Restrictive provider networks

Posted by on Monday, Apr 19, 2010

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.

Some health networks drop elite hospitals

By Liz Kowalczyk
The Boston Globe
April 17, 2010

Health insurers are starting to sell policies that largely bar consumers from receiving medical care at popular but expensive hospitals such as Massachusetts General and Brigham and Women’s — a once radical idea that is gaining traction as a way to control soaring health care costs.

Amid intense scrutiny into why health care costs in Massachusetts are climbing 7.5 percent a year, limited networks have emerged as the most immediate way to control costs.

The Group Insurance Commission (the agency that oversees health insurance for state employees) required its two largest providers — Harvard Pilgrim and Tufts Health Plan — to develop restrictive networks this spring.

(Dolores Mitchell, executive director of Group Insurance Commission) acknowledged that restricted plans could lead to problems in the market, if healthy employees migrate to cheaper plans and those with serious illness remain in more expensive open networks because they need broad access to the advanced care provided at teaching hospitals. That outcome could raise costs for individuals in the open plans, since costs would be spread among fewer employees.–+Health+news

Massachusetts intends to expand the use of limited provider networks in order to slow the rise in costs. The Patient Protection and Affordable Care Act also specifically allows the use of limited provider networks for the private plans that are to be established within the state insurance exchanges. The campaign rhetoric was that patients should have choice, yet the legislation limits patient choice of hospitals and health care professionals.

Losing choice is a big price to pay for allowing each private insurer to assemble provider lists based on lowest prices, especially when that doesn’t control total costs but only shifts costs. Contrast that with a single payer that negotiates appropriate prices with every provider on behalf of all patients. Appropriate prices would be based on legitimate costs plus fair profits throughout the health care delivery system. An expanded and improved primary care system would provide a portal for access to appropriate specialized services in any appropriate institution.

How would that work for expensive academic medical centers? Institutions would negotiate global budgets with consideration of patient care, teaching, and research services, and separate budgeting for capital improvements. The patient care component should not be any more expensive than similar care provided at the community level, except for high-tech services provided exclusively by the academic center. Even those services should be priced appropriately and accessed only when clinical screening indicates that they are warranted. Patients need guidance in order to prevent inappropriate choices of non-beneficial, high-tech services.

Restrictive provider networks are simply one more perversity that we don’t need in our health care financing system.

UnitedHealth CEO reaps nearly $100 million from stock options

Posted by on Friday, Apr 16, 2010

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.

UnitedHealth CEO reaps nearly $100 million from stock options

By David S. Hilzenrath
The Washington Post
April 16, 2010

The chief executive of UnitedHealth Group, one of the nation’s largest health insurers, reaped almost $100 million from exercising stock options last year, the company reported Thursday.

Stephen J. Hemsley exercised 4.9 million options in February 2009 at a gain of $98.6 million, the company said in a regulatory filing. The options were awarded almost a decade earlier.

According to measurement standards used by the Securities and Exchange Commission, Hemsley’s compensation for 2009 was a less stratospheric $8.9 million, up from $3.2 million in 2008. The 2009 total included a salary of $1.3 million, which was unchanged from the previous year, and a cash bonus of $2 million, up from $1.8 million the year before. It also included $5.6 million attributed to stock-related awards.

The compensation committee of UnitedHealth’s board believed that Hemsley’s 2009 compensation package “was appropriate to recognize Mr. Hemsley’s overall leadership in positioning the Company for long-term success in a very difficult overall economic environment,” UnitedHealth said in the report filed with the SEC Thursday.

The committee credited Hemsley with “enhancing the Company’s reputation, ethical culture and tone at the top.”

“Although Mr. Hemsley’s total compensation is below the median as compared to other CEOs in the Company’s peer groups, the Compensation Committee and Mr. Hemsley agree that it is sufficient to motivate and retain him,” the company reported.

Although the compensation of UnitedHealth’s Stephen Hemsley may be enough to motivate and retain him, it is difficult to see how it affirms his role in enhancing an ethical culture at the top. The behavior for which he is being rewarded is precisely what should have been eliminated with the recently enacted health care financing legislation.

