In Defense of Anthem (CA)

[Dave020]

The LA Times has once again had a field day with the horror of massive rate increases by Anthem Blue Cross in California. Greedy bastards are making trillions off of the back of mom and pop.

I wanted to point out a couple of things that will NEVER make the LA Times or other news media (or Obama for that matter) to be fair.

For those who don't know:

California's major risk program MRMIP provides insurance coverage to those uninsurable in California who cannot get Medicare, Medicaid, group coverage or underwritten coverage.

Anthem Blue Cross under MRMIP insures on average 78% of all of the Californians enrolled. Kaiser, Contra Costa and Blue Shield (before they got kicked out last October for overcharging) covered 22%. Three carriers do 22% one carrier does 78%.

HIPAA - a program for those losing group coverage to get guaranteed issue individual coverage with no underwriting.

Anthem on average prior to Jan 11, 2010 insured on average 72% of the HIPAA enrollments. All other carriers (Health Net, Kaiser, Blue Shield, PacifiCare, Aetna, Assurant) combined insured under 30% of the total HIPAA market (that's 7 carriers, folks!).

Anthem insures on average in California almost 3 times the number of uninsurable than ALL OTHER Carriers combined!

Say what you will about them, they are doing the job no other carrier or combination of carriers is willing or able to do.

 

[TXINSURANCE]

Anthem insures on average in California almost 3 times the number of uninsurable than ALL OTHER Carriers combined!

That's because the states "risk pool" system is horribly flawed from the ground up (they are not the only one...)

I recommend Medicaid to everyone, it's the wave of the future.

 

[Dave020]

HIPAA in California is not a risk pool nor related to the state risk pool. It is privately delivered by all carriers selling IFP.

The best way to think about it as it relates to the whole situation in CA is this:

HIPAA premiums cannot exceed 170% of standard underwritten premiums for mirror plans under HIPAA. If a carrier has the lowest HIPAA rates, the carrier must, therefore, have the lowest standard underwritten rates on the mirror plan.

Since Anthem was getting over 70% of the HIPAA business, it stands to reason that their underwritten rates were substantially lower than the competition for nearly identical plans (in this case 1500/2000/2500 PPO plans). 170% of the lowest rate is the lowest HIPAA rate.

Current proposed rate increase simply aligns Anthem with the other carriers price-wise.

 

[TXINSURANCE]

170% is low compared to other states.

 

[dgoldenz]

170% is low compared to other states.

400% for most here in VA

 

[moonlightandmargaritas]

The LA Times has once again had a field day with the horror of massive rate increases by Anthem Blue Cross in California. Greedy bastards are making trillions off of the back of mom and pop.

How much longer will it be before our friend Al is along to give you the "neocon" diatribe?

 

[somarco]

When a carrier dominates a market, especially a no-underwriting product, the reason is always price (or more specifically, value). The fact that they control three quarters of the market is a result of dynamics that feed off each other.

They have market share because of a lower price than their competitors. They are able to achieve and maintain that lower price because they have a large share of the market.

While HIPAA clients (as well as COBRA, conversion, etc.) are poor risks you can't say that all of them cost more than they generate in premiums. Some are truly "low maintenance" policyholders but have the potential to hit you hard without notice.

I have some clients that had a heart attack years ago. One guy had a heart attack 15 years ago. He takes Warfarin daily (less than $10/mo) and a cholesterol lowering med ($150/mo). Even though his meds cost less than folks who are insurable no one will touch him.

Same is true for HIPAA clients.

Because Anthem has a large share of the market they have a lot of folks who are not costing them a lot of money to offset the ones that are money losers.

You can make the same analogy for the traditional IFP market. Those with a larger market share can better weather the fluctuations in claims. Smaller players don't really have the buffer to work in their favor.

As for Medicaid expansion, that has its' downside as well. It creates more cost shifting which impacts premiums in the fully insured market.

 

[Winter_123]

In the new world order the DOI and the feds do a top down analysis rather than looking at cost build-up and payout. The reality is that Wellpoint is showing a profit and the feds know how much that should and should not be. If you are making a profit, then your rates are too high.

You notice that the lefties loathe Walmart even though they (often)have the lowest prices in town and provide a very competitive environment. Problem is that they are making a profit.

 

[somarco]

Wal-Mart style health insurance = Medicaid

 

[Winter_123]

Wal-Mart style health insurance = Medicaid

Nope,.we are all going to have the same health plan as the United States Senate.

Wait, nevermind, I need to update that a little. Those plans are "currently under advisement."