42 Comments - Vague - Friday, Jul 13, 07 @ 10:01 am: It’s a Blagojevich ruse. - Esteban - Friday, Jul 13, 07 @ 10:23 am: As an insurance agent, I know that renewal rates are set by “class”, not by individual claims history-at least in regard to individual policies. I think the guv has done what’s known as “changing the subject”. - cg - Friday, Jul 13, 07 @ 10:26 am: Question for those health policy wonks: For those like Bocchieri (Lombard man diagnosed with rare bone marrow disease), would an insurance company just move him to a different insurance pool, thus increasing his premium? Can they just move people to different pools when they get a new diagnosis? Thus, the administrative change Blago made has no impact? What impact would it have? - Kuz - Friday, Jul 13, 07 @ 10:31 am: Anyone else get robopolled last night about the Gov’s performance in handling the budget battle? - Ka Ching - Friday, Jul 13, 07 @ 10:44 am: Yea! How much does that cost the taxpayers? We are all less than dust to Blagojevich! - Southern Right - Friday, Jul 13, 07 @ 10:45 am: Mr. Bocchieri’s premiums on the states ICHIP pool is less than $500 a month. The wife and children could find excellent coverage for under $500 a month. This is less than half of their current premiums and would cover pre-existing illness. The Governor again is using bogus premiums to make his case. The AVERAGE premiums in Illinois for a family of 4 is between $6000 to $9000 a year. Look it up online. He stated it is over $15000. He just doubled it. I know he took BCBSIL best plan a zero deductible, 100% coinsurance plan for a family of 4 living on Lake Shore Drive. Not really the average premiums, just the highest price quoted. Next, group coverage is 40% to 80% more expensive than non group coverage. Group covers pre-existing illness, individual doesn’t. The last time our legislature tried helping to lower premiums was in July 1999. The result was premiums on small group plans doubled by July 2000. - bored now - Friday, Jul 13, 07 @ 11:03 am: how are brown’s comments helpful? is madigan asking that the state government be shut down? is he so stubborn that he’s unwilling to compromise at all? brown is being juvenile, and does nothing to move us towards a budget deal (that’s assuming they want one)… - Lula May - Friday, Jul 13, 07 @ 11:06 am: Boy Madigan’s people have this guy pegged. I know people who have been around this guy and most of the time he is just flying off the wall. - Moderate Repub - Friday, Jul 13, 07 @ 11:11 am: cg - Friday, Jul 13, 07 @ 10:26 am: Question for those health policy wonks: For those like Bocchieri (Lombard man diagnosed with rare bone marrow disease), would an insurance company just move him to a different insurance pool, thus increasing his premium? Can they just move people to different pools when they get a new diagnosis? Thus, the administrative change Blago made has no impact? What impact would it have? to answer your questions: No, No, and I don’t know what the impact would be, he is probably jsut trying to villinize the industry as he tried to do with all business during his GRT push. - Rod's Private Universe - Friday, Jul 13, 07 @ 11:18 am: Bored Now Who’s the juvenile? Try Blagojevich! - restless in Chicago - Friday, Jul 13, 07 @ 11:28 am: Agree with “bored now”…while you all continue to jump all over Blago no blame is EVER placed on Madigan. He fans the fires to cover up his agenda of getting the state coffers fixed for his daughter’s march to the Capitol!As someone said in an earlier blog - hold onto your wallets - a tax increase is just around the corner! That will be Madigan’s solution…HB750 is rising again! - hmmmm - Friday, Jul 13, 07 @ 11:31 am: Mautino = Insurance industry shill Nothing he says about healthcare can be taken seriously. Everybody in the Capitol knows this. He is just trying to protect his big buddies from having to disclose how much profit they are making off the people they “insure”. When a company pays out only 60% of what it collects in claims, someone is bringing home a big fat check. And it ain’t sick people. - maybe? - Friday, Jul 13, 07 @ 11:38 am: Anyone who claims that insurance companies don’t raise insurance premiums for people who get sick is just spouting off insurance industry talking points. If you have insurance on the individual market and you get sick, your rates are going to go up. A lot. - Larry - Friday, Jul 13, 07 @ 12:06 pm: With respect to health contracts underwtitten by life insurance companies (not HMOs), individual policies are generally written on a guaranteed renewable basis. “Guaranteed renewable” ( a defined term)means that the individual policy has to be renewed but rates can change. However, rate changes (increases) are permitted only on a class basis. Classes are based on risk characteristics at time of issue and can’t be changed after issue. Risk characteritics include age at issue, sex, family status, tobacco usage and health status at time of issue. So if you qualify as a healthy risk at time of issue and subsequently you have health problems that fact isn’t used in your rating. The problem is that if the class is small (insurers tend to stop selling a specific polify form and start selling a new policy form) it may appear that current health status is used because the class has a limited number of