It’s Way Past Time We Stopped Deluding Ourselves About Private Health Insurers
by Wendell Potter - The Huffington Post
I didn’t think it was possible for me to get more disgusted with the industry I used to be a cheerleader for, but I was wrong.
Health insurers—more specifically, the big for-profit health insurers that want to get even bigger through two pending mega-mergers (Anthem wants to buy Cigna and Aetna wants to buy Humana)—once again are demonstrating that nothing—absolutely nothing—is more important to them than making their rich shareholders even richer.
If that means making it more difficult for low- and middle-income Americans to get the medical care they need, so be it. “Too bad, so sad,” to use a phrase one of my former colleagues used to say when people complained about the way health insurers routinely screw their customers.
What turned my stomach today and compelled me to write this were comments Aetna’s executives made during a call with Wall Street financial analysts (who else?) following the release of the company’s second quarter 2016 profits.
Here’s the bottom line: Aetna made significantly more money between April 1 and June 30 of this year than it made during the same period last year—far more than even those Wall Street analysts had expected (in other words, the profit “exceeded their expectations”). But Aetna executives said that because some of the people enrolled in the Obamacare exchanges were sicker than they had anticipated, consequently making it necessary for them to pay more in medical claims than they had wanted to pay—it was thinking about pulling out of a lot—maybe even most—of the Obamacare markets next year.
It was by most measures a stellar quarter for Aetna, the country’s third largest insurer. Both revenue and profits were up considerably over the same period a year ago. Aetna’s operating earnings increased 8.5%, from $722.1 million during the second quarter of 2015 to $783.3 million in the second quarter this year. Total revenues for the quarter also increased handsomely, to just a few bucks shy of $16 billion.
On a per share basis, the company’s operating earnings blew way past analysts’ expectations, jumping from $2.05 a share during the second quarter of 2015 to $2.21 this year. Analysts had expected it to come in at $2.12. It’s not often that a company beats analysts’ forecasts by almost a dime per share.
As for the company’s growth in revenues, Aetna said it “was primarily due to higher Health Care premium yields and membership growth in Aetna’s Government business, partly offset by membership declines in Aetna’s Commercial Insured products.”
Translation: The company was able to hike its customers’ premiums (enough to more than offset what it had to pay out, overall, to cover those customers’ medical care), and it got significantly more money from taxpayers (that would be you and me) via the government’s Medicare and Medicaid programs, which have become big cash-cows for Aetna and many other insurers.
In fact, it is Aetna’s government business that is the only segment that’s growing. Aetna and most of the other for-profit insurers have been losing private-paying customers on a regular basis for some time. But not to worry. As long as Uncle Sam has the Medicare and Medicaid faucets wide open and flowing straight into the insurers’ bank accounts, they couldn’t care less.
Here are a couple of important details you have to dig through Aetna’s filings to find (and which I haven’t seen reported by any other media): The company lost 1,184,000 commercial (private paying) enrollees (members) between June 30, 2015, and June 30, 2016, but it gained 487,000 Medicare Advantage, Medicare Supplement and Medicaid enrollees during that time.
That’s a net loss of approximately 700,000 members. Think of it this way: Aetna saw its revenues increase 5%—and its profits increase more than 8%—while providing coverage for close to three-quarters of a million fewer people.
Despite all this, despite all of Aetna’s membership growth and most of its profits coming from the government, the company’s executives say they simply can’t deal with all those Obamacare enrollees needing so much care.
Here’s what galls me so much about this: many if not most of the people who get their coverage through the Obamacare exchanges could not afford to buy coverage from Aetna before the Affordable Care Act was passed—and many of those folks couldn’t buy it AT ANY PRICE because of Aetna’s and just about every other insurers’ practice of declaring millions of people UNINSURABLE because of preexisting conditions.
Remember those good old days? Before Obamacare, a number of insurers routinely turned down a third of their applicants—some insurers turned down even more—because the applicants had been sick in the past or had born with a congenital condition. Most of those unlucky Americans had no option other than to remain in the ranks of the uninsured and forgo medical care they needed.
When Obamacare was signed into law in 2010, 50 million of us were uninsured, and many of us had been BLACKBALLED by Aetna and other insurers.
Is it little wonder, then, that many of these newly insured folks, who at long last are able to go to the doctor and pick up the prescriptions their doctors prescribe, would cost a little more than the healthier people private insurance companies prefer as customers? It’s too bad, so sad, isn’t it, that Aetna is finally having to part with some of its premium revenue to pay for their care.
