PNHP

A liar for the insurance industry

A liar for the insurance industry

Interview: Wendell Potter

The SocialistWorker
February 10, 2011

Wendell Potter is the former head of public relations for insurance giant Cigna. In 2009, he became a whistleblower, describing with an insider’s knowledge the behavior of the health insurance industry. His book Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR Is Killing Health Care and Deceiving Americans documents those revelations.

Potter spoke to Helen Redmond during a Chicago stop on his national book tour in January.

Helen Redmond: Can you talk about how insurance companies make profits?

Wendell Potter: They make profits in ways that other companies don’t. It’s a unique way of doing business.

McDonald’s, when it sells hamburgers or French fries, doesn’t care whether you are old or young, whether you are sick or not, whether you are male or female. They don’t care about that, but insurance companies care a lot about that. And they don’t want to sell you their product if you have been sick in the past, they don’t want to sell you the product if you are older. If they do, they want to charge you a lot more.

McDonald’s doesn’t charge an older person three times as much for a hamburger as they charge a teenager. Insurance companies can do that. So it’s an entirely different kind of business that way, in order to make Wall Street happy. And I say Wall Street because the industry is controlled by big for-profit corporations these days, and they’re all listed on the New York Stock Exchange, so they have to meet Wall Street’s expectations.

To do that, they have to do things that are often not in the best interest of the people in this country. Their practices result directly in people going without insurance, not being able to buy it at any price. We have too many people in this country who don’t have insurance, largely because of the practices of the insurance companies.

These companies want to avoid risk. They want to avoid paying out medical claims. They try to avoid insuring people who need insurance.

HR: What are some of the “tricks of the trade” that you witnessed?

WP: Canceling insurance when people get sick, a practice called recission. The companies will cancel someone’s policy when they’re in the midst of cancer treatment. They’ll have someone look at the application the person filled out, looking for some justification to cancel the policy.

Often, they’ll find something–some omission that’s usually inadvertent, like one woman who testified before Congress. She was in the midst of treatment for breast cancer, and her policy was cancelled because she forgot to disclose that she had been treated for acne.

Purging small businesses from the rolls is another industry practice that is prevalent. It’s the reason why half of small businesses can’t offer health care to their employees. When one employee gets sick and has high medical claims, the insurance company will raise the rates so much that the employer will have to drop coverage for everyone. Refusing to pay for treatment that a doctor has recommended is another example.

HR: Denial of care.

WP: The industry calls it “denial of coverage.” They use that term because the lawyers insisted. We would always say “denial of coverage.” It’s semantics, because when you deny coverage to someone, you essentially deny care.

Most people in this country don’t have the financial resources to pay for a liver transplant, for example, or for cancer care. They don’t have the financial means to do it, and it’s why a lot of people go bankrupt. They think their insurance will cover them, they have to have the treatments but they find they can’t afford it. Others forego treatment and die. Many die.

HR: You were the public relations person for Cigna. What was your job, in terms of the overall picture?

WP: My job description said my responsibility was to protect and enhance the company’s reputation. It’s very broad, and it encompasses a lot of things–handling crisis communications, situations.

In that category, I was the person who handled what we called “high-profile” cases, when someone was denied coverage for care, and it became a media event. I would be the person, along with my staff, who would deal with the reporters. We tried to explain the company’s point of view.

I dealt with financial matters, particularly with litigation. I dealt with reporters from the Wall Street Journal and other financial media when they announced earnings. So I had to know how these companies make money and how they met or didn’t meet Wall Street’s expectations.

I represented the company at the industry level. I worked with my peers at other insurance companies to plan PR strategy to defeat health care reform. Or try to shape reform to benefit industry.

HR: Did you ever think in the course of your work that you were hurting people?

WP: I didn’t. I wouldn’t let myself think that. On the contrary, I thought some of the things I was doing might actually benefit people.

For example, I would explain the p.r. consequences to the CEO of not overturning a denial when the media was involved. I would say, “If you don’t reconsider this, then this will become a significant p.r. problem.” From time to time, the company would say they’d reconsider, and agreed to pay. I would pat myself on the back and say I played some role in this person getting a life-saving procedure.

That’s rationalization. I think all of us rationalize, and I know I certainly did, and a lot of my fellow employees did. You look at what you do individually, and you think that maybe you contribute to someone getting the care they need, and acknowledge that your company does provide insurance benefits to a lot people, and hopefully those people who are insured get the coverage they need when they need it.

You don’t really think about the other practices of the industry. I didn’t think about it until I rose up the corporate ladder and was able to see things that these companies do to satisfy Wall Street’s expectations. It became abundantly clear to me that what I was doing was contributing to the number of people who don’t have insurance. It was only in the latter part of my career that I came to terms with that.

HR: One of the most interesting parts of your book was your reaction to Michael Moore’s movie Sicko. Can you talk about what you had to do to spin that? It must have been a huge task.

WP: It was. When I finally saw the movie I was affected by it. I think he did an exceptionally good job of knowing how to handle people who were wronged by insurance companies in a way that connected with us emotionally.

It really was a movie that explained in an effective way the problems we have with our health care system in this country–and also, the benefits of other systems. Other countries have been able to achieve universal coverage for their citizens.

Moore knows how to elicit emotional responses, and that happened to me. He was depicting something that few people really understood. I knew from my own personal experience that what he was writing about was true–from my own handling of a lot of these high-profile cases. And they’re not just occasional cases. These things happen all the time. It’s just the fact that most of them aren’t known.

HR: When I saw Sicko,
people in the audience were crying.

WP: It was as if you were sitting across from some of those people and hearing their stories. I’ve heard these stories face-to-face from people as I’ve traveled around, and you want to do something for them. I know that by making Sicko, Moore hoped to change the system so people don’t suffer like that anymore.

HR: So how did you handle the p.r. for Sicko?

WP: I had an obligation to understand the situations that he had in the movie that pertained to Cigna. There were two or three people who were covered by Cigna in the film. I had to figure out a way to explain why we did what we did to those folks in a very general way. I would always say, “I can’t talk about a particular individual or case because of federal privacy laws.”

