As I Write, Aetna Shares Plummet

April 26, 2012

Shares in Aetna are down nearly 9% after the company announced first-quarter profits that were below Wall Street expectations.  The company’s medical and administrative cost ratios rose, and it appears investors are concerned that costs may be rising faster than expected.  Oh boy.


Healthcare Cost Trends Continue to Moderate

April 20, 2012

From the Altarum Institute.  Year-over-year growth in national healthcare expenditures by month.

RomneyCare is Working

April 17, 2012

I don’t know why this hasn’t gotten more media coverage, but the latest report from Massachusetts on the state’s six-year-old healthcare reform initiative can be summed up in one word: success. 

The Massachusetts Taxpayers Foundation reports that 98% of the state’s residents have health insurance while premiums are down for the second consecutive year for the 173,000 people who purchase coverage through the state’s exchange  (individual and small group)–all at a total incremental cost to the state of $453 million or 1.4% of the state’s $32 billion annual budget (2.8% if you include the share picked up by the federal government).

The Massachusetts Taxpayers Foundation concludes: “It would be premature to claim that the state’s historically high health care costs have been tamed, but there are encouraging signs of progress.”

Quote of the Day: Henry Paul Monaghan

April 16, 2012

Columbia Law professor Henry Paul Monaghan writing about the constitutionality of the individual mandate in The New Republic.

The individual health mandate surely passes constitutional muster under settled judicial principles….The Court’s precedents establish without question that Congress may regulate intrastate economic activities that Congress (not the Court) reasonably concludes have a substantial effect on interstate commerce. The existence of such congressional authority is especially clear when the challenged provision itself is part of a comprehensive legislative scheme that regulates interstate commerce….

The same is decidedly not true of the testing hypotheticals raised by members of the Court concerning mandates to purchase broccoli or automobiles: Individuals who wait to purchase such goods until they are needed do not undermine a larger regulatory scheme or shift costs to other consumers of those goods or to any other third party. Nor is the health mandate comparable to a requirement to purchase burial insurance, because no showing can be made that Congress would be responding to any real national problem….

The purported limit on congressional power favored by the mandate’s opponents—between constitutionally permissible regulation of “activity ” and unconstitutional regulation of “inactivity ”—is simply unknown to Commerce Clause jurisprudence, is wholly unworkable, and makes no economic sense.  

Molina Shares Fall 26%

April 9, 2012

What happens when you lose a contract that accounts for about 20% of your revenues?  Shares fall through the floor.  Molina Healthcare found out on Friday that it had lost its bid to continue to serve managed Medicaid members in Ohio.  It wasn’t the only one.  Other losers included Amergroup, Centene and WellCare.  Centene saw its shares fall 15% today, WellCare 7% and Amerigroup 5%.  Complete coverage will appear in this week’s issue of Health Plan Market Trends.

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