But Aetna, which had 838,000 Obamacare enrollees at the end of June, is not going to put up with this state of affairs much longer, according to CEO Mark Bertolini (who I know from my days in the industry. We both worked for Cigna before he left for Aetna and I left for good).
“...in light of updated 2016 projections for our individual products and the significant structural challenges facing the public (Obamacare) exchanges, we intend to withdraw all of our 2017 public exchange expansion plans, and are undertaking a complete evaluation of future participation in our current 15-state footprint,” Bertolini was quoted as saying in Aetna’s earnings press release today.
Aetna is certainly not alone. The two for-profit insurers that are even bigger than it is, UnitedHealthcare and Anthem, have said essentially the same thing.
Aetna and the other insurers have protested loudly about the rapidly increasing cost of prescription medications, and the company’s executives today singled out rising pharmacy costs as a big reason for their having to shell out more than expected to cover their Obamacare enrollees’ care.
I’m not the least bit surprised. Here’s why: the country’s private health insurers have been doing a lousy job of controlling medical expenses for many years. It is the big failure of our multi-payer system that insurance company executives hope we will never catch on to.
The truth: Because we have many private insurers, none of them—not even the big ones like Aetna—have enough leverage with drug companies and huge hospital systems to strike a decent bargain on behalf of their customers. Yet we continue to be deceived by industry propagandists like I used to be and hold as a tenet of faith that competition among our many insurers will somehow magically control costs. (What insurers actually do is try to predict how much they think medical costs will rise in the future and jack up their premiums a few percentage points above that to ensure a profit.)
Folks, we are guilty of magical thinking. We’ve fallen for insurers’ deception and misdirection, hook, line and sinker. And, to the financial benefit of the industry’s executives and institutional investors, many of us can’t be persuaded that we are being duped. Meanwhile, the shareholders of the big for-profits are laughing all the way to the bank. Every single day.
Post note: Aetna’s shareholders really liked the company’s second quarter numbers and what the executives had to say. Aetna’s share price closed at $115.71, up $1.26 from Monday’s close. During the Obama years in the White House, the company’s shareholders (including executives like Mark Bertolini) have become exceedingly richer. Between April 1, 2009, and today, Aetna’s share price has increased 525%. Any interest among the shareholders to share some of that wealth with folks who are struggling to get the care they need? Are you crazy?
Aetna's Greed Proves That Medicare-for-All Is the Best Solution
by Lauren McCauley - Common Dreams
Insurance behemoth Aetna announced late Monday that it is pulling out of Obamacare public exchanges in 11 states, citing projected financial losses because of the high number of people who—it turns out—need expensive medical care.
Following a string of similar announcements, advocates of single-payer healthcare say that these departures only underscore the fact that "big commercial insurance corporations" will always "put profits before patients' health."
In a statement, Aetna chairman and CEO Mark Bertolini said that the company is withdrawing from 70 percent of the Affordable Care Act (ACA) exchanges and will only remain in markets in Delaware, Iowa, Nebraska, and Virginia.
"Fifty-five percent of our individual on-exchange membership is new in 2016, and in the second quarter we saw individuals in need of high-cost care represent an even larger share of our on-exchange population," Bertolini stated. "This population dynamic, coupled with the current inadequate risk adjustment mechanism, results in substantial upward pressure on premiums and creates significant sustainability concerns."
To translate: "individuals in need of high-cost care" in this context really just means "sick people cost too much." Advocates have long-said that pitting financial risk against public health is one of the major pitfalls of for-profit health insurance.
"Aetna’s announcement proves the larger point that private insurance companies are willing to deny care to make a few extra dollars. It is further evidence of how badly we need a public option for all through Medicare in this country," declared Kait Sweeney, press secretary for the Progressive Change Campaign Committee (PCCC).
A single-payer system (also known as Medicare-for-All) would replace the current for-profit model with a government-run system that covers all Americans' medical needs. Such a plan was a pillar of Bernie Sanders' presidential campaign. A more incremental public option—killed off by Congress during the legislative battle over Obamacare—has now been endorsed by Democratic nominee Hillary Clinton.
