Thursday’s reports that some Californians will get rebates on their health insurance premiums are a little bit of good news–but not nearly as good as it could be.

An L.A. Times story reports that California small businesses and their employees who are insured by United Health Group will get rebates averaging $98 on last year’s premiums because United Health didn’t spend at least 80% of the premiums on health care, a requirement under the federal health reform. The total will come to about $3.5 million in the state. Other insurers may also owe money on small business, large employer and individual policies–the figures are still being crunched.

But what if insurance companies could not overcharge us in the first place? The 80% rule in the federal law only encourages insurance companies to pay hospitals and doctors inflated prices, because it inflates the 20% that insurance companies get to keep. (It’s like the Hollywood agent who gets a 15% cut–his personal incentive is to get the biggest price for his client.) With no real curbs in California on how much insurance companies can charge, they have no incentive to bargain for lower medical costs to begin with.

Unlike 35 other states, California has no power to make health insurance companies justify their rates and to deny or modify unreasonable or unjustified rates before they go into effect. Californians also have no right to make the state do its job through consumer challenges to unjustified rates. All this would change if voters pass an initiative, sponsored by the Consumer Watchdog Campaign, that’s headed for the November ballot.

Which brings us to another huge source of savings–the inflated rates that insurance companies encourage hospitals and in some cases doctors to charge. A shocking recent story, also in the L.A. Times, found that patients who are insured are often paying out of pocket many times the amount of patients who pay cash for the same treatment.

Here, from the story, is how it works:

Many hospitals, doctors offer cash discount for medical bills

The lowest price is usually available only if patients don’t use their health insurance. In one case, blood tests that cost an insured patient $415 would have been $95 in cash.

May 27, 2012|By Chad Terhune

A Long Beach hospital charged Jo Ann Snyder $6,707 for a CT scan of her abdomen and pelvis after colon surgery. But because she had health insurance with Blue Shield of California, her share was much less: $2,336.

Then Snyder tripped across one of the little-known secrets of healthcare: If she hadn’t used her insurance, her bill would have been even lower, just $1,054.

“I couldn’t believe it,” said Snyder, a 57-year-old hair salon manager. “I was really upset that I got charged so much and Blue Shield allowed that. You expect them to work harder for you and negotiate a better deal.”Unknown to most consumers, many hospitals and physicians offer steep discounts for cash-paying patients regardless of income. But there’s a catch: Typically you can get the lowest price only if you don’t use your health insurance.

That disparity in pricing is coming under fire from people like Snyder, who say it’s unfair for patients who pay hefty insurance premiums and deductibles to be penalized with higher rates for treatment.

The difference in price can be stunning. Los Alamitos Medical Center, for instance, lists a CT scan of the abdomen on a state website for $4,423. Blue Shield says its negotiated rate at the hospital is about $2,400.

When The Times called for a cash price, the hospital said it was $250.

Is your blood boiling yet? Insured patients can try to pay the cash price, but elsewhere in the story we find that hospitals may not even allow patients with insurance to get the cash price. And if you pay cash, it doesn’t count against your deductible or the out-of-pocket limit for your policy. Is this cozy or what for the (usually for-profit) insurance companies and (often for-profit) hospitals?

If California had the power to approve, deny or modify unjustified health insurance rates before they went into effect, the insurance companies would have to do more than prove they’re spending 80% of your premium on whatever they can define as “health care.” With their books open and both consumers and regulators looking on, they’d have powerful incentives to push harder to bring down costs, just as auto insurance companies do—in large part because regulators are watching. Executive compensation in the millions would no longer come out of patients’ pockets.

That form of regulation, called “prior approval” of rates, is the aim of the ballot initiative sponsored by the Consumer Watchdog Campaign. The same kind of regulation, passed by voters as Proposition 103 in 1988, already saves hundreds of millions of dollars a year on average for auto and homeowner insurance buyers in the state. In just the first nine years after voters passed Prop 103 in 1988, property and casualty insurance companies had to fork over more than $1 billion in consumer rebates–similar in type to the $3.5 million United Health is paying.

