PNHP

Blue Shield of California's rate hikes

Blue Shield of California's rate hikes

Blue Shield of California seeks rate hikes of as much as 59% for individuals

By Duke Helfand
Los Angeles Times
January 5, 2011

Another big California health insurer has stunned individual policyholders with huge rate increases — this time it’s Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

http://www.latimes.com/health/healthcare/la-fi-insure-rates-20110106,0,6975599.story

And…

Statement of HHS Secretary Kathleen Sebelius on Blue Shield of California’s proposed rate increase

U.S. Department of Health and Human Services
January 6, 2011

“The people of California have a right to be concerned when they see this kind of rate increase month after month. We have reached out to California Insurance Commissioner Dave Jones and know he is doing everything in his power to help consumers. We stand ready to assist him and the people of California in any way that we can.”

http://www.hhs.gov/news/press/2011pres/01/20110106b.html

And…

Statement by Blue Shield of California

Blue Shield of California
January 6, 2011

The rate increases reported today cover a period of more than one year and have almost nothing to do with the federal health reform law. These rates reflect trends that were building long before health reform. Our individual market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy. Health reform will help slow down this trend by expanding coverage, which will keep healthier people in the system, and through quality and cost containment initiatives such as the Independent Payment Advisory Board, Center for Medicare and Medicaid Innovation, Patient-Centered Outcomes Research Institute and other incentives for prevention and coordinated health care.

Even with these rate increases, Blue Shield of California expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011. These new rates meet the federal requirement that 80 percent of premiums are spent on healthcare expenses.

https://www.blueshieldca.com/bsc/newsroom/pr/statement_rates_010611.jhtml

Comment:

By Don McCanne, MD

Last year California’s for-profit Anthem Blue Cross, a division of WellPoint, enraged everyone when they attempted to raise premiums as much as 39 percent. In contrast, Blue Shield of California is a non-profit insurer attempting to compete in a market in which the rules are established by investor-owned insurers, yet they are now calling for premium increases as high as 59 percent. As a provider or a patient, it is difficult to tell the California Blues apart.

That said, the brief statement released by Blue Shield of California explains the reasons for the increases: higher provider prices, increased utilization, and a decline in enrollment in a bad economy resulting in spiraling premiums due to adverse selection. In spite of these premium increases, Blue Shield expects to lose tens of millions of dollars on its individual health plans.

These premium increases are intolerable, but is Blue Shield really to blame? Keep in mind that the average working family of four now uses over $18,000 worth of medical care (Milliman Medical Index), and Blue Shield is trying to sell a product that covers those costs plus its own administrative expenses. With insurer administrative costs at 20 percent for the individual market, that’s about $22,500 that the premium would have to be. To lower the premium, costs are shifted directly to the family through deductibles, co-payments, coinsurance, and paring of benefits, but how much in direct costs can the family bear when median household income is about $50,000?

Blue Shield is facing an impossible situation. They cannot create a product that has both affordable premiums and adequate protection against out-of-pocket medical expenses.

That is why the Patient Protection and Affordable Care Act provides income-indexed subsidies for both premiums and cost sharing, but applying simple math to these subsidies will demonstrate that they are inadequate for the majority of low- and moderate-income families who have health care needs.

If we were to increase the subsidies to a level where they would be adequate, then you would be paying more than an improved Medicare for all would cost since the subsidies would have to pay not only for health care but for all of the administrative excesses of our fragmented system composed of a multitude of private and public plans. If taxpayers are going to pay the bill, we might as well pay the one that is a bargain.

The administrative team at Blue Shield of California is composed of fine people. We should thank them for their dedicated service and offer them job retraining to serve in our expanded and improved Medicare program. For the investors and administrative team at Anthem Blue Cross, we should show them the door.

‘Don’t repeal health law – go beyond it to single-payer Medicare for all’: doctors’ group

FOR IMMEDIATE RELEASE
Jan. 7, 2011
 
Contact:
Garrett Adams, M.D., president, PNHP
Margaret Flowers, M.D., congressional fellow, PNHP
David Himmelstein, M.D., co-founder, PNHP
Quentin Young, M.D., national coordinator, PNHP, (312) 782-6006
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

A nationwide organization of doctors who favor a single-payer health care system today rejected calls by Republican leaders to repeal the new health law, noting that the law contains modest benefits for patients that should not be spurned.

At the same time, the doctors said that the enactment of a single-payer, Medicare-for-all program is the only way to assure high quality, comprehensive care to all Americans and the only way to rein in skyrocketing health care costs.

“We reject the call by Republican leaders to repeal the Patient Protection and Affordable Care Act (PPACA), even as we recognize the new law is incapable of resolving our health care morass,” said Dr. Garrett Adams, president of the 18,000-member Physicians for a National Health Program.

“The health law is flawed because it continues our nation’s reliance on an inefficient and wasteful private-insurance-based model of financing care – a rickety structure that denies health care access to millions, bankrupts patients, ratchets up costs and frustrates efforts to improve quality,” he said.

“That’s why we need to move to a single-payer system,” he said. “In doing so, we’ll save about $400 billion annually by cutting out the unnecessary paperwork and bureaucracy inflicted on us by the private insurers. We’ll also gain the one-system bargaining power we need to negotiate lower prices for pharmaceutical drugs and medical supplies.”

