healthy4u: health insurance

Marketing Bad Health Care Decisions as a New Form of Stealth Health Policy Advocacy

A remarkable set of video advertisements appeared a few weeks ago that seem designed to frighten people into making bad health care decisions. The "Bad Uncle Sam" Advertisements As <a href="http://www.businessweek.com/articles/2013-09-20/the-creative-minds-behind-the-new-ghoulish-anti-obamacare-ads">described</a> by Businessweek, <blockquote class="tr_bq">In the first ad, dubbed '<a href="http://www.youtube.com/watch?v=R7cRsfW0Jv8">The Exam</a>,' a young woman who has signed up for Obamacare arrives at a medical facility and changes out of her clothes and into a flimsy hospital gown. Following the instructions of a doctor, she reclines on a hospital bed and spreads her legs into a pair of stirrups. The doctor leaves the room. Then, suddenly a mascot wearing a plastic Uncle Sam mask and sporting an unwavering grin—Creepy Uncle Sam!—pops up between her legs. As she screams, the ad pans out. 'Don’t let government play doctor,' reads the kicker.</blockquote> The final message, for some reason not described by Businessweek, was <blockquote class="tr_bq">Opt out of ObamaCare</blockquote> <iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/R7cRsfW0Jv8" width="420"></iframe> Similarly, <blockquote class="tr_bq">A second spot, entitled '<a href="http://www.youtube.com/watch?v=BsN75nt1aUU">The Glove</a>,' follows a similar narrative arc. A young man sits in an examination room and tells a doctor that he’s signed up for Obamacare. 'I saw the ads and figured, why not?' he says. 'Okay,' says the doctor. 'Take your pants off.' The man drops his trousers, reclines on the hospital bed, and brings his knees to his chest. The doctor leaves the room. Behind the young man, Creepy Uncle Sam pops up, raises his hand into the air, snaps on a latex medical glove, and wiggles his fingers menacingly.</blockquote> Once again, the final message is <blockquote class="tr_bq">Opt out of ObamaCare</blockquote> <iframe allowfullscreen="" frameborder="0" height="315" src="//www.youtube.com/embed/BsN75nt1aUU" width="420"></iframe> The Ostensible Message of the Advertisements Again per Businessweek, the ads were sponsored by " <a href="http://generationopportunity.org/who-we-are/#axzz2fRyKxa6K">Generation Opportunity</a>, a Virginia-based conservative organization <a href="http://www.prwatch.org/news/2013/09/12247/breaking-new-list-dark-money-shell-game-groups-connected-kochs">funded</a> in part by Charles and David Koch,..."  According to an <a href="http://www.theatlanticwire.com/politics/2013/10/group-telling-young-people-opt-out-obamacare-still-working-math/70079/">article</a> on the Atlantic website, Generation Opportunity means to be <blockquote class="tr_bq">urging Millennials not to sign up for insurance on the health care exchanges created by the Affordable Care Act. It claims that paying the individual mandate's tax penalty and buying insurance that doesn't meet government coverage rules is a 'better deal' for young people.</blockquote> As many have noticed, that is not the implication of the visuals.  As an <a href="http://www.nationaljournal.com/politics/right-wing-ad-equates-obamacare-and-rape-20130919">opinion piece</a> in the National Journal put it, <blockquote class="tr_bq"> the message is that the government is trying to forcibly rape women with a blunt metal instrument.</blockquote> Furthermore, the final written message of both advertisements is not a nuanced one about where one should seek to go to buy health insurance.  It is simply "opt out of ObamaCare." A Nonsensical Premise Also, the premise of the advertisements is nonsense, to put it politely. ObamaCare does require health insurance to pay for various kinds of preventive care without requiring patients to pay deductibles.  It does not make physicians and nurses provide these services.  Whether a patient gets, for example, a pelvic exam, is up to that patient and her doctor or nurse practitioner, not the government.  Of course, the legislation does not remotely suggest creepy government agents should perform pelvic or rectal exams.  Thus, the entire point of these advertisements seems to be to generate irrational fears that will drive young people away from health insurance now available through ObamaCare. Stealth Health Policy Advocacy by Means of Marketing Bad Personal Health Care Decisions In the US, the Affordable Care Act, aka ObamaCare, still arouses a lot of controversy.  