HH: Joined now by Denny Weinberg. Denny is one of the founding directors of WellPoint. He has been in this business for twenty years. The Speaker ought to have him TDY to D.C. tomorrow to help them get the Plan B ready. Denny, welcome and thanks for joining me on short notice.
DW: Hugh, good to talk to you again.
HH: How big of a catastrophe is this going to be on 1/1/14?
DW: It’s going to be bad, and it’s not going to end 1/1/14.
HH: And I am mostly worried right now, though, about I don’t know how many millions of Americans aren’t going to have any insurance at all who have it right now, and the fact, Denny, that exposes them to ruin, doesn’t it?
DW: It will, and you know, this administration has decided what appropriate coverage is, and made a decision that for some reason seems to be more important than the decisions of all these millions of Americans made in the full light of day over the last several years. They’re happy with what they chose. They had those choices available. And Jay Carney says that it’s substandard, it’s onerous, it doesn’t meet minimum standards, but it certainly met what they wanted.
HH: Now they are out in the cold, and they can’t use the website, or they’re afraid to use the website, or premium shock has set in. The Republicans are going to see a white flag pretty soon, I believe, over the Democratic hill, because they’re getting killed on this, and rightfully so. What should they ask for, Denny? This is the key. What should the GOP demand that they could get done between now and January 1 to help?
DW: Well, it’s very difficult to imagine how you put Humpty Dumpty back together. And we have so destroyed the fundamental infrastructure that made this market work over the last several years as we prepared year after year for this final step of the Affordable Care Act. But if you step back, I think there’s some really important things that we would all agree to, those of us who understand the power, and we’ve seen the power of the private market at work. We’d like to see a national marketplace.
DW: A marketplace that is free from government interference, either state or federal. And you know, before the federal government got deep into this, many of the states were doing the same thing. And we pushed a good amount of that back by demonstrating how much better the under-regulated markets performed than the over-regulated markets, state by state. And it’s dramatic, the price of insurance, the number of offerings, the growth of the market, the stability, financially. There’s no comparison if you take a state like Texas and you compare it to a state like New York over the last twenty years.
HH: So what does that look like when we say interstate availability, would that mean, and let’s put it in modern terms, one website where everyone could see and competitively price every product?
DW: What I would do is I would immediately order the National Association of Insurance Commissioners, which represent the insurance departments of every state in the country, into emergency session, and I would say you guys come back out with a way to deal with interstate commerce, or intrastate commerce, that would allow whichever states have the best historic views of this to be available to those in other states who choose to purchase plans that are available in that state. If you open the market up and you deal with the state regulators, and have them address this issue about laying down their boundaries, there’s a chance of doing this. Historically, states have operated completely independently. As soon as you cross from one state to another, you’re in a different set of laws. And the politics of each of those states have overrun the logic of the market. But there are some states that have done this really well.
HH: Would there be companies that would be willing to run the risk, Denny, of saying okay, we’ve got Plan A, B, C, D, E and F, and we will make them available for the interstate market at these prices? Would anyone take that bold step forward?
DW: If they understood that the rules of offering were consistent around the country, that you didn’t have to deal with the Massachusetts Department of Insurance coming in and saying you can’t do that for somebody who applies for our state. So every insurance company would be thrilled to come into a market where a plan that was designed in Texas and approved by the Texas Department of Insurance Regulations, was available to other people in the United States under those same rules? Absolutely.
HH: Now you see, Denny, that’s what we do with immigration law by virtue of the Constitutional grant to the federal government of exclusive authority on immigration law. The states don’t get to mess around and create different markets for different immigration laws. There’s one immigration law. If we had the federal government come in and preempt the state insurance commissioners after they’ve selected, I don’t know, a hundred plans, could that work? And could it work quickly?
DW: Well, the question is who from the federal government could oversee that. Certainly, this administration and probably this Congress can’t. You know, the smartest people on this are some of these state insurance regulators who have been in open states that understand how to make this work. I don’t know how you pull them together and get the right force of action that would accomplish what you and I are talking about. But that would be the challenge. This has historically been a state business. Insurance has always been designed and regulated at the states. The best markets have been as a result of states with a very high appreciation of private market. The worst states, the worst performing health care, has been in states that believe the government has a better answer.
