This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Choosing the “Best” Plan in a Health Insurance Exchange: Actuarial Value Tells Only Part of the Story
By Ryan Lore, Jon R. Gabel, Roland McDevitt, and Michael Slover
The Commonwealth Fund, August 2012
In the health insurance exchanges that will come online in 2014, consumers will be able to compare health plans with respect to actuarial value, or the percentage of health care costs that a plan would pay for a standard population. This analysis illustrates the out-of-pocket costs that might result from plans with various plan designs and actuarial values. We find that average out-of-pocket expense declines as actuarial values rise, but two plans with similar actuarial values can produce very different outcomes for a given person. The overall affordability of a plan also will be influenced by age rating, income-related premium subsidies, and out-of-pocket subsidies. Actuarial value is a useful starting point for selecting a plan, but it does not pinpoint which plan will produce the best overall value for a particular person.
Consumers anticipate some health care needs when choosing a plan, but many health care expenses are not predictable and some consumers are drawn to low cost-sharing plans because they prefer to minimize risk. Even when provided with information about the plans and their premiums, it can be hard for people to choose a plan that best meets their expected medical needs.
Although this analysis focuses on out-of-pocket expense, premiums, and affordability, it should be noted that there are other important considerations in judging the value of a plan. Health plans also differ in network access and quality of care. Exchanges are responsible for providing information to help consumers evaluate these dimensions, including the ability for consumers to search for particular providers in each plan’s network.
The important contribution of this study is that it shows that choosing an exchange plan based on its actuarial value (bonze, silver, gold, platinum) does not necessarily predict what out-of-pocket expenses may be. There are so many other variables that out-of-pocket expenses can be quite different for plans with the same actuarial value.
Some of the variables include the size of the deductible, whether or not some services are covered before the deductible is met, the amount of copayments, the amount of coinsurance, the maximum cost exposure, the age of the patient, income levels in qualifying for premium subsidies and for out-of-pocket subsidies, and, most important of all, how much medical care you require during the year, much of which may be totally unpredictable.
Under a properly designed single payer national health program – an improved Medicare for all – none of these variables would apply. You would not be forced to choose each year from plans that are unaffordable, or that underinsure, or both. Insurance would not be an issue. When you need health care, you get it. Period.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Controlling Health Care Costs in Massachusetts With a Global Spending Target
By Robert Steinbrook, MD
JAMA, August 22, 2012
In July 2012, after years of consideration, Massachusetts enacted wide-ranging health care reform legislation that aims to control costs and improve quality. A signature feature of the act, signed into law by Deval Patrick, the state’s Democratic governor, on August 6, 2012, is the creation of an annual global spending target for total health care expenditures, which is tied to the growth rate of the state’s economy.
For 2013, the health care cost growth benchmark is set at 3.6%. For 2014 to 2017, the benchmark is set at the growth rate of potential gross state product, and for 2018 to 2022, it is set at the growth rate of gross state product minus 0.5%, with some provisions for adjustment. The state will not dictate how the annual benchmark is met.
The Health Policy Commission is to “establish procedures to assist health care entities to improve efficiency and reduce cost growth.” The commission may encourage, cajole, and, if needed, shame them into doing their part to control costs. Starting in 2016, the commission may require some to file and implement a “performance improvement plan” because they have exceeded the cost growth benchmark and have not adequately explained potential mitigating factors. Such an entity will be identified on the commission’s website until its plan is successfully completed.
There will be no way to know if this plan for Massachusetts is working until it has been in effect for at least several years. Until then, skepticism about the amount of projected savings is appropriate.
With a global spending target, health care in Massachusetts is still likely to be very expensive as compared with the United States and all other member countries of the Organisation for Economic Co-operation and Development. Health care may just not be quite as expensive as it could be without a spending target.
Recognizing that health care reform in Massachusetts enacted when Mitt Romney was governor has failed to control health care spending, Massachusetts has now enacted legislation supposedly designed to limit spending. One of the most important features is the introduction of global budgeting, an important economic tool long advocated by Physicians for a National Health Program. No, wait. It isn’t a global budget, but rather a global spending target, and that is the point of today’s message.
