PNHP

Economic crises and cost sharing don’t mix

Economic crises and cost sharing don’t mix

The economic crisis and medical care usage

By Annamaria Lusardi, Daniel J. Schneider, Peter Tufano
National Bureau of Economic Research
Working Paper 15843
March, 2010

We use a unique, nationally representative cross-national dataset to document the reduction in individuals’ usage of routine non-emergency medical care in the midst of the economic crisis. A substantially larger fraction of Americans have reduced medical care than have individuals in Great Britain, Canada, France, and Germany, all countries with universal health care systems. At the national level, reductions in medical care are related to the degree to which individuals must pay for it, and within countries are strongly associated with exogenous shocks to wealth and employment.

http://www.nber.org/papers/w15843

This five-nation study of the impact of the financial crisis on usage of routine medical care demonstrates that both a decline in employment and a decline in wealth are strongly associated with reductions in medical care. But once again, the United States is an outlier.

U.S. citizens pay the highest out-of-pocket amounts for health care, and therefore were two to five times more likely than Europeans to reduce their use of health care. In difficult economic times, higher cost sharing has a greater negative impact on health care access.

The Patient Protection and Affordable Care Act (PPACA) will intensify this problem because most of the subsidized private plans will have low actuarial values, requiring larger deductibles, higher coinsurance (percentage of costs paid by the patient), and higher copayments (dollar amount paid by the patient).

The health care financing system should be designed to allow individuals to have the health care that they need without exposing them to financial hardship, and that protection certainly should extend into times of economic crises.

Now that PPACA has established underinsurance as the norm, we can anticipate greater reductions in necessary care, especially during difficult economic times. Or instead we could ensure that people receive the care that they need by replacing our financing system with a single payer national health program. As voters, it’s our choice.

Is WellPoint's business model viable?

Big and beleaguered: WellPoint's bad image

By Emily Berry
American Medical News
August 16, 2010

Thus far, WellPoint and insurance trade group America’s Health Insurance Plans have responded to criticism about rate increases with variations on the same theme: Medical costs, driven by physicians and hospitals, are rising so dramatically that insurers cannot avoid raising rates.

The argument doesn’t appear to work if WellPoint and AHIP are trying to elicit sympathy or understanding from the public or policymakers.

As it went on the defensive using studies demonstrating higher medical costs, WellPoint reduced payment for physicians in most of its markets by double-digit percentages for certain procedures, and the cuts were across all specialties, said Susanne Madden, CEO of the consulting firm Verden Group in Nyack, N.Y.

“They’ve done a spectacular job destroying customer loyalty and physician loyalty at the same time, and they’re not making any friends in government,” she said. “They don’t seem to have a grasp on the fact that if they do not have physicians as allies in some way, shape or form, they’re going to have a hard time.”

If it cannot raise rates, WellPoint — and other national insurers — will have to cut costs, experts said. This is where physicians might be affected. WellPoint is likely to cut costs by further reducing payments for hospitals and physicians and restricting networks, experts said.

http://www.ama-assn.org/amednews/2010/08/16/bisa0816.htm

Comment: 

By Don McCanne, MD

WellPoint’s phenomenal business success has been largely due to its ability to offer competitive premiums by limiting what it has had to pay out in health care benefits. Will WellPoint’s business model continue to be viable?

It has targeted its marketing to the healthy workforce and their young, healthy families, and to the portion of the individual market that can pass underwriting standards. Under the Patient Protection and Affordable Care Act (PPACA) WellPoint will no longer be able to exclude individuals with greater health care needs, neither by favorable selection nor by retroactive rescissions. Without other innovative cost controls, premium increases will be inevitable.

Under PPACA, WellPoint will also be required to provide a standard package of benefits, preventing them from reducing health care spending by cutting benefits. They will also be required to provide plans with tiered actuarial values, prohibiting them from requiring ever greater out-of-pocket cost sharing by the patient. Thus premiums will have to reflect the actual increases in health care costs.

It would be possible for WellPoint to slash reimbursement rates for physicians and hospitals, but that would be a terrible business decision wince it would risk a massive exodus from their provider networks.

It is likely that WellPoint and other insurers will establish more restrictive networks with providers who are willing to accept payment reductions in exchange for greater volume, but that loss of choice would certainly further alienate their plan subscribers, also threatening their market.

The plans may search for other innovations, including some of those in PPACA, but at this time there is little prospect that cost savings could be achieved without creating greater animosity amongst patients and providers.

