I’ve been working professionally in health policy since 1979 when I was hired to write the consumer contracts and other communications in plain English for the Blue Cross Blue Shield plan in Maine. I neither knew nor cared anything about health care before that.
Rewriting contracts turned out to be a pretty good way to learn a whole lot about the business very quickly, I went from there to the research department and then to government relations. Before I left the Blues I was heading the state relations department for the national association in Washington. Then I went on to organize a trade association of health insurance companies that were interested in promoting free market solutions in health care.
I was surprised at how naïve the executives of these companies were when Clinton proposed his own health reforms. These were quiet, unassuming people who were happy to pool risks and pay claims and feel good about their work. They never expected to become the villains in Hillary’s ambitions, had never been political, and didn’t know how to cope with it.
So, understand that I am a man of the insurance industry. I am not a lawyer, have never worked for any government or politician, not an economist, don’t have an advanced degree in any field, and obviously have never cared for a patient. My sole qualifications are that I’m a good writer and a dogged researcher.
What has happened to the insurance industry has me stunned.
Now, I am no apologist for the industry. I have been one of its biggest critics. Its dalliance with Managed Care after the demise of ClintonCare was an enormous mistake that took its mission away from financial protection into health services management – something it was never qualified to do. The industry not only did a poor job of it, but it alienated and embittered the only people who really matter in health care – doctors and patients.
Granted, Managed Care pleased employers for a few years. It restrained their costs in the mid-1990s. But employers don’t really know anything about health care, either. What they do know is the morale of their workers, and Managed Care was the biggest morale-killer ever. Employees were furious that care was being denied by insurance company bureaucrats in Hartford, Connecticut, and they let company HR departments know it.
Employers started looking for other ways to restrain costs while preserving patient choice, and came to embrace “consumer-directed” health care (CDHC) in the early 2000s. This approach has been enormously successful and has exceeded the expectations of even its advocates like me. It has lowered costs and increased patient involvement in health care decision-making.
As an insurance guy, I liked that it was moving insurers away from their misguided notion of being the big boss in health care and back to the role of financial protection.
But the industry didn’t much like that aspect of it. Sure, they would sell the products because employers demanded it, but they were losing control as banks entered the market to manage the first few thousand dollars of expenses of a patient’s contract. The banks were still focused on financial protection and didn’t have ambitions to become health care managers.
So when Obama came along with an offer to require all Americans to buy their products, it was an offer they couldn’t refuse. Especially when the products he had in mind were comprehensive, cover-everything health plans. No more bank involvement. We’ll really be in the catbird seat now!
The naivety I had witnessed during the Clinton Wars was still in force. Many of us tried to warn the industry that they would regret this arrangement. Yes, they might be assured of modest profits, but the cost of sacrificing their autonomy would be far too high. They would become little more than public utilities. They would lose all control over benefit design, marketing practices, and rate setting. They would have no idea of the risks they were enrolling and would have to set premiums blindly.
It has become much, much worse than I ever imagined. Obamacare is not even fully in effect yet and already we are seeing the president playing with the carriers like a toddler plays with toy trucks –
- Employers will be mandated to buy your policies for 2014
- (Oops, employers are angry)
- Employers won’t be mandated until 2015 – if then
- Small employers will give workers a choice of health plans through the SHOP program in 2014
- (Oops, we can’t get the web site ready in time)
- Small employers won’t have to offer a choice of plan until – sometime later
- You must cancel these individual policies
- (Oops, public backlash)
- You must reinstate these policies
- (Oops, many insurance commissioners won’t allow it)
- You must continue to cover providers and drugs even for cancelled policies
- The deadline for enrollment will be December 15, 2013
- (Oops, web site problems)
- The deadline for enrollment will be December 23, 2013
- (Oops, too much traffic)
- The deadline for enrollment will be December 24, 2013
- Never mind, there is no deadline
- First month’s premium must be received by December 31, 2013
- (Oops, back-end problems with the web site)
- First month’s premium must be received by January 8, 2014
- Make that January 10, 2014
How can anyone run a business this way? This is worse than being a federal agency. No federal agency would be expected to stop and start on a personal whim like this. These aren’t rules, they aren’t regulations, they are dictates based on nothing more than Kathleen Sebelius’ momentary feelings.
These are only the “glitches” that have been made public. God knows what orders and threats are being issued in closed-door meetings.
How long will the insurance industry abide being treated like shoe shine boys? Mr. Obama will not be in office forever. His regime is already coming to an end. What will these companies do then? He will no longer be around to grant or withhold bailout (“risk corridor”) money. No other president, Democrat or Republican, will ever be as arrogant or irrational.
It is well past time for the industry, supposed Titans of Wall Street, to grow some spine and start thinking about the best interests of their customers and shareholders.
[First published at The Federalist.]