Iowans who buy health insurance through Wellmark Blue Cross and Blue Shield won't be getting premium rebates anytime soon. Wellmark has a near-monopoly on Iowa's individual and employer health insurance market. After the company announced last summer that it would not participate in the state's health insurance exchange during its first year of operation, Democratic State Senators Jack Hatch and Matt McCoy questioned why the company was holding about $1.3 billion in reserves. The senators argued that the Iowa Insurance Division had previously justified Wellmark's large cash reserves on the grounds that the company would be selling policies through the health exchange created under the 2010 Affordable Care Act. Hatch and McCoy asked Iowa Insurance Commissioner Nick Gerhart to study the issue, and in November, Gerhart retained Risk and Regulatory Consulting to investigate Wellmark's reserve levels.

The consultants' report, made public yesterday, concluded that Wellmark's cash reserves are "reasonable and prudent." Click through to read the full six-page report at the end of the article by Tony Leys of the Des Moines Register.

I've enclosed below a few excerpts from Leys' report, Hatch's letter to Gerhart last July, which provides background on the issue, and the joint statement Hatch and McCoy released yesterday. They noted that Wellmark "will be using its current reserves to protect them from risks that do not exist for them; namely, the Insurance Marketplace Exchange." Hatch and McCoy added that the report "puts to rest the notion that the ACA could ever be the basis for a future premium increase by the company, at least in the next three years."

After many years of double-digit percent increases in health insurance premiums, Wellmark did not raise premiums for many of its individual customers this year, presumably to deter them from shopping for a better deal on Iowa's exchange. I predict Wellmark will cite the 2010 health care reform law as an excuse for raising premiums again before too long. Iowa individuals and families can purchase policies on the exchange from either Coventry or Co-Oportunity Health. Only Co-Oportunity is selling employer health insurance plans through Iowa's exchange.

Roughly 46,000 Iowans who buy individual health insurance policies through Wellmark Blue Cross/Blue Shield will face an average rate hike of 8.5 percent this year, instead of the 11 percent Wellmark requested. State Insurance Commissioner Susan Voss announced on Friday that she had approved a smaller rate increase, in part because of reviews conducted by two actuaries who said Wellmark’s request was excessive. A law enacted in 2010 required an independent actuarial review whenever an insurer’s proposed premium hike exceeds the medical inflation rate.

According to the Des Moines Register, Voss said in a January 28 press release

that her department would look into whether the company has appropriate levels of reserves. She said the department also would examine how Wellmark’s dominant position in the Iowa market affects Iowans.

“We’ve heard the concerns of Wellmark’s customers,” Voss said.

“We think the time is right for a careful professional analysis of these two additional areas. We gained valuable insights from the extended review just completed that allowed us to arrive at the appropriate level of permitted rate increase. Learning more facts on these points will be useful in future considerations of rate adjustments.”

Wellmark has a near-monopoly on the individual health insurance market in Iowa. The company is the provider for more than 70 percent of Iowans who purchase their own health insurance.  

Thousands of Wellmark Blue Cross/Blue Shield customers learned late last year that their health insurance premiums would go up by 11 percent in 2011. Yesterday state Insurance Commissioner Susan Voss received reports from two actuaries who found that rate hike to be too steep:

Close to 46,000 Iowa policyholders under age 65 will see an increase in their base premium rate of 10.8 percent, effective April 1, 2011, if approved. Another 3,000 basic and standard policyholders will receive an increase of 11.3 percent. Approximately 2,500 Blue Transitions policyholders will receive an increase of 15 percent.

The company raised rates by 18 percent in May of 2010. […]

Lewis & Ellis Inc., of Overland Park, Kan., said Wellmark’s proposed rate increase is too high. They recommend a 7.5 percent instead of the proposed 10.8 percent increase.

The Insurance division’s in-house actuary is recommending a 9 percent increase.

Tom Alger with the Iowa Insurance Division said the reports will weigh heavily in Voss’ decision about whether Wellmark will get the rate increase it wants.

