Boston Mayor Tom Menino has responded to the Globe article on Humana’s price hike by demanding an investigation.
Boston Mayor Thomas M. Menino yesterday called for an investigation into Humana Inc.’s price increases for its Medicare prescription drug plans, saying the company’s 130 percent premium increase for its most popular plan in Massachusetts is a “bait and switch” tactic that preys on vulnerable people.”Our seniors need a program that’s affordable and consistent and not the bait and switch practices we’re seeing here,” Menino said. “They promised people one thing and gave them another.”
Menino, who said he was responding to a story in The Boston Sunday Globe detailing Humana’s 2007 price increases for its drug insurance, said he would raise the issue at an upcoming meeting of the United States Conference of Mayors in Washington, D.C., and seek support from leaders in other cities.
“This is not just a Boston issue,” he said. “This is a national issue. We have to act in unity and stop this gouging.”
Humana, which pretty much ignored the article at first, finally made its PR flack available for comment and this is his explanation: it’s the govt’s fault.
“The fact is that the premium prices that eventually appear on the government website are actually set by the government, and not by the individual health benefits companies,” said Tom Noland , a Humana spokesman. This year, he said, the company’s prices “ended up being higher than what we bid.”
Uh-huh. Interesting pass-the-buck move and it might make sense if you didn’t already know, as I said a few days ago, that Humana’s presentation to Wall Street bankers 2 years ago included plans for a significant price hike this year as part of its overall strategy to raise its profit margin (which was below 10%, a number Wall Street investors now consider, well, puny). Menino wasn’t buying their dodge, thank heaven. Neither were Congressman Ed Markey and Sen Kennedy, who joined Menino to ask for the investigation.
“Drug or other healthcare companies should not be allowed to lure seniors into low-priced plans one year and then hike the premiums through the roof the next,” said US Representative Edward Markey , Democrat of Malden , in a statement. “Companies know that they have a lock on seniors who choose their plans because they will not have the energy to go through the confusing and frustrating process of changing plans every year.”
Teddy, god bless ‘im, went straight to the top:
US Senator Edward M. Kennedy, Democrat of Massachusetts, yesterday wrote to Lesley V. Norwalk, acting CMS administrator, urging Norwalk to protect Medicare drug plan enrollees from “unjustified and predatory increases in insurance premiums for drug coverage.””It is unconscionable that insurance companies should be allowed to raise their rates by 100, 200, or even over 400 percent after luring seniors into the program with artificially low rates,” wrote Kennedy, who will become chairman of the Committee on Health, Education, Labor and Pensions.
It remains to be seen whether or not an investigation materializes, and whether or not it has any effect if it does, but at least some of our representatives aren’t just rolling over for corporate tummy pats. Mass Sec of State Bill Galvin, for instance, is going to be investigating the relationship between a Swiss bank called UBS AG and certain hedge funds based in Mass.
Secretary of State William F. Galvin said yesterday his ongoing probe of the relationship between Swiss bank UBS AG and certain hedge funds stems from broader concerns about the practices of a lightly regulated corner of the financial services industry.”The bigger issue,” Galvin said yesterday, “is, what is to be the role of hedge funds in the financial system? Hedge funds are like the jet stream that affects all the other weather, and can have a disruptive effect at a time when we’re saying to most investors . . . ‘you’re on your own.’ “
The specific issue is that a number of Boston’s hedge funds are located in extremely expensive digs provided by UBS that they appear to be paying for via “higher-than-normal trading fees”. That may not sound like much but it’s an indication that the hedge funds may be in bed with a foreign bank and using this and other little “arrangements” to hide money. Galvin isn’t issuing subpoenas or anything, but he’s putting the hedge funds on notice that playtime is over and they’re not going to be able to operate in a regulation-free zone much longer.
Even if you add them together, these two developments are barely baby-steps on the road to reining in corporate/investor-class excess, but they show the kinds of things we could do to stop the thievery if only the officials who are supposed to do it were willing.