Moody’s just downgraded the health insurance industry

From the Washington Post

Stephen Zaharuk is a Moody’s senior vice president who covers the health insurance industry. That makes him the guy who authored the report downgrading the credit outlook for health insurance companies from “stable” to “negative” on Thursday. We spoke Thursday afternoon about his outlook for the health-care industry, the big unknowns looming in 2014, and why the downgrade happened now. Some of his quotes made it into this story in Friday’s paper and what follows is a transcript of our discussion, lightly edited for clarity.
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AIDS advocates say drug coverage in some marketplace plans is inadequate

From the Washington Post

The nation’s new health-care law says insurers can’t turn anyone away, even people who are sick. But some companies, patient advocates say, have found a way to discourage the chronically ill from enrolling in their plans: offer drug coverage too skimpy for those with expensive conditions.

Some plans sold on the online insurance exchanges, for instance, don’t cover key medications for HIV, or they require patients to pay as much as 50 percent of the cost per prescription in co-insurance — sometimes more than $1,000 a month.

“The fear is that they are putting discriminatory plan designs into place to try to deter certain people from enrolling by not covering the medications they need, or putting policies in place that make them jump through hoops to get care,” said John Peller, vice president of policy for the AIDS Foundation of Chicago.
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Thousands of Doctors Dropped by Insurer After Obamacare Funding Cuts

From Newsmax

UnitedHealth Group has dropped thousands of doctors from its networks in recent weeks, leaving many elderly patients unsure whether they need to switch plans to continue seeing their doctors, the Wall Street Journal reported Saturday.

The insurer said in October that underfunding of Medicare Advantage plans for the elderly could not be fully offset by the company’s other healthcare business.

The company also reported spending more healthcare premiums on medical claims in the third quarter, due mainly to government cuts to payments for Medicare Advantage services.

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Another Health Insurer Caught Falsely Cancelling Thousands of Health Plans

From Daily Kos

Following the report that Insurer Humana was fined $65,000 in Kentucky for sending out 6,500 misleading cancellation letters for low-premiums plans only to be automatic re-enrollment in high cost plans before these customers were given a chance to shop on the open exchange for a better and cheaper plan – we now have a new report that Anthem Blue Cross is being sued for tricking people into dropping their “grandfathered” plans.

Think that’s bad, well this is even worse.

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How Insurers Are Hiding Obamacare Benefits From Customers

From Talking Points Memo

Donna received the letter canceling her insurance plan on Sept. 16. Her insurance company, LifeWise of Washington, told her that they’d identified a new plan for her. If she did nothing, she’d be covered.

A 56-year-old Seattle resident with a 57-year-old husband and 15-year-old daughter, Donna had been looking forward to the savings that the Affordable Care Act had to offer.

But that’s not what she found. Instead, she’d be paying an additional $300 a month for coverage. The letter made no mention of the health insurance marketplace that would soon open in Washington, where she could shop for competitive plans, and only an oblique reference to financial help that she might qualify for, if she made the effort to call and find out.
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Proposal Challenges TIAA-CREF on For-Profit Health Insurance

By Robert Kropp for Social Funds

Advocacy groups urge the pension fund to divest its holdings in private health insurance companies, arguing that the industry has a well-documented history of unethical behavior and abuses.

Should sustainable institutional investors hold the stocks of private health insurance companies in their portfolios?

It’s a question that advocates for a single-payer healthcare system is asking the Teachers Insurance and Annuity Association – College Retirement Equities Fund (TIAA-CREF), the financial services organization and one of the nation’s largest pension funds. A signatory to the United Nations’ Principles for Responsible Investment (PRI), TIAA-CREF states in its investment philosophy that it seeks “to invest in areas that affect social change and environmental stewardship while also producing competitive financial returns.”
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TIAA-CREF shareholders meeting hears call to divest from ‘unethical’ private health insurers

Shareholder’s comments provoke response from company’s president

CHARLOTTE, N.C. – Having suffered an earlier rejection by the leadership of TIAA-CREF of a shareholders resolution calling on the huge, nonprofit investment company to divest its funds from private health insurance firms because of the latter’s “unethical behavior,” a spokesperson for the divestment group took the microphone at the organization’s annual meeting Tuesday and urged just such a course of action.

Shareholder Sandra Fox, speaking on behalf of herself and others who have appealed to TIAA-CREF to divest its holdings in WellPoint and other giant health insurers, said such firms are not managed in an “exemplary and ethical manner” – a criterion for inclusion in the company’s portfolio – and therefore should be scrapped.

Going into to the meeting, Fox said: “The practices of these companies are anything but socially responsible. They make money by denying coverage, raising premiums, and increasing co-pays and deductibles, deterring patients from seeking care. Their everyday operations result in high overhead expenses, spiraling health care costs, worsening health, premature loss of life, and bankruptcy of countless Americans.”
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Demonstration at TIAA-CREF Shareholder Meeting in Charlotte, NC

Mark your calendar for Tuesday, July 16th, 2013. All are welcome to join us demonstrating at the TIAA CREF shareholder meeting in Charlotte, NC (8500 Andrew Carnegie Blvd) at 1pm.

We will be distributing this leaflet (.doc).

You can download the rejected shareholder resolution (.doc) that we submitted as well.