Adams said the “modest” benefits in the administration’s health law include greater funding of community health centers, the expansion of Medicaid coverage, and “measures to restrict some of the most outrageous practices of the private health insurance companies like denying coverage because of pre-existing conditions or rescinding coverage when people get sick.”

“These beneficial measures could have been enacted separately,” Adams said. “But now that they’re part of the law, we cannot in good conscience support the repeal of any provisions that might conceivably benefit our patients.”

Adams said Republican leaders’ call to repeal PPACA is especially objectionable, given that they have no serious alternative to offer by way of health care reform.

“The GOP and conservatives urge greater reliance on the private sector and ‘free market’ mechanisms, including less regulation of the insurance industry,” Adams said. “Such measures include allowing people to purchase insurance across state lines, which would lead them to buy junk insurance policies from companies in states where consumer protections have been all but eviscerated. It would mean a race to the bottom to even skimpier insurance policies than people have now.”

He also dismissed claims by the Republican leadership that tort reform will significantly affect the U.S. health care scene, noting that research has shown malpractice suits have a marginal impact on the costs of medical care.
 
“The proposals emanating from the GOP leaders would do nothing to control costs or reduce the enormous administrative waste in our current health care system,” he said. “They would do nothing to reduce the number of uninsured. In fact, the number of uninsured, now at 51 million, would likely rise much higher – worsening an already catastrophic situation.”

Adams, a pediatric infectious disease specialist who resides in Louisville, Ky., said that, in his opinion, Republican leaders who are vowing to repeal the new health law are not really aiming to do so.

“Despite their bluster, GOP lawmakers don’t really want to repeal the law because some of their chief financial backers, the health insurance companies, like its basic provisions,” he said. “The insurers especially like PPACA’s requirement that millions of people buy insurance from them and that at least $447 billion in federal subsidies will be coming their way over the next 10 years as part of this arrangement.

“We reject such political posturing at the expense of human suffering and human lives,” Adams said. “We call for a real, sustainable solution to our health care woes. PPACA should be superseded by a comprehensive health reform that provides quality, affordable care to everyone – single-payer national health insurance, an improved Medicare for all.”

***

Physicians for a National Health Program (www.pnhp.org) is an 18,000-member organization advocating nonprofit, single-payer national health insurance for the United States. Dr. Garrett Adams is the newly elected president of PNHP. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Buckle Up for Round 2

By DAVID BROOKS
The  New York Times, January 6, 2011

The health care reform law was signed 10 months ago, and what’s striking now is how vulnerable it looks. Several threats have emerged — some of them scarcely discussed before passage — that together or alone could seriously endanger the new system. These include:

The courts. So far, one judge has struck down the individual mandate, the plan’s centerpiece. Future decisions are likely to break down on partisan lines. Given the makeup of the Supreme Court, this should concern the law’s defenders.

False projections. The new system is based on a series of expert projections on how people will behave. In the first test case, these projections were absurdly off base. According to the Medicare actuary, 375,000 people should have already signed up for the new high-risk pools for the uninsured, but only 8,000 have.

More seriously, cost projections are way off. For example, New Hampshire’s plan has only about 80 members, but the state has already burned through nearly double the $650,000 that the federal government allotted to help run the program. If other projections are off by this much, the results will be disastrous.

Employee dumping. This is the most serious threat. Companies and unions across America are running the numbers and discovering they would be better off if, after 2014, they induced poorer and sicker employees to move to public insurance exchanges, where subsidies are much higher.

The number of people in those exchanges could thus skyrocket, especially as startup companies undermine their competitors with uninsured employees and lower costs. The Congressional Budget Office projects that 19 million people will move to the exchanges at a cost of $450 billion between 2014 and 2019. But according to the economists Douglas Holtz-Eakin and James C. Capretta, costs could soar to $1.4 trillion if those who would be better off in the exchanges actually moved to them. The price of the health care law could double. C. Eugene Steuerle of the Urban Institute, who has been among those raising the alarms about this, calls the law’s structure “unworkable and unfair.”

Health care oligarchy. Since the law passed, there has been a frenzy of mergers and acquisitions, as hospitals, clinics and doctor groups have joined together into bigger and bigger entities. The drafters encourage this, believing large outfits would be more efficient. The downside to this economic concentration is there could be less competition and cost control. In many places, the political power of these quasi-monopolies would be huge, with unforeseeable results. The law bans doctors from starting up hospitals to increase competition.

Public hostility. Right now about 53 percent of Americans oppose the health care law and 43 percent support it, according to an average of the recent polls. Complaints are especially high among doctors. According to a survey by the Physicians Foundation, 60 percent of private practice doctors say the law will force them to close their practices or to restrict them to certain categories of patients.

Given this level of unhappiness, people will blame the Obama law for everything they hate about the health care system. Political opposition was fierce last November, and it could easily shape the 2012 election and lead to changes or repeal.

Over all, there is a strong likelihood that the current health care law will face an existential threat over the next five years. Each party should be preparing contingency plans.

When the crisis comes, Democrats will face an interesting choice — to patch the Obama system or try to replace it with something bigger. The administration may want a patch, but by a ratio of nearly 2 to 1, according to a CNN poll, Democratic voters would prefer a more ambitious law. Liberals could logically say that the mistake was trying to create a hybrid system, rather than moving straight to a single-payer one.

Republicans are going to have to move beyond their current “Repeal!” posture and cohere behind a positive alternative. One approach, which Tyler Cowen of George Mason University has written about, is to allow more state experimentation. Another approach, championed by Capretta, Yuval Levin of National Affairs and Thomas P. Miller of the American Enterprise Institute, revolves around the words “defined contribution.”