HH: So if I’m the king of the forest, not queen, not duke, not earl, and I said okay, Denny Weinberg, you’ve persuaded me, I’m going to pass a law, and you’re going to be the chairman of an eleven person commission, go find ten other commissioners from ten different states so we get geographical balance, and you guys come out with a list of products and prices. Theoretically, and I just know you’re blue skying it here, what are we talking about? What would be a reasonable policy for people? And we have to pick up preexisting conditions. The American people want that. They don’t want people tossed off for preexisting conditions. But what would be a reasonable health care cost for someone?
DW: Well, let me just tell you a couple of things that have been overstated by the administration. Eliminating lifetime limits, eliminating annual limits, guaranteeing that once somebody’s insured they never lose their insurance are no brainers. They’re easy to do. They cost nothing. So while that’s been hyped up as a massive, massive achievement of the Obama administration, those are easy, and they cost very little. A guarantee issuing individuals at the time they first purchase is a big deal. And it’s, so there’s got to be a mechanism that allows a transition, a thoughtful way for people who are outside the system to transition into the system. It may not happen all at once. It may have to be done over time. But some states have even come up with clever way of subsidizing through high risk pools an interim period where over two or three years, you slowly transition your way into the system. But then you have to stay in the system. Everybody’s got to have a responsibility. Once you’re in, you stay in. No insurer can cancel at that point, and no insurer really does anymore. This is 1990s rhetoric. So a thoughtful way to transition those who wouldn’t ordinarily be in to get in. And the way you do it is not on January 1 of 2014 open the doors and a big website, and everybody floods in. This has got to be done thoughtfully, and it’s got to be done in a way that’s attractive to healthy people so the prices are low, there’s many, many options from very inexpensive to more comprehensive. This idea of essential health benefits and the government knowing what people ought, must have in their policy is no more rational…
HH: It’s absurd.
DW: …than saying we all ought to drive SUV’s.
HH: That’s it. It’s like trying, you took the words right out of my mouth. It’s like trying to mandate the car mix, the vehicle mix in America, and not just the car mix, but bicycles and motorcycles and pedestrian choices. So Denny, in terms of doability, if the Republicans got a signal from the Democrats that they were open, what would we do right now about the people losing their insurance? Would the insurance industry welcome a put back where they were instructed to return policies to the pro-hoc situation?
DW: Well, they haven’t yet cancelled. They’ve given notices as they’re required, so if there was a more, if there was some kind of a moratorium or an injunction passed, those carriers would all agree to keep their policies available, understanding that they wouldn’t be violating any law. We would set a date, maybe June of next year for the first step of whatever this is, and we would just freeze everything where it is. And it would have to be something like that, because we’re on a crash course for not only people losing their policies, but people choosing to drop their policies January 1. And everyone who will volunteer out of this system will be healthy. You know, we talk about young and old. The real issue isn’t the young people, are the old people out. The issue is that right now, the incentive is for somebody who does not see health needs in the foreseeable future to drop out of the system.
HH: Sure. It’s called adverse selection.
DW: The longer you have that open enrollment window open, the longer they’re going to wait.
DW: Is it crazy?
HH: It’s adverse selection. We dealt with it at the FEHB level for years in the 80s when I was in the Reagan administration. And it’s crippling. But it could be done. What I hear you saying is that there are things the Republicans could do right now if Democrats would cooperate and assume that the President, because he does not want his legacy to be destroyed, would go along with, that we could stabilize, prevent and possibly repair the system.
DW: I agree with your idea of grabbing the fifteen most knowledgeable insurance commissioners to an emergency session on how can we forestall this disaster from getting worse, because this website thing is nothing. What is going to happen on January 1 is beyond comprehension. There is no actuary that can tell you what the consequences will be.
HH: Denny Weinberg, I appreciate it. We’ll check back with you, founding director of WellPoint, and one of the smart guys. And really, Speaker Boehner and your staff, I know you’ll listen. Put him on a plane. Have him come back. Take the help that’s offered.
End of interview.