Dr. Arnold Relman, Outspoken Medical Editor, Dies at 91

By Douglas Martin
The New York Times, June 21, 2014

In a provocative essay in the New England journal on Oct. 23, 1980, Dr. Relman, the editor in chief, issued the clarion call that would resound through his career, assailing the American health care system as caring more about making money than curing the sick. He called it a “new medical-industrial complex.”

His targets were not the old-line drug companies and medical-equipment suppliers, but rather a new generation of health care and medical services — profit-driven hospitals and nursing homes, diagnostic laboratories, home-care services, kidney dialysis centers and other businesses that made up a multibillion-dollar industry.

“The private health care industry is primarily interested in selling services that are profitable, but patients are interested only in services that they need,” he wrote. In an editorial, The Times said he had “raised a timely warning.”

In 2012, asked how his prediction had turned out, Dr. Relman said medical profiteering had become even worse than he could have imagined.

His prescription was a single taxpayer-supported insurance system, like Medicare, to replace hundreds of private, high-overhead insurance companies, which he called “parasites.” To control costs, he advocated that doctors be paid a salary rather than a fee for each service performed.

Dr. Relman recognized that his recommendations for repairing the health care system might be politically impossible, but he insisted that it was imperative to keep trying. Though he said he was glad that the health care law signed by President Obama in 2010 enabled more people to get insurance, he saw the legislation as a partial reform at best.

The health care system, he said, was in need of a more aggressive solution to fundamental problems, which he had discussed, somewhat philosophically, in an interview with Technology Review in 1989.

“Many people think that doctors make their recommendations from a basis of scientific certainty, that the facts are very clear and there’s only one way to diagnose or treat an illness,” he told the review. “In reality, that’s not always the case. Many things are a matter of conjecture, tradition, convenience, habit. In this gray area, where the facts are not clear and one has to make certain assumptions, it is unfortunately very easy to do things primarily because they are economically attractive.”

****

The Arnold Relman Memorial Fund

Physicians for a National Health Program (PNHP)
From “Physicians and Politics” by Arnold S. Relman, M.D., in JAMA Internal Medicine, June 2, 2014:

“A new health care system that provides universal access and is affordable and efficient will be difficult to achieve. The private insurers and all the other businesses that profit from the current commercial system will resist it. Major reform will need wide public support, which in turn will rely on advocacy by the medical profession. But I believe that reform will nevertheless be eventually enacted because it meets a widely shared and growing public desire for more fairness in an American society pervaded by inequality in access to good health care and many other social benefits.

“Physicians have a unique power to reshape the medical care system. They are what makes it work and are best qualified to use and evaluate its resources. But if they never unite to press for major reform, the future of health care in the United States will indeed be bleak. We will end up either with a system controlled by blind market forces or with a system entangled in complicated and intrusive government regulations. In either case it would be impossible to practice good patient-centered medicine, and the quality and effectiveness of our health care system would sink even lower among the ranks of developed countries. It is up to the medical profession to see that this does not happen.”

Dr. Arnold S. Relman, professor emeritus of medicine and social medicine at Harvard Medical School, and past editor-in-chief of The New England Journal of Medicine, died on June 17, 2014. He was 91.

Dr. Relman was one of the most distinguished figures in U.S. medicine, and he leaves a rich legacy of research and writing on the economic, ethical, legal and social dimensions of health care.

An important part of this legacy is embodied in his influential book, “A Second Opinion: A Plan for Universal Coverage Serving Patients Over Profit,” in which he makes an impassioned case for establishing “a single-payer system sponsored by the federal government” coupled with “a reorganized medical care system based on independent multispecialty group practice with salaried physicians.”

Among Dr. Relman’s many achievements during his tenure as editor-in-chief at the NEJM, he oversaw the journal’s publication of “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. At the time, in 1989, the article’s appearance in the NEJM represented a major breakthrough for the mainstream discussion of single payer in the medical profession. It also served as a seminal article in the establishment of Physicians for a National Health Program.

In addition to Dr. Relman’s numerous awards and honors from professional societies, scientific academies, and universities, in November 2013 he was presented with PNHP’s Dr. Quentin D. Young Health Activist Award for his unswerving advocacy for a more just and equitable health care system in the United States.

