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A doctor's view: getting to real health care reform

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A doctor's view: getting to real health care reform

By Peter Mahr
The Oregonian
February 26, 2010

The Oregonian’s recent editorial on the president’s health care proposal is off base. The editorial board states that Barack Obama’s plan “includes essential elements of reform.” But there is no discussion of what elements are indeed essential when analyzing health care reform.

T.R. Reid, a one-time correspondent for The Washington Post and chief of its London and Tokyo bureaus, explored health care systems around the world in his book “The Healing of America.” He found that health care systems vary greatly but all wealthy industrialized countries build their systems on three essential elements. First, there is one system for everyone, regardless of age, wealth, employment, race or health status. This results in administrative efficiency, cost control and fundamental fairness. Second, all other developed nations have health care financing that is not-for-profit. Their health insurance systems are not allowed to profit in the provision of necessary health services. This eliminates the fundamental conflict of interest that insurance companies face in our system: In order to profit, they deny access to care, bar sick members or refuse payment of services. Finally, the third basic principle is that all other developed nations with health care systems provide true universal access to health care services. Nobody is uninsured. Nobody is denied access if unable to pay.

Obama’s health care proposal does not include any of the basic principles for true reform. Our inefficient, expensive patchwork system of health insurance would be maintained. For-profit financing would continue in the private insurance market while individuals and employers would be forced to buy it. Finally, there is no guarantee of universal coverage. Millions would be left without insurance and millions more would face financial hardship in payment of their premiums, deductibles and out-of-pocket payments.

The Oregonian has a responsibility to its readers to provide factual and analytical information. Since all other industrialized countries provide true universal access to necessary health services at roughly half the cost than we do, it is common sense to tease out common principles that make their systems work. T.R. Reid has done this for us and clearly exposes great problems with Obama’s proposal. It is The Oregonian’s responsibility to inform it’s readers of these weaknesses and suggest alternatives.

One alternative that includes all three elements of reform is single-payer national health insurance — Medicare for all. By scrapping our patchwork system and improving and expanding Medicare to all, administrative costs would plummet due to increased efficiency of the payment system, the conflict of interest between paying for medical services and making a profit would be eliminated and everyone, all Americans, would have access to all necessary medical services regardless of ability to pay. The Oregonian has a responsibility to make this known to its readers. In blindly supporting a reform that lacks any of the basic components required for a functioning health care system while ignoring a reform that includes all of these elements, The Oregonian has failed to truly inform the public.

Peter Mahr is a Portland physician and a member of Physicians for a National Health Program.

http://www.oregonlive.com/opinion/index.ssf/2010/02/a_doctors_view_getting_to_real.html

A doctor’s view: getting to real health care reform

By Peter Mahr
The Oregonian
February 26, 2010

The Oregonian’s recent editorial on the president’s health care proposal is off base. The editorial board states that Barack Obama’s plan “includes essential elements of reform.” But there is no discussion of what elements are indeed essential when analyzing health care reform.

T.R. Reid, a one-time correspondent for The Washington Post and chief of its London and Tokyo bureaus, explored health care systems around the world in his book “The Healing of America.” He found that health care systems vary greatly but all wealthy industrialized countries build their systems on three essential elements. First, there is one system for everyone, regardless of age, wealth, employment, race or health status. This results in administrative efficiency, cost control and fundamental fairness. Second, all other developed nations have health care financing that is not-for-profit. Their health insurance systems are not allowed to profit in the provision of necessary health services. This eliminates the fundamental conflict of interest that insurance companies face in our system: In order to profit, they deny access to care, bar sick members or refuse payment of services. Finally, the third basic principle is that all other developed nations with health care systems provide true universal access to health care services. Nobody is uninsured. Nobody is denied access if unable to pay.

Obama’s health care proposal does not include any of the basic principles for true reform. Our inefficient, expensive patchwork system of health insurance would be maintained. For-profit financing would continue in the private insurance market while individuals and employers would be forced to buy it. Finally, there is no guarantee of universal coverage. Millions would be left without insurance and millions more would face financial hardship in payment of their premiums, deductibles and out-of-pocket payments.

The Oregonian has a responsibility to its readers to provide factual and analytical information. Since all other industrialized countries provide true universal access to necessary health services at roughly half the cost than we do, it is common sense to tease out common principles that make their systems work. T.R. Reid has done this for us and clearly exposes great problems with Obama’s proposal. It is The Oregonian’s responsibility to inform it’s readers of these weaknesses and suggest alternatives.

