By Steve Schulte of
<a href="http://www.healthadvocatesolutions.com/index.html%22%3EHealth Advocate Solutions</a>
Please respond or inquire at (213) 999-1227
Now that the threat by Blue Shield of CA to raise individual premium rates by as much as 59% is behind us, it's worth examining whether there are lessons in this case for the future of implementing healthcare reform.
Even as we progress, don't overlook the fact that BS of CA backed down under tremendous pressure---notably from CA Insurance Commissioner Dave Jones (an elective post). Expect to see similar acts played out in the coming months.
In my view there are, in fact, several lessons to be gleaned.
1. MOST INSURERS WILL BE MORE INTERESTED IN PROTECTING THE BOTTOM LINE OF THEIR COMPANIES THAN IN OFFERING BETTER ACCESS, BENEFITS OR COST CONTROLS TO CONSUMERS.
Fine, you might say. Companies are meant to protect the interests of their shareholders.
True, but this canard underestimates the role that insurers are given in the new law. The responsibilities to set prices, determine benefit levels, assign medication pricing and so on. Lots of leeway and plenty of room to veer from the public interest. And, given their immense government relations engines assume the insurers will be writing many of the rules.
2. DON'T EXPECT THE FEDERAL GOVERNMENT TO BE AN AGGRESSIVE INFORCER OF THE NEW HEALTHCARE REFORM LAW.
This is brought home clearly by noting a recent White House meeting between President Obama and several governors. The President made it clear he will go along with state variations from the new heatlhcare model in 2014 as long as these variations do not cover fewer people, cost more to consumers or add to the federal deficit.
The law originally allowed this breadaway in 2017, but legislation authored by Wyden of OR and Brown of MA allows for the earlier date. Expect lots of differences, confusion and loss of consumer protections.
Therefore, while one might wish that Secretary Sibelius or the President had helped to clear the air on the CA rate hike request, it was not meant to be. No doubt there are complex reasons for this, but it means the administration with probably not be a hero in this drama.
3. THE INDIVIDUAL STATES WILL HAVE A KEY ROLE IN DETERMINING THE PRECISE ROLLOUT OF HEALTHCARE REFORM. ARE THEY READY?
One of the lessons from the Gulf Oil Spill was that the feds were not prepared or of a caliber to manage the horrific event. They simply did not have the capacity to respond and had to rely on BP and other companies.
I expect that many states will be in a similar position vis a vis the rollout of healthcare reform. States like Vermont, Massachusetts and Maine have set strong examples for better ways to manage and deliver care to their publics. Certainly Hawaii has been a strong leader as has Oregon, as least in how it handles Medicaid.
Still that means five states out of 50 have done a good job. Even if I have left some out of my lists that allows for lots of variance, inequity and cost control problems.
4. THERE WILL BE AN ADDITIONAL THREAT FROM SOME INSURERS: A TWO-HEADED HYDRA THAT COULD SWAMP REAL REFORM.
On the one hand, some insurers will threaten to leave markets if state officials are serious about healthcare reform. Although a hollow threat from these bottom-feeding companies, other states hungry for business will welcome them.
It is certainly plausible that they are doing this indirectly right now by "cleansing the rolls" of sicker individuals (hence a rate hike....). Insurers might be hoping to drive clients with health problems to the state exchanges like the one being established in CA. But if this is true, what is insurance for?
On the other hand, with states in serious financial condition and cutting back on most social, health and educational programs is it likely that we could see more giant social dramas like the one in WI over collective bargaining being withdrawn from public employees? Think about it: healthcare affects far more people than collective bargaining.
Any way you look at it the states face enormous challenges here. It's hard to be optimistic and we badly need some success stories that provide good examples.
5. WITH ALL OF THIS, IS THERE ANY CHANCE WE COULD SEE MOVES TO IMPROVE THE FEDERAL LAW IN TERMS OF BENEFITS, COVERAGE, ACCESS TO CARE AND SO ON?
This does not seem likely, at least in the short term. In fact, it must be noted that some Republicans and Tea Party members are ACTIVELY trying to repeal or at least to gut healthcare. The courts seem to be assisting. Expect the confusion to continue for a long time.
(Remember: the federal law does not mandate that insurers accept everyone regardless of condition until 2014. Also, there will be no sensible taxation of high premium (Cadillac plans) until 2018.)
Lots of reasons here to stay closely involved---and in touch with your legislators.
Your thoughts?
To respond to this blog, email steve6schul@yahoo.com
Monday, March 14, 2011
Wednesday, February 9, 2011
Can the Blue Shield Rate Hike be Justified?
