Who’s to Blame for Rising Healthcare Costs?

February 26, 2010

Good, balanced article in today’s Wall Street Journal titled “Race to Pin Blame for Health Costs” says:

Insurers contend that they must pass on ever-higher bills from hospitals and doctors. Hospitals say they are struggling with more uninsured patients, demands by doctors for top salaries, and underpayments from Medicare and Medicaid.  And doctors say they are strong-armed by insurance monopolies and hampered by medical malpractice costs.

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Healthcare Summit Exchange of the Day: Obama-Barrasso

February 26, 2010

My favorite exchange from yesterday’s healthcare summit was between President Obama and Sen. John Barrasso, M.D. (R-WY). 

BARRASSO: Sometimes the people with catastrophic plans are the people that are best consumers of healthcare, in using — the way they use their healthcare dollars. Because a lot of people come in and say, you know, my knee hurts; maybe I should get an MRI. They say — and then they say, “Will my insurance cover it?” That’s the first question. And if I say yes, then they say, “OK, let’s do it.” If I say no, then they say, “Well, what is it going to cost?” And “What’s it cost?” ought to be the first question. And that’s why, sometimes, people with catastrophic — catastrophic health plans ask the best questions, shop around, are the best consumers of healthcare….

I do believe we have the best healthcare system in the world. That’s why the premier of one of the Canadian provinces came here just last week to have his heart operated on. He said it’s my heart; it’s my life; I want to go where it’s the best, and he came to the United States. It’s where a member of parliament, a Canadian member of parliament with cancer, came to the United States for their care. They all have coverage there, but they want is care. So coverage does not equal care….

Half of all the money we spend in this country on healthcare is on just 5% of the people. Those are people, for the most part, that eat too much, exercise too little and smoke….

OBAMA: I just am curious. Would you be satisfied if every member of Congress just had catastrophic care? Do you think we’d be better healthcare purchasers?  I mean, do you think — is that a change that we should make?

BARRASSO: Yes, I think — I think, actually, we would. We’d really focus on it. You’d have more, as you’d say, skin in the game…

OBAMA: Because…

BARRASSO: … and especially if they had a savings account…They could put their money into that and they’d be spending the money out of that.

OBAMA: Would you feel the same way if you were making $40,000 or you had — that was your income?  Because that’s the reality for a lot of folks. I mean, it is very important…to listen to the folks that we get letters from.  Because the truth of the matter, John, is they’re not premiers of any place. They’re not sultans from wherever. They don’t fly in to Mayo and suddenly, you know, decide they’re going to spend a couple million on the absolute best healthcare. They’re folks who are left out….

And this notion somehow that for them the system was working and that if they just ate a little better and were better healthcare consumers they could manage is just not the case.   The vast majority of these 27 million or 30 million people that we’re talking about, they work, every day. Some of them work two jobs. But if they’re working for a small business they can’t get healthcare. If they are self-employed, they can’t get healthcare.


Script Volume at Express/NextRx

February 25, 2010

Here’s a chart in which J.P. Morgan attempts to break out the prescription volume of pharmacy benefit manager Express Scripts and the newly acquired operations of NextRx (formerly owned by WellPoint).


Obama Healthcare Summit: Talking in Circles

February 25, 2010

Everybody’s talking at me.
I don’t hear a word they’re saying,
Only the echoes of my mind.
Everybody’s Talkin’ by Harry Nilsson

I’ve been listening all morning to the President’s live healthcare summit.  I must say, the President gave eloquent opening remarks about the need for reform, the need for compromise, the need to work together.  For a minute, I actually believed there was hope.  Then the Republicans spoke, making clear they don’t want comprehensive reform but rather a “step-by-step” approach.  Or as Sen. Lamar Alexander (R-TN) said, “We don’t do comprehensive well.  The country is too big, too complicated, too decentralized.”  Well, at least they finally admit they have no comprehensive reform plan.  The “steps” are the same ones Republicans have promoted all along: tort reform, sale of insurance across state lines, cost reductions, small business purchasing alliances and so on.  Democrats, meanwhile, were noticeably frustrated about the continued obstruction.  In a nutshell, everybody is saying the same things they’ve said all along, but a bit more politely because the President is in the room and it’s live on TV.


The WellPoint Retreats

February 24, 2010

Here’s a link to photos of the various resorts WellPoint took its customers on retreat.  The slides were presented today during hearings before the House Committee on Energy and Commerce regarding WellPoint’s proposed individual price hikes in California.  To sum up: It was a rough day for Angela Braly.


Question of the Year: Michael Burgess (R-TX)

February 24, 2010

Rep. Michael Burgess (R-TX) in Congressional hearings today speaking to WellPoint chief executive Angela Braly on the company’s proposed individual rate increases of up to 39% in California:

“You had to know this was going to be trouble….Did you make a judgement as to whether this was the best time to do this?


‘Did WellPoint Inflate Its Proposed Premium Increases’

February 24, 2010

Great stuff in documents released by the House Committee on Energy and Commerce, calling into question the level of premium increases proposed by WellPoint:

Internal company documents appear to call into question WellPoint’s assertion that the 25% average rate increase is necessary. They suggest that WellPoint padded its rate increase by five percentage points to counteract anticipated concessions to state regulators concerning the size of its premium increases.

On October 24, 2009, Mr. Shane, the actuary, e-mailed Mr. Sassi, the head of WellPoint’s individual market division, that WellPoint executives needed to “reach agreement on a filing strategy quickly – specifically in the area of do we file with a cushion allowed for negotiations/margin expansion, or do we file at a lower level that maintains margin, but does not allow for negotiation.”

It appears that WellPoint elected to file with “a cushion.” In an October 21, 2009, presentation to the WellPoint Board of Directors, Mr. Sassi identified the “Key Assumptions” in the pricing for the individual market in 2010.  This slide differentiated the “2010 Rate Ask” from the “2010 Plan Rate Increase.”  According to the slide, WellPoint’s “Rate Ask” would be 25% to 26%, while the “Rate Increase” the company assumed in its “2010 Plan” was just 20.4%.


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