It’s no surprise that the health industry is one of the state’s most powerful political lobbies. It’s no surprise that such lobbying power has killed every effort to pass effective control of health insurance rates in the Legislature. It’s also no surprise that stories like the one above are making voters furious. At least voters, unlike too many politicians, don’t have to do what the health insurance industry tells them to do.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

State, Cities Urged to Bar All Taxpayer Purchases From Chrysler, GM, Other Tax Dodgers While They Refuse to Pay Fair Share

The state’s award of a contract for up to 1,900 Ford vehicles for the California Highway Patrol and other state agencies is a snub to GM and Chrysler, which eagerly sought the prestigious contract.

Consumer Watchdog applauded the tentative award, noting that of the Big 3 U.S. automakers, only Ford is not in a coalition battling to keep a California tax loophole that benefits large out-of-state corporations to the tune of at least $1 billion a year.

The nonprofit, nonpartisan Consumer Watchdog calls on the state and major cities, which it will be contacting, to bar all non-safety-related purchases of Chrysler and GM products until they cease their campaign and pledge willingness to pay the same tax rate that in-state corporations pay.

“Taxpayers shouldn’t be paying millions to automakers that are happy to starve California schools, police departments and disabled people of funding,” said Judy Dugan, research director for Consumer Watchdog. “What’s good for the CHP should be fine for other police departments and government agencies.”

Even with substantial state discounts, the contract for up to 1,800 Taurus-based police patrol cars and 100 Explorer-based police utility vehicles would likely be worth more than $50 million over time. Dealer prices listed online for the civilian models of the patrol car range from about $30,000 to $32,500, without costly additions like bulletproof doors.

The state is sharply cutting back its civilian auto fleet and the CHP has scaled back as well, but wear and tear force the CHP and other public safety agencies to replace vehicles at about 100,000 miles.

The state’s current tax loophole allows many out-of state companies with major sales in California to pay a lower tax rate than in-state companies, depriving the state of $1 billion or more a year, according to the state legislative analyst. Closing the loophole would help restore essential services axed in the current budget crisis, said Consumer Watchdog.

Two other major corporations, Kimberly-Clark (Scott, Kleenex, Huggies products) and International Paper have joined GM and Chrysler in the deceptively titled “California Employers Against Higher Taxes.”

Chrysler more than doubled its state lobbying expenses in the first quarter of this year, to $32,500, as it added two corporate tax reform bills, AB1500 and AB1501, to its lobbying list reported to the Secretary of State.  The larger General Motors spent more than $86,000 on state lobbying in the first quarter, and added the same legislation to its lobbying list. If a separately proposed ballot initiative to close the tax loophole qualifies for the ballot, the four companies are expected to up the ante on spending.

“The state and cities of California owe taxpayers the respect of shunning companies that are driving the state further into a hole of debt,” said Dugan. “The CHP contract is a great start. Other agencies should quickly and publicly pledge to stay away from the tax dodgers at Chrysler and GM.”

Resources:

State announcement of tentative award (no other bidders protested the award during the protest period)

Bid pricing list from the state’s request for proposals

Consumer Watchdog’s previous press release on the tax evasion history of the corporate coalition (from which founding member Proctor and Gamble has since departed)

Consumer Watchdog Report Revealed How Google Bases Jet Fleet At Moffett Field

Consumer Watchdog today welcomed an investigation by Sen. Charles Grassley, (R-Iowa) into Google’s use of NASA’s Moffett Federal Airfield in Santa Clara County, California, near Google headquarters.

Grassley, ranking member on the Senate Judiciary Committee, wrote Charles F. Bolden Jr., NASA Administrator, expressing concern about “troubling allegations regarding the Google fleet of aircraft housed at Moffett Airfield.”

In January 2011 Consumer Watchdog released a report, Lost in the Cloud: Google and the US Government, detailing how Google has inappropriately benefited from its ties to the Obama Administration, including how NASA’s Moffett Airfield, near Google’s world headquarters, was turned into a taxpayer-subsidized private airport for Google and their corporate junkets.

“Whistleblowers have questioned the benefit to the U.S. government from the Google fleet being housed at Moffett Airfield,” wrote Grassley. “Additionally, my office received allegations that Google has purchased jet fuel from the government at a discounted price, a price allegedly well below the market price due to its tax treatment.”