One alternative that includes all three elements of reform is single-payer national health insurance — Medicare for all. By scrapping our patchwork system and improving and expanding Medicare to all, administrative costs would plummet due to increased efficiency of the payment system, the conflict of interest between paying for medical services and making a profit would be eliminated and everyone, all Americans, would have access to all necessary medical services regardless of ability to pay. The Oregonian has a responsibility to make this known to its readers. In blindly supporting a reform that lacks any of the basic components required for a functioning health care system while ignoring a reform that includes all of these elements, The Oregonian has failed to truly inform the public.

Peter Mahr is a Portland physician and a member of Physicians for a National Health Program.

http://www.oregonlive.com/opinion/index.ssf/2010/02/a_doctors_view_getting_to_real.html

Needed: an improved Medicare for all

Letter to the Editor
Shepherdstown (W.Va.) Chronicle, Feb. 12, 2010

I agree with two points in Laura K. Shifflett’s Feb. 5 letter. Health care reform is needed, and mandated insurance is not the solution. I vehemently disagree with most of her other assertions.

What does it say about the values of our country when the idea of “personal responsibility” is perverted into a belief that health care is a privilege? How does one earn the “privilege” of health care?

Every day, my husband, a physician at a community health clinic, treats people without health insurance who work one and two jobs. He provides the best care he can, but many cannot afford the tests and consultations they need. Some of his patients are among the more than 44,000 people a year in our country who die because they cannot get needed medical care. They deserve to suffer and die?

Even ignoring the fact that Universal Declaration of Human Rights Article 25 identifies adequate medical care as a human right, how can we consider ourselves civilized with such a dog-eat-dog attitude?

All other first-world countries consider health care a right. An excellent documentary, “Sick Around the World,” available at the Shepherdstown Public Library and online, contrasts the stark differences between health care in our country and other nations who pay less for care and often have better outcomes.

There are many reasons we pay more than needed for health care. Overhead with a system of private health insurance runs 15-30 percent. (Medicare’s overhead is 3-5 percent.) With an improved Medicare for all (H.R. 676), we would pay a fair tax that would be lower than the cost of premiums, co-pays, and deductibles for all except the very rich.

Our health care dollars would go to health care, not to health insurance companies, their high CEO and executive salaries and bonuses, advertising, and armies of paper-pushers denying claims. There would be no premiums, co-pays, and deductibles, and doctors wouldn’t spend their time on mountains of unnecessary paperwork. There would be no “out of network” so we could see any physician and go to any hospital we chose.

Such a system of government financed health care – public funds with private providers – is not the same as “government run health care.” It is a system that can be held accountable and where we, citizens of a civilized country, insure that people receive medically necessary care and do not go bankrupt or die because they do not have money.

Lynn Moses Yellott
Shepherdstown, W.Va.

(Eastern Panhandle Single-Payer Action Network, a chapter of Physicians for a National Health Program)

http://shepherdstownchronicle.com/page/content.detail/id/500732/Health-care-assertions-don-t-face-reality-of-challenges.html?nav=5090&showlayout=0

Provider clout pushing prices up

Unchecked Provider Clout In California Foreshadows Challenges To Health Reform

By Robert A. Berenson, Paul B. Ginsburg and Nicole Kemper
Health Affairs
February 25, 2010

Abstract
 
Faced with declining payment rates, California providers have implemented various strategies that have strengthened their leverage in negotiating prices with private health plans. When negotiating together, hospitals and physicians enhance their already significant bargaining clout. California’s experience is a cautionary tale for national health reform: It suggests that proposals to promote integrated care through models such as accountable care organizations (ACOs) could lead to higher rates for private payers. Because antitrust policy has proved ineffective in curbing most provider strategies that capitalize on providers’ market power to win higher payments, policy makers need to consider approaches including price caps and all-payer rate setting.

Excerpts

As the dominant payer for the elderly and disabled, Medicare sets prices and is generally indifferent to providers’ negotiating clout. Private payers, which must negotiate with all hospitals and large physician practices, generally agree to pay much higher rates than Medicare pays to persuade providers to enter into a contract with them.

If accountable care organizations lead to more integrated provider groups that are able to exert market power in negotiations — both by encouraging providers to join organizations and by expanding the proportion of patients for whom provider groups can negotiate rates — private insurers could wind up paying more, even if care is delivered more efficiently.

Lessons from California, then, can inform current discussions about whether health delivery and payment reforms would reduce the rate of health care spending growth, not only in Medicare but overall. Our findings suggest the opposite: a definite shift in negotiating strength toward providers, resulting in higher payment rates and premiums. As one medical group executive said, “We are making out hand over fist.” In some cases, payment rates to hospitals and powerful physician groups approach and exceed 200 percent of what Medicare pays, with annual negotiated double-digit increases in recent years.