The leaflet reads:

CREF “SOCIAL CHOICE” IS A SHAM

TIAA-CREF REJECTS PROPOSAL FOR SHAREHOLDER RESOLUTION AND SEC ALLOWS NO SHAREHOLDER VOTE
U.S. HEALTH INSURANCE COMPANIES ARE NOT SOCIALLY RESPONSIBLE, i.e.
ARE NOT MANAGED IN AN “EXEMPLARY AND ETHICAL MANNER,” A CRITERIA FOR INCLUSION IN THE FUND

HEALTH INSURANCE COMPANIES’ PRACTICES RESULT IN SPIRALING HEALTHCARE COSTS, WORSENING HEALTH, PREMATURE LOSS OF LIFE, AND BANKRUPTCY FOR COUNTLESS AMERICANS

AMPLE EVIDENCE OF WRONG-DOING EXISTS, FROM HARVARD RESEARCH TO WHISTLEBLOWERS TO CONGRESSIONAL TESTIMONIES TO REPEATED LEGAL FILINGS TO CONVICTIONS, DAMAGES, AND FINES

TIAA-CREF AND MSCI (their vendor for rating companies) have received reams of this evidence from us during our so-called “dialogue,” yet these companies continue to receive high enough “scores” to be included in the fund. MSCI has not yet responded to our April request for the score on Wellpoint, which owns Anthem Blue Cross/Blue Shield, after we sent them news from the LA TIMES of a jury returning a damage award of $3.8 million against the insurer. This is not unusual–each of the insurance giants CREF includes in its Social Choice Fund has had a record of highly unethical and harmful behavior.

You call your method of inclusion of companies for Social Choice “best in class.” We call it a sham and a shame.

You claimed the shareholder proposal to divest from health insurance companies would “interfere with ordinary business.”

If ordinary business is hypocritical to the stated objectives of a socially responsible fund, we say it’s time to interfere with ordinary business.

DIVESTMENT CAMPAIGN FOR HEALTH CARE investigates holdings by TIAA-CREF and urges divestment from health insurance companies

By Sandra Fox

Healthcare-NOW, the national grassroots organization for single-payer healthcare, together with Physicians for a National Health Program, began a committee in 2010 to look at divestment from for-profit health insurance companies. We called ourselves the Divestment Campaign for Health Care.

As a member of the committee and a participant in TIAA-CREF funds, the nation’s largest pension fund that offers retirement options to academic (including medical centers) and religious organizations, I decided to investigate their holdings in the “socially responsible” stock option called “CREF-Social Choice.” As a stakeholder, I wanted to make sure that health insurance companies were not included in this fund.

Upon reviewing the 2010 Audited Schedules of Investments for the fund, I was very disturbed to discover that CREF-Social Choice included holdings in Aetna, CIGNA, Coventry Health Care, Humana, and WellPoint.

According to their Summary Prospectus the five “social criteria” TIAA-CREF reports using to decide on their socially responsible holdings include:

1) Strong stewards of the environment;
2) devoted to serving local communities where they operate and to human rights and philanthropy;
3) committed to higher labor standards for their own employees and those in the supply chain;
4) dedicated to producing high-quality and safe products; and
5) managed in an exemplary and ethical manner.

I understood from reading the Prospectus that companies are screened and ranked by an outside vendor, namely MSCI Inc, and that TIAA-CREF invests in companies that “meet or exceed the screening criteria…,” though “…concerns in one area do not automatically eliminate a company from potential inclusion in the …Fund.”

I further understood from the Prospectus, that “Even if an investment is not excluded by MSCI’s criteria, Advisors has the option of excluding the investment if it decides the investment is inappropriate, though it is expected that Advisors will normally apply MSCI’s screening results.”

Thus began my inquiry directly with TIAA-CREF headquarters in NYC.
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Time to divest from insurance companies?

From Alice Faryna M.D., Columbus, OH

After hearing someone say that health care reform is the civil rights issue of this decade, I retrieved the 1966 speech on civil disobedience by Dr. Martin Luther King. The two strategies described were marches and boycotts. His marches were successful because large target populations could be found in cities like Chicago and Atlanta , and quickly reached through churches. The single-payer movement has not been able to find such concentrated populations. Our rallies in D.C. and the Mad Docs tour in 2009 did not produce numbers of sufficient size to command attention. Let’s consider boycotts.

Dr. King said, “There is nothing quite so effective as refusal to cooperate economically with the forces and institutions which perpetuate evil in our communities.” Under the leadership of SCLC, refusing to buy products from companies which do not hire Negroes (sic), resulted in an increase of income in that community by more than $2 million annually.

Another example is the boycott organized by the Committee of African Organizations (CAO) with support from South Africa ’s Liberal Party in 1959. Additional support grew in British organizations and international labor movements. South African products came off the shelves. Eventually apartheid ended.

Paul Krugman recently commented on the sharp increase in premiums announced by WellPoint in their California individual market. WellPoint is not the villain. The current system invites a death spiral for the insurance industry which relies on large a large pool containing healthy clients to keep costs down. In the current economy, cash-strapped workers drop coverage resulting in a smaller, sicker pool. Legislation which bans discriminatory practices will further increase premiums and hasten the death spiral.

I suggest that PNHP and other organizations support disinvestment in companies which are on an unsustainable path. A precedent exists for pension fund managers to do this: In 2002, CALPERS embarked on a series of “socially responsible” investment boycotts starting with Asian companies which violated guidelines on human rights and labor standards. Also targeted were companies like Disney, Safeway, the New York Stock Exchange, and health maintenance organizations.

We could begin with encouraging PNHP members to purge their personal portfolios of health insurance companies; I have already done so. I intend to approach the STRS board with a request to divest from companies likely to see a sharp stock price reduction. Money talks.