“Sen. Grassley is finally asking the right tough questions about Google’s sweetheart deal with NASA,” said John M. Simpson, director of Consumer Watchdog’s Privacy Project.

Read Sen. Grassley’s letter here:

Consumer Watchdog’s study found that a growing fleet of jets and helicopters based at Moffett stand ready to ferry the company’s top executives near or far, for business or pleasure, for vacations or schmoozing. The trips included at least three wintertime jaunts to the Caribbean and a trip by Google’s then chief executive Eric Schmidt to the Cannes Film Festival.  Humanitarian groups, by contrast, have been denied access to the airport.

Read Consumer Watchdog’s report, Lost in the Cloud here:

Grassley asked Bolden to respond to these questions by May 25:

1. How did NASA arrive at the lease amount of $3.7 million per year? Does that represent a fair market rate for the lease? Which individuals at NASA and Google negotiated the lease amount?
2. As of the date of this letter, how many aircraft owned or operated by Google are present at Moffett Airfield? Provide detailed descriptions of all aircraft.
3. Why does Moffett Airfield house Google aircraft and when did this arrangement begin? Provide all contracts between Google, NASA, and/or the military related to aircraft and aircraft fuel at Moffett Airfield.
4. Please describe the agreements by which Google obtains fuel for its aircraft at Moffett Airfield and provide fueling records for each aircraft over the past five years.
5. Are any of the aircraft used to support NASA research? Provide a specific explanation regarding the Dassault/Dornier Alpha Jet.4
6. Have any NASA officials flown on the Google aircraft? Please provide a list of each official and describe the nature and purpose of each trip in detail.
7. For each aircraft owned or operated by Google, provide all flight plans and passenger manifests for each flight originating and landing at Moffett Airfield in the last five years.
8. In the last five years, have any other aircraft owned by private companies or individuals housed aircraft at Moffett Airfield? If yes, provide a detailed description of the aircraft, the ownership of the aircraft.

Consumer Watchdog had brought its report to the attention of Congress by sending it to Rep. Darrell Issa (R-CA), chairman of the House Oversight and Government Reform Committee, and had asked him to investigate.

The rest of the country is happily watching gasoline prices sink as the latest bubble in oil crude prices springs a leak. Except California. Nationally, gasoline prices are down more than 15 cents a gallon over the last month, according to the daily AAA fuel gauge. California drivers are still cringing, with prices up more than15 cents a gallon in just the last two weeks.

What gives? As usual, it’€™s the refineries. There are only 12 refineries supplying gasoline in the state, according to the California Energy Commission. Several of them are fully or partly shut down, for repairs or “€œscheduled maintenance”€ or just because the owner thinks refining gasoline is temporarily not profitable enough. This restriction in the state’s gasoline supply can go on for as long as refineries wish-the state has no authority to demand that scheduled maintenance be more rationally planned or efficiently conducted, or to investigate whether a plant owner is playing games with our pocketbooks.

The bottom line is that California, because it’€™s not on any major gasoline pipeline network, can’€™t bring in supplies to counter refinery shutdowns, is stuck with whatever shortage-induced gasoline price the refineries want to impose. If they can make up on profit what they lose on production, it’s just dandy for their bottom line. The extra profit that refineries generally make in California even has a name in the industry: “West Coast Premium.”

According to a 2009 investor report by the Texas-based refinery Tesoro, West Coast refineries have an average margin that is $8.50 per barrel higher than those operating on the Gulf Coast.

Given the power that refiners’€™ restrictions of gasoline supply have on gasoline prices, the state should have more regulatory power over refinery operations, modeled on regulation of power companies. The refiners would be guaranteed a modest but steady profit, and would in return have to guarantee a steady, reliable gasoline and diesel fuel supply. The new oversight would be more than paid for with a modest extraction tax on oil drilled in California-something every other oil-producing state enacted long ago.

Another conclusion from current gasoline prices in the state is that drilling more in California–off the coast, in deep shale, or by using dangerous superhot steam to wring more from old oilfields-won’t lower pump prices by a penny. Oil prices are going down now because speculators finally had to admit that there is no shortage of oil in the U.S. or in the world, but California drivers haven’€™t seen a penny of benefit.

