Wednesday, May 14, 2008

California Budget Revision Proves It: You Can't Trust the State With Health Care 

But those dependent on government programs refuse to see it

By John R. Graham

Categories:  California, Medicaid

As California struggles to get control of its budget deficit, Governor Schwarzenegger (who as recently as January collaborated with Democrats to almost wrangle a $15 billion health care tax and spending increase through the legislature) has been forced to propose cutting $2 billion (5 percent) from the state budget for health and human services - mostly Medi-Cal (Medicaid) and other services for low-income Californians.

The state's long-suffering doctors will be asked to take a ten percent pay cut to balance the budget.  How clever is that, when an increasing number of doctors nationwide take no Medicaid patients?  And why should California's physicians suffer because the state government cannot spend within its means, but lurches like a drunken sailor from one annual fiscal crisis to the next? (My apologies to drunken sailors, many of whom are fine people, I'm sure.)

The fact is that governments cannot act as responsible insurers, for health care or any other social service.  If the government let you and I control more of our health care money, at least we'd have the choice of saving up in the good times to ensure we'd have enough money to pay for our health care when income runs short - but the state forbids the poorest Californians from making this choice, even more so than the rest of us.

And yet, self-styled "advocates" for the poor continue to bleat for increased government dependency. Incredible!

 

• posted by John R. Graham
• 10:05 pm
• 0 comment

Monday, May 12, 2008

Advocate of State-Monopoly Health Care: "We Are Winning" 

Will Health Plans Continue to Aid and Abet the Enemy?

By John R. Graham

Categories:  California, Individual Mandates, Insurance Regulation

Commenting on Gov. Schwarzenegger's recent musing that he would like to re-launch last year's failed tax-hiking, choice-limiting, health "reform", State Senator Sheila Kuehl delivered a chilling post-mortem: "We are winning."

"We" are the advocates for government-monopoly health care.  Ms. Kuehl has been leading a gang of militant trade unionists and other malcontents in a long war to drive individual choice out of health care in California.  Her bill, SB-840, already vetoed but subsequently re-introduced, would establish a Canadian-style government monopoly over California health care.  (Being a career politician, she knows how to soft-pedal her agenda, but I have debunked it in harsher, more realistic terms.)

Surprisingly, I agree with much of today's analysis.  Indeed, she, like I, was opposed to the Schwarzenegger-Nuñez Health Care Deforminator Model ABX1 1.  But I opposed it because it was built on flawed evidence, an unnecessary tax increase, and a violation of basic insurance principles.  She opposed it because it didn't beat up the health plans enough.

Schwarzenegger-Nuñez ABX1 1 did lay on a heavy dose of over-regulation, but not the type that Sen. Kuehl likes best: it did not regulate premiums that health plans could charge.  Sen. Kuehl cannot afford to approve any "reform" that lets this one slip by, because she (surely) knows that regulating health premiums can only lead to citizens becoming more frustrated with private health care.

Premiums are going up because the costs of providing health care are going up, not because profits are going up, as a paper by PriceWaterhouseCoopers (among others) shows.  But Sen. Kuehl and her allies would love nothing more than to pass rate regulation, and wait for the "proof" to roll in that "we can't count on private health plans," as most flee the state and the rest can only pay for sub-standard care.

So, Sen. Kuehl dealt ABX1 1 the death blow last January in the Senate Health Committee.  She points out, as have I, that the number of Californians favoring a government take-over of health care has significantly increased, and the number favoring "individual responsibility", has decreased since the curtain dropped on Schwarzenegger's health care drama.  Furthermore, Californians' views of the credibility of various interest groups shows that the reputation of health plans continues to sink in the mud, while that of the militant (one might even be tempted to say "violent") California Nurses Association has grown.

Sen. Kuehl concludes: "We are winning," and I fear that she may be right.  But recall that California's health plans, with the exception of Anthem Blue Cross (WellPoint), aided and abetted the enemy by supporting Gov. Schwarzenegger's "reform."

And the latest polling shows where it got them.  If they want to survive in the long term, California's health plans must turn their back on Schwarzenegger-style government-run health care.

• posted by John R. Graham
• 5:32 pm
• 0 comment

Friday, May 2, 2008

San Francisco's Health Access Plan Has Raised $6 Million 

Now It Only Needs $194 Million More To Achieve "Universal" Health Care

By John R. Graham

Categories:  California

Thrilling news news from my fair town: San Francisco's Health Access Plan has managed to rope in 743 businesses, with 12,900 employees, before their deadline for enrolment in the City & County's new mandatory health care scheme.