From the Discussion

The shift in who holds the upper hand in negotiating payments — once held by health insurance plans but now resting with health care providers — has had a major impact on California premium trends. According to some survey respondents, the dynamic needs urgent policy attention. “I am shocked there isn’t an outcry over the fact that our costs are driven out of control,” a health plan executive complained. “We would like to establish some sort of boundary, beyond which these guys can’t go. We’d welcome some regulatory intervention to break up these monopolies, because they are just killing us.”

A single “must-have” hospital can develop enough clout to obtain payment rates much higher than Medicare’s, acknowledging that many providers believe Medicare payments to be inadequate. Indeed, across other markets studied by the Center for Studying Health System Change, providers are developing increased leverage through single-specialty group formation and merger-and-acquisition strategies that do not involve integration. Nevertheless, given the push in Congress and elsewhere to restructure health care delivery with accountable care organizations, it is instructive that whatever their merits in improving quality and efficiency, California-style integrated care systems currently produce higher prices that undermine cost containment.

Unless market mechanisms can be found to discipline providers’ use of their growing market power, it seems inevitable that policy makers will need to turn to regulatory approaches, such as putting price caps on negotiated private-sector rates and adopting all-payer rate setting. Indeed, some purchasers who believe strongly in the long-term merits of increased integration of care delivery believe that price regulation may be a prerequisite for payment reforms that encourage integration.

http://content.healthaffairs.org/cgi/reprint/hlthaff.2009.0715v1?ijkey=p3Di/BAt8Oh0w&keytype=ref&siteid=healthaff

And…

AHIP Statement on Premium Increases

America’s Health Insurance Plans (AHIP)
Press Release
February 18, 2010

AHIP recently sent a letter to Capitol Hill to highlight the key factors contributing to increases in health insurance premiums. These factors include:
* sharp increases in provider rates;
* increased cost-shifting as providers seek to offset the costs of treating more Medicaid patients;
* an increase in uncompensated care costs;
* consolidation among hospitals and other health care providers;
* a wide range of new state laws, including benefit mandates, regulations, and premium taxes; and
* economic factors that have caused some people to drop coverage resulting in a risk pool that is more heavily weighted with older, less healthy persons.

http://www.ahip.org/content/pressrelease.aspx?docid=29497

And…

White House says health-care bills contain cost-cutting remedies

By Shailagh Murray
The Washington Post
November 26, 2009

Unless lawmakers institute changes across the entire system, (AHIP’s Karen) Ignagni said in a statement Wednesday, “Health costs will continue to weigh down the economy and place a crushing burden on employers and families.”

http://www.washingtonpost.com/wp-dyn/content/article/2009/11/25/AR2009112503474.html

Comment: 

By Don McCanne, MD

The private insurers claim that health care costs are the major cause of high health insurance premiums. That is true. So where do we place the blame for failure to slow cost escalation?

The private insurers can be blamed for their despicable policies that prevent patients from receiving the care that they should have, but they can’t really be blamed for the fact that health care prices in the United States are much higher than in any other nation. So should they share some of the blame for failing to use their clout to slow down health care spending? Or is it that the private insurers really have no clout?

Are the health care providers to blame? The Health Affairs article by Robert Berenson and his colleagues at the Center for Studying Health System Change should be read by everyone interested in health system reform. They show that some California physicians and hospitals have been able to reverse the cost restraints that characterized the managed care revolution by using consolidation to greatly increase their negotiating clout. As an example of the impact, California hospitals were able to increase their prices for privately insured patients by 10.6 percent per year during 1999-2005.

Some may want to point to the greed and profit motives of the health care providers as being the primary problem. So which nefarious organizations are these? Sutter Health. Catholic Healthcare West. Hospitals in the University of California system. Ceders-Sinai Medical Center. These are not evil investor-owned institutions that take their directions from Wall Street. Since we can’t really blame Wall Street for high prices in California, do we blame the providers for failing to contain their own excesses? Or are they merely trying to meet the demand of patients who want the very latest and best in
health care?

The current reform proposal before Congress calls for accountable care organizations (ACOs) and bundled payments as means to slow the growth in health care spending. That might work for Medicare though it wouldn’t save much, but, as explained in this Health Affairs article, it would likely lead to higher private insurance costs through the market impact of provider consolidation.

When we’re deciding where to place the blame, we should keep in mind a very important declaration from this article: “As the dominant payer for the elderly and disabled, Medicare sets prices and is generally indifferent to providers’ negotiating clout. Private payers, which must negotiate with all hospitals and large physician practices, generally agree to pay much higher rates than Medicare pays to persuade providers to enter into a contract with them.”

