PNHP

Health care bill en route to the governor

Health care bill en route to the governor

By Carl Etnier
Vtdigger.org, May 6, 2011

Green Mountain Care is set to become law now that the House and Senate have passed the final version of the health care reform bill, which was hammered out in conference committee earlier this week. The House approved the bill Thursday on a 94-49 vote.

The legislation now heads to the governor’s desk where it is expected to be signed into law with fanfare. Gov. Peter Shumlin, a Democrat, is the architect of the single-payer health care plan, and he will likely sign the bill into law next week.

The House vote was intensely partisan with minority leader Rep. Don Turner, R-Milton, noting afterward that no House Republicans had supported it. He complained that the House GOP was shut out of the three-member House delegation to the conference committee, and he called on Shumlin “to ensure that minority position concerns are addressed.”

One Republican, Rep. Anne Donahue, R-Northfield, who voted against the legislation, said she would collaborate in implementing the state’s pioneering reform of its health care system.

Rep. Mark Larson, D-Burlington, and chair of the House Health Care Committee, reminded lawmakers that the health care reform initiative is the result of the problems inherent in the current system.

“Too many Vermonters continue to be uninsured, and even more face financial risk if they get sick or hurt because of inadequate insurance,” Larson said. “Vermont businesses continue to struggle with the skyrocketing cost of health insurance. And the way that we fund health care is inequitable, inefficient, and unfair to many. It continues to support the ability to cost shift, one to the other.

“Most importantly, our health care system lacks the ability to control costs and to ensure that the dollars Vermonters do spend provide Vermonters with quality and go towards things that help Vermonters get better when they’re sick or hurt, or to stay healthy, to avoid not just the cost of getting sick, but also just to preserve their health,” Larson said.

Green Mountain Care sets the state on a path towards universal health care coverage for Vermonters, regardless of where or whether they are employed. It would not, strictly speaking, be a single-payer system, as private supplemental insurance plans will continue to be available, and federal programs like Medicare and Medicaid will continue, but Larson expects the plan to reduce the number of insurers now operating in the state. He also says that the coverage of Green Mountain Care will be such a comprehensive benefits package, he is not “sure why somebody would want to purchase additional insurance beyond that, but that would be a choice that they could make.”

The conference committee resolved a number of issues that had mobilized health care activists in the waning days of the session. The Senate had specified that illegal immigrants be excluded from the coverage of Green Mountain Care. The final bill asks for a study of the costs of including or excluding undocumented immigrants. Larson pointed out that fear of deportation keeps illegal workers from seeking treatment when they need it, and if their condition worsens so much that they require emergency care or hospitalization, then those costs are borne by other Vermonters. It’s possible, he said, that it would be less expensive for everyone to cover even those aliens without papers.

Another thorny question relegated to further study is whether to cover and require payments from those eligible for TRICARE and other federal coverage. In this case, too, Larson said, it’s possible that creatively including these individuals in Green Mountain Care could lower costs for everyone.

Health insurers were both helped and hurt at the conference committee table. The bill’s supporters want Vermont to set up by 2014 a health benefit exchange of the type mandated by the federal Affordable Care Act. Some people had feared that no insurance providers would want to participate in Vermont’s exchange; the bill now requires that the state try to entice at least two insurance companies to underwrite Vermonters. On the other hand, the number of insurance company representatives allowed to serve on the Green Mountain Care advisory committee was reduced from three to one.

The bill was a signature issue in Shumlin’s gubernatorial campaign. In the Legislature, it has been the subject of intense lobbying, both by supporters and opponents. With passage virtually a foregone conclusion, representatives largely confined themselves to clarifying or debating the changes from the conference committee.

A few had the energy left to argue the larger questions of the bill. Rep. Cynthia Browning, D-Arlington, lamented the “lost opportunity” to help uninsured and under-insured Vermonters sooner than 2014. She also said that there were so many unanswered questions, it was like “Scarlett O’Hara health care: ‘We will think about that tomorrow.’”

Rep. Willem Jewett, D-Ripton, countered that the current approach is not working, and though the bill “does not provide a solution to our problems, it does provide a process through which we can reach one.”

Deb Richter, a physician who has lobbied for decades for single-payer health care, was on hand for the vote, and she was “overjoyed” at the passage of “an amazing piece of legislation.” She says that she gets a lot of letters from people who don’t understand the legislation, so she expects to be part of a group that travels around the state to explain to Vermonters how the bill works. When asked whether she would like to be a member of the five-member board the bill creates to implement Green Mountain Care, she replied, “I would never turn away a position that could be helpful to the process.”

http://vtdigger.org/2011/05/06/health-care-bill-en-route-to-the-governor/

Sanders/McDermott single payer American Health Security Act of 2011

Single-Payer, Medicare-for-All Legislation Introduced

Senator Bernie Sanders
May 10, 2011

Sen. Bernie Sanders (I-Vt.) announced today that he introduced legislation to provide health care for every American through a Medicare-for-all type single-payer system.