Massachusetts continues to finance care through a fragmented, dysfunctional system that can never be reined in. There is no state universal budget for health care, so there can be no global budgeting. Even hospitals cannot be globally budgeted because they have to interact with so many different payers. All this legislation does regarding global spending is to identify the various entities that exceed the targeted rate increases and them put them on a naughty boys’ list.
Be prepared. A few years from now, when we continue to teach that global budgeting is one of the more effective tools that we should be using to contain costs, we’ll have to respond to the claim that Massachusetts already tried that and it didn’t work. No they didn’t. Erecting targets on the sidelines has nothing in common with crafting a budget using real dollars.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Patients Would Pay More if Romney Restores Medicare Savings, Analysts Say
By Jackie Calmes
The New York Times, August 21, 2012
Mr. Romney has been especially critical of the cuts for insurance companies that provide Medicare Advantage, a popular private-policy alternative to Medicare. “This is the president’s plan: $716 billion cut, four million people losing Medicare Advantage and 15 percent of hospitals and nursing homes not accepting Medicare patients,” he said in a recent campaign appearance.
But Medicare Advantage, which was created 15 years ago in the hope that private-market competition for beneficiaries would result in lower prices, has consistently cost more than standard Medicare — costs that Medicare beneficiaries must help subsidize through their premiums.
The reductions for Medicare Advantage providers are “a matter of basic fairness because they’ve been overpaid for years,” said (Marilyn Moon, vice president and director of the health program at the American Institutes for Research). As for beneficiaries, she added, “they’re guaranteed basic Medicare benefits. They may lose some extra benefits they may have been getting, but in effect you’re saying some of the windfall benefits may go away.”
“The bottom line,” said Representative Chris Van Hollen of Maryland, the senior Democrat on the House Budget Committee, which Mr. Ryan leads, “is that Romney is proposing to take more money from seniors in higher premiums and co-pays and hand it over to private insurance companies and other providers in the Medicare system.”
Why would Mitt Romney support overpayments to the Medicare Advantage program? The reason is that they want a vibrant market of private health plans in order to be able to put into place their plans for a premium support (voucher) program for Medicare, even though those plans cost more than does the traditional Medicare program.
The precursor to Medicare Advantage (Medicare + Choice) already demonstrated that private insurers cannot meet Medicare’s lower costs for comparable Medicare populations. They pulled out of patient markets with average or worse levels of health, keeping the healthier regions enrolled in their plans. In the Medicare Advantage program, they have gone even further. They are receiving unwarranted risk adjustment payments by submitting data indicating that their patients are sicker than they actually are.
(There has been some misleading publicity about Medicare Advantage bids this year being only 98 percent of traditional Medicare costs, but the complicated formulas still result in payments well in excess of Medicare costs.)
Once the premium support system is up and running, the intent is to cap the amount that the government contributes to the premiums for the private plans, shifting an ever-increasing portion of the costs to the Medicare patients – sort of a delayed gratification for anti-government ideologues.
(Although today’s message is about the nefarious plot to foist off on us the privatization of Medicare, some may wonder what the NYT headline means. The scheduled reduction in payments to Medicare come from two sources – reduction of overpayments to the Medicare Advantage plans, and reductions in payments to some health care providers, but not from a reduction of benefits in the traditional program. The savings are shared with Medicare beneficiaries in the form of lower premiums and lower coinsurance payments. When Romney restores the Medicare cuts, costs go up for both the taxpayers who finance the government and for Medicare beneficiaries through higher premiums and coinsurance payments.)
Investors in Health Care Seem to Bet on Incumbent
By Andrew Ross Sorkin
The New York Times, August 20, 2012
Who is going to win the presidential election?
You might want to ask Mark T. Bertolini. He just bet $5.7 billion on President Obama.
Mr. Bertolini is the chief executive of Aetna, which on Monday agreed to acquire Coventry Health Care, a huge provider of Medicare and Medicaid programs. His $5.7 billion bet makes a lot of sense if you believe that the Affordable Care Act — otherwise known as Obamacare — will not be repealed.