The San Francisco Health Access Plan promises to bring "universal" health care to our fair city through taxing people without health insurance to empower a public health bureaucracy.  (Well, legally they're taxing the employers, but that's just semantics, because when the government lays a burden on business, employees are the first to pay, through lower wages).

These 743 businesses have 20 to 49 workers each.  Half of these 12,900 employees will be below the income cut-off to get "free" enrolment in SFHAP: that's 6,450 on top of the 19,000 already enrolled (primarily from firms with over 50 workers each, which had an earlier deadline).

If you're still with me on the math: We're now up to 25,450 enrolled in SFHAP, of an estimated uninsured adult population of 73,000 - one third of the eligibles.

How much money has SFHAP got from shaking down the businesses (through the "solidarity fee" or whatever it's called)? According to the article, $6 million of this year's $200 million budget - three percent of the budget.

And, did I mention that San Francisco, like California, has a big bomb of a budget deficit before taking SFHAP into account?

It's beginning to look a lot like Massachusetts (where the revenue is far less and the spending far greater than when the Commonwealth Connector health reform bill was signed in April 2006).

• posted by John R. Graham
• 6:02 pm
• 0 comment

Friday, May 2, 2008

HSAs, State by State 

Largest number in California; highest proportion in Minnesota

By Grace-Marie Turner

Categories:  California, Hawaii, HSAs, etc., Minnesota, New Mexico

America's Health Insurance Plans released its latest estimates of the number of people who have health insurance that would qualify them to have Health Savings Accounts.

AHIP for the first time produced estimates of how many people in each state have HSA-qualifying insurance. California leads with 638,999 (even though the state legislature refuses to allow people to deduct their HSA deposits from their state income taxes). Minnesota had the highest percentage penetration of HSAs, representing 9.2% of the insurance market. Massachusetts and New Mexico need to get with the program: They came in next to last at 0.9%, followed only by Hawaii at 0.1%.

Two key findings stand out. First, HSAs clearly are an important health insurance option for small business. The fastest growing market for HSA-qualifying insurance was in the small group market, accounting for 31% of new policies.

The average balance in an HSA account is $1,083, money that consumers have saved and can spend on future health care needs.

Roy Ramthun of HSA Consulting has produced an excellent and more detailed summary, which you can find here.

• posted by Grace-Marie Turner
• 8:01 am
• 0 comment

Wednesday, April 30, 2008

Is the New Anthem Off-Key? 

If I were writing WellPoint's new California ads, they'd look different

By John R. Graham

Categories:  California, Insurance Regulation

For reasons best known to its executives, Indianapolis' WellPoint, owner of Blue Cross of California, has recently decided to re-name itself Anthem Blue Cross.

How this will help it address the snares and traps set for it by politicians, regulators, and self-styled "patient advocates," I have no idea, but I suppose that if you're in a hole, the first thing to do is re-brand yourself.

California is now indundated with billboards and advertisements filled with happy, smiling patients, apparently excited about receiving inexplicable EOBs (Explanation of Benefits) from Anthem Blue Cross instead of Blue Cross of California.  The Los Angeles Times' David Lazarus doesn't buy it.

Mr. Lazarus is a fan of socialised medicine and I am not, but the facts are non-partisan.  Anyone who watched as WellPoint's last earnings call caused the stock to drop from almost $90 to under $45 knows that these commercial insurers (UnitedHealthGroup suffered a similarly dismal response from investors) are toiling with a broken business model.  I don't know if the members they're losing are going to other commercial carriers (like CIGNA or Aetna) or non-profit carriers, or becoming uninsured.

But I do know that if I ran a carrier in this kind of crisis I would not spend my ad budget on happy faces, thrilled by a new logo.  Instead, I'd call the public's attention to things happening in the state of California that harm both patients and Anthem Blue Cross.

How about telling people:

• How organized medicine is trying to reduce competition in health insurance by making it illegal for a health plan to operate in California unles its Medical Loss Ratio achieves an arbitrary accounting hurdle that has nothing to do with health care?
• How some unknown lobbyists have convinced state legislators to impose a new mandatory benefit for unlimited gynecological cancer screening that will increase premiums enough to price 85,000 Californians out of health insurance, despite the expert report whose experts confessed they could not really estimate how much claims would increase?
• How Sutter Health, Northern California's dominant hospital system insists on "gag" clauses in its contracts with health plans, which forbid them from giving their members information on hospitals' prices?

Not that I think the solution to health reform is for everyone to point the finger at each other, but until the citizens are informed about how the health care elites drive up health costs, they will not be ready for consumer-driven health care.

Which, buy the way, is the model WellPoint and its competitors must adopt if they want to fix their business models.

