Have Yourself a VISA Highmark Christmas (parody and commentary)

by: nightowl724

Mon Dec 03, 2007 at 19:03:34 PM PST

Some of you may have already heard about this appalling product at Daily Kos through nyceve's diary VISA introduces holiday healthcare gift card and xxdr zombiexx's follow-up diary The sheer obscenity of VISA's "Healthcare Gift Card."

The whole healthcare gift card concept is so freaking festive that I just have to break out in holiday song!  Here is the first verse of Have Yourself a VISA Highmark Christmas:

Since you've stifled Universal Health Care,
Profit from our plight.
As always,
Your earnings will be out of sight.

But before revealing the rest of my parody, I'll give you some background, crunch a few numbers and invite you to submit a song or poem, too.  

Won't you jump over the fold with me for some facts and fun?

Highmark is purportedly a non-profit organization, but is somehow permitted to own for-profit subsidiaries.  Highmark is privately held, so information is sometimes scant.  One thing has become clear lately - Highmark executives are very well compensated.  Just this morning, the Philadelphia Inquirer published an in-depth article called Top salaries key to approval of Blues merger about these issues and mentioned in passing another questionable Highmark practice, that of retaining such huge surpluses (emphasis mine):

The official, Stephen J. Johnson, demanded that the top executives of the state's two largest Blue Cross plans disclose every last nuance about their future pay as Independence Blue Cross and Highmark Inc. pursue a merger.

Base pay, severance pay, bonuses - everything.
...
"It's not surprising that the public is sort of skeptical of these large salaries, because quite often they don't feel the products offered to them are affordable or offer adequate coverage," said Renee Marus Hodin, a lawyer with Community Catalyst, a health advocacy group.
...
In the new company, Melani will be chief executive and Frick will take on the job of chief operating officer.

While mum about future compensation plans, Independence Blue Cross recently disclosed Frick's total pay for the first time.

It revealed that he was paid $1.6 million last year, putting him in the middle for pay among Blue chiefs nationwide.

Melani was paid $3.2 million. That placed him in the top tier among his Blue peers.

The Blues say the pay for Melani and Frick is well-deserved, in line with industry standards, and reflects challenging jobs running big operations with many lines of business.

CRITICS ARE SKEPTICAL.

"I cannot understand why they are making so much," said Lance Haver, director of Philadelphia's Office of Consumer Affairs. "It would make sense to tie their compensation to how well they serve the public and how affordable the product and how widespread the coverage is."
...
"They are owned by their members, they have a social mission, and that would mean explaining how they arrive at compensation," Haver said.
...
Along with pay, regulators must consider many other important issues, ranging from the merger's impact on customers' bills to the ongoing controversy over the plans' massive surpluses. Highmark had a reserve to pay potential future claims of $3.6 billion last year. Independence Blue Cross' surplus was $1.7 billion.

In past years, Blue Cross, unlike Highmark, has refused to make public the entire pay of its chief executive. In response to questions from The Inquirer, it has changed that policy and disclosed his $1.6 million in compensation.

The firm is not required to disclose the total; it did so voluntarily. Since they pay federal taxes, Highmark and Independence Blue Cross do not face federal disclosure rules that apply to most nonprofit organizations. Moreover, Frick draws portions of his pay from a dozen Blue Cross entities, many of which are profit-making firms not subject to disclosure under Pennsylvania law.

Melani was paid twice Frick's amount - even though the two Blues are similar in size. Of Melani's compensation, $2 million was a bonus.

The Highmark chief's compensation has doubled in the last two years. The company said the surge rewarded a big boom in net income in recent years.

FOR-PROFIT SUBSIDIARIES

While technically nonprofit, both Blues are really collections of for-profit subsidiaries under a nonprofit corporate umbrella.
...
Because of the hybrid nonprofit/for-profit nature of their organizations, Highmark's and Independence Blue Cross' executive compensation does not follow trends in either sector.

...
SALARY CRITICISM

As the national Blue Cross picture has been transformed by big mergers and a switch of many Blues to for-profit status, the pay of executives has flared again and again as an issue.
...
In another case that has generated criticism, the chief executive of Anthem, which owned Blue plans in eight states, saw his pay climb from $2.2 million to $30 million in the years after Anthem switched to for-profit status.
...
SUBSTANTIAL TAXES

Despite the nonprofit status of their parent companies, the Pennsylvania Blues still pay substantial taxes, the firms point out.