By Steve Schulte of
Health Advocate Solutions
Respond to (213) 999-1227
On February 1 Blue Shield of California corporate headquarters released a statement announcing that they---changing their previously stated position---would abide by Insurance Commissioner Jones' (CA) request to delay any rate hikes for 60 days.
This delay of proposed rate hikes on individual policies (by as much as 59%) for 60 days will allow the Department of Insurance to review BS's effort to raise rates.
This was dramatic, given that, only a few weeks before, Blue Shield spokesman Tom Epstein had stated emphatically and brusquely that the company would NOT back down. This despite agreements from Anthem Blue Cross, Aetna and others to abide by the Commissioner's request concerning their new rate hikes for 2011.
Amidst the public outcry (and, frankly, anxiety) about BS's proposed rate hikes it is important to look more closely at whether the hikes can be justified. While some annual increase might be necessary for sound business reasons the current request is baffling.
First, BS initially responded to protests that they were retaining an outside auditor to review the hikes and would report unilaterally the outcome. It seems strange that such a move was not taken before announcing the hikes given their scope.
Second, the insurer says, predictably, that the costs are due to "rising medical and claims costs". But this seems unlikely, at least in being new.
Healthcare inflation is higher than the rate for other goods and services, but not 50+% higher. Additionally, it seems doubtful that individual claims could have risen at an equivalent amount in just several months. (BS and other insurers were given rate hikes in CA last fall.....).
So, if healthcare and claims cost changes cannot explain BS's decision to raise rates, what is the likely explanation?
Given the secrecy and lack of transparency with which most large corporations---and certainly insurers---operate, it's difficult to "get into the thinking" of BS actuaries, underwriters and financial experts who look out for the bottom-line considerations.
But some causes for the rate hike are very likely. These include:
1) Preparation by BS and other insurers for the health care law changes that will require everyone to be covered despite any pre-existing conditions (2014). Thus, a strong defense and indirect challenge from insurers since many more people---including many sicker people now excluded--will have to be covered.
2) A move to drive people off of current insurance policies so they will join state exchanges that will cover the "hard to insure" as these mandated exchanges (under the new health law) are set up. Higher costs would do just that.
3) A more cynical move to game the system by increasing prices and bureaucratic hurdles so that the average person will turn against the healthcare law---feeling that it is worthless and ineffective. AND, forgo insurance altogether.
Whatever the real reasons---and what I have cited are very likely causes---changing to universal healthcare coverage is complicated and difficult. No one should underestimate this.
But if insurers want to "keep skin in the game"---and avoid a press for, say, universal Medicare or a single payer system, they should be finding ways to INCEASE ACCESS TO COVERAGE, MAKE IT MORE AFFORDABLE AND EASIER TO OBTAIN rather than more difficult.
Clearly BS does not have this mindset. My advice: change direction and and work to help get everybody covered.
Plus, President Obama, Secretary Sibelius and Governor Brown (as well as other governors) should take note and join Commissioner Jones in fighting moves like this to increase rates in a lopsided and hostile fashion. Such attention would bolster public confidence both in the new healthcare law and in our current insurance system.
I welcome your comments.
Sources: LA Times, NY Times, Wall Street Journal, Kaiser Family Foundation.
To respond to this blog, email steve6schul@yahoo.com
Health Advocate Solutions
Respond to (213) 999-1227
On February 1 Blue Shield of California corporate headquarters released a statement announcing that they---changing their previously stated position---would abide by Insurance Commissioner Jones' (CA) request to delay any rate hikes for 60 days.
This delay of proposed rate hikes on individual policies (by as much as 59%) for 60 days will allow the Department of Insurance to review BS's effort to raise rates.
This was dramatic, given that, only a few weeks before, Blue Shield spokesman Tom Epstein had stated emphatically and brusquely that the company would NOT back down. This despite agreements from Anthem Blue Cross, Aetna and others to abide by the Commissioner's request concerning their new rate hikes for 2011.
Amidst the public outcry (and, frankly, anxiety) about BS's proposed rate hikes it is important to look more closely at whether the hikes can be justified. While some annual increase might be necessary for sound business reasons the current request is baffling.
First, BS initially responded to protests that they were retaining an outside auditor to review the hikes and would report unilaterally the outcome. It seems strange that such a move was not taken before announcing the hikes given their scope.
Second, the insurer says, predictably, that the costs are due to "rising medical and claims costs". But this seems unlikely, at least in being new.
Healthcare inflation is higher than the rate for other goods and services, but not 50+% higher. Additionally, it seems doubtful that individual claims could have risen at an equivalent amount in just several months. (BS and other insurers were given rate hikes in CA last fall.....).
