It's Plain in Maine

(The following op-ed appeared in the Bangor Daily News, on Saturday, October 17, 2009.)

On the eve of the Senate Finance Committee’s vote on health reform, the health insurance industry flexed its muscle publicly, claiming that the bill would drive up health insurance premiums faster and higher than ever if it were to become law. As a former health insurance industry executive, I know there is every reason to take the insurers at their word on this.

Maine’s Sen. Olympia Snowe should take heed: So long as there is no public health insurance option in the bill to serve as a benchmark on health plan premiums in the exchange, insurers can and will do whatever it takes to maximize profits.

Sen. Snowe opposes a public option because she is concerned about being “fair” to the health insurance industry. She should be more concerned about ensuring that Mainers and other Americans are not saddled with out-of-control health care costs — and that’s exactly what the bill she voted for will mean.

For-profit insurers never have played fair with their customers, and no one sees that more clearly than Maine residents. This month, in the midst of a serious economic crisis, Anthem Blue Cross, a subsidiary of insurance giant WellPoint, Inc., is suing Maine for rejecting its request for an 18.5 percent rate increase and granting a 10.9 percent increase instead.

I wonder why Sen. Snowe’s desire for fairness doesn’t prompt her to focus on one key reason health care costs are skyrocketing — lack of competition in the insurance market. Dominant insurers are creating barriers to market entry for smaller, nonprofit insurers. Does anyone really think that a respected health plan, such as Harvard Pilgrim Health Care or Tufts Health Plan from the Boston area, could break Anthem-WellPoint’s hammerlock on Maine? Such companies have lower administrative costs and don’t answer to Wall Street tycoons. But the unfair market advantage of Anthem-WellPoint keeps smaller insurers at bay and blocks Mainers from having good, affordable health care choices.

Without a public health insurance option, there is little reason to think there will be new market entrants to compete with Anthem-WellPoint. Indeed, there is every reason to believe people without good, job-based coverage will be worse off under the Finance Committee bill, precisely because it does not include a public health insurance option.

Even as they attacked reform, insurers admitted they have a strong incentive to drastically raise premiums and protect themselves from difficult-to-assess risks. Truth be told, insurers have never liked insuring sick people.

The Senate Finance bill has taxpayers footing a large chunk of the cost for people living under 400 percent of the federal poverty level (about $44,000 for an individual and $88,000 for a family of four). Many Mainers will qualify for a hefty subsidy to offset premium costs, and that’s a good thing. Sen. Snowe also championed waivers for people whose premium would consume more than 10 percent of their income to make sure no one is forced to buy unaffordable coverage, and that’s also good.

But Sen. Snowe has done nothing to keep insurers from continuing to gouge Americans; nor to protect people whose income is slightly too high to qualify for the subsidy. She doesn’t seem to recognize that premiums are only one element of heath care costs. Under the Finance Committee bill, deductibles and co-pays will likely become an even bigger share of every Maine family’s health costs. So, Mainers, beware of developing costly and complex conditions requiring substantial care. Under the Finance Committee bill, you could have to devote as much as 25 percent of your pretax income to paying health care bills.

Even worse, the Finance Committee bill does not require transparency or accountability from the private plans. There are no minimum standards telling insurers what share of premium revenue must be spent on doctors and hospitals, and there are no limits on premium increases. Because the bill does not require strong federal oversight to complement state regulation, it will not function as a powerful counterweight to rich and powerful insurers with a long track record of having their way with the states.

Beware, Sen. Snowe. If the final reform legislation does not include a national public health insurance option to create competition in the insurance market and check private insurers, health care reform is destined to end up benefiting Wall Street investors more than your constituents and their fellow Americans. That is most certainly not fair.

Wendell Potter is a Senior Fellow at the Center for Media and Democracy based in Madison, Wisconsin.