Voss also presided over a public hearing yesterday, at which an attorney for Wellmark defended the rate hike, and some customers asked Voss to reject the insurer’s proposal. But a rate increase of 7 percent or 9.5 percent would still be unaffordable for many customers, and there are other problems too:

State Rep. Janet Petersen, who last year pushed legislation requiring the hearings and the independent actuarial review, called the recommendations a small victory.

The Des Moines Democrat noted that even if Wellmark is denied permission to raise its base rates as much as it wants, it still can impose big increases for people who shift into new categories, including as they age.

For individuals and families who buy their own health insurance, Wellmark has a virtual monopoly in Iowa. Giving Americans the option of buying into Medicare would not instantly make health insurance affordable, but it might constrain the excessive rate increases from companies like Wellmark.

Last week the federal departments of Health and Human Services, Labor, and Treasury “released interim final regulations implementing five of the insurance enrollee protections of the Patient Protection and Affordable Care Act” (the official name for the health insurance reform law adopted in March). Timothy Jost analyzed the regulations for the Health Affairs blog, and his whole post is worth reading. While a lot of uncertainty surrounds the new rules, the cost of compliance is expected to be low. Jost finds that “[r]elatively few people will directly benefit” from the health insurance reform, but there will be “[l]arge benefits for those who are affected.”

During the last presidential campaign and more than a year of health care debates on Capitol Hill, countless politicians swore they were committed to ending discrimination against Americans who have pre-existing medical conditions. After reviewing the interim regulations, Jost has good news and bad news for adults who lack health insurance because of a medical problem.

The ban on preexisting conditions exclusion found in the Affordable Care Act is much broader than the preexisting condition exclusion imposed by the Health Insurance Portability and Accountability Act [of 1996].  It prohibits any limitation or exclusion of benefits in a group or individual plan based on the prior existence of a medical condition.  The provision not only prohibits the exclusion of coverage of specific benefits based on a preexisting condition, but also the complete exclusion from the plan of a particular person if the exclusion is based on a preexisting condition.   The regulation does not, however, prohibit coverage exclusions that apply regardless of whether a condition is a preexisting condition or not.   The provision applies to enrollees under the age of 19 effective the first plan year beginning after September 23, 2010, but to adults only beginning in 2014.

In the summer of 2009, many progressives were disturbed to learn that the draft House health care bill delayed implementation of the pre-existing condition provision until 2013 (the date was pushed back to 2014 later in the legislative process). Why should Americans with previous or chronic medical problems continue to be denied health insurance for four more years? Don’t worry, we were told: new high-risk pools will be created to bridge the gap for people with pre-existing conditions.

We are now learning more about how the new Pre-Existing Condition Insurance Plan will operate. Eligible Iowans will be able to start applying for our state’s plan on July 15. But uh oh:

The new program, expected to start in a few weeks, will be financed with $35 million in federal money from the new health care reform law. That money will be enough to help only 975 Iowans, state administrators have concluded.

“$35 million doesn’t cover as many people as you’d hope,” said Susan Voss, Iowa’s insurance commissioner.

Another twist is that Iowans who participate in the state’s current high-risk insurance pool won’t be able to switch into the new pool, which will be significantly less expensive.

Federal experts have estimated that 34,500 Iowans could be eligible for the new pool.

The money is supposed to last until 2014, when private insurers will be banned from discriminating against people with pre-existing health conditions. At that point, such people should be able to buy their own insurance just like anyone else, health reform proponents say.

You see immediately what Jost was getting at: few Iowans with pre-existing conditions will benefit from the new high-risk pool (perhaps 3 percent of the eligible population). For those who get in, though, the benefits are immense: insurance for about the same price a healthy person would pay.

While helping 950 uninsurable Iowans obtain coverage is significant, it would have been better to implement the health insurance reform on a faster timetable. Because Congress lacked the political will to impose significant costs on insurance companies, 97 percent of Iowa adults with pre-existing conditions will have to wait until 2014 to reap the full benefit of the health reform.

That sounds like over-promising and under-delivering to me. But I can’t say I wasn’t warned a long time ago.