To comply with PPACA, WellPoint will have to increase premiums and market primarily plans with low actuarial values of 60 or 70 percent, leaving excessive out-of-pocket costs for those with health care needs. The subsidies in PPACA are too small to prevent financial hardship, and there is little political will to expand the federal budget by increasing the subsidies.

The situation can only grow worse with time. The WellPoint model will inevitably end up in the trash heap of failed policies as it is replaced with a single payer national health program – a program that would meet the needs of patients and their health care professionals.

Is WellPoint’s business model viable?

Big and beleaguered: WellPoint’s bad image

By Emily Berry
American Medical News
August 16, 2010

Thus far, WellPoint and insurance trade group America’s Health Insurance Plans have responded to criticism about rate increases with variations on the same theme: Medical costs, driven by physicians and hospitals, are rising so dramatically that insurers cannot avoid raising rates.

The argument doesn’t appear to work if WellPoint and AHIP are trying to elicit sympathy or understanding from the public or policymakers.

As it went on the defensive using studies demonstrating higher medical costs, WellPoint reduced payment for physicians in most of its markets by double-digit percentages for certain procedures, and the cuts were across all specialties, said Susanne Madden, CEO of the consulting firm Verden Group in Nyack, N.Y.

“They’ve done a spectacular job destroying customer loyalty and physician loyalty at the same time, and they’re not making any friends in government,” she said. “They don’t seem to have a grasp on the fact that if they do not have physicians as allies in some way, shape or form, they’re going to have a hard time.”

If it cannot raise rates, WellPoint — and other national insurers — will have to cut costs, experts said. This is where physicians might be affected. WellPoint is likely to cut costs by further reducing payments for hospitals and physicians and restricting networks, experts said.

http://www.ama-assn.org/amednews/2010/08/16/bisa0816.htm

Comment: 

By Don McCanne, MD

WellPoint’s phenomenal business success has been largely due to its ability to offer competitive premiums by limiting what it has had to pay out in health care benefits. Will WellPoint’s business model continue to be viable?

It has targeted its marketing to the healthy workforce and their young, healthy families, and to the portion of the individual market that can pass underwriting standards. Under the Patient Protection and Affordable Care Act (PPACA) WellPoint will no longer be able to exclude individuals with greater health care needs, neither by favorable selection nor by retroactive rescissions. Without other innovative cost controls, premium increases will be inevitable.

Under PPACA, WellPoint will also be required to provide a standard package of benefits, preventing them from reducing health care spending by cutting benefits. They will also be required to provide plans with tiered actuarial values, prohibiting them from requiring ever greater out-of-pocket cost sharing by the patient. Thus premiums will have to reflect the actual increases in health care costs.

It would be possible for WellPoint to slash reimbursement rates for physicians and hospitals, but that would be a terrible business decision wince it would risk a massive exodus from their provider networks.

It is likely that WellPoint and other insurers will establish more restrictive networks with providers who are willing to accept payment reductions in exchange for greater volume, but that loss of choice would certainly further alienate their plan subscribers, also threatening their market.

The plans may search for other innovations, including some of those in PPACA, but at this time there is little prospect that cost savings could be achieved without creating greater animosity amongst patients and providers.

To comply with PPACA, WellPoint will have to increase premiums and market primarily plans with low actuarial values of 60 or 70 percent, leaving excessive out-of-pocket costs for those with health care needs. The subsidies in PPACA are too small to prevent financial hardship, and there is little political will to expand the federal budget by increasing the subsidies.

The situation can only grow worse with time. The WellPoint model will inevitably end up in the trash heap of failed policies as it is replaced with a single payer national health program – a program that would meet the needs of patients and their health care professionals.

My Favorite August: The 70 year Slog to Women's Suffrage

By GAIL COLLINS
The New York Times, August 13, 2010

The story in American history I most like to tell is the one about how women got the right to vote 90 years ago this month. It has everything. Adventure! Suspense! Treachery! Drunken legislators!

But, first, there was a 70-year slog.

Which is really the important part. We always need to remember that behind almost every great moment in history, there are heroic people doing really boring and frustrating things for a prolonged period of time.

That great suffragist and excellent counter, Carrie Chapman Catt, estimated that the struggle had involved 56 referendum campaigns directed at male voters, plus “480 campaigns to get Legislatures to submit suffrage amendments to voters, 47 campaigns to get constitutional conventions to write woman suffrage into state constitutions; 277 campaigns to get State party conventions to include woman suffrage planks, 30 campaigns to get presidential party campaigns to include woman suffrage planks in party platforms and 19 campaigns with 19 successive Congresses.”

