PNHP

Remedy for insurers' actions that resulted in racketeeringallegations

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Remedy for insurers' actions that resulted in racketeeringallegations

Filed June 19, 2006)

United States District Court for the Southern District of Florida Miami Division

Master File No. 00-1334-MD-Moreno
(U.S. District Judge Federico Moreno)

IN RE: MANAGED CARE LITIGATION

Order Granting Summary Judgment in Favor of Remaining Defendants United and Coventry on All Claims

Presently before the Court is the Omnibus Motion for Summary Judgment (D.E.No. 3922) filed by Defendants United Healthcare, Inc., United Health Group, Inc. (collectively, “United”) and Coventry Health Care, Inc. Since the Defendants filed their motion for summary judgment, the Court has provided the Plaintiffs with multiple opportunities to demonstrate a triable issue of fact regarding whether the Defendants conspired to defraud doctors by manipulating their claims processing systems. The Plaintiffs and Defendants have filed numerous briefs regarding conspiracy, and the Court has heard oral argument several times, most recently on March 14, 2006. As explained below, because no reasonable juror could return a verdict in the Plaintiffs’ favor, the Defendants’ motion for summary judgment is GRANTED as to all remaining claims.

In granting judgment in favor of the remaining defendants, this court is reminded of the Eleventh Circuit’s opinion affirming class certification in this very case. See Klay v. Humana, Inc., 382 F.3d 1242 (11th Cir. 2004).
The appellate court indicated that “(i)t would be unjust to allow corporations to engage in rampant and systemic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous.” Klay, 382 F.3d at 1274. As such, based on the allegations of conspiracy with each other to program their computer systems to systematically underpay physicians for their services, the class was certified. After reviewing thousands of documents, there simply is insufficient evidence of the wrongdoing claimed – i.e. agreeing with their competitors to defraud doctors. The evidence submitted here falls short of that needed to trigger the Racketeer Influenced and Corrupt Organizations Act’s remedial scheme described as “the litigation equivalent of a thermonuclear device.” See Miranda v. Ponce Federal Bank, 948 F.2d 41, 44 (1st Cir. 1991). In so holding, the Court is not giving its imprimatur to the Defendants’ actions or to the tremendous amounts of compensation received by their executives, described by some as exorbitant. But any reform related to executive compensation or individual practices by health maintenance organizations is beyond the power of this court. Those desiring changes in the way health care is provided in America must either look for remedies before Congress or allow the free market to dictate the results.

http://www.flsd.uscourts.gov/default.asp?file=cases/index.html (Under “00-MD-1334-MORENO-In Re Managed Care Litigation” click “”Order granting summary judgment in favor of remaining defendants United and Coventry on all claims”)

Comment:

By Don McCanne, M.D.

Although this insurance company racketeering lawsuit was dismissed because of the failure of the plaintiffs to demonstrate a joint conspiracy between the insurers, Judge Moreno did not rule that the insurers were blameless. In fact, he specifically stated that “the Court is not giving its imprimatur to the Defendants’ actions.” If the insurers had done no wrong, it is unlikely that the other defendant companies would have previously settled. These included, alphabetically, Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Net, Humana, Prudential Financial Services, and WellPoint Health Networks (though PacifiCare Health Systems also escaped by holding out for a summary judgment).

The primary allegation was that the insurers used claims processing software that was designed to reduce or deny payment to physicians for legitimate services provided and billed, using agreed-upon, standard CPT coding.
Physicians understandably felt that they were being cheated, and were particularly incensed by the outrageous executive compensation being granted with what seemed to be funds that rightfully belonged to the physicians.
(The reality of stock options is another story that won’t be covered here.)

In my opinion, the actions of the insurers were blatantly dishonest and should disqualify them from their role as managers of our health care funds.
Leaving crooks in charge merely because they manage to barely fall short of being criminals is not sound policy.

Judge Moreno states that, if we desire change, we should look to Congress or the free market. By continuing to leave control in the hands of private insurers, we have already selected the market approach. In the face of overwhelming evidence that this distorted market is not working to the benefit of patients or providers, we continue to do nothing. Well, we do something. Some of us whine. Some of us pay more. Some of us die!

Congress must provide us with the remedy. We desperately need a publicly-funded and publicly-administered program of national health insurance.

Why copays?

Retail clinics: The competition heats up
By Ken Terry
Medical Economics
June 16, 2006

“Retail” walk-in clinics, located in supermarkets and stores like CVS and Target, are already competing with physicians in many communities. Now Blue Cross and Blue Shield of Minnesota has added a new twist: It’s waiving copayments for patients who go to these in-store clinics.

Copayments for office visits are on the rise everywhere. So if there were no copays in retail clinics, an increasing number of patients would have an incentive to go there. Blue Cross sees this as a matter of saving money for its customers and for itself.

