Tag: Insurers

Will CIGNA Remake The Health Plan Marketplace?

Mar 30, 2009• 17

By BRIAN KLEPPER

America’s health plans are floundering. If their job has been to provide the nation’s mainstream families
with access to affordable care (let’s leave quality out of it for the moment), they have failed miserably, though they were very profitable along the way, at least until Q1 2008. In 2008, the Milliman Medical Index – an estimate of the total cost for health coverage premium and out-of-pocket costs for a family of four – was $15,609. Now it is almost certainly above $17,000, more than the total income of more than one-third of American households.

To many health plan execs, these are simply market dynamics that must be accommodated through new product and service designs. I just attended a health plan conference where the overarching themes were the transition away from group to individual coverage, and the use of incentives and touch points like texting, email, and ergonomic Web interfaces to cultivate member competency, loyalty and retention.

There are important steps forward but, to me, the discussion tiptoed
around the more glaring problem – costs this high have exhausted many
purchasers’ ability to pay, and are rapidly shrinking health plans’ commercial market and profitability.

Karen Ignagni lie of the day, part 68

Mar 25, 2009• 49

By Matthew Holt

The big insurers now seem to be doing anything they can to prevent a Medicare-equivalent public plan
being launched to beat them up. Yes AHIP has apparently decided to throw the schlockmeisters off the boat, and more or less agree to end medical underwriting.

Those of you who listened to my interview with Tom Epstein of California Blue Shield will recall the cognitive dissonance he was suffering when he had to defend Blue Shield and other insurers’ behavior in the individual insurance market (hey, it’s the man’s job), while at the same time calling for policies that would essentially end the individual market and create a near-universal purchasing pool. By definition, that would require some level of uniformity of benefits and some risk-adjustment mechanism, and consequently it would put several currently profitable lines of insurers business out of business—yes I am talking about Tonik and Mega Life & Health among others. In general this might be a good trade for the bigger plans as they’d add a bunch more younger healthier lives at a higher price point (although what Wellpoint’s actuaries and accountants really think about it is yet to be determined—note their opposition to the similar ArnieCare legislation).

Tom Epstein, Blue Shield of California, on the hot seat

Mar 19, 2009• 8

By Matthew Holt

A couple of weeks ago the PR company for Blue Shield of California contacted me asking if I wanted their take on health reform. I somehow suspect that the PR flack concerned wasn’t as familiar with the California rescission issue as I am, or hadn’t checked on THCB’s extensive coverage of it

But Blue Shield of California is an odd case. CEO Bruce Bodaken has been a leader among health plans in looking towards a regulated utility model, and supporting both Arnie-Care and now Obama/Baucus-care. On the other hand, as we’ve discussed numerous times on THCB, Blue Shield has not only been as bad as the rest in terms of bad behavior in the individual market–but has also been the most aggressive of all insurers in defending its right to that behavior in the courts.

Tom Epstein, is an old Clinton White House hand who’s now running Public Affairs at Blue Shield of California. Tom was brave enough to come on THCB, discuss the good, the bad and the ugly, be frank about what they want to happen and to forecast what he thinks might happen in terms of reform, and the potential role of health plans in it. Here’s the interview and I think you’ll find it very interesting.

A Sticky Solution to a Sticky Problem

Mar 16, 2009• 23

By ALISTAIR ROCK

“Don’t pull the knot tight,” the philosopher Ludwig Wittgenstein once warned, “before being sure you have got hold of the right end.” Those who hope to sort out the tangle of health care spending would do well to heed his advice.

Clearly, there’s been no lack of solutions put forward since the Clintons first put health care atop the national agenda more than a decade ago. But with health care spending still rising at twice the rate of inflation, few have made any real and lasting impact.

Employers (who still pay the lion’s share of health insurance premiums here in the U.S.) know, of course, that keeping employees from getting sick in the first place—and minimizing the severity and duration of their illness when they do—is the first step in reducing this unwelcome “growth sector” of our economy. They understand, for the most part, that healthier employees equal not only lower healthcare costs but reduced absenteeism and greater productivity for the economy as a whole.

Is the Healthcare Economy Rightsizing?

Mar 12, 2009• 34

By Brian Klepper and David C. Kibbe

More than at any time in recent memory, powerful forces are buffeting
the health care sector. We are in
the midst of profound upheaval,
driven by market and policy responses to the industry's long-term
excesses.
We can already see evidence that the dysfunction of our traditional
health system is accelerating. It also seems clear that the center
cannot hold indefinitely.