"It is disappointing that Aetna has joined other large for-profit health insurance companies in pulling out of the insurance marketplace," the Senator from Vermont said Tuesday. "Despite the Affordable Care Act bringing them millions more paying customers than ever before, these companies are more concerned with making huge profits then ensuring access to health care for all Americans."
Sanders, who promised to re-introduce legislation creating a "Medicare-for-All" again next year, added: "The provision of health care cannot continue to be dependent upon the whims and market projections of large private insurance companies whose only goal is to make as much profit as possible."
Sanders, who promised to re-introduce legislation creating a "Medicare-for-All" again next year, added: "The provision of health care cannot continue to be dependent upon the whims and market projections of large private insurance companies whose only goal is to make as much profit as possible."
Sweeney agreed, adding that the call for an alternate healthcare model "has new urgency at this moment. A public option is not only smart policy, but also a super popular economic populist issue that will help lead Democrats to victory in November—and it should be a priority for a new administration."
As Los Angeles Times columnist Michael Hiltzik noted last week—amid the first rumblings of Aetna's draw down—Congress and the Obama administration did the health insurance industry an "enormous favor in enacting the Affordable Care Act in 2010." Not only did they place Big Insurance at the "center of Obamacare ...they killed the public option," believing it to be a foot-in-the-door for single-payer.
He points out that health insurance companies at all levels are "reaping the benefits of Obamacare," and argues that alternately these "whining" insurers are likely seeking something. In Aetna's case, Hiltzik said it likely has to do with the fact that the U.S. Department of Justice is attempting to block its proposed $37-billion merger with Humana.
Sen. Elizabeth Warren (D-Mass.) expressed a similar hunch, writing on Facebook: "The health of the American people should not be used as bargaining chips to force the government to bend to one giant company's will."
Aetna's announcement followed similar news from Anthem, Humana, and UnitedHealth Group which all recently dialed back their participation in the exchanges.
And despite corporate media spin on the departures, Hiltzik concluded that "it's a mistake to view insurers' withdrawals from ACA exchanges as a sign that it's impossible to provide affordable health coverage to more Americans. It's more a sign that the fundamental error in the ACA's design was giving too much away to the insurance industry."
In a scathing op-ed published weeks before the official announcement, Wendell Potter, author of "Nation on the Take," said that it "disgusts" him that big for-profit health insurers are so blatantly demonstrating that "nothing—absolutely nothing—is more important to them than making their rich shareholders even richer. If that means making it more difficult for low- and middle-income Americans to get the medical care they need, so be it."
Breaking down how Aetna specifically has profited during President Obama's tenure, he wrote: "Between April 1, 2009, and today, Aetna's share price has increased 525%. Any interest among the shareholders to share some of that wealth with folks who are struggling to get the care they need? Are you crazy?"
As Richard Kirsch, former National Campaign Manager of Health Care For America Now and Senior Fellow at the Roosevelt Institute, said Tuesday, "Big commercial insurance corporations continue to put profits before patients' health, which is why Hillary Clinton's call for a public insurance option so that everyone in every exchange in the country has a choice of an affordable option is more essential than ever."
It's time for the government to play hardball with those whining Obamacare insurers
by Michael Hiltzik - LA Times
It’s easily forgotten that Congress and the Obama administration did the health insurance industry an enormous favor in enacting the Affordable Care Act in 2010.
Several favors, in fact. They placed commercial insurers at the center of Obamacare, giving them most of the responsibility for covering enrollees—and therefore access to an army of new customers. They left in place private insurers’ access to the immense Medicaid pool via Medicaid managed care. They killed the public option, which would have provided a nonprofit counterweight to private insurers, hopefully goading the latter into maintaining competitive pricing and customer service.
One would expect the insurance industry to show some gratitude for these handouts. One would be wrong. The nation’s big insurers haven’t ceased badmouthing Obamacare and grousing about losses, which in many respects are their own fault. Over the last year or so, several have announced they’re withdrawing from the program’s individual exchange market, or threatened to do so.
These threats generally are treated as evidence of flaws in Obamacare that can be rectified only if the government capitulates to the insurers’ demands—for looser benefit mandates and tighter restrictions on special enrollment rights, among other things.
Yet the authorities aren’t entirely powerless. It’s time for the government to push back and deliver the following message to insurers: If you want to reap the profits from participating in public health programs, you’ll have to participate in the Affordable Care Act too. To put it in terms the insurance companies understand: no more cherry-picking.
