Tag: Insurers

HEALTH PLANS: Brocade CEO goes to jail; what about McGuire?

Jan 18, 2008• 2

I don’t understand why the Brocade CEO is convicted of back-dating options for others and sentenced to jail while former United Healthgroup CEO Bill McGuire is somehow able to pay a small-ish fine relative to what he made and apparently will face no charges. I was hoping that someone smarter than me would explain. Then I read this in former Republican Senator David Durenberger’s most excellent newsletter.

BILL MCGUIRE IN LIMBOIf there is such a place, Bill is in it for some time, thanks to U.S. District Judge James Rosenbaum who has responsibility for the litigation arising around United Health Group’s stock options back-dating for directors and officers. A few weeks ago a couple of retired Minnesota Supreme Court Justices, whom Rosenbaum appointed to make recommendations relative to Bill McGuire’s alleged back-dating, did the "Minnesota Nice" thing and found a way for Bill and his corporate counsel, David Lubbens, to walk on water without drowning. Return $468 million and $24 million respectively in options without having to acknowledge any responsibility for actions to the public, shareholders, customers and community reputation. Rosenbaum wasn’t satisfied and the case goes on.

So I think I understand…(OK I don’t really). Can someone take a crack at it?

WSJ Editorial on Liver Transplants Cherry-Picks the Numbers

Jan 16, 2008• 12

By MAGGIE MAHAR

Dr. Scott Gottlieb, a resident fellow at the conservative American Enterprise Institute, published an op-ed in the Wall Street Journal last week that returned to the much-exploited story of Nataline Sarkisyan, the 17-year-old Californian who died before receiving a liver transplant. Gottlieb used the story to make the argument that “the U.S. has the best health care in the world.”

Gottlieb is squaring off against John Edwards, who has been suggesting that if Nataline had lived in a European country she might have lived. Edwards blames CIGNA, her for-profit insurer, for refusing to cover the procedure. Dr. Gottlieb, who is a former FDA official, responds with a double-barreled argument: “Americans are more likely than Europeans to get an organ transplant, and more likely to survive it too.” He sounds confident, and at first glance, his argument seems persuasive.

But a closer look reveals that Gottlieb makes his case by carefully culling the numbers that fit his argument, while omitting those that don’t. Unfortunately, too many people involved in the healthcare debate play fast and loose with the facts. Everyone interested in reform should be on the look-out for those who don’t cite solid evidence for their assertions. If they don’t give you their source, it may be because they don’t want you to look it up—and because they realize that they are cherry-picking the numbers.

Before engaging Gottlieb’s argument, I should acknowledge that, as I have said in an earlier post, I think Edwards has picked a bad case to make his argument for healthcare reform. I am not at all certain that the transplant would have helped this particular patient. And while Edwards puts all of the blame on CIGNA, Nataline’s insurer, I am bothered by the fact that the hospital asked for a $75,000 down payment on the surgery and then refused to go forward without it. As one physician/blogger from the very same hospital where Nataline was treated asked: “Why didn’t the hospital simply perform the surgery and defer payment from the family or CIGNA [Nataline’s insurer] until later? If it was such a great idea, why didn’t they exhibit the outrage and strength of conviction to go ahead regardless of CIGNA’s assessment?”Continue reading…

Four Big Trends – Brian Klepper

Jan 16, 2008• 9

Brian Several events and trends emerged over the last year that will reverberate throughout the health care
marketplace in 2008 and going forward. While none of these dominated the trade press like some other issues – electronic and personal health records, RHIOs, the evolving labor shortage, pay-for-performance reimbursement – these manifestations of change are occurring in the marketplace as well as through policy, and are moving health care forward in fundamentally positive and far-reaching ways.