Under this approach, Republicans would say that the federal government has a role in subsidizing health insurance — a generous role, but not unlimited. The government would provide needy citizens with a predefined amount of money to spend on insurance and allow them to shop in a transparent, regulated, but not micromanaged marketplace.

After the trauma of the last two years, many people wish the issue would go away. But it’s not going away, especially since costs will continue to rise.

Some Congresses achieve health care; members of this Congress or the next one will have health care thrust upon them.

ObamaCare Repeal: GOP Should Be Careful What It Wishes For

The individual mandate is unpopular, but repealing it could open the door to future reform based on payroll taxes.

By ROBERT B. REICH
The  Wall Street Journal, January 7, 2011

Republicans in the House, now in the majority, say they’ll vote to repeal the health-care law on Jan. 12. It will largely be a symbolic vote: Even in the unlikely event that 60 senators agree, Republicans don’t have the votes to override President Obama’s certain veto.

A more likely scenario in the weeks and months to come will be the Republicans’ attempt to strip the Department of Health and Human Services of the money necessary to implement the law’s requirement that all Americans buy health insurance. This could easily precipitate a showdown with the White House—and a government shutdown later this year.

The individual mandate is the linchpin of the health-care law because it spreads the risks. Without the participation of younger or healthier people, private insurers won’t be able to take on older or sicker customers with pre-existing medical conditions, or maintain coverage indefinitely for people who become seriously ill. The result would be to unravel the health-care law, which presumably is what many Republicans seek.

On the surface, this is a smart strategy for the GOP. The individual mandate is the least popular aspect of the law. According to a Dec. 9-12 ABC/Washington Post survey, 60% of the public opposes the individual mandate. While they want help with their health-care bills, and over 60% want to prevent insurers from dropping coverage when customers become seriously ill, Americans simply don’t like the idea of government requiring them to buy something. It not only offends libertarian sensibilities, but it also worries some moderates and liberals who fear private insurers will charge too much because of insufficient competition in the industry.

The individual mandate is also most susceptible to legal challenge. Twenty states, led by Florida, have joined together in a lawsuit to argue that the mandate oversteps federal authority. Virginia and some interest groups are also challenging the mandate’s constitutionality in federal court. In the first major ruling, Commonwealth of Virginia v. Sebelius, on Dec. 13, Judge Henry Hudson of the federal district court in Richmond called the individual mandate an “unbridled exercise of federal police powers” and an overreach of the Constitution’s Commerce Clause. The U.S. government is now appealing that decision.

Defenders of the law argue that mandates aren’t unusual. After all, most states require people to purchase auto insurance in order to drive a car, and most lenders (including those underwritten by Fannie Mae or Freddie Mac) require potential homeowners to buy home insurance. But the analogy doesn’t quite hold. These requirements come from states or from banks—not directly from the federal government. More importantly, they rest on a basic act of volition. No one has to buy a car or a house. Not so with health insurance under the new law.

Nonetheless, there’s a great irony in the Republican assault. The federal government wouldn’t be nearly as vulnerable to these political and legal obstacles had the health-care law been built upon the framework of Social Security or Medicare—public insurance financed by payroll taxes—as many Democrats had initially urged. Not only are these programs enormously popular—”Don’t take away my Medicare!” was a rallying cry among some conservative populists during the debates over the health-care law—but they also rest on a more widely accepted relationship among the individual, the government and the market.

Americans are accustomed to paying for public insurance through their payroll taxes. Such payments aren’t viewed as federal mandates that encroach upon individual freedoms, or as payoffs to private companies likely to make even more money from mandatory purchases of their products, but as well-deserved entitlements.

Indeed, the biggest problem with Social Security and Medicare is they’re so popular that politicians have had a hard time trimming their benefits to match payroll tax revenues—a major contributor to the budget deficit in coming years. Had health care been added as more public insurance financed by payroll taxes, the challenge might be even greater, which may help explain the fierce resistance of Republicans to using Social Security and Medicare as templates for the new health-care law.

For 60 years, the battle over health-care reform has been waged over these two ways of spreading costs and risks: either through payroll taxes and public insurance, or mandated purchases from private insurers. For most of those six decades, Democrats advocated the former. Harry Truman’s initial plan for adding health insurance to Social Security was defeated, but Lyndon Johnson’s Medicare succeeded.

Apart from George W. Bush’s drug benefit, which was also based on this Democratic framework, Republicans have always been on the side of mandated purchases from private insurers. In 1974, Richard Nixon’s proposed Comprehensive Health Insurance Plan would have required private employers to provide their employees with comprehensive health insurance coverage purchased from private insurers. (An employer mandate is tantamount to an individual mandate in that employees are forced to pay it indirectly via lower wages.) Ted Kennedy simultaneously proposed universal coverage financed through Social Security taxes, essentially copying Medicare. Neither plan succeeded, but Nixon’s framework redefined the idea of national health insurance from then onward.

President Obama and a majority of Democrats in the last Congress opted for the Republican model even though many Democrats would have preferred Medicare for all, or at the very least a public option. Most polls showed that the public favored such an option. But the White House hoped for Republican support and wanted to ward off opposition from health insurers and pharmaceutical companies by promising them some 30 million additional customers.

