health insurance
U.S. Sen. Jay Rockefeller (D., W.Va.), liberal health-care reformer who heads the Senate Commerce Committee, is leaning on Philadelphia-based Cigna Corp. and other for-profit insurers to explain what he says is a growing diversion of customers' premiums away from doctor bills and into profits and marketing.
In a letter to Cigna chairman H. Edward Hanway this week, Rockefeller also accused Cigna and the other companies of keeping two sets of books: telling Wall Street investors they're spending less on medical care and pocketing the difference, while telling customers and regulators they're spending more.
Rockefeller noted that some states set minimum limits for how much of every premium dollar has to go to medical care instead of advertising, dividends, or other expenses. "These minimum ratios range from a low of 50 percent in Pennsylvania to a high of 80 percent in neighboring New Jersey," he wrote, citing America's Health Insurance Plans, an industry lobby.
Rockefeller wants to see a single national guideline - once insurers report what they're spending now.
But that's hard, he added, because insurers are reluctant to say exactly where customer premiums really go.
Rockefeller cited claims by AHIP that insurers spend "87 cents of every premium dollar on medical care." But financial reports filed with the Securities and Exchange Commission by Aetna Inc., Cigna, Coventry, Humana Inc., UnitedHealth Group Inc., and WellPoint Inc. show their actual medical loss rates were between 81 percent and 85 percent, rates Rockefeller said have been falling since the early 1990s.
That's "billions of dollars that the health insurance industry claims to spend providing health care but actually uses to bolster its profits or pay other non-benefit expenses."
Cigna spokesman Christopher Curran told me that Cigna already told Rockefeller last month that its medical-loss ratio actually totaled 89 percent for employer-run plans, 93 percent for individual plans.
So Rockefeller read the SEC reports wrong? No, Curran told me, the SEC number doesn't count Cigna's managed-care business.
The higher number Cigna gave the senator in October includes that business.
Which may just prove Rockefeller's point: There are different numbers for different audiences.
Still, Curran told me, medical-loss ratio shouldn't be the only measure. It doesn't take into account value-added services such as disease-management programs, which help people get and stay healthy, but are counted as "administrative cost."
Rockefeller conceded as much in his letter to Hanway. But, he added, his committee asked in August for Cigna and other insurers to report medical loss "by state and business segment." Cigna and "most of the for-profit national health insurance companies" so far "have still not voluntarily provided complete responses."
The insurers are in line for massive subsidies, as well as spending limits, if the Democrats' plan passes. Might as well know what they're currently spending, and keeping, and where, before opening the spigot.
Thanks and blame
The U.S. House Financial Services Committee voted, 37-32, to permanently exempt public companies worth under $75 million from disclosing their internal financial controls, as big companies do, under the seven-year-old Sarbanes-Oxley Act. Thank (or blame) its sponsors: the bipartisan duo of U.S. Rep. John Adler (D., N.J.), and Scott Garrett (R., N.J.).
The vote was cheered by Mark Heesen, head of the National Venture Capital Association, who told me it removes a costly burden from struggling small companies and encourages others to go public.
But the Consumer Federation of America and investors' and accountants' groups in a statement warned the bill would "weaken protections against accounting fraud at roughly half of public companies. . . . Amazingly, after the worst financial crisis since the Great Depression," Congress is gutting "the few effective protections investors already have by weakening reforms put in place after the Enron collapse."
U.S. Sen. Jay Rockefeller (D., W.Va.), liberal health-care reformer who heads the Senate Commerce Committee, is leaning on Philadelphia-based Cigna Corp. and other for-profit insurers to explain what he says is a growing diversion of customers' premiums away from doctor bills and into profits and marketing.
In a letter to Cigna chairman H. Edward Hanway this week, Rockefeller also accused Cigna and the other companies of keeping two sets of books: telling Wall Street investors they're spending less on medical care and pocketing the difference, while telling customers and regulators they're spending more.
Rockefeller noted that some states set minimum limits for how much of every premium dollar has to go to medical care instead of advertising, dividends, or other expenses. "These minimum ratios range from a low of 50 percent in Pennsylvania to a high of 80 percent in neighboring New Jersey," he wrote, citing America's Health Insurance Plans, an industry lobby.
Rockefeller wants to see a single national guideline - once insurers report what they're spending now.
But that's hard, he added, because insurers are reluctant to say exactly where customer premiums really go.
Rockefeller cited claims by AHIP that insurers spend "87 cents of every premium dollar on medical care." But financial reports filed with the Securities and Exchange Commission by Aetna Inc., Cigna, Coventry, Humana Inc., UnitedHealth Group Inc., and WellPoint Inc. show their actual medical loss rates were between 81 percent and 85 percent, rates Rockefeller said have been falling since the early 1990s.
That's "billions of dollars that the health insurance industry claims to spend providing health care but actually uses to bolster its profits or pay other non-benefit expenses."
Cigna spokesman Christopher Curran told me that Cigna already told Rockefeller last month that its medical-loss ratio actually totaled 89 percent for employer-run plans, 93 percent for individual plans.
So Rockefeller read the SEC reports wrong? No, Curran told me, the SEC number doesn't count Cigna's managed-care business.
The higher number Cigna gave the senator in October includes that business.
Which may just prove Rockefeller's point: There are different numbers for different audiences.
Still, Curran told me, medical-loss ratio shouldn't be the only measure. It doesn't take into account value-added services such as disease-management programs, which help people get and stay healthy, but are counted as "administrative cost."
Rockefeller conceded as much in his letter to Hanway. But, he added, his committee asked in August for Cigna and other insurers to report medical loss "by state and business segment." Cigna and "most of the for-profit national health insurance companies" so far "have still not voluntarily provided complete responses."
The insurers are in line for massive subsidies, as well as spending limits, if the Democrats' plan passes. Might as well know what they're currently spending, and keeping, and where, before opening the spigot.
Thanks and blame
The U.S. House Financial Services Committee voted, 37-32, to permanently exempt public companies worth under $75 million from disclosing their internal financial controls, as big companies do, under the seven-year-old Sarbanes-Oxley Act. Thank (or blame) its sponsors: the bipartisan duo of U.S. Rep. John Adler (D., N.J.), and Scott Garrett (R., N.J.).
The vote was cheered by Mark Heesen, head of the National Venture Capital Association, who told me it removes a costly burden from struggling small companies and encourages others to go public.
But the Consumer Federation of America and investors' and accountants' groups in a statement warned the bill would "weaken protections against accounting fraud at roughly half of public companies. . . . Amazingly, after the worst financial crisis since the Great Depression," Congress is gutting "the few effective protections investors already have by weakening reforms put in place after the Enron collapse."