The ethical culture we should have would be one in which our health care dollars would be used to ensure that everyone receives the health care that they need. Instead, President Obama and Congress have ensured that Mr. Hemsley and his ilk will continue to be richly rewarded (for what?), while tens of millions are left without coverage, and the rest of us will have difficulties paying our premiums and our-of-pocket expenses.

UnitedHealth’s version of “ethical culture.” What BS!

Ohio’s lesson for Medicare Part D

Posted by on Thursday, Apr 15, 2010

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.

State, patients, doctors like new Medicaid drug plan

By Catherine Candisky
The Columbus Dispatch
April 14, 2009

When the state took back control of Medicaid’s prescription-drug program last year, there was a lot of talk about how the move would save millions.

It has.

But it’s also making it easier for patients to get the medications they need.

An analysis by the Ohio Coalition for Patient Rights found that Medicaid patients have improved access to “quality and appropriate” treatments and medications.

On Feb. 1, the state created a single, statewide drug formulary for all Medicaid programs, replacing eight different managed-care pharmacy plans.

At the time, state officials said the so-called carve-out would save money because the state is eligible for savings programs such as drug-company rebates.

The Coalition for Patient Rights’ analysis compared access to 122 drugs for health conditions including asthma, heart disease, diabetes and mental illness. It found that the state formulary, in many instances, placed fewer restrictions on patients’ ability to obtain medications prescribed by their doctor.

Such restrictions include the need for prior authorization from the insurer before a drug can be obtained and requiring patients to try different drugs before medications prescribed by their doctors can be made available.

Physicians also are applauding the change.

“We supported the idea of the carve-out because each managed-care company had its own formulary, and from an administrative perspective, it was a nightmare,” said Ann Spicer of the Ohio Academy of Family Physicians.

“It’s much simpler dealing with a single formulary, and the number of prior authorizations have been drastically reduced.”

Enactment of Medicare Part D – the Medicare drug program – was a gift to the pharmaceutical industry and the private intermediaries managing the drug benefits. The government was even explicitly prohibited from negotiating drug prices in a competing plan. Many of us at the time objected to the rejection of the broader concept of having the government as the exclusive administrator of the Part D pharmaceutical benefit. We could have had greater savings and less third party intrusion if we had adopted a public program instead.

The story from Ohio is a vindication for those of us who still insist that the Medicare Part D program should be revamped into a public program that would better serve patients, without wasting funds on the excesses of the pharmaceutical firms and the pharmacy benefit managers.

Think of how this compares with the recent health care financing reform process. The debate ended up being over a competing public insurance option, after totally rejecting any consideration of a single publicly administered insurance program for everyone. Eventually even the public option was rejected, just as a competing public Part D option had been rejected. The Republicans established the flawed policy principles with Part D, and the Democrats have now followed the same path.

The Ohio experience demonstrates not only that Medicare drug benefits should be administered by the government, but also, by extrapolation, that our entire health care financing infrastructure should be converted into an improved Medicare for everyone. We can still do that.

UnitedHealth usurping role of primary care provider

Posted by on Wednesday, Apr 14, 2010

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.

UnitedHealth to Pay Walgreens, YMCA, for Progress on Diabetes

By Katherine Hobson
The Wall Street Journal
Health Blog

UnitedHealth Group and Walgreens say they’re teaming up with the YMCA on a program that will reimburse pharmacists and lifestyle coaches to help insured patients prevent and control diabetes.

The program, which will be announced Wednesday at the CDC Diabetes Conference in Kansas City, Mo., will have two parts, says Tom Beauregard, executive vice president of UnitedHealth and executive director of the UnitedHealth Center for Health Reform and Modernization. The prevention arm will use UnitedHealth claims data and other demographic information to flag people at risk of developing diabetes and invite them to a free, 16-session exercise and nutrition class at a local YMCA. They’ll have monthly follow-up after the class is over, and instructors will be paid bonuses if participants meet certain modest weight-loss goals.

The control part of the program will be administered with Walgreens. Participants who already have diabetes will receive a 45-minute assessment and then other health-care coaching sessions, covering both medical and lifestyle management, says Colin Watts, chief innovation officer at Walgreens.

