Representative Leon Stavrinakis wrote an editorial in The Charleston Post and Courier about South Carolina Gov. Nikki Haley’s choice for Insurance Commissioner.  See below.

 

Have you opened your mail from your homeowner’s insurance company lately? Have you seen the premiums you are being charged? Take a look and I think you will share my concern and alarm.

South Carolina has the unfortunate distinction of having the highest property insurance rates of any coastal state in the country. Not by a little, but by a lot. It may surprise you to know that according to the Government Weather Services, South Carolina is not considered a “high-risk state” for hurricanes. In fact, we are actually considered a “low-risk state” for hurricanes, which means that our insurance rates should be right around the national average.

But our insurance rates are not even near the national average. As a state, South Carolina has become the nation’s cash cow for big insurance company profits. The insurance industry socks away a 22 percent rate of return in our state, while the national average is around 5 to 10 percent. Adding insult to injury, these profits came during the national economic down turn.

Why is South Carolina the insurance industry’s cash register?

It’s simple — because they can get away with it.

Our current governor, Nikki Haley, has treated your Department of Insurance as an advocate for big insurance companies. She has put in place insurance commissioners who are not from the consumer protection, premium-payer advocate side of the market.

Instead they are insurance company insiders. Your insurance commissioner is supposed to protect and represent the people who pay the premiums for fair coverage, not kowtow to the industry’s wishes.

The state Senate is currently deliberating the confirmation of Gov. Haley’s handpicked choice to be the state’s new insurance commissioner, Ray Farmer. The governor’s pick for this job, Mr. Farmer, is a longtime lobbyist for the insurance industry — a 40-plus-year career.

This past week saw a Senate hearing room stacked full of representatives from the insurance industry clamoring to tell lawmakers that their own lobbyist should be the official that regulates their industry.

S.C. taxpayers should be outraged.

This coming week the Senate stands at a crossroads. Does the state continue with this current and expensive practice? Does it confirm Gov. Haley’s nominee, a big insurance lobbyist to regulate the industry he has represented for decades?

Do we want to continue charging taxpayers more than our neighboring states? Or should we start looking out for property owners?

Personally, I am tired of these inflated premiums. South Carolina property owners deserve a better deal than we are currently getting. We deserve an insurance commissioner who will be an advocate for consumers, not look out for big insurance companies who are already swimming in profits.

We deserve a commissioner who will stand up to the big insurance companies and keep this complex marketplace competitive for us.

What we are getting now amounts to property owners paying premiums on our henhouse and our governor appointing the fox to guard us.

We need a change. We need to have this important consumer protection position popularly elected by South Carolina voters. We need to have an advocate truly accountable to the people of South Carolina and we need to prevent the insurance companies from rigging the game for their benefit.

Call your state senators.

Let them know we need a fair, competitive insurance market.

Let them know we need a voice that will challenge the insurance industry.

Let them know we need an independent voice who will represent the best interest of property owners — not the insurance companies and their profits.

 

The New York times reported that millions of poor and elderly Americans may have to contribute more for health care under a proposed federal policy that would give states more freedom to impose co-payments and other charges on Medicaid patients. Under the proposal, a family of three with annual income of $30,000 could be required to pay $1,500 in premiums and co-payments.

The 2010 health care law extended Medicaid to many childless adults and others who were previously ineligible. The Supreme Court said the expansion of Medicaid was an option for states, not a requirement as Congress had intended.  Hoping to persuade states to expand Medicaid, the Obama administration is allowing state Medicaid officials to charge higher co-payments and premiums for doctors’ services, prescription drugs and certain types of hospital care, including the “nonemergency use” of emergency rooms.

With patients paying more, the federal government and states would pay less than they otherwise would.

 

Several media outlets have reported that national health spending has remained stable as a share of the economy since Obamacare was enacted.   Spending increased overall to $2.7 trillion in 2011, or an average of $8,700 for every person.  The rate of increase in health spending, 3.9 percent in 2011, was the same as in 2009 and 2010 — the lowest annual rates recorded in the 52 years the government has been collecting such data.   National health spending grew at roughly the same pace as the overall economy, without adjusting for inflation, so its share of the economy stayed the same, at 17.9 percent in 2011, where it has been since 2009.

Kathleen Sebelius, the secretary of health and human services, said that “the statistics show how the Affordable Care Act is already making a difference,” saving money for consumers. Medicaid spending grew less quickly in 2011 than in the prior year, as states struggled with budget problems. But Medicare spending grew more rapidly, because a one-time increase in Medicare payments to skilled nursing homes.

