Category Archives: Medicare Advantage

Useless Health Insurance Companies

Don McCanne’s Quote-of-the-Day brings us an article from the Los Angeles Times by Michael Hiltzik about how useless health insurance companies are.

Los Angeles Times
August 5, 2019
Health insurance companies are useless. Get rid of them
By Michael Hiltzik

 

The most perplexing aspect of our current debate over healthcare and health coverage is the notion that Americans love their health insurance companies.

This bizarre idea surfaced most recently in the hand-wringing over proposals to do away with private coverage advocated by some of the candidates for the Democratic nomination for president. Oddly, this position has been treated as a vote-loser.

During the first round of televised debates on July 30 and 31, only four of the 20 candidates raised their hands when asked if they would ban private insurers as part of their proposals for universal coverage: Sens. Elizabeth Warren of Massachusetts, Bernie Sanders of Vermont and Kamala Harris of California, and New York Mayor Bill de Blasio. Harris later backed away, releasing a “Medicare for all” proposal that would accommodate private insurers at least for the first 10 years.

Health insurers have been successful at two things: Making money and getting the American public to believe they’re essential.

HEALTH INSURANCE EXPERT WENDELL POTTER

She should have stood her ground. The truth is that private health insurers have contributed nothing of value to the American healthcare system. Instead, they have raised costs and created an entitled class of administrators and executives who are fighting for their livelihoods, using customers’ premium dollars to do so.

“Health insurers have been successful at two things: Making money and getting the American public to believe they’re essential,” says Wendell Potter. He should know, since he spent decades as a corporate communications executive in the industry, including more than 10 years at Cigna.

The insurers’ success in making themselves seem essential accounts for the notion that Americans are so pleased with their private coverage that they’ll punish any politician who dares to take it away. But the American love affair with private insurance warrants close inspection.

Let’s start by examining what the insurers say are their positive contributions to healthcare. They claim to promote “consumer choice,” simplify “the health care experience for individuals and families,” address “the burden of chronic disease” and harness “data and technology to drive quality, efficiency, and consumer satisfaction.” (These claims all come from the website of the industry’s lobbying organization, America’s Health Insurance Plans (AHIP).

They’ve achieved none of these goals. The increasingly prevalent mode of health coverage in the group and individual markets is the the narrow network, which shrinks the roster of doctors and hospitals available to enrollees without heavy surcharges. The hoops that customers and providers often must jump through to get claims paid impose costly complexity on the system, not simplicity. Programs to manage chronic diseases remain rare, and the real threat to patients with those conditions was lack of access to insurance (until the Affordable Care Act made such exclusion illegal).

Private insurers don’t do nearly as well as Medicare in holding down costs, in part because the more they pay hospitals and doctors, the more they can charge in premiums and the more money flows to their bottom lines. They haven’t shown notable skill in managing chronic diseases or bringing pro-consumer innovations to the table.

pareto

The vast majority of Americans have very little need for medical care in any given year; that’s why most people are satisfied with their coverage. But what if they have a big claim?
(NIHCM)

 

Insurers cite these goals when they try to get mergers approved by government antitrust regulators. Anthem and Cigna, for example, asserted in 2016 that their merger would produce nearly $2 billion in “annual synergies,” thanks to improved “operational” and “network efficiencies.”

The pitch has a long history. The architects of a wave of health insurance mergers in the 2000s also proclaimed a new era of efficient technology and improved customer service, but studies of prior mergers show that this nirvana seldom comes to pass. The best example may be that of Aetna’s 1996 merger with U.S. Healthcare in a deal it hoped would give it access to the booming HMO market.

According to a 2004 analysis by UC Berkeley health economist James C. Robinson, the merger became a “near-death” experience for Aetna. The deal was expected to bring about “millions in enrollment and billions in revenue to pressure physicians and hospitals” to accept lower reimbursement rates, he wrote.

“The talk was all about complementarities, synergies, and economies of scale… The reality quickly turned out to be one of incompatible product designs, operating systems, sales forces, brand images, and corporate cultures.” Aetna surged from 13.7 million customers in 1996 to 21 million in 1999, but profits collapsed from a margin of nearly 14% in 1998 to a loss in 2001.

Even when they don’t happen, insurance merger deals cost customers billions of dollars. That’s what happened when two proposed deals — Aetna/Humana and Anthem/Cigna — broke down on a single day in 2017. The result was that Aetna owed Humana $1.8 billion and Anthem owed Cigna $1.85 billion in breakup fees — money taken out of the medical treatment economy and transferred from one set of shareholders to another.