Dr. Relman leaves his wife, Dr. Marcia Angell; two sons, Dr. David Relman and John Relman; a daughter, Margaret Batten; six granddaughters; and two stepdaughters, Lara and Eliza Goitein.

Shortly before his death, Dr. Relman asked that in lieu of flowers, donations in his memory be directed to PNHP.

Physicians for a National Health Program is honoring Dr. Relman’s legacy by establishing The Arnold Relman Memorial Fund, dedicated to expanding PNHP’s special outreach programs to the medical profession, including to medical residents and fellows, to advance the understanding and realization of Dr. Relman’s vision.

The Arnold Relman Memorial Fund: https://org.salsalabs.com/o/307/p/salsa/web/common/public/content?content_item_KEY=12729

****

Comment:

By Don McCanne, MD

Although some have described Dr. Relman’s 1980 New England Journal of Medicine essay on the medical-industrial complex as controversial, it would better be described as a release of the medical profession from the shackles of the old conservative guard of organized medicine. Although always exercising editorial independence, the NEJM was a publication of the Massachusetts Medical Society – the state chapter of organized medicine. For those of us on the West Coast who were somewhat removed from Boston and Chicago medical politics, Dr. Relman became and remained a beacon of hope for the future of a health care system that would be wholly dedicated to the patient rather than to vested interests.

Perhaps the greatest breakthrough was in 1989 when he published in NEJM “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. That signaled the start of a movement coming from within the medical profession in support of health care justice for all.

Although Dr. Relman had requested that donations be made to PNHP in lieu of flowers, the paramount action that we should take is to honor his legacy by intensifying our efforts to transform our health care system from a medical-industrial complex into a nirvana of the healing arts. That does require that we become more thoroughly enmeshed in technical details such as enacting an Expanded and Improved Medicare for All. But Bud Relman wouldn’t have it any other way.

Dr. Arnold Relman, Outspoken Medical Editor, Dies at 91

By Douglas Martin
The New York Times, June 21, 2014

In a provocative essay in the New England journal on Oct. 23, 1980, Dr. Relman, the editor in chief, issued the clarion call that would resound through his career, assailing the American health care system as caring more about making money than curing the sick. He called it a “new medical-industrial complex.”

His targets were not the old-line drug companies and medical-equipment suppliers, but rather a new generation of health care and medical services — profit-driven hospitals and nursing homes, diagnostic laboratories, home-care services, kidney dialysis centers and other businesses that made up a multibillion-dollar industry.

“The private health care industry is primarily interested in selling services that are profitable, but patients are interested only in services that they need,” he wrote. In an editorial, The Times said he had “raised a timely warning.”

In 2012, asked how his prediction had turned out, Dr. Relman said medical profiteering had become even worse than he could have imagined.

His prescription was a single taxpayer-supported insurance system, like Medicare, to replace hundreds of private, high-overhead insurance companies, which he called “parasites.” To control costs, he advocated that doctors be paid a salary rather than a fee for each service performed.

Dr. Relman recognized that his recommendations for repairing the health care system might be politically impossible, but he insisted that it was imperative to keep trying. Though he said he was glad that the health care law signed by President Obama in 2010 enabled more people to get insurance, he saw the legislation as a partial reform at best.

The health care system, he said, was in need of a more aggressive solution to fundamental problems, which he had discussed, somewhat philosophically, in an interview with Technology Review in 1989.

“Many people think that doctors make their recommendations from a basis of scientific certainty, that the facts are very clear and there’s only one way to diagnose or treat an illness,” he told the review. “In reality, that’s not always the case. Many things are a matter of conjecture, tradition, convenience, habit. In this gray area, where the facts are not clear and one has to make certain assumptions, it is unfortunately very easy to do things primarily because they are economically attractive.”

http://www.nytimes.com/2014/06/22/us/dr-arnold-relman-outspoken-medical-…

****

The Arnold Relman Memorial Fund

Physicians for a National Health Program (PNHP)
From “Physicians and Politics” by Arnold S. Relman, M.D., in JAMA Internal Medicine, June 2, 2014:

“A new health care system that provides universal access and is affordable and efficient will be difficult to achieve. The private insurers and all the other businesses that profit from the current commercial system will resist it. Major reform will need wide public support, which in turn will rely on advocacy by the medical profession. But I believe that reform will nevertheless be eventually enacted because it meets a widely shared and growing public desire for more fairness in an American society pervaded by inequality in access to good health care and many other social benefits.

