Newsletter: Health insurers don’t want you thinking about all their cash

I’m Business columnist David Lazarus, with a look today at how health insurers work hard to prevent policyholders from enjoying a level playing field.

This involves legislation in Washington state, not California, but the industry players will be familiar to SoCal denizens. And the issues involved are relevant to us all.

State Sen. Christine Rolfes, a Democrat, introduced legislation that would have required Washington’s insurance commissioner to factor in an insurance company’s surplus funds when deciding if a proposed rate increase is reasonable.

The thinking was that if an insurer is sitting on a big pile of cash, maybe it doesn’t actually need to jack up customers’ premiums.

According to Northwest News Network, a collaborative venture backed by public radio stations, the three biggest nonprofit health insurers in the region — Regence BlueShield, Premera Blue Cross and Kaiser Foundation Health Plan of Washington — have amassed nearly $4.5 billion in surpluses.

Despite all those excess funds, the news service reported, consumers have faced double-digit rate hikes as insurers argued they’re barely getting by.

Guess what happened? After industry lobbying, Rolfes’ bill was amended on the Senate floor last week to make the surplus review requirement optional, not mandatory.

“If it sounds like the insurance commissioner’s office and the carriers worked on this amendment together, that’s because they did,” Rolfes said as she introduced the amendment.

A spokesman for Rolfes told me the bill still has teeth, but the bottom line is that the original language saying the insurance commissioner “shall” review surplus funds now says the commissioner “may” perform such a review.

And that, like the pirate’s code, “is more what you’d call guidelines than actual rules.”

Chris Bandoli, executive director of the Assn. of Washington Healthcare Plans, said the language change was “just a matter of giving the commissioner’s office discretion” about whether to consider surplus funds.

“We don’t think this is an appropriate thing to look at for a rate filing,” he told me.

With healthcare among the top issues in the presidential election, and “Medicare for all” a key talking point for most Democratic candidates, it doesn’t seem as if asking too much for insurers to not reach deeper into people’s pockets when their own pockets are bulging with money.

Besides, Rolfes’ proposed surplus-funds review wouldn’t have been the whole shebang. It would have been just one component in any a rate-making decision.

The fact that the insurance industry fought — and beat back — this modest rule speaks to how committed insurers are to protecting their own livelihoods while making customers pay and pay and pay for coverage.

Average annual premiums for individual and family coverage last year rose about 5% from a year earlier, according to the Kaiser Family Foundation. That’s more than the 3.4% average growth in wages and well beyond the 2% increase in inflation.

Meanwhile, insurers keep forcing policyholders to shoulder a greater financial burden by boosting deductibles, which have more than tripled in the last decade.

I wrote on Friday that Medicare for all would achieve a hat trick for healthcare reform — more people covered, lower costs and elimination of wasteful spending.

The behavior of some insurers only reinforces that conclusion.

Now then, here are a couple of recent stories from our pages worth highlighting:

Fresh start: Michael Milken was given a 10-year sentence, fined $200 million and required to pay $400 million in restitution for stock fraud and other crimes. He served 22 months at a minimum-security prison. He then embarked on decades of philanthropy — and now has been pardoned by President Trump.

Backtracking: California officials voted last week to allow Sacramento-area developers to build homes that don’t come equipped with solar panels — a move solar installers and environmentalists said would undermine the state’s first-in-the-nation home solar requirement.

Recalls

About 5.7 million Contigo kids’ water bottles were recalled because of a choking hazard related to the detachable spout. The bottles were sold at Costco, Walmart, Target and other stores from April 2018 through Feb. 7 of this year.

Pharmaceutical company Eisai has withdrawn the weight-loss drug lorcaserin — sold under the Belviq brand name — from the market. The move followed a warning from the Food and Drug Administration that the drug could increase a user’s risk of cancer.

Spare change

That fleeting reference to the pirate’s code makes me wonder: songs with pirates in the lyrics? There’s the “Yo Ho” one from Disney, of course. Bob Marley has catchy number. So does Jimmy Buffett. But my personal fave is this one from Elton John, in which lyricist Bernie Taupin coins the evocative phrase “pirate smile” (which Kate Hudson absolutely nailed in “Almost Famous”).