Mitt Romney has pledged to repeal the act “on my first day if elected,” so any gamble that Obamacare stays intact could be fairly described as a wager that President Obama will remain in office.
At a minimum, the stock market, which is an indicator of future earnings, seems to be in disagreement, at least somewhat, with the steady drumbeat of C.E.O.’s and investors who have said that President Obama’s administration, in the words of Daniel Loeb, the outspoken activist hedge fund investor, “is openly hostile to most businesses and unable to articulate or implement policies to spark growth and reduce unemployment.”
Mr. Loeb is a frustrated Obama voter who now backs Mr. Romney.
But take a look at some of his most recent investments in the health care field. In the last quarter, he reported in Securities and Exchange Commission filings, he picked up shares of Aetna, Cigna, Humana, UnitedHealth and WellPoint, among others. All of those companies stand to benefit while Obamacare remains in force; a repeal of the bill could send those shares reeling.
Aetna is not the only company to make a bet on the White House. WellPoint agreed to acquire Amerigroup for $5 billion in July, just a little over a week after the Supreme Court’s decision to uphold the Affordable Care Act. Before that, Cigna paid $3.8 billion for HealthSpring in another bet on the expansion of Medicaid and Medicare.
Companies like Aetna, WellPoint and Cigna have all gravitated to rivals with a foothold in government-sponsored programs because the prevailing view is that margins for private customers are going to steadily erode. According to Aetna on Monday, the acquisition of Coventry will “substantially increase Aetna’s Medicaid footprint, creating more opportunity to participate in the expansion of Medicaid and to pursue high acuity positions as they move into managed care.” Aetna’s revenue from the government will jump to 30 percent from 23 percent.
David Einhorn of Greenlight Capital recently made the contrarian case that companies like Cigna would actually do better if the law were to be repealed, ostensibly because of the margin compression that is likely as a result of the new law.
“While the stocks are already cheap, there is the additional unpriced upside in the possibility that the election changes the political landscape, resulting in a possible modification or repeal of Obamacare,” he wrote in a letter to investors last month.
Still Mr. Einhorn, through smarts or luck, made a big investment in Coventry in the last quarter. With the sale to Aetna, irrespective of his investment thesis, Mr. Einhorn’s firm just made about $72 million.
Although this article suggests that presidential election politics may influence the future of the private health insurance industry, the message is really nonpartisan. No matter who is elected president, there will be a lot on money to be made by investing in private insurers. Regardless of the election outcome, this message is terrible news for the patients in our health care system.
Health care’s new maverick
By Geoff Colvin
Fortune, August 13, 2012
What’s the future of American health care?
Dr. Ralph de la Torre, CEO of Steward Health Care System, may represent the answer. Steward, owned by the private equity firm Cerberus Capital Management, is a growing Massachusetts-based group of community hospitals, and industry analysts say de la Torre is one of the most dynamic and influential executives in the business. He’s consolidating hospitals, finding efficiencies, investing big in infotech, and creating a new model that he says won’t change much regardless of how Obamacare’s future plays out. De la Torre, 46, is the son of Cuban immigrants and became the chief of cardiac surgery at Harvard’s Beth Israel Deaconess Medical Center at age 38, then gave up practicing medicine to become a CEO.
You’ve hosted the President at your house for a Democratic fundraiser. Have you advised him on health care policy?
I always give my opinions, but they’re not always listened to by either side of the aisle. One of the harder realities is that health care reform is not about public health. That’s the mistake people make…
Health care reform is public finance. And when you get into public finance, it’s not about doing a study to guide policy; it’s about creating a business plan…
You’ve bought a lot of community hospitals, and it wouldn’t be surprising if you bought more. Is this consolidation trend going to become a nationwide phenomenon?
It has to. In deference to those who love the individual hospital, you have to look back at America and the trends in industries that have gone from being art to science, to being commodities. Health care is becoming a commodity. The car industry started off as an art, people hand-shaping the bodies, hand-building the engines. As it became a commodity and was all about making cars accessible to everybody, it became more about standardization. It’s not different from the banking industry and other industries as they’ve matured. Health care is finally maturing as an industry, and part of that maturation process is consolidation. It’s getting economies of scale and in many ways making it a commodity.