And you thought health care reform was a drawn-out battle.

The great, thundering roadblock to progress was — wait for the surprise — the U.S. Senate. All through the last part of the 19th century and into the 20th, attempts to amend the U.S. Constitution ran up against a wall of conservative Southern senators.

So the women decided to win the vote by amending every single state constitution, one by one.

There were five referenda in South Dakota alone. Susan B. Anthony spent more time there than a wheat farmer. But she never lost hope. The great day was coming, she promised: “It’s coming sooner than most people think.” I love this remark even more because she made it in 1895.

Sometimes I fantasize about traveling back through time and telling my historical heroes and heroines how well things worked out in the end. I particularly enjoy the part where I find Vincent van Gogh and inform him that one of the unsold paintings piled up over in the corner will eventually go for $80 million. But I never imagine telling Susan B. Anthony how well American women are doing in the 21st century because her faith in her country and her cause was so strong that she wouldn’t be surprised.

The constitutional amendment that finally did pass Congress bore Anthony’s name. It came up before the House of Representatives in 1918 with the two-thirds votes needed for passage barely within reach. One congressman who had been in the hospital for six months had himself carted to the floor so he could support suffrage. Another, who had just broken his shoulder, refused to have it set for fear he’d be too late to be counted. Representative Frederick Hicks of New York had been at the bedside of his dying wife but left at her urging to support the cause. He provided the final, crucial vote, and then returned home for her funeral.

The Senate failed to follow suit. But Woodrow Wilson, a president who had the winning quality of being very vulnerable to nagging by women, pushed the amendment through the next year. The states started ratifying. Then things stalled just one state short of success.

Ninety years ago this month, all eyes turned to Tennessee, the only state yet to ratify with its Legislature still in session. The resolution sailed through the Tennessee Senate. As it moved on to the House, the most vigorous opposition came from the liquor industry, which was pretty sure that if women got the vote, they’d use it to pass Prohibition. Distillery lobbyists came to fight, bearing samples.

“Both suffrage and anti-suffrage men were reeling through the hall in an advanced state of intoxication,” Carrie Catt reported.

The women and their allies knew they had a one-vote margin of support in the House. Then the speaker, whom they had counted on as a “yes,” changed his mind.

(I love this moment. Women’s suffrage is tied to the railroad track and the train is bearing down fast when suddenly. …)

Suddenly, Harry Burn, the youngest member of the House, a 24-year-old “no” vote from East Tennessee, got up and announced that he had received a letter from his mother telling him to “be a good boy and help Mrs. Catt.”

“I know that a mother’s advice is always the safest for a boy to follow,” Burn said, switching sides.

We celebrate Women’s Suffrage Day on Aug. 26, which is when the amendment officially became part of the Constitution. But I like Aug. 18, which is the day that Harry Burn jumped up in the Tennessee Legislature, waving his mom’s note from home. I told the story once in Atlanta, and a woman in the audience said that when she was visiting her relatives in East Tennessee, she had gone to put a yellow rose on Harry Burn’s grave.

I got a little teary.

“Well, actually,” she added, “it was because I couldn’t find his mother.”

This article has been revised to reflect the following correction:

Correction: August 14, 2010

An earlier version of this article incorrectly stated that the House of Representatives was composed of only men in 1918. Jeannette Rankin, a female representative from Montana, served from 1917 to 1919.

http://www.nytimes.com/2010/08/14/opinion/14collins.html

My Favorite August: The 70 year Slog to Women’s Suffrage

By GAIL COLLINS
The New York Times, August 13, 2010

The story in American history I most like to tell is the one about how women got the right to vote 90 years ago this month. It has everything. Adventure! Suspense! Treachery! Drunken legislators!

But, first, there was a 70-year slog.

Which is really the important part. We always need to remember that behind almost every great moment in history, there are heroic people doing really boring and frustrating things for a prolonged period of time.

That great suffragist and excellent counter, Carrie Chapman Catt, estimated that the struggle had involved 56 referendum campaigns directed at male voters, plus “480 campaigns to get Legislatures to submit suffrage amendments to voters, 47 campaigns to get constitutional conventions to write woman suffrage into state constitutions; 277 campaigns to get State party conventions to include woman suffrage planks, 30 campaigns to get presidential party campaigns to include woman suffrage planks in party platforms and 19 campaigns with 19 successive Congresses.”

And you thought health care reform was a drawn-out battle.

The great, thundering roadblock to progress was — wait for the surprise — the U.S. Senate. All through the last part of the 19th century and into the 20th, attempts to amend the U.S. Constitution ran up against a wall of conservative Southern senators.

