Following the Obama administration’s announcement about the suspension of enrollment in a high-risk health insurance program known as the Pre-Existing Condition Insurance Plan, a flurry of commentary began on what the move means for the Affordable Care Act.
Some observers said that the program’s underwhelming enrollment numbers and high costs foreshadow inevitable problems with the ACA’s health insurance exchanges, while others drew a clear division between a program intended to insure only those with pre-existing health conditions and state marketplaces designed to spread risk by insuring both those who are sick and those in good health.
Two months after the halted enrollment, the debate continues.
Closing the Pools
The high-risk pools were designed to help sick U.S. residents gain coverage ahead of January 2014, when the ACA’s ban on denying individuals coverage because of pre-existing conditions will take effect.
In early February, the administration announced several cost-saving reforms intended to prevent the $5 billion program from running out of money. However, on Feb. 15, HHS officials announced that enrollment in the high-risk pools would end because of rising costs and limited funding.
Continue reading “Is the Suspension of the Pre-Existing Condition Insurance Plan a Preview of Obamacare’s Failure?”
Filed Under: Health Plans, THCB, The Insider's Guide To Health Care
Tagged: Affordable Care Act, Health Plans, HHS, high-risk pools, Insurance Exchanges, Matthew Wayt, Obamacare, PCIP, Reform
Apr 26, 2013
If it is done right, the Affordable Care Act (a.k.a. Obamacare) may well promise uninsured Americans a lot more than cheap, reliable medical care. It can also open the door to the democratic empowerment of millions of poor people, who are often alienated from much of the nation’s civic life, by strengthening the organizations that give them a voice.
This year more than 30 million uninsured Americans are to begin signing up for Obamacare, but the vast majority of those eligible for either the expanded Medicaid program, or for subsidized private health insurance through state health exchanges, have no idea how to enroll. Surveys and focus groups have found that up to three-quarters of Americans who might directly benefit from the program are skeptical that the law can provide high-quality insurance coverage at a price they can afford.
Continue reading “Obamacare’s Other Benefit”
Filed Under: OP-ED, THCB
Tagged: Activism, Affordable Care Act, California, Covered California, Georgia, Health Insurance Exchanges, Health Plans, Louisiana, Medicaid Expansion, Nelson Lichtenstein, Texas, The States, the uninsured
Mar 27, 2013
As the Obama administration continues its top secret effort to build federal insurance exchanges in about 34 states while 16 states are doing it on their own, that continues to be the big question.
HHS is using IT consulting firm CGI for much of the work on the exchanges and the federal data hub. CGI has their plate full since they are not only working on the federal exchange but also doing work for the state exchanges in at least Colorado, Vermont, and Hawaii.
Earlier this month, the Senate Finance Committee held an oversight hearing. The Obama guy in charge of exchange development testified before them. I thought it was notable that it was the Democrats who expressed the greatest concern, and frustration, over senators not getting a clear idea for just where the administration is toward the goal of launching the new health insurance exchanges on October 1.
Continue reading “Six Months Out Health Plan Execs Say They Doubt Exchanges Will Be Ready”
Filed Under: Health Plans, THCB
Tagged: Affordable Care Act, CGI, Edifecs, Health Insurance Exchanges, Health Plans, HHS, Robert Laszewski, The States
Mar 26, 2013
Here’s a hypothetical question Roger Longman posed to a panel at the recent Real Endpoints Symposium that is probably worth a little thought from everyone; since the issues raised are intended to be general, I’ve modified this scenario slightly to try to make it as non-specific as possible, so it explicitly doesn’t (and isn’t intended to) apply to a particular disease state or to particular drugs.
Here’s his hypothetical:
Let’s say you are the CMO of a not-for-profit health plan, and are considering costs and reimbursement approaches associated with therapies for a disease that could be treated with Drug A or Drug B. The disease doesn’t cause any symptoms, but if untreated, serious organ damage could occur after many years. Drug A offers a 95% cure rate. Drug B offers a 88% cure rate. The manufacturer of drug B offers a very good economic deal to the payor, saying “If you place our drug first, we’ll offer you excellent pricing and also pay for patients who are failed by our drug to receive drug A.” What would you do?
Continue reading “Case Study: What Should the Health Plan Executive Do?”
Filed Under: Health Plans, THCB
Tagged: Case Study, Costs, David Shaywitz, Health Plans, Patients, Payor, Real Endpoints Symposium, Roger Longman
Mar 15, 2013
America is only a few months away from Exchange Day—October 1, 2013—when the state and federal health exchanges open up for business. And when they do… well, I’d surprised if a whole lot happens at first; most people assume they open on January 1, 2014. But eventually there will be a flood of people streaming into the exchanges (virtually) to search for health insurance plans, including the Millennials.