Set against this background, the current Republican attack on mandatory coverage is curious because it raises the essential question of how society would otherwise spread health-care risks. If successful—either in Congress or in the courts—a Republican victory could turn into a Pyrrhic one by opening the way to the alternative model, based on the system Americans seem to prefer: payroll taxes and public insurance.

Mr. Reich, professor of public policy at the University of California at Berkeley and former secretary of labor under President Clinton, is the author, most recently, of “Aftershock: The Next Economy and America’s Future” (Alfred A. Knopf, 2010).

Blue Shield of California’s rate hikes

Blue Shield of California seeks rate hikes of as much as 59% for individuals

By Duke Helfand
Los Angeles Times
January 5, 2011

Another big California health insurer has stunned individual policyholders with huge rate increases — this time it’s Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

http://www.latimes.com/health/healthcare/la-fi-insure-rates-20110106,0,6975599.story

And…

Statement of HHS Secretary Kathleen Sebelius on Blue Shield of California’s proposed rate increase

U.S. Department of Health and Human Services
January 6, 2011

“The people of California have a right to be concerned when they see this kind of rate increase month after month. We have reached out to California Insurance Commissioner Dave Jones and know he is doing everything in his power to help consumers. We stand ready to assist him and the people of California in any way that we can.”

http://www.hhs.gov/news/press/2011pres/01/20110106b.html

And…

Statement by Blue Shield of California

Blue Shield of California
January 6, 2011

The rate increases reported today cover a period of more than one year and have almost nothing to do with the federal health reform law. These rates reflect trends that were building long before health reform. Our individual market medical costs are rising rapidly due to higher provider prices, increased utilization, and the fact that healthier people are dropping coverage during a bad economy. Health reform will help slow down this trend by expanding coverage, which will keep healthier people in the system, and through quality and cost containment initiatives such as the Independent Payment Advisory Board, Center for Medicare and Medicaid Innovation, Patient-Centered Outcomes Research Institute and other incentives for prevention and coordinated health care.

Even with these rate increases, Blue Shield of California expects to lose tens of millions of dollars on its individual healthcare business in both 2010 and 2011. These new rates meet the federal requirement that 80 percent of premiums are spent on healthcare expenses.

https://www.blueshieldca.com/bsc/newsroom/pr/statement_rates_010611.jhtml

Last year California’s for-profit Anthem Blue Cross, a division of WellPoint, enraged everyone when they attempted to raise premiums as much as 39 percent. In contrast, Blue Shield of California is a non-profit insurer attempting to compete in a market in which the rules are established by investor-owned insurers, yet they are now calling for premium increases as high as 59 percent. As a provider or a patient, it is difficult to tell the California Blues apart.

That said, the brief statement released by Blue Shield of California explains the reasons for the increases: higher provider prices, increased utilization, and a decline in enrollment in a bad economy resulting in spiraling premiums due to adverse selection. In spite of these premium increases, Blue Shield expects to lose tens of millions of dollars on its individual health plans.

These premium increases are intolerable, but is Blue Shield really to blame? Keep in mind that the average working family of four now uses over $18,000 worth of medical care (Milliman Medical Index), and Blue Shield is trying to sell a product that covers those costs plus its own administrative expenses. With insurer administrative costs at 20 percent for the individual market, that’s about $22,500 that the premium would have to be. To lower the premium, costs are shifted directly to the family through deductibles, co-payments, coinsurance, and paring of benefits, but how much in direct costs can the family bear when median household income is about $50,000?

Blue Shield is facing an impossible situation. They cannot create a product that has both affordable premiums and adequate protection against out-of-pocket medical expenses.

That is why the Patient Protection and Affordable Care Act provides income-indexed subsidies for both premiums and cost sharing, but applying simple math to these subsidies will demonstrate that they are inadequate for the majority of low- and moderate-income families who have health care needs.

If we were to increase the subsidies to a level where they would be adequate, then you would be paying more than an improved Medicare for all would cost since the subsidies would have to pay not only for health care but for all of the administrative excesses of our fragmented system composed of a multitude of private and public plans. If taxpayers are going to pay the bill, we might as well pay the one that is a bargain.

The administrative team at Blue Shield of California is composed of fine people. We should thank them for their dedicated service and offer them job retraining to serve in our expanded and improved Medicare program. For the investors and administrative team at Anthem Blue Cross, we should show them the door.

Blue Shield of California seeks rate hikes of as much as 59% for individuals

Insurer says the increases result from fast-rising healthcare costs and other expenses resulting from new healthcare laws. The move comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39%.

By Duke Helfand
Los Angeles Times, Jan. 5, 2011

Another big California health insurer has stunned individual policyholders with huge rate increases — this time it’s Blue Shield of California seeking cumulative hikes of as much as 59% for tens of thousands of customers March 1.

Blue Shield’s action comes less than a year after Anthem Blue Cross tried and failed to raise rates as much as 39% for about 700,000 California customers.

San Francisco-based Blue Shield said the increases were the result of fast-rising healthcare costs and other expenses resulting from new healthcare laws.

“We raise rates only when absolutely necessary to pay the accelerating cost of medical care for our members,” the nonprofit insurer told customers last month.

In all, Blue Shield said, 193,000 policyholders would see increases averaging 30% to 35%, the result of three separate rate hikes since October.

Nearly 1 in 4 of the affected customers will see cumulative increases of more than 50% over five months.