Rep. Jim McDermott (D-Wash.) filed a companion bill in the House to provide better care for more patients at less cost by eliminating the middle-man role played by private insurance companies that rake off billions of dollars in profits.

The twin measures, both called the American Health Security Act of 2011, would provide federal guidelines and strong minimum standards for states to administer single-payer health care programs.

“The United States is the only major nation in the industrialized world that does not guarantee health care as right to its people,” Sanders said at a press conference on Capitol Hill. “Meanwhile, we spend about twice as much per capita on health care with worse results than others that spend far less. It is time that we bring about a fundamental transformation of the American health care system. It is time for us to end private, for-profit participation in delivering basic coverage. It is time for the United States to provide a Medicare-for-all single-payer health coverage program.”

McDermott said, “The new health care law made big progress towards covering many more people and finding ways to lower cost. However, I think the best way to reduce costs and guarantee coverage for all is through a single-payer system like Medicare. This bill does just that – it builds on the new health care law by giving states the flexibility they need to go to a single-payer system of their own. It will also reduce costs, and Americans will be healthier.”

http://sanders.senate.gov/newsroom/news/?id=47d632b8-4a43-4d2b-b500-cb2c105e93ef

American Health Security Act of 2011:
http://thomas.gov/ (select bill number and insert S.915 or H.R.1200)

And…

Doctors’ group greets single-payer health bill in Senate

Physicians for a National Health Program
May 10, 2011

Physicians for a National Health Program says Sen. Bernie Sanders’ American Health Security Act would go far beyond federal health law, slash bureaucracy and lay the basis for universal, high-quality care.

https://pnhp.org/news/2011/may/doctors-group-greets-single-payer-health-bill-in-senate

The single payer concept has not gone away. We really don’t have to accept the deficiencies of the Patient Protection and Affordable Care Act (PPACA): tens of millions uninsured, and under-insurance as the new standard. The low actuarial value plans being established by PPACA will create financial hardships for middle-income Americans who have significant health care needs.

What we do need is an America that understands what we can have in health care for everyone, but what we won’t be receiving if we simply sit back and let PPACA play out. It’s our job to get the word out.

Vermont seeks insurance for most residents

By Chelsea Conaboy
The Boston Globe, May 7, 2011
 
As soon as 2017, Vermont could become the first state to provide and pay for insurance for most of its residents under a plan passed by the Legislature Thursday. But it must first clear several significant hurdles, including persuading the federal government to allow the state to assume responsibility for Medicare and Medicaid enrollees and finding a way to pay for the program.
 
The bill outlines a planning process for implementing what is often referred to as a “single-payer” system. Called Green Mountain Care, the program would operate in its first few years much like other state health care exchanges established under the federal Affordable Care Act and must begin enrolling individuals and small business in 2014. That’s the year the mandate for most Americans to have health insurance takes effect.
 
Vermont’s plan is different, however, because it lays out the state’s intention in 2017 to move most people with private and government insurance into a unified system in which their insurance would be paid for through their taxes, not through premiums and copayments.
 
Anya Rader Wallack, special assistant for health care to Governor Peter Shumlin, said that the bill’s passage is a significant step toward a single-payer system, but that supporters have “some real heavy lifting ahead.”
 
An analysis by Harvard economist William Hsiao and Steve Kappel, a Vermont health-policy consultant, said the plan could shave between $1.7 billion and $2 billion off the state’s projected $9 billion in health care costs in 2020.
 
Implementing the plan would require new taxes. One proposal studied by Hsiao, Kappel, and others is to raise payroll taxes to 10.9 percent for employers and 3.6 percent for employees.
 
By Kappel’s analysis, even with the new taxes, employers and employees at low-wage companies that now offer high benefits would save money using the exchange. But the new program would cost those at high-wage companies with lower benefits. Kappel called it a “humble bill” that leaves many open questions. “This bill is very much more a statement of goals,” he said.
 
Wallack said far more analysis is needed before the state can present the Legislature with a solid financial plan. The Vermont secretary of administration must present a plan for paying for the program to the Legislature by Jan. 15, 2013.
 
The state’s largest health system, Fletcher Allen Health Care, could manage just fine as a provider in the proposed system, said Melinda L. Estes, president and chief executive. However, she said, “There are a tremendous amount of unknowns from the business and employer side,” including whether the system would be exempt under the new program because it is self-insured, meaning it acts as insurer for its employees.
 
Paul Harrington, executive vice president of the Vermont Medical Society, questioned whether the state could secure the waivers necessary to assume authority for the federal programs while continuing to receive hundreds of millions of dollars in subsidies through the Affordable Care Act. His group did not take a position on the bill.
 
The bill, which passed with a final House vote of 94 to 49 after approval in the Senate, was opposed by some business groups, including the Vermont Insurance Agents Association.
 