“Physicians have a unique power to reshape the medical care system. They are what makes it work and are best qualified to use and evaluate its resources. But if they never unite to press for major reform, the future of health care in the United States will indeed be bleak. We will end up either with a system controlled by blind market forces or with a system entangled in complicated and intrusive government regulations. In either case it would be impossible to practice good patient-centered medicine, and the quality and effectiveness of our health care system would sink even lower among the ranks of developed countries. It is up to the medical profession to see that this does not happen.”

Dr. Arnold S. Relman, professor emeritus of medicine and social medicine at Harvard Medical School, and past editor-in-chief of The New England Journal of Medicine, died on June 17, 2014. He was 91.

Dr. Relman was one of the most distinguished figures in U.S. medicine, and he leaves a rich legacy of research and writing on the economic, ethical, legal and social dimensions of health care.

An important part of this legacy is embodied in his influential book, “A Second Opinion: A Plan for Universal Coverage Serving Patients Over Profit,” in which he makes an impassioned case for establishing “a single-payer system sponsored by the federal government” coupled with “a reorganized medical care system based on independent multispecialty group practice with salaried physicians.”

Among Dr. Relman’s many achievements during his tenure as editor-in-chief at the NEJM, he oversaw the journal’s publication of “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. At the time, in 1989, the article’s appearance in the NEJM represented a major breakthrough for the mainstream discussion of single payer in the medical profession. It also served as a seminal article in the establishment of Physicians for a National Health Program.

In addition to Dr. Relman’s numerous awards and honors from professional societies, scientific academies, and universities, in November 2013 he was presented with PNHP’s Dr. Quentin D. Young Health Activist Award for his unswerving advocacy for a more just and equitable health care system in the United States.

Dr. Relman leaves his wife, Dr. Marcia Angell; two sons, Dr. David Relman and John Relman; a daughter, Margaret Batten; six granddaughters; and two stepdaughters, Lara and Eliza Goitein.

Shortly before his death, Dr. Relman asked that in lieu of flowers, donations in his memory be directed to PNHP.

Physicians for a National Health Program is honoring Dr. Relman’s legacy by establishing The Arnold Relman Memorial Fund, dedicated to expanding PNHP’s special outreach programs to the medical profession, including to medical residents and fellows, to advance the understanding and realization of Dr. Relman’s vision.

The Arnold Relman Memorial Fund:https://org.salsalabs.com/o/307/p/salsa/web/common/public/content?conten…

Although some have described Dr. Relman’s 1980 New England Journal of Medicine essay on the medical-industrial complex as controversial, it would better be described as a release of the medical profession from the shackles of the old conservative guard of organized medicine. Although always exercising editorial independence, the NEJM was a publication of the Massachusetts Medical Society – the state chapter of organized medicine. For those of us on the West Coast who were somewhat removed from Boston and Chicago medical politics, Dr. Relman became and remained a beacon of hope for the future of a health care system that would be wholly dedicated to the patient rather than to vested interests.

Perhaps the greatest breakthrough was in 1989 when he published in NEJM “A National Health Program for the United States: A Physicians’ Proposal,” by Dr. David U. Himmelstein, Dr. Steffie Woolhandler, and 29 others. That signaled the start of a movement coming from within the medical profession in support of health care justice for all.

Although Dr. Relman had requested that donations be made to PNHP in lieu of flowers, the paramount action that we should take is to honor his legacy by intensifying our efforts to transform our health care system from a medical-industrial complex into a nirvana of the healing arts. That does require that we become more thoroughly enmeshed in technical details such as enacting an Expanded and Improved Medicare for All. But Bud Relman wouldn’t have it any other way.

Survey of Non-Group Health Insurance Enrollees

By Liz Hamel, Mira Rao, Larry Levitt, Gary Claxton, Cynthia Cox, Karen Pollitz and Mollyann Brodie
Kaiser Family Foundation, June 19, 2014

The Kaiser Family Foundation Survey of Non-Group Health Insurance Enrollees is the first in a series of surveys taking a closer look at the entire non-group market. This first survey was conducted from early April to early May 2014, after the close of the first ACA open enrollment period. It reports the views and experience of all non-group enrollees, including those with coverage obtained both inside and outside the Exchanges, and those who were uninsured prior to the ACA as well as those who had a previous source of coverage (non-group or otherwise).

