Chances of health reform passage soar

By rhetorically flagellating health insurers such as WellPoint Inc., President Obama’s has greatly boosted his chances
of success in the eyes of Wall Street. But to make his health reform bill reality, he might need to answer the less-than-reassuring
news coming from Massachusetts (again).

Intrade.com is selling a futures contract on whether Obama’s health reform bill will become law by June 30. On Tuesday,
March 2, the market rated the chances of that happening at a mere 30 percent. Just one week later, the chances had soared
to 60 percent.

“Every year, insurance companies deny more people coverage because they've got pre-existing conditions. Every year,
they drop more people's coverage when they get sick right when they need it most. Every year, they raise premiums higher
and higher and higher,” Obama said March 8 during a speech in Pennsylvania. “Just last month, Anthem Blue Cross
[WellPoint’s subsidiary in California] tried to jack up rates by nearly 40 percent—40 percent. Anybody's paycheck
gone up 40 percent?”

The stock prices of Indianapolis-based WellPoint and its health insurance peers have lost a bit a ground over roughly the
same time period. Health insurers began opposing the Democratic health bills in October, but it’s not clear how much
the legislation would hurt them. The bills include more than $35 billion a year in subsidies to help an additional 30 million
Americans buy health insurance.

Insurers have objected, however, that the bills would force them to cover all comers but then offer a relatively weak penalty
for those who don’t obey a mandate to buy insurance. The result, insurers fear, would be that healthy people don’t
pay for insurance until they’re sick and have large medical bills.

Obama’s combination of a mandate to buy insurance, a requirement of insurers to take all comers, and subsidies for
those with modest incomes is modeled closely on reforms passed in Massachusetts in 2006.

The reform has been popular there, sharply reducing the number of uninsured and decreasing the cost of insurance for those
buying insurance without the help of their employers, according to a February report from the Pioneer Institute, a Massachusetts
think tank. You can read its full report here.

But small businesses got socked with big premium increases in 2010, ranging as high 47 percent, according to the Boston
Globe. And Columbia Journalism Review, a trade publication, highlighted a report showing low-income workers
and their companies, such as home-health agencies, struggling mightily to buy insurance that’s affordable for them.
That article is here.

In addition, the amount spent on health care services in Massachusetts is still 32-percent higher than the national average,
and growing faster, according to the Massachusetts Divisions of Health Care Finance and Policy.

Gov. Deval Patrick, concerned about those costs and revelations of exorbitant prices demanded by Partners HealthCare System
in Boston, asked the Massachusetts Legislature to give him the authority to control prices by rejecting health care providers’
price increases if they were faster than the overall rate of medical inflation.

WellPoint CEO Angela Braly has defended her company’s recent premium hikes for individual customers—which average
21 percent in Indiana and 25 percent in California—by blaming the ever-rising cost of care provided by doctors and hospitals.

“The increases in premium costs are driven by prices charges by clinicians, hospitals, medical-device manufacturers,
pharmaceutical companies and other suppliers in health care that are accelerating much faster than general inflation,”
Braly told Congress on Feb. 24.