Tag: Insurers

The problem with astroturf

Sep 15, 2008• 5

By Matthew Holt

….is that sometimes real weeds might sneak in and mess up the nice green carpeting you’re laying down.

To wit, here’s an exchange between an SEIU member and AHIP President Karen Ignagni at the AHIP astroturf meeting in Ohio. When asked why Wellpoint’s CEO is still talking about profitability (and going off message to the political world when going on message to Wall Street), Ignagni starts off about “No Margin, No Mission”.

Err … Karen, that’s the line used by non-profits that (theoretically) have a mission to do some social good. The mission of investor-owned companies like Wellpoint, Healthnet, Aetna, United, et al is to make a profit. Your opponents can show you lots of “insurance companies” that do a pretty good job (or at least as good as your members and usually better) and don’t make a profit. Hint: one’s called Medicare, another is the VA.

And at another astroturf forum a different AHIP spokesman also showed a lack of comprehension of basic economics when he apparently said that it is necessary for the insurance industry to make profits to cover costs. Err no, you have to cover your costs to cover your costs — profit is on top of that!

Has Steve Poizner gone soft?

Sep 12, 2008

By Matthew Holt

California’s de facto health insurance commissioner Lisa Girion reports on California’s actual Insurance Commissioner Steve Poizner’s agreement with Healthnet. After all that fuss, the deal is that Healthnet pays $14m in canceled medical bills, reinstates around 1,000 canceled policy-holders and pays a $3.6m fine. Poizner agreed to this despite all his tough words of not too long ago.

How is it that the punishment fine is less than the cost of the offense? So let me see. Don’t pay $14m in medical bills you’d agreed to insure, and either get away with it, or run the slight risk of not getting away with it and pay $18m several years later. That’s a deal any self-respecting egregious booty capitalist would take. And let’s face it being one of those is a requirement of the job to run a health plan these days.

Of course, the separate $9m fine Healthnet has already seen in one case alone—handed down by an arbitrator whose decisions cannot be overturned later—gives a clue to what the real damages will be in the courts should these cases get there.

So no wonder Shernoff and the trail lawyers are pissed that this settlement may undercut their case. And why has Poizner rolled over?

UPDATE: Darrel Ng, Press Secretary at the CA Department of Insurance is working late on Friday and responded to this post "One of the highlights of the settlement is that by accepting the payments and health insurance, patients do not have to forgo future litigation. So while I know critics have made the assertion that their case may be undercut, I’m not sure why they would believe that’s the case." Darrel didn’t explain why the fine for one case in arbitration was three times the fine for 1,000 cases from the DOI.

McGuire not in prison. Reyes is. Anyone understand?

Sep 12, 2008• 18

By Matthew Holt

So Bill McGuire has settled with CALPers in the scandal where he backdated the value of his United HealthGroup stock options. He’ll pay a $30m fine which sounds a lot but is a rounding error on his net worth. So it appears that his troubles are over.

Meanwhile Gregory Reyes the CEO of Brocade did exactly the same thing and he’s doing 21 months in the big house as well as paying a similarly big fine.

For that matter Steve Jobs apparently did the same thing too, and just today Apple settled with the SEC for a mere $14 million (or about 8 minutes of iPhone sales) and Jobs himself doesn’t seem to be paying anything.

Isn’t there something about equal treatment under the law in one of those fuddy-duddy 18^th century documents we Americans are so keen on? Can anyone explain the rationale behind these differences in treatment?

Private Medicare plans face uphill battle to prove efficiency

Sep 9, 2008• 3

By Robert Laszewski

I have been struck by the optimism regarding private Medicare presented by health plan executives during the recent earnings season and the analysts failure to press them on just how their numbers will add-up to sustain the long-term viability of a private Medicare strategy.

The typical private Medicare health plan operates on a medical cost ratio in the mid-80s. Let’s assume 86% for medical costs and the remaining 14% for overhead, profit, and taxes.