• posted by John R. Graham
• 3:51 pm
• 0 comment

Wednesday, April 30, 2008

Cities and States Usurping Federal Law 

Health insurance by mandates?

By Merrill Matthews, Jr.

Categories:  California, Insurance Regulation, Maryland

Federal law severely limits state and local efforts to pass sweeping health care reform legislation. But a case now being reviewed by the 9th Circuit Court of Appeals, regarding a San Francisco law that forces employers to provide health insurance or pay the city an assessment, could change all of that. And in so doing, it might fundamentally change the availability of good health insurance coverage.

Unwilling to wait on federal health care reform legislation, several states have taken their own steps.

A few years ago, for example, Maryland passed legislation, over the governor's veto, requiring that large for-profit employers (more than 10,000 employees) spend at least 8 percent of payroll on health care or pay an assessment (read "tax") into a state fund to pay for the uninsured (also known as "pay-or-play" legislation). The legislation was dubbed the "Wal-Mart bill" because Wal-Mart was the only company in the state that would be affected - a fact both understood and intended.

The law was challenged based on a federal law known as the Employee Retirement Income Security Act, or ERISA, which pre-empts state efforts to micromanage certain employer benefit plans. The purpose behind the health-related portion of the 1974 legislation was clear: to allow large employers to offer a standard health insurance plan in multiple states without those states constantly trying to interfere with the design, benefits or administration of it.

In the ensuing 30-plus years, ERISA has become a bastion against state interference in employer- provided health insurance. Just imagine some of the potential problems. Each state requires health insurance to cover certain providers and benefits, known as mandates. The number of mandates vary from 15 in Idaho to 64 in Minnesota - with a total of 1,961 nationwide. Without ERISA, a large employer would have to deal with each state's health insurance laws and mandates separately, creating what could be vastly different coverage from one state to another. It would be an administrative nightmare, and employers might find it easier just to give a raise and drop the coverage.

ERISA puts a halt to those attempts by allowing employers that self-insure (i.e., the employer bears the risk of loss) to offer a uniform plan to all its employees. And the courts have consistently ruled in favor of the ERISA pre-emption when states have tried to get around it. So, when a suit was filed against the Maryland legislation, a federal judge correctly ruled that ERISA pre-empted the law.

However, state lawmakers, miffed by this limit on their abilities to make health insurance more regulated and expensive, constantly threaten to return with revised legislation that will survive an ERISA pre-emption challenge. But they never do.

Thus, no one was terribly surprised when the city of San Francisco decided to pass pay-or-play legislation, or when the Golden Gate Restaurant Association filed suit. The trial court ruled last December that the legislation violated ERISA.

What was a surprise was when on Jan. 9 the U.S. Court of Appeals for the 9th Circuit lifted the injunction, suggesting that the city just might succeed in challenging the ERISA preemption and therefore its plan should be allowed to move forward. A 9th Circuit merits panel will conduct a hearing, which is supposed to be concluded by mid-April.

Under the San Francisco law, large employers (100 or more employees) will be required to contribute $1.76 per hour for each covered employee. That's a 10 percent increase for someone making $17 per hour, or about 20 percent for someone making $8.50 an hour.

Mid-sized employers (20 to 99 employees) must contribute $1.17 per hour.

Employers that still refuse to provide health insurance will be penalized 1.5 times that amount, up to $1,000 per employee per week. (Higher paid management and supervisors are exempted.) Because the 9th Circuit differs from the Maryland ruling, there's a good chance the issue will move to the Supreme Court - which has already ruled several times in favor of ERISA.

Let's hope it does so again. States are all over the map when it comes to health care legislation; they are even more diverse when it comes to reforming the health care system. Witness Massachusetts' sweeping health care reform, which has not yet been challenged under ERISA because no one has filed a suit against it.

And if cities are also allowed to jump in - proudly boasting they have done something about the uninsured, while passing the costs over to employers - standardized benefit plans for employees would become a thing of the past.

If states really want to get into the health care reform battle, they should follow the ERISA example, which provides employers with a lot of flexibility to design good plans that are affordable.

San Francisco and the states may think that what they are doing will decrease the number of uninsured. The truth is they will almost surely undermine employers' efforts to provide good comprehensive health coverage.

• posted by Merrill Matthews
• 8:37 am
• 0 comment

Monday, April 28, 2008

Field Poll Hits The Health Care Ball Into Left Field Again 

Yet Another Poll Claims Californians Trust Government More Than Themselves

By John R. Graham

Categories:  California, Insurance Regulation

I was pretty appalled last August, when the Field Poll reported that 36% of Californians approved of government-monopoly health care.  Well, they've done it again.