• The ACA motivated many non-group enrollees to get coverage, and nearly six in ten Exchange enrollees were previously uninsured
• Enrollees in ACA-compliant plans report somewhat worse health than those in pre-ACA plans
• Majority gives positive ratings to their new insurance plans and says they are a good value, though four in ten find it difficult to afford their monthly premium
• Among plan switchers, as many report paying less as paying more for their new plans, but survey shows some signs of a trend toward narrower provider networks
• Plan switchers are less likely to be satisfied with plan costs, maybe because half of them report having their previous plan cancelled
• Half got help with enrollment; most say the shopping process was easy, but a third say it was difficult to set up a Marketplace account
• In the non-group market, those most likely to feel they have benefited from the ACA are people getting subsidies, those most likely to feel negatively impacted are those who had their plans cancelled

As a whole, non-group enrollees are more likely than the public overall to have a favorable view of the ACA – they are roughly evenly split between positive and negative views (47 percent favorable, 43 percent unfavorable), while views among 18-64 year-olds nationally are more negative than positive (38 percent favorable, 46 percent unfavorable1. Like it is nationally, opinion of the ACA among non-group enrollees is strongly divided along party lines. About equal shares of non-group enrollees feel their families have benefited (34 percent) and been negatively affected (29 percent) by the ACA. However, these averages mask substantial differences within the non-group market. Those who are most likely to feel they have benefited from the law are people receiving government financial assistance for Exchange plan premiums (60 percent benefited), while those most likely to feel they have been negatively affected by the law are people who experienced a plan cancellation in the past year (57 percent negatively affected).

Survey of Non-Group Health Insurance Enrollees

Does the Affordable Care Act Cover the Uninsured?

By Drew Altman
The Wall Street Journal, June 19, 2014

Among the facts: 57% of those who bought coverage from the new marketplaces during the first ACA open-enrollment period were previously uninsured, and seven out of 10 of them had been uninsured for two years or more.

The number of uninsured people covered through the exchanges is far higher than critics of the ACA have suggested. On the other hand, the number is probably a little lower than supporters of the health-care law would like. As is typical in the highly polarized debate about the ACA, the facts are not what either side would want them to be.

http://blogs.wsj.com/washwire/2014/06/19/does-the-affordable-care-act-cover-the-uninsured/

****

Comment:

By Don McCanne, MD

It is ironic that we have a health reform program that satisfies neither proponents nor opponents. On the question of how effective has the Affordable Care Act been in insuring those who were previously uninsured, supporters are concerned that it was not enough and critics are disappointed to see that more people became insured under the program than had been insured under prior plans (since that refutes their argument that the exchanges are ineffective because it only shifted previously insured individuals into the exchanges).

WSJ’s Drew Altman makes the point that “in the highly polarized debate about the ACA, the facts are not what either side would want them to be.”

So is this a balanced debate between two sides with legitimate views? Opponents would like to see much of the Act repealed, but the few recommendations they do have, they can’t even agree on. Besides, most of their recommendations would not repair the flaws in our health care system, and some would make them worse.

Supporters at least want to see improvements in coverage, access and affordability, not to mention quality, but they realize that ACA is falling far short of goals (though they may not want to admit it) and has actually had a negative impact in lowering the actuarial value of plans – making health care less affordable for many by increasing out-of-pocket costs – while also reducing access by paring down the numbers of physicians and hospitals in the insurers’ provider networks.

We can reject the views of those polarized against reform as not being responsive to our overpriced and underperforming health care system.

Although we support the views of those who would repair the flaws, we can reject the policies they have selected as being cruelly inadequate. Those who really do want reform should join us in supporting single payer – a model that would be truly universal, accessible, affordable, and, properly designed, would improve the quality of health care in the United States. In fact, many of the current opponents might consider supporting a program that actually would work, especially if they see that it would not increase overall spending. We should tell them about it.