(Beauregard) said UnitedHealth would pay the YMCA around $300 for someone who completed the program and it could rise to $500 for someone who met weight-loss goals. Neither he nor Watts would disclose the reimbursements to Walgreens, but Watts says it includes a strong pay-for-performance element.

One of the most important goals of health care reform was to reinforce the primary care infrastructure to provide for everyone a medical home that would ensure access to the highest quality care reasonably attainable.

That would have been easy through a universal publicly administered health care financing program such as an improved Medicare that included everyone. Instead reform was based on an expansion of a chronically underfunded welfare program – Medicaid – plus an infusion of taxpayer funds into an expansion of the private insurance industry.

Think about it. UnitedHealth is using its proprietary data bank to glean information about primary care patients, and then using that information to pull the patients out of their primary care homes and referring them on to the YMCA and Walgreens, effectively fragmenting their health care management. If the programs are appropriate, the decision to use them should be made in the primary care home, and not usurped by middlemen money managers.

With the need to demonstrate a medical loss ratio of 80 percent (individual and small groups) to 85 percent (large groups), we can anticipate that UnitedHealth, WellPoint and the other for-profit insurers will make every effort they can to establish other similar programs outside of the mainstream of health care that would satisfy their medical loss ratio requirements. Of course these programs will draw funds away from primary care professionals, hospitals and other health care providers.

We do need a much stronger primary care infrastructure, but we need to get UnitedHealth and the others out of the way so that we can do it right. A publicly-owned financing system would place patients first, ensuring that they would have the coordinated care that they need.

Healthcare overhaul won’t stop premium increases

Posted by on Tuesday, Apr 13, 2010

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.

Healthcare overhaul won’t stop premium increases

By Noam N. Levey
Los Angeles Times
April 13, 2010

Public outrage over double-digit rate hikes for health insurance may have helped push President Obama’s healthcare overhaul across the finish line, but the new law does not give regulators the power to block similar increases in the future.

And now, with some major companies already moving to boost premiums and others poised to follow suit, millions of Americans may feel an unexpected jolt in the pocketbook.

At least in the short term, regulators will be able to do little more than require insurers to publicly explain why they want to raise rates. Consumer advocates think that will not be an effective deterrent against premium increases such as the 39% hike that Anthem Blue Cross sent some California customers last year.

“It is a very big loophole in health reform,” Sen. Dianne Feinstein (D-Calif.) said. Feinstein and Rep. Jan Schakowsky (D-Ill.) are pushing legislation to expand federal and state authority to prevent insurance companies from boosting rates excessively.

But more intensive oversight would not begin until 2014, when states set up new regulated insurance markets, or exchanges, where consumers who do not get insurance at work would shop for coverage.

The healthcare bill allows regulators to ban insurers from the exchanges if their rates are deemed unjustified.,0,3121779,full.story

The health insurance overhaul that is now law does not include significant regulatory control of private insurance premiums. At most, plans can be excluded from the state insurance exchanges if their premiums are considered to be excessive. Thus the call for more legislation to increase oversight of premium increases. But would this really address the problem?

Actually the bill does require that 75 to 85 percent of premium dollars must be spent on health care. As long as the insurers demonstrate that they are complying with that requirement, the premium increases are not deemed to be excessive as far as excluding them from the exchanges. Of course they will be excessive, but that is because health care costs will continue to rise at excessive rates.

There are two questions we should be asking. One is why we should consider 15 to 25 percent of the premium to be a reasonable share for the private insurers to consume for their own intrinsic purposes, especially when they place an administrative burden of another 12 percent or so on the providers of health care, amounting to an administrative cost of 27 to 37 percent of the insurance premiums. You would think that this would be a prime target in our efforts to improve health care spending.

The other question we should be asking is why we should finance health care using using a market model that has a half century track record proving that it is ineffective in controlling costs, when we could be using a public insurance model that would use proven economic tools that can actually slow health care increases to sustainable rates.

Regardless of the hoopla, we didn’t reform health care financing, we only expanded our existing dysfunctional system. We don’t have to accept this. We can still do it right.

