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POLICY: Communism breaks out on Wall Street? (No not really)

I sat through a very interesting talk about American health care yesterday afternoon. I guess I knew all this but it was good to have it laid out in front of me. Here are my notes from the talk about the health insurance market.

The overall number of people with private health insurance has been stagnant (176.9m) since 2000 while the workforce is growing (from 137m in 2000 to 145m in 2006). The number of uninsured is growing as are those in public programs. And as a consequence the “lives” growth in the big for-profit health plans has been below Wall Street expectations. Consumer directed health plans are growing and from around 9–10m lives in 2007 may end up at as many as 25m lives in 2010 (although those projections are much lower than they were a year ago).

Margins are as high as they’ve ever been and are at the top or even higher than the top of the underwriting cycle. Is the underwriting cycle over as they’re saying? Maybe but it’s been around for 50 years, and margins in non-profit Blues (which the speaker said aren’t so concerned about profits as the for-profits, which may be news to some non-profit CEOs I’ve met!) have started to trend down, and overall premium trend is moving down. Furthermore, some competition between plans is causing overall pricing go down (although some of that may be change in product mix, as more HDHPs which have lower premiums are sold).

Then there was a great chart showing that usually medical cost trend goes up with a 3–4 year lag to overall economic growth. We’re at about 3–4 years after the start of the most recent economic expansion now. So should we expect medical trend to go up, while premiums are going (relatively) down, and so in consequence expect the financial health of insurers to be getting worse? (My note: Is that why they’re trying so hard to hang on to those “extra” Medicare Advantage payments?)

Finally, we’re seeing employer’s provision of coverage to their employees go down, unusually, in the middle of a boom (the jobless recovery is not jobless, so much as benefit-less).

What did the speaker think was the likely outcome of all this? Bad news for health plans compounded by national health reform starting in 2009 lead by a Democratic President.

And from which lefty did I crib all this insight? Matt Borsch, health care analyst at that well known group of Bolsheviks called Goldman Sachs.

THCB UPDATE: Reader Mail

In response to yesterday’s post on AthenaHealth’s 2007 insurer ratings, Brian Klepper of the Center for Practical Health Reform writes:

I suspect that AthenaHealth would be unwilling to publicly report physician performance. Who wants to antagonize their clients?

But if AH has access to the information within the individual claims
records, it could add significant additional value by discretely
providing physicians with their relative performance values and
performance benchmarks. Physicians could use this information in health
plan negotiations and to guide performance improvements that will
become increasingly important as P4P takes root. At this point, the
only data most doctors have access to during contracting are the
numbers the health plans give them.

While health plans have actively campaigned for provider performance
transparency, their own performance has remained fundamentally opaque.
If this continues, it will render the changes possible through P4P –
which changes the incentives to reward the right care instead of simply
more care – much more difficult to achieve, because providers inherent
distrust will bubble over, as it did with managed care. After all, if
I’m not willing (or able) to tell a physician or hospital what
utilization or cost changes resulted from the incentive shift, or how
the savings were distributed, the conclusion will be that the health
plan simply pocketed the dollars with no savings to the system.

In this sense, AthenaHealth has taken a major step forward in
precipitating health plan transparency, and they deserve our collective
thanks.

That said, its useful knowing how long it takes for plans to pay
claims, but hardly what’s required to fully understand health plan
performance. A more robust tool is eValue8 (www.evalue8.org), developed
by the National Business Coalition on Health (www.nbch.org). This last
October, the Florida Health Care Coalition performed an evalue8
analysis of major health plans operating in Florida and then released
the results. These tools finally begin to provide a credible method for
purchasers and providers to get a handle on the complex, confusing
workings of health plans.

If AthenaHealth could leverage their resources a little further by
broadening their analysis, they’d add real value to changing the
dysfunction that plagues this part of the system. 