So the women decided to win the vote by amending every single state constitution, one by one.

There were five referenda in South Dakota alone. Susan B. Anthony spent more time there than a wheat farmer. But she never lost hope. The great day was coming, she promised: “It’s coming sooner than most people think.” I love this remark even more because she made it in 1895.

Sometimes I fantasize about traveling back through time and telling my historical heroes and heroines how well things worked out in the end. I particularly enjoy the part where I find Vincent van Gogh and inform him that one of the unsold paintings piled up over in the corner will eventually go for $80 million. But I never imagine telling Susan B. Anthony how well American women are doing in the 21st century because her faith in her country and her cause was so strong that she wouldn’t be surprised.

The constitutional amendment that finally did pass Congress bore Anthony’s name. It came up before the House of Representatives in 1918 with the two-thirds votes needed for passage barely within reach. One congressman who had been in the hospital for six months had himself carted to the floor so he could support suffrage. Another, who had just broken his shoulder, refused to have it set for fear he’d be too late to be counted. Representative Frederick Hicks of New York had been at the bedside of his dying wife but left at her urging to support the cause. He provided the final, crucial vote, and then returned home for her funeral.

The Senate failed to follow suit. But Woodrow Wilson, a president who had the winning quality of being very vulnerable to nagging by women, pushed the amendment through the next year. The states started ratifying. Then things stalled just one state short of success.

Ninety years ago this month, all eyes turned to Tennessee, the only state yet to ratify with its Legislature still in session. The resolution sailed through the Tennessee Senate. As it moved on to the House, the most vigorous opposition came from the liquor industry, which was pretty sure that if women got the vote, they’d use it to pass Prohibition. Distillery lobbyists came to fight, bearing samples.

“Both suffrage and anti-suffrage men were reeling through the hall in an advanced state of intoxication,” Carrie Catt reported.

The women and their allies knew they had a one-vote margin of support in the House. Then the speaker, whom they had counted on as a “yes,” changed his mind.

(I love this moment. Women’s suffrage is tied to the railroad track and the train is bearing down fast when suddenly. …)

Suddenly, Harry Burn, the youngest member of the House, a 24-year-old “no” vote from East Tennessee, got up and announced that he had received a letter from his mother telling him to “be a good boy and help Mrs. Catt.”

“I know that a mother’s advice is always the safest for a boy to follow,” Burn said, switching sides.

We celebrate Women’s Suffrage Day on Aug. 26, which is when the amendment officially became part of the Constitution. But I like Aug. 18, which is the day that Harry Burn jumped up in the Tennessee Legislature, waving his mom’s note from home. I told the story once in Atlanta, and a woman in the audience said that when she was visiting her relatives in East Tennessee, she had gone to put a yellow rose on Harry Burn’s grave.

I got a little teary.

“Well, actually,” she added, “it was because I couldn’t find his mother.”

This article has been revised to reflect the following correction:

Correction: August 14, 2010

An earlier version of this article incorrectly stated that the House of Representatives was composed of only men in 1918. Jeannette Rankin, a female representative from Montana, served from 1917 to 1919.

http://www.nytimes.com/2010/08/14/opinion/14collins.html

Dr. Hsiao Lays the Groundwork for his Designs

By Ethan Parke
Vermont for Single Payer Supporter, Montpelier
August 7, 2010

It was an impressive performance on August 5th by Professor William Hsiao, the Harvard health policy economist who has been hired to design three universal health care systems for Vermont. Dr. Hsiao was in Montpelier to give a progress report to the Vermont Health Care Reform Commission.

Using his courteous, often humorous demeanor, and his total command of the subject, Dr. Hsiao deftly fielded skeptical questions and gave every indication that the health care designs he and his team are working on will be comprehensive, evidence-based, and tailored to fit Vermont.

“We’re not doing a design in an ivory tower,” said Dr. Hsiao. “We’re designing something in the real world.” Hsiao said his researchers have been interviewing health care providers, insurance companies, and state officials, to gather background data and to fully understand Vermont’s health care problems and the possible solutions.

Throughout Hsiao’s presentation, what came clear was that in order to control costs and to make health care universal, there must be a rational system. Right now Vermont only has a patchwork of unaffordable insurance based on adverse selection, various government programs, problematic fee-for-service provider compensation, and fragmented financing, Hsiao said.

“No country can control costs unless it has a health care system operating as a whole,” declared Dr. Hsiao. He said Taiwan reduced costs by 8 percent in the first year of its universal health care program—but only because it created a single payer financing mechanism.