Congress wiped out the federal tax exemption for Blues 25 years ago, although both Highmark and Independence do still get some breaks in state taxes.
...
Nonetheless, U.S. Sen. Arlen Specter (R., Pa.) pushed Melani on the pay issue at a public hearing in April, shortly after the proposed deal was announced.

Specter asked Melani how he squared his compensation "in excess of $3 million . . . if nonprofit really has to have some significance in terms of not being for-profit."

Melani reddened.

Then he pointed out that Highmark serves 28 million people nationally, including the 4.6 million insured in Pennsylvania.

"So," Melani said, "if you were to charge our customers for my compensation... it would be about 10 cents per customer per year."

The Givewell web site, which has exclusive rights to market the cards, suggests that for the ultimate indulgence, you might even want to buy one for yourself! Interestingly (and, not coincidentally, I'm sure), you can use them to pay your Highmark health insurance premiums, co-pays, and deductibles. Hmmm... Let's see, you can pay fees to buy cards from Highmark so you can pay some more fees to Highmark.  Someone must have spiked my eggnog, because I'm getting a little dizzy here!

Currently, the cards are available for Western Pennsylvania residents only, but Highmark hopes it won't stop there, according to the Pittsburgh Post Gazette article Highmark offers the ultimate get-well card:

Just in time for the holidays, you'll be able to buy Dad a gift card that pays for his semiannual trip to the urologist.
...
The card itself costs $4.95, and can be loaded with as little as $25, which might cover a prescription co-pay, to as much as $5,000, which could pay for an elective surgery, such as Lasik.
....
"Ultimately, we think this product may go national," said Kim Bellard, Highmark's vice president of e-marketing and consumer relations. He expects other insurers will be interested in using the "intellectual technology," which Highmark hopes to patent.

"We do expect other people to follow," he said. "We certainly expect phone calls from other Blues plans. ... I would love to get a phone call from AARP."

I'll just bet they would!

That same article reports:

But couldn't you just take the gift card to Rite Aid and spend it on a case of Coca-Cola and a bag of Snickers bars? "We obviously don't advertise that," Mr. Bellard said. But the answer is, yes -- for now. In the future though, the purchases could be restricted not just from merchant to merchant, but from product to product. You could use the card on medicine, but not candy bars, in other words.

"You give him $200 in cash, he's going to spend it on beer," Mr. Bellard said of the hypothetical college student. "You give him a gift card, he's sort of got to cheat" to spend it on something other than its intended purpose.

Combining information from the PG article with what's in the Wall Street Journal article Well Wishes: Highmark's Gift Cards Can Cover Insurance, Medical Fees hints at the profit possibilities:

Wondering what to give your aunt this Christmas? How about paying for her next trip to the chiropractor?
...
Highmark expects to sell "several hundred thousand" gift cards, mostly between $75 and $100, during the next year, Mr. Bellard said.

I'll make some presumptions and do some simple arithmetic for you.  I realize that this is "fuzzy math," but it should give us a general sense of the amount of money we are talking about here.  Feel free to correct or improve these numbers in the comment section.  

Here goes:

First, I'll assume that Highmark will sell 500,000 cards with a value of $88 each.

500,000 x $88.................................$44,000,000

Purchasers pay a fee of $4.95 per card.

500,000 cards x $4.95/card................$2,475,000

The Givewell site states that there will be another fee - for "maintenance" - of $1.50 per month, starting after the ninth month and paid for by the individual possessing the card.  (The gift that keeps on giving.) I'll guess that half the buyers will hold the cards for one year before depleting them.  

250,000 cards x $1.50/mo x 3 mo.........$1,125,000

So far, that's $3.6M just for selling the cards!  Now, consider that they will be earning interest on other people's money (read: yours) while they are holding it.  This is trickier to estimate and calculate.  I will pretend than one fourth of the money is depleted every quarter and that Highmark earns an 8% simple annual interest rate (or 2% per quarter).

1stQ.....$44,000,000 x .02.......$880,000
2ndQ....$33,000,000 x .02.......$660,000
3rdQ....$22,000,000 x .02.......$440,000
4thQ....$11,000,000 x .02........$220,000

Adding these up yields another $2.2M.  Now, think about the fact that the providers who accept these cards pay a fee on processing fee on payments made with the card.  A typical processing fee for merchants is 3%.

