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Tag: Insurers

CONSUMERS: Trade up players, but maybe not enough of them

• 12

Once again there’s something very important in a WSJ/Harris poll which concentrates on the people that, when I was at Harris, were called the "Trade up players". These are the people with enough discretionary income to buy themselves a better class of service from their providers.  As I know many of you don’t have WSJ access, I’ve quoted most all of the results.

"Do you have health insurance? It could be from an employer, that you purchase yourself or from a government program like Medicare or Medicaid?"

Base: All Adults

Yes, have health insurance 87%
No, do not have health insurance 13

* * *

"Which one of these statements best describes you?"

Base: Adults with health insurance

Total
I only go to doctors that accept my health insurance 85%
I sometimes go to doctors who don’t accept my health insurance 15

* * *

"Whether or not you have done so in the past, how willing would you be to go to a doctor who doesn’t take your health insurance if he or she was highly recommended by a source that you trust?"

Chart1

"How willing would you be to pay the full cost of a doctor’s visit – rather than use your health insurance – if you . . .?"

Chart2

The important issue is that pretty uniformly, those with incomes over 50K, which is a little over average household income and around US median income, are willing to spend more money to get a better class of service. Obviously this means a couple of things

a) If you are marketing a health care service to wealthier Americans there is a willingness to pay for it. Of course that’s a well known fact to chiropractors, orthodontists, and cosmetic surgeons. But it might mean that other physicians and providers might start to think about providing better access and customer service, for a small fee (and I don’t mean insisting on $20,000 for concierge service). This is the Nordstroms approach, and one that health care providers should be thinking about emulating (and one that some are).

b) This willingness to pay is a minority effect — it’s a big minority and may be a majority in the case of referrals from someone the patient trusts.  But for most of these services more people are unwilling to pay extra, and of course large majorities of those with lower incomes, even those with health insurance, do not want to pay extra.

This tells me that continued bifurcation is likely to be the case when people seek health services that they have to pay out of pocket for, with roughly double the number who want to "trade up" skimping on "extras". Why does this matter?  Because in our brave new consumer world, cash may be an increasingly important way that patients pay for health care, especially for "minor" care out of their HSAs. So this correlates with much other data about user fees at the point of care–they tend to prevent lower income people from getting care (including often needed care).

Like it or not, we are slowly heading towards this future.  Unless, that is, you live in Rochester New York.

Meanwhile, (and this is a bit of a throwaway for Ron) the Kaiser Network Health Policy Report notes that the CBO is out with a study showing that "Uninsured workers are unlikely to purchase individual health insurance, regardless of whether they receive tax credits or other subsidies to help cover the cost of premiums, according to a report released on Friday by the Congressional Budget Office". Proving to my mind once again that high deductible health plans are not going to solve the uninsurance problem and that voluntary universal health care is a myth.

POLICY/HEALTH PLANS: Stronger Rules Sought on Association Health Plans – Los Angeles Times

• 8

Following up the post about the Shadegg legislation which would allow people to buy health insurance across state lines, the other shoe dropping in the Congress is the approval of Association Health Plans — legislation passed in the House and now en route to the Senate, which basically will allow associations of varying stripes and ethical fortitude to offer health insurance across state lines also without having to adhere to state regulations. These are descendants of the Multiple Employer Welfare Trusts of the 1980s, which were essentially a license to print money for organized crime.

Consumer groups in California are prepping for these early, trying to get their retaliation in first, and are finding a willing audience in Insurance Commish John Garamendi.

HEALTH PLANS: Fuzzy math from eHealthinsurance?

• 27

I’m having no luck getting a reply from eHealthInsurance.com (albeit I’ve approached them in a rather roundabaout route via their sponsored blogger!) about this study they put out last week. They claim that people buying high-deductible health plans from their site found that compared to last year their premiums fell an average of $29 per month. Given that those plans are pretty cheap anyway, that’s a pretty big fall. And several people have emailed me or referenced this study. (More details here and the report itself is here [PDF]). But when did you ever hear of health insurance premiums falling when health care costs continue to rise?