State Representative George Till, who is a physician, challenged that assumption. “I agree with your diagnosis, but I don’t agree that the problem must be corrected by a single payer system,” said Till. He asked Hsiao if costs couldn’t be controlled simply by paying all providers the same rate, much like Medicare does.

Dr. Hsiao replied that mandating a uniform payment rate is one aspect of a single payer system, but that in order to control costs you must also unify the payment source as much as possible. Only by taking this extra step can cost shifting be eliminated, and fraud and abuse be kept in check, he said. Hsiao’s implication was that a system that consolidates financing can build in incentives and disincentives to achieve desired results, whereas fragmented financing encourages each provider to find ways for others to pick up costs.

Another commission member, State Senator Kevin Mullen, voiced skepticism on two issues. He said when lawmakers tried to enact health care reform several years ago, IBM objected that it would not want to have employee insurance in Vermont that was different from insurance covering its employees elsewhere. Mullen also said he thought the federal ERISA law would block reform efforts in Vermont. “I worry that we will just be spinning our wheels again,” said Mullen. “I would like to see some real progress next year.”

Hsiao deflected the point about IBM, saying that a company doing business all over the world would be very used to publicly financed health care systems. On the subject of ERISA, Dr. Hsiao joked that “It’s my nightmare.” He said he knows full well that the ERISA law has many interpretations, but added that he is talking to experts at Harvard Law School about the issue.

Two commission members, Con Hogan and State Representative Topper McFaun, said they hoped Hsiao’s work would include as much economic analysis as possible. Unfortunately, said Hsiao, there is only so much his team can accomplish with the funding that has been provided and the short time frame allowed. A key member of Hsiao’s team, renowned MIT economist Jonathan Gruber, will test the three designs using a micro-economic model, Hsiao said. Gruber’s job will be to see how the designs would affect households and employers, but a full macro-economic analysis, looking at the effect of reform on the entire economy, is beyond the scope of Hsiao’s contract. Pressed on this point, Hsiao said he will certainly provide economic analysis, but it will be mostly qualitative and based on economic theory, not on precise numbers.

The three models to be designed by Hsiao’s team are (1) a state run single payer system, (2) a public option within a framework prescribed by the law passed last spring by the legislature, and (3) a consultant-designed plan. This third plan, according to Hsiao, will be designed within political and institutional constraints posed in Vermont. These constraints will be determined, in part, through “stakeholder analysis,” said Hsiao. It was unclear how the third plan might differ from the first, especially given Hsiao’s successful experience with single payer systems worldwide. One possible explanation is that the first design would be more or less a “pure single payer” and the third plan might be a single payer that is modified to fit Vermont realities.

Time will tell which design, if any, the next legislature and the new governor will decide to implement. For the time being, however, single payer supporters should be thrilled that the world’s foremost health system designer is working for Vermont. Dr. Hsiao’s breadth of knowledge, his pragmatic approach, his optimism, and his matter-of-fact endorsement of single payer dazzled his audience last Thursday in Montpelier.

http://vermontforsinglepayer.org/blog/2010/08/dr-hsiao-lays-the-groundwork-for-his-designs/

Is WellPoint's business model viable?

Big and beleaguered: WellPoint’s bad image

By Emily Berry
American Medical News
August 16, 2010
Thus far, WellPoint and insurance trade group America’s Health Insurance Plans have responded to criticism about rate increases with variations on the same theme: Medical costs, driven by physicians and hospitals, are rising so dramatically that insurers cannot avoid raising rates.
The argument doesn’t appear to work if WellPoint and AHIP are trying to elicit sympathy or understanding from the public or policymakers.
As it went on the defensive using studies demonstrating higher medical costs, WellPoint reduced payment for physicians in most of its markets by double-digit percentages for certain procedures, and the cuts were across all specialties, said Susanne Madden, CEO of the consulting firm Verden Group in Nyack, N.Y.
“They’ve done a spectacular job destroying customer loyalty and physician loyalty at the same time, and they’re not making any friends in government,” she said. “They don’t seem to have a grasp on the fact that if they do not have physicians as allies in some way, shape or form, they’re going to have a hard time.”
If it cannot raise rates, WellPoint — and other national insurers — will have to cut costs, experts said. This is where physicians might be affected. WellPoint is likely to cut costs by further reducing payments for hospitals and physicians and restricting networks, experts said.
http://www.ama-assn.org/amednews/2010/08/16/bisa0816.htm