There are many people who have been critical of various aspects of the law.  (In fact, we <a href="http://hcrenewal.blogspot.com/2010/03/health-care-reform-bill-and-health-care.html">criticized </a>it for not addressing most of the issues about which we write on this blog.)  Furthermore, there is at least a large minority who want to repeal the law.  So there has been an ongoing barrage of persuasive messages meant to support or criticize various aspects of the law, and to support or discredit the entire law. However, the "Bad Uncle Sam" advertisements are different.  They do not urge people to vote for any particular person or initiative.  They do not urge people to express their own policy views.  They do not ask for contributions to political or advocacy organizations. Instead, they urge people to make particular health care decisions.  Despite the more nuanced messages espoused by Generation Opportunity when interviewed, their advertisements try to irrationally scare people away from purchasing health insurance made available by ObamaCare. They are aimed at young adults, who are less likely to have spare funds to pay for expensive health insurance, less likely to get sick or injured, and more likely to feel relatively invincible.  However, were an uninsured person, even a young one, to suffer a significant illness or injury, the resulting costs in our dysfunctional and extremely expensive health care system could drive them bankrupt.  This is all the more likely since the uninsured are likely to be charged "rack rates" for health care, while insurance companies negotiate discounts for their subscribers.  Furthermore, uninsured people may put off needed tests and treatments due to financial concerns, yet doing so may lead to worse health care results, or even death. An <a href="http://www.stltoday.com/business/columns/jim-gallagher/should-young-people-get-health-insurance/article_157c7d91-543b-5724-a560-c3f6eb34fae7.html">article</a> in the St Louis Post succinctly listed the costs associated with some unlucky outcomes for uninsured young people, for example,  <blockquote class="tr_bq">Suppose you twist your knee playing soccer. Without coverage, fixing it will be at least $20,000 to repair the ACL ligament, according to an estimate from <a href="http://health.costhelper.com/" title="http://health.costhelper.com/">Costhelper.com.</a> Can’t pay it? Buy some crutches. They run about $30. You’ll also take on the <a href="http://www.nlm.nih.gov/medlineplus/ency/article/007208.htm" title="http://www.nlm.nih.gov/medlineplus/ency/article/007208.htm">risk of tissue damage and early arthritis</a>.</blockquote> Personal finance columnist Jim Gallagher concluded, <blockquote class="tr_bq"> although the vast majority of young adults stay healthy, serious trouble is not rare. Those without insurance are playing the odds. If they win, they’ve saved the insurance premiums. If they lose, they’re ruined.</blockquote> Generation Opportunity may <a href="http://generationopportunity.org/who-we-are/">claim to be</a> <blockquote class="tr_bq"> a free-thinking, liberty-loving, national organization of young people promoting the best of Being American: opportunity, creativity and freedom. </blockquote> However, what it appears to be doing is urging bad health care choices  based on a false premise to serve an ideological agenda. Thus, its advertisements are a unique and uniquely bad mixture of marketing (of bad decisions) and <a href="http://hcrenewal.blogspot.com/search/label/stealth%20health%20policy%20advocacy">stealth health policy advocacy</a>.  If they want to publicly oppose ObamaCare, that is their right.  Fooling people into making bad decisions in the hopes that this will financially burden ObamaCare is completely unethical and amounts to <a href="http://hcrenewal.blogspot.com/search/label/disinformation">disinformation</a>, in my humble opinion.  The leadership and funders of Generation Opportunity ought to be ashamed of themselves. The US has many major health care problems.  They deserve discussion and debate.  Disinformation that tries to confuse people into making bad personal health care decisions is likely to make our health care dysfunction even worse.   <div style="background-color: white; border: medium none; color: black; overflow: hidden; text-align: left; text-decoration: none;"></div>