According to the latest poll, Californians trust the government more than they do themselves, to take responsibility for their own health care.  While the share of respondents favoring government-run health care increased from 22% in 2006 to 31 percent, the share favoring employer-sponsorship dropped from 42% to 38%, and the share favoring "personal responsibility" (whatever that means - perhaps "consumer-directed" because surely government or employer sponsorship does not eradicate personal responsibility)

It looks like my fellow Californians are grumpy because Governor Schwarzenegger's plan to tax them into good health failed.  Oh, well: there's no accounting for taste.  Nevertheless, I still think that if the questions were posed differently, the answers would favor individual control of health care resources.

Lowlights include: strong majorities favor requiring health insurers to offer coverage to anyone regardless of their condition, individual and employer "pay-or-play" mandates, and the (demonstrably false) diagnosis that the health care crisis is caused by uninsured patients crowding into emergency rooms but not paying their bills.

OK: I put my trust in the people, and the people let me down.  But I still think if the questions were posed differently we'd see answers more favorable to consumer-driven health care.  For example, question 16 reads: "Do you think you and your family would be better off if you were to get health insurance coverage through an employer, through the government, or havng personal responsibility for getting your own coverage?"

I'd phrase it differently: "Do you think you and your family would be better off if the government returned to you the money it had taken or given to your employer to buy health insurance, and let you buy it yourself?"

I think a question like that would move then needle.

 

• posted by John R. Graham
• 11:59 pm
• 1 comment

Tuesday, April 22, 2008

Less is More 

Fewer patients, more patient care

By Grace-Marie Turner

Categories:  California

Many physicians feel that it's their mission to serve as many patients as possible rather than to provide the best care possible, writes Beverly Hills internist Albert Fuchs. Most significantly, doctors today are preoccupied with the bureaucracy of insurance companies.

When Fuchs began his own private practice in internal medicine, volume grew quickly and so did his work hours. So he dropped an insurance plan — one that gave him the least compensation.

Almost immediately, he had fewer patients but more time and energy for those he maintained. Like hundreds of doctors across the country, Fuchs now does not receive a single dollar from any insurance company. When doctors break free from the shackles of insurance companies, they can practice medicine the way they always hoped they could, he writes. And they can get back to the customer service model in which the paramount incentive is providing the best care.

• posted by Grace-Marie Turner
• 7:48 am
• 0 comment

Thursday, April 17, 2008

California Benefits Mandate Mania: 85,000 To Lose Health Insurance 

Legislators Ignore Law Requiring Independent Analyses of Bills

By John R. Graham

Categories:  California, Insurance Regulation

What is the point of passing a law that requires independent analyses of the costs of mandating which benefits health plans must cover, if the lawmakers are then free to ignore the results of the independent analyses?

The California Legislature is considering ten bills mandating benefits that will cost $2.7 billion in private premium increases and taxpayer funding for CalPERS (the public employees’ benefits fund) and MediCal (Medicaid) in the first year of coverage.  The premium increases will add 3.6% to Californians' health plan costs.

Disappointingly, Capitol Weekly, Sacramento’s political daily, reports these numbers as coming from the California Association of Health Plans (CAHP). But they don’t. The health plans’ trade association is simply promoting the results of independent analyses of the bills that the Legislature itself requires. The California Health Benefits Review Program (CHBRP) was established in 2002 as a result of a law (passed in an uncharacteristic fit of common sense) that required independent analysis of any health benefit mandate passed by the Legislature. CHBRP is run by the University of California system.

And CAHP quotes CHBRP conservatively. The “killer mandate” in the package of ten bills is AB 1774, which mandates gynecological cancer screening. CAHP’s “fact sheet” states that AB 1774 will cost $2.1 billion in increased private premiums and CalPERS and Medi-Cal costs. However, CHBRP also estimates that AB 1774 will also increase patients’ out-of-pocket costs by almost $1 billion, for a total increase of $3 billion.

Of course, CHBRP concludes that the mandate might have some benefits, which whittles the net cost down to $2.7 billion. Nevertheless, it admits that its analysis suffers from a lot of uncertainty, because AB 1774 is written so that it is quite impossible to estimate its costs and benefits.

The sponsor, Assemblywoman Sally Lieber, states (incorrectly) that, “the common Pap test does not detect ovarian or uterine cancer. Additional tests are readily available to diagnose them, but they are underutilized.” In fact, according to CHBRP, “the standards used by plans to determine medical necessity appear to be broadly consistent with evidence-based clinical guidelines…..”

