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It’s Easier to Beat Up the Insurers

Things are playing out just as one might predict in the Massachusetts small business and individual insurance market. The Insurance Commissioner turned down proposed rate increases, the state’s insurers appealed to the courts, and now they can’t write policies.

Meanwhile, policy-makers ignore the underlying causes of the problem:

Just a few weeks ago, the Attorney General issued a report, after months of study, that explained that insurance price increases in the state were the result of two factors, the underlying increase in health care costs and a disparity of reimbursement rates that paid some providers substantially more than other providers.

As noted by my colleague Ellen Zane, in remarks consistent with the findings of the AG, “The funneling of dollars disproportionately among hospital and provider groups serves to warp the overall system balance.”

Taking a page from the debate on national health care, local officials seem to have decided that it is easier to beat up on the unpopular insurance companies rather than address the root cause of the problems. Here, though, the insurers are non-profits. If they are forced to charge prices below those that are based on actuarial determinants, there are no shareholders to absorb the losses. The most direct result is a reduction in capital reserves, a key metric the Division of Insurance is statutorily charged to protect.

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juicy couture handbagsHealth & beautyBarry CarolEastCoasterNate Recent comment authors
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juicy couture handbags
Guest

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Health & beauty
Guest

Yeah right, it’s easy to beat up the insurers. I’ve had a living hell with these insurance companies since my accident a year ago. I can’t even go anywhere anymore.

Health & beauty
Guest

Yeah right, it’s easy to beat up the insurers. I’ve had a living hell with these insurance companies since my accident a year ago. I can’t even go anywhere anymore.

Health & beauty
Guest

Yeah right, it’s easy to beat up the insurers. I’ve had a living hell with these insurance companies since my accident a year ago. I can’t even go anywhere anymore.

Health & beauty
Guest

Yeah right, it’s easy to beat up the insurers. I’ve had a living hell with these insurance companies since my accident a year ago. I can’t even go anywhere anymore.

Peter
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Peter

Would be nice if everyone had access to revenue codes and chargemaster amounts. Another example of how this system is so screwed against the individual insured market and the uninsured market. Here in NC even the state hospital charges the uninsured close to chargemaster prices. But Nate shows us that price controls are good and not best left up to the providers. I support price controls, except that I think everyone should have access to them.

Nate
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Nate

http://www.milliman.com/expertise/healthcare/publications/rr/high-value-hospital-care.php
very interesting study on high value hospitals for Medicare and if they are high value for private payors

Nate
Guest
Nate

I would agree with most of what Barry says except the large commercial carriers are 140-150% from what we see. On big name hospitals they are even higher.

Barry Carol
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Barry Carol

Peter – While Paul or one of his finance people can probably speak to this more accurately than I can, at least for BIDMC, my understanding is that payment equal to 125% of costs is in the range that large commercial insurers pay hospitals on average. Hospital chargemaster rates (list prices) are largely arbitrary multiples of cost which can range from under 2X to well over 10X depending on the item though insurers generally pay on a case rate or per diem basis, not for each line item including tissues and aspirin. Under the Maryland all payer system, I’m not… Read more »

Peter
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Peter

“our partners audited the bill by revenue code, looked up what they report as their cost to deliver that service then only allow 125% of the total.”
So was the hospital gouging? How did you determine that 125% above cost was appropriate? Why did the hosptial rollover for the $140,000 “loss” or was the employee on the hook to pay the hospital the difference? Who do you think the hospital now has to upcharge to make up the difference as you’re always saying how Medicare shifts costs to private payers?

Nate
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Nate

our partners audited the bill by revenue code, looked up what they report as their cost to deliver that service then only allow 125% of the total.

Peter
Guest
Peter

“We had a $230,000 bill for placing a defib, we cut it back to 90K.”
How?

Nate
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Nate

“I don’t think we can wait for prices to be brought under control by tweaking the present system with fine-tuning methodologies.” I took over a poorly ran health plan for a trucking company 7/1/10. They were with a large local insurance carrier. I immediatly reduced their fix cost 40% or so. The 6 months or so since then we have easily cut their claim cost 20-30%. This didn’t involve any massive cost shifting to employees. It was just doing things smarter, cutting waste, and not paying every bill that came in from providers. We had a $230,000 bill for placing… Read more »

EastCoaster
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EastCoaster

not to mention the costs with every worried chest pain patient and the ever out of control mental health patient and related expenditures.
MD as HELL, please explain what you mean by “the ever out of control mental health patient?” The snippet sounds sort of offensive to me, so I’d like to make sure that I understand what you mean before I judge too harshly.

Peter
Guest
Peter

“that unless they shifted some of the responsibility for changing how health care was actually delivered to the care system”
Shifted “some” of the responsibility, but did not abandon overall control. I don’t think we can wait for prices to be brought under control by tweaking the present system with fine-tuning methodologies.