Marketing Bad Health Care Decisions as a New Form of Stealth Health Policy Advocacy

A remarkable set of video advertisements appeared a few weeks ago that seem designed to frighten people into making bad health care decision...

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The Market Made Us Do It: Increasing Low Level Employees' Health Plan Deductible While Paying Executives Millions

A small <a href="http://kuow.org/post/striking-providence-hospital-workers-criticize-nonprofit-ceo-s-6-million-pay">news item </a>from the Seattle public radio station, KUOW, provides our latest example of the contrasts between how hired executives and "regular" employees are treated even at non-profit health care organizations, and between these organizations' actions and their stated missions.  Hospital Employees Strike Against Reductions in their Health Insurance The report was about a small job action going on at a single hospital.  Ironically, the strike is over the employees' own health insurance.  <blockquote class="tr_bq">Along with housekeepers, nursing assistants and other staff, surgical technologist Bob Wilson is a member of the Service Employees International Union local 1199NW. 'You see all the guys on TV that hand the doctor the scalpel? That’s me,' he said from the picket line on Friday. 'We’re out here because we think we deserve affordable health care.' The union and Providence St. Peter have been in contract negotiations since last summer. SEIU represents about one fourth of the hospital's employees. In January, employees' health insurance changed. The union says the higher deductibles and out of pocket expenses hurt for a union whose median member makes $31,000 a year. I’m forgoing care,' Wilson said. 'I’m not going and seeing a doctor unless I absolutely have to. A lot of people here at Providence are doing the same thing: They’re trying to save their money.'</blockquote> An<a href="http://www.huffingtonpost.com/mary-kay-henry/health-care-strike_b_2923621.html"> piece</a> on the Huffington Post further described the strikers' concerns about the new health plans' deductible amounts: <blockquote class="tr_bq">The employees' new $3,000 annual deductible for families is 10 percent of the average worker's pay and a sharp boost from the $750 yearly deductible in their previous health plan.</blockquote> Millions for Hired Managers  The first contrast is between the strikers' relatively low pay and modest insurance coverage with the compensation given to the hospital system's top managers.  Per KUOW, <blockquote class="tr_bq">Providence St. Peter is part of Providence Health & Services. The Catholic organization runs hospitals in five western states. Its headquarters is in Renton.</blockquote> Furthermore, <blockquote class="tr_bq">The union says Providence can afford to do better given what it pays its CEO, John Koster. The union just learned of Koster’s 2011 pay on Thursday after reading Providence’s latest filing with the IRS. Providence reported Koster’s compensation as $6.4 million, up from $3.1 million in 2010.</blockquote> Also, <blockquote class="tr_bq">Providence’s IRS filing reveals that 19 employees of the Catholic ministry earned at least $1 million in 2011. Eight of those employees earned at least $2 million. The top five executives earned more than $3 million each.</blockquote> Note further that the <a href="http://www.guidestar.org/FinDocuments/2011/510/216/2011-510216586-08d12748-9.pdf">organization's filing </a>acknowledged that some of its most highly compensated employees received "first-class or charter travel," "tax indemnification and gross-up payment[s]," discretionary spending account[s]," "housing allowance[s] or residence[s] for personal use," and "payments for business use of personal residence."  Serving the "Poor and Vulnerable?" The second contrast is between the hospital system's stated mission and how it treats different kinds of employees.  The <a href="http://www2.providence.org/phs/Pages/default.aspx">Providence Health & Services web-site</a> states: <blockquote class="tr_bq">Providence Health & Services is a not-for-profit Catholic health care ministry committed to providing for the needs of the communities it serves – especially for those who are poor and vulnerable. Providence Health & Services continues a tradition of caring that the Sisters of Providence began more than 155 years ago.</blockquote> It does not seem unreasonable to claim that low level employees making about $31,000 a year given a health plan with a $3,000 deductible are likely to become poor and vulnerable were they to be unlucky enough to sustain any major illness or injury. The Market Made Us Do It However, instead of considering its mission, Providence Health & Services spokespeople invoked the market as justification for its less than generous health plan versus its exceedingly generous pay of top managers.   In an email to KUOW, "Providence officials" described its contract offer and health plan as "competitive with other health care providers." Regarding its compensation practices, <blockquote class="tr_bq"> In an email, Providence spokeswoman Colleen Wadden said Providence sets its compensation the same way, whether it’s for housekeepers or executives: Base salaries are set at the middle of the market.</blockquote> Note that we have discussed the "market made me do it" justification for huge executive compensation from health care organizations as a talking point that is used again and again by public relations operatives and board members (e.g., look <a href="http://hcrenewal.blogspot.com/2013/02/non-profit-hospital-executive-salaries.html">here</a>).  Its use in this case, though, is particularly unfortunate.  Summary In this example, we have a huge health system (with over $3.6 billion in revenue in 2011) whose mission is to be a "Catholic health care ministry" that serves the "poor and vulnerable" also claiming that the almighty market means it must pay its executives more than one hundred times what it pays its lowliest employees, compensate them with first class travel, tax gross-ups, and so forth.  Moreover, presumably this dictatorial market also makes sure this ministry cannot provide its lowliest employees with health insurance that seems sufficient to prevent them from becoming poor and vulnerable should a severe illness strike.   Maybe Providence Health & Services executives and public relations people should read what one prominent Catholic theologian wrote (<a href="http://www.vatican.va/roman_curia/pontifical_councils/hlthwork/documents/XXVIIConferenzaPCPS.pdf">here</a>, and see <a href="http://hcrenewal.blogspot.com/2012/11/should-health-care-be-commodity.html">this post</a>) about the market in health care: <blockquote class="tr_bq">Hospitals and other facilities 'must rethink their particular role in order to avoid having health become a simple 'commodity,' subordinate to the laws of the market, and, therefore, a good reserved to a few, rather than a universal good to be guaranteed and defended,' </blockquote> That theologian was the current Pope Emeritus, Benedict XVI.  So this is a new, vivid example of how leaders of big health care organizations may preach about the mission while acting to put their own self-interest way ahead of that mission.  As we have said until blue in the face,... Health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior. If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

The Market Made Us Do It: Increasing Low Level Employees' Health Plan Deductible While Paying Executives Millions

A small news item from the Seattle public radio station, KUOW, provides our latest example of the contrasts between how hired executives and...