In a retort to the post on the growing support on Wyden’s health care plan, Barry Carrol writes:

I wonder about several things with the Wyden approach.First, how efficient will it be to, in effect, sell health insurance
one policy at a time as opposed to thousands at a time (through a large
employer)? The main problems with employer provided health care, in my
opinion, are lack of choices and lack of access to affordable coverage
if one loses or leaves a job or retires before becoming eligible for
Medicare. An employer mandate, at least for all but the smallest
employers, coupled with lots of choices similar to the Federal
Employees Health Benefits Plan might be a more workable approach.

Second, the Massachusetts experience is instructive on several
levels. First, Massachusetts has the highest per capita healthcare
costs in the country (over $9.000), a below average percentage of the
population that is uninsured, and a market that is overwhelming
dominated by non-profit insurers and hospitals.  Supposedly greedy for profit insurers and hospitals are simply not much of a factor in Massachusetts.

Within the last couple of days the Massachusetts health connector
website went live. People can key in their zip code, date of birth,
number of people to be covered, etc. and get rate quotes from four or
five different plans for each of four coverage levels – Bronze (both
with and without RX), Silver and Gold. Type in a Massachusetts zip code
and try it out. The website is: www.mahealthconnector.org.

 

In the comment thread on Andy Grove’s prescription for solving the healthcare crisis, Gregory Pawelski writes:

"It is entirely inappropriate to regard the randomized clinical trial as being the "gold standard" for judging whether a treatment does more good than harm. In life or death situations, one must make judgements based upon preponderance of available evidence as opposed to proof beyond reasonable doubt. It seems obvious that evidence-based medicine proponents may fail to apply this common sense standard on a consistent basis. "

In response to Beth Israel Deconess Medical Center CEO Paul Levy’s critical post on pay-for-performance plans, Mehul Dalal writes:

"We cannot talk about closing the income gap between the cognitive
and procedural specialties without mentioning the role of the Relative
Value Scale Update Committee (RUC). Their proceedings are opaque and
dominated by specialists and my understanding is that CMS adopts their
recommendations rather uncritically.

It seems that these proceedings should be more transparent and
perhaps an independent entity should ensure their recommendations are
aligned with the preferences of the beneficiaries. (this is public
money after all)."

PMH had this to say in the thread on the interview with MDVIP CEO Ed Goldman.

I attended a MDVIP kick-off last night. It was an older doctor (my
wife’s) who falls into the category of "frustrated over having too many
patients, wants a life." A lot of his patients seemed to be older and
probably have the money. Nobody walked out, and it was pretty well
receiv
ed.

"Our pediatrician had booted the insurance companies before my kids became patients. Luckily, my family has been healthy. There have been a few emergency room visits over the years and one daughter went through a battery of allergy/asthma evaluations. While the cost of annual doctor’s visits has added up over the years, it was the testing, specialist, and emergency room visits that were by far the biggest hits. Insurance was applicable to those services.

The pediatrician seems to have been successful with his approach. His staff is small and he’s accessible, as well as being a good guy."

M.W. writes in to criticize Dr.Anna Pou’s supporters:

Having read many of the sympathetically concerned statements regarding the Dr. Anna Pou/Memorial Hospital Case, the majority positions of support, based either on personal character assessments or assumptions regarding professional competency, are sadly but well intentionally misplaced. The truth of the matter is that injections of combined drugs in conjunction with saline were administered to chronically ill elderly patients with the intent to humanely end life. Also, the supportive statements are unaware of the single 30ml immediate-release morphine sulfate bottle which plays an important but  ancillary role in this case.

POLICY/POLITICS: Wyden gets a noted conservative to join him

Ron Wyden’s interesting universal health care proposal, which is essentially a variant of managed competition with an individual mandate that decouples employment from insurance is getting some support. And notably it has a major Republican, Bob Bennett from Utah, signing on. (Following is an email Wyden’s office sent out)

U.S. Senators Ron Wyden (D-OR) and Bob Bennett (R-UT) are scheduled to join some of the nation’s top CEOs at a news conference this Monday, May 7, to announce new business support for efforts to reform the nation’s ailing health care system. Wyden and Bennett are the chief Senate sponsors of the Healthy Americans Act (HAA), the first bipartisan, comprehensive health care reform bill in more than a decade to guarantee health coverage for all Americans.