While most policyholders received separate notices for the successive rate hikes, others were given the news all at once because they had contracts guaranteeing their rate for a year, Blue Shield spokesman Tom Epstein said.

Michael Fraser, a Blue Shield policyholder from San Diego, learned recently that his monthly bill would climb 59%, to $431 from $271.

“When I tell people, their jaws drop and their eyes bug out,” said Fraser, 53, a freelance advertising writer. “The amount is stunning.”

Like many people who hold individual policies, Fraser is self-employed. Others who carry such insurance include people who aren’t covered by employer plans or who have been laid off.

The Blue Shield increases triggered complaints to new Insurance Commissioner Dave Jones, and they could prove to be an early test of how the former Democratic state assemblyman deals with rate hikes and the insurance industry.

Anthem’s attempt to raise rates by up to 39% led to national outrage and helped President Obama marshal support for his healthcare overhaul. The insurer was ultimately forced to back down, accepting maximum rate hikes of 20%.

Jones said the Blue Shield move underscored the need for the Legislature to give the insurance commissioner legal authority to regulate insurance rates the same way he does automobile coverage.

At present, the commissioner can block increases only if insurers spend less than 70% of premium income on claims. Jones’ office said Blue Shield’s March 1 increase was under review.

“Blue Shield’s increases pose the same problem posed by Anthem Blue Cross last year and other health insurers as well,” Jones said in an interview. “My hope would be that Blue Shield would reexamine these rate hikes, particularly in the face of the impact they are having on individual policyholders.”

Blue Shield said the cost of health coverage was being driven up by large hospital expenses, doctors’ bills and prescription drug prices. Blue Shield’s Epstein said other factors also contributed to the three increases in five months.

On Oct. 1, he said, Blue Shield imposed increases averaging 18% and as high as 29%. Those hikes had been delayed for three months while state regulators examined Blue Shield’s filing, costing the company tens of millions of dollars.

Epstein said Blue Shield raised rates again Jan. 1 to pay for changes under the national healthcare overhaul and a new state law that bars insurers from charging women more than men. (Some policyholders will pay less under the state gender law, while others will pay more.)

A third round of hikes scheduled for March 1 comes in response to rising healthcare costs, Epstein said. Those increases will average 6.5% and be as high as 18%.

Some policyholders have seen their bills rise gradually over the last five months, while others will see the charges lumped together March 1.

“It’s unfortunate that they all came in a five-month period,” Epstein said. “Rates are going to continue to rise unless the cost of medical care is brought under control. We need to reduce what we pay to hospitals, medical groups and pharmaceutical companies.”

Despite the large increases, Epstein said Blue Shield would again lose “tens of millions of dollars” on its individual business in 2011.

Not included in the rate increases are 78,000 Blue Shield individual policyholders whose insurance is regulated by a second state agency, the Department of Managed Health Care. Those customers have seen two rate increases since October that together average 37%, Epstein said.

While Blue Shield’s cumulative rate increases are high, Anthem Blue Cross’ increases last year affected more people.

Anthem said Wednesday that it too expected to raise rates — an average of 9.8% for individual policyholders, effective April 1. That would come on top of increases in October averaging 14% that had been delayed for six months amid heightened scrutiny by state regulators.

Anthem is taking a cautious approach to its rate hikes given the controversy generated by last year’s plan for 39% hikes.

Spokeswoman Kristin Binns said the company priced its 2011 rates competitively, saying: “We understand that these are difficult economic times, and we are committed to working to moderate the impact of rate increases on our members.”

duke.helfand@latimes.com

http://www.latimes.com/health/healthcare/la-fi-insure-rates-20110106,0,6975599.story

Lowest rate of health spending increases still very high

Recession Contributes To Slowest Annual Rate Of Increase In Health Spending In Five Decades

Anne Martin, David Lassman, Lekha Whittle, Aaron Catlin and the National Health Expenditure Accounts Team
Health Affairs
January 2011

In 2009, US health care spending grew 4.0 percent — a historically low rate of annual increase — to $2.5 trillion, or $8,086 per person. Despite the slower growth, the share of the gross domestic product devoted to health spending increased to 17.6 percent in 2009 from 16.6 percent in 2008. The growth rate of health spending continued to outpace the growth of the overall economy, which experienced its largest drop since 1938. The recession contributed to slower growth in private health insurance spending and out-of-pocket spending by consumers, as well as a reduction in capital investments by health care providers. The recession also placed increased burdens on households, businesses, and governments, which meant that fewer financial resources were available to pay for health care. Declining federal revenues and strong growth in federal health spending increased the health spending share of total federal revenue from 37.6 percent in 2008 to 54.2 percent in 2009.

http://content.healthaffairs.org/content/30/1/11.full#aff-5

Comment: 

By Don McCanne, MD

How much are we spending on health care?

For 2009:

National health expenditures: $2.5 trillion

Percent of GDP: 17.6%

Spending per person: $8,086

Although the title of this article and the news reports stemming from it tout the fact that this is the slowest increase in health care spending in five decades, the 4.0 percent increase is well in excess of inflation and remarkably high considering that it occurred during the Great Recession.

Perhaps the most impressive number that demonstrates this increased spending on a background of the recession is the percent of federal revenues that were directed to federal health spending. Federal revenues decreased 18.2 percent while federal health spending increased 17.9 percent. Thus the federal revenues directed to federal health spending increased from 37.6 percent in 2008 to 54.2 percent in 2009. Over half of the recession-impacted federal revenues were spent on federal health programs!