Why? A variety of reasons. One is that people like being insured and prefer it to the uncertainty of being uninsured; those previously unable to purchase a policy they could afford now have subsidies to help them do so. Another is that people largely don’t have a choice—forego purchasing health insurance and get fined.
But the bottom line is this: whether compelled to do so by the safe feeling of being insured or the specter of a fine, Millennials are expected to be an enormous group of entrants into the exchanges: while we make up only 22% of the population, we account for 38% of the uninsured in America.
To compound our already-stratospheric opinion of ourselves, we know that the Millennials are a coveted market for health exchange insurers. Face it: you want us. Bad. That’s because we’re relatively healthy, loyal to brands we like that we see as having a positive impact (70% identify as being brand loyal), and we could actually be the first generation to recommend our health insurance plan to others.
So, culling from Millennial research, surveys, and conversations with fellow Millennials, here are a few morsels of unsolicited advice on how to win us over.
Continue reading “How to Win Friends and Influence Millennials: Health Exchanges Edition”
Filed Under: Health Plans, THCB
Tagged: Affordable Care Act, Health Insurance Exchanges, Health Plans, Marketing and Advertising, Mike Miesen, Millenials, Reputation Management
Feb 11, 2013
A report published by the Institute of Medicine (IOM) on high-value health care attracted attention when it was issued last June. Authored by a group of eleven leading hospital executives, A CEO Checklist for High-Value Health Care describes programs at various hospitals that resulted in quality improvements and lowered costs. The report has a section called “Yield,” quantifying the extent of these improvements. These programs sound notable, and in fact I know some of the executives and hospitals involved, and would vouch that many significantly improved patient care.
But the report is less impressive when it tackles the cost side of the value equation, especially when it names cost control outcomes like: “days cash on hand increased from 180 to 202,” and “multiple years of 4-5 percent [hospital] margin.” Clearly, the hospitals improved their own bottom lines, but by how much did patient bills decrease? The hospital executives don’t account for that in the “yield.”
It seems this report defines “high-value” to mean highly valuable to hospital CEOs. Strikingly, though, the authors do not find it necessary to explicitly say so anywhere within the report. Perhaps they simply assume that a high-value checklist for hospital CEOs is automatically high-value to CEOs in other industries that are paying for services from hospitals. No offense to these well-meaning and highly accomplished hospital executives, but that is not always the case. Purchasers don’t see high-value health care in hospital cash flow or profit margins. They see value when they get the best service at the best price.
Continue reading “Why Employers Should Stop Worrying About Health Costs”
Filed Under: THCB, The Business of Health Care
Tagged: Affordable Care Act, Catalyst for Payment Reform, Costs, David Goldhill, Employees, Employers, Health Plans, Hospitals, HSA, IOM, John Torinus, Lead Binder, Quality, Serigraph, The Leapfrog Group, Transparency, Value-based Purchasing
Jan 23, 2013
One of the perks of giving keynotes all over the country is being able to hear what other health care leaders are saying without having to pay the conference fees. One of my major keynote themes is that everyone (patients, doctors, hospitals, employers, and health plans) will have to change in order to thrive during the current health care delivery system transformation.
Recently in Delray Beach, I stayed after my keynote to hear Florida Blue CEO Patrick Geraghty describe his first year of trying to change the Blue Cross/Blue Shield franchise to respond to health care reform. I have written elsewhere about the health plan response to the changing environment, but Geraghty’s speech highlighted how urgent and how difficult change can be when an industry business model is disrupted by federal legislation and market forces.
Geraghty has led the Blues effort in Florida to update their name, mission, vision, and values. Focus groups revealed that the new name Florida Blue was easier to say and communicated a less corporate, more friendly image than the old name Blue Cross Blue Shield which brought to mind adjectives such as corporate, distant, and expensive.
A four paragraph mission statement was replaced by a single sentence: “To help people and communities achieve better health.” The vision statement was rewritten to now describe the company as “a leading innovator enabling healthy communities.” The five corporate values now include the familiar “respect,” “integrity,” and “excellence,” and the more unusual “courage” and “imagination.”
What I found most intriguing and revealing was how these new efforts are being translated into concrete tactics such as opening retail centers and partnering with Disney on a new innovation institute.
Continue reading “Health Plan Case Studies: A New Florida Blue”
Filed Under: Health Plans
Tagged: ACOs, Affordable Care Act, Baptist Health South Florida, Blue Cross/Blue Shield, Cisco, Disney, Florida, Florida Blue, Fred Karutz, GE, health care delivery system, Health insurance, Health Insurance Exchanges, Health Plans, Johnson & Johnson, Kent Bottles, Medicare Shared Savings Program, Patrick Geraghty, Regina Herzlinger, Silverlink Communications, The States
Oct 8, 2012
Gregg Masters reports on a recent Kaiser Health News article: Hospitals Look to Become Insurers, As Well as Providers of Care”.