: an economic good
: something useful or valued
: a good or service whose wide availability typically leads to smaller profit margins and diminishes the importance of factors other than price
: one that is subject to ready exchange or exploitation within a market
Massachusetts has been leading the way in health care reform, even if in the wrong direction. Now, instead of reform heading in the direction of public health, we are seeing the commoditization of health care. Even Puck could see what fools these mortals be.
Comment by Quote of the Day subscriber Sarah K. Weinberg:
Americans seem to get stuck on the idea of health care as a privately traded commodity, and therefore, in general, something the government should not interfere with. The rest of the world (all of the industrialized nations and most of the less developed nations as well) views health care as an essential service that is a governmental obligation to provide for all its citizens. In my opinion, we will not get a universal health care system in the U.S. until we change our view of the role of government.
This particular American exceptionalism goes back to our founding fathers, who had just fought a nasty war to separate us from England. Much of the impetus for fighting for independence was unhappiness over excessive intrusion by the British crown in American life, especially in levying excessive (punitive?) taxes. Our first attempt at an independent government was a confederation with an extremely weak central government. I don’t know much about this period except that it didn’t last more than a decade at most, and I believe it was unable to raise the funds necessary to pay off debts incurred to fight the War of Independence. So we convened a constitutional convention to draft a better central government structure.
So you can see that the mindset of the founding fathers at that convention was to set up a government that would be just strong enough to manage defense against an enemy attack, with just enough taxation power to fund such a war. The rest was to be left to the states to manage as they liked. Even our “cherished” Bill of Rights was an afterthought, put in as the first 10 amendments to the constitution. Unlike other democracies, our Bill of Rights is all negative – spelling out what the federal government is NOT permitted to do to individual citizens or states.
Contrast that with the United Nations Declaration of Human Rights (1948), which spells out obligations of governments toward their citizens (and includes medical care as one such right). The U.S. signed the UN Declaration, but has never incorporated its principles into our laws, let alone our constitution. Other democracies have followed the UN Declaration in writing their constitutions and/or laws, which makes it MUCH easier to create and maintain a national health care system supported by general taxes of some sort.
Somehow Americans have to get beyond the myth of us all as rugged individualists and recognize that we are all in this together and need to share our resources enough to provide for all those who need support. We like to look down our noses at “socialist” Europe, assuming that all those nations are inferior to us, but actually, most of them are doing very well with good social infrastructures that are not bankrupting them.
Republicans, like Democrats, opposed to cutting Medicare benefits, wary of privatization
Kaiser Health Tracking Poll
When it comes to Medicare, one of the most notable aspects of Republicans’ views is how uncharacteristically similar they are to those of Democrats and Independents, according to this month’s Post/Kaiser poll. A large majority of Republicans (69 percent) say they are opposed to reducing Medicare benefits, even in the service of debt reduction. At the same time, roughly six in ten Republicans would support cuts in benefits if they were targeted only at high income seniors. In both cases, these views put Republicans on the same side of the issue as Democrats, a rare occurrence of late.
At the same time, a majority of Republicans (55 percent) currently say they prefer that Medicare continue as a defined benefits program, rather than changing to a system in which seniors are guaranteed a fixed amount of money to be used to buy coverage either from Medicare or from a private plan, an option supported by 39 percent of Republicans. Here again, the balance of opinion among Republicans puts them closer to the views of Democrats and Independents than usual in this area. The issue is set up to be an important one this fall given Representative Ryan’s advocacy of moving toward some sort of premium support model, though both Representative Ryan and Governor Romney have explicitly stated that any such change would not impact today’s seniors but would take effect for younger people when they become eligible for Medicare in the future.
Democrats share with Republicans a preference for keeping Medicare as it is rather than switching to a premium support system (68 percent prefer to keep the current system, compared to 29 percent that would back the change). They are also opposed to cutting Medicare benefits as a way to reduce the federal budget deficit (85 percent oppose), unless those cuts are targeted only at the rich, in which case two in three would be supportive.