FP Michael J. Morris of Willmar, MN, thinks the insurer’s approach to this issue works against its efforts (and those of other plans) to encourage primary care doctors to manage patients’ overall health.

FP David D. Luehr, president of the Minnesota Medical Association, agrees.

“It’s important for physicians to see patients in their offices, where they have their medical records,” he says. “This type of approach starts to disrupt that continuity.”

Rick Kellerman, president-elect of the AAFP, says the Blue Cross initiative is “a bit shortsighted. If they’re going to waive copays on visits to retail clinics, why don’t they waive them for a similar service in a physician’s office? They should try to encourage people to have a personal medical home, where cost can be better controlled and quality better assured.”

So why not give patients the same incentive to visit primary care physicians for minor problems that the plan gives them to go to retail clinics? It’s mainly a matter of price, replies (internist David W. Plocher, senior vice president and medical director of Blue Cross and Blue Shield of Michigan).

If a nurse practitioner can provide the same service at half the cost, Blue Cross wants patients to use the NP.

http://www.memag.com/memag/article/articleDetail.jsp?id=333253

And…

CalPERS to Weigh Cutting Health Benefits The proposed changes, including some higher co-pays, are designed to give patients incentives to choose cheaper medical care.
By Daniel Yi
Los Angeles Times
June 19, 2006

The California Public Employees’ Retirement System, once a benchmark of generous employer-sponsored health plans, is proposing to trim benefits for hundreds of thousands of its members in a bid to rein in runaway healthcare costs.

CalPERS’ plans include raising co-pays for more expensive treatments and lowering premiums for those willing to use a smaller network of doctors.

Health plans and large employers have been dropping more-expensive doctors and hospitals from their provider networks to save money, but such measures are reaching their limits. Increasing patients’ financial stakes may be unpopular but does drive down costs.

CalPERS currently offers two Blue Cross of California PPO plans. Among the measures being considered Tuesday is the creation of a third PPO that would have about half the number of doctors in the network compared with the other two plans, but premiums would be 7.5% cheaper.

“My problem with these proposals is that they don’t address the underlying problem of lack of affordable healthcare,” said Yvonne Walker, a bargaining official with Service Employees International Union Local 1000, which represents 90,000 state employees. “You have gas going up, the overall cost of living going up, and you want to put people in a position where they have to make financial decisions about their healthcare. I don’t think that is the direction we want to go.”

But that is the direction most are already headed, said Peter Lee, chief executive of the Pacific Business Group on Health, a coalition of employers.

If the system is not made more efficient, rising healthcare costs will drive more employers to drop benefits, leaving workers unprotected, Lee said.

“Costs will be shared one way or the other,” he said, either through co-pays or “taxes going up to treat more uninsured people.”

http://www.latimes.com/business/la-fi-calpers19jun19,1,5491259.story?coll=la-headlines-business

Comment:

By Don McCanne, M.D.

Copayments have continued to grow in popularity because they have been proven to reduce health care utilization, and, therefore, health care spending. The problem with copays is that they are a very blunt instrument.

They reduce utilization of beneficial health care services and result in impaired health outcomes. Clearly we should be looking for policies that contain costs while improving health care quality.

It has been well established that improving the primary care infrastructure, establishing a medical home for everyone, improves quality while reducing spending. It seems that the private insurers would want to establish policies that would promote primary care. But what are they doing?

BC/BS of Minnesota is now adopting a policy of discouraging use of primary care by requiring copays, but waiving them when the patient fragments their own care by using discount, walk-in, retail clinics. When insurers adopt policies to discourage efficient, higher-quality care in exchange for a cheaper, instant fix, it’s clearly not about encouraging better health consumer shopping; it’s purely “a matter of price.”

CalPERS’ new Blue Cross PPO raises similar flags. In order to reduce premiums, they are slashing the list of contracted providers. Insurers should be adopting policies that improve access to primary care providers, rather than disrupting the medical home of those whose primary care providers are deleted from the approved lists.

Blue Cross already uses coinsurance to limit patients’ choices of a medical home. Coinsurance is a percentage of the fee that the patient must pay. Like copays, coinsurance is a disincentive to obtaining care, but even more so since the out-of-pocket payments are often much higher than with copays.

Coinsurance can also be very disruptive when it heavily penalizes the patient for staying with his or her non-contracted primary care provider.

Affordability of health care concerns everyone today, but policies designed to reduce use of beneficial services are the wrong way to go.

Peter Lee says that we will share costs either through copays or taxes.

Clearly our current copay policies are detrimental to health care. What about taxes? Not only are they much more equitable, but the public stewards of a single payer system would ensure that each and every one of us has affordable access to a medical home.

APA President Urges Support For Single-Payer InsuranceSystem

APA President Urges Support For Single-Payer Insurance System
American Psychiatric Association
Psychiatric News
June 16, 2006

The events that (APA President Steven) Sharfstein weathered this past year underscored the importance of the advocacy mission in which he had challenged his fellow APA members to join him. He left them with this simple but weighty message:

“We must tirelessly advocate for [single-payer universal health reform]. As the health care crisis extends and mushrooms, with more and more Americans without adequate coverage, the opportunity for such change will come at national, state, and local levels. And we must be there as advocates for our patients.”

http://pn.psychiatryonline.org/cgi/content/short/41/12/1-a

Is the NBT an individual mandate?

State health law could be template
By Bob Kievra
Worcester Telegram & Gazette
June 16, 2006

The state’s 65-day-old health care law could have national significance – legislation that might alter presidential politics in 2008 and shift the vexing topic out of the “hopeless” category for the first time in a generation, a Harvard University professor said last night.

Robert J. Blendon, professor of health policy and political analysis at the Harvard University of Public Health and the John F. Kennedy School of Government, said the new Massachusetts law – if it can be made to work – offers hope that the problems of the uninsured can be tackled in a thoughtful, bipartisan manner.

The 145-page law, intended to provide health care coverage to the state’s 550,000 uninsured adults, imposes an individual mandate for everyone in Massachusetts to obtain health insurance by July 1, 2007.

http://www.telegram.com/apps/pbcs.dll/article?AID=/20060616/NEWS/606160517/1002/BUSINESS

And…

AMA: Penalize some uninsured Americans
By Bruce Japsen
Chicago Tribune
June 13, 2006

The AMA’s policy-making House of Delegates vote in favor of what it called “individual responsibility” comes as state and federal lawmakers are weighing similar ideas in the form of legislation in Congress and state houses across the country.

In the past, the Republican-leaning AMA has shied away from government mandates as a way to provide health insurance coverage for more Americans.
In this instance, the group acknowledged Tuesday at a press briefing that its support of tax penalties to incentivize people to buy coverage would be a “significant shift” in the organization’s thinking on matters of covering the uninsured.

http://www.chicagotribune.com/business/chi-060613ama,1,3515691.story?coll=chi-news-hed

And…

Can Massachusetts Lead the Way in Health Care Reform?
By Stuart H. Altman, Ph.D., and Michael Doonan, Ph.D.
The New England Journal of Medicine
May 18, 2006

Massachusetts will require everyone who can afford health insurance to buy it – an individual mandate.

We don’t know exactly what the new insurance plans will look like, how much they will cost, and whether government subsidies will prove adequate. The cost of the reform will be contingent on the actual price of available plans and subsidy levels, which will not be known until regulations are drafted and insurers and health plans offer new products for this market.

http://content.nejm.org/cgi/content/full/354/20/2093

And…

Editorial
Los Angeles Times
June 14, 2006

…the real solution to the nation’s healthcare problems will have to come from a Washington ZIP Code. If it’s smart, Congress will study some of the states’ innovative ideas to determine whether they could work on a national level.

Requiring all citizens to have health insurance, for instance, is an interesting idea that could gain bipartisan traction.

http://www.latimes.com/news/opinion/editorials/la-ed-vermont14jun14,0,4682219.story?coll=la-news-comment-editorials

And…

Cheers and jeers for Mass. insurance mandate By Leah Carlson Shepherd
Employee Benefit News
June 1, 2006

In a groundbreaking move with far-reaching implications, Massachusetts adopted a law in April to require state residents to obtain medical insurance by July 1, 2007. Previously, no state had required people to carry medical insurance.

U.S. Sen. Edward Kennedy (D-Mass.): “Massachusetts once again leads the nation with an innovative plan that will achieve our longstanding goal of expanding health care for all.”

http://www.benefitnews.com/detail.cfm?id=9026

Comment:

By Don McCanne, M.D.

There has been a dramatic surge in media reports that there is a developing consensus that the individual mandate, requiring each individual to purchase his or her own insurance, is the common ground which will bridge the partisan divide on health care reform. It is rumored that even the leading candidate for the 2008 Democratic Party presidential nomination is currently working with consultants to develop an individual mandate model.

The individual mandate does not displace consumer-directed health care as the leading right-wing proposal for reform. On the contrary, it would greatly expand the market for consumer-directed products such as HSAs and high-deductible health plans. It merely reframes the rhetoric, making the individual mandate appear to be the politically feasible compromise. But do the politicians really understand what they are supporting?

The fundamental flaw with the individual mandate model is that insurance plans will have a new responsibility. They will have to cover not only the relatively healthy: healthy employees, their healthy families, and those who pass underwriting standards in the individual market. Since the individual mandate means that everyone must be covered, the plans will have to cover those with higher health care costs as well. Pooling everyone together is expensive. This year we are already spending $7110 per person for health care. Can a middle-income family of four really afford to pay nearly $30,000 for their share of the health care spending pool? Of course not.

A universal individual mandate can work only if the insurance product is affordable. By mandating that everyone be included, there are only two ways of keeping premiums affordable.

The current consumer-directed trend is to strip benefits out of the plans, and to increase out-of-pocket spending through high-deductibles, co-payments and coinsurance. That way, the health insurance premium is affordable, but access to care is not affordable for those who have needs. This totally defeats the purpose of insurance: providing financial protection against the losses of adverse medical events.

The other way to keep premiums affordable would be to shift the bulk of health care costs to the government. Very large tax credits would help, but that would add even more to the current, relatively-opaque taxpayer burden that is already funding 60 percent of our health care. Another government role would be to provide re-insurance, protecting the insurance companies from major losses (i.e., that 20 percent of individuals who use 80 percent of our health care). But then what good are insurers if they are not going to insure us against loss?

Even if we did adopt a government-funded individual mandate, we would perpetuate the tremendous losses that we are already experiencing due to profound administrative excesses, and due to a highly wasteful and even harmful maldistribution of our health care resources. Now that’s what’s not affordable!

So the NBT (Next Big Thing) is the individual mandate? Single payer advocates – get on your horses!

HMO rate increases decline to a mere 11.7 percent

HMO Rate Increases Continue to Decline for Fourth Consecutive Year, According to Hewitt Associates U.S. Employers Remain Focused on Managing Costs
Hewitt Associates LLC
Press Release
June 13, 2006

Preliminary information from Hewitt Associates, a global human resources services company, shows that 2007 HMO rates will increase approximately 11.7 percent — representing the fourth consecutive year of declining rate increases.

“Although there has been a steady decline in the level of HMO rate increases over the past several years, double-digit increases are still very difficult for employers to absorb,” said Paul Harris, senior health care strategist, Hewitt Associates. “The good news is that there do not appear to be market pressures that might cause rates to begin increasing again.”

Although increases are moderating, companies are still facing double-digit increases and, as a result, continue to make plan design changes and share more of the cost with employees.

http://was4.hewitt.com/hewitt/resource/newsroom/pressrel/2006/06-13-06.htm

Comment:

By Don McCanne, M.D.

This is good news? Rates are stabilizing at low double digit increases? Employers are managing costs by sharing more of the costs with employees?

These rate increases are well in excess of inflation, and costs are being shifted to employees at a time when their wages are failing to keep up with the rest of the economy. Patients are bearing much of the brunt of our failed health care funding policies.

It’s not that we don’t understand how to control health care costs. We do. The single payer model does precisely that (with the not insignificant additional advantage that it also provides truly comprehensive coverage for absolutely everyone).

The problem is that we continue to depend on private sector plans to manage costs, which now means that they manage to shift more of the costs to patients. Their model doesn’t work and it needs to be dumped. It’s time for single payer.

AMA supports individual mandate for higher-income individuals

2006 Annual Meeting of the House of Delegates Reference Committee highlights
AMA

The AMA voted to support a requirement that individuals and families earning greater than 500 percent of the federal poverty level obtain, at a minimum, coverage for catastrophic health care and evidence-based preventive health care, using the tax structure to achieve compliance. Upon implementation of a system of refundable tax credits or other subsidies to obtain health care coverage, this requirement would apply to individuals and families earning less than 500 percent of the federal poverty level.

http://www.ama-assn.org/ama1/pub/upload/mm/471/refcom_highlights.pdf

Comment:

By Don McCanne, M.D.

For 2006, an income of 500 percent of the federal poverty level is about $50,000 for an individual and about $100,000 for a family of four. Only about one-tenth of the uninsured have incomes at that level or higher. This is obviously only a tiny step towards universal coverage.

What is important is that the AMA is now officially on record as supporting an individual mandate to purchase health coverage in the private insurance market. They would eventually expand that to cover all of the uninsured through a system of refundable tax credits. The good news is that the AMA is explicitly supporting universal health care coverage.

The bad news is that individual mandates for private plans is the most expensive method of achieving universal coverage, and it leaves patients vulnerable to medical debt because of the deterioration in the quality of plans available in the private market.

Let’s not simply settle for universal coverage. Let’s also make it efficient, affordable and comprehensive through a single payer program of national health insurance.

How Hillary Clinton could work with the Republicans on health care reform

The Huffington Post
The Blog
(Accessed June 13, 2006)

In today’s NY Times (June 10), Hillary Clinton states, “I think you should cover all children who don’t have other access to coverage. We shouldn’t have any uninsured children. But we have to take that step by step.”

For decades, we have been reforming health care “step by step.” These steps have resulted only in more uninsured and in an explosion in medical debt due to deteriorating coverage. These financial barriers to care have resulted in impaired health outcomes.

John Conyers’ HR 676 would replace our inefficient, inequitable, fragmented system with an affordable national health insurance program providing comprehensive benefits for everyone. For those concerned about skyrocketing costs, this is the only effective proposal (which expands coverage) that actually brings costs under control. It should appeal to progressives who want access and coverage for everyone, and to the business community which wants relief from unrelenting cost escalation while ensuring adequate coverage for employees.

This should no longer be a partisan issue. If the Republicans would begin to discuss the business rationale of single payer, then Sen. Clinton should be willing to concede that comprehensive reform really is feasible. But we do need to sit down with our Republican friends to be sure that they understand the single payer business model.

By: dmccanne on June 10, 2006 at 01:05pm

http://www.huffingtonpost.com/deborah-burger/a-walking-tour-of-america_b_22478.html

Wounds Salved, Clinton Returns to Health Care (NY Times, June 10):
http://www.nytimes.com/2006/06/10/washington/10hillary.html?pagewanted=all

Comment:

By Don McCanne, M.D.

Seriously. Let’s make every effort to be certain that the Republicans and the business community clearly understand the single payer business model. The efficiencies and cost containment mechanisms should appeal to anyone who is struggling with budgets.

Kevin Drum and Uwe Reinhardt on social insurance

Washington Monthly
Political Animal

By Kevin Drum
June 11, 2006

THE S-WORD….Ezra Klein, practicing for his career as a TV talking head, responds to a question about whether national healthcare is “socialist”:

“We should stop running from that moniker. If we’re going to call what Canada, France, Germany, England, Japan, and essentially every – actually, not essentially, just every – other industrialized nation offers socialized health care, but they cover all of their citizens with better outcomes and lower costs than we do, then I’m happy to associate myself with that.”

OK, it was only a training session. But still. Can I suggest something a wee bit different?

“Socialist” is a scare word conservatives use when they’ve run out of serious arguments. But national healthcare isn’t socialism any more than Medicare is. It’s just a practical and efficient way of providing medical treatment for everyone in the country, the same way that interstate highways are a practical and efficient way of providing roads for everyone in the country.

The facts are simple: A well-designed national healthcare plan gives you greater choice of doctors, it’s less expensive than private insurance, it helps rein in spiraling costs, it keeps you covered even if you temporarily lose your job or have a preexisting condition, it helps out small companies that can’t afford to provide health coverage for their employees, it helps out big companies like GM and Ford that are nearly bankrupt because they do provide health coverage, and it covers everyone all the time.

And best of all, it gets rid of the bureaucratic hodgepodge we have now:
Medicare for the old, employer coverage for people who work for big companies, 50 different versions of Medicaid for the poor, emergency rooms for the destitute, and no coverage at all for people who are unlucky enough to work for Wal-Mart. It’s an expensive mess that drives doctors nuts and provides most of us with mediocre care.

Or something like that. In any case, the basic answer to “Is national healthcare socialist?” should always be no, not yes. We are not in favor of command economies, ownership of the means of production, or state control of doctors, and that’s what most people think of when you say “socialist.”

And that’s Kevin’s media training for the day.

-Kevin Drum

http://www.washingtonmonthly.com/archives/monthly/2006_06.php

Uwe E. Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University, responds:

“Socialism” is an arrangement under which the means of production are owned by the state. Government-run health insurance is not “socialism,”and only an ignoramus would call it that. Rather, government-run health insurance is a form of “social insurance,” that can be coupled with privately owned for-profit or not-for-profit health care delivery systems.

Conservative critics of “social insurance” often forget that they benefit from many other forms of “social insurance” — e.g., the principle of limited liability of shareholders, which is the rockbed of capitalism. In a real sense, the national defense system also is a form of “social insurance” against threats from abroad. People in the farmbelt may never rail against “socialized medicine,” because so much of their income is protected by another form of social insurance, agricultural price supports and import restrictions (like the sugar quota.)

In fact, none other than Hank Greenberg, former CEO of the huge AIG insurance company, asked for government help to protect insurance companies from catastrophic losses such as those following 9/11. That, too, is “social insurance.”

I have gotten tired of ignoramuses who call social insurance “socialism,”
all the while being beneficiaries of it. One has the right to argue with them quite aggressively and ad hominem (or ad feminam), if the case fits.

Republican Governors think nothing of going to Washington, hat in hand, demanding federal emergency funds after a natural disaster has struck their state. Well, breast cancer or severe neonatal illness is a natural disaster too, and there is nothing socialist about an individual in Texas or Mississippi asking her fellow Americans for helping financially with coping with that natural disaster as well.

Perhaps I am wrong, of course, in my assumption that this is a nation, and not just a bunch of people sharing a geography, and that the “national” flag we may not burn actually means something. I grew up in nations — Germany and Canada — where the idea of nationhood and the national flag do mean something (even though there one may burn the flags, I believe). I haven’t a clue what Americans actually think of that big blob of land south of Canada and north of Mexico.

-Uwe Reinhardt

Big UAW Auto Assembly Plant Endorses HR 676

Conyers’ Single Payer Legislation

Newark, DE-On the eve of the UAW’s international union convention this week in Las Vegas, UAW Local 1183, representing 2,000 workers at the Daimler/Chrysler assembly plant here, has endorsed HR 676, a bill introduced by Congressman John Conyers (D-MI) to institute a single payer health care system in the U.S.

UAW local unions and CAP Councils in Birmingham, AL, West Mifflin, PA, Detroit, MI, Chicago, IL, and Holyoke, MA, have sent resolutions to the convention urging support for HR 676.

HR 676 now has 70 congressional co-sponsors in addition to John Conyers. It would institute a single payer health care system in the U.S. by expanding a greatly improved Medicare system to every resident.

HR 676 would cover every person in the U. S. for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, chiropractic and long term care. HR 676 ends deductibles and co-payments. HR 676 would save billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

#30#

HR 676 has been endorsed by 144 union organizations including 26 central labor councils, two state AFL-CIO’s (KY and PA), and two area labor federations.

For further information and a complete list of union endorsers contact:
Kay Tillow
All Unions Committee For Single Payer Health Care-HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551, (502) 459-3393
email: nursenpo@aol.com

A Walking Tour of America's Broken Health Care System

by Deborah Burger
June 7, 2006
on-line at The Huffington Post

June 7th 2006 is a national day of action for HR 676, Rep. John Conyers’ landmark bill to create Medicare for All. To mark this day, California’s nurses are taking a walking tour of the country’s broken healthcare system. Won’t you join us?

Everything you need to know about can be found in just one block of America, a quiet business-park block in a San Fernando Valley town named Woodland Hills. Here we find such the headquarters of such titans of the healthcare world as Blue Cross/Blue Shield, Wellpoint, Health Net, and Meridian Healthcare Management.

In just this handful of companies, we find the three values that mark today’s system of big-business healthcare: denial of care, cash register politics, and huge profits amidst a growing crisis.

Our tour guide Sue Cannon, RN, starts at Blue Cross, to talk about the corporate need to save money by denying care–hardly the way a health CARE system is supposed to work. We’re at Blue Cross because they’ve just been sued by numerous patients who’ve for”retroactive denial of coverage.” Here’s how that works: you get sick and Blue Cross approves a certain medical procedure. Then they go over your original application to see if they can find any inconsistencies; if so, they boot you out of the system, and leave you with the bills they just approved.

Nurse Cannon moves on to Health Net to talk about cash register politics and how it hurts patients. Between 1998 and 2004, healthcare corporations spent $1.2 billion on federal lobbying, winning favors such as George Bush’s Medicare Part D Prescription Drug benefit that forces seniors to enroll in a private health plan to qualify for the benefit and blocks the federal government from negotiating drug price discounts. Health Net symbolizes this excess. In California alone, for example, Health Net spent $580,615 lobbying in the 2005-2006 legislative session (to date).

Our final stop is WellPoint, to discuss the disparity between huge healthcare industry profits and the growing crisis of the uninsured. WellPoint used to be a for-profit division of non-profit Blue Cross. Subsequently, it bought Blue Cross of California, turning the whole organization for-profit. Why? In the words of one stock analyst, to “liberate them from their social responsibilities.” This liberation led to $2.5 billion in profits in 2005, and $157 million in direct compensation to their top five executives over the past three years. Yet HMOs have led the fight against a universal healthcare system based on a single standard of care for all, despite the fact that some 50 million Americans and over 6 million Californians have no health insurance,.

Denial of care, cash register politics, and record profits from a health care crisis. That’s the health care system we enjoy in America today. Thousands of people die unnecessarily each year because of this, and every year we fall further behind countries like Canada and England that haven’t handed their health care off to big corporations like these in Woodland Hills.

John Conyers’ has a plan to fix this, with Medicare for All, building on the most popular and effective federal program (George Bush’s efforts notwithstanding).

California nurses are taking up the fight to help Conyers revive our broken healthcare system. Here’s one way you can help: click here and send a message to your members of Congress, telling them it’s to extend Medicare to every single American.

_____________________________

Comment by PNHP Senior Health Policy Fellow, Dr. Don McCanne June 10, 2006

In today’s NY Times, Hillary Clinton states, “I think you should cover all children who don’t have other access to coverage. We shouldn’t have any uninsured children. But we have to take that step by step.”

For decades, we have been reforming health care “step by step.” These steps have resulted only in more uninsured and in an explosion in medical debt due to deteriorating coverage. These financial barriers to care have resulted in impaired health outcomes.