My role was to say that we provide care for millions of people, and we have an effective way for people to appeal denials. So I more or less talked about process–about how we had a process to keep these things from happening.

HR: Can you discuss the influence of America’s Health Insurance Plans (AHIP) on the new health care legislation passed last year? How much influence did they have on the crafting of the law?

WP: An enormous amount of influence. AHIP made sure one of their CEOs was visiting the White House on a regular basis. Ron Willams of Aetna was there at least half a dozen times during the debate, meeting with the president.

HR: Behind closed doors?

WP: Yes, absolutely behind closed doors–at least, not public meetings. They weren’t all necessarily private meetings with the president, but they were with him and/or staff out of public view. They also have lobbyists who were responsible for crafting the legislation and making sure the industry’s points of view were in the bill.

Karen Ignagni, the head of AHIP, testified before Congress many times. They spent a lot of time on Capitol Hill, both testifying and lobbying.

HR: Is there any concern among AHIP members about the suffering their industry causes?

WP: If there is, it’s never discussed. I’ll speak for myself. I was in a lot of meetings. I never heard any acknowledgement that the industry played a role in the suffering.

There is a great deal of denial. The finger was pointed elsewhere. We’d say, “We’re not the reason why health care costs are so high.”

Also, we’d try to find other reasons why the number of uninsured was so high, other than the practices of the insurance industry. You spend an enormous amount of time looking at other potential reasons for people’s suffering.

HR: Like the pharmaceutical industry and the prices they charge for medication?

WP: Oh yes. Consolidation among providers was another one. As my former CEO would call it, “the real drivers of health care costs.”

HR: And the real drivers of health care costs are?

WP: Driven by other parts of the health care system. And by us.

If you believe the health care executives, all Americans are largely responsible for high health care costs, because we demand the best. We demand drugs we see advertised, we demand the latest technology, so we demand all these things without having any understanding of how much they cost. Or we don’t care how much they cost.

HR: What do you think about PPACA? Will it solve the health care crisis?

WP: It will not solve the health care crisis. It will begin to make a dent in it.

I’ve said the legislation is worth passing. There are a lot of flaws. Much of it was written by the health insurance industry to benefit health insurance companies–like the individual mandate, the requirement that we buy their product.

But it also makes some of their practices illegal. It does have consumer protections in there. It begins to close the “donut hole” for Medicare Part D. Parents can keep their kids on their policies until the age of 26. It will prohibit the industry from using pre-existing conditions [to bar people from insurance].

It does a lot of good things–but it doesn’t bring all of us into coverage and it does not do enough to end these egregious practices. It doesn’t do enough to reduce or control costs. In my view, the enactment of this reform is the “end of the beginning “of health care reform.

HR: They’ll still be able to deny coverage for medical treatment.

WP: Yes, they will. This legislation doesn’t affect that. For most people, it’s a “benefit decision.” The law doesn’t require these companies to cover everything the doctor recommends.

HR: Are you a supporter of single payer as proposed by Physicians for a National Health Program (PNHP)?

WP: I don’t talk about that too much. I try to stick to what I know. And I know a lot about what the insurance industry has done. I don’t pretend to know the ideal solution for the health care crisis. What I have said is it’s outrageous that Congress didn’t give single-payer a fair hearing. It never was debated. And it seems to work quite well for Canadians. They like it a lot.

Why don’t we look at how France has been able to achieve universal coverage? Why did we have a debate just looking at what we’ve got? Why don’t we look at something that’s more far reaching–I hate to use the word “radical”–but something that is different from system that is broken right now?

HR: It would mean the abolition of the insurance industry as we know it. Can you see that happening?

WP: I can see that happening. I can say I’d be in favor of that happening.

HR: What do you hope your book will do?

WP: I hope it will make people think. I hope it will open eyes. I hope people will see that it pulls the curtains back on how corporations behave, what they do to win, and why frankly it’s so hard to get meaningful reform. Why has it taken 100 years to get this far?

http://socialistworker.org/2011/02/10/liar-for-the-insurance-industry

Organizations of Faith for Single-Payer

Eleven faith-based organizations have passed resolutions in support of HR 676/Medicare for All so far.

In the summer of 2008, for example, the Presbyterian Church (USA), adopted a recommendation supporting national health care reform, calling for advocacy and education that pursues “the goal of obtaining legislation that enacts single-payer, universal national health insurance as the program that best responds to the moral imperative of the gospel.”

The United Methodists have called single-payer, the “Pure Alternative” to healthcare reform, and say that the, “United Methodist policy says ‘Yes’ to Jesus’ mandate that we move to a caring non-profit system that uses our money to cover everybody, not for profits, but for a single payer system that provides guaranteed quality healthcare for all.”

If your church or faith group wants to pass a resolution in favor of HR 676/single-payer, let us know. We’ll be happy to provide you with sample resolutions or more information.

Faith Endorsements for Medicare for All

Assembly of the Urban Caucus of the Episcopal Church
General Board on Global Ministries of the United Methodist Church
Presbyterian Health, Education and Welfare Association of the Presbyterian Church (USA)
Church Women United State Governments
Unitarian Universalist Association General Assembly
Presbyterian Church (USA)
Union for Reform Judaism
Ainsworth United Church of Christ of Portland, Oregon
The Network of Spiritual Progressives – Tikkun Magazine
United Church of Christ
Episcopal Church’s General Convention

Bill outlines governor's health care path

By Nancy Remsen
Burlington (Vt.) Free Press, Tue, Feb 8, 2011

MONTPELIER — The woman who Gov. Peter Shumlin hired to guide his health reform effort presented lawmakers Tuesday with the administration’s roadmap — an 80-page bill — leading to a consolidated, publicly financed system that would provide medical coverage to all Vermonters.

“We don’t think we have all the answers, but we think we are putting in front of you a solid proposal for moving forward with major, meaningful health reform,” Anya Rader Wallack, Shumlin’s special assistant on health reform, told members of House Health Care and Senate Health and Welfare committees. “We know you will find ways to change and improve it.”