This is the dumbest idea I’ve heard since “I’m going to invest all my money in Facebook’s IPO and get rich!”
Here are six reasons why:
1) You’re too late. Health insurance was an attractive and profitable business in the 00s, but after passage of the Accountable Care Act it’s been commoditized.
First, the health plan business model of the past decade is dead. That model was — “Avoid and shed risk” — or more simply, avoid insuring people who are already sick (preexisting conditions) and get rid of people who become sick (rescissions). Under the ACA, health insurers must take all comers and they can rescind policies only for fraud or intentional misrepresentation.
Second, the ACA institutes medical loss ratio restrictions on health insurers. Depending the the type of plan, insurers now must spend at least 80-85% of premium dollars on paying medical claims; if they spend less, they must return these “excess profits” as rebates to customers. As a result, health insurance has become a highly regulated quasi public utility.
This is why you see health plan CEOs like Mark Bertolini of Aetna declaring “Health insurers face extinction”. The old health insurance model is on a burning platform, and health plans are reformulating themselves as companies involved in health IT, analytics, data mining, etc.
2) You have bigger fish to fry. Focus on developing accountable care capabilities. The AHA estimated that hospitals will need to spend $11-25 million to develop an ACO. Get going.
Continue reading “Hospitals…Thinking About Getting Into Health Insurance? 6 Reasons To Lie Down Until the Urge Goes Away.”
Filed Under: Hospitals
Tagged: Aetna, Gregg Masters, Health Plans, Hospitals, Insurance, MLR, Vince Kuraitis
Aug 28, 2012
In 1932, the Committee on the Cost of Medical Care identified rising medical costs as a threat to the financial security of millions of Americans. In a series of studies that created the field of health services research, the Committee recommended several strategies for cost containment that reads like a blueprint for today’s cost containment efforts: prevention, price controls, capitation, elimination of unnecessary care, and integration. If it sounds like a précis of my previous two blogs – cut prices and cut quantities – it should. We have known for a long time that those are the only ways to cut spending. And yet here we are, 80 years later, facing a spending crisis that threatens to take down the entire economy.
In my lifetime, we have been subjected to a steady drumbeat of rising medical costs. There have been respites – for a couple of years after Medicare introduced DRGs and for about five years in the 1990s during the heyday of HMOs. While DRGs and HMOs shifted costs down, they did not seem to reverse underlying growth trends, although HMOs did not thrive for long enough to be certain.
Not for lack of trying have medical costs continued to increase. We promote prevention, regulate prices, capitate providers, and review utilization to eliminate wasteful spending. We have seen horizontal integration that led to market power and higher costs, and vertical integration that more often than not created unmanageable bureaucracies. Most of today’s proposals for cost containment can be encapsulated by two words: “Try harder.” The Affordable Care Act gives us free preventive care, stricter price controls, ACOs, and the Comparative Effectiveness Institute. We need radical change but all we get is creeping incrementalism. I will take creeping incrementalism over the do-nothing approach of the previous decade, if only because we could use another respite. But the ACA is no permanent fix.
Continue reading “The Way Out of the Wilderness”
Filed Under: Health Plans
Tagged: 2012 Election, Affordable Care Act, David Dranove, Health care spending, Health Plans, HMOs, Innovation, Medicare, skin in the game
Aug 17, 2012
Several years ago I had dinner with a woman who had served in the late 1990s as the national Chief Medical Officer of a major health plan. At the time, she said, she had developed a strategic initiative that called for abandoning the plan’s utilization review and medical management efforts, which had produced heartburn and a backlash among both physicians and patients. Instead, the idea was to retrospectively analyze utilization to identify unnecessary care.
This was at the height of anti-managed care fervor. A popular movie at the time, As Good As It Gets, cast Helen Hunt as the mother of a sick kid. When someone mentioned an HMO, Ms. Hunt’s character let fly a flurry of expletives. America’s theater audiences exploded in applause.
Apparently, the health plan’s senior management team bought into cutting back on medical management but saw no need for retrospective review. After all, if the health plan abandoned actions against inappropriate services, utilization and cost would explode. Fully insured health plans make a percentage of total expenditures, so more services, appropriate or not, meant the plan’s profits would increase.
And that’s how it played out. Virtually all health plans followed suit, dismantling the aggressive medical management that had been managed care’s core mechanism in driving appropriateness. In the years following 1998, health plan premium inflation grew significantly, for a short period reaching 5.5 times general inflation, but averaging 4 times general inflation through today. Medical management became all but a lost, or at least a scarce, discipline in American health care, which is its status now.
Continue reading “Why Medical Management Will Re-Emerge”
Filed Under: THCB
Tagged: accountable care, Brian Klepper, Cost of Healthcare, Health Plans, HMO, Managed Care
Aug 1, 2012