UPDATE: Democrats will talk up the health reform changes that take effect sooner, such as new Medicare reimbursement rates. Those are expected to increase payments to Iowa doctors and hospitals. But the public case for health care reform wasn’t built on wonky issues like Medicare reimbursement rates. It was a simple moral argument, and not letting insurers discriminate against people with a pre-existing condition was at its core.  

Approximately 80,000 Iowans will face substantial health insurance premium hikes beginning May 1. An independent review has confirmed the "need" for Wellmark Blue Cross and Blue Shield to raise rates by an average of 18 percent. The higher rates were intended to go into effect on April 1, but last month Governor Chet Culver ordered a delay pending an review of the matter. The Des Moines Register reports today,

[Iowa Insurance Commissioner Susan] Voss said in a memo to Culver that Wellmark's losses supported "the need for the rate increase" based on two separate actuarial analyses conducted by INS Consultants, a Philadelphia actuary. The group also found that the insurance division's rate review process is actuarially "acceptable" and "reasonable" compared with INS's methodology.

Birny Birnbaum, head of the Center for Economic Justice, a nonprofit consumer advocacy group in Texas, said it's unlikely that INS would disagree with the rate increase.

"While INS is technically independent, there is no way the firm would contradict and embarrass the agency which hired the firm," Birnbaum said Monday. "If INS were to contradict the insurance division, it would likely not be hired in the future by the Iowa Insurance Division or any other insurance regulator."

Speaking to the Register, State Representative Janet Petersen touted legislation passed during the 2010 session, which is intended to give consumers more information and warning regarding health insurance premium increases. After the jump I've posted some key points from Senate File 2201 and Senate File 2356.

These bills contain a lot of good provisions but probably won't solve this particular problem for many Iowans. Wellmark dominates the insurance market in this state. Giving people a few weeks to shop around won't magically allow them to find a better deal. In addition, health insurers can still exclude coverage for pre-existing conditions until 2014. The only real choices Wellmark's individual customers have are: 1) pay a lot more, like my family, or 2) downgrade to a policy that's less comprehensive and/or involves higher out-of-pocket costs for medical care.

Iowa House Republican leader Kraig Paulsen showed his creative side yesterday, finding a way to blame Democrats for Wellmark's rate hikes:

Paulsen pointed out that the Democrat-controlled Legislature has voted in recent years to impose several health insurance mandates, such as coverage of cancer clinical trials and prosthetics.

"It's indisputable that those add to rates. That's just the way it works," he said.

Health insurance mandates drive up costs for Iowans, Paulsen said.

"Mandates aren't necessarily requirements that insurance companies sell something. They're requirements that purchasers buy something," he said.

One legislative proposal would have allowed state-regulated health insurance companies to provide mandate-free coverage "for those who want a less comprehensive product," Paulsen said.

That idea by House Republicans failed, as did a proposal to study allowing out-of-state insurers to offer policies in Iowa, which could help Iowans find cheaper policies, he said.

Come on, Mr. Paulsen, who ever anticipates needing prosthetics someday, or being in a position to benefit from a cancer clinical trial? Anyway, that cancer clinical trial bill passed both the Iowa House and Senate unanimously. Also, allowing out-of-state insurers to sell policies here would spark a "race to the bottom" in terms of consumer protection.

Share any relevant thoughts in the comments.

UPDATE: The vote on the rules for the reconciliation bill debate passed 224-206 (roll call). The final vote on the Senate bill will be late tonight.

FINAL UPDATE: The House approved the Senate bill 219-212, with no Republicans voting in favor and 34 Democrats voting against (roll call). It’s clear House leaders did not have the votes without the Stupak bloc.

VERY FINAL UPDATE: Two more roll calls: a Republican-backed poison pill that would have inserted the president’s executive order language on the Hyde amendment into the reconciliation fixes failed 232-199. Then the House passed the reconciliation fixes to the Senate bill by a vote of 220-211.

The House of Representatives began debating the health insurance reform legislation on Sunday afternoon. Speaker Nancy Pelosi is using the gavel Representative John Dingell’s father used the day the House approved Medicare in 1965. I will update this post as votes are taken on the reconciliation package and later on the Senate’s bill.