Democratic legislative leaders embraced the bill as a framework they would use to speedily write their own version. House Speaker Shap Smith, D-Morristown, wants the House Health Committee to vote out a bill by the second week in March.

The proposal created plenty of unease — among lawmakers as well as special interest groups for businesses and hospitals.

Rep. George Till, D-Jericho, a doctor and member of the House Health Care Committee, said the bill asked Vermonters to agree to build a new system without knowing fundamental information such as how the system would be financed or how payments to providers would change.

Others who are anxious to see a single-payer system cheered the bill.

“I feel pretty positive about it,” Dr. Deb Richter of Montpelier said. “Everything in there I feel we can work with.”

The bill would move the state through three stages in four years to reach the target of a single-payer system. Planning would dominate the first stage that would commence in July, with the first structural changes taking place in 2014.

A new, independent Vermont Health Reform Board proposed to begin work later this year would be charged with developing ways to contain health costs by reforming the way doctors and hospitals are paid and setting budgets for health expenditures.

“We need to do that as soon as possible,” Wallack said.

In prepared remarks, Wallack acknowledged the legislation would scare some who are wary of change and disappoint others who want to move faster toward a single payer system.

Wallack asked all sides to “work with us to build a better system.”

She stressed Shumlin’s resolve concerning this initiative — in case anyone thought the administration might give up because of the hurdles ahead.

“Make no mistake, we are committed to reforms that get us as many of the benefits of a single payer as possible under current federal law, and to asking for a waiver from federal law so that we can gain the full benefits of a single payer when that option is available,” she said. “We are committed to this goal and we are giving you a plan for how we will reach it.”

Concerns

Betsy Bishop, president of the Vermont Chamber of Commerce, agreed with Till that the bill left critical decisions for the future. The proposal says the administration would have until January of 2013 to deliver a plan for financing a publicly run system.

“It is difficult to build a system and say we will talk about how to pay for it at a later date,” Bishop said. “I hope to persuade them to have that conversation this year.”

Sen. Kevin Mullin, R-Rutland, noted that many important and potentially controversial decisions wouldn’t be up for discussion this year. They are given to the Vermont Health Care Reform Board, a sixmember panel that the governor would appoint.

“We will see if the Legislature is willing to give up all that authority,” Mullin said.

Bea Grause, president of the Vermont Association of Hospital and Health Care Systems, complained about the Shumlin administration’s proposal to increase a tax on hospitals and reduce reimbursements under a state health insurance program — all to help balance next year’s budget.

“We can’t really separate this bill from the budget,” Grause said. “We are willing to build a better mouse trap,” she continued, “but the state doesn’t have a good track record.”

Support

House Health Care Committee Chairman Mark Larson, D-Burlington, is the sole sponsor of the Shumlin bill in the House. He sees it as the catalyst for a decision about the future of health care in Vermont.

“We need to make a decision about where we are going,” Larson said. “Dr. Hsiao started the conversation,” Larson said, referring to William Hsiao, a Harvard researcher the Legislature hired, who reported two weeks ago that a singlepayer system was the best way to fix the state’s broken health-care system.

“The administration moved that conversation forward when it provided one answer on how to get there.” Larson said.

Cassandra Gekas, health care advocate with the Vermont Public Interest Research Group, called the introduction of the bill “a historic moment for Vermont” because it set out “the most ambitious plan to implement federal health care reform in the nation and will position Vermont as a leader.”

James Haslam, director of the Vermont Workers’ Center that has campaigned to win support for the idea that health care is a human right, said introduction of the bill signaled how much had been accomplished.

His organization, however, is preparing for a fight to win passage of Shumlin’s plan.

“The people who don’t want to move in this direction have a particularly loud voice,” Haslam said. “We are pushing more of the grassroots organizing that got us here. That is going to be really critical.”

Contact Nancy Remsen at 578-5685 or nremsen@bfp.burlingtonfreepress.com

Health reform bill

The Shumlin administration released its health-care reform legislation Tuesday. The bill sets out a three-step process to move the state to a single-payer health system over four years. Here’s the timeline:

Stage one

– After July 1, establish a six-member, independent board to set cost containment targets, create system-wide budgets, review state regulators’ decisions on insurance rates, pursue reforms in the way hospitals and doctors are paid to focus on outcomes rather medical procedures.

– Effective July 1, authorize and begin planning a health benefit exchange, a “mar­ketplace” where Vermonters would be able to compare health insurance coverage. Al­though the exchange might offer multiple in­surance plans, the bill proposes the ex­change would require a common claims process and other administrative simplifica­tion.

– By Jan. 15, 2013, deliver to Legisla­ture details of how the exchange would ac­commodate Medicaid, Medicare, private in­surance, associations, state and local government workers and teachers. Also de­liver to lawmakers two financing plans — one if the state receives federal waivers and can set up a single-payer system in 2014 and one if the state doesn’t receive waivers.

Stage two

– On Jan. 1, 2014, launch Vermont Health Benefit Exchange, with coverage ex­tended to employers with fewer than 100 workers, plus government workers, teachers and Vermonters on Medicaid, Medicare and other state health insurance programs. Pri­vate insurers would be required to sell their products through the exchange. Federal tax credits would be available to reduce the price of coverage for uninsured individuals up to 400 percent of the federal poverty level.

($43,320 for an individual.)
Stage three

– 2014-17: As soon as allowed under federal law or by a waiver, launch Green Mountain Care, a publicly financed health in­surance program offering “essential” benefits to all Vermont residents. Health care would no longer be connected to employment.