Mutual fund managers are relieved

Posted by on Monday, Apr 12, 2010

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.

Health Care Overhaul May Help a Fund Sector

By Geraldine Fabrikant
The New York Times
April 9, 2010

Now that President Obama has finally gotten his sweeping health overhaul passed, mutual fund managers can breathe a sign of relief. Finally, there is some certainty about the changes, and most of them appear to be beneficial for health care stocks.

“There does not seem to be any onerous cost control,” said Les Funtleyder, a heath care analyst at Miller Tabak, an insititutional brokerage firm and asset manager.

In the wake of the new bill, the only negative he sees is a potential problem for insurance companies, like WellPoint, the UnitedHealthGroup and Aetna, because at some point they will have to cover all potential clients. “Then the question is, will they price these things so that they can avoid losing money?” he asked.

For those of us who continue to express concerns about the failure of the reform legislation to adequately control the excess growth in health care spending, this news is no surprise. Mutual fund managers are relieved that there are no onerous cost controls, allowing them to continue to include health care stocks as an important part of their portfolios. The only concern they’ve expressed is that health insurers now are going to have pay for health care for high-cost patients that they’ve been successful in excluding from their plans.

Expanding our expensive dysfunctional health care financing system works well for Wall Street, but it doesn’t work for the rest of us. It is absolutely inevitable that we will have to adopt a program of social insurance, preferably an improved Medicare for all.  The sooner, the better.

Illinois lawmaker to reintroduce single-payer bill

Posted by on Monday, Apr 12, 2010

By Chris Gray

The ink may not be dry on the health bill signed into law by President Obama, but Illinois state Rep. Mary Flowers is undeterred in her plans to continue to push for single-payer health care in the president’s home state.

“I’ve gotten lots of calls from my constituents asking where they could sign up for health care,” said Flowers, a Democrat from Chicago’s South Side. “It’s a long battle just to explain this legislation. It would’ve been a lot easier just to have single payer.”

The new health law retains a dominant role for the for-profit, private health insurance industry, with all of the costly, unnecessary paperwork and bureaucracy that comes with it. In contrast, a single-payer system would create a streamlined public agency to handle all medical bills, similar to how Medicare operates today, and use the resultant savings to assure everyone comprehensive, quality care.

On the national level, supporters of single-payer reform have backed two pieces of legislation: H.R. 676, the U.S. National Health Care Act, sponsored by Rep. John Conyers Jr., D-Ill., and 87 other congresspersons, and S. 703, the American Health Security Act, sponsored by Sen. Bernie Sanders, I-Vt. It’s expected that both bills will remain in the legislative hopper.

Meanwhile, Flowers plans to reintroduce her state-based single-payer bill, HB 311, next January. She has pledged to rename it the Nicholas Skala Health Care for All Illinois Act.

During the present legislative session, HB 311 will likely not make it out of committee. Flowers said the other legislators were reluctant to move forward with a state single-payer bill until they saw what Congress would pass in Washington. She said one of her health care committee meetings failed to even attract a quorum.

But Flowers said that once people see how inadequate the federal legislation is, her bill should gain more support.

“We will be paying money into the insurance companies without getting any coverage,” Flowers said. “I think quite frankly it’s going to help [state single-payer reform] when people see that the insurance companies will not cooperate, constantly raising rates on deductibles and premiums.”

The bill, originally written by Nick Skala, a founding member of the single-payer advocacy group Health Care for All Illinois who died in 2009, has been introduced to the Illinois General Assembly several times.

Flowers said she may not have gotten so involved with single payer if not for the efforts of Skala and Dr. Quentin Young, the national coordinator for Physicians for a National Health Program.

“Nick’s whole life was making sure that the people of Illinois have access to health care. It was only fitting that the least we could do to remember him was to name the health care bill after him,” she said.

In 2008, Flowers, with the help of 35 co-sponsors, including House Speaker Michael Madigan, was able to shepherd the Health Care for All Illinois Act out of committee, but it never came up for a vote in the full House.