On further review there are more questions than answers. Who got insurance? Was this group more underwritten (i.e. healthier) than the previous year? And what benefits were they getting compared to last year?  And were there changes in deductibles, co-pays and out of pocket maximums?

Just saying that the premium went down is a bit like saying the average price of a BMW 3 series is less this year on average because more people are buying them without the fully loaded options. And if it’s really true that apples for apples the premiums went down why didn’t eHealthinsurance.com put that information in the report?

Anyone who can shed light on this, please get in touch.

HEALTH PLANS/PBMs: Wall Street loves ’em

Wellpoint_1 It’s a wacky day on Wall Street.  Since Aetna’s quarterly announcement that it made a decent profit hitting expectations, the entire sector has gone a little doolally. And not all at once but over the course of the day. Look at this chart below and you’ll see that all the big health plans are up following Aetna’s lead.

And if that wasn’t crazy enough, the PBMs are doing even better. Express Scripts came in with lower revenue than expected but beat forecasts on profits. That took it through the roof today, and its now up 10% in the last week! Caremark and Medco are following. Pity I didn’t buy them all back in 2001.

Esrx

One day I’ll figure this stock market thing out.  But then again last night I went to see Enron: The Smartest Guys in the Room, and I don’t necessarily think that Wall Street gets it right all the time!

POLICY/HEALTH PLANS: Bruce Bodaken–as good as can be expected but…

• 4

The SF Chron had an interview with Blue Shield of California CEO Bruce Bodaken . In general when you’re looking across the spectrum of the self-interested actors in American health care, the genuine non-profit insurers (e.g. Kaiser and a few of the Blues like BS of CA) are the ones doing the most innovative work, and are certainly — given the system that we’ve got — better than most of the shysters who are taking over our insurance system. And that doesn’t even count the Richard Scrushy’s and Fred Hassan‘s of the world who think that the health care system should be run exclusively in their personal interest. However when asked about why, if he supports universal health insurance (and by implication community rating) we need the extra cost of a private health insurance sector, Bodaken’s speechwriter let him down badly.

Q: What is your response to those who say the ultimate way to promote efficiency is to avoid wasting money on red tape and bureaucracy in the insurance system?

A: When we look at the administrative costs of a single-payer system versus the private system, we often are comparing apples and oranges. We are doing things that the government isn’t doing. The government isn’t managing chronic disease. The government isn’t providing Web sites and opportunities for people to interface with their physician as well as with their health plan. If the government can administer the program more efficiently, you would (save money).

So by that logic back in the early 1990s, before there was any chronic disease management (which by the way should make care cheaper overall and therefore should not be a cost-add) and before anyone had heard of a web site, public and private health care administrative costs should have been the same. The really has me ROTFLMAO.  And yes Steffie and David’s classic article on the vast differential between private and public program administrative costs was published in the NEJM in, wait for it,1991.

Now I understand that Bruce has a tough spot to defend, and that he’s an advocate of universal insurance —  but please can he come up with a better answer than this for the seminal question of why health plans need to stay around. 

Hint: For just a teeny portion of that huge "surplus" BS of Ca is running as it put my rates up again this year, I can help.

HEALTH PLANS: Mckinsey on CDHPs

• 9

McKinsey, a very smart firm that should be trusted about as far as it can be thrown in terms of putting its clients’ interests above its own, is out with what looks a pretty well researched report on CDHPs.  My less well researched opinion is that the CDHP is an intermediate step on the employer’s retreat from offering health insurance, and that the HSA is a foolish tax-deductible sop to the people who would have put that money aside anyway. But then again I’ve got one, as there’s no better alternative.

Essentially the report says that the employees who had CDHPs (connected to HRAs not HSAs but it’s the same sort of thing) were more cost conscious in their health choices than they had been in the good old days of more generous plans, but that they were less satisfied with their health plans. However, the lower spending on care for patients is similar to the introduction of managed care back in the 1990s, other than initially managed care recipients were happier with their plans — as they had lower out of pocket costs than in FFS. One thing I do know is that high out of pocket costs correlates with higher patient dissatisfaction, so as the employees are left more and more on their own, dissatisfaction will likely increase. Still I suspect at least one of my commentators (can anyone guess who?) will tell me that I’m wrong.