The bill establishes a system to help people find and manage their health plans through the exchange. But Joseph Normandy, executive director of the insurance association, worries that many of his members could lose business. About one-third of his group’s 150 member agencies sell health insurance, he said.
 
“In this economy, when you outlaw health insurance agents, you eliminate jobs,” Normandy said.
 
But the plan also saw pushback from people who said it did not go far enough.
 
Without a funding plan or details about what kind of coverage the state would offer, the bill does not actually do much, said Dr. David Himmelstein, visiting professor at Harvard Medical School and a founder of Physicians for a National Health Program.
 
“It’s an important step, if they take the next one,” he said. “If this is all they pass then, frankly, it’s not.”
 
Chelsea Conaboy can be reached at cconaboy@boston.com.
 
http://articles.boston.com/2011-05-07/news/29520685_1_single-payer-system-health-insurance-affordable-care-act/

Irrational system puts squeeze on doctors

Letters
San Francisco Chronicle, May 6, 2011

Re “More family doctors charging patients annual fee” (May 3): It should come as no surprise that some physicians are resorting to charging an annual fee in order to make ends meet, as the reimbursements we receive from both public and private insurance programs continue to trend downward while the amount of time spent on paperwork increases.

And, yes, this could continue to drive up costs, but the fault lies not with physicians. Rather, it is our fragmented, inefficient, wasteful, profit-driven health care system that has created this situation, and the Affordable Care Act passed last year will do little to change it. If we had a single-payer (“Improved Medicare for All”) system, physicians would not have to deal with the hundreds of health insurance programs in California, and we could spend our time doing what we are trained to do: take care of patients.

Richard Quint, M.D.
Berkeley

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2011/05/06/EDU91JBV6N.DTL#ixzz1Lre7oEBt

Private insurers turn to "captives"

Richard Klumpp's Captive Insurance Brief

Wilmington Trust

March 24, 2011

A captive insurance company is a wholly-owned subsidiary created to provide insurance to its parent company (or companies).

Once established, it operates like any commercial insurer, i.e., it assumes the risk of its parent/owner in exchange for a pre-determined premium payment.

April 27, 2011

While captives are real insurance companies, they are essentially a form of self insurance, especially for single parent captives. Unexpected losses, if they occur, will negatively impact the profits of the parent firm.

http://blog.wilmingtontrustcaptiveinsurance.com/

And…

Seeking Business, States Loosen Insurance Rules

By Mary Williams Walsh and Louise Story
The New York Times, May 8, 2011

Companies looking to do business in secret once had to travel to places like the Cayman Islands or Bermuda.

Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.

Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.

Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis.

Aetna recently used a subsidiary in Vermont to refinance a block of health insurance policies, reaping $150 million in savings, according to its chief financial officer, Joseph M. Zubretsky. The main reason is that the insurer did not need to maintain conventional reserves at the same level as would have been required by insurance regulators in Aetna’s home state of Connecticut.

For insurers, these subsidiaries offer ways to unlock some of the money tied up in reserves, making millions available for dividends, acquisitions, bonuses and other projects. Three weeks after Aetna’s deal closed, the company announced it was increasing its dividend fifteenfold.

Another issue is public oversight. State regulators normally require insurance companies to make available reams of detailed information. A policyholder can find every asset in an insurer’s investment portfolio, for instance, or the company the carrier turns to for reinsurance. But not if the insurer relies on a captive. The new state laws make the audited financial statements of the captives confidential.

“We are concerned about systems that usher in less robust financial security and oversight,” said Dave Jones, the California insurance commissioner.

While saying that he wanted to remain open to innovation, Mr. Jones added, “We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers.”

http://www.nytimes.com/2011/05/09/business/economy/09insure.html?hp=&pagewanted=all

Comment: 

By Don McCanne, MD

Aetna has established a “captive” which has enabled it to refinance a block of health insurance policies for the purpose allowing it to maintain a lower level of reserves, under the cloak of confidentiality. Unlocking that money by removing it from reserves has enabled it to increase its dividends fifteen fold.

This is the industry that Congress has insisted must remain in charge of our health care financing. They create insurance products we can’t afford with benefits that won’t adequately protect us. They waste tremendous resources in their administrative excesses. And for what? To enrich shareholders and investment bankers by draining value away from policyholders?

Why is there no outrage? Why do Americans remain silent as our public stewards force us into giving control of our health care dollars to these crooks? Americans have made it clear that they don’t want our Medicare dollars to be placed in the hands of these thieves. Why can’t Americans make the connect that we could throw these jerks out and place all of our health care dollars into our own Medicare program?

Blue Cross, Blue Shield Getting Richer, Like Corporate Insurers

By Wendell Potter
PR Watch, May 2, 2011
 
I’ve written frequently in recent weeks about the eye-popping profits the big, publicly-traded health companies have been reporting. Last year — as the number of Americans without health insurance grew to nearly 51 million — the five largest for-profit insurers (Aetna, CIGNA, Humana, UnitedHealth and WellPoint) had combined profits of $11.7 billion.
 
