John Caroll (a fellow “Fierce” editor, not that I’m one any more) gives private Medicare plans a rather soft ride and shows that appparently it’s all looking good for Managed Medicare!"The trajectory for managed care is very good," says Mark McClellan, MD, PhD, the director of the Centers for Medicare & Medicaid Services, in an interview with Managed Care (as this story hit the presses, McClellan announced his plans to retire from CMS). He bullishly points to big gains in Medicare Advantage enrollment, new enlistees in the prescription drug plans, and bigger benefits ahead for coordinating care for the sickest beneficiaries as positive indicators of what’s to come.Medicare reform has fundamentally changed the way this market works for managed care, says McClellan, pointing to a benefit package that combines a drug benefit with preventive care incentives and the rest of the traditional benefits into "a package that Medicare Advantage plans can really excel at."

No shit Sherlock. We stick a huge extra amount in the kitty for private managed care plans, and what did we expect? However, we’ve seen this movie before and we know that a) overall this costs MORE for the system, and b) when the supernormal profits go away, so does the frothiest private sector interest. In the mean time luckily only the tax-payer/Chinese central bank gets screwed.

The question is what happens when real risk adjustment cuts in. Then we’ll see if Medicare Advantage can sustain itself and <gasp> innovate in terms of improving care delivery at a lower cost. I hope so, but put me down as a skeptic.

With an election in less than 2 months, the state is finally wading into the Wellpoint BC cancellation mess. Blue Cross now faces a fine:

In the first sanction of its kind, California’s top HMO regulator fined Blue Cross on Thursday for illegally canceling a woman’s medical policy because she did not disclose corrective surgery she had 23 years earlier. The $200,000 fine might not be the last resulting from the state’s investigation of allegations that insurers dump sick policyholders to avoid paying claims, said Cindy Ehnes, director of the Department of Managed Health Care.

And Arnie has broken his silence:

“Californians — who make the right decision to have health insurance as security for themselves and their families — should not be afraid that if they use it, they will lose it because of confusing applications,” he said in a statement. “oh and please vote for me in 6 weeks” (OK he didnt say that last part)

Meanwhile, the east coast establishment has noticed—or at least Paul Krugman has—it’s the lead in his column today calling for single payer Medicare for all

Given that Blue Cross of California Unveils Major Initiative to Revise Rescission Policies and Procedures: in order to stop its retroactive cancellations, and that in its very own press release it quotes :

William Shernoff, an attorney representing some customers who have filed suit claiming rescission of their policies was not warranted, said the actions that Blue Cross has undertaken are appropriate and positive. "I’m impressed with the Blue Cross response to rescission concerns," Mr. Shernoff said. "Blue Cross is stepping up and acting very proactively to streamline the process and ensure fairness."

The new policies and procedures will be submitted to the Department of Managed Health Care and Department of Insurance for review and comment.

Methinks that a big out of court settlement is about to happen. Or else why would Shernoff be sounding quite so cordial. Blue Cross must be hoping that the usually tame DMHC and their not quite so tame “buddy” insurance commish John Garamendi are not going to follow up too much or too expensively.

For a view of what obfuscation may lie behind their shiny new guidelines, see over at Insureblog (yup the one blog that was supporting Blue Cross!).

I personally really hope that this is a case of a big bad insurer mending its ways. Let’s see.

This article, Sick but Insured? Think Again by Lisa Girion at the Los Angeles Times is why she’s been slow to respond to my email about the AHIP quote from last week. No matter. It’s the same meme about California health insurers retrosprctively cancelling sick people’s insurance on very flimsy grounds.

What I can’t tell is if this is a new story or just a human interest piece on the same issue. Wellpoint’s Blue Cross unit is already in deep “discussions” with both the patients’ legal team and the state’s DMHC from the cases reported earlier this year. There were reports that California’s Blue Shield (not related to Wellpoint or Blue Cross) is also being examined, and the story features them doing the same thing. By the way, if you look carefully at the comments from the AHIP piece last week, you’ll see that Pacificare/United is accused of the same thing too.