Private insurers do not have the clout to obtain best pricing, but a single payer such as Medicare does. Best prices are prices that are adequate to ensure that physicians and hospitals will be there when you need them but are not so high that they result in waste on non-beneficial excesses. If a universal public payer were to exercise too much clout, push back by patients and providers would moderate it.

So where should we place the blame for the failure to slow our excessive cost escalation? It is President Obama and Congress who have refused to consider a publicly financed and publicly administered program such as an improved Medicare for all that would finally allow us to receive the care that we need while still being able to pay for it.

But the real culprits? We, the people. We have failed to let our leaders know how truly passionate we are about achieving honest-to-goodness health care justice for all. We can change that.

RNs Praise Atty Gen. Move to Subpoena Insurance Plans

Move Follows Nurses Report on Patient Claims Denials -- NEW DATA – Denial Rates Averaged 26% Even After Public Uproar

Press Release from California Nurses Association/National Nurses Organizing Committee

For Immediate Release
February 25, 2010

The California Nurses Association/National Nurses Organizing Committee today praised the announcement from California Attorney General Jerry Brown that he will subpoena records from seven of the state’s biggest private insurance companies to review their policies that have led to public outrage over denials of claims and huge rate increases.

Brown began an investigation following release of research by CNA/NNOC last September, and extensive media reporting, that documented that since 2002 more than one of every five requests for medical claims for insured patients have been rejected by California’s largest private insurers.

Today CNA/NNOC released new data from its research arm, the Institute for Health and Socio-Economic Policy – also based on publicly available data from the California Department of Managed Care. It shows that despite the public uproar following the initial reports last September, the high denial rates were actually higher for the last six months of 2009, averaging 26 percent for seven large insurers.

Claims denial rates by leading California insurers, second  half of 2009, compared to the first six months of 2009:

  • PacifiCare —  41.17% (up from 39.6 percent for the first six months of 2009)
  • Cigna – 35.43 percent (up from 32.7 percent)
  • HealthNet – 25.82 percent (down from 30 percent)
  • Kaiser Permanente – 26.96 percent (down from 28.3 percent)
  • Anthem Blue Cross – 24.5 percent (down from 27.9 percent)
  • Aetna — 6.4 percent (no change)
  • Blue Shield – 22 percent (Blue Shield had previously not reported separate denial data, and only began reporting after the media reports on denials)

For the reporting period of July 1, 2009 to December 31, 2009, the denials average 26.05 percent by the seven insurers.

 “What we see over and over is an arrogant industry that is indifferent to the pain and suffering caused by routine care denials or economic catastrophe prompted by outrageous price gouging,” said CNA/NNOC Co-President Geri Jenkins.

“The denials and pricing practices are both motivated by the prime directive  that seems to surpass everything else for these companies —  squeezing their patients and providers alike for profits and revenues regardless of who gets hurt along the way.”

“We applaud the effort of the Attorney General to more carefully scrutinize the behavior and records of the insurers. They must be held accountable to the public for their disgraceful and potentially illegal behavior,” Jenkins said.

The Missing Voices at the Healthcare Summit

By John Nichols
The Nation Blogs: The Beat
02/25/2010

President Obama and congressional Republicans arrived at the White House health care summit with talking points — not just for the summit itself but for the after-summit jockeying to claim the upper hand coming out of a session that always had more to do with messaging than making progress to insure more Americans at less cost.

Obama got off a good enough line about “not campaigning anymore.”

Congressman Eric Cantor, the Virginia Republican who has become a “party of no” pointman, showed up with Ross Perot-style props and plenty of gripes.

Ultimately, Obama summed things up pretty well:

I think we’re establishing that there are actually some areas of real agreement,” he said, stopping for a minute outside the gates. “And we’re starting to focus on what the real disagreements are.

If you look at the issue of how much government should be involved, the argument that the Republicans are making really isn’t that this is a government takeover of health care but rather that we’re ensuring the — we’re regulating the insurance market too much. And that’s a legitimate philosophical disagreement.

The problem, of course, is that most of the really meaningful disagreements went undiscussed.

The summit positioned Obama and a relatively united Democratic leadership against Senate Minority Leader Mitch McConnell, R-Kentucky, House Minority Leader John Boehner, R-Ohio, and their “party of no” minions.

They got in the same room, and stuck around for a long time.

But they did not get along.

They did not offer much in the way of new ideas, let alone ideas that might actually meet the challenge of providing care for all Americans without breaking the bank.

What would have made the gathering at Blair House more interesting and, potentially, more useful would have been an airing — in this C-Span aired, high profile setting — of the range of ideas that members of Congress entertain with regard to health-care reform.

