Forget Opting Out. Most States Will Opt Into the Medicaid Expansion

July 19, 2012

We keep hearing about states that may opt out of the ObamaCare Medicaid expansion.  But there’s a strong argument that states headed up by even the most dogmatic opponents of reform–like Gov. Rick Perry’s Texas–will end up opting in. 

As Jay Hancock of Kaiser Health News notes (and I agree), “Insurers are expected to join hospitals and patient advocates to fight for Medicaid expansion and what are enormous amounts of money.”  He adds, “If there’s one thing more powerful than Republican governors’ dislike of the Affordable Care Act…it may turn out to be the business interests in their own states.”

I also sincerely believe that public pressure to help millions of poor people will simply force the hands of the Rick Perrys of the world.  Call it the “better angels of our nature” argument.   As Jonathan Cohn says, “I remain convinced that most states will choose to participate in the Medicaid expansion before January 1, 2014, and that the holdouts will come within a few years after that. But I’m confident of that only because I’m confident that politicians will feel political pressure to do so—and progressives must do their part to create it.”


ObamaCare Saved Her Life

July 17, 2012

From the Los Angeles Times:

Not to be overly dramatic, but for me the Supreme Court decision on the Affordable Care Act was a matter of life and death….

When I was diagnosed with an aggressive form of breast cancer late last year, I had no health insurance, which meant my options were extremely limited. No insurer would pick up someone in my circumstances. But luckily, the Pre-existing Condition Insurance Plan had already kicked in, and it made it possible for me to purchase insurance under a government program.

I was uninsured not because I’m a lazy, freeloading deadbeat but because my husband and I are self-employed. We had been purchasing health insurance on the individual market along with 6% of the rest of the population. But after exhausting all of our resources trying to keep up with premiums of $1,500 a month, we had no choice but to cancel it.

Six months ago, when I first wrote about my situation in this newspaper, I got hate mail from people who said I deserved to die. But there was also a lot of curiosity and a lot of encouragement and support. Much of the curiosity was from abroad. Canadians, French, Italian, British and Swiss cannot understand why healthcare reform is so politicized here; why most people don’t know anything about the Affordable Care Act; how we can be so cruel to one another; and why we criticize their healthcare systems.

There but for the grace of god….


Jim Carlson: The Fox in WellPoint’s Henhouse?

July 17, 2012

Citi analyst Carl McDonald comments on the highly regarded management team that comes with WellPoint’s acquisition of Amerigroup, including chief executive (and former president of United Healthcare) Jim Carlson.

It’s no secret that Angela Braly, WellPoint’s CEO, has a tenuous relationship with many of the company’s largest shareholders, who weren’t pleased initially with her lack of operating experience, and WellPoint’s stock underperformance relative to United hasn’t done much to improve the situation, with WellPoint’s stock down 25% since she took over.  It’s also no secret the relationship among some of WellPoint’s senior executives has been shaky. There’s evidence of this among the number of senior executives at WellPoint that have come and gone over the past few years, but even among those executives that remain, there are still questions about whether everyone is in the role they should be.

Assuming for a minute that this version of events is somewhat close to accurate, if you’re Angela Braly, it raises the question of why invite the fox into the henhouse? As we noted before, Jim Carlson has a lot of publicly traded experience, he was quite successful at his last company, he used to run a big commercial operation, and he has a significant amount of cachet with investors. Before, WellPoint’s board didn’t have a lot of obvious choices if they wanted to go in a new direction with the leadership of WellPoint, but that’s no longer the case.

There are a couple of possible explanations. The simplest one is that Angela Braly’s standing at WellPoint is a lot more secure than those of us outside the company perceive, and that she doesn’t see Jim Carlson as any kind of threat. A second possible explanation is Jim Carlson’s age. He’s 59 today, and assuming the board wanted him to have a year or two of experience within WellPoint, it would raise the question of whether the board would name someone CEO knowing that they’d have to go through another CEO succession process in a limited number of years.

A third possible explanation is that Angela Braly, Chairwoman, President, and CEO of WellPoint, has decided that being the CEO of WellPoint isn’t everything it was made out to be. It’s possible we end up in a scenario where Braly stays as an executive chairwoman of the board, with Carlson taking over day to day operations of the company.

In any event, whether any of these scenarios play out or not, we think the investment community will like the added depth that WellPoint’s management team now has, and the additional leadership flexibility it gives the company going forward.

McDonald adds that the acquisition of Amerigroup is a good deal for WellPoint, despite the high price paid.  The deal adds heft to the WellPoint’s Medicaid line–a growing business–and reduces the company exposure to commercial, which faces profit pressures because of ObamaCare.


Make Medicaid a Federal Program

July 10, 2012

Merrill Goozner in The Health Care Blog:

Many states – often the same ones that oppose the Medicaid expansion – insure a relatively low proportion of their Medicaid-eligible residents by doing a poor job of outreach. Advocates sometimes accuse these states of deliberately trying to hold down their own costs at the expense of the poor.

A federalized Medicaid program that successfully reached into all corners of the country like Medicare would come much closer to providing universal coverage than what even Obamacare contemplates. But it would cost a lot more, too.


Medicare ACOs Serve 2.4 Million

July 9, 2012

Medicare says there are now 154 ACOs serving 2.4 million members through its shared savings program.  A list of 89 ACOs that most recently joined the program appears here.  Notes CMS:

Studies have shown that better care often costs less, because coordinated care helps to ensure that the patient receives the right care at the right time, partly because patients avoid unnecessary duplication of services and dangerous medical errors.

Well, that’s the idea behind ACOs anyway, and if it works it will be a very big deal indeed.  There are about 46 million Medicare members–indicating that the shared saving program is serving about 5% of total Medicare lives.  In contrast, Medicare Advantage serves about 13 million members or 28% of total Medicare lives.


WellPoint Shells Out Big to Acquire Amerigroup

July 9, 2012

WellPoint is on a buying spree.

The company has announced a definitive agreement to acquire Medicaid plan Amerigroup for $4.9 billion or $92 per share–a whopping 43% premium over Amerigroup’s Friday close.  The deal marks WellPoint’s second major acquisition in less than a month–having acquired 1-800 Contacts for $900 million in June.

The Amerigroup deal will make WellPoint the largest Medicaid plan in the nation with more than 4.5 million members. 

This type of consolidation in the rapidly growing managed Medicaid market was widely expected and so comes as no big surprice.  There’s huge opportunity here for revenue and earnings growth, and clearly WellPoint is hoping to capitalize.

WellPoint is also in need of a boost to its lagging stock price.  As one investor told me, WellPoint chief executive Angela Braly “is not regarded as the sharpest tack in the box.”  Maybe she’s decided come out swinging.


The Mandate: “It’s a Tax!”

July 2, 2012

The Daily Show on the Supreme Court’s decision to uphold ObamaCare.


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