A sign that the effects of the recession have begun to fade is the percentage of people with private health insurance increased 0.5 percent in 2011 after losing ground the previous three years.
And the share of Americans with health coverage is expected to grow substantially in 2014, when some states will expand their Medicaid programs, and federal subsidies will be offered through insurance exchanges under the Affordable Care Act.  More people gained health insurance as a result of the health law’s requirement that young adults can stay on a parent’s plan until age 26.

 

Health care spending is highly skewed toward the sickest people. Five percent of patients account for nearly half the total spending in any given year.  Prevention and early treatment are the keys to keeping health care spending low.

See articles at The Washington Post, The N.Y. Times, The Wall St. Journal, and Politico.

The L.A. Times reported that health care consumers saved nearly $1.5 billion in 2011 as a result of the Affordable Care Act (Obamacare) that limit what insurance companies can spend on expenses unrelated to medical care, including profit, a new analysis by the New York-based Commonwealth Fund shows.  Much of those savings — an estimated $1.1 billion — came in rebates to consumers required because insurers had exceeded the required limits. The study also suggests that the Affordable Care Act forced insurers to become more efficient by limiting their administrative expenses, a key goal of the 2010 law.

In some cases, insurers passed savings on to consumers in the form of lower premiums and higher spending on medical care, the researchers found.   Administrative costs in the individual market dropped in 39 states, with major improvements in South Carolina.  Insurers in 37 states spent relatively more of their customers’ premiums on medical care, with big gains in South Carolina.

Stepping up regulation of health insurance companies has been a top priority for consumer advocates, who have complained for years that insurers routinely increase premiums to pad profits and executive salaries rather than pay for medical care. The healthcare law attempts to address this by requiring insurers to spend at least 80 cents of every dollar they collect in premiums on medical care, rather than on administrative expenses.  Insurers selling to employers must meet an even tougher standard, spending at least 85 cents of every dollar on medical care.

 

The Washington Post reported that the average premium for basic Medicare drug coverage will stay the same next year, $30 a month. That’s the third year in a row of little or no change. In addition, Medicare recipients with high prescription costs are saving an average of $629 apiece thanks to a provision of the new health care law that gradually eliminates a coverage gap called the “doughnut hole.”

 

The L.A. Times recently reported that U.S. consumers and businesses will receive an estimated $1.3 billion in rebates from insurance companies this year, according to a new study by the nonprofit Kaiser Family Foundation quantifying a key early benefit of the healthcare law that President Obama signed in 2010.  Obama’s healthcare law requires insurers to spend a minimum portion of customers’ premiums on medical care, a provision championed by consumer groups concerned that companies were hiking premiums to pay for executive salaries, shareholder dividends and other expenses unrelated to their customers’ care.

Starting last year, if insurers did not meet these targets – known as medical loss ratios – they had to pay rebates this year to people enrolled in their plans. The Kaiser study, which analyzed rate documents filed with state regulators nationwide, found 486 health plans nationwide that will be required to pay rebates, with the largest number in the individual market forpeople who do not get health coverage through work. A third of all consumers in this market will be eligible for a rebate.

The authors of the Kaiser report noted that the new requirements likely mitigated some rate hikes, however, in part by pushing insurers to seek smaller premium increases than they might have. “Greater regulatory scrutiny of private insurance is improving value and helping to get excess costs out of the system,” said Kaiser President and Chief Executive Drew Altman.

 

Kaiser Health News reported the decision by the Supreme Court of Maine allowing Maine to limit insurance premiums and presumably their profits.  The decision upheld state regulators’ authority to hold down rate increases sought by Anthem Health Plans of Maine. The Supreme Judicial Court said that Maine’s insurance superintendent had “properly balanced the competing interests” in arriving at an approved rate increase of 5.2 percent. The insurer, a unit of Wellpoint, the nation’s largest insurer, had sought a 3 percent profit margin as part of an overall 9.2 percent increase in health insurance rates for policies sold to individuals in 2011. It argued that state regulators’ decision to grant a 1 percent profit margin violated state law and the U.S. Constitution by depriving the company of a “fair and reasonable return.”

Maine law, like that in many states, says premium increases cannot be excessive, inadequate or unfairly discriminatory.  The District of Columbia and 26 states, including Maryland and Virginia, have the authority to veto rates deemed excessive for at least some types of insurance, generally policies sold to individuals and small businesses. Seven states, including California, have the power to review rate increases in advance but not to block them.

“This is great news for consumers because it reaffirms that a state insurance regulator, when they have the authority, can do a balanced, comprehensive review of rates,” Kofman, now a researcher at Georgetown University’s Health Policy Institute.

 

USA Today had a great article on Medicare premiums.  Medicare Advantage premiums fell 4%while enrollment rose 10% this year, despite predictions from opponents of last year’s federal health care law that it would drive down enrollment and force up premiums.  Extra benefits in some Medicare Advantage plans, such as for vision or hearing, also are expected to remain the same.