Unless Thursday’s summit was a conference committee meeting, a final session for reconciling differing House and Senate measures (perhaps with some prodding from an engaged president), the product of the session was never going to be a final health-care reform bill.

So why not talk about best responses to a very real crisis?

Why not consider not just Republican alternatives to President Obama’s proposal but the fix that Obama, himself, once suggested (as a 2004 U.S. Senate candidate) was the essential point of beginning for a just and equitable health-care system in a developed nation? Why not let the dozens of House and Senate members who support a Medicare-for-All, single-payer system into the discussion? Why not let House Judiciary Committee chair John Conyers, D-Michigan, Senator Bernie Sanders, I-Vermont, and other members of Congress ask the questions that should be asked about Obama’s compromise plan?

Instead of Republican grumbling about how Obama is going to far, why not have a rational discussion about whether Obama is going far enough?

That rational discussion could have begun with a review of the response the presidential proposal by Physicians for a National Health Program, the organization of 17,000 doctors who support single-payer, Medicare-for-All approach to reform.

PNHP leaders, including the organization’s national coordinator, Dr. Quentin Young asked to be included in the Blair House session. (And this White House knows Young. The Chicago physician whose office once cared for Obama and his family and whose friendship with the future president was forged more than a decade ago.)

So, too, did congressional backers of Medicare-for-All proposals, including Dennis Kucinich, D-Ohio; Anthony Weiner, D- New York, and Peter Welch, D-Vermont, all made similar requests.

What might have been added to the discourse.

Consider Dr. Quentin Young’s Young’s assessment of the president’s plan.

“Regrettably, the president’s proposal is built on some of the worst aspects of the Senate bill,” Young said, in an accurate assessment of Obama’s approach. “For example, the president’s proposal would ship hundreds of billions of taxpayer dollars to the private health insurance industry in the form of subsidies. And to help finance this, it would impose a new tax on health benefits of workers, especially those in high-cost states.

Added Young:

(Obama’s proposal for an) individual mandate would force millions of middle-income uninsured Americans to buy insurers’ skimpy products – insurance policies full of gaps like ever-rising co-pays, deductibles and premiums. Such policies already leave middle-class American families vulnerable to economic hardship and medical bankruptcy in the event of a serious illness like cancer,” continued Young, citing a recent study.

Even so, at least 23 million people would remain uninsured,” he said. “We know that being uninsured raises your chance of dying by about 40 percent,” he continued, citing another recent study. “That translates into about 23,000 unnecessary deaths each year. As physicians, we find this completely unacceptable.

“In short,” added Young, “this proposal is an insurance company bonanza, not good, evidence-based health reform. The president would do better by abandoning the insurance and drug companies and instead taking up the single-payer approach.”

http://www.thenation.com/blogs/thebeat/534817/the_missing_voices_at_the_healthcare_summit

Health Changes: Incremental or Comprehensive?

By Scott Horsley
National Public Radio, Feb. 25, 2010

(Excerpt)

Of course President Obama himself opted for an incremental approach early on in the health care debate when he rejected calls for a single-payer system as too disruptive to the status quo. Vermont Congressman Peter Welch wants the president to reconsider, [saying] the government would avoid a lot of confusion and complexity by simply expanding Medicare to cover everyone.

REP. PETER WELCH: “This debate we’ve had here in Washington, going around and around, has essentially been, in some ways, avoiding the obvious.”

Welch argues that expanding Medicare would give consumers guaranteed health care and a choice of providers, while sharply reducing administrative costs. That’s one health care overhaul that’s too comprehensive even for President Obama.

A faulty prescription for reform

By Steffie Woolhandler
Reuters, The Great Debate Blog
Feb 25, 2010

– Dr. Steffie Woolhandler is a co-founder of Physicians for a National Health Program, an organization of 17,000 doctors who support single-payer national health insurance. She is a professor of medicine at Harvard Medical School and co-director of the school’s General Internal Medicine Fellowship program. The views expressed are her own.

President Obama, at today’s summit and in his proposal earlier this week, has embraced a deeply-flawed bill – the Senate bill – as his model for reform.

That bill would leave about 24 million people uninsured in the year 2019, according to the Congressional Budget Office. Leaving 24 million people without health insurance is neither “universal care” nor even serious reform. As my research team has recently shown, that 24 million uninsured people would translate into about 24,000 unnecessary deaths annually. As a doctor, I find that prospect completely unacceptable.

Sen. Harry Reid, in his opening remarks at the summit, cited our study about 45,000 deaths annually due to lack of insurance (with about 45 million currently uninsured). He also cited another recent study we published showing that 62 percent of bankruptcies are linked to medical bills and illness, and that three-quarters of those bankrupted had health insurance when they first got sick. But when it comes to a remedy, the senator – and the president, I regret to say – offer the wrong prescription.

