Colorado’s quasi-governmental health-care rationing

Despite the impression generated by the shouting Tea Party rabble this month, most Americans know very well that health care in the U.S. is rationed. Not all of the procedures you want performed are covered by your insurance, if you have insurance. And sometimes, as lawmakers in Denver discovered yesterday, insurers send a nurse who’s really also a spy to monitor your doctor’s visits and make sure you don’t get the treatment you need.

What’s behind this patient-consumer nightmare? Is it government control? Is it corporate greed? It’s a pretty good test case, actually. The insurer at the heart of the accusations is Pinnacol Assurance, the state-chartered workers’ compensation fund that has been amassing enormous cash reserves in the last decade and is now seeking greater market autonomy.

Pinnacol has been a state agency for nearly 100 years, formed to provide workers’ compensation insurance to employers who couldn’t get insurance elsewhere. Now Pinnacol wants to break free of state control, including legislative oversight, and in exchange would begin to pay taxes. But if testimony this summer is any measure, Pinnacol is already acting like the worst kind of private company, abusing clients, doling out executive bonuses and expensing luxuries like a privately held Wall Street firm immune to outside scrutiny.

It also seems to be doing all of this at the expense of the injured workers whose treatment it is supposed to be underwriting.

According to the Denver Post, a parade of angry workers at the hearing Monday voiced their complaints, one asking panelists to consider how Pinnacol has managed to reach the kind of profitability that has generated a $700 million surplus over the last ten years.

“I don’t know how they did it, but I can’t help but wonder if their aggressive scrutiny of claims had something to do with it,” said Mike Byrd, who was hurt in a work-related car accident in 2004.

Byrd testified that Pinnacol denied treatments and he is the one who said Pinnacol tried to send a company nurse with him to doctor’s appointments as a spy.

The Post:

Steve Stahl, a former firefighter from Durango who said he suffered back injuries in the line of work, told of an eight-year ordeal in which Pinnacol denied him treatments and surgery and only partially relented after he sued. He and other injured workers said they were constantly followed by private investigators with video cameras.

Stahl took particular aim at Ken Ross, chief executive of Pinnacol and a member of the special committee, sitting a few feet away in the hearing room in the state Capitol.

“You complain about not making enough money while spending more on a weekend of fun than many of your claimants make in a year,” Stahl said. “Your company’s compensation packages are outrageous.”

In 2008, Ross received $297,500 in salary and a $131,545 bonus. His total compensation for that year was $448,813.

The legislative committee has met several times this summer and is headed by Sen. Morgan Carroll, D-Aurora.

A hearing as equally revealing as Monday’s was held August 15 on Pinnacol’s corporate-style compensation packages and expenses.

The Post:

A 2003 state audit questioned Pinnacol’s expenses and executive pay, noting its luxury suite at Invesco Field at Mile High Stadium, where it regularly fetes insurance agents and other guests.

Auditors found that compensation for the top seven executives at other quasi-governmental agencies, such as the Colorado Public Employees’ Retirement Association and Colorado Housing and Finance Authority, ranged from $79,000 to $258,000, compared with $175,000 to $419,000 for Pinnacol.

Compensation packages for Pinnacol executives have grown even larger since 2003.

In 2008, Pinnacol chief executive Ken Ross received $297,500 in salary and a $131,545 bonus. His total compensation for that year was $448,813.

Eight other Pinnacol executives received salaries over $100,000 in 2008, with bonuses ranging from $21,459 to $190,361.

Some of the information the committee heard included a KMGH-Channel 7 report in May that revealed hundreds of thousands of dollars in Pinnacol expenses on golf outings, retreats at luxury hotels, trips and lavish meals that included a $2,500 dinner with $144- per-plate lobster and $115 bottles of wine.

One expense revealed in the KMGH report included a $25,000 bill for a two-night stay at the Ritz-Carlton Hotel in Bachelor Gulch for an event to honor female insurance agents. Although Ross did not attend the event, his wife did.

At the August 15 hearing, Sen. Shawn Mitchell, R-Broomfield, an outspoken small-government fiscal-discipline champion of Colorado’s Taxpayer Bill of Rights, protested the accounts of Pinnacol abuses as inflammatory. He said the expenses being described were comparable to expenses racked up by Pinnacol’s private sector competitors. Pinnacol has to keep up, he argued.

“How many people think it’s a good idea to have a $2 billion company run by someone making $90,000 a year?”

That might be as good an argument for a health-care public option as any you’ll hear this fall.

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