health care). The 6,000,000 would be reduced to a few hundred thousand maybe (like auto, it's mandated but not everyone who drives has it).

7. Better NFRs, a much larger pool of premiums, a true balance of low and high risk subscribers could lead to better rate stability.

 

[Winter_123]

Many are assuming that Anthem wants the pending bill or some provisions of it to be dead. Everyone is working from that assumption, and it may be incorrect. I can assure you that they have looked at what they need and what every sentence of both bills would mean to them (good or bad or both). There may, in fact be some genius at work here. Change the assumption and look at it a different way.

All of those points have merit and since we dont know the real answer just yet they must be considered and could even be right.

However, I was in the corporate world long enough to not immediately embrace the "genius at work" theory, although it does happen occasionally. I believe that it is reasonably likely that they are just a bunch of turnipheads who have been aching to raise rates and assume that the bill was dead enough to start down that road.

But let us go with the genius at work/intelligent design theory here for a minute. What did they have to gain by waiting this long rather than flopping it out when they were looking for senate and house votes before most of the dems had considered it to be time to move on to other things?

We dont know. I am just saying that I go with the turniphead theory for now. If they think they can disburse or outwit the enemy by calling the artillery in on their own position, that might work or they might get their heads blown off too. I think it could be simpler than the collusion theory. If you look around the country Anthem is proceeding with requests for varying levels of increase. Some palatable, some so-so, and some not and they figured this was time to get on with it in the various states. Then up pops this doozy from Pelosi and Boxerland and the rest is history. It is possible that your theory is entirely correct. It is equally possible that the boys in the corner office are just going "duh" maybe we should have held off on that puppy for another month until every formally agreed that we were going back to the drawing table.

Who knows, maybe the way Toyota has bungled this most recent fiasco is all part of a grand scheme too. Don't know.

 

[Dave020]

But to me it makes no sense as Anthem is not going to make any money with this move. You'd have to be entirely devoid of a brain to take losses AND sully your reputation.

Three things are happening with these rate increases besides Anthem looking really bad publicly:

1. People are going to cheaper plans at lower premiums (many with 2 year rate locks)
2. People are switching carriers to lower premiums or dropping coverage altogether waiting for a better day
3. People left on the plans will be the ones who are sick, but their much smaller premiums, even at 39%, will not make up for the losses from 1 & 2.

They had to wait because they could not raise rates on prior year plans until March by their own focal rule. The new letters now correct that by stating that going forward, rates "could be changed more than once per year depending on healthcare reform". Regulatory changes at work here and potential elimination of the annual focal.

This is interesting for two reasons. One, focal is always March for IFP with Anthem, so March is the soonest focal they could use (hence the timing and obviously they have enacted a regulatory change). Two, interpretation of the expression "depending on healthcare reform".

We might assume that statement to mean "if we get healthcare reform", but what if it means "if we don't get healthcare reform".

We as agents have assumed during this process that the carriers were against healthcare reform or Obamacare. However, none of the carriers, at least in California, have ever said that. Perhaps the timing is important with the loss of the Senate super-majority and the necessity of more bi-partisan reform.

In California it is very simple math--1/6 of the entire population is sitting on the bench right now not paying any premiums (and in some cases using major services that they are not paying providers for).

They've got group, they've got Medicare, they've got Medicaid/HIPAA/Conversion/MRMIP. What they ain't got is the extra 3 million subscribers they can pick up to pay premiums with a mandate and GI provision. And that's just Anthem. The other 3 million divided amongst the other carriers. It's a huge pool.

 

[arnguy]

... which is where I saw Paul (aka. Moonlight) and his dog.

Which one is Moonlight, the one in the uniform or the one with all the fur? Just kidding, Paul. I couldn't resist posting this.

 

[stormtracker]

Which one is Moonlight, the one in the uniform or the one with all the fur? Just kidding, Paul. I couldn't resist posting this.

Hope that dog didn't die from poisoning...

 

[somarco]

Anthem to delay insurance rate hike amid criticism - Yahoo! News