A Wall Street Analyst on Healthcare Reform

September 30, 2008

We said pretty much the same thing yesterday (It’s All Bailout, All the Time).  So we’re on the same page as Carl McDonald of Oppenheimer when it comes to the prospects of healthcare reform in 2009.

Writes McDonald: “All the enthusiasm that has been built up around meaningful health care reform in 2009 under a new administration probably won’t result in too many major changes. Health care reform will be extraordinarily difficult to achieve in the best of circumstances, and it’s easy to argue that things are not good these days. The national debt is approaching $10 trillion, the federal deficit is now projected to be more than $400 billion for the fiscal year ending September 30, the government has already committed several hundred billion dollars to try and bail the country out of the ongoing housing crisis, and most people today care more about what they are paying for gas every week than they do about the cost of health care.”

What the word I’m looking for?  Ugly!


It’s All Bailout, All the Time

September 29, 2008

It’s not surprising that the debate over healthcare reform has taken a backseat to the possible economic collapse of the world as we know it. 

A Wall Street bailout of some form is clearly needed to protect against the possibility of a broad and deep recession or worse.  But even with the addition of taxpayer safeguards included in the most recent Congressional compromise, it’s hard to imagine that this package isn’t going to cost us all a lot of money.  Some financial analysts have noted that $700 billion is just the tip of the iceberg, with a final pricetag possibly reaching as high as $2 trillion.

The implications for healthcare reform are clear.  No money, no reform.  It’s all about flexibility, or rather the lack of flexibility that any new President will have to pursue a healthcare reform agenda in the face of soaring budget deficits and rising national debt ($9.9 trillion and counting).

We’re not happy about it.  Just when the political train was leaving the station in favor of a serious run at universal healthcare, this crisis risks jamming on the brakes.  Well, it wouldn’t be the first time universal healthcare was derailed in this country.  Let’s hope we can still find a way to make the numbers work.

Excerpts from the CRG Premium Survey

September 26, 2008

Here are a few excerpts from the 2009 CRG premium rate survey, which will be published shortly in Managed Healthcare Market Report.

“The city of Los Angeles expects overall premium rates to increase just 1.5% in 2009, after a 6% to 10% increase in 2008. Rates for an HMO and PPO from WellPoint’s Blue Cross of California are expected to remain unchanged.  Kaiser HMO premiums are expected to rise about 3%.  About half of the city’s 78,000 lives are in the Kaiser HMO.”

“The California Public Employees’ Retirement System (Sacramento, CA), said HMO premiums will increase 6.6% in 2009, after rising 7.4% in 2008. PPO rates will actually decline 0.04%.  Overall premiums for 2009 will increase 4.3%, the lowest rate of increase in more than a decade.  Calpers, with 1.3 million covered lives, expects to spend about $5.7 billion on healthcare benefits in 2009.”

“The State of Florida expects premiums to rise about 11% in 2009.  The state, with more than 368,000 covered lives, offers a self-insured PPO administered by Blue Cross Blue Shield of Florida and HMOs from AvMed, Capital Health Plan Florida Health Care Plans, UnitedHealth and Vista.”

“The city of Indianapolis is expecting a 2009 premium decrease of about 4.3%, down from a 4% increase in 2008.  The city, which covers 7300 active employees and 450 retirees, cut premiums by adding deductibles of $250 for inpatient services and $100 for brand prescriptions per individual to its fully funded HMO. ”

“The Group Insurance Commission (Boston), which purchases health insurance for state employees, received a 6.4% rate increase for active employees for fiscal 2009, ending June 30.  GIC, which covers about 300,000 lives, offers plans from Neighborhood, Health New England, Fallon, Harvard Pilgrim, Tufts and Unicare.”

“The City of St. Paul, MN, received a 9.5% rate increase in 2009, compared to an 18.5% increase in 2008.  The city will also receive a 9.5% increase in 2010 as part of a guaranteed contract.  The city offers three health plan options from HealthPartners, including two PPO options and a POS plan.  The city covers 2850 active employees and 2350 retirees.”

“The State of Ohio, with more than 129,000 lives, is expecting a premium increase of 7% in 2009 after receiving a 1.5% increase in 2008. The state offers five plans: Ohio Med, Aetna, Paramount, The Health Plan, and United Healthcare.”

“The Texas Employees’ Retirement System (Austin, TX) will see average monthly single HMO premiums increase about 5% in the fiscal year ending Aug. 31, 2009.”

Georgia on My Mind

September 26, 2008

The Savannah Business Group on Health, which provides network contracting services to self-funded PPOs, expects a 2% increase in hospital and physician costs in 2009, the same increase as in 2008, according to Gary Rost, executive director.  Rost said that the group’s long-term relationship with local providers enables it to negotiate favorable contract terms.  The group’s PPO network serves 15,000 lives among 20 different employers, each of which contracts separately for TPA services. 

Maybe the Savannah Business Group is onto something here.

Rost notes that direct contracting programs work best in a smaller communities because a critical mass of membership is needed.  The Savannah Business Group’s PPO membership accounts for more than 10% of the local commercial market, Rost said.  It also helps to have a lot of locally headquartered companies.

Eliminate the Medicare Drug Coverage Gap

September 25, 2008

Since it looks like we’re going to spend $700 billion to bailout Wall Street, how about eliminating the Medicare drug coverage gap?  I know, we can’t afford it. 

But the gap is causing pain for seniors.  A new study from Medco Health Solutions says, “Seniors battling high cholesterol are more likely to stop taking their medications once they reach the Medicare Coverage Gap, a result that may put them at higher risk for heart attack and stroke.”

That can’t be what we mean when we talk about improving the quality, cost and efficiency of the U.S. healthcare system.  I’ve called for the elimination of the gap before (see article).  And frankly I’m amazed the issue hasn’t gotten more attention, along with the issue of allowing the government to negotiate directly with drug companies for lower prices.

My line above—”I know, we can’t afford it”—is only partly ironic.  All this stuff costs money, and the bills are piling up for the U.S. government (read: taxpayer).  But how do you look a senior straight in the face and say you can’t have those cholesterol meds you need and then turn around and give Wall Street what amounts to a blank check?

Premium Rate Trends Revealed

September 25, 2008

Some definitive data is starting to come in on rate trends for 2008 and 2009.

The Kaiser Family Foundation just came out with its 2008 figures, estimating that health insurance premiums will rise just 5% for the year.  Kaiser also notes that many workers faced higher deductibles in 2008, driven in part by the growth of consumer-directed health care plans.

As for 2009, Towers Perrin said that employer healthcare costs are expected to rise about 6%, with employee costs up between 7% and 10%.  Both the Kaiser and Towers Perrin figures are based on surveys of employers.

One striking observation made by Towers is the variation among companies.  The most effective companies at controlling costs  (which Towers labels high performers) “spend almost $1,500 less per employee overall,” Towers said.  About $350 of that savings is shared with employees in the form of lower contributions, Towers added.

Furthermore, Towers said, 42% of high performers are expected to see healthcare cost rise 3% or less in 2009.  Towers’ conclusion: “A variety of health-focused management techniques…are paying off in significant ways—and point toward broader solutions to the cost crisis.”


September 24, 2008

Apologies for the lack of posts today.  We’ve been tied up with other projects.  Back tomorrow.

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