So it’s safe to say that everyone is at it. And it’s therefore safe to say that the individual market sucks.

Aetna seems to think so. Last week Aetna shares rose after comments on medical costs. Of course this could be a blip given that last quarter the stock fell on a higher than expected medical loss ratio. But assuming that it’s not, given that overall premium increases are a little lower this year, this means either that Aetna has gotten a-hold of its spending a little better than expected, or that it’s done a better job underwriting and getting rid of its poorer risks. Given its history in this regard, I wonder which?

You’re not exactly surprised are you? A Commonwealth Fund Study Says Individual Insurance Too Costly

The overwhelming majority — 89% — of working-age adults who shopped for health coverage in the individual market over the last three years were rejected for health reasons or found it too expensive <SNIP> Coverage was not affordable for 58% of the applicants, and 21% who had a medical condition were turned down, charged a higher premium or sold a policy that excluded the existing problem from coverage, the report said.

But don’t worry—that bastion of pure unadulterated research AHIP has its own study:

America’s Health Insurance Plans, an industry group, took issue with the study and its methodology — a telephone survey of more than 4,000 consumers — saying their impressions were not as reliable as the trade organization’s survey of insurance companies last year. The group also pointed out that its survey showed that 16 million people had individual health insurance and that the policies they purchased were more affordable than the Commonwealth report suggested and with richer benefits than employer-sponsored coverage.

Are they really saying that “individual health insurance policies are more affordable” AND have“richer benefits than employer-sponsored coverage.” Even on an acid trip there’s no way that Karen Ignagni and her lackeys can keep those two thoughts in their head at the same time without smoke coming out of their ears. I mean I know they’re well versed in lying but that one is about as stupid as possible. If only because by definition the distribution costs of selling individual policies massively exceed those of group policies. If they’re “more affordable,” it’s because their benefits are lower. And yes the benefits of most individual policies are worse than those of group policies, and most of them are consequently cheaper on an absolute dollar basis. But on a “dollar per benefit” scale they cost more. . Just one tiny study from Gabel and co in 2002 proving this is here

And that’s not even counting the fact that insurers underwrite the crap out of the individual market. AHIP’s own release confirms that  “Of those applicants offered coverage in the individual market, more than three-quarters received their requested coverage at standard rates, while 22 percent were offered full coverage at higher initial premiums.  Only 1 percent of offers included a coverage exception for a specified condition.” In other words the 20% of people who were potentially sick were underwritten. Duh! (And of course they don’t count people who were completely rejected, so their not bothering with the relevant denominator).

But back to the LA Times article. Please, please tell me AHIP’s being misquoted (and to be fair their own press release doesn’t quite say what the Post says they say), and that they meant “or” not “and”? Well let’s see—in a riposte to the paper I linked to in the previous paragraph which suggested that the individual market was poor value in Health Affairs back in 2002, this was written:

Administrative expenses are much higher for individually purchased insurance. Since each dollar of health insurance protection costs more in the individual market, it is not surprising that consumers in that market buy less of it

This is logical. It also would appear to completely agree with my point and rubbish the quote from the AHIP lackey research director in the LA Times. So who came up with this powerful and insightful analysis? It was Donald A. Young and Thomas F. Wildsmith. And who were they?

Donald Young is president and Thomas Wildsmith is a policy research actuary at the Health Insurance Association of America in Washington, D.C.

HIAA merged with GHAA to form AHIP shortly after that was published. Pity they didn’t bring their research team with them. At least they had some vague standards of honesty when they debated their corner back then.

CODA: By the way, I’m not exactly thrilled with any study done on the individual market. Even the massive RAND one in California had several flaws as I pointed out here, but no one in their right mind should trust anything AHIP says on the subject.

Tom Leith is perplexed about the nation’s largest health plan’s branding strategy: