Kaiser gouges patients while lining executive pockets

June 26th, 2012

National Public Radio is reporting that Kaiser Permanente’s premium increases of up to 20 percent on its biggest customers may be the result of a practice called “shadow pricing.”

Mark Smith, head of the California HealthCare Foundation, highlighted how Kaiser charges patients extra:

“If your competitor takes $4 to make a banana and it only takes you $2 to make a banana, you price your banana at $3.95 and you pocket the rest,” Smith says.

These cost increases hit everyday Californians directly in the pocketbook, and have left Kaiser awash in money.  In the first quarter of 2012, Kaiser posted $770 million in profits on top of $6.2 billion in profits during the previous three years.

These profits are not shared with Kaiser’s workforce. While Kaiser’s Chief Executive, George Halvorson, makes $9 million a year and enjoys multiple pensions, an entry level EVS worker at Kaiser’s flagship Los Angeles hospital makes $14.14 per hour, a ratio of 305 to 1.

Kaiser’s exorbitant profits also raise the question whether Kaiser’s rate increases are in violation of California state regulations designed to protect consumers.

In December of 2011, NUHW and the Courage Campaign requested that the Department of Managed Health Care (DMHC) investigate rate hikes that Kaiser Permanente planned to impose on 660,000 Californians.  In September of 2011, after discussions with DMHC regulators and at NUHW’s urging, Kaiser partially rolled back a prior rate increase saving California consumers an estimated $30 million.