Government-run Medicare operates on about 3% overhead. One can argue that many federal Medicare costs are paid for elsewhere but that is the number the private plans have to compete against. So private Medicare plans spend 14% on overhead and Medicare charges
itself 3% — that’s an 11% disadvantage for the private market right
out of the box.

Rising health benefits costs slowing

Sep 8, 2008• 2

By Jane Sarasohn-Kahn

Health benefit costs will increase in 2009 by just under 6 percent. This would be a slightly slower rate compared with the past several years, according to Mercer, the benefits consulting firm that calculated health cost growth of about 6 percent each year since 2005.

Mercer’s finding that health benefits costs are slowing down next year echoes the same message previously delivered by Aon, and covered here in Health Populi in August. However, Aon projected nearly 10 percent health cost growth.

Mercer forecasts that 5.7 percent would be the lowest increase in more than 10 years.

A long way to go in price and quality transparency

Sep 2, 2008• 4

By Jane Sarasohn-Kahn

Providing price and quality information is viewed as a Holy Grail among health plans and providers, who see transparency as the key for igniting health care consumerism. However, that Grail remains elusive, as issues of tool usefulness and consumer trust cloud the market."A Health Plan Work in Progress: Hospital-Physician Price and Quality Transparency," a report from those indefatigable folks at the Center for Studying Health System Change (CSHSC), explains that health plans are ramping up transparency efforts in what is still an early phase of market development and adoption.

The mirage of a “nonprofit” health system

Aug 29, 2008• 3

By Don Johnson

Not-for-profit hospital monopolies are helping make health insurance unaffordable for millions of Americans.

In its Thursday edition, The Wall Street Journal profiles the near monopoly that Carilion Health System has in Roanoke, Virg., and how it uses its monopoly power to inflate prices and enrich its executives.

The impact graph:

Carilion’s market clout is manifest in other ways. With eight hospitals, 11,000 employees and $1 billion in assets, the tax-exempt hospital system has become one of the dominant players in the Roanoke Valley’s economy. Its dozens of subsidiaries include businesses ranging from athletic clubs to a venture-capital fund.

The power of nonprofit hospital systems like Carilion over their regional communities has increased in recent years as their incomes have surged. Critics charge this is creating untaxed local health-care monopolies that drive the costs of care higher for patients and businesses.

The Journal also published a story in its Jan. 17, 2005, edition. about how the Federal Trade Commission was trying to stop monopolistic hospital mergers. I commented on it here.

On Jan. 24, 2007, I said health care reform should include breaking up not only health systems, but also medical groups and large regional insurers.

The Journal continues to call not-for-profit, tax-exempt health care providers “nonprofit.” Its stories show that tax-exempt health care providers are not “nonprofit.”

Two Blues, two different Health 2.0 approaches

Aug 26, 2008• 3

By Matthew Holt

Two of the better behaved and more innovative health plans (both non-profit regional Blues) have been taking different approaches to Health 2.0, user-generated content, communities and all that. BCBS Minnesota created a separate company called Consumer Aware which created HealthCare Facts, and the Healthcare Scoop. Now the Healthcare Scoop is going national. (You can hear more about that in the podcast I did with CEO MaryAnn Stump last year).

Meanwhile, in the Pacific Northwest Regence has been beavering away creating its own communities within its core web site — and has been making a pretty job of it, too. They’re theoretically for members only, but you can get a guest pass. And there’s a good deal of activity there. Which kind of answers the question, should health plans get involved in Health 2.0? These early adopters say, yes.

And, of course, I’d be remiss in my crass marketing duty if I didn’t tell you that Mary Ann Stump and Regence’s Joe Gifford will both be at the Health 2.0 Conference in October.

A Primary Care Paradigm Shift

Aug 17, 2008• 8

By Dr. Richard Reece

********@*ol.com“>Dick Reece is a retired pathologist and a prolific health care commentator with an active following, particularly among physicians. An astute, incisive observer, he is the author of 10 books; the latest is Innovation-Driven Health Care: 34 Key Concepts for Transformation. He is regular columnist on HealthLeaders, and writes his daily posts at MedInnovation Blog. THCB welcomes him. — Brian Klepper

Something profound is happening in buyers’ and the public’s attitudes towards primary care and the health system. With inexorable rises in costs and corresponding decreases in access to primary care doctors, buyers and the public are mad as hell, and they’re deciding they’re not going to take it anymore. Something is badly and sadly wrong, and corrective measures are being put in place.