It’s true that the ACA individual market has flaws that warrant addressing. The Department of Health and Human Services has taken action on some of these, typically at the behest of insurers; it has reduced some of the options for signing up for coverage outside of the annual open-enrollment periods, for example. Some other issues, as we’ve reported, stem either from ill-advised or cynical congressional action (step forward, Marco Rubio), or congressional gridlock. It may be too early to make too much of this, but it’s possible that the next Congress will be more amenable to making the necessary adjustments for the ACA to work better.
Yet other insurer complaints are suspect. Aetna’s abrupt reversal of sentiment on the potential profitability of its Obamacare exchange business is an example: Three months ago, its CEO, Mark Bertolini, was praising the exchange market as “a good investment,” albeit one in which profits were still a year or more away—which is a pretty good definition of an “investment” in the future. Aetna was preparing to expand the states in which it offers individual exchange plans.
Then the U.S. Department of Justice sued to block its proposed $37-billion merger with Humana. Suddenly, Bertolini was saying that “the poor performance” of the exchange market warrants “a complete evaluation of our current exchange footprint” and cancellation of its 2017 expansion plans.
This is a very selective reading of Aetna’s experience with the Affordable Care Act. The truth is, it’s well in the black. The company has projected losses of $300 million on its exchange business for 2016, but in the same conference call in which he dissed the ACA exchange business, Bertolini also announced a record $6.5 billion in government program premiums for the first quarter of 2016 alone, an increase of 13% over the same quarter a year ago.
“This steady growth has been driven by a combination of new contract wins, county expansions in existing states, and ACA-related expansion membership,” he said. “Looking to the future, we are confident that Aetna is well positioned to take advantage of the strong growth dynamics of the Medicaid business.”
Aetna’s not alone. UnitedHealth, which has distinguished itself with the volume of its whining about Obamacare exchange losses and the speed of its withdrawal from that business, disclosed last month at its second-quarter earnings conference call that its Medicaid business is doing fabulously. Its revenue in that line rose 14.7% to $8.3 billion year-to-year and it added 225,000 enrollees, including new members in Iowa, New York and Pennsylvania, which have expanded Medicaid under the ACA. And Anthem, which has been complaining (albeit quietly) about the difficulty of scoring profits in the exchange market, has been buying up Medicaid insurers — including Simply Healthcare, which had nearly 200,000 Medicaid and Medicare members in Florida, for $1 billion last year.
Not only are the big insurers reaping the benefits of Obamacare via the Medicaid expansion. Centene, a smaller company that targets low-income customers, is happily serving 1 million Medicaid expansion members in nine states, not including 60,000 it has picked up in Louisiana, which just launched its own expansion.
These profits parallel those that insurers reap via Medicare Advantage, a managed care program in which the government pays a flat rate that generally exceeds the standard Medicare reimbursement rate in return for their taking on all responsibility for a member’s health needs. Medicare Advantage has been popular among enrollees and such a reliable profit-maker for insurers that they keep piling into the pool—the average Medicare Advantage member can choose from among 19 plans; in some states and counties, the choice of Obamacare exchange plans is down to one or two.
“It seems that insurers are perfectly happy and prosperous competing in the markets where the government is the payer,” commentator Andrew Sprung observed in February.
This all hints at the leverage the government might have against the insurers threatening to leave the ACA exchange market. What if it conditioned participation in Medicaid and Medicare managed care on a certain minimum participation in the private exchanges? Alternatively, it could reinvent and restore the public option, whether by offering Medicare to all Americans under 65 or sponsoring its own public plans.
These mechanisms might work because, given their lower premium rates, they might attract more low-use enrollees—the elusive young and healthy cadres needed to help subsidize costlier and older members.
It isn’t clear what legislation or administrative changes would be required to make any of these changes happen. The insurance industry surely would mobilize politically to kill the public option again, but might be more amenable to expanding the public managed care pool to accommodate more customers.
On the other hand, as Sprung observed, doctors and hospitals would be losers, as they would be receiving lower government reimbursements for a larger patient population. But even the expanded Obamacare population is small in relation to the overall patient market—perhaps 30 million customers in ACA and government programs, compared to nearly 150 million receiving their coverage through their employers.