But that was so 2010.
 
If the profits those companies made during the first three months of this year are an indication of things to come, 2011 will more than likely be the most profitable year ever for these new darlings of Wall Street.
 
But lest you think only those big New York Stock Exchange-listed corporations have figured out how to make money hand over fist while their base of policyholders is shrinking, take a look at the so-called nonprofit Blue Cross and Blue Shield plans.
 
Don’t think for a minute that the Blues are any more interested in your health and well-being than the companies that at least own up to being in business to make a hefty profit off of insuring the healthy and shunning the sick.
 
According to a report by Carl McDonald of Citi Investment Research and Analysis, last year was the most profitable year in history for the Blues plans, which enjoy significant tax advantages because of their claim to be nonprofit and terrific community citizens. Collectively, the Blues reported more than $5.5 billion in net income in 2010.
 
Not only that, but the Blues now have more than five times that amount in capital above what state regulators require. As McDonald noted in his report, maintaining such a huge reserve should make regulators think twice before approving rate increases in the future.
 
“Our analysis of the financial position of 33 Blue Cross plans suggests that their capital position has reached a level that’s difficult for the nonprofits to justify, and if sustained, will lead to significant tension between the nonprofit Blues, regulators and consumer activists,” McDonald wrote. “According to our data, the nonprofit Blues held a total of $52 billion in capital at the end of 2010, or more than $29 billion above minimum regulatory requirements.”
 
One of the ways the Blues have been able to amass such fortunes is by avoiding paying for care in exactly the same way the big for-profit companies do. They are rapidly moving their policyholders into high-deductible plans and spending far less on medical care — and far more on overhead — than they have in the past.
 
How much insurance firms spend on medical care is measured by what is called the medical loss ratio.
 
In 1993, the average medical loss ratio in the health insurance industry was 95 percent, which meant that insurers spent 95 cents out of every dollar they collected in premiums on medical care. In their quest for profits, all insurers, regardless of their tax status, have been spending less on care in recent years. The average medical loss ratio is now closer to 80 percent.
 
McDonald found that some of the Blues are spending far less than that these days. The medical loss ratio at the Texas Blues, for example, was just 64.4 percent last year.
 
The Big Myth: Competition Between Insurers Results in Lower Premiums
 
Beginning this year, as a result of the health care reform law, insurers will have to maintain medical loss ratios of at least 80 percent. Had that provision of the law been in effect in 2010, McDonald says the Texas Blues plan would have had to price its policies for individuals about 12 percent lower than it actually did.
 
McDonald found that some Blues are much greedier than others when it comes to making profits and building up big surpluses.
 
It turns out that the Blues plans that have to compete with the big for-profit companies behave, well, just like the big for-profits. In other words, the competition actually works against the interests of policyholders. The profit margins and the size of the surpluses of
the Blues in states where the for-profits have a significant presence were on average considerably higher than in states where the for-profits don’t have as much market share.
 
So much for the myth that competition among insurers results in lower premiums.
 
Health insurance is one part of the U.S. economy where the free market works beautifully for the insurers and a few executives (and shareholders of for-profit companies) but horribly for the rest of us.
 
Little Difference Between For-Profit and Non-Profit Insurers
 
The nonprofit Blues don’t have to reward shareholders, but they do lavish a big chunk of their premium revenue on themselves. Take BlueCross BlueShield of Tennessee as an example.
 
Last year was a very good year for the Tennessee Blues. It raised premiums an average of 6.5 percent, which was enough to increase profits five-fold over 2009 and boost its reserves to almost 50 percent more than the $955 million required by the state. Its medical loss ratio for individual policyholders was only 76.7 percent.
 
The company has been building up the reserves for many years, but instead of giving money back to policyholders in the form of rate reductions, it has built itself a veritable palace overlooking downtown Chattanooga.
 
Under pressure by lawmakers and consumer advocates a few years back to reduce its surplus, BlueCross BlueShield of Tennessee decided instead to spend $300 million on a new 950,000 square-foot headquarters. The building has a scenic view of the Tennessee River and is on historic Cameron Hill, where during the Civil War the Union built a fort and fired cannons at the Confederate army.
 
When the company’s 4,000 employees moved into their new digs in 2009, they left vacant several buildings in downtown Chattanooga. City officials now realize it will be hard to find new tenants for those buildings, but that didn’t stop them from giving BlueCross an unprecedented 16-year, 50 percent tax break back in 2005. Bottom line: nonprofits can be very profitable If your nonprofit is a Blue Cross or Blue Shield plan.
 
Wendell Potter is senior fellow on health care for the Center for Media and Democracy. He previously served as head of communications for Cigna, one of the nation’s largest health insurers.
 
http://www.prwatch.org/news/2011/05/10696/blue-cross-blue-shield-getting-richer-corporate-insurers

Private insurers turn to “captives”

Richard Klumpp’s Captive Insurance Brief

Wilmington Trust

March 24, 2011

A captive insurance company is a wholly-owned subsidiary created to provide insurance to its parent company (or companies).