Health 2.0The most significant for the long term in terms of its capacity to change how health care works is the Health 2.0 movement, which Matthew Holt and Indu Sabaiya have played a central role in facilitating and explaining. In some ways, Health 2.0 is simply a continuation of what has come before: companies creating new value through information and connecting with customers over the Web. Health 2.0 takes this approach into every area of health care data, often driven by companies outside of or at the margins of health care, who have no financial stake in perpetuating inappropriateness and waste, and who see an opportunity to make money by rationalizing the system.

On Practical Reforms – Brian Klepper

Jan 9, 2008• 11

Now that health care reform is once again an active, visible issue in state governments and the presidential campaigns, the ideas are flying fast and furious. Predictably, some ideas are better than others.

Over at Health Care Policy and Marketplace Review, Bob Laszewski asks an important, practical but vexing question for universal coverage advocates: Can you really mandate people to buy health insurance?

The Politics of Publicly-Funded Health Care – Brian Klepper

Jan 3, 2008• 1

Over at Health Care Policy and Marketplace Review, the always insightful Bob Laszewski walks us through the mechanics of the just-passed federal budget and its health care financing implications for SCHIP, physicians, hospitals, Medicare Advantage plans. This clear, common sense analysis is a must-read for anyone interested in how the budget process actually works.

The final bill had 12,000 earmarks,
testimony to continuing special interest domination over the public interest. Everyone facing
a cut got a reprieve, but all the same issues (and cuts) will be on the
table in the near future. Here’s one of Bob’s summary paragraphs.

Late in 2008, the docs will be facing
a 15% Medicare fee cut on January 1, 2009, SCHIP will be out of money a
few months later on March 1, 2008, the extra payments to Medicare
Advantage plans will present the same plump target, and we will know
who won the November elections.

So the cuts were held off. Nothing really changed. And once again,
our Congressional representatives on both sides of the aisle made
decisions that accrued much more to the interests of their contributors
than those they claim to represent.

HEALTH PLANS: Populist Republican attacks sweet, innocent non-profit

Dec 14, 2007• 11

Blue Shield of California, the cuddly non-profit, is going to the mat with the state over recissions. Essentially Shield is saying, “It was fraud, so the recissions are legal.” Everyone else has settled.

This has mightly pissed off California insurance commish Steve Poizner. A Republican, albeit one I voted for:

Calling the allegations "serious violations that completely undermine the public’s trust in our healthcare delivery system and are potentially devastating to patients," Insurance Commissioner Steve Poizner said he would announce today that he would seek a $12.6-million fine.

That’s almost real money.

But what really got me was an interview I heard with Poizner on NPR just now. He said that first, none of the cases he’s raising have any hint of fraud by the consumer. Second, and this is the controversial part, as soon as an insurer issued a policy, it had the obligation to live up to it. Once the policy was issued, he assumed that the insurer had completed its investigation into the application and that was that.

Blue Shield is one of two plans that investigated my application a couple of years back, and the one that did the most thorough job. Healthnet accepted what I said (after I said it twice). Blue Shield accepted what I said and looked at my medical records (which duplicated what I said). But then they decided I was uninsurable.

I suspect that Blue Shield is correct in its interpretation of the law. But in winning that battle it’s helping to lose the “war”, in as much is the war retains the right to make huge profits in the individual insurance business.

And what is most bizarre is that culturally and politically, Blue Shield and its CEO Bruce Bodaken are probably on the side of massive insurance reforms that would eliminate the individual market as we know it. So quite why they’re fighting so hard I don’t know.

But when you lose the support of the Republicans….

HEALTH PLANS: Bill McGuire–off the hook?

Dec 10, 2007

Bill McGuire Friday tried to put the options scandal behind him.

Don’t forget that he did (at least) two very questionable things before the scandal came to light. First he formally abandoned utilization review at United in 2001. That to me was a signal to employers and providers that health plans were giving up on trying to control the behavior of providers. So the way they were going to make money in the future was the old fashioned way—risk selection and adding a pass through chunk on top to what providers charged them—and sticking that to their end customer.