A large majority of Americans, regardless of political affiliation, are supportive of Medicare and do not want to see its benefits reduced, nor do they want it privatized through a defined contribution, premium support, or voucherized program. As dissatisfaction with our current dysfunctional health care financing system increases, it is inevitable that the public will eventually support an improved Medicare for everyone.
One concern in this poll is that Republicans and Democrats alike believe that Medicare benefits should be reduced for the wealthy. That would be a terrible mistake, and not only because of the administrative headache that would be created trying to match benefits with labile incomes. The wealthy will have to contribute more, but that should be done through progressive tax policies that are used to finance the entire system. The full complement of benefits should always be there for all of us, reinforcing the importance of social solidarity that is characteristic of the very successful health care programs in other nations.
Journal editorial: Pay-for-performance a faulty policy in medicine
By Chelsea Conaboy
The Boston Globe, August 15, 2012
Programs that reward doctors and hospitals for hitting certain quality targets are being rolled out in Massachusetts and across the country. A major focus of the health care law signed by Governor Deval Patrick last week is that doctors should be paid for keeping patients healthy, rather than for the volume of tests or treatments they order. Yet, several recent publications question whether pay-for-performance systems actually lead to better care for patients.
The programs are meant to push doctors to think about a patient’s overall care and to consistently do things that are thought to improve health outcomes, such as give appropriate counseling to people with heart conditions or timely antibiotic treatment to people with pneumonia.
A review of seven studies of primary care programs that paid doctors extra for meeting certain targets, published by the Cochrane Collaboration in September, was inconclusive about the effect on quality of care. “Implementation should proceed with caution,” the authors wrote.
A study published in March in the New England Journal of Medicine found that a large Medicare pilot program that paid providers more if they met certain process targets — and docked pay for those who did poorly — did not reduce short-term patient mortality rates. A version of the program is being rolled out nationally. The authors of the paper called the results “sobering.”
In an editorial published Tuesday in BMJ, formerly known as the British Medical Journal, two public health professors and a best-selling author in the field of behavior economics explain why they think paying doctors more based on quality metrics is inherently problematic.
Hospitals and doctors can easily change their reporting practices to improve their quality scores, they wrote. And financial incentives can undermine doctors’ intrinsic desire to help their patients, Drs. David Himmelstein and Steffie Woolhandler, both professors at City University of New York and visiting professors at Harvard, and Duke University Professor Dan Ariely wrote.
Himmelstein and Woolhandler are long-time advocates for a national health system. Ariely is an author of several books, including The (Honest) Truth about Dishonesty.
“Incentives may mutate honesty into legal trickery; gaming can so thoroughly distort reality that rewards become uncoupled from performance,” they wrote.
The idea that people will be motivated to do better if they are paid more as a result may seem like common sense, but medicine is complex, Himmelstein said. Often the measures used to determine success do not match the conditions of care or patient outcomes the program is meant to address, he said. The editorial points to trouble the government has faced in accurately measuring avoidable readmissions, when patients return to the hospital soon after being discharged because they do not receive the appropriate follow-up care.
Himmelstein said other fields have struggled with pay-for-performance programs. Under national education policy, schools that score poorly on standardized tests receive less funding.
“They’re the ones who need it most,” Himmelstein said. “Is the right reaction to poor quality that those institutions need fewer resources, not more?”
Editorial: Why pay for performance may be incompatible with quality improvement
By Steffie Woolhandler, Dan Ariely and David U. Himmelstein
BMJ, August 14, 2012
Beyond the simple criticism that pay for performance can’t operate on an extended time frame and that years may elapse between treatment and outcome, the concept of pay for performance in healthcare rests on flawed assumptions about medicine, measurement, and motivation. Performance based pay may increase output for straightforward manual tasks. However, a growing body of evidence from behavioral economics and social psychology indicates that rewards can undermine motivation and worsen performance on complex cognitive tasks, especially when motivation is high to begin with.
BMJ editorial ($30 fee for access):
Intuitively, it seems that basing pay on performance, quality, outcomes, or other desirable results would be an improvement that we should look at as we address the very high costs of our health care system. But is this really an answer to our high costs?