Their proposal is based on handing over $440 billion in taxpayers’ money to the private health insurance industry, the cause of the problem in the first place. Their rationale is to subsidize purchase of the insurers’ shoddy policies, which are riddled with gaps like ever-increasing co-pays, deductibles and uncovered services. Decades of experience show that the private insurance industry can neither control health care costs, nor give American families the health coverage they need. Many states already regulate insurance premiums and coverage, so merely regulating private insurers is not the solution. Moreover, the Senate plan to send $440 billion into the coffers of the profit-driven insurance industry will give them even more financial and political power to block future reform.

Once the president decided to allow the private insurers to continue to run our health care system, he effectively blocked any prospects for a reform that was comprehensive, universal and affordable. And he immediately faced a series of unpalatable choices in order to raise money to pay for reform, including proposals like mandating that uninsured families pay thousands of dollars for skimpy private coverage, cutting back Medicare coverage and imposing a new excise tax on the health benefits of workers.

What we need is a Medicare-for-All approach, which makes universal health care affordable because it saves about $400 billion in administrative costs every year. It would eliminate the wasteful paperwork and bureaucracy that the insurers impose on our health system and you use those savings to cover the uninsured, and to plug the gaps in coverage for people who now have insurance.

Polls show that the American people support the idea of a Medicare-for-All program supported by taxes. However, the private health insurance industry has hijacked the reform process through campaign contributions and lobbyists. They’ve hijacked Congress and, unfortunately, they’ve hijacked the Obama administration.

These for-profit interests are also giving money to the opponents of the reform process on the right, aiming to steer the whole process towards higher profits for insurers and drug companies, and further and further away from the only workable, rational reform: single-payer Medicare for All.

The American people want an approach that improves care for those with insurance, and the Obama proposal does virtually nothing on this score.

They want a bill that covers all of the uninsured, not half of them. And they want it to be affordable. That means we have to go with single payer.

http://blogs.reuters.com/great-debate/2010/02/25/a-faulty-prescription-for-reform/

WellPoint's "downgrade options"

U.S. House of Representatives

Committee on Energy and Commerce
February 24, 2010

Memorandum
From: Committee on Energy and Commerce Majority Staff
Re: Questions Raised by Internal WellPoint Documents

As part of the Committee’s investigation into premium increases proposed by Anthem Blue Cross, a subsidiary of WellPoint, Inc., the Committee has received over 3,000 documents from WellPoint and its regulators, including internal WellPoint correspondence, presentations to senior corporate management, company-produced actuarial assessments, and regulatory filings. Committee staff also spoke to representatives of the company; received briefings from regulators, including the California Department of Insurance and the National Association of Insurance Commissioners; and spoke to outside experts in the field of health finance.

As summarized below, a review of the documents provided to the Committee and the other information received by the Committee raises multiple questions that members may wish to pursue during today’s hearing.

Question 4: Is WellPoint pushing people into less generous plans?

According to Ms. Braly’s testimony (Angela Braly, WellPoint President and CEO), “Another dynamic in our current challenging economy is that a higher proportion of healthy individuals move to lower cost coverage, such as coverage with a higher deductible, than in more robust economic times.”

Internal documents suggest that WellPoint’s business plan includes moving consumers into less generous plans. This strategy appears to have three components.

First, WellPoint’s highest rate increases seem to apply to their most comprehensive insurance plans. Maternity care is a marker for a more comprehensive package of benefits. A chart of proposed rates shows that WellPoint’s highest rate increases apply to the only two product families regulated by the Department of Insurance with maternity coverage. The chart also shows that for the most part, WellPoint proposed lower increases within specific product lines for the versions with higher deductibles than for the versions with lower deductibles.

Second, WellPoint is developing new products, called “downgrade options,” to promote to consumers facing the high rate increases. In one e-mail, David Shea, the Vice President for Individual Pricing, states: “Jim has asked Bryan to price 5-6 downgrade options to be made available in conjunction with the upcoming rate action.” In another internal e-mail, Mr. Curley, the Regional Vice President and Actuary, proposed that WellPoint “create 5-6 CA look-alike plans for CA with a benefit or two removed to create a downgrade option upon renewal.”

WellPoint also introduced a completely new product line called CoreGuard, advertised to have “some of our lowest monthly rates” and a “higher percentage of member cost-sharing in exchange for lower premiums.” One of the CoreGuard plans has a $20,000 deductible for a family for in-network services and a separate $20,000 deductible for non-network services. On top of that, a family can spend an additional $15,000 for co-payments for non-network services. Enrollees can be liable for another $4,500 in prescription drug costs. This adds up to a potential $59,500 out-of-pocket maximum for a family, who are still liable for the cost of drugs not on the formulary and maternity services.