The point is that it’s a mistake to view insurers’ withdrawals from ACA exchanges as a sign that it’s impossible to provide affordable health coverage to more Americans. It’s more a sign that the fundamental error in the ACA’s design was giving too much away to the insurance industry. If the government started threatening to take some of that back, the betting here is that the insurers would be sounding a lot more cooperative, and complaining a lot less.
BURLINGTON, Vt., Aug. 16 – U.S. Sen. Bernie Sanders (I-Vt.) issued the following statement Tuesday after Aetna announced plans to withdraw from Affordable Care Act health exchanges in 11 of 15 states where it currently operates:
"It is disappointing that Aetna has joined other large for-profit health insurance companies in pulling out of the insurance marketplace. Despite the Affordable Care Act bringing them millions more paying customers than ever before, these companies are more concerned with making huge profits than ensuring access to health care for all Americans.
“In my view, the provision of health care cannot continue to be dependent upon the whims and market projections of large private insurance companies whose only goal is to make as much profit as possible. That is why we need to join every other major country on earth and guarantee health care to all as a right, not a privilege. That is also why we need to pass a Medicare-for-all single-payer system. I will reintroduce legislation to do that in the next session of Congress, hopefully as part of the Democratic Senate majority."
Obamacare Will Survive Aetna’s Retreat
Editorial Board - NYT
Die-hard opponents of the 2010 health reform law, the Affordable Care Act, have often used its real and imagined problems to argue that it is fatally flawed. Now they are seizing on an announcement by Aetna that it will reduce its participation in the health insurance marketplaces set up by the law. Donald Trump’s campaign called Aetna’s move “the latest blow to this broken law that is slowly imploding under its regulatory red tape.”
This is hyperbole. The law has survived many setbacks, and it will overcome Aetna’s decision, too.
The law set up federal and state-run marketplaces where people who don’t have health insurance through their employers or government programs like Medicarecan buy coverage. Despite initial problems with HealthCare.gov, the federal program’s website, and some state sites, the marketplaces have helped many Americans become insured. About 11 million people have bought policies, and the government provides tax credits to 85 percent of them to make the coverage affordable.
But some big national insurers like UnitedHealth, Humana and now Aetna say they are losing too much money on marketplace policies. The reason is that the customers they signed up used more medical services than the insurers had anticipated. On Monday, Aetna said it would reduce the number of counties where it sells such policies to 242, from 778, citing a $200 million pretax loss on those policies in the second quarter. The company had sold marketplace policies to about 911,000 customers as of April.
Aetna’s decision will cause problems in some places. For example, Pinal County in Arizona might have no insurer selling marketplace policies for 2017 unless another company steps in to replace Aetna. But competition is more robust elsewhere. A Kaiser Family Foundation report published in July said that in 16 states and the District of Columbia, there would be an average of 5.8 insurers selling policies for 2017. That number was down from 6.5 in 2016 but about the same as in 2014.
There have been questions about Aetna’s motives. Senator Elizabeth Warren, Democrat of Massachusetts, said the insurer could be pressuring the Justice Department to drop or settle a lawsuit it filed last month to block Aetna’s proposed $37 billion acquisition of Humana. She and others have pointed out that as recently as April, Aetna’s chairman and chief executive, Mark Bertolini, told analysts that he considered the company’s presence in the marketplaces “a good investment.” And in May, Aetna said that it might expand into other parts of the country. Aetna says that the lawsuit did not influence its decision to reduce participation.
It is clear, however, that Congress should strengthen the marketplaces to ensure sufficient competition. For example, it could encourage more healthy people to buy insurance by extending tax credits to families that now earn too much to qualify. Many of those people find it cheaper to pay the tax penalty for not having insurance than to buy it. If more healthy people participated, more insurers would want to be on the exchanges. Congress and state governments could also consider offering a government insurance plan in rural areas and other places where there is little or no competition, as President Obama and Hillary Clinton have proposed.
Any law as complex and comprehensive as the Affordable Care Act is bound to have some hiccups. The only sensible response to those problems is to improve the law.
Aetna decision exposes weaknesses in Obama’s health-care law
by Carolyn Y. Johnson and Juliet Ellperin - Washington Post
Insurance giant Aetna’s decision to stop offering much of its individual coverage through the Affordable Care Act is exposing a problem in President Obama’s signature health-care law that could lead to another fraught political battle in Congress.