These numbers demonstrate that even a severe recession was unable to reduce the increase in health care spending to anywhere near the rate of inflation nor the growth in GDP (gross domestic product).

Since the cost containment measures in the Patient Protection and Affordable Care Act (PPACA) are so weak, there is little hope for truly significant relief from escalating costs in the foreseeable future. Yet just the administrative savings alone of a single payer system would be much more effective, and there is no reason that an improved Medicare covering everyone couldn’t adopt some of the modest but beneficial cost-saving measures of PPACA so long as they have no detrimental policy impacts.

Instead of repealing PPACA, we need to retain the beneficial measures, but then replace the flawed financing component with one that will work – an improved Medicare for all.

Healthcare CEOs doing just fine without healthcare law repeal

By National Nurses Movement
DailyKos, Wed Jan 05, 2011

If the Obama health care bill is just a “government takeover,” why are healthcare industry CEOs being rewarded with so much money?

The alleged expropriation of healthcare by big government is, of course, a major story line of the right and the new leadership of the House which is planning the useless exercise of a vote to repeal the law.

But if the private companies who actually do control our health are hurting so badly, why are they shelling out so much to their top executives?

A report from Kaiser Health News out today exposes lavish pay packages for some of the biggest players in the private healthcare industry.

Here’s what a few top executives banked the past two years according to KHN:

• Billy Tauzin, PhRMA — $9,098,585
• Scott Serota, Blue Cross/Blue Shield — $7,214,668
• Charles Kahn III, Federation of American Hospitals — $4,513,714
• Karen Ignani, America’s Health Insurance Plans — $3,791,261
• Richard Umbdenstock, American Hospital Association – 3,818,426
• Stephen Ubl, Advanced Medical Technology — $2,389,423
• James Greenwood, Biotechnology Organization — $2,418,690

As KHN notes, most of these execs supported either the entire law or key aspects of the law.

PhRMA, the drug company trade lobby, and Tauzin  famously cut a deal with the White House to lock down backing for the bill by the pharmaceutical industry, the 800-pound gorilla in healthcare profits. In exchange, the White House blocked progressive proposals to support drug reimportation as a way around the outrageous price gouging of the drug industry. 

Tauzin, so artfully chronicled by Michael Moore in “SiCKO,” is a former Congressman who was  rewarded with the top job in PhRMA after leading passage of the Bush administration’s Medicare drug deal which created windfall profits for the drug giants. He has since decided to take the money and run, leaving his post last June.

The insurance companies played it both ways.  The insurers supported the bill long enough to assure the administration and top Democrats would scuttle first single payer reform, then even the public option, while including the individual mandate requiring all those without coverage to buy private insurance. The result – tens of millions of new customers, and hundreds of millions in added profits, hardly an indication they were being “taken over” by the government.

Of course the ever greedy insurers sought to hedge their bets by also running ads attacking other parts of the law and backing many of its opponents, apparently ignoring the irony that some of those they were supporting would be promoting the legal challenge to the insurers’ beloved individual mandate. 

Private hospitals, expecting lots of additional revenue, were also key advocates of the law. CEOs of some of the biggest hospital chains in the country, including for-profit s like Tenet Healthcare, and non-profits like Kaiser Permanente, have been among its biggest champions.

Also on board were those profiting from medical technology programs, as almost all the reform advocates push information technology as the supposed solution to medical errors and cost savings, despite the enormous cost of such technology and its frequent misapplication too often used to displace the expertise and judgment of professional caregivers which can lead to worse patient care. 

Finally, there’s the biotech industry which, as KHN notes, also favored the law, winning in exchange a highly dubious 12-year exclusivity for brand name biologic drugs and a tax credit to boot.

Do we really need to replay the same debate over the current law over and over? Will that solve any of the still very real problems that exist? Notably the tens of millions of Americans who remain uninsured, many of whom will not be covered even if the law goes into full effect. And the millions more who are slammed daily by un-payable medical bills and ever rising costs that the bill does so little to address.

Reminders of the continuing healthcare crisis come regularly. To name just three:

• The U.S. ranks just 22nd in health well-being among major industrialized countries, according to a UNICEF report issued in December.
• Growing numbers of parents with premature babies, or children born with special needs, according to another KNH report, are being socked with huge bills for neonatal care because the health professionals are deemed to be “out of network.”
• Only 58 percent of private sector employees have access to paid sick leave, according to a report out this week from the Institute for Women’s Policy Research. 

Among the consequences of the sick leave report, many sick employees come to work because they can’t afford the unpaid lost time, especially in a deep recession, or they avoid taking sick time for fear of employer retribution. They thus risk aggravating their illness and facing more serious sickness, more lost time, and higher health costs, and they increase the likelihood of infecting others in their workplace.

It’s time to move on. Let’s end the fiction that the current law was a government takeover. Let’s stop replaying the fruitless debate of the past two years over the false issues the right loves to exploit.