In reality, Americans don’t like their private health insurance so much as blindly tolerate it. That’s because the vast majority of Americans don’t have a complex interaction with the healthcare system in any given year, and most never will. As we’ve reported before, 1% of patients account for more than one-fifth of all medical spending and 10% account for two-thirds. Fifty percent of patients account for only 3% of all spending.

Most families face at most a series of minor ailments that can be routinely managed — childhood immunizations, a broken arm here or there, a bout of the flu. The question is what happens when someone does have a complex issue and a complex claim — they’re hit by a truck or get a cancer diagnosis, for instance?

“We gamble every year that we’re going to stay healthy and injury-free,” Potter says. When we lose the gamble, that’s when all the inadequacies of the private insurance system come to the fore. Confronted with the prospect of expensive claims, private insurers try to constrain customers’ choices — limiting recovery days spent in the hospital, limiting doctors’ latitude to try different therapies, demanding to be consulted before approving surgical interventions.

Indeed, the history of American healthcare reform is largely a chronicle of steps taken to protect the unserved groups from commercial health insurance practices.

When commercial health insurance became insinuated into the American healthcare system following World War II via employer plans, it quickly became clear who was left behind — “those who were retired, out of work, self-employed, or obliged to take a low-paying job without fringes,” sociologist Paul Starr wrote in his magisterial 1982 book, “The Social Transformation of American Medicine.”The process even left those groups worse off, Starr observed, because insurance contributed to medical inflation while insulating only those with health plans. “Government intervention was required just to address the inequities.”

Insurers wouldn’t cover the aged or retirees, so Medicare was born in 1965. Insurers refused to cover kidney disease patients needing dialysis, so Congress in 1973 carved out an exception allowing those patients to enroll in Medicare at any age. (So much for addressing the “burden of chronic disease.”)

Individual buyers were charged much more for coverage than those buying group plans through their employers — or barred from the marketplace entirely because of their medical conditions — the Affordable Care Act required insurers to accept all applicants and, as compensation, required all individuals to carry at least minimal coverage.

The health insurance industry’s most telling contribution to the debate over healthcare reform has been “to scare people about other healthcare systems,” Potter told me. As a consequence, discussions about whether or how to remove private companies from the healthcare system are chiefly political, not practical.

The Affordable Care Act allowed private insurers to continue playing a role in delivering coverage not because they were any good at it but because their wealth and size made them formidable adversaries to reform if they chose to fight it. They were sufficiently mollified to remain out of the fray, but some of the big insurers then did their best to undermine the individual insurance exchanges once they were launched in 2015.

Even as individual Americans fret over losing their private health insurance, big employers have begun to see the light. Boeing, among other big employers, is experimenting with bypassing health insurers as intermediaries with providers by contracting directly with major health systems in Southern California, Seattle and other regions where it has major plants. It would not be surprising to see the joint venture of Amazon, Berkshire Hathaway and JP Morgan Chase try a similar approach in its quest to bring down costs.

That’s an ironic development, since the private insurers first entered the market precisely by offering to play the role of intermediaries for big employers. But instead of fulfilling the promise of efficiency and cost control, they became rent-seeking profiteers themselves.

There’s no doubt that it will take years to wean the American healthcare system off the private insurance model; Kamala Harris’s proposal may be merely a recognition of the necessary time frame. It’s true that some countries with universal healthcare systems preserve roles for private insurance, including coverage for services the government chooses to leave out of its own programs or providing preferential access to specialists, at a price.

But the private insurers’ central position in America’s system is an anachronism dating back some 75 years. The sooner it’s dispensed with, the better — and healthier — America will be. The next time a debate moderator asks presidential candidates if they favor doing away with private insurance, let’s see all the hands go up.

No Socialists Here

Dear Insurance company execs, pharmaceutical company execs, employee benefits consultants and executives, Wall Street investors, and all other stakeholders in the current dysfunctional, broken, complex, complicated, and bloated mess called the US health care system.

You have heard many politicians, and journalists, not to mention your own peers, or even you yourselves label the push for Medicare for All as “Socialism.”

We even have the Administrator of CMS, Seema Verma, calling it, and the public option plan,  “radical and dangerous for the country” recently when she spoke to the Better Medicare Alliance’s Medicare Advantage Summit in Washington, D.C.

Her solution, and probably yours as well, is to keep selling Medicare Advantage plans, which only makes the current system worse.