So, if healthcare and claims cost changes cannot explain BS's decision to raise rates, what is the likely explanation?
Given the secrecy and lack of transparency with which most large corporations---and certainly insurers---operate, it's difficult to "get into the thinking" of BS actuaries, underwriters and financial experts who look out for the bottom-line considerations.
But some causes for the rate hike are very likely. These include:
1) Preparation by BS and other insurers for the health care law changes that will require everyone to be covered despite any pre-existing conditions (2014). Thus, a strong defense and indirect challenge from insurers since many more people---including many sicker people now excluded--will have to be covered.
2) A move to drive people off of current insurance policies so they will join state exchanges that will cover the "hard to insure" as these mandated exchanges (under the new health law) are set up. Higher costs would do just that.
3) A more cynical move to game the system by increasing prices and bureaucratic hurdles so that the average person will turn against the healthcare law---feeling that it is worthless and ineffective. AND, forgo insurance altogether.
Whatever the real reasons---and what I have cited are very likely causes---changing to universal healthcare coverage is complicated and difficult. No one should underestimate this.
But if insurers want to "keep skin in the game"---and avoid a press for, say, universal Medicare or a single payer system, they should be finding ways to INCEASE ACCESS TO COVERAGE, MAKE IT MORE AFFORDABLE AND EASIER TO OBTAIN rather than more difficult.
Clearly BS does not have this mindset. My advice: change direction and and work to help get everybody covered.
Plus, President Obama, Secretary Sibelius and Governor Brown (as well as other governors) should take note and join Commissioner Jones in fighting moves like this to increase rates in a lopsided and hostile fashion. Such attention would bolster public confidence both in the new healthcare law and in our current insurance system.
I welcome your comments.
Sources: LA Times, NY Times, Wall Street Journal, Kaiser Family Foundation.
To respond to this blog, email steve6schul@yahoo.com
Saturday, January 1, 2011
Attacks on Healthcare Reform: the Mouse and the Roar
By Steve Schulte of
Health Advocate Solutions
Please respond or inquire at (213) 999-1227
Forget what you thought about everything surrounding the commercial craziness of the Christmas holidays: the silly season is about to begin in earnest.
More specifically, a new Congress will imminently descend upon Washington.
Despite the buffoonery and lack of credibility (and perhaps some lack of imagination)the past Congress, expect the new ideas with this new and improved group to take your breath away.
In case you marvelled at what Speaker Pelosi was able to cook up, see what you can find edible in Congressman Boehner's servings (slightly salty, of course....).
Let's focus for a few moments on a key campaign of the new House majority: gutting or dis-establishing healthcare reform. Don't know about you, but in my view "we the people" need access to affordable healthcare. Any platform that does not have universal (or at least extremely broad) access to care is a nonstarter.
It matters little to most people whether that access comes through truly affordable and dependable coverage or diligent and efficient community clinics or insurance attainable by searching across state lines (as long as quality is standardized). Key outcomes matter: access, affordability, quality. Oh, and cost control would be nice as well.
In other words, the battle is not really about ideology. It may be Democrat or Republican depending on who's in charge at present and on the slavishness of Congressional representatives to their party (and local hack) dictums.
But any intellectually honest person would have to acknowledge that the desired results are achievable (or nearly so) in a variety of ways. In my view these lie along a spectrum of government-managed to market-reliant alternatives.
The recent bill is a pastiche relying heavily on regulation and government incentives. It is more government-related. But it is by no means pure. Please remember that the mandate started, for example, as a Republican idea. Or that cost controls are insufficient.
Those more "liberal" insist the government should guide rules and insist on these to improve coverage. Those more "conservative" want the market to rule. Great digression here would result from repeating the weaknesses in either general approach.
So, let me suggest we be quided as we follow this debate (cum mega-fireworks) by three principles.
One, anyone desiring coverage should have it. This is partly a question of affordability and proximity to care. But it is also dependent on a political commitment that all are deserving and therefore the means to good care (funding, structures, doctors and nureses, etc.)are provided for. If a proposal meets this objective---rather than insisting, for example, that only the well-off and well-heeled deserve good care---it is worthy of consideration.
Two,our national patchwork of a system does many things very well. But the system is byzantine, the insurer network is unruly and not well-regulated; costly and unnecessary procedures and hospitalizations abound. Any improvement on the current reform should address spreading best practices and focus on efficiency, effectiveness and cost control. Insurers need to be regulated---well before 2014.
Three, about one-fourth of our national output is concerned with health and welfare. That says a couple of things: a lot of Americans depend on government to help and, likewise, what the government does is not all wrong. Remember when anyone close to you turned down Medicare or Veterans benefits? Expensive, yes, but a good delivery system.