Once established, it operates like any commercial insurer, i.e., it assumes the risk of its parent/owner in exchange for a pre-determined premium payment.

April 27, 2011

While captives are real insurance companies, they are essentially a form of self insurance, especially for single parent captives. Unexpected losses, if they occur, will negatively impact the profits of the parent firm.

http://blog.wilmingtontrustcaptiveinsurance.com/

And…

Seeking Business, States Loosen Insurance Rules

By Mary Williams Walsh and Louise Story
The New York Times, May 8, 2011

Companies looking to do business in secret once had to travel to places like the Cayman Islands or Bermuda.

Vermont, and a handful of other states including Utah, South Carolina, Delaware and Hawaii, are aggressively remaking themselves as destinations of choice for the kind of complex private insurance transactions once done almost exclusively offshore. Roughly 30 states have passed some type of law to allow companies to set up special insurance subsidiaries called captives, which can conduct Bermuda-style financial wizardry right in a policyholder’s own backyard.

Captives provide insurance to their parent companies, and the term originally referred to subsidiaries set up by any large company to insure the company’s own risks. Oil companies, for example, used them for years to gird for environmental claims related to infrequent but potentially high-cost events. They did so in overseas locations that offered light regulation amid little concern since the parent company was the only one at risk.

Now some states make it just as easy. And they have broadened the definition of captives so that even insurance companies can create them. This has given rise to concern that a shadow insurance industry is emerging, with less regulation and more potential debt than policyholders know, raising the possibility that some companies will find themselves without enough money to pay future claims. Critics say this is much like the shadow banking system that contributed to the financial crisis.

Aetna recently used a subsidiary in Vermont to refinance a block of health insurance policies, reaping $150 million in savings, according to its chief financial officer, Joseph M. Zubretsky. The main reason is that the insurer did not need to maintain conventional reserves at the same level as would have been required by insurance regulators in Aetna’s home state of Connecticut.

For insurers, these subsidiaries offer ways to unlock some of the money tied up in reserves, making millions available for dividends, acquisitions, bonuses and other projects. Three weeks after Aetna’s deal closed, the company announced it was increasing its dividend fifteenfold.

Another issue is public oversight. State regulators normally require insurance companies to make available reams of detailed information. A policyholder can find every asset in an insurer’s investment portfolio, for instance, or the company the carrier turns to for reinsurance. But not if the insurer relies on a captive. The new state laws make the audited financial statements of the captives confidential.

“We are concerned about systems that usher in less robust financial security and oversight,” said Dave Jones, the California insurance commissioner.

While saying that he wanted to remain open to innovation, Mr. Jones added, “We need to ensure that innovative transactions are not a strategy to drain value away from policyholders only to provide short-term enrichment to shareholders and investment bankers.”

http://www.nytimes.com/2011/05/09/business/economy/09insure.html?hp=&pagewanted=all

Aetna has established a “captive” which has enabled it to refinance a block of health insurance policies for the purpose allowing it to maintain a lower level of reserves, under the cloak of confidentiality. Unlocking that money by removing it from reserves has enabled it to increase its dividends fifteen fold.

This is the industry that Congress has insisted must remain in charge of our health care financing. They create insurance products we can’t afford with benefits that won’t adequately protect us. They waste tremendous resources in their administrative excesses. And for what? To enrich shareholders and investment bankers by draining value away from policyholders?

Why is there no outrage? Why do Americans remain silent as our public stewards force us into giving control of our health care dollars to these crooks? Americans have made it clear that they don’t want our Medicare dollars to be placed in the hands of these thieves. Why can’t Americans make the connect that we could throw these jerks out and place all of our health care dollars into our own Medicare program?

Are Health Insurers Writing Health Reform Regulations?

By Wendell Potter
PR Watch, May 5, 2011

One of the reasons I wanted to return to journalism after a long career as an insurance company PR man was to keep an eye on the implementation of the new health reform law.  Many journalists who covered the reform debate have moved on, and some consider the writing of regulations to implement the legislation boring and of little interest to the public.

But insurance company lobbyists know the media are not paying much attention. And so they are able to influence what the regulations actually look like — and how the law will be enforced — with little scrutiny, much less awareness.

At a January meeting of several hundred patient and consumer advocates in Washington, a top aide to Health and Human Services Secretary Kathleen Sebelius all but pleaded with those in the audience to bombard the Obama Administration with messages insisting that the law be implemented as Congress intended. Rest assured, he told them, that the insurance industry’s lobbyists were relentless in their demands that the regulations be written to give them the maximum slack.

One example: a section of the law expanding the rights of consumers to appeal adverse decisions made by their health plans.

“The Affordable Care Act will help support and protect consumers and end some of the worst insurance company abuses,” read an Obama administration fact sheet from last summer.

The fact sheet went on to assure us that the new rules would guarantee consumer access to both internal and external appeals processes “that are clearly defined, impartial, and designed to ensure that, when health care is needed and covered, consumers get it.”