Some kind of new deal appears to have been struck with Bart Stupak and his group of anti-abortion Democrats. Link to follow later when more details become available. I assume this means House leaders didn’t have 216 votes without the Stupak bloc, which is how the whip counts have been looking. (UPDATE: The president agreed to issue this executive order affirming that the health insurance reform bill “maintains current Hyde Amendment restrictions governing abortion policy and extends those restrictions to the newly-created health insurance exchanges.” The executive order allows Stupak and his bloc to vote for the bill without the appearance of caving.)

Republicans are making fools out of themselves warning about the death of liberty and the “government takeover.” Gubernatorial candidate Rod Roberts has filed amendments to two Iowa House bills seeking to “challenge the constitutionality of President Obama’s plan to nationalize the health care industry.” He also says that as governor he would sue the federal government, claiming that health insurance reform violates the 10th Amendment to the U.S. Constitution. Roberts is copying a Bob Vander Plaats campaign promise here, which supports my view that Roberts’ main function in the governor’s race is to undermine Vander Plaats in the GOP primary.

Meanwhile, Democrats are making fools of themselves claiming that passing a Republican plan from 1993 is something to cheer about. We should be ashamed that corporate interest groups got everything they wanted in this bill, to the extent that the lobbying arm of the pharmaceutical industry is running ads supporting the bill. We should be outraged by all of President Obama’s broken promises on health care reform and the fact that he lied about supporting a public health insurance option after secretly agreeing to leave that out of the bill.

I don’t know whether better health care reform was achievable. Certainly Big Tent Democrat is right that progressives botched the negotiating process (see also here), but once the president decided not to do anything that angered corporate groups, we were probably stuck with what we’re getting. Some people will benefit from subsidized insurance and new primary health care clinics, but other people will be forced to downgrade their coverage, and there will be no new competition for the insurance companies that have near-monopolies in most of the country. I doubt this reform will reduce insurance company abuses, and I doubt it will save tens of thousands of lives a year, and I doubt future Congresses with (at best) smaller Democratic majorities will improve it in any meaningful way, but let’s hope I am wrong.

Failing to pass the bill might have hurt Democrats more in the short term, but I think over-promising the benefits will hurt us badly later. When Americans continue to face medical bankruptcies, and some insured people continue to find medical care unaffordable, and “wellness incentives” become the new method of discriminating against people with pre-existing conditions, Democrats will be blamed.

Listing the alleged “progressive victories” in this bill is just an exercise in self-delusion. This bill was written for the benefit of corporate groups. Many provisions that would have been in the public interest have been left out. It’s a disgrace that large Democratic majorities produced this reform, and it’s one reason the Democratic National Committee, the Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee will get no money from me for the forseeable future.

You can claim the bill is a slight improvement on the status quo, but calling it “progressive” or a sign of interest groups in decline is an insult to everyone’s intelligence. Not as stupid as calling it a “government takeover,” but almost as deceptive.

Share your own thoughts in this thread, whether or not you feel like celebrating today’s “historic victory.”

UPDATE: Republican strategist David Frum argues that the GOP made a huge mistake by refusing to make a deal with Obama on health care reform:

Barack Obama badly wanted Republican votes for his plan. Could we have leveraged his desire to align the plan more closely with conservative views? To finance it without redistributive taxes on productive enterprise – without weighing so heavily on small business – without expanding Medicaid? Too late now. They are all the law.

No illusions please: This bill will not be repealed. […]

We followed the most radical voices in the party and the movement, and they led us to abject and irreversible defeat.

There were leaders who knew better, who would have liked to deal. But they were trapped. Conservative talkers on Fox and talk radio had whipped the Republican voting base into such a frenzy that deal-making was rendered impossible. How do you negotiate with somebody who wants to murder your grandmother? Or – more exactly – with somebody whom your voters have been persuaded to believe wants to murder their grandmother?

I’ve been on a soapbox for months now about the harm that our overheated talk is doing to us. Yes it mobilizes supporters – but by mobilizing them with hysterical accusations and pseudo-information, overheated talk has made it impossible for representatives to represent and elected leaders to lead.