Signs of Paradigm Shift

Signs of a paradigm shift – a change in assumptions about the system’s basic structure – are everywhere. No longer do we accept the notion every patient should have a specialist for every disease, every life-improvement procedure, every orifice, and every organ. Care, it’s now assumed, must be coordinated to prevent people from falling through the cracks. We must stop wasting time and resources for patients and the system as a whole.

The U.S. system lacks timely access to primary doctors who oversee care. And specialty services are overused. Yet the U.S. has fewer primary care physicians per capita than any other country in the developed world. On the other hand, we have more specialists per square mile than other countries.

What’s Driving the Paradigm Shift?

• Major corporate buyers, led by IBM, which spends $1.7 billion on health care, have created an activist organization, The Patient-Centered Primary Care Collaborative. Paul Grundy, MD, MPH, IBM’s Director of Health Transformation, chairs the Collaborative. It is based partly on IBM’s experience in Denmark, where it owns a company, and where patient satisfaction with care is 97% versus 50% in the U.S. Grundy believes every citizen should have a personal physician, and every physician should be rewarded for offering same day access, managing a patient panel, and be compensated for telephone and email consultations.

• A vibrant movement is underway to “disintermediate” health plans. “Disintermediation” occurs when access to information or services is given directly to consumers. In the process, “middlemen” in the form of health plans may be ended, or their services transformed. That’s what consumer-driven health care is about, that’s why their existence in their present form is threatened, and that’s why health plans are moving rapidly to high deductible plans linked to health savings accounts.

• The “medical home” concept is gaining traction. This concept hinges on two ideas: 1) placing the primary care physician at the center of care by having him/her coordinate overall care; 2) giving primary care doctors “ownership” control of specialty care referrals. America wants a health system in which the primary physician uses a secure computer platform to coordinate efforts of specialists, pharmacists, therapists, and others. Increasingly patients don’t appreciate why they must fill out a new form at each doctor’s office, why doctors don’t communicate with each other, and why doctors duplicate tests and don’t know what other doctors do. A number of medical home pilot studies are now being conducted. To make medical homes happen, doctors will need financial incentives and support to introduce technology, and coordinate care. Payers will need to step up the payment plate to help medical homes become real.

• New business models to reduce cost and offer convenience are fast evolving. These include retail clinics, medical offices at the worksite, specialty clinics, urgent care clinics, elective surgical centers, and ambulatory facilities offering imaging, multiple specialty services, and one-stop care. Most of these are outside expensive hospital settings. Some are currently beyond the control of primary care physicians. At last count, there were over 1000 retail clinics, 500 worksite clinics, and roughly 3,000 urgent care facilities.

• The physician empowerment movement is growing. The Physicians’ Foundation for Health System Excellence, which represents state and local medical societies, has completed a survey of 300,000 primary care physicians to highlight their problems, to educate the public, and to persuade policy makers to take steps to enhance the supply of primary care doctors, to pay them better, and to give them tools to offer comprehensive coordinated care. Sermo, a physician social networking site, has 75,000 members and will soon issue an “Open Letter to the American Public,” signed by 10,000 doctors to reflect physician grievances and to indicate how the system can be improved. These efforts, coupled with the Patient-Centered Primary Care Collaborative, are designed to improve the lot of primary care physicians.

Conclusion: A new primary care paradigm is upon us and will fundamentally change how the U.S. delivers care.

David Hamilton is very smart

Aug 7, 2008• 2

By Matthew Holt

In his piece he suggests that data portability will lead to a clash as consumers figure out that it’s not privacy of this data that’s the problem, it’s what insurers do to people they already know information about. And that behavior is inevitable in the absence of political reforms which said clash will cause….at some point.

Of course I think he’s smart because I agreed with him here!