House Bill 311 was greeted with significant grassroots support during that session. In a “Single Payer Lobby Day” on March 24, 2009, more than 150 residents and health care providers from across the state of Illinois, representing at least 30 organizations, descended on Springfield to show their support for the bill. The large crowd forced the House Health Care Access Committee to move into the largest hearing room at the State Capitol to accommodate them.

Champaign County alone brought two dozen people to the hearings as well as a couple thousand petitions in support of single-payer legislation in Illinois, said Claudia Lennhoff, executive director of Champaign County Health Care Consumers.

That support still exists, she said. “I think people are hungry at the opportunity to do something around single payer,” Lennhoff said. She said it was the grassroots support that moved Champaign’s state representative, Naomi Jakobsson, to co-sponsor the bill. “People need to know that they made a real impact.”

About 70 members of the Illinois Single Payer Coalition met recently in Chicago’s Hyde Park neighborhood, talking about grassroots efforts from East St. Louis to Springfield to Chicago and its suburbs. While many of the activists were unhappy, if not incensed, that single-payer national health insurance was pushed to the side during the congressional debate, they show no signs of giving up on their goal.

To find out more about the work of the ISPC, visit To learn more about Health Care for All Illinois, the state affiliate of Physicians for a National Health Program, visit

Chris Gray is an intern at Physicians for a National Health Program (

Parker Griffith’s Selective Memory

Posted by on Monday, Apr 12, 2010

By Pippa Abston MD, PhD, FAAP

Just got back from a day at the annual MASA (Medical Association of the State of Alabama) meeting in Huntsville. I’ll have more overall impressions later, but I had to post this before going to sleep tonight, while it is still fresh in my memory (you’ll see why in a minute).

The last session before dinner was a panel of 3 physicians, including none other than our friend Congressman Parker Griffith. He was speaking about healthcare reform, with the usual rhetoric. When I saw he was on the panel, I realized I’d have a chance to ask him a question, so I had several minutes to decide how best to word it. You know, it is an art, because politicians are good at turning questions around to suit themselves.

So when the time came, I got up and was last in a line of only 4 physicians to come to the microphone with questions. The tone of voice you should imagine me using is very sweet and sincere. I introduced myself as a general pediatrician and the physician coordinator of North Alabama Healthcare for All, a Chapter of Physicians for a National Health Program. Then I made a little joke about being MASA’s token liberal, which got a laugh. I said to Parker that I had enjoyed meeting him and talking to him several times. I reminded him of a meeting lasting over an hour that we had a little over a year ago at his Huntsville office with me, 5 other physicians and a couple of other single payer advocates. I recalled for him that he had said he thought universal single payer coverage was the best idea and that we would eventually get it, but it just wasn’t practical politically right now. We had asked him if he would be willing to sign HR 676, the Conyers single payer bill, and he said he wouldn’t– because he didn’t feel like he had enough influence yet in Congress where it would make any difference to the bill passing. After reminding him of this conversation, I said that I was not naive and realized politicians do often say things they don’t mean, because they want us to like them. But if he really had meant it, my question to him was “What would have to change to make it safe for you and other conservatives to publicly admit they support single payer?”

I noticed he was turning a little red as I was talking! His response was “selective memory is an interesting thing.” Then he proceeded to say that he had actually told us that if our country had “grown up” with single payer, we probably wouldn’t change it. He said he had told us he was for universal access but that he wouldn’t support Conyers’ bill because that would be socialized medicine.

So I did make one short response, reminding him that there were 5 other doctors in the room who had the same selective memory. Parker responded with a soliloquy about the problem in healthcare being insufficient numbers of providers, which is a true problem but not related. Then Rep. Price spoke up and rescued Parker, and I sat down.

After the session, I thought maybe I’d be getting some glares from my colleagues, but far from it! I can’t tell you how many people came up and congratulated me on my question, and said it was obvious to them all that I was telling the truth about what Parker had said. I even got hugs, and I was invited to speak at a fund-raiser for a Republican opponent of Parker (had to graciously decline). Apparently, the poor man has alienated so many docs in his conservative base that no one spoke up in his defense.

