A Philadelphia Hall Monitor source sent us a copy of Independence Blue Cross’ “Political Action Committee Member Participation Form,” asking us to shed light on how private profit-making insurance companies control health care in the United States. Our source wished to draw attention to how Independence Blue Cross, its subsidiaries, and its vendors maintain the political process through donations. First, we want to report on how the insurance industry controls how Americans receive health care.
In 2018, a research group that works for “Fortune 100” companies found, “Although advances in science and medicine make it possible to treat diseases more effectively and save lives, the reality is that many patients do not gain access to new treatments prescribed by their physicians.“
The reason for limited access isn’t the poor financial health of Insurance companies. Companies have been using ratepayer dollars to persuade regulators to raise rates year after year. Average annual health insurance premiums 2023 are $8,435 for single coverage and $23,968 for family coverage. These average premiums each increased 7% in 2023.” In the last decade, rates increased by 47%The average family premium has increased 22% since 2018 and 47% since 2013.
The companies’ rate increases led to increased profits. Wendell Potter, a former Insurance company executive turned critic, said “In 2022, Big Insurance revenues reach $1.25 Trillion, and profits soared to $69.3 billion. A 300% increase in revenue and a 287% increase in profits from 2012″.
Independence Blue Cross (IBX), our region’s largest health insurance company, was one of the companies.
The Philadelphia Inquirer wrote, “Annual revenue at Independence Blue Cross’ parent company has grown by an impressive two-thirds over the last five years, adding $10 billion in revenue through 2022.”
Many people may believe Blue Cross is a Non-Profit insurance company that forgoes profits to ensure health care. But IBX doesn’t forgo profits. It is the owner of several large for-profit companies that make money for the Company. Over 25 years ago, the then President of IBX, Fred DiBona, Jr, disclosed that the insurance giant would no longer focus on not-for-profit insurance. “We want to become a multiregional company. . . I think you’re going to see the majority of our book of business be managed care and in our for-profit companies.”
In 2022, the last year of IBX’s posted annual report, IBX states its total net worth is over $13 billion, with “unearned income” over $260 million. IBX claims it paid $860 million while the Consolidated Report shows “Premium, Health Care reforms and other taxes, $583 million” and “Income Tax Expensives of $130 million”. The total listed on the report is $147 million less than what IBX writes it paid.
Nowhere in the report does it say where the profit comes from for which it is paying income taxes. There is no listing of which of IBX’s companies are for profit, but some must be.
One of the ways the companies sweeten their bottom line is by limiting care.
A link on IBx’s web page calls the limitations of care “utilization management.”
”In certain instances, Independence has delegated utilization review activities to entities with expertise in medical management of a certain membership population or type of benefits (such as mental health/substance abuse, diagnostic imaging, and outpatient radiation therapy). A formal delegation and oversight process is established in accordance with applicable law and with nationally recognized utilization review and quality assurance accreditation body standards. In such cases, the delegate’s utilization review criteria are generally adopted by Independence for use by the delegated entity.”
American insurance companies cut costs and increase profits using similar techniques:
“Prior Authorization” requires doctors and their staff to spend money and hours talking to nondoctors at insurance companies trying to persuade the insurance company to cover what the doctor believes is needed care. “Over a period of two months last year, Cigna doctors denied over 300,000 requests for payments using this method, spending an average of 1.2 seconds on each case, the documents show.”
“Step Therapy” insurance companies require doctors to use the least expensive therapies first, even when the doctor believes the treatment will be ineffective before the insurance company agrees to pay for what the doctor thinks will work.
Limits on Treatment: Insurance companies routinely limit how long a patient can receive treatment.
Eliminating Covered Medications: Insurance Companies can and do decide to stop paying for certain medications.
Pennsylvania’s Attorney General has not challenged any of these limits to health care. A brief review of what our source sent may explain why.
Independence Blue Cross, its for-profit subsidiaries, and its vendors have set up political action committees (PAC) to make campaign contributions to candidates, both Democrats and Republicans. In writing, IBX’s PAC states: “Candidates may be from both political parties and understand (our) business objectives and support our mission.”
The PAC states it is “a personal and voluntary decision” to contribute. It then lists the amount it recommends each type of employee give from “Supervisors,” giving $ 15 per pay period, all the way up to “Executive Vice Presidents, who are advised to provide $ 192.30 per pay period.
The member participation form says the PAC is completely voluntary, “your job will not be affected by your choice.” Those who do contribute receive a lapel pin to wear at work and are able “to attend IBX PAC events” with others who give.
According to Open Secrets, an organization that follows money in politics, IBX’s PAC shows it gives to Democrats and Republicans.
But the largest amounts are given to other PACs, which obscures who is being supported. The largest contribution to another PAC in the 2022 election cycle was given to the “Pennsylvania Future Fund” which defines itself as “a pro-growth political action committee that is focused and committed to improving and maintaining the Republican majority in the Pennsylvania legislature and courthouses across the Commonwealth.”
Nor is IBX’s PAC the only PAC representing IBX. Amerihealth has its own , and IBX’s vendors have created a PAC, PA Health Care Leadership to support IBX’s agenda. The PACs supplement the hundreds of thousands IBX and its “subsidiaries” pay for lobbying.
Over 90 % of IBX’s PAC gifts go to incumbents. Incumbents who cross ideological lines. As our source wrote us:
“What is shocking is not the actions on the part of IBX to preserve the savage inequalities foundational to their business model. What is shocking is the number of progressives who line up to receive thousands of Independence dollars.”
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