Survey of Non-Group Health Insurance Enrollees

By Liz Hamel, Mira Rao, Larry Levitt, Gary Claxton, Cynthia Cox, Karen Pollitz and Mollyann Brodie
Kaiser Family Foundation, June 19, 2014

The Kaiser Family Foundation Survey of Non-Group Health Insurance Enrollees is the first in a series of surveys taking a closer look at the entire non-group market. This first survey was conducted from early April to early May 2014, after the close of the first ACA open enrollment period. It reports the views and experience of all non-group enrollees, including those with coverage obtained both inside and outside the Exchanges, and those who were uninsured prior to the ACA as well as those who had a previous source of coverage (non-group or otherwise).

• The ACA motivated many non-group enrollees to get coverage, and nearly six in ten Exchange enrollees were previously uninsured
• Enrollees in ACA-compliant plans report somewhat worse health than those in pre-ACA plans
• Majority gives positive ratings to their new insurance plans and says they are a good value, though four in ten find it difficult to afford their monthly premium
• Among plan switchers, as many report paying less as paying more for their new plans, but survey shows some signs of a trend toward narrower provider networks
• Plan switchers are less likely to be satisfied with plan costs, maybe because half of them report having their previous plan cancelled
• Half got help with enrollment; most say the shopping process was easy, but a third say it was difficult to set up a Marketplace account
• In the non-group market, those most likely to feel they have benefited from the ACA are people getting subsidies, those most likely to feel negatively impacted are those who had their plans cancelled

As a whole, non-group enrollees are more likely than the public overall to have a favorable view of the ACA – they are roughly evenly split between positive and negative views (47 percent favorable, 43 percent unfavorable), while views among 18-64 year-olds nationally are more negative than positive (38 percent favorable, 46 percent unfavorable1. Like it is nationally, opinion of the ACA among non-group enrollees is strongly divided along party lines. About equal shares of non-group enrollees feel their families have benefited (34 percent) and been negatively affected (29 percent) by the ACA. However, these averages mask substantial differences within the non-group market. Those who are most likely to feel they have benefited from the law are people receiving government financial assistance for Exchange plan premiums (60 percent benefited), while those most likely to feel they have been negatively affected by the law are people who experienced a plan cancellation in the past year (57 percent negatively affected).

http://kff.org/private-insurance/report/survey-of-non-group-health-insur…

Does the Affordable Care Act Cover the Uninsured?

By Drew Altman
The Wall Street Journal, June 19, 2014

Among the facts: 57% of those who bought coverage from the new marketplaces during the first ACA open-enrollment period were previously uninsured, and seven out of 10 of them had been uninsured for two years or more.

The number of uninsured people covered through the exchanges is far higher than critics of the ACA have suggested. On the other hand, the number is probably a little lower than supporters of the health-care law would like. As is typical in the highly polarized debate about the ACA, the facts are not what either side would want them to be.

http://blogs.wsj.com/washwire/2014/06/19/does-the-affordable-care-act-co…

It is ironic that we have a health reform program that satisfies neither proponents nor opponents. On the question of how effective has the Affordable Care Act been in insuring those who were previously uninsured, supporters are concerned that it was not enough and critics are disappointed to see that more people became insured under the program than had been insured under prior plans (since that refutes their argument that the exchanges are ineffective because it only shifted previously insured individuals into the exchanges).

WSJ’s Drew Altman makes the point that “in the highly polarized debate about the ACA, the facts are not what either side would want them to be.”

So is this a balanced debate between two sides with legitimate views? Opponents would like to see much of the Act repealed, but the few recommendations they do have, they can’t even agree on. Besides, most of their recommendations would not repair the flaws in our health care system, and some would make them worse.

Supporters at least want to see improvements in coverage, access and affordability, not to mention quality, but they realize that ACA is falling far short of goals (though they may not want to admit it) and has actually had a negative impact in lowering the actuarial value of plans – making health care less affordable for many by increasing out-of-pocket costs – while also reducing access by paring down the numbers of physicians and hospitals in the insurers’ provider networks.

We can reject the views of those polarized against reform as not being responsive to our overpriced and underperforming health care system.

Although we support the views of those who would repair the flaws, we can reject the policies they have selected as being cruelly inadequate. Those who really do want reform should join us in supporting single payer – a model that would be truly universal, accessible, affordable, and, properly designed, would improve the quality of health care in the United States. In fact, many of the current opponents might consider supporting a program that actually would work, especially if they see that it would not increase overall spending. We should tell them about it.

Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law

By Louise Radnofsky
The Wall Street Journal, June 18, 2014

Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching.

That is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings, which stretch from Rhode Island to Washington state. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year, according to a Wall Street Journal review of the filings. That percentage represents the average rate increases for all individual health plans offered by that carrier.

At the same time, insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.

The rate proposals reflect a combination of big carriers stepping back from initial aggressive pricing, rising medical costs and increased competition during the second year of President Barack Obama’s health law.

With dominant market share now, analysts say, carriers feel they have room to raise rates. Nine of the carriers are proposing average increases for 2015 that range from 8.5% by Anthem Inc. in Virginia to 22.8% from CareFirst for its BlueChoice plans in Maryland. Most of these large carriers’ proposed rate increases hover around 10%.

Erin Shields Britt, a spokeswoman for the Department of Health and Human Services, said the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors, which is a trend we are already seeing accelerate in a number of states, with new plans entering the market.”

http://online.wsj.com/articles/premiums-rise-at-big-insurers-fall-at-small-rivals-under-health-law-1403135040

****

Aetna CEO says 2015 Obamacare rates increase less than 20 pct

By Caroline Humer
Reuters, June 11, 2014

Health insurer Aetna Inc is submitting premium rates to regulators for 2015 Obamacare insurance plans that generally increase less than 20 percent from 2014, Chief Executive Officer Mark Bertolini said on Wednesday.

Bertolini said that customers are disenrolling from exchange plans on a regular basis but that the company still expects to have 450,000 exchange customers at year end. He said that while he did not know the reason for these customers leaving, he suspected that it was due to the out-of-pocket costs before members reach their deductibles.

http://www.reuters.com/article/2014/06/11/aetna-insurance-idUSL2N0OS1CF20140611

****

Comment:

By Don McCanne, MD

Because of uncertainty of claims experience and instability in enrollment, it is difficult for insurers to set their 2015 premiums to match market conditions. But what is projected so far is that the dominant insurers intend to raise their premiums about 10 percent, ranging between 8.5 and 22.8 percent, according to this WSJ report. Aetna’s Mark Bertolini assures us that increases will be “less than 20 percent.” What a relief.

Our Department of Health and Human Services is thoroughly sold on the concept of using markets to price insurance products. As their spokeswoman, Erin Britt, says, the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors.” Let’s look a little bit closer at what this market competition means.

The insurance underwriting cycle is a phenomenon in which insurers enter the market with low premiums in an effort to gain a larger share of the market. Once they have that share, they increase their premiums to the maximum tolerated. In the meantime, competitors with a smaller share of the market lower their premiums in an attempt to increase their share. Because their premiums are too low and their volume is too small, they fail and shut down. That leaves the dominant insurers in a position to charge even higher premiums than their costs would warrant. Patient/consumers end up being the losers.

That is precisely what is happening now, according to this report. The dominant insurers are raising their rates significantly (but “under 20%”) and “insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.”

These sick market dynamics are part of the reason that we have the least effective health care financing system in the world. Nobel laureate Kenneth Arrow explained to us decades ago why markets do not work in health care. While it is true that they do not work for the patient/consumer, market distortions work very well in moving our financial resources into the hands of those controlling the markets.

Mark Bertolini, who is keeping Aetna’s premium increases below 20 percent, for 2013 received an executive compensation of $30,712,565. Works pretty well for him.

Each day I write these comments, this is the point at which my blood pressure goes up and I have to restrain myself from using inappropriate language. I don’t know how much longer I can do that. Using the democratic process, we need to take over our government by electing representatives who serve us, the people, rather than serving those whose “r” is greater than our “g.”

At the following link, Paul Krugman explains Thomas Piketty’s r>g. It is very wonkish, but skim on through to the end and you’ll get the point.

http://krugman.blogs.nytimes.com/2014/03/14/notes-on-piketty-wonkish/

Premiums Rise at Big Insurers, Fall at Small Rivals Under Health Law

By Louise Radnofsky
The Wall Street Journal, June 18, 2014

Hundreds of thousands of consumers nationwide who bought insurance plans under the Affordable Care Act will face a choice this fall: swallow higher premiums to stay in their plan, or save money by switching.