Aetna’s announcement Monday night was the latest sign that large insurers are losing money in the Affordable Care Act’s marketplaces, heightening concerns about the long-term stability of a key part of Obama’s domestic policy legacy. But addressing this issue could open the door to a nasty political fight, given that some Republicans have vowed to repeal the law outright.
If insurers continue to lose money, more are likely to withdraw from the marketplaces, a move that would reduce choices for consumers and could contribute to higher premiums. In one county, Aetna’s exit in 2017 could leave no insurers offering policies through its marketplace.
Aetna said it will exit 11 of the 15 states where it offers coverage through the Affordable Care Act, widely known as Obamacare. That affects about 80 percent of its customers covered through insurance marketplaces.
The marketplaces, known as insurance exchanges, were created to provide coverage for Americans who cannot get affordable health benefits through a job. A key aspect of the health-care law, the marketplaces allow people to purchase insurance online with subsidies based on their income.
Earlier this month, Humana said it will cut back its participation on the exchanges from 15 states to 11. On an earnings call in July, UnitedHealth Group chief executive Stephen Hemsley announced that his company plans to remain on “three or fewer exchange markets.”
In a reversal of expectations, Anthem said it is projecting mid-single-digit losses on the individual plans it sells on the exchanges for 2016. And Cigna has said that it is losing money on the exchanges, although the insurer is planning to expand its marketplace presence to three new states in 2017.
The health-care law is likely to prompt another heated political battle, regardless of which party wins the White House and control of Congress in November.
GOP presidential nominee Donald Trump has suggested that he would seek to scrap it altogether. Quoting a news story by Reuters on Tuesday, he tweeted: “Another health insurer is pulling back due to ‘persistent financial losses on #Obamacare plans.’ Only the beginning!”
Democratic nominee Hillary Clinton has pledged to modify the law to expand coverage and wants to add a public insurance option.
Both candidates’ proposals would face stiff political headwinds, but several health-care experts said lawmakers could still pursue more modest changes to make the program work better.
“The idea of somehow repealing it is far-fetched,” said Joseph Antos, a resident scholar at the American Enterprise Institute. “But changing it is not far-fetched.”
There are many possible policy remedies, but the main issues have to do with the risk pool — the balance between healthy people and sick people with higher health-care expenses. Many insurers have noted that people who have signed up for health insurance on the marketplaces are sicker, putting greater demands on the system.
“You have here a situation which all of us who care about the exchanges have to worry about,” said Zeke Emanuel, who served as a top White House health policy adviser during Obama’s first term and is now vice provost for global initiatives at the University of Pennsylvania. “There is a problem with the risk pool. There is a problem with the numbers of people signing up.”
One solution would be to entice more people — particularly healthy ones — to sign up for insurance, whether through a more robust public outreach campaign or by warning them about escalating financial penalties for not having coverage. Another would be to find new and better ways to give insurers that cover the sickest people greater financial relief.
“There are incremental steps the administration can take to address that, but I think more significant changes would require legislation that could get bipartisan support,” said Mark McClellan, director of the Margolis Center for Health Policy at Duke University.
In a statement Tuesday, Clinton spokesman Jesse Ferguson said the candidate is committed to expanding the law, which Obama signed in 2010.
“Hillary Clinton has outlined concrete plans to make health coverage more affordable in and out of the marketplaces, with more choices, expanded relief for costs, aggressively containing prescription drug expenses and the choice of a public option,” he said.
Many of these initiatives, along with any move to stiffen the financial penalties for not purchasing insurance, would require congressional approval.
In the meantime, however, some insurers are pulling back — and at least one county in Arizona has no insurers slated to sell marketplace plans in 2017.
Aetna chief executive Mark Bertolini said in a statement that there are not enough healthy people to financially offset those with major health problems who require high-cost care. As of June 30, Aetna covered 838,000 people through the exchanges. In total, 11.1 million people were signed up for the marketplace plans at the end of March.
Katherine Hempstead, a senior adviser at the Robert Wood Johnson Foundation, said that these national carriers haven’t traditionally been the biggest part of the exchanges.
“I think the market could survive without these guys,” she said. “Obviously, it would be better to see lots of people seeing a lot of opportunity in this space. . . . But I don’t think it’s a chapter in a Greek tragedy.”
The decisions also come as four of the major insurers are in a battle with the Obama administration. The Justice Department has blocked two proposed mergers: between Aetna and Humana, and between Anthem and Cigna. The companies are fighting the decisions.