“In implementing this law, we have worked to end the worst insurance company abuses, preserve existing options and slow premium increases,” an administration official said. “Through it all, protecting consumers has been — and remains — our top priority.”

The rules, originally scheduled to go into effect July 1, 2011, were actually written by the [[National Association of Insurance Commissioners|National Association of [State] Insurance Commissioners]] (NAIC), which was tasked by Congress to develop several important regulations required by the law. If the law is implemented as the NAIC recommends, patients will be able to get an external appeal of a broad range of coverage denials, including denials that result from an insurer’s decision to rescind, or cancel, a patient’s policy — not just denials made on the basis of “medical necessity” as determined by the insurer.

The NAIC’s standards also say that insurers must provide consumers with clear information about their rights to both internal and external appeals, and that the companies must expedite the appeals process in urgent or emergency situations.

Insurers Push Back Hard; is the White House Capitulating?

Well, surprise, insurers don’t like being told what to do by regulators. So they’re pushing back hard. Consumer advocates who have been in meetings at the White House in recent weeks say they believe the administration is bending over backward to accommodate the insurers.

“We have reason to fear that the external appeal regs won’t be very consumer friendly,” said Stephen Finan, senior director of policy for the American Cancer Society Action Network.

Finan and representatives of several other consumer and patient rights organizations, including Consumers Union, the National Partnership for Women and Families and the American Diabetes Association, wrote officials in the Departments of Labor and Health and Human Services in
late January pleading with them to “stand firm for consumers” in rejecting several of the insurance industry’s demands.

They expressed concern that the final regulations would allow insurers to stack the decks against patients by allowing health plans to deem a second-level internal appeal of a denial as meeting the
requirement for an independent external appeal. They’re also worried that health plans will not be required to provide clear and understandable information to policyholders about their denial
decisions, that the plans will not provide adequate translation of written communications into other languages (insurers are claiming this would be too burdensome), and that they will be able to take as long as 72 hours (instead of the recommended 24) to decide an urgent appeal.

Equally as frustrating for the consumer advocates is the administration’s indication that they will give the insurers until January 1, 2012, rather than July 1, 2011, to comply with the regulations.

Consumer advocates say the administration has told them that the reason it is proposing to delay the effective date of the new rules for half a year is to accommodate the health plans’ enrollment cycles and marketing needs. Health plans do need adequate lead time to make changes to their systems and to prepare materials to inform their customers of new procedures, especially in multiple languages, so some of their push back is understandable. The new regulations will also add to the insurers’ administrative costs, and the new law limits how much they can spend on overhead.

But the consumer groups believe the administration itself has caused some of the problems by taking so long to finalize the regulations. The NAIC got its work done comparatively swiftly.

“There is a clear pattern of leaning toward the insurance industry more than consumers,” one of the patient advocates told me.

Industry Lobbyists Outnumber Consumer Advocates 100 to 1

The consumer advocates, most of whom not so long ago were applauding the Democrats for getting reform enacted, even if it fell short of their original goals, are becoming increasingly discouraged, partly because there are so many more lobbyists for the insurers than for consumers. It’s hard to compete with them.

“We’re outnumbered 100 to 1,” said one of the consumer advocates.

It’s clear,” he added, “that the insurers are willing to make life more difficult for patients” by trying to weaken and delay the consumer protections.

It’s also clear that, at least for now, the insurers seem to have the upper hand in dealing with the White House.

Wendell Potter is a senior fellow on health care at the Center for Media and Democracy. His former positions include serving as director of corporate communications for CIGNA.

http://www.prwatch.org/news/2011/05/10709/are-health-insurers-writing-health-reform-regulations

Part D private insurers actually raise Medicare costs

Lower-Than-Expected Medicare Drug Costs Reflect Decline in Overall Drug Spending and Lower Enrollment, Not Private Plans

Evidence Shows Reliance on Private Insurers Actually Raised Medicare Costs

By Edwin Park
Center on Budget and Policy Priorities, May 6, 2011

Some supporters of the House budget plan’s proposal to replace Medicare with a voucher to purchase private health insurance claim that reliance on private insurers can lower costs. They cite the fact that the costs of Medicare Part D, which took effect in 2006, have been lower than the Congressional Budget Office predicted when Congress enacted the drug benefit. They attribute this lower spending to efficiencies produced by competition among the private insurers that deliver the benefit.

This claim does not withstand scrutiny. The two primary factors driving the reduction in Medicare Part D spending were:

* The sharp decline in growth in spending for prescription drugs throughout the U.S. health care system.

* Lower-than-expected enrollment in Medicare Part D.