That is the picture emerging from proposed 2015 insurance rates in the 10 states that have completed their filings, which stretch from Rhode Island to Washington state. In all but one of them, the largest health insurer in the state is proposing to increase premiums between 8.5% and 22.8% for next year, according to a Wall Street Journal review of the filings. That percentage represents the average rate increases for all individual health plans offered by that carrier.

At the same time, insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.

The rate proposals reflect a combination of big carriers stepping back from initial aggressive pricing, rising medical costs and increased competition during the second year of President Barack Obama’s health law.

With dominant market share now, analysts say, carriers feel they have room to raise rates. Nine of the carriers are proposing average increases for 2015 that range from 8.5% by Anthem Inc. in Virginia to 22.8% from CareFirst for its BlueChoice plans in Maryland. Most of these large carriers’ proposed rate increases hover around 10%.

Erin Shields Britt, a spokeswoman for the Department of Health and Human Services, said the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors, which is a trend we are already seeing accelerate in a number of states, with new plans entering the market.”

http://online.wsj.com/articles/premiums-rise-at-big-insurers-fall-at-sma…

****

Aetna CEO says 2015 Obamacare rates increase less than 20 pct

By Caroline Humer
Reuters, June 11, 2014

Health insurer Aetna Inc is submitting premium rates to regulators for 2015 Obamacare insurance plans that generally increase less than 20 percent from 2014, Chief Executive Officer Mark Bertolini said on Wednesday.

Bertolini said that customers are disenrolling from exchange plans on a regular basis but that the company still expects to have 450,000 exchange customers at year end. He said that while he did not know the reason for these customers leaving, he suspected that it was due to the out-of-pocket costs before members reach their deductibles.

http://www.reuters.com/article/2014/06/11/aetna-insurance-idUSL2N0OS1CF2…

Because of uncertainty of claims experience and instability in enrollment, it is difficult for insurers to set their 2015 premiums to match market conditions. But what is projected so far is that the dominant insurers intend to raise their premiums about 10 percent, ranging between 8.5 and 22.8 percent, according to this WSJ report. Aetna’s Mark Bertolini assures us that increases will be “less than 20 percent.” What a relief.

Our Department of Health and Human Services is thoroughly sold on the concept of using markets to price insurance products. As their spokeswoman, Erin Britt, says, the new exchange system “drives competition among plans, requiring issuers to be more conscious of how they stack up to their competitors.” Let’s look a little bit closer at what this market competition means.

The insurance underwriting cycle is a phenomenon in which insurers enter the market with low premiums in an effort to gain a larger share of the market. Once they have that share, they increase their premiums to the maximum tolerated. In the meantime, competitors with a smaller share of the market lower their premiums in an attempt to increase their share. Because their premiums are too low and their volume is too small, they fail and shut down. That leaves the dominant insurers in a position to charge even higher premiums than their costs would warrant. Patient/consumers end up being the losers.

That is precisely what is happening now, according to this report. The dominant insurers are raising their rates significantly (but “under 20%”) and “insurers with the smallest enrollments are proposing to cut rates so they can lure customers as the cheapest plans in their markets.”

These sick market dynamics are part of the reason that we have the least effective health care financing system in the world. Nobel laureate Kenneth Arrow explained to us decades ago why markets do not work in health care. While it is true that they do not work for the patient/consumer, market distortions work very well in moving our financial resources into the hands of those controlling the markets.

Mark Bertolini, who is keeping Aetna’s premium increases below 20 percent, for 2013 received an executive compensation of $30,712,565. Works pretty well for him.

Each day I write these comments, this is the point at which my blood pressure goes up and I have to restrain myself from using inappropriate language. I don’t know how much longer I can do that. Using the democratic process, we need to take over our government by electing representatives who serve us, the people, rather than serving those whose “r” is greater than our “g.”

At the following link, Paul Krugman explains Thomas Piketty’s r>g. It is very wonkish, but skim on through to the end and you’ll get the point.

http://krugman.blogs.nytimes.com/2014/03/14/notes-on-piketty-wonkish/

Calif. Court Rules Insurer Payments Should Reflect Value of Care

California Healthline, June 16, 2014

An appellate court ruling in Fresno last week could change the way California hospitals and health insurers enter into contracts and negotiate payments for services, the Sacramento Business Journal reports.