And despite some long and complex correspondence with a couple of advocates I still can’t understand why an employer would give their healthy employees money for an HSA and then let them keep it if they didn’t spend it. (In an HRA, it reverts back at year end).

HEALTH PLANS/POLICY: Individual health insurance — going cheap!

• 27

Two people have mentioned this report from eHealthinsurance.com, so I thought I’d better address it. The first is from "friend of THCB" Brian Klepper at the Center for Practical Health Reform. He writes:

Here’s a report, issued a couple days ago, that is a striking example of the power of transparency information, applied to current individual health insurance pricing. eHealthInsurance.com ran a study to determine the lowest quotes available to non-smoking 30 year olds who purchased a $1,000 max deductible, 20% co-insurance, $3,286 out-of-pocket max plan.

They did this around the country, and then selected the lowest premium available for this profile in each location. Long Beach, CA had the lowest monthly premiums, coming in at $54. The lowest 10 cities – 7 are in California, 2 are in Arizona and 1 is in Ohio – all come in at less than $59. Pricing goes up from there: My hometown of Jacksonville, FL is 29th at $89.03. Las Vegas is 34th at 113.38. Dallas, Miami, Boston and NYC are 47-50, at $146.42, $151.20, $267.57, and $334.09 respectively. (The authors note that Boston and New York are subject to state-mandated guarantee issue and community rating). Still, the Long Beach premium is 61% of Jacksonville’s, 37% of Dallas’, 36% of Miami’s, 20% of Boston’s and 16% of NYC’s.

It is difficult to believe that even the combined differences in care and regulatory costs can account for such huge disparities. This type of information is a starting point for inquiry and action by industry leaders, regulators, and legislators. Congratulations to eHealthInsurance for publishing this revealing look at the industry.

The other post about the study is from a new heath care blogger (but a regular blogger on other subjects), Elisa Camahort, how is getting sponsored to blog about health care from the consumer’s view point, by eHealthinsurance.com. The blog is called Healthyconcerns and  has some discussion of the same study.  Elisa figured out that she could have saved a little if she’d used her sponsor’s service.

Interestingly Elisa’s Pilates teacher who was unable to get coverage because of a pre-existing condition, managed to sneak in the backdoor into insurance coverage by using short term coverage….that’s not a real solution. First it deliberately excludes people with virtually any major disease, then it runs out after a year or six months and can’t be renewed with that company.  You can usually renew it with another company, but over time you’ll run out of insurers.  Finally, you’ll want to get onto more stable long term insurance. 

I tired to do that via eHealthinsurance and my $70 quote became a $400 quote for the same coverage once they found that I’d had a prior knee surgery. So then I retreated to yet another short term insurance plan.  I presume that I could have kept playing that game for a while, but in the end I opted for a $200 a month premium for the same coverage via a small business coalition in California called PacAdvantage.  It’s not exactly a great rate, as everyone who can do better in the individual market is already in it, leaving a bunch of sickies in the pool, but I kid myself it’s better than the uncertainty of a short term policy.  And of course if the short-term guys figure out that sick people are using them to get access to insurance, they’ll extend those "excluded" groups to include more categories of potentially sick people.

Brian is right, though.  It’s good to have some transparency in pricing (although attempts to do that at the provider level are failing).  But the issue remains that in insurance we’re not really discussing apples to apples. And if you look at real health care premiums in different places, including underwriting averages et al, then they don’t match the vast discrepancies seen in this study — even though they are vastly different because of the difference in underlying health care costs, which are explained by Wennberg, not eHealthinsurance.

And  the idea behind these cheap health insurance products, promoted first by Blue Cross in California in the late 1990s, is theoretically to get more uninsured people into insurance.  But of course while we want to get them into the risk pool, these products are not going to remain viable if they let sick people buy them.  So that’s why they’re underwritten to death and why they’re not a solution to uninsurance. And of course you only really need health insurance if you’re sick. It’s the same old story of the bank only lending you the money if you can afford to pay them back — and then why would you want to borrow the money.