Moreover, there is evidence that, far from reducing costs, the use of private plans to deliver the Medicare drug benefit has increased costs.

http://www.cbpp.org/files/5-6-11health.pdf

Comment: 

By Don McCanne, MD

Edwin Park has dispelled the myth that private insurers were to be credited for Medicare Part D drug spending that fell below prior projections of the Congressional Budget Office. The lower than anticipated spending had nothing to do with the interventions of the private insurers, but were due primarily to two factors: 1) lower prices due to greater use of generics, more drugs losing patent protection, and a lack of new blockbuster drugs, and 2) fewer Medicare beneficiaries than anticipated enrolled in these lousy Part D drug plans.

Not only can these plans not take credit for the lower than expected program spending, they, in fact, actually increased costs to Medicare. The reasons are explained in the technical but easy-to-read, three page report available at the link above.

Not mentioned in the report are the facts that these plans also reduced choices in drugs by having limited formularies, and they reduced choices in pharmacies by having restricted pharmacy networks.

This is yet one more example of how private insurance intermediaries increase our costs while reducing our choices of both providers and their products and services. Yet the Patient Protection and Affordable Care Act is based on this model that brings us fewer choices at higher costs.

Let’s oust these expensive, wasteful, intrusive intermediaries and replace them with our own public financing program that would offer all of us free choice and greater value.

Vermont Passes Plan for Universal Healthcare

By Robert Lowes
Medscape Today, May 5, 2011

In a 94 to 49 vote today, the state House in Vermont sealed the deal on a bill to eventually create a publicly financed universal healthcare system that some supporters dub “single payer.”

With the state Senate already having given its approval last week, the bill will now go to Vermont Governor Peter Shumlin, who is eager to sign it into law.

Today’s action completes the second round of voting for the bill. Both chambers of the Vermont legislature had approved earlier versions, but a House–Senate conference committee had to iron out minor differences and send the bill back for additional votes.

The legislation establishes a state health insurance exchange — mandated by the new healthcare reform law called the Affordable Care Act (ACA) — through which individuals and small businesses can purchase coverage. The bill envisions this exchange becoming a publicly financed health plan called Green Mountain Care that is available to all Vermont residents. Proponents of Green Mountain Care have touted it as a single-payer system, but the bill allows individuals covered under the state plan to buy supplemental policies from private insurers. In addition, individuals can keep the insurance coverage they already have.

For these and other reasons, a group called Physicians for a National Health Program contends that the Vermont bill falls short of a true single-payer model. Although Governor Shumlin disagrees with that assessment, lawmakers removed the expression “single-payer system” from the bill and replaced it with “universal and unified health system.”

Under the ACA, states can obtain waivers to opt out of federal healthcare reform requirements and enact equivalent statewide reforms similar to the kind underway in Vermont beginning in 2017. Shumlin and others hope that Congress passes a pending bill that would move the opt-out date to 2014. States securing waivers will receive the ACA funding that they are otherwise entitled to. Nevertheless, Vermont lawmakers still face the job of devising a comprehensive plan to pay for their new system.

Vermont’s roadmap for universal healthcare coverage and a publicly financed health plan has received mixed reviews from physicians in that state. According to a survey conducted by Democratic state Rep. George Till, MD, who voted for the legislation, 44.2% of physicians support the single-payer concept, and 45.6% oppose it. Opponents tend to be specialists, who are more likely than primary care physicians to view the new system as financially unattractive. In addition, 28.4% of physicians say they would likely stop practicing medicine in Vermont if the proposed reforms come to fruition.

http://www.medscape.com/viewarticle/742154

Part D private insurers actually raise Medicare costs

Lower-Than-Expected Medicare Drug Costs Reflect Decline in Overall Drug Spending and Lower Enrollment, Not Private Plans

Evidence Shows Reliance on Private Insurers Actually Raised Medicare Costs

By Edwin Park
Center on Budget and Policy Priorities, May 6, 2011

Some supporters of the House budget plan’s proposal to replace Medicare with a voucher to purchase private health insurance claim that reliance on private insurers can lower costs. They cite the fact that the costs of Medicare Part D, which took effect in 2006, have been lower than the Congressional Budget Office predicted when Congress enacted the drug benefit. They attribute this lower spending to efficiencies produced by competition among the private insurers that deliver the benefit.

This claim does not withstand scrutiny. The two primary factors driving the reduction in Medicare Part D spending were:

* The sharp decline in growth in spending for prescription drugs throughout the U.S. health care system.

* Lower-than-expected enrollment in Medicare Part D.

Moreover, there is evidence that, far from reducing costs, the use of private plans to deliver the Medicare drug benefit has increased costs.

http://www.cbpp.org/files/5-6-11health.pdf

Edwin Park has dispelled the myth that private insurers were to be credited for Medicare Part D drug spending that fell below prior projections of the Congressional Budget Office. The lower than anticipated spending had nothing to do with the interventions of the private insurers, but were due primarily to two factors: 1) lower prices due to greater use of generics, more drugs losing patent protection, and a lack of new blockbuster drugs, and 2) fewer Medicare beneficiaries than anticipated enrolled in these lousy Part D drug plans.