insurers and good risks may change insurers and all that is left in the class are people with health conditions. This phenomenon is known as the “death spiral for closed blocks of individual health policies.” Moving from individual health policies written by life insurers to small employer group health policies, the situation is a bit different. Small employer group business, like large employer group business is written on an experience rated basis. For small employer groups, groups may consist include only 3 or 4 people. Deterioration in health status of an individual employee may have a big impact on employee rates since the class may consistes of only 2-3 people. This was a big issue about 20 years ago and regulations limiting the size of the rate increase were implemented. However permitted rate increases were significant (if my memory is correct). Basically, the dynamics of risk pooling don’t work with small employer market products. Healthy small employer groups can jump from insurer to insurer to find the best rate for the group. Small employer groups don’t have this ability. My knowledge of HMO products is limited but I suspect that that the principles discussed above apply to HMOs but I can’t say for sure. Bottom line — Regulating health insurance premiums involve many nuances and new policy initiatives have to be carefully analyzed before their impact determined. I started by mentioning health insurance policies written by life insurance companies. Insurers (very generically) fall into 3 categories: (1) Life insurance companies (2) HMOs (Health Care Service orgaizations) Blue Cross/Shield So the analysis of proposed legislation/regulation needs to consider products, markets and insuring organizations within the scope of the legislation/regulation. Also, the legislation/regulation effective date needs to be considered. For example new legislation/regulation will not effect previously issued gyaranteed renewable health insurance policies. I am NOT a state employee. I retired from the state about 4.5 years ago. - Rod hasn't a CLUE - Friday, Jul 13, 07 @ 12:19 pm: Larry, As you said in your Bottom line — Regulating health insurance involve many nuances and new policy initiatives have to be carefully analyzed before their impact determined. Which Blagojevich and his inner circle are clueless about. It’s all about re-establishing who gets the money and the power. You would think he’d back off his greedy ways with the Feds breathing down his back….. So much for the sharpest tool in the shed. - Larry - Friday, Jul 13, 07 @ 12:27 pm: Rod hasn’t a clue My comments were not directed to any specific person but everyone participating in the discussion. I have no opinion as to whether Blagojevich and his inner circle are clueless or not on the topic of health insurance coverage and premiums. However, anyone participating in the discussion should at least understand the fact that there are many nuances. Blanket statements about the topic are not very informative. - zatoichi - Friday, Jul 13, 07 @ 12:33 pm: Larry pretty much got it. Small employer groups (say 25 people) can get really nailed by having 1-2 major health issues or simply have a older employee group with no health issues but through longevity/age they start hitting the actuarial buttons. I find it very interesting that the Illinois Covered plans clearly say co-pays and deductibles are adjusted based on evaluations of pre-existing conditions. There are no stated limits or caps for these charges. So you can have an “affordable” monthly premium with a $5,000 deductible and high co-pays. The premuim would not go up but the affordability of the coverage can just as easily be out of reach for uninsured people. - Levois - Friday, Jul 13, 07 @ 12:42 pm: Why didn’t the governor propose this in the first place, as opposed to having his heart’s desire on an expensive universal health insurance program. I just wanna know. - Larry - Friday, Jul 13, 07 @ 12:44 pm: zatoichi, Good catch. This is the type of “nuance” that people should be looking for, analyzing their impact and the determining how it got into any legislation/regulation. Since I am retired, I not sure as to what is/are the “Illinois Covered” plans. - Squideshi - Friday, Jul 13, 07 @ 1:36 pm: “When the ADD (attention deficit disorder) kicks in, he flits off to Chicago every couple of days,” Brown said. “Absolutely, it’s diversionary.” It’s actually called ADHD (Attention Deficit Hyperactivity Disorder) these days; and it’s ironic that Brown would use such an analogy when discussing health insurance. - the Patriot - Friday, Jul 13, 07 @ 1:41 pm: I am surprised to see so many say insurance companies do not consider individual health. I have family members who had specific exclusions to health insurance plans due to prior conditions. They are going to consider past conditions whether in a claims made issue or not. This is the best idea he has had yet. Run out insurance companies, make more people uninsured, create greater need for universal health care. I am sure if he works hard enough, he can take the number of uninsured from 1.4 to 2.5 million by the end of the year. I don’t think large group plans consider specifics but I KNOW some small individual policies do. - Southern Right - Friday, Jul 13, 07 @ 1:57 pm: Larry great job on the