What they’re saying

“We are asking everyone involved in this discussion to step back and look at the big picture and work with us to build a better system. We need to cover everyone and control costs. This can’t be done overnight, and it can’t be done recklessly, but it must be done.”
— Anya Rader Wallack, special assistant for health care to Gov. Peter Shumlin

“It is difficult to build a system and say we will talk about how to pay for it at a later date. I hope to persuade them to have that conversation this year.”
— Betsy Bishop, president of the Vermont Chamber of Commerce

“It is truly a historic moment for Vermont. The governor has released a comprehensive health reform bill … that is by far the most ambitious plan to implement federal health care reform in the nation and will position Vermont as a leader.”
— Cassandra Gekas, health care advocate, Vermont Public Interest Research Group

“It creates a starting point. … I don’t think it does much but create a panel that will make all the decisions. Now we will see if the Legislature is willing to give up all that authority. I’m trying to be optimistic that we do more good than harm.”
— Senate Assistant Republican Leader Kevin Mullin of Rutland

“This is a road map. It is up to us to make sure there are no detours we need to take.”
— Senate President Pro Tempore John Campbell, D-Windsor

http://www.burlingtonfreepress.com/article/20110208/NEWS03/110208010/Bill-outlines-governor-s-health-care-path

15 Executives Who Get Paid Millions To Deny You Health Care Coverage

By Business insider, Wall St. Cheat Sheet
March 20, 2010

The business model of American health insurers is basically: try to get healthy customers as clients, and then resist as long as possible when it comes to paying out claims.

That’s actually not an indictment or a criticism.

It’s just the way our system works, and it’s screwed up.

Whatever you feel about Obamacare, you probably think our current system needs reform in some sense.

Below we present the posterboys of the problem. Top healthcare CEOs making millions, leading companies that deny you coverage.

Herbert Fritch, HealthSpring

2008 revenue: $2.2 Billion
Y/Y change: 39.0%

CEO compensation: $800,000

HealthSpring earnings rose by 33% in the Q409 thanks to a 26 percent increase in premiums, according to BizJournal.

Said Fritch: “We are pleased with out operating results in 2009. Moving to 2010, our Medicare Advantage membership has increased despite the fact that we reduced benefits across many of our markets in response to Medicare rate cuts.”

Source: Fortune

Jay Gellert, Health Net

2008 revenue: $15.4 Billion
Y/Y change: 8.9%

CEO compensation: $1.34 Million

Health Net increased the premiums of just one small business in New Jersey 124% in 2010. The company blamed the changes on changing demographics at the small business, according to WSJ.com.

Source: Forbes and Fortune

J. Mario Molina, Molina Health Care

2008 revenue: $3.1 Billion
Y/Y change: 24.9%

CEO compensation: $2.2 Million

Molina boosted profits more than any other Michigan HMO in 2008, according to Crain’s.

Source: Fortune

Allen Wise, Coventry Health Care

2008 revenue: $11.9 Billion
Y/Y change: 20.6%

CEO compensation: $2.6 Million

3.2% of Coventry’s revenues end up as pure profit for the company, according to Fortune.

Source: Forbes

Richard Barasch, Universal American

2008 revenue: $4.6 Billion
Y/Y change: 53.5%

CEO compensation: $3.5 Million

After taking a pay cut from 2006 to 2007, Barasch more than doubled his total compensation for 2008, jumping up from $1,564,293 in 2007, according to FierceHealthCare.

Source: Fortune and Forbes

Angela Braly, WellPoint

2008 revenue: $61.2 Billion
Y/Y change: 0.2%

CEO compensation: $4.07 Million

WellPoint has given on $6.2 million towards helping uninsured individuals find insurance and receive care, only one-fifth of what was promised according to the LA Times.

Source: Forbes and Fortune

Michael McCallister, Humana

2008 revenue: $28.9 Billion
Y/Y change: 14.5%

CEO compensation: $4.76 Million

CEO McCallister considers the use of the company’s aircraft part of his compensation, including the use of the jet for family, according to FierceHealthCare.

Source: Fortune and FierceHealthcare

Stephen Hemsley, UnitedHealth Group

2008 revenue: $81.2 Billion
Y/Y change: 7.6%

CEO compensation: $5.03 Million

United Health has raised premiums on the town of Weston, Connecticut 23.5%. The town only budgeted for a 5% increase, according to The Weston Forum.

Source: Forbes and Fortune

James Carlson, Amerigroup

2008 revenue: $4.5 Billion
Y/Y change: 14.5%

CEO compensation: $5.29 Million

Amerigroup was sued in 2008 for excluding pregnant women and unhealthy patients from Medicaid, according to Reuters. The insurer paid $225 million in a settlement.

Source: Fortune and FierceHealthCare

CFO Joseph Zubretsky, Aetna

2008 revenue: $31.0 Billion
Y/Y change: 12.1%

CFO compensation: $5.57 Million

Aetna has boosted premiums on small businesses in New York 20% this year, according to the New York Post.

Source: Fortune

CFO George Mikan III, UnitedHealth Group

2008 revenue: $81.2 Billion
Y/Y change: 7.6%

CEO compensation: $6.531 Million

UnitedHealth Group has premium increases of 13-16% in Rhode Island in 2009 alone, according to HealthReform.gov.

Source: Fortune

Heath Schiesser, WellCare Health Plans

2008 revenue: $6.5 Billion
Y/Y change: 21.0%

CEO compensation: $8.1 Million

WellCare was subject to a government probe after going public in 2007 on the way it paid executives by providing equity up front, a low salary, and further equity in yearly compensa
tion. This hindered its ability to hold on to top talent, according to Tampa Bay Business Journal.

Source: Fortune and Tampa Bay Business Journal

Michael Neidorff, Centene

2008 revenue: $3.5 Billion
Y/Y change: 20.1%

CEO compensation: $8.77 Million

Following news that Centene had decreased benefits for the elderly and disabled, shares jumped 9%, according to Forbes (2008).

Source: Fortune and FierceHealthCare

H Edward Hanway, Cigna

2008 revenue: $19.1 Billion
Y/Y change: 8.4%

CEO compensation: $10.27 Million

Cigna is trying to convince its customers to fight for lower prices from the hospitals they visit, according to WSJ.com.

Source: Forbes and Fortune

Ronald A Williams, Aetna

2008 revenue: $31.0 Billion
Y/Y change: 12.1%

CEO compensation: $38.12 Million

In order to increase profits year on year from 2009 to 2010, Aetna plans to raise premiums to the point where up to 650,000 people would have to drop their coverage in 2010, according to the Huffington Post.