Third, company officials discussed scaling back benefits for existing plans. In an e-mail, Mr. Shea states: “During our Plan review this morning Brian was mentioning that, in CA in the past, we mitigated rate increases by introducing product changes for existing members. We brought up the introduction of new products but he wanted to pursue existing product changes.” In another e-mail, Mr. Curley described scenarios that would produce a 6% to 10% reduction in benefits for four plans. The options included raising deductibles in three of the four plans and adding 25% coinsurance payments.

http://energycommerce.house.gov/Press_111/20100224/Questions.Raised.by.Internal.WellPoint.Documents.pdf

Testimony of Angela Braly, WellPoint President and CEO:
http://energycommerce.house.gov/Press_111/20100224/Braly.Miller.Testimony.pdf

Comment: 

By Don McCanne, MD

When most of us are concerned about skyrocketing health care costs, the private insurers have concentrated on their more immediate concern: How can they maintain a market presence by making their health plans more affordable?

To keep premiums at a level that maintains their market, the insurers have reduced benefits and and have increased cost sharing, especially through much higher deductibles and greater coinsurance. Compared to copayments, coinsurance, as a percentage of charges, shifts much more of the costs to those who need a greater amount of health care.

These innovations are resulting in a transformation of the market into a choice of new options, referred to internally by the insurance industry as “downgrade options.” The consumer facing outrageous premium increases would have new choices – either deceptive “look-alike” plans with reduced benefits, or new innovative products such as CoreGuard. With CoreGuard, for a reduced premium, you can have a plan with family cost sharing of only $59,500 plus the cost of products and services that are not included as a benefit.

Of course, these downgrade options represent an expansion in the market of underinsurance products. Downgrade options are a devious method of shifting health care cost increases to those individuals who need health care. It is bad enough to be sick or injured without having to face intensifying financial hardship and perhaps bankruptcy, even if insured.

What will President Obama’s proposal do to rectify the injustices of these downgrade options? For most individuals, almost nothing. They will remain in their employer-sponsored plans or other programs such as Medicare or Medicaid. For the minority who will be able to purchase plans through state insurance exchanges, the plans will have prescribed benefits and an actuarial value at a relatively low 70 percent (60 percent for some), meaning that cost sharing can still pose a major burden. Because these relatively Spartan plans will still be more generous than the downgrade options, the premiums will be higher.

The Obama plan specifies that a family will not have to contribute more than 9.5 percent of income to the premium (less for lower income families), as long as they don’t upgrade to a plan with the benefits that they should have. If they upgrade, they pay the entire difference. Obama’s plan also would limit cost sharing to current HSA limits ($11,900 per family in 2010), but that is misleading since considerable costs can be racked up outside of the plan.

With higher premiums than current individual plans, with some limits placed on the exposure of the family to costs, and with impotent measures to slow cost escalation, an increasing burden will be placed on the taxpayers who are subsidizing this system. That’s us. So we’ll pay, one way or another.

Why is President Obama forcing on us this profoundly expensive, administratively complex, and comparatively ineffectual system when we could have an improved Medicare for all of us that would ensure that we get the care we need while keeping it affordable? More to the point, why aren’t we mounting a rebellion (with civility)?

WellPoint’s “downgrade options”

U.S. House of Representatives

Committee on Energy and Commerce
February 24, 2010

Memorandum
From: Committee on Energy and Commerce Majority Staff
Re: Questions Raised by Internal WellPoint Documents

As part of the Committee’s investigation into premium increases proposed by Anthem Blue Cross, a subsidiary of WellPoint, Inc., the Committee has received over 3,000 documents from WellPoint and its regulators, including internal WellPoint correspondence, presentations to senior corporate management, company-produced actuarial assessments, and regulatory filings. Committee staff also spoke to representatives of the company; received briefings from regulators, including the California Department of Insurance and the National Association of Insurance Commissioners; and spoke to outside experts in the field of health finance.

As summarized below, a review of the documents provided to the Committee and the other information received by the Committee raises multiple questions that members may wish to pursue during today’s hearing.

Question 4: Is WellPoint pushing people into less generous plans?

According to Ms. Braly’s testimony (Angela Braly, WellPoint President and CEO), “Another dynamic in our current challenging economy is that a higher proportion of healthy individuals move to lower cost coverage, such as coverage with a higher deductible, than in more robust economic times.”

Internal documents suggest that WellPoint’s business plan includes moving consumers into less generous plans. This strategy appears to have three components.

