HMO faces scrutiny for their arithmetic

by Brian Leubitz

Kaiser is something of a mixed bag.  They get some good press for focusing on areas that help to reduce health care costs, preventative care, that sort of thing.  On the flip side, they are usually somewhere in the background on lobbying efforts, killing any attempts to make health care insurance more consumer friendly in California.

Well, today’s news is more on the dark side.  It turns out that they’ve been overcharging small business customers and not really providing the data to back it up:

Kaiser Permanente has retroactively rolled back rate increases that went into effect for small businesses on July 1 by 1.2 percent.

The welcomed – albeit small – bit of news for thousands of  California enrollees comes after a bit of wrangling with the state regulators.

Kaiser in April had proposed a 10.7 percent rate hikes for the bulk of its small business customers. The state Department of Managed Health Care, armed with a new law that allows them to scrutinize actuarial data behind the rate filings, pushed back.

“We’ve been  concerned about the lack of data they provided to support their trends and we requested they reduce their rates,” said department spokeswoman Lynne Randolph.

The new increase of 9.5 percent translates into a total savings of $13.5 million, Randolph said. “We  believe thousands of people in small businesses are going to benefit from this,” she said. “It shows the rate review process can be effective.” (SF Gate)

This is bigger than it might seem. First, Kaiser had been facing heat from NUHW for a while now on labor issues, but also on issues of fairness like this.  In fact, NUHW raised the alarms in a letter (PDF) on this issue back in June.

There’s always more than meets the eye in these things.  Everybody scratches everybody else’s back.  In fact, the wife of Bob Hertzberg sits on the board of Kaiser.  Hertzberg, the former speaker of the Assembly and leader of the rich dude funded “Think Long” project that will be coming up with ideas to “reform” the tax system sometime in the next few months.  You think they’ll call for increased monitoring of the massively profitable “non-profit” health insurance companies?