The new statistics disprove the doom-and-gloom predictions of last year and show that because of the 2010 law,  Medicare Advantage premiums will go down next year and seniors will enjoy more free benefits and cheaper prescription drugs.

Medicare Advantage allows seniors to leave traditional Medicare and choose private health insurance plans, including health maintenance organizations or preferred provider organizations.

The health care law includes $145 billion in reduced payments to Medicare Advantage providers over 10 years. Critics said lower payments would force insurance companies to increase premiums, and that fewer people would enroll. The CBO predicted that by 2019, Medicare Advantage enrollment would decline by 35% because of a continued reduction in payments to providers.  

The critics were dead wrong.

The plans were targeted because the government pays more per capita for beneficiaries in the private plans than it spends on those in traditional Medicare. The billions of dollars cut from the plans were used to help the Obama administration pay for the cost of expanding coverage to 32 million Americans through expanded Medicaid eligibility and subsidies for people buying coverage in new insurance exchanges starting in 2014.

 

 

The conservative Center for a Just Society had an incredible article from the well-respected Ken Connor discussing tort reform and health care.  The article is below:

"In the state of nature… all men are born equal, but they cannot continue in this equality. Society makes them lose it, and they recover it only by the protection of the law."
Charles de Montesquieu

In the ongoing debate over health care reform, critics on the right are increasingly citing the lack of tort reform as a major deficiency of the current proposals floating around the halls of Congress. Instead of focusing on truly conservative solutions to our nation’s mounting health care crisis, Republican lawmakers and pundits are playing the same old song-and-dance—blaming ballooning health care costs on trial lawyers. This red herring tactic is a classic example of politicians trampling principle in pursuit of politics. In this case, Republicans moonlighting as "conservatives" seek to use tort reform to shield corporate malefactors (who also happen to be their financial benefactors) from full accountability for their wrongdoing. In so doing, they are undermining a bedrock principle of our nation’s justice system.

For years, Big Business and the U.S. Chamber of Commerce have spent millions of dollars in a public relations campaign aimed at demonizing trial lawyers, portraying them as unethical con-artists out to game the system. These corporate interests have a vested interest in keeping the tide of public opinion running against trial lawyers because it deflects attention from the widespread problem of negligent and reckless conduct that injures consumers. This "shoot the messenger" tactic not only enables businesses to avoid financial accountability for wrongdoing—it deliberately undermines the people’s civil liberty.

The reality is that trial lawyers are the people’s first line of defense to secure redress of grievances for private or civil wrongs committed against them. The most highly publicized of these kinds of cases usually involve David and Goliath-type scenarios—think of the massive frauds committed by WorldCom, Enron, or Bernie Madoff and you get an idea why trial lawyers are essential to securing justice for those wronged at the hands of well-heeled rogues with deep pockets and limitless legal resources. And yes, sometimes these cases involve substantial claims against doctors or hospitals accused of malpractice.

Despite unfair characterizations to the contrary, medical malpractice is no joke. Every day thousands of Americans walk into doctors’ offices, emergency rooms, and operating rooms trusting their lives to the expertise and integrity of the medical system. Errors in diagnosis, misread charts, medication errors… all can cause irreparable harm to their victims. And these kinds of accidents happen often—far more than Republican advocates of "reform" are willing to admit and far more than most people realize. According to several studies conducted over the last decade, up to 98,000 people die every year as a result of an estimated 15 million instances of preventable medical errors. These statistics place death by malpractice as the 6th leading cause of death in the United States.

For the victims and their families, the tragedy inflicted as a result of medical malpractice is very real, and the process of seeking a just remedy can be overwhelming. It is for precisely these kinds of situations that the 7th Amendment to the United States Constitution guarantees all Americans the right to a fair trial before a jury of their peers. This right is a foundational principle of our civil liberty and should be a core tenet of conservatism because it affirms the responsibilities citizens have in a free society and the accountability of all before the law.

Nevertheless, the importance of the civil justice system and the right to trial by jury is poorly understood by many conservatives because trial lawyers are constantly demonized by special interests seeking to evade justice. Many Republicans have been wrongly led to believe that tort "reform" is some kind of Reaganesque trickle-down solution to the high cost of insurance and the high cost of medical care. The facts, however, don’t support such a notion. Skyrocketing insurance premiums are not a result of malpractice litigation, and the high cost of medical care stems more from "offensive medicine" (profiteering by doctors seeking to make an extra buck), rather than "defensive medicine" purportedly resulting from fears of malpractice suits.

In 2007, the Congressional Budget Office estimated that costs associated with medical malpractice claims only amounted to 2% of overall health care spending. Furthermore, multiple studies suggest that the high cost of medical insurance has virtually no correlation with the frequency or amount of malpractice payouts but is actually a result of insurance companies playing the market and—in some cases—intentionally misrepresenting the influence of malpractice payouts in order to keep premiums high. Doctors are not fleeing the medical profession from fear of lawsuits, and those who are sued for medical malpractice are often permitted to continue working with little to no professional censure for the harm they inflicted.