So, to help you get over your fear and loathing of Socialism, and to prove to you that the only reason why the US is the only Western, industrial nation to not provide its citizens with universal health care is because you are making money off of other people’s health, or lack thereof.

You are doing so, because you are greedy. There I said it. Now I hope you will pay attention to the following graphic:

Do you see any socialist countries? Do you see any radical and dangerous regimes that are hostile to the interests of the US? Well, maybe Slovenia. After all, they did send us Melania and her illegal family.

But back to the case at hand. I defy any of you hotshots in the health care space to prove to me that all of these Capitalist, free-market countries are flaming Reds, or even a bit Pinko.

You can’t, because it is not true. You and those who call Medicare for All, Single Payer, or even the so-called “public option” radical, just don’t want the government to interfere with your looting the pockets of the American people for your financial gain.

And that is why we are the only country with an “X”, instead of a check mark below our name.

16,000 Unnecessary Deaths Tied to Failure to Expand Medicaid

The Los Angeles Times reported Monday that a new study found that Medicaid expansion brought appreciable improvements in health to enrollees, but also that full expansion nationwide would have averted 15,600 deaths among the vulnerable Medicaid-eligible population.

This is in contrast to the view of opponents of Medicaid expansion who have said that lack of evidence that enrollment in Medicaid improves health and saves lives, and therefore they believed that expansion was a waste of money.

In the 22 mostly red states that refused expansion, the cause of the 15,600 deaths of their state’s residents was attributed to failure to expand.

“This highlights an ongoing cost to non-adoption that should be relevant to both state policymakers and their constituents,” the authors of the study said.

Fourteen states are still holding out, States such as Wyoming and South Dakota, the article states, have a warped sense of “freedom.” States such as Maine and Louisiana, who have had a change in governors from Republican to Democrat, have recently adopted expansion.

medicaid

Fourteen states still resist Medicaid expansion, at great cost to their residents (Kaiser Family Foundation)

The article takes a dim view of the entire rationale for refusing to expand Medicaid, and cites a few noted Conservative voices against the entire idea of expansion and Medicaid itself.

Conservatives have worked hard to depict Medicaid as ineffective, the article reports. They’ve done so, it continues,  by overinterpreting limited studies such as a 2013 study of a Medicaid expansion in Oregon.

Critics focused on the researchers’ finding of “no significant improvements in measured physical health outcomes in the first 2 years” of expansion, but they overlooked the findings that the expansion did “increase use of healthcare services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.”

Conservative health policy Avik Roy has crowed, the article states, that the result “calls into question the $450 billion a year we spend on Medicaid, and the fact that Obamacare throws 11 million more Americans into this broken program.”

Another right-wing critic of Medicaid expansion, and not to mention, also of Medicare for All, and now more recently, the public option for Medicare, is CMS Administrator Seema Verma, a Trump flunky.

(Credit: Getty Images )  Picture worth a thousand words was never more true. What a piece of work!

Verma has argued that the expansion hasn’t been a success despite its enrollment figures and has been a leader in undermining the program by allowing states to impose premiums, work requirements and punitive disenrollments on patients. (Her efforts have been blocked by a federal judge, for now.)

This is why advocates for Medicare for All are so passionate and determined, in the face of even the slightest opposition to improving the health and lives of millions of Americans for small changes to our nation’s health care system.

Failure to expand Medicaid, failure to enact universal health care, even if it is a public option, is challenged from the right for morally indefensible and reprehensible reasons.

The cry of “freedom” from conservatives is a smoke-screen to hid their true purpose. To dismantle all social programs and funnel that money to the wealthy and corporations, as they have already done with the Trump tax giveaway.

Now they are trying to cut three million Americans off of food stamps.

All these schemes have one purpose in mind, to kill off their most ardent supporters in Southern and Midwestern states that continue to vote for these sociopaths. To them, freedom means, freedom for a company to profit off of your misfortune, whether that misfortune is due to poor diet, poor personal habits such as smoking and drug abuse, and poor health outcomes due to poverty and economic distress.

Naturally, any attempt to improve the health and lives of the poor, black or white, or Latino, etc., is viewed as “Socialism” and is deemed bad for the country, as Ms. Verma did this week to the Better Medicare Alliance’s Medicare Advantage Summit in Washington, D.C.

No, it’s not bad for the country. It’s bad for the profits of the insurance companies, the pharmaceutical companies, the benefit managers industry, the health care consultants, and Wall Street investors.

Wanting to cut of food stamps, fail to expand even Medicaid, tightening rules for who is eligible for these programs, is not only bad for the health of average Americans, it is bad for the economic vitality of the nation in an era of global competition.

