Douglas Rooks: On Anthem, the die was cast long ago

Maine Health, the state's largest hospital chain, made headlines last week by announcing it would sever its network agreement with Anthem, the nation's second largest health insurer, at year's end.

This probably won't happen; these shots across the bow are common, as both entities maneuver for advantage.

Maine Health claims $13 million in underpayments, by its lights, and $70 million in non-payments from Anthem, which controls 11% of the national market. It's also Maine's largest insurer, and Blue Cross franchisee.

The real news, however, came from small providers, who chimed in about the difficulties they have in collecting from Anthem, often waiting months for a response, with claims rejected for seemingly trivial reasons.

Anyone who's studied American health care economics can attest that prices are often fictional – take the "retail" rate for most prescription drugs. But it still matters who pays, and how much, and the usual answer is "too much."

Anthem is a highly profitable company, with $6 billion in net income for 2021. It presence here dates to 2000, when it acquired the ailing Maine Blue Cross-Blue Shield, the state's largest health insurer – and non-profit, as most Blue Cross plans were then.

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Anthem started in 1946 as an Indiana mutual insurance company. After the failure of Bill Clinton's managed care plan in Congress in 1994, Anthem saw the opportunity to offer "private managed care" on a corporate scale.

It snapped up Blue Cross plans and made them for-profit, eventually going public and trading on Wall Street. It started in Ohio, then moved to New England, acquiring plans in Connecticut, New Hampshire and Maine.

The $104 million purchase price for Maine now seems risibly small, but we were told Blue Cross was a "sick" company. The relevant legislators and newly re-elected Gov. Angus King quickly signed off, asking few questions.

Only a few voices were raised in dissent, and they were ignored.

But not every state sold. In Rhode Island, then-Congressman Patrick Kennedy raised substantive objections, and the offer was rejected. Today, Rhode Island Blue Cross is still non-profit, and still that state's largest insurer.

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As for Anthem, it decided what Maine Blue Cross's problem was: insufficient rates. Not only did the company seek far larger increases than the non-profit had, but it rapidly built up reserves – also allowed under Maine law – well beyond claims it paid.

One begins to see how Anthem became a "cash cow," a reliably profitable stock beloved of investors.

Among the many problems with giant national health insurers is that they're subject only to state regulation, with minimal federal rules – a mismatch that's easily exploited.

One egregious example came in Maine, where Anthem was largely responsible for wrecking the Dirigo "public option" insurance plan instituted by the Baldacci administration in 2003.

Even as Anthem became sole provider of Dirigo policies, it repeatedly sued the state about the plan's financing through a surcharge on all private policies, reflecting the system's documented savings.

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Anthem lost every round, legally. Yet Gov. Baldacci, unaccountably, then scrapped the "savings offset" payment and replaced it with "sin taxes" on food and alcohol, instantly becoming known as the "Dirigo taxes."

Not surprisingly, a tax increase for no discernible reason had few defenders. It was repealed in a Republican-backed 2009 referendum, foreshadowed the 2010 GOP sweep.

In 2011, Gov. Paul LePage signed legislation scrapping Dirigo, and another non-profit – this one fully public – bit the dust.

It's not that there's something magic about non-profit health care; hospitals are, on paper, mostly non-profit, but most resemble corporate businesses in their practices and their eagerness to merge.

But there's little question that no longer having a Maine-centered health insurer has cost the state dearly. In Anthem's universe, Maine isn't even pocket change.

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What we've been stirred up to think about Central Maine Power and its giant corporate parent is just as true, if not more so, for health care, now much bigger without becoming cost-efficient. Customers often find its bills incomprehensible.

Any further state efforts will likely be unavailing; a Maine campaign to get universal health care on the 2023 ballot has just been abandoned, and they've failed elsewhere.

Federal reform is the only answer, and the odds are long there, too, with the growing influence of corporate health care, with limitless campaign spending, courtesy of the U.S. Supreme Court.

Yet it has to be done. A public system not controlled by the public will never serve any state's long-term interests; it's unfortunate we couldn't see that back when it would have made a difference.

Douglas Rooks, a Maine editor, commentator and reporter since 1984, is the author of three books. His first, "Statesman: George Mitchell and the Art of the Possible," is now out in paperback. He welcomes comment at [email protected]

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