Many claim that we should no longer pay for the volume or intensity of services, but pay for good outcomes instead. What is this “instead”? Good medicine requires a lot of intensive labor. The work will have to be done if we expect optimal outcomes.
When we measure performance, quality and outcomes, precisely what are we measuring? For performance, do we use standard protocols for complex clinical presentations? Even with documentation of simple problems, who is to say that the protocol used is correct when the presenting problem may not be as it appears? As an example, a negative streptococcal screening test is used to default to a diagnosis of a “virus” in a person presenting with a sore throat, when actually the person was experiencing the onset of acute leukemia. Measuring this one encounter might score well on performance and quality, when only later would it be discovered that the outcome may be below that of a resolved viral pharyngitis.
We are now seeing a proliferation of accountable care organizations that are to be rewarded with a potion of the savings that they can produce, providing that they achieve certain standards in measuring performance, quality and outcomes. What about that sore throat? Do you order a peripheral smear on everyone with a suspected viral pharyngitis? Of course not. But if it turns out to be leukemia, do you gets points for performance, quality and cost savings, even though you missed the diagnosis, but you saved the cost of a lab test?
The point is that the concept of paying for performance is a diversion from what we should be doing about much more pressing problems: improving access for everyone by removing financial barriers to care, and improving value in our collective health care purchasing by adopting a financing system that will actually provide that value – a single payer national health program. The impact would be immensely more beneficial than any pay-for-performance scheme.
This does not mean that we shouldn’t continue to try to develop methods of improving performance, quality, and outcomes. Of course we should. That is and always has been a primary goal in the art and science of medicine. What it does mean is that we should not use performance measures as a decoy to distract us from our most urgent goal – an improved Medicare for all.
A Giant Hospital Chain Is Blazing a Profit Trail
By Julie Creswell and Reed Abelson
The New York Times, August 14, 2012
During the Great Recession, when many hospitals across the country were nearly brought to their knees by growing numbers of uninsured patients, one hospital system not only survived — it thrived.
In fact, profits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared, far outpacing those of most of its competitors.
The big winners have been three private equity firms — including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate — that bought HCA in late 2006.
The financial performance has been so impressive that HCA has become a model for the industry. Its success inspired 35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms eager to repeat that windfall.
HCA’s emergence as a powerful leader in the hospital industry is all the more remarkable because only a decade ago the company was badly shaken by a wide-ranging Medicare fraud investigation that it eventually settled for more than $1.7 billion.
Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the cost of its medical staff, a move that sometimes led to conflicts with doctors and nurses over concerns about patient care.
In late 2008, for instance, HCA changed the billing codes it assigned to sick and injured patients who came into the emergency rooms. Almost overnight, the numbers of patients who HCA said needed more care, which would be paid for at significantly higher levels by Medicare, surged.
As HCA’s profits and influence grew, strains arose with doctors and nurses over whether the chain’s pursuit of profit may have, at times, come at the expense of patient care.
Nobody expected the for-profit HCA hospital chain to change its fundamental practices. It hasn’t. It is an investor-owned corporation designed to make money, which it does very effectively. The PNHP model of single payer reform calls for an end to for-profit, investor-owned corporations in health care. You need only to read this fairly long article to understand why.
Implementing the Affordable Care Act’s Insurance Reforms: Consumer Recommendations for Regulators and Lawmakers
National Association of Insurance Commissioners (NAIC)
These materials were prepared to assist regulators, lawmakers, and the National Association of Insurance Commissioners (NAIC) during ongoing implementation of the comprehensive insurance reforms called for by the Patient Protection and Affordable Care Act of 2010 (ACA). The purpose of these recommendations is to convey the perspectives of consumer advocates on appropriate standards and guidelines for implementing these reforms, which will go into effect in 2014.
These recommendations are limited to the ACA’s insurance reforms and do not address other critical reforms of equal importance to the consumer representatives and millions of consumers, such as the expansion of the Medicaid program, the implementation of health insurance exchanges, the availability of federal subsidies, and the need for meaningful consumer outreach and education, among others.