Source: Forbes and Fortune

http://wallstcheatsheet.com/breaking-news/15-executives-who-get-paid-millions-to-deny-you-health-care-coverage.html

Tiered and limited networks deprive patients of choice

Plans steer patients to lower-cost hospitals

By Liz Kowalczyk
The Boston Globe
February 10, 2011

Hundreds of small businesses have signed up in the past month for a new Blue Cross Blue Shield health insurance plan that charges employees hefty fees for seeking care at more expensive hospitals, in an effort to steer them to lower cost care.

The popularity of the plan — Blue Cross Blue Shield of Massachusetts says it is the fastest launch ever of a new product — is the latest sign that the once radical idea has been embraced as a way to control soaring health care costs, even as pricier hospitals warn of a possible backlash and cuts in services.

Other Massachusetts insurers also report brisk business in plans that offer lower premiums in exchange for limits on use of high-cost care. The plans either charge consumers extra for receiving care from popular but expensive hospitals or doctors, or bar them altogether from seeking treatment at those institutions and practices.

The Blue Cross Hospital Choice plan, which went on sale last month, charges members, for example, an extra $1,000 for an inpatient stay or outpatient surgery, and $450 more for an MRI, at 15 higher-cost hospitals, including Massachusetts General and Brigham and Women’s hospitals, Children’s Hospital Boston, and UMass Memorial Medical Center in Worcester.

In Massachusetts, insurers traditionally have offered wide-open networks, meaning members can check into a pricey teaching hospital to deliver a baby rather than go to a less expensive community hospital, and can schedule MRIs in a hospital outpatient department, even when freestanding clinics provide similar service for less money. But amid intense scrutiny into why health care costs in Massachusetts are climbing 7.5 percent a year, “tiered” and “limited” networks have emerged as an immediate way to control costs.

But executives at Partners HealthCare, the parent organization of Massachusetts General and Brigham and Women’s, said that while these new policies are making providers more sensitive to price, they have pitfalls.

Dr. Thomas Lee, head of Partners’ physician group, said some people will become seriously ill and realize they can’t go to, or can’t afford, their first-choice hospital.

http://www.boston.com/business/healthcare/articles/2011/02/10/plans_steer_patients_to_lower_cost_hospitals/?page=full

Comment: 

By Don McCanne, MD

Although private insurers in California have led the way in innovative product changes in an attempt to keep insurance premiums competitive (at the great cost of impairing the protection afforded by their products), Massachusetts is now serving as the laboratory for what we might expect under the Affordable Care Act (ACA), since Massachusetts got a jump start on the ACA model.

What determines which insurance policy people will select for themselves or for their families? The premiums or the benefits? If they are relatively healthy, which most people are, they may look at both, but the decision will most likely come down to choosing a plan with a premium that they can barely afford over a plan with a premium that is totally beyond their means. They are less likely to study the fine print on the benefits that states, for instance, the less expensive plan uses “tiered” or “limited” networks.

As this Boston Globe article indicates, the financial penalties for using a higher tiered facility can be very severe. And limited networks? The plan pays nothing outside of the network. Plan-approved provider networks have been used by the insurers as a tool to leverage the negotiations for provider rates. The expansion in the use of tiered or limited networks now uses the patient as a tool – contrary to their own interests – in an attempt to reduce spending so that premiums remain affordable, if only barely so.

Tiered and limited plans are growing rapidly in Massachusetts. Some of the most prestigious academic medical centers in the nation are being targeted and could face serious budget constraints. In using these tools of the marketplace, financial decisions are not being made based on what services should be provided and paid for; instead they are being made on the basis of what will best support the market of private insurance plans. As a result, serious damage could be inflicted on the infrastructure of our health care delivery system.

Imagine Medicare engaging in this behavior. You really can’t. Although always a work in process, Medicare includes the entire health care delivery system as its network, and reimburses at rates that have some semblance of maintaining the financial viability of the delivery system, while reining in waste. It can do better, and would do so if it were purchasing essentially all care provided in the United States, through an improved Medicare for all. The multiple tools of a single payer system would dramatically improve the efficiency of our health care purchasing.

A Better Approach to Health Care

As the current health law comes under attack and our national deficit continues to grow, single-payer plans are gaining more and more interest.

By Margaret Flowers, MD
YES! Magazine, Feb 08, 2011

Last month, fulfilling a campaign promise, Republicans in the House of Representatives voted to repeal “Obamacare.” The vote was primarily a symbolic gesture. House leadership knows repeal will not survive a vote in the Senate or a Presidential veto. But the Republican leadership is likely to attempt steps that would lead to a de facto repeal of the health law.

One of the main strategies for weakening the law will be to prevent funding to key elements and programs—particularly of those having to do with enforcing regulations on the insurance industry.

We can also expect Republican members of Congress to promote “triggers,” which change the law if certain goals are not met. These changes will drive employers to stop offering health insurance to employees and instead offer fixed contributions that employees can use to purchase health insurance on the open market. As premiums rise, more people will be forced to purchase skimpier policies, leaving them unprotected in times of need.

Republicans also advocate for the opening of the health insurance market across state lines in the belief that this will create competition that reduces the cost of health insurance. In truth, in order to make a profit, health insurers compete to insure the healthiest patients and to avoid paying for care. The result will be a race to the bottom.

Health insurance regulations—which control, for example, what services insurers must cover, or how many physicians they must allow patients to choose between—were put into place to protect patients. Regulations vary by state, meaning that, just as corporations move their headquarters to states with lower taxes, health insurers will base themselves in states with fewer regulations. Premiums may become cheaper, but at the cost of higher out-of-pocket costs and lower quality benefits that leave patients unable to receive needed care or forced into bankruptcy by an unexpected illness or accident.

Such changes shift more and more of the cost of care onto individual patients—particularly those who have the greatest needs. This is exactly the wrong approach if our goal is the creation of a system that improves the health of our population and controls our soaring health care expenditures.

The United States is the only industrialized nation that does not have a coherent health system and that allows investor-owned corporations to finance and provide health services. As a result, we have the highest health care costs in the world but relatively poor outcomes—not to mention a growing number of people who can’t afford the care they need.