That failure of the managed care business to contain costs has directly led to more uninsured Americans. OK, so it wasn’t all their fault, but who’s picking up the slack? Yes, it’s the lower paid worker whose employer stopped providing insurance and the taxpayer who’s paying more for the people in government programs who previously would have had insurance at work. Had managed really worked to change health care, perhaps that wouldn’t have been the case.

But McGuire did fine despite that, of course. (And he’s paid much less tax personally than he would have done in the 1990s because of the way the Bush tax cuts were slanted to the super-rich). United instead did fine being an old fashioned risk-shifter.

Which leads to the second questionable thing. Buying Patrick looney Rooney’s company, Golden Rule—the insurer that made a living selling health insurance only to those who didn’t need it—for some $900 million. (And of course it was Rooney that pushed the MSA/HSA into the forefront of Republican policy).

Now in what looks like a desperate attempt to remain a free man, McGuire has given back a big chunk of the gains he got when he was backdating the options and pay a civil penalty to the SEC of $7m. Big to most of us, chicken-feed to him.

Of course the other people involved in option backdating in other companies are currently heading to court. The first two, from Brocade, have already been found guilty and are awaiting sentencing with a potential 20 years in the slammer. Other than United did well under McGuire and Brocade did badly, as a securities law neophyte I am struggling to tell the difference.

CODA: Funnily enough United’s current CEO has been making strange mea culpas about the company’s current customer service. Anyone who can figure that out should add their 2c in the comments. And United’s hometown paper the Minneapois Star Tribune had a long article Sunday detailing their "issues" with paying claims correctly over the years

POLICY: Low prices ain’t cheap enough

Nov 20, 2007• 23

Mercer says that the number of small businesses offering health insurance to workers went down last year despite the greater and easier availability of high-deductible and HSA plans.

Fewer small employers offered health insurance this year, despite
the widespread availability of new, lower-cost high-deductible
insurance plans, a survey released today by benefit firm Mercer shows.
Advocates of the high-deductible plans touted them as one solution to
the growing number of uninsured, expecting the plans to appeal to small
employers, who would continue to offer health insurance as a result.
"That’s not happening," says Blaine Bos, a Mercer partner and one of
the study authors. "In fact, the reverse is happening."The
study of nearly 3,000 employers found that the percentage of employers
with 200 workers or fewer offering any kind of health insurance fell to
61% this year from 63% in 2006.That drop came even as the cost
of high-deductible plans with tax-free savings accounts averaged $5,970
per worker per year. That was $700 less than a comparable plan without
a savings account and far lower than the $7,120 for the average HMO,
the study says.

HSA/HRA type plans are growing in the market, but not as fast as employers are dropping coverage.

HEALTH PLANS: Lisa Girion puts boot in again!

Nov 9, 2007• 7

Will someone please stop that nasty Lisa Girion beating up sweet innocent health plans.

Woodland Hills-based Health Net Inc. avoided paying $35.5 million in medical expenses by rescinding about 1,600 policies between 2000 and 2006. During that period, it paid its senior analyst in charge of cancellations more than $20,000 in bonuses based in part on her meeting or exceeding annual targets for revoking policies, documents disclosed Thursday showed.

If she doesn’t stop, those insurers might lose their reputations as darlings of the downtrodden consumer.

HEALTH PLANS: I am dumb, dumb, dumb

Nov 7, 2007• 1

I know what you’re thinking but it’s not that. Late last year
I went back and forth with Bob at Health Policy and Marketplace Review on why, given the unlikely prospects for much growth in Medicare reimbursement and the Democrats’ win in November, the stock price of health plans servicing Medicare–and making a packet off it–had not collapsed. No need to rehearse that argument here, other than to note that life was not likely to be getting better for the stock prices of the companies still big into that sector (United, Humana, etc)

Then I went to a fun meeting in Nashville this May which had lots of industry scuttlebutt and featured several experts on reinsurance. Everyone there was talking about one Florida health plan, specializing in Medicare and Medicaid and its very dubious offshore transactions with its captive re-insurer.