CEOs and business leaders scheduled to attend the news conference with Wyden, Bennett and U.S. Reps. Brian Baird (D-WA) and Jo Ann Emerson (R-MO) include Steve Burd, CEO, Safeway Inc.; Art Collins, CEO, Medtronic, Inc.; H. Edward Hanway, CEO, CIGNA; Nancy McFadden, Senior Vice President, PG&E Corporation; Steve Sanger, CEO, General Mills; and Ronald A. Williams, CEO, Aetna Inc. Baird and Emerson announced earlier this week that they will introduce the Healthy Americans Act in the House.

Realistically this isn’t going to pass any time soon, and if it did Bush would veto it. But it does set the groundwork for a universal insurance system compromise sometime in the future and at least Aetna and Cigna think that they’ll be better off taking that compromise than the alternative!

TECH/CONFERENCE: TieCon East, innovation conference in Boston 15-6 June

Peter Mueller from BCBS Mass asked me to let you know about TieCon East. This is a conference on innovation with a health care track (as well as a tech track and an enterprise track too). Peter is chairing the health track and has put together an interesting and varied line up on topics such as consumerism, technology in HC, personalized medicine, and medical devices. It’s in Boston on June 15–6.

PHARMA/POLICY: DEA insanity continues–Dr. Hurwitz Convicted

I’m a little late as this happened last week, but it has to be reported even though it makes me very angry. The DEA and its poodles in the DOJ have succeeded in getting Dr. William Hurwitz Convicted on 16 Counts of Drug Trafficking. Hopefully Hurwitz will be out of jail relatively soon—although no guarantees. He’s served 2 and a half years for just being a doctor, and could serve up to 18 more.

Unfortunately the chronic epidemic of untreated pain goes on and on. As I pointed out in Spot-on last year :

45 to 80 percent of nursing home residents have substantial pain.  The consequences of poor pain management include sleep deprivation, poor nutrition, depression, anxiety, agitation, decreased activity, delayed healing and lower overall quality of life. Fewer than half of nursing homes residents with predictably recurrent pain were prescribed scheduled pain medications

So we have a massive health problem, and the DEA acts like a bunch of brownshirts, going after pain doctors. Listen to Tierney’s account of one of the patients from the doctor that the prosecution used.

Then, during cross-examination by the defense, Dr. Hamill-Ruth was shown records of a patient who had switched to Dr. Hurwitz after being under her care at the University of Virginia Pain Management Center. This patient, Kathleen Lohrey, an occupational therapist living in Charlottesville, Va., complained of migraine headaches so severe that she stayed in bed most days. Mrs. Lohrey had frequently gone to emergency rooms and had once been taken in handcuffs to a mental-health facility because she was suicidal. In 2001, after five years of headaches and an assortment of doctors, tests, therapies and medicines, she went to Dr. Hamill-Ruth’s clinic and said that the only relief she had ever gotten was by taking Percocet and Vicodin, which contain opioids.

Mrs. Lohrey was informed that the clinic’s philosophy “includes avoidance of all opioids in chronic headache management,” according to the clinic’s record. The clinic offered an injection to anesthetize a nerve in her forehead, but noted that “the patient is not eager to pursue this option.” Mrs. Lohrey was referred to a psychologist and given a prescription for BuSpar, a drug to treat anxiety, not pain.“You gave her BuSpar and told her to come back in two and a half months?” Richard Sauber, Dr. Hurwitz’s lawyer, asked Dr. Hamill-Ruth. Dr. Hamill-Ruth replied that unfortunately, the clinic was too short-staffed at that point to see Mrs. Lohrey sooner. Under further questioning Dr. Hamill-Ruth said that she was not aware that BuSpar’s side effects included headaches.