California, even if it could produce every drop of oil that the state uses, would still be largely at the mercy of refiners.

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Posted by Judy Dugan, research director for Consumer Watchdog, a nonpartisan, nonprofit organization dedicated to providing an effective voice for taxpayers and consumers in an era when special interests dominate public discourse, government and politics. Visit us on Facebook and Twitter.

Next week we will be turning in the signatures for our ballot petition to force health insurance companies to justify their rates and get permission before instituting their rate hikes.

Download, sign and return in the mail by the end of the weekend to be part of the signature turn-in or forever hold your peace.

This short video preview of the initiative by our friends in Hollywood explains why this is the most important autograph you will give this year.

Two years ago, as federal health reform lay on death’s door, CEO Angela Braly, head of Blue Cross’s parent company Wellpoint, spit on beleaguered patients. She sat through poignant Congressional testimony from customers whose lives were being ruined by spiraling premium hikes, then Braly testified that the public outrage was “a triumph of sound bites over substance.”

The CEO’s arrogance and Anthem Blue Cross’s planned 39% rate hike were enough to revive federal reform in the court of public opinion. The federal law passed, but failed to give California the power to reject unreasonable rate hikes.

That’s why, on May 1, one million Californians began paying hundreds of millions of dollars more for their health insurance. It’s a plot right out of Groundhog Day, only it happens every Spring, Winter, Summer and Fall.

Recently Braly, the health insurance world’s Marie Antoinette, was at it again, only in a more intimate setting. On a conference call with shareholders she attacked a pending rate regulation ballot measure in California as unnecessary because she said federal reform was all patients needed. In other words, Braly’s advice for the one million who face a choice between paying for food or health insurance: Let ’em eat cake.

Want to fight back?  The final signatures are being collected in the next couple of days to submit 800,000 signatures for a ballot petition taking power from Braly and the other monarchs of health insurance to raise rates whenever they want without any justification.

Californians can download and sign the ballot petition at JustifyRates.org and vote in November to require Anthem Blue Cross and other health insurance companies to get permission before they raise rates.  But voters have to sign today in order to mail back the ballot petition in time to have theirs’ delivered with the other 800,000 Californians demanding this change.

Health insurance rates are like a runaway train and there’s no police force or firefighting squad with the power to stop them.  Thirty-five states require health insurance companies to get permission before raising rates, but not California.

Patients pay the price.

In Studio City, a self-employed single mom watched her health insurance premium triple over the last decade. On May 1st the price climbed by 16%. She asks,” If I have to get pre-approval from my insurance company every time I want my health care paid for, shouldn’t they have to get approval when they want me to pay more?”

For a decade the legislature has answered no, arguing, exactly as Braly does, that the market and federal health care reform can be trusted to moderate rates.   We can see how well enlightened despotism has worked in health care.

Over the last decade health insurance premiums have shot up 153% — growing five times the rate of inflation (29%). Four companies, including Anthem Blue Cross, control 71% of the health insurance market – competition isn’t in the cards. As a result Californians don’t just move to cheaper plans, they also drop insurance. California has one of the nation’s highest uninsured rates.

Since 2003, the California legislature has refused to pass a law requiring that health insurance companies get approval before raising rates in the same way that auto insurance and home insurance companies have to today.  That insurance company lobbying power is why consumer advocates like myself have joined with Sen. Dianne Feinstein and Insurance Commissioner Dave Jones to qualify the ballot measure that requires health insurance companies to live up to the same standards as other insurance companies.

It’s high time to dethrone Braly and the other health insurance monarchs who are accountable to no patient and no insurance commissioner in the state of California.  They raise rates because they can, not because it’s necessary.  800,000 California voters are about to take on Braly’s “Let ’em eat cake” corporate views.  Act now and you can be with us.

Starting this week one million Californians will pay hundreds of millions of dollars more for their health insurance. It’s a plot right out of Groundhog Day, only it happens every Spring, Winter, Summer and Fall.

Health insurance rates in California are like a runaway train and there’s no police force or firefighting squad with the power to stop them.  Thirty five states require health insurance companies to get permission before raising rates, but not California.

So Hollywood’s fighting back with a short movie trailer preview of an alternative future. This short preview is of the impact of a real ballot proposal – which only needs another two hundred thousand signatures to qualify for the November ballot. With enough signatures, Californians can then decide their own fate and stop outrageous rate hikes.

In Studio City, CA a self-employed, single mom watched her health insurance premium triple over the last decade. On May 1st the price will climb by 16%. She asks,” If I have to get pre-approval from my insurance company every time I want my health care paid for, shouldn’t they have to get approval when they want me to pay more?”

For a decade the legislature has answered no,  following the health insurance industries’ line that the market and federal health care reform can be trusted to moderate rates. Tell that to the million Californians hit with rate hikes on May 1st.

Over the last decade health insurance premiums  have shot up 153% — growing five times the rate of inflation (29%). Four companies, including Anthem Blue Cross, control 71% of the health insurance market – competition isn’t in the cards. As a result Californians don’t just move to cheaper plans, they also drop insurance. California has one of the nation’s highest uninsured rates.

Since 2003, the California legislature has refused to pass a law requiring that health insurance companies get approval before raising rates in the same way that auto insurance and home insurance companies have to today.  That’s why consumer advocates like myself have joined with Senator Dianne Feinstein and Insurance Commissioner Dave Jones to qualify the ballot measure  that requires health insurance companies to live up to the same standards as other insurance companies.

More than 600,000 voters have signed our petition to make health insurance companies publicly justify their rates, as we rush toward the deadline to qualify for the November ballot. The preview of different future isn’t just a Hollywood story. It’s within our sights if 200,000 more Californians sign our ballot measure in the next two weeks.

by Consumer Watchdog

One million Californians will be slammed today with health insurance rate hikes as high as 20%. Consumer Watchdog Campaign has a solution.

Watch this short, funny movie trailer about an alternative future with no rate hikes, and share it with your friends.

Health insurance price hikes recur more often than Groundhog Day — Spring, Summer, Winter, Fall. Now there’s something Californians can do about it.

Go to www.JustifyRates.org to download, print and sign the ballot petition to stop outrageous rate hikes. The short movie trailer tells the story. Watch it. Post it. Tweet It.

Let your friends know what’s happening and what they can do about it!

Help us beat the health insurance companies at the ballot.

Consumer advocates and patients facing May 1 rate increases delivered a blank check to health insurance companies representing the hundreds of millions more that one million Californians will pay for their insurance, today in Santa Monica and outside Anthem’s San Francisco offices. They called on voters to sign the official ballot initiative petition to require health insurance companies to get permission before raising rates.

One million Californians – the “May Million” – will pay premium increases as high as 20% for their health insurance with Anthem Blue Cross, Health Net and UnitedHealthcare on May 1st.

This week, Anthem Blue Cross parent company CEO Angela Braly told investors that California doesn’t need the health insurance rate regulation initiative because federal law adequately protects patients. Braly made $13.2 million in compensation in 2011. Anthem Blue Cross will raise rates by more than $100 million for over 700,000 Californians even as it delivers rebates for overcharging consumers last year and raked in $856 million in profits in the first quarter of 2012.

Harvey Rosenfield, author of insurance reform Proposition 103 which has saved drivers $62 billion since 1988, said: “CEO Angela Braly told investors that California already has plenty of oversight of health insurance prices and doesn’t need our ballot measure. She should tell that to the 700,000 customers of Anthem Blue Cross in California who will pay over $100 million more when their health insurance premiums go up on May 1st. A CEO who made $13 million last year is completely out of touch with patients who can’t afford double-digit rate increases because premiums are rising at five times the rate of inflation.”

Jessica Blacher from Santa Monica is one of the “May Million” who was faced with a rate increase on May 1st. The proposed 23% hike in Jessica’s premiums was the fourth in just two years, and she was forced to trade her coverage for a catastrophic plan with lower benefits and higher out of pocket costs, including $9500 she must pay out of pocket every year on top of her premium.