Dog Eat Dog
It is useful to remember that the health care industry's
different stakeholders are adversaries. While they clearly share a
common understanding that a wholesale meltdown is possible, there is
little real motivation for collaboration and no unity. Independent of
role, the industry as a whole has been focused on, and extremely
effective at, securing dollars from purchasers: government, employers
and individuals. But each silo within the industry has been separately
focused on growing its own slice of the health care pie. In every
niche, there are courteous conceits – access, appropriateness, efficiency and value – reserved
for the good manners of public relations. But these are meaningful in
practice only if they do not conflict with the professional's or the
firm's economic performance.

My forecast: a sad conclusion to the health care bubble…

Mar 12, 2009• 12

Brian Klepper and David Kibbe have written a terrific piece on how and why health care is in a handbasket and wondering where it’s going. But as we ex-futurists know, there’s lots of luck required to make a good forecast.

When I met Brian five years ago he told me that the sky would fall within five years, and at the time he was trying to persuade players in the health care system to self-reform. He suggested to them that the alternative would be soon be much worse.

I said, “no no, it'll take longer (10-15 years) and the system players will never self reform”. Instead I thought “reform” would be be done to them by the government when the system hit crisis. My guess was a combination of Medicare with 5 years of baby boomers on board and a middle class with 80 million uninsured would arrive around 2012–15. And then the brown stuff would be hitting the whirly object soon after that when the Chinese wanted their money back.

As it turns out we were both wrong and both right.

A Broker’s Lament: We Brought This On Ourselves

Mar 7, 2009• 63

By JOHN SINIBALDI

A huge segment of the American population is simply far too strapped to ever afford the premiums and costs associated with health insurance/health care as it is structured today.

It isn't the employees of government (local, county, state or federal) who will demand immediate change. It isn't the employees of institutional companies (the Motorolas, GEs, Microsofts of the country) who will demand change. It isn't those on Medicare or Medicaid or the VA who will demand change. It isn't the wealthy. It isn't the poor. And, it isn't the vast majority of health insurance agents who work with large group clients (because, while that market is becoming ever more difficult and the work more taxing, they're still selling SOMETHING to these bigger businesses and government entities).

Why don't these people see what I'm seeing? Simply because, while they are feeling the effects of the rise in health care/health insurance costs and the downturn in the economy, most of these businesses and their employees and dependents (and the affluent) have yet to have a clue about how expensive things really are (or in the case of the rich, they can still afford their out-of-pocket expenses). The agents who market to large employers are still making lots of money (I know, I rub elbows with them at my local Health Underwriters meetings once a month).

I really don’t understand Wall Street, part 98

Feb 27, 2009• 7

By Matthew Holt

On the campaign trail Obama said that he would if elected cut the overpayments to Medicare Advantage plans by about $15bn a year. Once elected he confirmed that he would.

Stupid me thought that this would mean people on Wall Street would listen and that this freely available information would have been priced into the stocks. After all Bob Laszewski and I have been asking each other about this for quite some time!

So did I spend the last few weeks building up a big short position in the for-profit health insurers? No, this news was well known and already reflected in the stock price.

And when Obama’s budget came out today and essentially showed that it would cut Medicare payments by about the same amount he said he would (OK the cut proposed is $17.5 bn not $15bn but close enough). So did the stocks stay flat? Err… look at the chart

Healthplans

They’re all off 10% today alone, and Humana, one of the biggest Medicare players is off 20% today and 40% for the week! Were you short? Or were you too clever—just like me?

Divided we might get somewhere, but not yet

Feb 20, 2009• 7

By MATTHEW HOLT

The NY Times describes the Republican-less lobbyist meetings with Democrats that are allegedly getting
towards a consensus on an individual mandate as the way to universal health care. Funnily enough some of those same groups (e.g. The Business Roundtable & the NFIB) appear to be lessening their commitment to the worthily named “Divided we Fail” campaign.

And then on the second page of the NY Times article there’s this:

Many businesses, crushed by soaring health costs, say they now support changes in the health care system as a way to control their costs. But in its summary of the recent discussions, Mr. Kennedy’s office said, “There was little consensus on the employers’ role.”

Connecting the dots–Uninsured people are poor!

Feb 20, 2009• 10

By MATTHEW HOLT

A bunch of random articles all hit at once on Wednesday morning. And they win the John Madden award for stating the bleedingly obvious. This is kind of a companion piece to my rant about Friday’s NY Times article on the health industry and its political allies and adversaries sitting down to come to consensus.

Inquiry featured a worthy study. It tried to suggest that high costs “crowd out” health insurance spending.