Cedars-Sinai and UCLA cut from Los Angeles health plan

By Chad Terhune
Los Angeles Times, September 21, 2012

Two of the most prestigious names in Southern California healthcare — Cedars-Sinai and UCLA — are getting shut out of a major insurance plan for being too expensive.

In a bold cost-cutting move, Anthem Blue Cross has eliminated doctors affiliated with the hospitals from a health plan offered to about 60,000 employees and dependents at the cash-strapped city of Los Angeles.

The city opted for Anthem’s plan because it will save $7.6 million in annual premiums next year by excluding physicians from the two institutions known for tending to the Southland’s rich and famous.

“Purchasers are sending a signal that certain prices are just unaffordable,” said David Lansky, chief executive of the Pacific Business Group on Health, which represents large companies such as Walt Disney Co. “We want great teaching and medical research institutions to survive. Whether that should happen by charging everyone in society a higher rate for routine services is more debatable.”

“Implementation of the narrow network was a difficult choice, but one made necessary by the city’s fiscal constraints,” a city spokesman said. Los Angeles is expected to be the biggest employer to offer Anthem’s Select plan.

Officials at Cedars-Sinai and UCLA criticized the rationale for the move, saying the increased costs are tied to their world-class medical research and cutting-edge treatments in areas such as cancer or organ transplants that benefit the entire community.

Thomas Priselac, chief executive of Cedars-Sinai Medical Center, said these exclusions offer a “false economy” because they don’t reduce costs in the healthcare system overall.

“It just pushes the cost onto those who continue getting care at those facilities,” Priselac said. “Secondly, it doesn’t recognize the reason why places like Cedars and UCLA are more expensive than the typical community hospital.”

For its part, UCLA said its hospitals treat a large number of patients in Medi-Cal, the government program for the poor and disabled.

“Other providers don’t have to deal with the expenses UCLA has to deal with,” said Santiago Muñoz, chief strategy officer for the UCLA Health System.

Anthem isn’t alone in pursuing this strategy. Many insurers are aggressively pitching these sharply limited networks, which offer fewer choices and lower-priced doctors and hospitals, as a cost-cutting tool at a time when U.S. health insurance premiums have climbed three times as fast as inflation and wages over the last decade.

Industry giant WellPoint Inc., which owns Anthem Blue Cross in California, offers plans that include as few as 30% of the company’s full list of providers.

http://www.latimes.com/business/la-fi-hospital-costs-20120921,0,4069159,full.story

The explosion in limited-network private insurance plans is taking choice away from more and more patients. The business tools that  private insurers use to control costs are very different from the patient-service tools of a single payer national health program. Not only do the private insurers’ tools restrict patients’ care, but they are also quite ineffective in controlling overall spending, as is demonstrated by the fact that our health care costs are about twice the average of other nations.

Under a single payer system, all legitimate costs are paid by the government and are not linked to specific health plans assigned to different individuals – a very inefficient and fragmented method of financing health care. Using the example of UCLA, there would be no tiers of private coverage and no problem with an underfunded Medicaid program. The hospital costs would be globally budgeted, just as are police and fire departments. Separate, extraordinary costs of research functions would be funded through our National Institutes of Health. Education grants can be provided through the global budgeting process since house staff members are, from a financing perspective, really just low-paid hospital employees.

We need to get WellPoint/Anthem Blue Cross and their ilk out of our health care and out of our lives. Let’s improve our own Medicare program and then provide it for everyone.