Further, the statistic says that this portion of the budget will grow and is dangerous to our national health. So finding ways to control costs is paramount. Standardized forms, streamlined processing and delivery of services, reliable electronic records, negotiated pharmaceutical prices, shared economic burden (copays, coinsurnace, taxed "cadillac" plans---all these become important. Ensuring access is only one aspect of the overall equation.
I would welcome hearing other ideas, but these three will be key quides to what is proposed seriously and what is not.
Also, let your Congressperson: Weiner, Frank, Feinstein, Rubio, Baucus, Sanders--whomever----hear from you. Or your Governor: Brown, Branstad or Kasich. These folks don't ----and, well, do----work in a vacuum.
Amidst the craziness DO stay tuned. Keep centered on what is most important.
Sources: NY Times, Bloomberg Business Week, Wall Street Jounal, Kaiser Family Foundation.
To respond to this blog, email steve6schul@yahoo.com
Health Advocate Solutions
Please respond or inquire at (213) 999-1227
Forget what you thought about everything surrounding the commercial craziness of the Christmas holidays: the silly season is about to begin in earnest.
More specifically, a new Congress will imminently descend upon Washington.
Despite the buffoonery and lack of credibility (and perhaps some lack of imagination)the past Congress, expect the new ideas with this new and improved group to take your breath away.
In case you marvelled at what Speaker Pelosi was able to cook up, see what you can find edible in Congressman Boehner's servings (slightly salty, of course....).
Let's focus for a few moments on a key campaign of the new House majority: gutting or dis-establishing healthcare reform. Don't know about you, but in my view "we the people" need access to affordable healthcare. Any platform that does not have universal (or at least extremely broad) access to care is a nonstarter.
It matters little to most people whether that access comes through truly affordable and dependable coverage or diligent and efficient community clinics or insurance attainable by searching across state lines (as long as quality is standardized). Key outcomes matter: access, affordability, quality. Oh, and cost control would be nice as well.
In other words, the battle is not really about ideology. It may be Democrat or Republican depending on who's in charge at present and on the slavishness of Congressional representatives to their party (and local hack) dictums.
But any intellectually honest person would have to acknowledge that the desired results are achievable (or nearly so) in a variety of ways. In my view these lie along a spectrum of government-managed to market-reliant alternatives.
The recent bill is a pastiche relying heavily on regulation and government incentives. It is more government-related. But it is by no means pure. Please remember that the mandate started, for example, as a Republican idea. Or that cost controls are insufficient.
Those more "liberal" insist the government should guide rules and insist on these to improve coverage. Those more "conservative" want the market to rule. Great digression here would result from repeating the weaknesses in either general approach.
So, let me suggest we be quided as we follow this debate (cum mega-fireworks) by three principles.
One, anyone desiring coverage should have it. This is partly a question of affordability and proximity to care. But it is also dependent on a political commitment that all are deserving and therefore the means to good care (funding, structures, doctors and nureses, etc.)are provided for. If a proposal meets this objective---rather than insisting, for example, that only the well-off and well-heeled deserve good care---it is worthy of consideration.
Two,our national patchwork of a system does many things very well. But the system is byzantine, the insurer network is unruly and not well-regulated; costly and unnecessary procedures and hospitalizations abound. Any improvement on the current reform should address spreading best practices and focus on efficiency, effectiveness and cost control. Insurers need to be regulated---well before 2014.
Three, about one-fourth of our national output is concerned with health and welfare. That says a couple of things: a lot of Americans depend on government to help and, likewise, what the government does is not all wrong. Remember when anyone close to you turned down Medicare or Veterans benefits? Expensive, yes, but a good delivery system.
Further, the statistic says that this portion of the budget will grow and is dangerous to our national health. So finding ways to control costs is paramount. Standardized forms, streamlined processing and delivery of services, reliable electronic records, negotiated pharmaceutical prices, shared economic burden (copays, coinsurnace, taxed "cadillac" plans---all these become important. Ensuring access is only one aspect of the overall equation.
I would welcome hearing other ideas, but these three will be key quides to what is proposed seriously and what is not.
Also, let your Congressperson: Weiner, Frank, Feinstein, Rubio, Baucus, Sanders--whomever----hear from you. Or your Governor: Brown, Branstad or Kasich. These folks don't ----and, well, do----work in a vacuum.
Amidst the craziness DO stay tuned. Keep centered on what is most important.
Sources: NY Times, Bloomberg Business Week, Wall Street Jounal, Kaiser Family Foundation.
To respond to this blog, email steve6schul@yahoo.com
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