Anthem has said that if its proposed deal with Cigna is allowed to go through, it will increase its exchange offerings to nine additional states.
Caroline Pearson, a senior vice president at Avalere Health, a health-care consulting firm, said that the lawsuit may have affected the timing of Aetna’s announcement — in late April, Bertolini described the marketplace as “a good investment” — but not the underlying facts about the viability of the marketplaces.
House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) said in a statement that the administration deserves the blame. “Plans are rapidly exiting the so-called marketplace because Washington has damaged and upended the insurance markets,” he said.
But Rep. Diana DeGette (Colo.), the top Democrat on Energy and Commerce’s subcommittee on oversight and investigations, said in an interview Tuesday that Republicans “seem to be hell-bent” on holding hearings “to support their multitude of efforts to repeal the ACA” and “have totally neglected their duty to try to fix it.”
DeGette said multiple senior and influential Republicans have told her privately that they are open to tweaking the health-care law after the November elections, when they have a clearer sense of the new political landscape.
“There’s a long list of things large and small that need to be adjusted,” she said. “But I don’t think anyone can say what that is until we know what the new Congress looks like.”
Aetna Shows Why We Need a Single Payer
by Robert Reich
The best argument for a single-payer health plan is the recent decision by giant health insurer Aetna to bail out next year from 11 of the 15 states where it sells Obamacare plans.
Aetna’s decision follows similar moves by UnitedHealth Group, the nation’s largest insurer, and Humana, one of the other giants.
All claim they’re not making enough money because too many people with serious health problems are using the Obamacare exchanges, and not enough healthy people are signing up.
The problem isn’t Obamacare per se. It’s in the structure of private markets for health insurance – which creates powerful incentives to avoid sick people and attract healthy ones. Obamacare is just making the structural problem more obvious.
In a nutshell, the more sick people and the fewer healthy people a private for-profit insurer attracts, the less competitive that insurer becomes relative to other insurers that don’t attract as high a percentage of the sick but a higher percentage of the healthy. Eventually, insurers that take in too many sick and too few healthy people are driven out of business.
If insurers had no idea who’d be sick and who’d be healthy when they sign up for insurance (and keep them insured at the same price even after they become sick), this wouldn’t be a problem. But they do know – and they’re developing more and more sophisticated ways of finding out.
It’s not just people with pre-existing conditions who have caused insurers to run for the happy hills of healthy customers. It’s also people with genetic predispositions toward certain illnesses that are expensive to treat, like heart disease and cancer. And people who don’t exercise enough, or have unhealthy habits, or live in unhealthy places.
So health insurers spend lots of time, effort, and money trying to attract people who have high odds of staying healthy (the young and the fit) while doing whatever they can to fend off those who have high odds of getting sick (the older, infirm, and the unfit).
As a result we end up with the most bizarre health-insurance system imaginable: One ever more carefully designed to avoid sick people.
If this weren’t enough to convince rational people to do what most other advanced nations have done and create a single-payer system, consider that America’s giant health insurers are now busily consolidating into ever-larger behemoths. UnitedHealth is already humongous. Aetna, meanwhile, is trying to buy Humana.
Insurers say they’re doing this in order to reap economies of scale, but there’s little evidence that large size generates cost savings.
In reality, they’re becoming very big to get more bargaining leverage over everyone they do business with – hospitals, doctors, employers, the government, and consumers. That way they make even bigger profits.
But these bigger profits come at the expense of hospitals, doctors, employers, the government, and, ultimately, taxpayers and consumers.
So the real choice in the future is becoming clear. Obamacare is only smoking it out. One alternative is a public single-payer system. The other is a hugely-expensive for-profit oligopoly with the market power to charge high prices even to healthy people – and to charge sick people (or those likely to be sick) an arm and a leg.
Hospital CEO pay rises faster than overall health care spending
by Robert Weisman - Boston Globe
Pay increases for many top Massachusetts hospital executives outpaced the growth of state health spending in 2014, according to new filings with the Internal Revenue Service.
Leading the pack was Elizabeth G. Nabel, president of Brigham and Women’s Hospital in Boston, who drew total compensation of $5.4 million that year, up 119 percent from her $2.5 million pay package in 2013. Most of the increase was attributed to a jump in deferred compensation in 2014, the year she vested in a retirement plan managed by Brigham and Women’s corporate parent, Partners HealthCare.