Mrs. Lohrey looked elsewhere for help. Having seen Dr. Hurwitz on television _ — “60 Minutes” and other programs had featured his controversial high-dose opioid treatments — she sent him a letter describing her pain and the accompanying nausea and vertigo.“I have lost hope of retrieving my life as it was,” she wrote, because she could find no doctor to take her seriously. “I currently have a physician who has said that I am psychologically manufacturing my headaches, and that I am addicted to narcotic pain relief. This of course is not the first time that I have been treated as a ‘nut’ or a ‘junkie.’ ”

<SNIP>

“I felt that I had a duty to the patients,” Hurwitz said. “I hated the idea of inflicting the pain of withdrawal on them.” After the closure of his practice in 2002, he said, two of his patients committed suicide because they gave up hope of finding pain relief. The most moving testimony came from Mrs. Lohrey and other patients who described their despondency before finding Dr. Hurwitz. They said they were amazed not just at the pain relief he provided but at the way he listened to them, and gave them his cellphone number with instructions to call whenever they wanted.

“I felt like I was his only patient,” Mrs. Lohrey testified. “I think he truly understood the nature of what I was going through.” When she lost her health insurance, she said, Dr. Hurwitz continued treating her at no charge, and helped her enroll in a program that paid for her opioid prescriptions. After Dr. Hurwitz’s practice was shut down, she could not find anyone to treat her for seven months. Eventually, she found a doctor willing to prescribe small numbers of low-dose Percocet, but she said she was not getting enough medicine to consistently blunt the headaches.

“The last two weeks, I was pretty much in bed and sick with the headaches and the nausea and the whole nine yards,” she said, explaining that she had deliberately undergone the two weeks of pain in order not to use up any of her pills. “I had to save up medication,” she testified, “so I could be here today.”

Tell me which physician was guilty of malpractice, and why on earth one of them deserves to be in jail?

POLICY: Slagging off Philip Longman, defending Jon Cohn

Up at Spot-on I’m defending Jon Cohn from a way-off topic review of his book from Philip Longman in the Washington Monthly. This is an important topic because Longman is in the “we can’t afford universal health insurance because the delivery system is inefficient” camp. He’s way wrong about that and he’s not alone. In fact his logic is backwards. We need to sort that out quickly, and I have a go at doing so in a piece called New America? Old Excuses. (The “New America” is the Foundation Longman is from which for some reason has teed off my editor over at Spot-on in the past). Here’s the intro:

Last week, I came to criticize Jonathan Cohn (for being too nice). Today, I come to defend him. Phillip Longman who hails from the New America Foundation complains in the Washington Monthly that Cohn’s new book Sick is Misdiagnosed because Cohn concentrates on the financial consequences of living without health insurance and not on the overall problems with inefficient and ineffective care in the U.S. system. He doesn’t exactly get off to a roaring start, taking Cohn to task and getting it totally wrong in the process.

Read the rest and come back here to comment

JOB POST: Blue Shield of California

Blue Shield of California is a long-established health
care firm which is embarking on a major program to reengineer its core business
and to modernize the technology that supports it. The Legacy Modernization
program will provide the key technology and business processes which are
fundamental to delivering on the firm’s strategies for future growth. Under the
umbrella of the LM project, there, are a number of critical business
opportunities which have become available. These opportunities are available in
both San Francisco and Sacramento, CA and are as follows:

Business Architects
Director of Business Architecture
Senior Project Managers -PMO Office
Sr. Systems EngineerSenior Performance Engineer
Director of Finance-PMO
Director of Package Configuration
IT Product Configuration Lead
Senior Business Analyst
Please send all responses to: ca************@**********ca.com.  When responding please include THCB job board in your subject line.

Blue Shield of California is an equal opportunity employer.

– Go read more job listings on the THCB job board. (BETA)