The men and women at Trump rallies are angry, but they are angry at the wrong people. The clown on the stage is the person they really should be angry at, and his entire swamp of “the best people.”

The Disruptors are Coming: The New Health Economy and the Medical-Industrial Complex

A big shout out to Dr. Don MCanne for his Quote of the Day post Friday for today’s topic, and a belated shout out to him for his post last Tuesday about the gains from the ACA being reversed. See my post, ACA Gains Reversing.

This time, Don alerts us to the impact the new health economy disruptors will have and what it might mean for the push towards single payer health care.

Last month, the PwC Health Research Institute (HRI) released a report analyzing the new health economy landscape as more and more companies pursue acquisitions of companies in the insurance, pharmacy benefit management, health care services and retail spaces.
In the last six months, the report states, there has been an explosion of unusual deals between companies such as CVS Health buying Aetna, Cigna buying Express Scripts, UnitedHealth’s Optum buying DaVita Medical Group (Kidney disease and dialysis), Albertsons agreeing to merge with Rite Aid, as well as the much highly publicized partnership between Amazon, JP Morgan, and Berkshire Hathaway.

Naturally, these aren’t the only deals that have occurred. Last year, 67 deals occurred in the US health services market, including payers and providers, the report adds.

The value of these deals increased 146% over those in 2016. The US health care industry, the report states, is undergoing seismic changes generated by a collision of forces: the shift from volume to value, rising consumerism, and the decentralization of care.
The HRI identified four new archetypes of companies engaged in this new health care economy:

• Vertical integrators — CVS & Aetna, Optum & DaVita, Cigna & Express Scripts
• Employer activists — February 2016, 20 US companies form Health Transformation Alliance (HTA) and developed tools to help its members cut employee healthcare costs. In January, Amazon, JP Morgan and Berkshire Hathaway partnered to lower costs and improve employee satisfaction
• Technology invaders — Amazon selling over-the-counter medical products, offering discounted access to Prime service, Apple’s newest operating system allows users to access parts of their EHRs on their phones
• Health retailers — CVS, Walgreens, Walmart, Albertsons and others using their network of store locations, consumer insights, national and global supply chains, and national (and sometimes global) branding to attract consumers looking for affordable, convenient care and goods

The HRI report recommends that all healthcare companies should make the following moves:

• Invest in customer experience
• Plan for a broader workforce
• Focus on price

This is how Don McCanne commented on this report. He wrote that Arnold Relman, like Dwight Eisenhower did about the military-industrial complex, warned us about the medical-industrial complex, but did not realize how intense the disruption would be in health care that the HRI report discusses.

According to Don, we are about to see a takeover by the disruptors who “have a leg up on many established health players in understanding consumers and tailoring experiences for them.”
The disruptors are “positioned to address price through greater scale, ownership of middlemen and a wider grip on the US health system value chain.”

If you don’t believe Don, then read what Jamie Dimon, the CEO of JP Morgan said, “To attack these issues, we will be using top management, big data, virtual technology, better customer engagement and the improved creation of customer choice (high deductibles have barely worked). This effort is just beginning.”

This is exactly what the Waitzkin et al. book describes when explaining the methods used by the medical-industrial complex to control and direct the American health care system for power and profit of the members of the complex.

Dr. McCanne observes that it is almost as if the physicians, nurses and other health care professionals and the hospitals and clinics in which they provide their services have become a peripheral, albeit necessary, appendage to their wellness-industrial complex that is displacing our traditional health care delivery system and its more recent iteration of the medical-industrial complex.

In other words, the physicians and nurses and other professionals have become proletarianized, and the hospitals and clinics merely the places where the medical-industrial complex derives its power and profit from.

Dr. McCanne posits the following questions as to what the health care system would look like once the transformation is well along:

• Once the silos of the health care system are flattened, how will health care be financed?
• Will there still be networks?
• Cost sharing barriers such as high deductibles?
• Will it be possible to fund this expansive model of the wellness-industrial complex through anything remotely resembling an insurance product, especially when the insurers are being amalgamated into what was formerly the health care delivery system?
• And now that the plutocracy is in control, how could we ever remove the passive investors that extract humongous rents through the wellness-industrial complex?
• And what about the patients? Did we forget about them?

It is obvious from his comments that this new health economy is going to be more problematic for providing universal health care to all Americans and will only make things worse. His Rx is to begin now to move to a single payer, Medicare for All program, and not worry about what has passed.

Smart diagnosis and prescription.