Not only can these plans not take credit for the lower than expected program spending, they, in fact, actually increased costs to Medicare. The reasons are explained in the technical but easy-to-read, three page report available at the link above.

Not mentioned in the report are the facts that these plans also reduced choices in drugs by having limited formularies, and they reduced choices in pharmacies by having restricted pharmacy networks.

This is yet one more example of how private insurance intermediaries increase our costs while reducing our choices of both providers and their products and services. Yet the Patient Protection and Affordable Care Act is based on this model that brings us fewer choices at higher costs.

Let’s oust these expensive, wasteful, intrusive intermediaries and replace them with our own public financing program that would offer all of us free choice and greater value.

Futurist Ian Morrison on being "bronzed" in the exchanges

The Four Americas

By Ian Morrison
Hospitals and Health Networks, May 3, 2011

Health insurance exchanges could have a major impact on the health care marketplace.

Here are some things to watch for.

* We are all turning bronze. There is a growing body of evidence — from actuaries, academics, consultants and researchers — that when consumers in the exchange select insurance options, they will pick the bronze plan (a 60 percent actuarial value). By definition, these plans will have high out-of-pocket costs and may not cover as wide a range of benefits as the health reform enthusiasts intended.

Some in the health care delivery business see exchanges as a new source of patients with commercial insurance similar to the benefits that schoolteachers and firefighters enjoy. Not so fast. Not only will those schoolteachers and firefighters get their benefits rolled back as part of the global backlash against public employees, but those of us in the exchanges will be operating with skinny network, high-deductible plans.

* Exchanges could be a non-event or become the exchange that ate Manhattan. Depending on how exchanges are structured at the state level, they could have limited pickup. The proposed insurance exchanges have two huge advantages over some of the failed insurance exchanges across the country, such as California’s PacAdvantage program for small business. First, the proposed exchanges have subsidies. Second, they have enabling rules. However, there is still a huge opportunity for states to make exchanges highly dysfunctional by not regulating the behavior in the nonsubsidized individual and small group market.

What killed PacAdvantage was brokers taking good risks outside the exchange and dumping bad risks into the exchange. Unless state legislation prevents this, it is highly possible that exchanges get selected against and spiral downward. Conversely, if exchanges are up and functioning and acceptable, there could be massive growth over time as employers see the benefit of giving their employees incentives to move to the exchange. This won’t happen initially in 2014, but in a Cadillac tax world and with high-functioning exchanges, there could be massive growth. (And remember, we would all be pretty bronzed.)

http://www.hhnmag.com/hhnmag/HHNDaily/HHNDailyDisplay.dhtml?id=6270005407

Comment:

By Don McCanne, MD

If the stewards of the ACA-mandated state insurance exchanges are diligent, they may be able to avoid problems such as the death spiral of adverse selection. With careful design, they should be able to establish a functioning market of private health plans. What can we expect of this market?

The overwhelming majority of insurance shoppers will be purchasing their plans based on price, whether or not they qualify for subsidies. Since most will be relatively healthy, it will be the price of the insurance plans that will drive their purchasing decisions, rather than the unanticipated but potential out-of-pocket expenses that they would face only if they were unfortunate enough to develop significant medical  problems. For the price discount, most purchasers will take a chance, gambling that they will stay healthy.

What plans in the exchanges will offer the lowest prices? The bronze plans. These plans cover an average of 60 percent of the medical costs and the patient is responsible for the remaining 40 percent. Although many would be eligible for subsidies, a recent Commonwealth Fund analysis (Gruber and Perry) demonstrated that one-fourth of middle-income individuals with medical needs would not be able to afford the out-of-pocket medical costs after meeting other necessary expenditures in their budgets. Thus choosing these plans is definitely a gamble, but one they must take since they cannot afford the higher costs plans – especially the gold and platinum plans (which are not Cadillac plans since about all they do is reduce out-of-pocket spending for relatively standard benefits).

What innovations will insurers use to keep their premiums competitive within the exchanges? Although they will have to provide a basic set of regulated benefits, they will be able to keep premiums priced at the lower end of the market by requiring large deductible and coinsurance payments, and by limiting provider contracting to a narrow network of the cheapest physicians and hospitals. This is what Ian Morrison is referring to when he says, “those of us in the exchanges will be operating with skinny network, high-deductible plans.”

If the stewards do their job well and the exchanges are very successful in achieving massive growth – “the exchanges that ate Manhattan” – then, as Ian Morrison states, “we would all be pretty bronzed.”

So if the exchanges work like they’re designed to, what will we get, at best? Unaffordable deductible and coinsurance payments, with skinny networks which take away our choices of physicians, hospitals, and other health care providers, unless we’re eligible for Medicare by being over 65 or permanently disabled.

Say, did anyone ever think that maybe it would be better to improve Medicare and provide it to everyone? That way we would have our choices of our health care professionals and health facilities, and we wouldn’t have to face unaffordable out-of-pocket costs. This seems like an idea that maybe we should work on.