But that’s not the real problem. As originally written, AB 1774 would have mandated annual screenings, but the current, amended, language mandates “any test…..when ordered by a physician, nurse practitioner, or certified nurse midwife….” That’s right, if you want a test every week, you are free to get one after another and shift the costs to your fellow beneficiaries. Remember this the next time you consider why U.S. physicians order so many extra, unnecessary tests.

Of course, not many California women have the time or inclination to get a gynecological cancer test every week. But this mandate will undoubtedly cause a certain number of asymptomatic women to seek tests outside medical guidelines. As CHBRP notes, this can lead to false positives that result in unnecessary, expensive, and sometimes harmful interventions. It will also allow unethical physicians and labs to make money hand over fist without any constraint.

By shoving AB 1774 onto the legislative calendar alongside a bunch of mandates that have lesser, or even trivial, costs, Democratic legislators and Anthony Wright, of the self-styled “patient advocacy” group Health Access California, have been able to convince Capitol Weekly that the health plans are “whining” about “bupkis”.

But they are not. CAHP concludes that these mandates will cause premium hikes that will cost 85,000 Californians their health insurance. That is hardly what I call a “benefit” of political intervention.

• posted by John R. Graham
• 3:43 pm
• 0 comment

Thursday, April 17, 2008

California Benefits Mandate Mania: 85,000 To Lose Health Insurance 

Legislators Ignore Law Requiring Independent Analyses of Bills

By John R. Graham

Categories:  California, Insurance Regulation

What is the point of passing a law that requires independent analyses of the costs of mandating which benefits health plans must cover, if the lawmakers are then free to ignore the results of the independent analyses?

The California Legislature is considering ten bills mandating benefits that will cost $2.7 billion in private premium increases and taxpayer funding for CalPERS (the public employees’ benefits fund) and MediCal (Medicaid) in the first year of coverage.  The premium increases will add 3.6% to Californians' health plan costs.

Disappointingly, Capitol Weekly, Sacramento’s political daily, reports these numbers as coming from the California Association of Health Plans (CAHP). But they don’t. The health plans’ trade association is simply promoting the results of independent analyses of the bills that the Legislature itself requires. The California Health Benefits Review Program (CHBRP) was established in 2002 as a result of a law (passed in an uncharacteristic fit of common sense) that required independent analysis of any health benefit mandate passed by the Legislature. CHBRP is run by the University of California system.

And CAHP quotes CHBRP conservatively. The “killer mandate” in the package of ten bills is AB 1774, which mandates gynecological cancer screening. CAHP’s “fact sheet” states that AB 1774 will cost $2.1 billion in increased private premiums and CalPERS and Medi-Cal costs. However, CHBRP also estimates that AB 1774 will also increase patients’ out-of-pocket costs by almost $1 billion, for a total increase of $3 billion.

Of course, CHBRP concludes that the mandate might have some benefits, which whittles the net cost down to $2.7 billion. Nevertheless, it admits that its analysis suffers from a lot of uncertainty, because AB 1774 is written so that it is quite impossible to estimate its costs and benefits.

The sponsor, Assemblywoman Sally Lieber, states (incorrectly) that, “the common Pap test does not detect ovarian or uterine cancer. Additional tests are readily available to diagnose them, but they are underutilized.” In fact, according to CHBRP, “the standards used by plans to determine medical necessity appear to be broadly consistent with evidence-based clinical guidelines…..”

But that’s not the real problem. As originally written, AB 1774 would have mandated annual screenings, but the current, amended, language mandates “any test…..when ordered by a physician, nurse practitioner, or certified nurse midwife….” That’s right, if you want a test every week, you are free to get one after another and shift the costs to your fellow beneficiaries. Remember this the next time you consider why U.S. physicians order so many extra, unnecessary tests.

Of course, not many California women have the time or inclination to get a gynecological cancer test every week. But this mandate will undoubtedly cause a certain number of asymptomatic women to seek tests outside medical guidelines. As CHBRP notes, this can lead to false positives that result in unnecessary, expensive, and sometimes harmful interventions. It will also allow unethical physicians and labs to make money hand over fist without any constraint.

By shoving AB 1774 onto the legislative calendar alongside a bunch of mandates that have lesser, or even trivial, costs, Democratic legislators and Anthony Wright, of the self-styled “patient advocacy” group Health Access California, have been able to convince Capitol Weekly that the health plans are “whining” about “bupkis”.

But they are not. CAHP concludes that these mandates will cause premium hikes that will cost 85,000 Californians their health insurance. That is hardly what I call a “benefit” of political intervention.

• posted by John R. Graham
• 3:43 pm
• 0 comment