John Conyers’ HR 676 would replace our inefficient, inequitable, fragmented system with an affordable national health insurance program providing comprehensive benefits for everyone. For those concerned about skyrocketing costs, this is the only effective proposal that actually brings costs under control. It should appeal to progressives who want access and coverage for everyone, and to the business community which wants relief from unrelenting cost escalation while ensuring adequate coverage for employees.

This should no longer be a partisan issue. If the Republicans would begin to discuss the business rationale of single payer, then Sen. Clinton should be willing to concede that comprehensive reform really is feasible. But we do need to sit down with our Republican friends to be sure that they understand the single payer business model.

The Best Corporate Health Plan

Jonathan Tasini
June 30, 2005
Tom Paine.com

Jonathan Tasini is president of the Economic Future Group and writes his “Working In America” columns for TomPaine.com on an occasional basis.

The imploding health care system is finally making one thing crystal clear: Corporate America is shredding its own global competitiveness because it can’t shake the death grip of an anti-government ideology. This short-sighted ideology leads big business to shun single-payer national health insurance, which could save businesses hundreds of billions of dollars.

The simple fact is that private-sector insurance has failed. According to the 30-member-country Organization for Economic Cooperation and Development, in 2003, “the United States spent $5,635 per person on health, more than twice the OECD average and around ten times more than the lowest-spending countries, Mexico and Turkey.” According to the National Coalition on Health Care, “Health insurance premiums will rise to an average of more than $14,500 for family coverage in 2006.” The United States devotes 15 percent of its gross domestic product to health spending.

Because health care expenditures come either out of business profits or get passed on to consumers as higher prices, U.S. companies put themselves at a competitive disadvantage compared, at least, to every other country in the industrialized world. And that doesn’t even touch the issue of China. Though the China competitive issue is bigger than health care, The New York Times reported this week that a Chinese auto worker earns $1.50 an hour in wages and benefits, compared to $55 an hour at General Motors.

There are two responses that the business community has to this crisis: eliminate health coverage altogether or shift the costs of health care to workers. You want a headache, check this out: according to the Henry J. Kaiser Foundation, the annual premium that a health insurer charges an employer for a health plan covering a family of four averaged $9,950, or $829 a month in 2004; workers contributed $2,661, or 10 percent more than they spent in 2003; and, for single coverage, workers contributed an average of $558 toward the $3,695 annual premium.

I’m not here to argue the moral imperative for single-payer national health care. Instead, progressives need to turn their rhetoric to hard-core, good ‘ole patriotic, rally ‘round the flag” American business interests. In a “Working in America” column six months ago , I wrote that “companies that don’t advocate for a single-payer system are endangering shareholder value, throwing money into a system that is dragging down profits and competitiveness.” That has become clearer as time passes.

What better example can one give than GM, the once-proud gold standard of American industry whose bonds’ credit rating has plummeted to junk status? GM will spend $5.6 billion this year on health care for its employees and retirees—more money than it shells out for steel for its cars—which means every GM car we buy costs $1,500 more because of health care. Speaking to GM shareholders recently, GM’s CEO Rick Waggoner said, “Our $1,500-per-unit health care expense represents a significant disadvantage versus our foreign-based competitors. Left unaddressed, this will make a big difference in our ability to compete in investment, technology and other key contributors to our future success.”

Now don’t get me wrong: GM has an obligation to its workers. And its saber-rattling threats that the United Auto Workers must agree by today to health care benefit cuts for auto workers is outrageous, and perhaps illegal (full disclosure: I am a UAW member). But the problem is unavoidable.

Even that poster child for corporate malfeasance, Wal-Mart, would have good reason to get behind a single-payer plan, if only to get some good press. Wal-Mart workers, who make an average of $14,000 a year, are forced to pay a $1,000 deductible—when they qualify at all for the company’s stingy plan. Since most workers can’t foot that bill, taxpayers already subsidize Wal-Mart: 13 percent of its 91,000 workers in Florida are enrolled in the state Medicaid program, 10,000 children of Wal-Mart workers in Georgia rely on state-funded health care and the company leads the pack in this dubious category in other states such as Iowa, Tennessee, Wisconsin, Arkansas and New Hampshire.

Some executives are starting to see the light. I recently had an exchange with a senior executive from a national employer lobbying group who said, “You’re right that some are thinking, ‘How much worse can it be?’ Thus far, though, national health care is a bridge too far.” Instead, companies are fiddling around the edges, engaging in discussions with various health care advocacy groups—but always falling short of the single-payer option. So we have to build that bridge and lead—or kick—corporate America across it.