We have the cruelest form of health care rationing in this nation: rationing based on the ability to pay. Except for those in the very highest income brackets, we are all at risk of personal bankruptcy due to a health crisis. In fact, the U.S. is unique in that most personal bankruptcies are due to medical illness or medical costs—and more than three-fourths of those who experienced medical bankruptcy were insured.

The good news is that it doesn’t have to be this way. As the weakening of the federal health care law begins, a nationwide effort for more substantial reform—a national single-payer system, also known as improved Medicare for All—is taking place. Health professionals and advocates around the nation are actively engaged in educating, organizing, and agitating to promote Medicare for All. There are tremendous opportunities at the state and national level to pass a single payer system.

As the current health law falls apart and our national deficit continues to grow, single-payer plans are gaining more and more interest. More than 20 state legislatures have either passed single payer health bills or are in the process of creating such bills. California has passed a single payer bill twice, only to have it vetoed. Advocates are working to pass the law once again this year. Vermont is in the process of putting together legislation setting up a system similar to single-payer; legislators expect to pass their bill this year. At the federal level, single-payer bills will be introduced in both the House and Senate.

Our current health spending is enough to pay for high quality comprehensive care for everyone if we switch to a single risk pool that is transparent and publicly accountable.

Dr. Margaret Flowers wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Dr. Flowers is a congressional fellow with Physicians for a National Health Program and a pediatrician based in Baltimore.

Tiered and limited networks deprive patients of choice

Plans steer patients to lower-cost hospitals

By Liz Kowalczyk
The Boston Globe
February 10, 2011

Hundreds of small businesses have signed up in the past month for a new Blue Cross Blue Shield health insurance plan that charges employees hefty fees for seeking care at more expensive hospitals, in an effort to steer them to lower cost care.

The popularity of the plan — Blue Cross Blue Shield of Massachusetts says it is the fastest launch ever of a new product — is the latest sign that the once radical idea has been embraced as a way to control soaring health care costs, even as pricier hospitals warn of a possible backlash and cuts in services.

Other Massachusetts insurers also report brisk business in plans that offer lower premiums in exchange for limits on use of high-cost care. The plans either charge consumers extra for receiving care from popular but expensive hospitals or doctors, or bar them altogether from seeking treatment at those institutions and practices.

The Blue Cross Hospital Choice plan, which went on sale last month, charges members, for example, an extra $1,000 for an inpatient stay or outpatient surgery, and $450 more for an MRI, at 15 higher-cost hospitals, including Massachusetts General and Brigham and Women’s hospitals, Children’s Hospital Boston, and UMass Memorial Medical Center in Worcester.

In Massachusetts, insurers traditionally have offered wide-open networks, meaning members can check into a pricey teaching hospital to deliver a baby rather than go to a less expensive community hospital, and can schedule MRIs in a hospital outpatient department, even when freestanding clinics provide similar service for less money. But amid intense scrutiny into why health care costs in Massachusetts are climbing 7.5 percent a year, “tiered” and “limited” networks have emerged as an immediate way to control costs.

But executives at Partners HealthCare, the parent organization of Massachusetts General and Brigham and Women’s, said that while these new policies are making providers more sensitive to price, they have pitfalls.

Dr. Thomas Lee, head of Partners’ physician group, said some people will become seriously ill and realize they can’t go to, or can’t afford, their first-choice hospital.

http://www.boston.com/business/healthcare/articles/2011/02/10/plans_steer_patients_to_lower_cost_hospitals/?page=full

Although private insurers in California have led the way in innovative product changes in an attempt to keep insurance premiums competitive (at the great cost of impairing the protection afforded by their products), Massachusetts is now serving as the laboratory for what we might expect under the Affordable Care Act (ACA), since Massachusetts got a jump start on the ACA model.

What determines which insurance policy people will select for themselves or for their families? The premiums or the benefits? If they are relatively healthy, which most people are, they may look at both, but the decision will most likely come down to choosing a plan with a premium that they can barely afford over a plan with a premium that is totally beyond their means. They are less likely to study the fine print on the benefits that states, for instance, the less expensive plan uses “tiered” or “limited” networks.

As this Boston Globe article indicates, the financial penalties for using a higher tiered facility can be very severe. And limited networks? The plan pays nothing outside of the network. Plan-approved provider networks have been used by the insurers as a tool to leverage the negotiations for provider rates. The expansion in the use of tiered or limited networks now uses the patient as a tool – contrary to their own interests – in an attempt to reduce spending so that premiums remain affordable, if only barely so.

Tiered and limited plans are growing rapidly in Massachusetts. Some of the most prestigious academic medical centers in the nation are being targeted and could face serious budget constraints. In using these tools of the marketplace, financial decisions are not being made based on what services should be provided and paid for; instead they are being made on the basis of what will best support the market of private insurance plans. As a result, serious damage could be inflicted on the infrastructure of our health care delivery system.

Imagine Medicare engaging in this behavior. You really can’t. Although always a work in process, Medicare includes the entire health care delivery system as its network, and reimburses at rates that have some semblance of maintaining the financial viability of the delivery system, while reining in waste. It can do better, and would do so if it were purchasing essentially all care provided in the United States, through an improved Medicare for all. The multiple tools of a single payer system would dramatically improve the efficiency of our health care purchasing.

Vermont Gov. Proposes Single-Payer Health Plan

By Aimee Miles
Kaiser Health News, Feb 08, 2011

Vermont Gov. Peter Shumlin, who was elected last November after promising to reform health care in the state, unveiled a bill  Tuesday that would abolish most forms of private health insurance and move state residents into a publicly funded insurance pool.

His much anticipated proposal lays out a strategy that leaves a number of key details—including how to pay for the system—open for debate.

Under Shumlin’s “single-payer” system, Vermont residents would receive health benefits paid for by the state, regardless of their employment status or income. The plan is designed to help stem rising health costs, which state officials say have become unsustainable.

“Health care costs are climbing at a rate of more than 12 times the growth of the Vermont economy, and we’re not getting the best value for our money,” Shumlin said in a prepared statement. “The time for change has come.”