The compensation data from the Brigham and other hospitals are contained in IRS filings by nonprofit organizations that are made with a nearly two-year lag.
Partners, the state’s largest hospital and physicians network, reported a 19 percent increase in total compensation, to $3.1 million, for chief executive Gary L. Gottlieb in 2014. Gottlieb left Partners early last year to lead Partners in Health, a separate organization.
Overall health care spending in Massachusetts climbed about 4.8 percent in 2014, according to the state Center for Health Information and Analysis. That was above a 3.6 percent target ceiling established in a law passed by the Legislature in 2012.
In a statement released by Partners, its board chairman, Edward P. Lawrence, said: “We must provide competitive wages and benefits in order to attract and retain the best individuals at a time when health care is undergoing sweeping change. The competition for excellent managers and leaders is especially strong at this time.”
Partners reported cuts in the pay packages of two other top executives in 2014.
Peter L. Slavin, president of Partners-owned Massachusetts General Hospital in Boston, drew total compensation of $2.1 million, down 6 percent from a year earlier.
And David Torchiana, who headed the Mass. General physicians organization, had total compensation of $1.4 million, down 48 percent.
Changes in retirement vesting amounts reduced both pay packages.
Torchiana last year succeeded Gottlieb as chief executive of Partners HealthCare.
Other hospital systems also reported 2014 pay increases.
Total compensation rose 29 percent to $2.2 million for Howard R. Grant, president of Lahey Health System in Burlington; 7.1 percent to $1.5 million for Kevin Tabb, president of Beth Israel Deaconess Medical Center in Boston; 7.6 percent to $1.4 million for Kathleen E. Walsh, president of Boston Medical Center; and 70 percent to $1 million for Michael Wagner, president of Tufts Medical Center in Boston. Wagner spent much of 2013 heading the Tufts physician organization.
Boston Children’s Hospital reported total pay of $1.7 million for president Sandra Fenwick in 2014, up 41 percent. Dana-Farber Cancer Institute in Boston paid its president Edward J. Benz Jr., who will retire early next year, $1.5 million, up 7.1 percent.
The largest health system in Central Massachusetts, UMass Memorial Health Care in Worcester, reported paying 2014 compensation of $1.6 million to chief executive Eric Dickson, a 41 percent increase from the previous year, and $1.1 million to Patrick Muldoon, president of UMass Memorial Medical Center, the system’s flagship hospital, up 58 percent.
Baystate Health in Springfield reported that its president emeritus, Mark R. Tolosky, had total pay of $1.4 million in 2014, when he retired midyear, down 23 percent from 2013. The current Baystate president, Mark A. Keroack, had total pay of $1.2 million in 2014.
When Maine wasn’t looking, more babies began to die
Erin Hatch knew throughout her 24 hours of labor in March 2015 that once her twin boys left her body their tiny lungs wouldn’t be formed enough to breathe. After trying for eight years to become pregnant, she found herself planning not for birth but death.
A social worker met with her to make funeral arrangements while she was still in labor, and she could feel her boys, Mason Christopher and Marshall Carter, kicking.
They lived for minutes. Unlike a stillbirth, where the death occurs in utero, the twins died because they were premature — just 20 weeks. They died because they were born.
“They were just perfect. Mason looked like my husband, and Marshall looked like me. They were very small, but they had fingernails and hair and eyelashes,” Hatch, of Bangor, said.
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She and her husband, Scott, held the bodies of their babies, washed them and had keepsake imprints made of their feet and hands. Hospital staff encouraged pictures. And when it was time, they wrapped them in blankets and said goodbye.
For Hatch, the death of her twins also meant the death of her hopes and dreams for them.
“I didn’t just lose my children, I lost their whole life. I lost their first day of kindergarten. I lost school shopping. I lost going to camp in the summer. I lost teaching them to swim,” she said.
In Maine, more moms and dads are seeing their dreams for their babies cut short. Many, like the Hatch family, don’t know why their little ones are born premature or die in their first year. Often, the reasons for a baby’s death aren’t knowable or preventable.
In other cases, though, they may be. Or there may be a chance to learn how the family could have received better support.
The rate of infant deaths in Maine has been increasing since the 1990s, according to a BDN analysis of the data. It’s not clear why the trend is occurring, however, because a panel created by the Legislature to track and analyze the factors surrounding the deaths has been unable to do its work.
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