….and don’t start me on the impact of high deductible health plans on the community risk pool.

HEALTH PLANS: United not big enough, needs to buy Pacificare

• 2

Some thing tells me that United thinks that the government trough for health plans will continue to overflow a while longer. Apparently it’s planning to buy Pacificare for a mere $7-8 billion. Pacificare shares jumped 10% and then were halted at around $82 on the news.

This means that despite Pacificare’s great run over the last year, United at least thinks, that government based plans (especially Medicare) will continue to see more than their fair share of growth. Pacificare’s stock was below $30 when the Medicare bill was passed and those fools who thought that HMO stocks were over the top then (i.e. me and Don Johnson at least), well it shows that we’re fallible!

Again, no one told me in advance, grump, grump.

In other buying news, Philips is adding to its PACS business by buying ASP PACS vendor Stentor.

HEALTH PLANS: The Gadfly seems to have caused Kaiser real trouble

• 7

So the Gadfly has really had an effect, and in some ways so has THCB. But I’m not sure it’s a good one. Yesterday for the breach of patient confidentiality that was fairly exhaustively documented on THCB and elsewhere, the California Department of Managed Healthcare (DMHC) fined Kaiser $200,000.

Just to remind you, some contractor left some database schemas of Kaiser’s Health Connect project on an open web site some time between 2002 and 2004. Somewhere in those charts, which I looked at (not knowing what was in them) were patient records for 150 real live patients (although I never saw one and the Gadfly said that she only ever saw three and never knew they were real). The Gadfly linked to the site from her website, and after she wrote to me, I put it in a story here last August. Within a few days, that website had been taken down, and I assumed that that was that.

But apparently not. The Gadfly, who was involved in a nasty if unrelated dispute about her firing, had mirrored and copied the site to prove (at least to her satisfaction) that Kaiser was doing something wrong. Kaiser apparently is being fined for not reporting its breach of confidentiality. "DMHC officials were concerned that Kaiser allowed the site to languish on the Web in an accessible format and did not act to remove it until its existence was brought to the attention of federal civil rights authorities in January 2005. In addition, Kaiser authorities chose not to inform state regulators until after the site had been reported to the media in March. However, Kaiser has since informed all of the approximately 150 members who may have been affected." So playing out the time-line, Kaiser knew (we can assume) in August 2004, started going after the Gadfly in March 2005 when the story broke in the SJ Mercury News, but apparently had been told by the Civil Rights Commission in January that there its data had been (or still was) online, but didn’t inform the DMHC until March.

However, given that they had taken down the offending site the previous August, really Kaiser is being punished for not informing DMHC when it knew, rather than keeping it quiet and pretending (or at least insinuating pretty heavily) that it was the Gadfly who’d allowed public access to the site. But then again the Gadfly was allowing access to the data from August 2004 until March 2005, although it was a mirror of the site that had been up for over two years.

In some ways there is some karmic justice to all this. Kaiser didn’t treat the Gadfly at all well as an employee. She went after them rather too aggressively, even if she didn’t know that she was showing real patient data. Kaiser in turn responded in a more than proportionally aggressive response, and never tried to work it out with the Gadly to see if some reasonable accomodation to her problems could be reached. And they failed to do the CYA necessary to stop themselves getting in trouble with DMHC. But if $200,000 is a fair fine, then it’s more than $1200 per person, and probably more than a few thousand dollars per actual viewing by anyone on the web. So to my mind that’s a more than proportional punishment.  And I’m not sure that it’s not just DMHC grandstanding–I mean I know it was against the law, and Kaiser was slow, but I can’t see that that much harm was done to any of those patients.

Now Kaiser is a very wealthy organization and had a very good year last year ($481m profit in Q1 2005 alone), so $200,000 is not exactly that much to it. But on the other hand, it’s real money that could be used to provide health care to many needy people, and I suspect that had just a little been spent on better health insurance for the Gadfly, all of this could have been avoided. Of course the DMHC can now try to go after the Gadfly, but it appears that HIPAA privacy requirements do not apply to individuals.

So the lesson for health care organizations is mind your data and mind your employees, and treat both with common sense.

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