Former Vermont governor Howard Dean, who unsuccessfully sought to institute a single-payer system in 1994, praised the effort.

“It makes a lot of sense and it’ll save them a ton of money,” he said in an interview.

Some Democrats advocated for a national single-payer plan when Congress was debating the federal health overhaul that passed in March, but that plan was never considered politically viable because of widespread opposition and concerns about cost. Even efforts to offer a public option insurance plan that would compete against private insurers for consumers’ business failed after conservative Democratic senators refused to support it. Instead, the health law opted for tighter regulation of existing private plans, with a mandate that almost every American purchase health insurance.

Skeptics have questioned whether Shumlin’s reform agenda is feasible.  Lt. Gov. Phil Scott, a Republican, said before Shumlin’s bill was released that he had received letters from a number of state residents who have concerns.

“They’ve heard about the bill and they’ve heard the thoughts, but the devil’s in the details, and they’d like to see what it means to them,” Scott said.

The governor’s plan calls for creation of a health reform board this year to make recommendations for the plan. A full single-payer plan would not be operational before 2014.

Shumlin, a Democrat, has garnered some support for a health overhaul in the legislature, where Democrats overwhelmingly control both houses. The legislature had already commissioned its Harvard economist William Hsiao, who helped design Taiwan’s single-payer system, along with MIT economist Jonathan Gruber and Vermont policy consultant Steve Kappel to provide recommendations on how to reform Vermont’s health car system. Shumlin’s plan takes many of those recommendations into account.

But Republicans in the state have raised concerns and business groups have not yet signed on.  The state also will need to clear a series of administrative hurdles at the federal level.

The Need For Waivers

Shumlin’s strategy seeks to take advantage of federal resources that will kick in under the new health law in 2014. By that time, every state is expected to have its own “health exchange,” an online marketplace where consumers can shop for private health plans that meet new federal standards. Shumlin’s proposal involves using federal funding to build and exchange infrastructure that could later be converted to support the single-payer system.

But because a single-payer plan is not sanctioned in the health law, Vermont would also need to secure waivers from the federal government in order to move forward with its plans.

“At each step of the way, we may be dealing with constraints as far as federal law, and march forward,” said Anya Rader Wallack, Shumlin’s special assistant on health care reform.

The federal health law allows states such as Vermont to request waivers to opt out of many of its requirements starting in 2017, so long as they present an alternative that would achieve the same goals—broader health coverage for more people—with equal or greater success.

But Vermont legislators, fearing that support could shift against single-payer during the next election cycle, don’t want to wait another six years to deliver their reforms. They’re hoping they’ll be able to opt out of the health care law sooner.

That puts Vermont in a delicate position: for now, at least, the state will need to work out a plan to comply with the federal health law while simultaneously laying the groundwork for its own plan.  To make matters more complicated, Vermont officials would also have to work with federal officials to make critical payment adjustments within Medicare, the federal health program for seniors and disabled individuals.

Funding Is An Open Question

The governor’s team has not yet devised a way to pay for the new system. They plan to return to the legislature in 2013 with proposals, according to Wallack.

Hsiao and colleagues had earlier recommended that the state levy a payroll tax divided between employers and employees—an idea that raised alarm bells with small business owners.

Among them is Scott, who also owns a construction company. “I understand some of the arguments for this type of system was to take the burden off employers and I guess I’m not seeing where that burden is being moved,” Scott said.

Rick Rayfield, who owns a bookstore in Waitsfield, is tentatively in favor of a single-payer system—but wants to see how the legislature hammers out key details.

“It seems to me we’re trying to develop a philosophy about who pays for healthcare without asking ourselves exactly what we’re willing to pay for,” he said.  “We’re being asked if a single-payer system is something we would like without saying what we’re going get for it.”

Still, Rayfield sees some advantages. “I guess I’m so overwhelmed by the stupid complexity of the (current) system as it is that I just adore the simplicity of the single-payer plan,” he said.

Supporters of the change say the need is dire. They point to statistics showing that health spending more than doubled in Vermont between 1992 and 2009. Shumlin’s office has estimated the state would save $500 million in the first year of a single-payer plan.

That would come from reduced insurance marketing and administrative costs. Hospitals and physicians also lose time and money in filling out claims information for every private health plan they bill.

Shumlin’s plan recommends paying physicians and hospitals in a way that encourages them to provide higher quality care without providing unnecessary services.

“There’s a lot of smart things the governor’s doing,” Dean said. “The smartest thing of all is that he’s 
 saying, ‘We’re not going to come up with funding mechanism until we change the payment system.'”

http://www.kaiserhealthnews.org/Stories/2011/February/08/vermont-governor-shumlin-single-payer.aspx

Big employers shift more health costs onto employees

By Claudia Fegan, M.D.
Hyde Park Herald (Chicago), Feb. 9, 2011

Many residents of Hyde Park work for large employers, the University of Chicago being just one example among several. In the wake of the new health law, what benefit changes can workers at these large companies expect to see?
 
A survey of 72 big employers like IBM, Boeing, General Electric, FedEx and others conducted last fall showed that 63 percent of these companies plan to shift more of their health premium costs to employees in 2011, and that 46 percent expect to raise the maximum out-of-pocket costs (co-pays, co-insurance and deductibles) that their employees are expected to bear, including for prescription drugs.
 
In other words, big employers are shifting more of the financial burden for health care onto the shoulders of their employees. Significantly, the new health law doesn’t prohibit such hikes on workers’ share of health costs, and in fact perpetuates the idea that “cost-sharing” by employees is a good thing – despite solid evidence to the contrary.
 
There are some exceptions to this rule, however. Some preventive services like mammograms or colonoscopies will now require no patient co-pays or deductibles. (Some employers already offer this benefit, although studies show most workers don’t avail themselves of such preventive services when they’re offered.)  And patients will not incur a financial penalty if they see an obstetrician or a pediatrician without a referral.
 
But, in general, employees at large companies will be asked to pay higher costs for their care, and will see their wages negatively impacted by employers who will say that the rising costs of health benefits prevent them from giving workers pay raises. Much hinges, of course, on the individual employer and whether your wages and benefits are protected by a union contract.
 