Alison Heath, a self-employed mother from San Francisco, is also one of the “May Million,” and will pay a 19.7% rate increase on May 1st. Alison’s increase will be the third in less than two years, hiking the monthly premium on the Anthem policy that covers her and her husband to $1767 a month.

In her comments to investors Braly said California’s rate review process was “effective,” yet just last month a rate increase was implemented even though state Insurance Commissioner Dave Jones found it was unreasonable, because no one in California has to power to prevent unreasonable rate increases.

Wellpoint’s 1st quarter financial report notes that medical costs increased just 4.8%, but California patients will see rate increases of up to 19.9%, more than four times that amount.

Consumer Watchdog Campaign, and supporters including U.S. Senator Dianne Feinstein, AARP, Insurance Commissioner Dave Jones, Courage Campaign and Consumer Federation of California, have emailed millions of voters across the state, asking them to download, print, sign and return the petition at www.JustifyRates.org. The campaign has gathered more than 500,000 of the 795,000 signatures needed to qualify for the November ballot, with just three weeks of signature-gathering remaining.

Jamie Court, president of Consumer Watchdog and proponent of the ballot initiative, with Jessica Blacher of Santa Monica.

The ballot initiative, the “Insurance Rate Public Justification and Accountability Act:”

• Requires health insurance companies to publicly disclose and justify, under penalty of perjury, proposed rate changes before they take effect.
• Makes every document filed by an insurance company to justify a rate increase a public record, and requires public hearings on some proposed rate increases.
• Gives Californians the right to challenge excessive and unfair premium rate increases.
• Prohibits health, auto and home insurers from considering Californians’ credit history or prior insurance coverage when setting premiums or deciding whether to offer coverage.
• Gives the insurance commissioner authority to reject unjustified health insurance rate increases.

Ballot Measure to Regulate Health Insurance Prices Will Let Voters Decide Whether To Regulate Health Insurance Prices

A new analysis at followthemoney.org finds that health insurance companies gave $11.6 million in campaign cash to California politicians, including $7.4 million to candidates for the California legislature, between 2000 and 2010. The largest health insurance donor in California over the last decade was Wellpoint, the parent company of Anthem Blue Cross, which will increase health insurance premiums as much as 20% for nearly 600,000 California policyholders on May 1.

Click here to find the report, “Health Insurance Interests Invest Heavily in California Campaigns.”

Health insurance companies have wielded their influence in Sacramento to kill legislation introduced every year for the last decade that would have required health insurers to get approval before increasing patients’ insurance premiums. The largest recipients of health insurer money were lawmakers that voted against or blocked reform. They include: Lou Correa ($119,967), Gloria Negrete-McLeod ($135,610), Ron Calderon ($65,700) and Juan Vargas ($42,122).

A ballot measure proposed for the November ballot will go around the insurer roadblock in the legislature to let California voters decide whether to regulate health insurance rates, said Consumer Watchdog Campaign today. Dario Frommer, who received $150,388 from health insurers while in office, now works for the industry and wrote the industry’s analysis of the ballot measure for the Legislative Analyst’s Office.

“Health insurance companies paid California politicians an $11.6 million bounty to kill rate reform over the last decade. But we’re lucky in California, because when compromised politicians stand in the way of reform the voters can take charge. This ballot measure will let voters decide if it’s time to force health insurers to rein in skyrocketing rate hikes,” said Carmen Balber with Consumer Watchdog Campaign.  The analysis issued at followthemoney.org also found:

• The top four health insurance industry contributors, Wellpoint, Kaiser, Blue Shield and Health Net, gave $5.5 million to candidates. (These companies are also the four largest health insurers in California.)
• More than half, $5.3 million, of the money given by health insurers to candidates went to members of the Health or Insurance committees responsible for bills that regulate the industry.
• Health insurance companies also contributed $2.9 million to support and oppose ballot measures.

The ballot measure to regulate health insurance rats can be downloaded to print and sign at JustifyRates.org. It would require health insurers to publicly justify rate changes, under penalty of perjury, and give the state insurance commissioner the ability to modify or deny excessive rate increases. Health insurance premiums in California have gone up at 5 times the rate of inflation over the last decade.