The truth is that corporate moguls push for tort reform because they have little use for a civil justice system that puts the little guy on the same plane as the rich and powerful. These so-called fiscal conservatives don’t like equal justice. They want preferential treatment—something they are accustomed to getting from politicians because of their hefty campaign contributions.

Conservatives need to educate themselves about the importance of a civil justice system that protects everyone and treats all litigants—rich and poor alike—as equals before the law. Furthermore, true conservatives ought to resist attempts to federalize tort law and impose one-size-fits-all solutions to "problems" that are, in large part, the fictional creations of special interest lobbyists seeking to enrich the coffers of their wealthy clients. Any change in medical malpractice laws should occur at the state level and be tailored to meet conditions in the individual states. The people in Topeka may approach the same problem differently from the folks in Tallahassee. They may be experiencing different problems, or perhaps, none at all. In any event, the residents of Attapulgus, Georgia don’t want Chuck Schumer and Olympia Snow dictating the remedy they can pursue when a doctor leaves a pair of scissors in the site of their incision or causes avoidable brain damage to their newborn.

Tort reform subsidizes wrongdoing by shielding wrongdoers from accountability for the consequences of their misconduct. It is an affirmative action program for corporate miscreants. Incorporating tort reform into health care reform will do nothing to cut medical costs. It is, however, guaranteed to result in more, not fewer, cases of medical malpractice. Furthermore, federalizing tort laws will only result in the accretion of more power in the hands of the central government and the emasculation of the rights of states and individuals.

If Republicans are truly sincere in their commitment to protecting the rights and liberties of the American people against more and bigger government, they should resist any attempt to federalize the laws of medical malpractice.

With the recent discussion on how to best reform America’s health care system, insurance companies and nursing home lobbyists, are once again blaming the lawyers.   Numerous studies have debunked the need for tort "reform".   For example, Health Affairs published a study assessing the cost of malpractice premiums, litigation, and payments, in addition to potential expenditures from so-called "defensive medicine".

U.S. citizens spent $5,267 per capita for health care in 2002—53 percent more than any other country. The cost of defending U.S. malpractice claims is estimated at $6.5 billion in 2001, only 0.46 percent of total health spending. The two most important reasons for higher U.S. spending appear to be higher incomes and higher medical care prices.

Malpractice Claims Filed in the US.   The authors compared domestic suits with those in Canada, Australia and Britain (all countries with a similar, British-based legal system), and it turns out Americans sue 50% more than Britain or Australia, and 350% more than Canada. The most likely explanation is our private system makes more mistakes.  While approximately 98,000 people die each year from negligent treatment, a mere 2 percent sue their physicians. Between 1990 and 2002, “5.2 percent of doctors were responsible for 55 percent” of all malpractice pay outs.  Of our high rate of suits, 2/3rds are dropped, dismissed, or found for the defendant. Only 1/3rd of plaintiffs make anything. In Britain, however, 60% of suits are settled, while only 36% are dropped or found for the defense. So while we have more malpractice, we have much fewer victims being compensated.

• Claim Payments Lower in the US     Our average payout is much less than Canada or the UK: we give $265,103 vs. their $309,417 and $411,171 respectively, putting us 14% below Canada and 26% behind the UK.   Media attention and conservative rhetoric focus on the large rewards, but they are rare .

• Cost of Malpractice     Legal costs are $27,000 per claim, settlements and judgments are $4.4 billion, and insurance is $700 million. The total cost of malpractice is thus 6.5 billion –.46% of health care costs, or less than one half of one percent. They’re just not a significant factor in rising health prices, and those who say different are lying.

Defensive Medicine    The Congressional Budget Office did a study and concluded that the savings from less defensive medicine post-tort reform, if there were any, would be very small.

• Claim Payments Have Not Been Growing More Rapidly in the US    Payments stateside have been growing at a steady 5% over inflation. In other countries, however, they’ve been growing at 10-28%. If malpractice insurance is growing rapidly in America, it is the fault of our insurance companies and system, not consumers.   British and Canadian physicians are protected from malpractice litigation risks by a single national organization with government subsidized premiums and no incentive to jack up prices on doctors. Australia has a private system more like ours, but the government subsidizes malpractice premiums and reinsures high-cost claims.

The way to protect doctors from malpractice costs is to remove the profit incentive for insurers to hike premiums on them. Canada, Britain and Australia have all done so by bringing the government in and promising protection to doctors. Under their solutions, consumers and physicians were protected, insurance companies were the ones who ended up hurt.