Only a single-payer national plan will work. All the other gimmicks relying on market-based, employer-centered insurance have failed. The premiums for employer-based health insurance rose by 11.2 percent in 2004, the fourth consecutive year of double-digit increases—and every single type of plan (health maintenance organizations, preferred provider organizations, and point-of-service plans) registered double-digit increases. And, ultimately, state-based single-payer plans, while admirable, can’t survive in the long term because they will lack the economies of scale only a sweeping national plan can make possible.

We need to put the real onus on corporate executives with a carrot-and-stick approach that is based on a clear principle: your ability to compete depends on single-payer health care. For those who refuse, it’s time to mount an aggressive corporate and public relations campaign. One shareholder approach might be to cut back executive pay and benefits each year by the same percentage total health care costs amount to in the corporate bottom-line. If that doesn’t work, a more serious step would call for divesting from companies that oppose single-payer.

Organized labor and their allies in the huge public employee pension funds should lead the fight. If unions represented the same proportion of the workforce they did in the 1950s—35 percent—40 million people would not be without health insurance because more people would be under unionized, employer-based health plans. And we’d end up with a different system because unions—whose main fight at the bargaining table today is over health care costs—would have a stronger hand to play in lobbying for single-payer. But even in its smaller state, unions need to take the fight on for the public good. Pension funds, representing hundreds of thousands of current and retired workers who face health care cost pressure, have a significant financial interest in seeing the system changed; the California Public Employees Retirement System alone has $177 billion that it could use as leverage.

When I first broached this notion with colleagues, they snorted, “Yeah, but how do you pass this kind of thing with Republicans controlling the government?” That’s a fair point—if your thought process is driven solely through a “red state, blue state” prism.

But I’d wager that the wind could shift dramatically, driven by a population of all colors that can coax or bludgeon the business community into doing what’s in its best economic self-interest. And here’s a prediction: A serious campaign based on single-payer national health insurance could propel someone to the White House in 2008.

MedPAC update of Medicare Advantage overpayments

Medicare Advantage benchmarks and payments compared with average Medicare FFS spending
MedPAC
Medicare Briefs

The purpose of this report is to present data on the level of Medicare Advantage (MA) payments for Parts A and B services relative to the spending on similar beneficiaries in Medicare’s traditional fee-for-service (FFS) program. This responds to requests from Congressional committees to update our past analyses.

CMS no longer determines MA plan payments based solely on administratively set payment rates. Plans now submit formal bids, and then CMS compares the bids with benchmarks to determine payment. Medicare’s payment declines if bids are lower than the benchmarks.

Plan service areas have expanded to more rural and other areas with benchmarks that are high relative to Medicare FFS spending. The benchmarks were relatively high because these areas were given increases in payment rates under earlier law.

Finally, the risk adjustment system has changed payment rates. In 2004, the Centers for Medicare & Medicaid Services (CMS) adjusted plan payments with a blend of 70 percent demographic factors and 30 percent health risk factors.

For 2006, 25 percent of each payment is based on the demographic factors and 75 percent is based on the health risk factors. By 2007, payments will be based 100 percent on risk-adjusted rates.

With the introduction of risk adjustment, the payment system now explicitly takes into account the relative disease burden of the MA population. Risk adjustment (applied to 75 percent of payments in 2006) generally would lower payments to plans if they enrolled beneficiaries who were healthier. But CMS has taken steps to prevent overall payments to plans from going down. A hold-harmless adjustment increases the benchmark rates in 2006 by the amount that CMS expects payments would fall because of risk adjustment.

We find that the combined benchmarks are set at an average of 115 percent of FFS Medicare in 2006. After taking into account the amount that plans return to the trust fund through the bidding process, the 115 percent figure falls to 111 percent. In sum, this 111 percent includes all three factors we have discussed: the relationship of the MA benchmarks to FFS rates, the effect of bidding and returning funds to the trust funds, and the hold-harmless provisions.

http://www.house.gov/stark/news/109th/pressreleases/20060606_MedPAC.pdf

Comment:

By Don McCanne, M.D.

Hold-harmless!?

The private Medicare plans have always benefited by their ability to selectively market their products to healthier Medicare beneficiaries, even though they have received payments at a higher level that assumes that they enroll their fair share of those in poor health. Congress and the administration have promised us, and have now required by law, that the payments to the plans would be adjusted to reflect the risk based on the level of health of the enrollees.

The required risk adjustments are now in place. But what has CMS done? By giving back to the plans the required adjustments, CMS is ensuring that the plans will not be harmed by their success in excluding, by selective marketing, the higher-cost Medicare patients with greater health care needs.

“Hold-harmless” is yet another abuse of rhetoric that characterizes this administration. Granting a gift of taxpayer funds to the private Medicare Advantage plans certainly harms the taxpayer.

Worse, they promised to us and enacted measures that would establish fairness by adjusting for risk. They lied to us!