Table of Contents
Guaranteed Issue and Guaranteed Renewal
Elimination of Preexisting Condition Exclusions
Definition of the Small Group Market
Limitation on Waiting Periods
Coverage for Participating in Approved Clinical Trials
Essential Health Benefits, Including State-Mandated Benefits
Actuarial Value, Limitations on Cost-Sharing, and Catastrophic Coverage
Stop Loss and Self-Insurance
Limited Medical Benefit Plans
You likely don’t have time for this now, but this report is so important that you should download it now, or at least keep the link for later downloading. If nothing else, when you have time, you should read the six page executive summary of the recommendations.
So what is this that makes it so important? It is a report prepared for the National Association of Insurance Commissioners by respected authorities who represent consumer interests (that is, patients). It discusses details of reforms of private insurance that should be considered as the Affordable Care Act is implemented.
It is important to understand the complexities and interactions of the various private insurance reforms that should be considered. Two things are clear: 1) They will never get the details aligned such that the final product will serve the best interests of patients, and 2) The complexities leave wide open the opportunities for the private insurance industry to game the system – obviously for their own benefit and not for the benefit of patients.
This report does not address many other important issues such as the changes in Medicaid, the complexities of the private insurance premium and out-of-pocket subsidies, the fate of the 30 million who will remain uninsured, and, most importantly, how this highly flawed, outrageously expensive, and highly fragmented model of reform is the worst model to try to best serve the interests of consumers (oh yes, patients).
Maybe it’s time for someone to write that much needed paper, “It’s the Private Insurers, Stupid!”
Blue Shield, UCLA end long health insurance dispute
By Chad Terhune
Los Angeles Times, August 10, 2012
Nonprofit insurer Blue Shield of California said it resolved a lengthy contract dispute with UCLA and other UC system hospitals over reimbursements for patient care.
The previous contract expired Dec. 31 as the two sides bickered over rising medical costs. These disputes have become more common across the country as some insurers try to rein in healthcare costs and major hospitals exert their market power to maintain adequate reimbursements.
Contract talks broke down between UCLA and Blue Shield in 2006 and 2008 as well.
Blue Shield top executives’ pay changed little in 2011
By Chad Terhune
Los Angeles Times, August 11, 2012
Nonprofit insurer Blue Shield of California said its outgoing chief executive earned $4.6 million last year, off slightly from a year earlier, as all insurance companies faced new government rules on how customer premiums are spent.
The San Francisco company declined to comment on the value of Bodaken’s retirement pay and benefits or to reveal the pay package of his successor. Paul Markovich, chief operating officer, will take over as CEO Jan. 1.
We should be able to agree that a health care financing system should be designed to optimally serve the health care needs of the patient. Under the private insurance model of health care financing, there should be no better example as to how that might work than non-profit Blue Shield of California’s coverage of care at the public University of California academic medical centers. Surely, a large non-profit traditional insurer and a system of public university health centers would collaborate to serve patients first.
California’s Blue Cross set the stage. It converted to a for-profit corporation, and then engaged in practices to improve investor return. An important part of their strategy was to impose contract restrictions on both patients and providers. To remain competitive, Blue Shield adopted the same strategies, blurring the distinction between the for-profit and non-profit Blues in California.
There are clinical situations in which the most appropriate care would be provided at one of California’s prestigious university medical centers. A health care financing system that was designed in the patients’ best interests would ensure access to these centers when appropriate. But that is not what happened in this instance when disputes arose over contract terms on the provider side. Though there was no dispute on the patient side of the contracts, Blue Shield patients nevertheless were potentially exposed to severe financial penalties should they access care at the university centers.
So this is what we get with the best in private insurance financing – contract disputes that are disruptive to patient care. If a single payer system – an improved Medicare – were our only program, spending would be priced right, based on global budgets and negotiated rates. Patients would no longer be restricted to contracted networks imposed on them by private insurers. Instead, patients would consult with health care professionals of their own choice and would receive care in facilities that best served their own medical needs, rather than in facilities that best complied with the business plans of private insurers.
Why do we keep paying private insurers for their expensive administrative services that they use to impede our access to care? That’s not very smart.
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