And let’s find ways to address the continuing health problems plaguing so many by working instead:

To  really reign in skyrocketing costs, that are primarily driven by the very same profiteering private companies whose executives are being paid so much, and

Guarantee healthcare for all Americans, best done by expanding the most cost effective, real universal program Medicare to cover everyone.

http://www.dailykos.com/story/2011/1/5/181958/6884

Lowest rate of health spending increases still very high

Recession Contributes To Slowest Annual Rate Of Increase In Health Spending In Five Decades

Anne Martin, David Lassman, Lekha Whittle, Aaron Catlin and the National Health Expenditure Accounts Team
Health Affairs
January 2011

In 2009, US health care spending grew 4.0 percent — a historically low rate of annual increase — to $2.5 trillion, or $8,086 per person. Despite the slower growth, the share of the gross domestic product devoted to health spending increased to 17.6 percent in 2009 from 16.6 percent in 2008. The growth rate of health spending continued to outpace the growth of the overall economy, which experienced its largest drop since 1938. The recession contributed to slower growth in private health insurance spending and out-of-pocket spending by consumers, as well as a reduction in capital investments by health care providers. The recession also placed increased burdens on households, businesses, and governments, which meant that fewer financial resources were available to pay for health care. Declining federal revenues and strong growth in federal health spending increased the health spending share of total federal revenue from 37.6 percent in 2008 to 54.2 percent in 2009.

http://content.healthaffairs.org/content/30/1/11.full#aff-5

How much are we spending on health care?

For 2009:

National health expenditures: $2.5 trillion

Percent of GDP: 17.6%

Spending per person: $8,086

Although the title of this article and the news reports stemming from it tout the fact that this is the slowest increase in health care spending in five decades, the 4.0 percent increase is well in excess of inflation and remarkably high considering that it occurred during the Great Recession.

Perhaps the most impressive number that demonstrates this increased spending on a background of the recession is the percent of federal revenues that were directed to federal health spending. Federal revenues decreased 18.2 percent while federal health spending increased 17.9 percent. Thus the federal revenues directed to federal health spending increased from 37.6 percent in 2008 to 54.2 percent in 2009. Over half of the recession-impacted federal revenues were spent on federal health programs!

These numbers demonstrate that even a severe recession was unable to reduce the increase in health care spending to anywhere near the rate of inflation nor the growth in GDP (gross domestic product).

Since the cost containment measures in the Patient Protection and Affordable Care Act (PPACA) are so weak, there is little hope for truly significant relief from escalating costs in the foreseeable future. Yet just the administrative savings alone of a single payer system would be much more effective, and there is no reason that an improved Medicare covering everyone couldn’t adopt some of the modest but beneficial cost-saving measures of PPACA so long as they have no detrimental policy impacts.

Instead of repealing PPACA, we need to retain the beneficial measures, but then replace the flawed financing component with one that will work – an improved Medicare for all.

Moody's reports negative outlook for private insurers

Outlook negative for insurers: Moody's

By Melanie Evans
ModernHealthcare.com
January 4, 2011

Health insurers’ outlook continues to be negative as the sector faces new regulations, heightened political pressure and a weak economy, which are expected to squeeze earnings, one major ratings agency said.

Moody’s Investors Service said in a report that insurance provisions of the Patient Protection and Affordable Care Act that go into effect this year could limit insurers’ income. Analysts described 2011 “as a transition year” for insurers as companies grapple with new medical-loss ratio regulations, which require 85% of large group premiums and 80% of small group and individual premiums to be spent on patient care.

Flat Medicare Advantage reimbursement levels for 2011, to be followed by cuts next year, could squeeze insurers’ margins, the report said. Insurers have moved to diversify to increase revenue and income not affected by changes under the reform law, analysts said. The sector also faces greater oversight and political pressure regarding insurers’ premium increases.

Insurers also face threats to enrollment from the economy, according to the report. The weak job market and possible further layoffs in the public sector this year could leave more households without employment, the source of health insurance for many, the report said. Struggling employers and households may not be willing or able to pay for care even as providers seek pay increases to increase revenue.

http://www.modernhealthcare.com/article/20110104/NEWS/301049965/-1#

And…

US Healthcare Insurers: Outlook Remains Negative

Moody’s Investor Service
December 29, 2010

…Despite better than expected results in 2010, Moody’s has maintained its negative outlook for the U.S. healthcare insurance sector due to regulatory, political, and economic threats that combine to place downward pressure on future earnings. Our expectations for 2011 for the sector as a whole include lower earnings, flat-to-low membership growth, and strategies increasingly focused on diversification. The negative sector outlook represents our view of credit conditions facing health insurers over the next 12 to 18 months; it provides a framework against which to consider issuer-specific ratings and research. 1. Regulatory Issues ¡ The healthcare reform law passed in early 2010, has already imposed a number of challenges for health insurers. During 2010, most changes required insurers to provide additional benefits while allowing them to adjust premiums appropriately. However, in 2011, two key provisions of the law — minimum medical loss ratio (MLR) regulations and changes to Medicare Advantage…

The remainder of this 9 page report can be purchased for $550.00 at this link:
http://moodys.alacra.com/research/moodys-global-credit-research—PBC_129845

Comment: 

By Don McCanne, MD

We hear much about the private health insurance industry from Health and Human Services (HHS) and from America’s Health Insurance Plans (AHIP) and the private insurers themselves. This report is of interest because it provides a perspective on for-profit health insurers from a consulting firm for investors.

Although the regulatory changes that the insurance industry faces as a result of the Patient Protection and Affordable Care Act bring bad news to investors, in a sense this is good news for patients because some of the greed has been squeezed out of the system. Moody’s seems to be an expert on greed since they charge $550.00 for a 9 page report that apparently only tells us what we already knew. (I must confess that I made an exception in not reading the full report that was used as the source of today’s quote since I couldn’t bring myself to pay that fee.)