There’s more. Under the new law, better-quality health plans face the threat of being hit with a punitive 40 percent excise tax starting in 2018. This is the so-called Cadillac tax on employers who offer decent health benefits. Because the “Chevy” plans of today are likely, thanks to rising health prices, to be the Cadillac plans of tomorrow, this could easily provoke many big employers to dump their health benefits altogether and to force workers to seek even costlier coverage in the proposed insurance exchanges.
 
Some beneficial parts of the new law include the removal of lifetime caps on benefits (annual limits will stay in place in many cases, however, until 2014), the eligibility of children under age 26 to remain on their parent’s insurance policy, and new restrictions on the ability of private insurers to deny coverage for persons with pre-existing medical conditions.
 
It’s fair to say that the new health law faces an uncertain future. Most big employers take it for granted that the law will survive efforts to repeal it or to declare it unconstitutional, and they are acting accordingly. And in fact most big companies are quite comfortable with it, as are investors who hold shares in health-related companies. They know that the law builds upon the status quo, where private health insurers and Big Pharma hold commanding positions in our system and where profits will still flow into the health industry.
 
Unfortunately, it’s precisely because the private insurers remain in the driver’s seat that we will suffer from ever-rising costs, from patients putting off needed care because they can’t afford it, and from the squandering of valuable health dollars on excessive paperwork. The result: even though the U.S. spends more per capita than any other nation on earth, our medical outcomes will remain far behind other industrialized nations.
 
I favor a system of financing care known as single-payer national health insurance, an improved Medicare for all. Under a single-payer plan, everyone would be covered, there would be no co-pays or deductibles, and everyone would have free choice of physician and hospital. A one-payer system’s bargaining clout would help us contain costs.
 
Vermont and some other states are taking a look at shifting to a single-payer system. Illinois should do likewise, as should Congress.
 
Claudia Fegan, M.D., is associate chief medical officer for the Ambulatory and Community Health Network for the Cook County Bureau of Health Services. She resides in Hyde Park. [This article was originally published under the headline “My thoughts on health care.”]

Rationing is not the only alternative

By DR. RALPH S. BOVARD
Star Tribune, Feb. 7, 2011

“Of all the forms of inequality, injustice in health care is the most shocking and inhumane.”

THE REV. MARTIN LUTHER KING JR.

In a recent commentary (Opinion Exchange, Jan. 23), Dr. Virginia Dale told readers that they must choose between universal health insurance and rationing.

As a physician, I agree that we must get health care costs down if we’re going to achieve universal coverage, but I strongly disagree that the only way to do it is to ration.

There is another viable and proven option: a single-payer or regulated multipayer health care system, such as exists in every nation in the Organization for Economic Co-operation & Development except the United States and Mexico.

The average OECD nation spends 6 percent to 10 percent of GDP on health care; we spend 17 percent. Their per-person spending averages $3,000 to $5,000 a year, compared with $8,000 in the United States.

We could save huge sums — more than enough to insure the uninsured — by cutting the administrative waste and executive profit in our system, and by collective bargaining to lower the price at which drugs, devices and medical services are sold in this country.

The true “elephant in the room,” to use Dale’s metaphor, is the fact that our health care system has been “privatized” by an insurance industry more intent on lining its pockets than on ensuring that the American people get the public service and care that they pay for.

HMOs reap a hugely profitable business by denying and limiting care (a more severe form of rationing than exists in any other OECD nation) and by taking upward of 20 percent from every premium dollar and even tax-funded programs to pay excessive salaries to people who provide no patient care whatsoever.

The 80 percent they are obligated to spend on your health care is called their medical loss ratio. Nice, huh?

In a recent survey, 23 percent of Americans felt they were inappropriately denied care, compared with 4 percent of Canadians.

It was revealing to look at the political cartoons in the same Opinion Exchange section in which Dale’s commentary appeared.

One showed an American with a letter labeled “DENIED” and a caption stating: “50% of all Americans under 65 have preexisting medical conditions that may prevent them from getting insurance … .”

The next image showed a smirking lawmaker in his Washington office with his feet up. The caption: “100% of the 249 congressmen voting to repeal health care have their health care plan paid for by those same Americans … .”

And that is the truth.

The more somber note is that even if the American depicted in that cartoon has health coverage, with the loss of a job or the onset of a major illness that causes the loss of health benefits, he or she may easily join the millions each year who are bankrupted by medical bills.

That doesn’t happen under universal coverage or a single-payer system.

Providing universal health care is not socialistic. It is the pooling of resources by a highly ordered social structure to provide for the common good. Some call it civilization.

Think about it: This is how we fund all of our public services, including fire, police, water, education, libraries, sewage, parks and recreation, and highways. Health care would seem the most essential of public services.

Why do some people call it “socialized” (like it is a dirty word) only when we apply the term to medical care, but not to the other public services that we fund and use daily?

Tommy Douglas, who was voted the “Greatest Canadian” in 2005, nearly 20 years after his death, for bringing a universal health care system to his nation, was a humble clergyman dedicated to the importance of economic democracy and the “social gospel.”

If only our politicians had an ounce of his moral integrity and commitment to serving the nation’s best interests.

It is highly misleading to tell the public that our choice is between continued high numbers of uninsured people or rationing.

Our choice is continued high numbers of the uninsured vs. cutting the enormous administrative waste and corporate profit out of our system with a single-payer system that allows us to lower the prices we pay for medical services, drugs and devices to levels paid in other countries.

As taxpayers and voters, we need to demand accountability, and we are not getting it from our current HMO system. The industry has had more than 20 years to get it right and has failed miserably to do so.

 We are getting fleeced. As Paul Wellstone said: “We all do better when we all do better” — not when the CEOs and executives of medical care organizations do obscenely better at the expense of our national health.

Ralph S. Bovard is a steering-committee member of Physicians for a National Health Program-Minnesota Chapter.

http://www.startribune.com/opinion/commentary/115522679.html?elr=KArksc8P:Pc:U0ckkD:aEyKUiD3aPc:_Yyc:aULPQL7PQLanchO7DiUr