Background on Case

The lawsuit between Children’s Hospital Central California and Anthem Blue Cross involved a dispute over insurer reimbursement rates for hospital services.

In 2007, the hospital and insurer for about 10 months were unable to reach an agreement to renew a contract setting reimbursement rates for hospital services. During that time, federal and state laws required that Children’s Hospital continue to provide emergency care to Anthem beneficiaries.

The hospital later billed Anthem for post-stabilization emergency medical care that took place during the 10-month contract gap. In the billing, the hospital listed the full rate of services included in its “chargemaster” document instead of the usual discounted rate based on volume. In total, the hospital charged Anthem $10.8 million for care provided to 896 beneficiaries.

Anthem paid the hospital about $4.2 million based on Medi-Cal rates. Medi-Cal is California’s Medicaid program.

Children’s Hospital filed a lawsuit over the difference, and a jury awarded the hospital $6.6 million. Anthem then filed an appeal.

Details of Ruling

On Tuesday, the Fifth District Court of Appeals ruled that insurers are not required to reimburse hospitals for amounts that are more than the actual value of services.

The ruling states that the hospital “rarely received payment based on [their] published chargemaster rates.” Therefore, the trial court should have allowed Anthem to present evidence of the value of post-stabilization emergency services.

The appeals court ordered a new trial between Children’s Hospital and Anthem to establish damages that reflect the “reasonable value” of services, as opposed to the higher costs included on hospital’s bill to the insurer.

Implications

Dan Baxter, an attorney representing Anthem, said, “This ruling will absolutely change the landscape between hospitals and health plans in litigation going forward.” He added, “It’s a clear-cut California case we didn’t have until now — finally — that says in no uncertain terms you can consider a full body of information, not just billed charges.”

However, Glenn Solomon, an attorney representing Children’s Hospital, said the ruling could result in insurers paying contract rates for health care services without actually establishing a contract.

Solomon said, “If a health plan can get the benefit of contracted rates without actually engaging in a contract themselves, there’s less incentive for them to enter into a contract in the first place,” adding, “That’s not just bad for hospitals. It’s bad for all of California” (Robertson, Sacramento Business Journal, 6/13).

http://www.californiahealthline.org/articles/2014/6/16/calif-court-rules-insurer-payments-should-reflect-value-of-care

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Comment:

By Don McCanne, MD

This case centers around a dispute on whether an insurer pays list rates (chargemaster prices) or prior contracted rates during an interval in which the insurer/hospital contract had lapsed. But there is a much more important issue here: Should an insurer be able to dictate unilaterally to a hospital what rates will be paid during a time in which there is no contract with the hospital?

Regarding the particulars of this case, hospital chargemaster rates are usually pie-in-the-sky rates that nobody pays. The insurer, Anthem Blue Cross Medi-Cal managed care, should be able to negotiate rates down. On the other hand, Medicaid (Medi-Cal) rates in California are the lowest in the nation and result in a loss for most providers, so Children’s Hospital Central California should be able to negotiate up the rates for “post-stabilization emergency services” when it has no contract with the insurer. It appears that the intent of this court ruling was to prevent unreasonably high, binding rates from being set arbitrarily by hospital chargemaster programmers.

Although other laws apply, this ruling seems to be a step towards allowing private insurers to dictate rates when no contract is in force. It would be untenable if private insurers could enforce provisions of a contract that they would like to have without the necessity of formally contracting with the providers.

This is no way to set payment rates. Control should be completely removed from the private insurers. They should be dismissed from the health care financing scene anyway since they waste resources diverted to their intrusive exploitations. We also know that providers should not be allowed to set their own rates. During the implementation of Medicare, physicians were paid based on usual, customary and reasonable fees, and they responded by driving fees up exponentially. No, we know from the experience of other countries that the government must be involved if we expect fair pricing.

Under a single payer system, whether setting global budgets for hospitals or negotiating rates for professional services or health care products, including pharmaceuticals, our own government stewards would be there to represent us as patients and as taxpayers. As public servants, they would not be representing their own personal interests. Payments would be based on legitimate costs and fair margins.

Besides receiving greater value, we would be eliminating the costs and grief of the profound administrative waste of our current fragmented, dysfunctional financing system. That alone should be enough for us to decide to make the change.