WellPoint’s phenomenal business success has been largely due to its ability to offer competitive premiums by limiting what it has had to pay out in health care benefits. Will WellPoint’s business model continue to be viable?
It has targeted its marketing to the healthy workforce and their young, healthy families, and to the portion of the individual market that can pass underwriting standards. Under the Patient Protection and Affordable Care Act (PPACA) WellPoint will no longer be able to exclude individuals with greater health care needs, neither by favorable selection nor by retroactive rescissions. Without other innovative cost controls, premium increases will be inevitable.
Under PPACA, WellPoint will also be required to provide a standard package of benefits, preventing them from reducing health care spending by cutting benefits. They will also be required to provide plans with tiered actuarial values, prohibiting them from requiring ever greater out-of-pocket cost sharing by the patient. Thus premiums will have to reflect the actual increases in health care costs.
It would be possible for WellPoint to slash reimbursement rates for physicians and hospitals, but that would be a terrible business decision wince it would risk a massive exodus from their provider networks.
It is likely that WellPoint and other insurers will establish more restrictive networks with providers who are willing to accept payment reductions in exchange for greater volume, but that loss of choice would certainly further alienate their plan subscribers, also threatening their market.
The plans may search for other innovations, including some of those in PPACA, but at this time there is little prospect that cost savings could be achieved without creating greater animosity amongst patients and providers.
To comply with PPACA, WellPoint will have to increase premiums and market primarily plans with low actuarial values of 60 or 70 percent, leaving excessive out-of-pocket costs for those with health care needs. The subsidies in PPACA are too small to prevent financial hardship, and there is little political will to expand the federal budget by increasing the subsidies.
The situation can only grow worse with time. The WellPoint model will inevitably end up in the trash heap of failed policies as it is replaced with a single payer national health program – a program that would meet the needs of patients and their health care professionals.

Is WellPoint’s business model viable?

Big and beleaguered: WellPoint’s bad image

By Emily Berry
American Medical News
August 16, 2010

Thus far, WellPoint and insurance trade group America’s Health Insurance Plans have responded to criticism about rate increases with variations on the same theme: Medical costs, driven by physicians and hospitals, are rising so dramatically that insurers cannot avoid raising rates.

The argument doesn’t appear to work if WellPoint and AHIP are trying to elicit sympathy or understanding from the public or policymakers.

As it went on the defensive using studies demonstrating higher medical costs, WellPoint reduced payment for physicians in most of its markets by double-digit percentages for certain procedures, and the cuts were across all specialties, said Susanne Madden, CEO of the consulting firm Verden Group in Nyack, N.Y.

“They’ve done a spectacular job destroying customer loyalty and physician loyalty at the same time, and they’re not making any friends in government,” she said. “They don’t seem to have a grasp on the fact that if they do not have physicians as allies in some way, shape or form, they’re going to have a hard time.”

If it cannot raise rates, WellPoint — and other national insurers — will have to cut costs, experts said. This is where physicians might be affected. WellPoint is likely to cut costs by further reducing payments for hospitals and physicians and restricting networks, experts said.

http://www.ama-assn.org/amednews/2010/08/16/bisa0816.htm

WellPoint’s phenomenal business success has been largely due to its ability to offer competitive premiums by limiting what it has had to pay out in health care benefits. Will WellPoint’s business model continue to be viable?

It has targeted its marketing to the healthy workforce and their young, healthy families, and to the portion of the individual market that can pass underwriting standards. Under the Patient Protection and Affordable Care Act (PPACA) WellPoint will no longer be able to exclude individuals with greater health care needs, neither by favorable selection nor by retroactive rescissions. Without other innovative cost controls, premium increases will be inevitable.

Under PPACA, WellPoint will also be required to provide a standard package of benefits, preventing them from reducing health care spending by cutting benefits. They will also be required to provide plans with tiered actuarial values, prohibiting them from requiring ever greater out-of-pocket cost sharing by the patient. Thus premiums will have to reflect the actual increases in health care costs.

It would be possible for WellPoint to slash reimbursement rates for physicians and hospitals, but that would be a terrible business decision wince it would risk a massive exodus from their provider networks.

It is likely that WellPoint and other insurers will establish more restrictive networks with providers who are willing to accept payment reductions in exchange for greater volume, but that loss of choice would certainly further alienate their plan subscribers, also threatening their market.

The plans may search for other innovations, including some of those in PPACA, but at this time there is little prospect that cost savings could be achieved without creating greater animosity amongst patients and providers.