explanation. If this administration wanted to really help, all they need to do is overfund the ICHIP. That just doesn’t sound as sexy as “Illinoiscovered” in a 30 second sound bite. Kidcare worked, why did we rename it Allkids? A 30 second sound bite. - Larry - Friday, Jul 13, 07 @ 2:14 pm: the Patriot, You wrote “I don’t think large group plans consider specifics but I KNOW some small individual policies do.” Please be more specific. Do you mean small empolyer group contracts with individual certificates? Do you mean “at time of issue” or “renewal”? Do you mean, at time of claim and are referring to “post-issue underwriting” relative to pre-existing conditions? I don’t recall but there may be existing regulations dealing with post-issue underwriting. This wasa big issue many years ago. If you meant individual policies, are they guaranteed renewable policies, conditionally renewable or some other form of renewability? THis is important to know to gewt a fix on the extent of the concern. Precise statements are important to understand the magnitude of the concern and to evaluate potential regulations designed to address the issue. - bored now - Friday, Jul 13, 07 @ 2:15 pm: Rod’s Private Universe: just because rod acts childish, there’s no excuse for brown doing likewise. in fact, madigan now has no moral superiority at all, he’s conceded that they are all childish by this action. oh, he could fire brown to try to reclaim it, but i don’t believe for a minute that brown was speaking out of turn. it’s almost as if they don’t care if they get a budget. where’s the leadership? it sure the hell isn’t in springfield… - Anonymous - Friday, Jul 13, 07 @ 2:24 pm: Larry got it right. I am worried about if this EO in the heat of the legislative overtime to make “points” will violate the law of Unintended consequences. Does utility rates come to mind. - Captain America - Friday, Jul 13, 07 @ 3:00 pm: Haven’t got time to raed all the posts and consider the technicalities of insurance law. If the governor’s executive order can withstand a legal challenge, this is probably a good move. The real probelm is that individuals and small businesses can not get affordable health insurance. Expereince rating and samller rsik pools are major factors contributing to these higher rates. People with prexisting medical condtions can be SOL in terms of health care insurance. There is a genuine crisis in terms of the large number of unisured in Illinois and nationally. This problem is not a figment of the Governor’s imagination. I believe he is sincere in trying to address this crisis regardless of what you think of his methods and tactics. No one needs to shed any tears for health insurance companies. Generally they are making money hand over fist! - Larry - Friday, Jul 13, 07 @ 3:12 pm: Captain America, The number of uninsured is large, very large. Whether the governor is sincere or not is beyond my knowledge base. I have no idea. I am not privy to any “inner circle” discussion. The sole purpose of my comments are to bring precision to the statements being thrown around so that a sound solution, if a solution is possible, can be constructed. A solution may not be possible, sort of the Heisenberg Uncertainty principle in physics. When you say health insurance comapnies are making money hand over fist are you sure that is the insuring entity. Might it be the proucers, agents and brokers, that are making money? If health insurance was so lucrative, you would find many more entities willing to enter the market. I have no love for the insurance industry nor do I have any for unsubstantiated statements. - cermak_rd - Friday, Jul 13, 07 @ 3:35 pm: One of the concerns it seems a lot of people have is with small group plans. I remember part of Bill & Hill’s health plan that I actually liked was the idea of creating super-groups, a ploy whereby small businesses A, B, C and D (say Maury’s hair dressing, Joe’s Tool & Die, Mary’s Nails, and Jane’s Mechanics) could band together into 1 group which, because it would have many members would be able to smooth over the effects of having 1 or 2 employees with health issues. Essentially it would have created a middle man entity that dealt with the insurer and then dealt with the companies and employees. Usually with introducing middle men you increase the cost of doing business, but in this case, due to the risk pool enlargement, you improved things for the purchasers of health insurance without particularly harming the insurer (because they were still only dealing with 1 purchaser). Is it time to rethink this idea? - madman - Friday, Jul 13, 07 @ 3:37 pm: Captain America - You articulate a common problem. The “technicalities” of financial risk management and insurance represent arcane subject matter that most people are loathe to really try to understand. Its easier just to conclude that insurance companies “are making money hand over fist” and get the pitchforks and torches organized. The reality is that health care insurance is expensive because health care itself is expensive. There is little in the Governor’s “Illinois Covered” plan and nothing in this proposed rulemaking that addresses that fundamental concern. Hat’s off to Larry for trying to bring clarity to the issue of “financing” health care through the risk management tool known as