We could have had better news. The savings that is good news for patients is only minuscule when you consider the much larger amount that we could have saved by changing to a single payer national health program – an improved Medicare for all.

Moody’s reports negative outlook for private insurers

Outlook negative for insurers: Moody’s

By Melanie Evans
ModernHealthcare.com
January 4, 2011

Health insurers’ outlook continues to be negative as the sector faces new regulations, heightened political pressure and a weak economy, which are expected to squeeze earnings, one major ratings agency said.

Moody’s Investors Service said in a report that insurance provisions of the Patient Protection and Affordable Care Act that go into effect this year could limit insurers’ income. Analysts described 2011 “as a transition year” for insurers as companies grapple with new medical-loss ratio regulations, which require 85% of large group premiums and 80% of small group and individual premiums to be spent on patient care.

Flat Medicare Advantage reimbursement levels for 2011, to be followed by cuts next year, could squeeze insurers’ margins, the report said. Insurers have moved to diversify to increase revenue and income not affected by changes under the reform law, analysts said. The sector also faces greater oversight and political pressure regarding insurers’ premium increases.

Insurers also face threats to enrollment from the economy, according to the report. The weak job market and possible further layoffs in the public sector this year could leave more households without employment, the source of health insurance for many, the report said. Struggling employers and households may not be willing or able to pay for care even as providers seek pay increases to increase revenue.

http://www.modernhealthcare.com/article/20110104/NEWS/301049965/-1#

And…

US Healthcare Insurers: Outlook Remains Negative

Moody’s Investor Service
December 29, 2010

…Despite better than expected results in 2010, Moody’s has maintained its negative outlook for the U.S. healthcare insurance sector due to regulatory, political, and economic threats that combine to place downward pressure on future earnings. Our expectations for 2011 for the sector as a whole include lower earnings, flat-to-low membership growth, and strategies increasingly focused on diversification. The negative sector outlook represents our view of credit conditions facing health insurers over the next 12 to 18 months; it provides a framework against which to consider issuer-specific ratings and research. 1. Regulatory Issues ¡ The healthcare reform law passed in early 2010, has already imposed a number of challenges for health insurers. During 2010, most changes required insurers to provide additional benefits while allowing them to adjust premiums appropriately. However, in 2011, two key provisions of the law — minimum medical loss ratio (MLR) regulations and changes to Medicare Advantage…

The remainder of this 9 page report can be purchased for $550.00 at this link:
http://moodys.alacra.com/research/moodys-global-credit-research—PBC_129845

We hear much about the private health insurance industry from Health and Human Services (HHS) and from America’s Health Insurance Plans (AHIP) and the private insurers themselves. This report is of interest because it provides a perspective on for-profit health insurers from a consulting firm for investors.

Although the regulatory changes that the insurance industry faces as a result of the Patient Protection and Affordable Care Act bring bad news to investors, in a sense this is good news for patients because some of the greed has been squeezed out of the system. Moody’s seems to be an expert on greed since they charge $550.00 for a 9 page report that apparently only tells us what we already knew. (I must confess that I made an exception in not reading the full report that was used as the source of today’s quote since I couldn’t bring myself to pay that fee.)

We could have had better news. The savings that is good news for patients is only minuscule when you consider the much larger amount that we could have saved by changing to a single payer national health program – an improved Medicare for all.

California and New York lessons for Medicaid expansion under PPACA

Cuomo Targeting Medicaid Spending

By Jacob Gershman
The Wall Street Journal
January 4, 2011

Gov. Andrew Cuomo is aiming to reduce the state’s Medicaid spending by billions of dollars, exceeding the size of cuts to the program proposed in past years, according to individuals with knowledge of his budget.

The Cuomo administration is considering a cut of about $2.1 billion out of the state’s projected spending on Medicaid in the upcoming fiscal year. With federal matching funds, the cut comes to more than $4 billion.

http://online.wsj.com/article/SB10001424052748704111504576060280154691892.html

And…

Brown to propose broad list of budget cuts

By Kevin Yamamura
The Sacramento Bee
January 3, 2011

(Gov. Jerry Brown) will propose Medi-Cal (Medicaid) savings by requiring patients to provide co-payments for services, limiting doctor visits and reducing rates paid to health providers. In Healthy Families (CHIP), which provides subsidized care for low-income children, he wants participants to pay more in premiums and co-payments while eliminating vision care.

“These would be shocking cuts if we hadn’t seen them before, but we have seen them before,” said Anthony Wright, executive director of Health Access California. “This is what’s left to cut outside of the wholesale dismantling of core programs. These are bad cuts that will impact millions of Californians.”

http://www.sacbee.com/2011/01/03/3295079/brown-to-propose-broad-list-of.html

Comment:

By Don McCanne, MD

A substantial increase in eligibility qualification for the Medicaid program is a crucial measure in the Patient Protection and Affordable Care Act (PPACA), designed to decrease the numbers of Americans without insurance coverage. Now the newly-elected Democratic governors of the two most populous states in the nation intend to sharply reduce funding of their Medicaid programs. What does this say about the wisdom of the PPACA policy of using Medicaid to expand coverage?

Gov. Brown’s proposal to impose financial penalties for accessing care, placing caps on doctor visits, and further slashing payments in this already critically underfunded program can only be disastrous for the low-income patients enrolled.

Once again, this is not change we can believe in. We desperately need an improved Medicare that covers everyone.