To comply with PPACA, WellPoint will have to increase premiums and market primarily plans with low actuarial values of 60 or 70 percent, leaving excessive out-of-pocket costs for those with health care needs. The subsidies in PPACA are too small to prevent financial hardship, and there is little political will to expand the federal budget by increasing the subsidies.

The situation can only grow worse with time. The WellPoint model will inevitably end up in the trash heap of failed policies as it is replaced with a single payer national health program – a program that would meet the needs of patients and their health care professionals.

Medicare and physicians' pay

Letter to the Editor
Chicago Tribune
August 12, 2010

This is in response to the recent opinion piece in the Chicago Tribune “Patients will end up receiving less care” (Commentary, Aug. 5), by Cory Franklin, a physician with NorthShore University HealthSystem.

Franklin’s opinion piece repeats many mistaken ideas about Medicare and about single-payer health systems.

But I would like in particular to address his statements about physician satisfaction.

Private insurance companies may, on paper, pay physicians substantially more than Medicare, but this must be taken in the context that Medicare actually pays the rates it publishes and pays on time, while private insurance companies subject physicians to a maze of voluntary and involuntary discounts, denials, delays and underpayments that make calculation of what physicians actually get impossible.

Under an improved Medicare for all, not only would physicians be paid reliably, but they would reduce their administrative overhead by one-half due to greatly simplified billing, while at the same time having no more pre-authorizations and pre-approvals to deal with, and no uncollectable bills.

Thus the day Medicare for all is implemented, physicians will get a raise, even without any change in Medicare payment.

Furthermore physicians will be able to unite to negotiate fair reimbursement, rather than being at the mercy of multiple payers, each promising to deliver patients in return for discounted payments.

Anne Scheetz, M.D., Chicago

Medicare and physicians’ pay

Letter to the Editor
Chicago Tribune
August 12, 2010

This is in response to the recent opinion piece in the Chicago Tribune “Patients will end up receiving less care” (Commentary, Aug. 5), by Cory Franklin, a physician with NorthShore University HealthSystem.

Franklin’s opinion piece repeats many mistaken ideas about Medicare and about single-payer health systems.

But I would like in particular to address his statements about physician satisfaction.

Private insurance companies may, on paper, pay physicians substantially more than Medicare, but this must be taken in the context that Medicare actually pays the rates it publishes and pays on time, while private insurance companies subject physicians to a maze of voluntary and involuntary discounts, denials, delays and underpayments that make calculation of what physicians actually get impossible.

Under an improved Medicare for all, not only would physicians be paid reliably, but they would reduce their administrative overhead by one-half due to greatly simplified billing, while at the same time having no more pre-authorizations and pre-approvals to deal with, and no uncollectable bills.

Thus the day Medicare for all is implemented, physicians will get a raise, even without any change in Medicare payment.

Furthermore physicians will be able to unite to negotiate fair reimbursement, rather than being at the mercy of multiple payers, each promising to deliver patients in return for discounted payments.

Anne Scheetz, M.D., Chicago

U.S. Health Care System Ridiculous, Say Canadians

By Jane Bryant Quinn
CBS Moneywatch, Aug. 12, 2010

You have to leave the country to get a proper perspective on the high cost of health care in the United States. Even if it’s just over the border.

My husband and I spent a long weekend in Canada last month, lapping up plays at Stratford, Ontario’s justly famous Shakespeare Festival. At our bed-and-breakfast, we lapped up waffles and strawberries, and got an earful from Brenda, our host, on the craziness of American medical bills.

She was planning a trip to Florida, where her brother lives, at the end of the theater season. For safety she’ll buy a private travelers’ health insurance policy tailored to costs in the United States. She doesn’t dare leave home without it. “I’d go bankrupt if I had to pay even part of an American bill,” she said.

At home, Brenda is covered by Ontario’s single-payer policy, in a tax-supported system that amounts to Medicare for all. She gets only token coverage, however, if she falls ill or has an accident in another country, and America scares her. Some countries’ medical systems are affordable, she says, but not the one in the United States. Canadians pay more for travelers’ policies usable in the U.S. than for policies designed for use anywhere else in the world.

Brenda bristled with facts. When her brother in Florida had to be rushed to the hospital last year, the ambulance bill came to $1,300. When her husband had a similar emergency in Stratford, they paid $45. If she needs a Florida doctor, she’ll be reimbursed at Canadian rates, which are significantly lower than the rates charged in the U.S. Brenda tried to be polite but she couldn’t understand why Americans endure it.