$44,000,000 x .03..........$1,320,000

Alrighty then... the cards can only be ordered online.  There is a shipping and handling fee for each card, even for multiple cards ordered at the same time. The fee is $1.25 for standard 5-7 day delivery or $20 for express 2-3 day delivery.  I'll imagine that 90% of the buyers opt for standard delivery.

500,000 x .90 x $1.25........$562,000
500,000 x .10 x $20........$1,000,000

Wow!  Another $1.5M for shipping!  Now, if someone loses the card, it costs $4.95 plus shipping and handling again to replace it.  I'm thinking that only about 1% will lose the thing and that, if they do, they will opt for the slower shipping method.

500,000 x .01 x $4.95...........$24,750
500,000 x .01 x $1.25.............$6,250

Chump change, except that how many people will bother to spend the time and at least $6 to replace a card that has, say, less than $15 left on it?  Not many - and you can bet that Highmark is well aware of this and has found a way to predict the additional benefit to their bottom line!  But, I don't know how, so I'll just stop here.

That brings the grand total to $8,713,000 gross income just in one year in one area of one state, mostly just for acting as a middleman!   I won't presume to know how much of this will be profit.  No matter.  It still means yet another $9M or so NOT spent on actual prevention or treatment, but only to improve profits for an insurer.  It also amounts to about $17 per card and adds about 2% to the overall cost of the healthcare paid for with the card.  

I will repeat: Highmark encourages you to use these cards to pay your Highmark health insurance premiums, co-pays, and deductibles.  But, hey, as healthcare paid for through insurance companies already suffers from roughly 31% overhead, what's another 2% here and there?

This page from the Givewell site has a few ideas for you:

Are you looking for a gift that is sure to fit? Why not give the Prepaid Healthcare Visa Gift Card and let friends and loved ones know just how much you care.

December Holidays and New Year's
  -- Thank You
  -- Thinking of You
  -- High School or College Graduation
  -- Baby Shower
  -- Boomer Birthday

The website proudly calls it "The Easiest Way to Say 'I Care.'"

Really.

This is just (pardon the expression) sick on so many levels. The United States is the only industrialized country in the world without some form of national health coverage, and it shows; millions have to go to the emergency room for even basic health care, and far too many others are forced into bankruptcy by soaring medical costs. It is truly obscene that some marketing vulture seized on this national disgrace as the opportunity to make a buck.
...
And now they have come up with another way of making money. It's a win-win for the company - take customers' premiums, deny them the care they paid for, and then make money off them again by selling them these gift cards.

After all, why bother going to the trouble of actually making things better for everyone, against the wishes of the well-heeled insurance lobby, when you can just foist off a gift card and declare the job done?

I wrote a parody for progressives to sing to Highmark this holiday season, based on the Yuletide favorite Have Yourself a Merry Little Christmas, written by Hugh Martin and Ralph Blane for MGM's 1944 Academy Award winning blockbuster Meet Me in St. Louis.

I invite each of you to add a verse to my tune or to create your own Christmas, Hanukkah, Kwanzaa , Winter Solstice, Adha Eid, HumanLight, Yule, Bodhi Day, Saturnalia, or Festivus holiday parody for progressives.  Please post your creations in the comments.

I hope you enjoy this video of the original version of Have Yourself a Merry Little Christmas, as sung by the delightful and talented Judy Garland to a very young and bright Margaret O'Brien as you check out my tongue-in-cheek threat to Highmark and the rest of the health insurance companies:

Have Yourself a VISA Highmark Christmas

Since you've stifled Universal Health Care,
Profit from our plight.
As always,
Your earnings will be out of sight.

Push the Highmark VISA Healthcare Gift Card,
For holidays this year!
As always,
Just prey upon our need and fear.

The cards will bring you much gold in days,
Many sold in days, for sure.
You will grab from us sitting ducks,
Fifty million bucks, or more!

But, know this,
Someday there will be justice.
Here's your fate, we vow.
Not for profit health care will be ours, somehow!
But, have yourself a VISA Highmark Christmas now...  

The cards may bring you much gold these days,
Countless sold these days. You'll score!
You will nab from us sitting ducks,
Mucho million bucks, once more!

But, Blue Cross,
You know your days are numbered.
Even this cash cow,
Won't be legal when we're through with you, somehow!
But, have yourself a VISA Highmark Christmas now...  

Cross-posted at Daily Kos