insurance. To Patriot - the anecdotes you describe where health status was a factor had to have been at the time the initial policy was issued…not at renewal. With regard to the question of whether or not the proposed reg. can withstand a legal challenge…I doubt it. The rule itself is significantly more far reaching than the simple thought expressed in the Governor’s press release. Surprise, surprise. - Huh? - Friday, Jul 13, 07 @ 3:58 pm: Regarding the crack by Brown about ADD of the policically correct - ADHD, one of the most frustrating things about the disease is that a child can fixate on a task to the exclusion of anything else or the kid can’t sit still for 30 seconds to hear the instructions. - Larry - Friday, Jul 13, 07 @ 4:03 pm: cermak_rd: In thoery, a super group would work if the small groups that pooled together were forced to remain with the super group that they joined for “n” years. I have no idea what “n” shou;d be be. If small groups could come and go as they please, the super group would not mimic the pooling mechanism of a large employer/employee group. - Captain America - Friday, Jul 13, 07 @ 4:04 pm: Larry and Madman I do have an advanced degree in health administration from a presitgious local institution and many years of experince in the health care care industry. I did not intend to demonize the health insurance industry by noting they are making substantial amounst of money. They are! There are in fact multiple feasblie solutions to dealing with the problem of dealing with the millions of uninsured in this country. What’s lacking is the political intelligence and will to adopt and implement these solutions. Illinois is behind some other large, rich states in addressing the problems of access to affordable health care. I am convinced that all parties - health care providers, health care consumers, and health insurance companies are all part of the problesm and all must be part of the solution. All parties are going to have to make some sacrifices for the greater good. Give the Governor credit for trying to accompalish something positive regardless of what you think of him or his various and sundry intiatives and his style and tactics. Many legislaters beleive the Governor has bitten off more than he can chew with respect to the State’s responsiblities and see it as a problemsthat should be addressed by our federal government. Going to work so I won’t be able to supplement my comments or respond further. It is indeed a very complicated subject beyond the scope of most of us to underatand. If there were any easy solutions, health care reform would not be as controversial as it is. - Southern Right - Friday, Jul 13, 07 @ 4:07 pm: cermack rd How about asking the UAW and Ford or GM how much of an advantage a large pool is in their insurance pricing. This path of larger is better was used to promote small business health associations. It doesn’t pass the sniff test. Beyond 18 to 30 employees there is very little difference in risk for a health insurance carrier. A+B+C=D A simple equation. You add up doctors, hospital, labs, RX, All administrative costs that equals premiums. Health insurance carriers must remain priced as competitive as they can. If they stop adding new clients they have the life expectency of a house fly. If you buy a house or a car you shop. When you have a heart attack you accept what is billed. Why? Why is the state and this concerned Governor not putting prices and quality guides online for all to see? He built a website for “Illinoiscovered”. Where is our information on who are the best doctors and best hospitals and their fees for various services? Start looking at what drives health insurance premiums. - Larry - Friday, Jul 13, 07 @ 4:32 pm: I hope that everyone could agree that all parties “I am convinced that all parties - health care providers, health care consumers, and health insurance companies are all part of the problesm and all must be part of the solution. All parties are going to have to make some sacrifices for the greater good.” are part of the problem and that “parties” include the government as a regulator and purchaser of health coverage. - Mr. Wizard - Friday, Jul 13, 07 @ 5:10 pm: The real problem here is this: The gummint has over the years slowly taken over the health care industry - thru regulation, service provision and even pricing. Big insurance, hospitals, docs, lawyers, etc. responded (thru lobbying) by carving out their piece of the pie, so they can make good/great profits on it. The current “system” is a hodge-podge one that no one controls, costs a fortune and provides lousy care. We should get the gummint out of it or take it over completely. - madman - Friday, Jul 13, 07 @ 8:16 pm: Wizard….good points (your 5:10 p.m. post). You are absolutely right. In 1945 Harry Truman sent a message to Congress asking for legislation to create a national health insurance plan. After two decades of debate, Medicare and its companion program Medicaid were signed into law by Lyndon Johnson in 1965 as part of his ‘Great Society’ initiative. Since then, physicians and hospitals have learned how to game the system and drive up the cost of care. Years go by, the Association of American Medical Colleges controls enrollment in medical schools and residency assignments. Emphasis slowly shifts from