As luck would have it, a doctor was staying at our bed-and-breakfast, too. He makes less than his peers in the U.S. and said he didn’t care. Life was fine and he was glad not to have to negotiate prices with patients or turn away the uninsured. His bottom line on U.S. care: “The corporations that own American hospitals exist only to make money, that’s the problem.”

Americans imagine that Canadians rue their system because of the waiting lists for elective surgery. The rich avoid lines by going to the U.S. (or elsewhere in the world) and paying out-of-pocket. At our Stratford breakfast, however, no one worried about a four-month wait for a hip transplant. They all said they take the waits into account by starting the march toward elective surgery a little earlier than American patients might. As long as they were kept pain free, they saw no reason to hustle toward the knife.

As for rumors running around the web that older Canadians can’t get lifesaving or pain-reducing procedures such as heart bypass surgery: They’re false.

Yes, but what about taxes? The face of the doctor’s wife got a little grim. “Taxes go up and people just pay them,” she said. For example, sales taxes on many items rose in Ontario in July. She didn’t like it, but would she give up her health-care system in return for a lower tax? Not a chance. “No one in Canada lives in fear of medical costs,” she said.

I prowled around the web, looking for comments on Canadian medical care. Health outcomes are generally better than in the United States.

No system is perfect, of course, and there are grumps. “Healthcare is not free in Canada even though it seems like it. We are taxed to death,” one person complained (while going on to say that Ontario ought to boost the amount it reimburses patients for clinic care).

The stories that affected me more told how reliable access to care can change a life. Here’s just one:

“My dad at the age of 50 was forced to go into business for himself. I am pretty sure he would not be able to afford or qualify for any health insurance at his age. But because he was Canadian, he was able to start his own company. I am also pretty sure that, considering the expenses I incurred with three premature children, my employer would be none too happy with me if I worked for a small American firm. That’s something I’m not worried about here.”

Will Americans ever achieve that same peace of mind?

http://moneywatch.bnet.com/investing/blog/make-money/us-health-care-system-ridiculous-say-canadians/392/

Corporate perquisites and drug testing the left

Executives at health insurance giants cash in as firms plan fee hikes

By Noam N. Levey
Los Angeles Times
August 11, 2010

The top executives at the nation’s five largest for-profit health insurance companies pulled in nearly $200 million in compensation last year — while their businesses prepared to hit ratepayers with double-digit premium increases, according to a new analysis conducted by Health Care for America Now.

http://www.latimes.com/health/la-fi-insurance-salaries-20100811,0,7386070.story

And…

White House spokesman blasts liberal critics

By Peter Nicholas and Tom Hamburger
Los Angeles Times
August 11, 2010

Festering tensions between the White House and liberal activists flared Tuesday, with presidential Press Secretary Robert Gibbs scolding what he called “the professional left” for its vocal objections to President Obama’s record.

“These people ought to be drug tested,” Gibbs said. “They will be satisfied when we have Canadian healthcare and we’ve eliminated the Pentagon. That’s not reality. They wouldn’t be satisfied if Dennis Kucinich was president.”

The backlash against Gibbs was swift.

Dr. Quentin Young, a Chicago physician and national coordinator of Physicians for a National Health Program, which advocates for single-payer health insurance, said he was “incredulous” when he first heard of Gibbs’ comments. Young, an early supporter of Obama, immediately wrote Gibbs.

“I believe that unless you retract the insulting description of deeply committed citizens you will drive off those of us who supported the president’s campaign and have anguished over the fruitless lurches to the right that have characterized the first half of the president’s first term,” Young wrote.

http://www.latimes.com/news/nationworld/nation/la-na-gibbs-20100811,0,7297603.story

Comment: 

By Don McCanne, MD

It is no secret what the Democrats under the leadership of President Obama did when it came time to fix our health care system. They left the big corporations in charge of the health care funds. The report on the very high compensation for the top executives of the nation’s five largest for-profit health insurance companies at a time of double digit premium increases leaves no doubt as to who the financing infrastructure is designed to benefit. It is a sickening example of our national priorities which result in a massive transfer from the ordinary people to the wealthy.

Liberals who care are becoming less tolerant. The message has been received by The White House. Their response? We should be “drug tested” for wanting “Canadian healthcare.”

PNHP’s Quentin Young has responded appropriately to presidential Press Secretary Robert Gibbs, as quoted above.

It isn’t that those on the left who wanted a better deal for all Americans are poor losers. It’s that the administration of Change who greased the conduits for the upward flow of societal funds are bad winners.

How effective the mind is in dealing with perceptions and realities brings us to asking another question. Who is it that needs to be drug tested?