Anyway, I was grateful at the warm, friendly reception I was given as a public liberal by my MASA friends. They know we disagree on some issues, but we are able to enjoy each other’s company and conversation. And they know that, whatever our disagreements, the bottom line is that we all care about our patients. At the physician level, I really do believe there is hope for an honest dialogue and will continue to work towards that end.

Originally posted on Dr. Abston’s blog

Health care reform and children

Posted by on Friday, Apr 9, 2010

By Pippa Abston MD, PhD, FAAP

I’ve noticed you get fewer people complaining about the idea of universal coverage for children, I guess because they’re cuter and we know they can’t get a job to pay for their own healthcare. Believe it or not, there are actually some people who don’t want to pay for the children of “irresponsible” parents. A new form of eugenics?

But most people do care about children. Wait until they hit 18, however, and the compassion starts nose-diving. Folks don’t want to take any chance that they might wind up spending any money on someone who is lazy and just doesn’t deserve help, by whatever criteria they use to determine what “deserve” means.

Of course, I have an ethical problem with even that– but just suppose we take the stand that we DON’T want to help any undeserving adults. Guess who is going to suffer? Not just those adults, but our children!

Children don’t exist in a vaccuum. Providing just for their health insurance is not what they need for optimal health– they need healthy parents and communities. A sick parent may not be able to work enough hours to provide decent housing, food, and clothing. We have heard it said that the schools can’t take on all the responsibility for educating a child and that the parents must pitch in– but what if that parent is ill, works as many hours as she can and then has to crash in bed or on the sofa? How will that parent help educate her child? And even more importantly, a sick parent may not have the emotional resources to provide a child’s primary needs– love, attention and nurturing. Imagine also the emotional burden on the child, having to watch a loved parent suffer needlessly.

The same applies to other community members. A child interacts with so many people during the day– neighbors, church leaders, a schoolbus driver, the lunchroom lady, athletic coaches, etc, etc. We need these people also to give their best efforts to our nation’s children. A bus driver who can’t get health care for his diabetes could go into a coma while driving your child to school and crash.

And then there’s the problem of infection. Any adult who can’t afford care but isn’t at an emergency level of illness will usually NOT go to the ER. So there’s that adult walking around sharing his whooping cough with your infant, who is not old enough to have finished her vaccines. Or swine flu. Or in case of bioterrorism, anthrax, small pox, you name it!

I hope everyone can see from the above how short-sighted it is to exclude any of us from health care. If not for them, for the sake of our children.

Originally posted on Dr. Abston’s blog

UCSF student Eric LaMotte on single payer

Posted by on Friday, Apr 9, 2010

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.

Opinion: Healthcare Reform Not Found: Abort, Retry, Ignore?

By Eric LaMotte
Synapse, The UCSF Student Newspaper
April 8, 2010

Despite the intense efforts of a vocal minority, healthcare reform was enacted this year by congressional Democrats who claimed to place the needs of American citizens over those of corporations. Unfortunately, they chose to enact policies that will continue to allow a costly, complex, fragmented, for-profit insurance system to inflict damage on the rest of our healthcare system. Now, living in a post-reform world, we must decide where to go from here, and I am reminded of the error prompt that every frustrated computer user has had to answer at one point or another: Abort, Retry, Ignore?

Amidst the already loud voices in support of “Abort” and “Ignore,” we need to raise a new and thundering voice for “Retry.” The national single payer bill described above (in the full article at the link below) is already written: HR 676.

In California, we will have our own shot at enacting a statewide single payer system with SB 810. The bill passed the State Senate in January by a vote of 22-14. But it’s a long way from being enacted, and California’s idiosyncratic political system makes it unlikely that California will be the first state to enact a single payer plan. You can support real reform by joining efforts with PNHP/CaPA, CaHPSA, AMSA, CNA, or California OneCare.

For a picture of Eric LaMotte with Senator Arlen Specter, with the caption, “Senator Specter talks with first-year medical student Eric LaMotte, who supports single payer health insurance”:

For a breather, today’s message is an affirmation that there is hope for the future in health care, as represented by this article by Eric LaMotte, an astute medical student at the University of California at San Francisco (my alma mater).

Thanks, Eric.

(During our travels this month, qotd messages will be sporadic to nil.)

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