First, WellPoint’s highest rate increases seem to apply to their most comprehensive insurance plans. Maternity care is a marker for a more comprehensive package of benefits. A chart of proposed rates shows that WellPoint’s highest rate increases apply to the only two product families regulated by the Department of Insurance with maternity coverage. The chart also shows that for the most part, WellPoint proposed lower increases within specific product lines for the versions with higher deductibles than for the versions with lower deductibles.

Second, WellPoint is developing new products, called “downgrade options,” to promote to consumers facing the high rate increases. In one e-mail, David Shea, the Vice President for Individual Pricing, states: “Jim has asked Bryan to price 5-6 downgrade options to be made available in conjunction with the upcoming rate action.” In another internal e-mail, Mr. Curley, the Regional Vice President and Actuary, proposed that WellPoint “create 5-6 CA look-alike plans for CA with a benefit or two removed to create a downgrade option upon renewal.”

WellPoint also introduced a completely new product line called CoreGuard, advertised to have “some of our lowest monthly rates” and a “higher percentage of member cost-sharing in exchange for lower premiums.” One of the CoreGuard plans has a $20,000 deductible for a family for in-network services and a separate $20,000 deductible for non-network services. On top of that, a family can spend an additional $15,000 for co-payments for non-network services. Enrollees can be liable for another $4,500 in prescription drug costs. This adds up to a potential $59,500 out-of-pocket maximum for a family, who are still liable for the cost of drugs not on the formulary and maternity services.

Third, company officials discussed scaling back benefits for existing plans. In an e-mail, Mr. Shea states: “During our Plan review this morning Brian was mentioning that, in CA in the past, we mitigated rate increases by introducing product changes for existing members. We brought up the introduction of new products but he wanted to pursue existing product changes.” In another e-mail, Mr. Curley described scenarios that would produce a 6% to 10% reduction in benefits for four plans. The options included raising deductibles in three of the four plans and adding 25% coinsurance payments.

http://energycommerce.house.gov/Press_111/20100224/Questions.Raised.by.Internal.WellPoint.Documents.pdf

Testimony of Angela Braly, WellPoint President and CEO:
http://energycommerce.house.gov/Press_111/20100224/Braly.Miller.Testimony.pdf

Comment: 

By Don McCanne, MD

When most of us are concerned about skyrocketing health care costs, the private insurers have concentrated on their more immediate concern: How can they maintain a market presence by making their health plans more affordable?

To keep premiums at a level that maintains their market, the insurers have reduced benefits and and have increased cost sharing, especially through much higher deductibles and greater coinsurance. Compared to copayments, coinsurance, as a percentage of charges, shifts much more of the costs to those who need a greater amount of health care.

These innovations are resulting in a transformation of the market into a choice of new options, referred to internally by the insurance industry as “downgrade options.” The consumer facing outrageous premium increases would have new choices – either deceptive “look-alike” plans with reduced benefits, or new innovative products such as CoreGuard. With CoreGuard, for a reduced premium, you can have a plan with family cost sharing of only $59,500 plus the cost of products and services that are not included as a benefit.

Of course, these downgrade options represent an expansion in the market of underinsurance products. Downgrade options are a devious method of shifting health care cost increases to those individuals who need health care. It is bad enough to be sick or injured without having to face intensifying financial hardship and perhaps bankruptcy, even if insured.

What will President Obama’s proposal do to rectify the injustices of these downgrade options? For most individuals, almost nothing. They will remain in their employer-sponsored plans or other programs such as Medicare or Medicaid. For the minority who will be able to purchase plans through state insurance exchanges, the plans will have prescribed benefits and an actuarial value at a relatively low 70 percent (60 percent for some), meaning that cost sharing can still pose a major burden. Because these relatively Spartan plans will still be more generous than the downgrade options, the premiums will be higher.

The Obama plan specifies that a family will not have to contribute more than 9.5 percent of income to the premium (less for lower income families), as long as they don’t upgrade to a plan with the benefits that they should have. If they upgrade, they pay the entire difference. Obama’s plan also would limit cost sharing to current HSA limits ($11,900 per family in 2010), but that is misleading since considerable costs can be racked up outside of the plan.

With higher premiums than current individual plans, with some limits placed on the exposure of the family to costs, and with impotent measures to slow cost escalation, an increasing burden will be placed on the taxpayers who are subsidizing this system. That’s us. So we’ll pay, one way or another.

Why is President Obama forcing on us this profoundly expensive, administratively complex, and comparatively ineffectual system when we could have an improved Medicare for all of us that would ensure that we get the care we need while keeping it affordable? More to the point, why aren’t we mounting a rebellion (with civility)?

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