primary care and prevention to specialty and sub-specialty care. Mortality rates rise while the cost of care actually goes up. In the late seventies/early eighties health insurance companies who up until now simply passed the health care cost increases along to their customers were suddenly held accountable by their customers (employers/employees/individuals) and forced to get a handle on rising premiums. To accomplish this they used what up until that time was an expensive, elite insurance product called Health Maintenance Organizations (HMOs). They took the mechansisms that HMOS used to ensure that docs and hospitals were getting patients all of the care they needed, - mostly preventive and wellness care - and used those same mechansisms to suddenly begin ratcheting down on all care. The resultant backlash is now history. It seems that physicians and insurance companies are now on mostly the same page (see the AMA website and compare it to national insurance trade associations) Hospitals on the other hand seem unable to wean themselves from from the Medicaid trough. This wasteful $9 billion program is now for all practical purposes the largest health care plan in the state and the waste burdens every other aspect of the health care system in Illinois. There is no question that we need government assistance for needy populations but it needs to be thoughtful in its approach. I think there is a SOME role for government in providing health care. But we have to be very careful and not demagogue on the issue. If we don’t we will have two health insurance pools in this country. The pool of the rich and famous and the pool of last resort. I believe in the wisdom of the marketplace and that it, not government, will set us free. - Cassandra - Friday, Jul 13, 07 @ 9:45 pm: What Illinois needs (all together now) is community rating and guaranteed access. That means that an Illinois resident can obtain health insurance regardless of employment/health status and that everyone is charged the same for the same type of policy. In practical terms, that means every Illinoisian should be able to get the same level of care as our state employees get (and that Illinoisians pay for them to get). Get a copy of the Benefits Choice Handbook for state of Illinois employees and you’ll have an idea of all Illinoisians should be getting, at a minimum. We’re paying for it, after all. - For Sale - Cheap! - Friday, Jul 13, 07 @ 9:46 pm: Southern Right - you’re right. Find out what is driving the costs. Just buying insurance for everyone is going to just make the parties richer and eventually bankrupt the fund. Why fund insurance so they can pay a doctor $175 for a 5 minute office visit. Why cover Suzy so she can demand a prescription for antibiotics for a cold she’s had to two days. The present system is destined to bankrupt us all. The problem is much deeper than Gov Rod is going to want to look. He’s invested 10 minutes to dreaming up his solution. - Migraine Lady - Saturday, Jul 14, 07 @ 10:09 am: From personal experience I know the insurance industry is misleading if it indicates that it only rates classes. What is does for anyone who has any history ill DENY ALL COVERAGE ALL TOGETHER. For example, I have persistant migraines. Therefore, I am uninsurable. Techically they speak the truth when they say the rate by class; what they do not say is how they do or do not let anyone into the class or into the insurance plan to begin with. Even persons with seemingly mild conditions will be shocked, as was I, to find that they cannot qualify for individual coverage in Illinois. - Squideshi - Saturday, Jul 14, 07 @ 10:23 am: “Regarding the crack by Brown about ADD of the policically correct - ADHD, one of the most frustrating things about the disease is that a child can fixate on a task to the exclusion of anything else or the kid can’t sit still for 30 seconds to hear the instructions.” Let’s not make the mistake of assuming that only children have ADHD. There are plenty of adults who also suffer from the disorder; and a good number of those who have it as children are likely to have it into adulthood–even if the tendency move from hyperactivity to attention deficit. - FED UP - Saturday, Jul 14, 07 @ 11:55 am: Why is the state using taxpayer dollars for Blagos make up. If blago wants to wear make up thats up to him to each there own, he probably needs a little lipstick to make him feel confident and ready to face the world but the state taxpayers should not have to pay for blagos vanity. - Cassandra - Saturday, Jul 14, 07 @ 12:22 pm: An additional thought– Why couldnt the guv open up to all Illinois residents the managed care benefits offered to all state employees at the same prices those employees pay. Those below a certain level of income get subsidized. Nobody can be kicked off the plan. But the managed care companies get a new influx of customers and Illinoisians get the same benefits they are paying for for their employees–the state employees. Maybe the guv could put the Benefits Choice Handbook online so all Illinoisians can see what they are missing. If we can pay for the employees, we can pay for the residents. There is no shame in paying a high proportion of the state budget on health care for all in a wealthy, advanced society. Sorry, comments for this post are now closed.