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Another Revolving Door Variant: From Academia with Millions in Medtronic Royalties, to the White House, to the Health Care Service Corp

The revolving door spins, and where it will stop, nobody knows... In October, 2010, we noted questions about how Dr Stephen Ondra got to be a <a href="https://www.va.gov/opa/bios/docs/ondra.pdf">Senior Policy Adviser for the US Department of Veterans Affairs</a>. A veteran who was a neurosurgery professor at Northwestern University, Dr Ondra had received millions of dollars in royalties from device manufacturer Medtronic, whose CEO supported his appointment to the government position  (see this <a href="http://hcrenewal.blogspot.com/2010/10/toxic-and-dangerous-watchdog-vs.html">post</a>).  As soon as he was appointed, he publicly opposed a nominee for US Surgeon General who had been critical of the medical device industry, and its financial ties to doctors. After going to Washington, Dr Ondra apparently also served in the Executive Office of the President, in the White House, but <a href="http://triblocal.com/lake-forest/community/stories/2012/04/northwestern-memorial-hospital-names-stephen-l-ondra-chief-medical-officer/">returned</a> to Northwestern University in 2012.  However, he did not stay there for long. This month, a <a href="http://www.forbes.com/sites/brucejapsen/2013/02/07/obama-advisor-ondra-hired-as-top-doc-at-blue-cross-plan/">post</a> on Forbes indicated he is moving on again, and back to the corporate side of health care. <blockquote class="tr_bq">the nation’s fourth-largest health insurance company is naming a key former health advisor to President Obama as its top doctor. Dr. Stephen Ondra, will become senior vice president and chief medical officer at Health Care Service Corp., the Chicago-based parent company of Blue Cross plans in Illinois, Texas, Oklahoma and New Mexico. The plan has more than 13 million health plan members and is looking to grow even more, announcing last year a proposed partnership with the Blue Cross plan in Montana.</blockquote> Health Care Service Corp is a mutual insurance company, that is, a company owned by its policy-holders rather than stock holders.  However, that does apparently not make it any more ascetic than a typical for-profit insurance company, at least in terms of generosity towards its top hired executives.  As Crain's Chicago Business <a href="http://www.chicagobusiness.com/article/20120515/NEWS03/120519922/blue-cross-parents-ceo-pay-climbs-to-12-9-million">reported</a> in 2012, <blockquote class="tr_bq">New federal regulations intended to force health insurers to spend less on administration didn't keep the parent of Blue Cross & Blue Shield of Illinois from paying CEO Patricia Hemingway Hall more than $12.9 million in 2011, a 61 percent raise. The Health Care Service Corp. chief executive's total compensation last year dwarfed the $8 million she received in 2010, according to a filing with the Illinois Department of Insurance. The 2011 increase was fueled by an $11.8 million bonus, which was 69 percent above her 2010 bonus of $7 million. Ms. Hall wasn't alone in getting a big raise at Health Care Service, whose insurance business booked net income of more than $1 billion in 2011, for the second straight year. The 10 highest-paid executives at the Chicago-based mutual company — which operates Blue Cross plans in Illinois and three other states — earned a collective $41.7 million, 65 percent more than the $25.3 million they were paid in 2010.</blockquote>  If Dr Ondra's new position puts him among the latter group of executives, he too stands to make millions a year.  So to recap Dr Ondra's career so far, in 2010 he was a medical school professor who had earned millions in royalties from Medtronic.  He then went to top leadership positions in the US Veterans Department and Executive Office of the President.  He returned briefly to Northwestern University, only to leave again for a top executive position in for-profit insurance company Health Care Service Corp, where he is likely to make millions more. Thus Dr Ondra is our latest interesting example of the "<a href="http://hcrenewal.blogspot.com/search/label/revolving%20doors">revolving door</a>" phenomenon in health care.  He started as an erstwhile academic physician but with a very major financial relationship with a medical device company.  He then went through the door the first time into the US government, and then a second time from the government to a for-profit insurance company, with just a brief stop-over in academia. By the way, it appears that all of this is quite legal.  It does again raise questions about whether health care leaders in government with previous relationships with industry might still feel undue sympathy to the interests of industry, as might government leaders who can expect future jobs in industry. Moreover, this case, like previous cases we have discussed,  indicates how leadership in academic health care, corporate health care, and the government tend to blend together.  Leaders of one type of organization have more and more in common with leaders of the other types of organizations than they do with their lesser ranked colleagues, and certainly than with other health care constituencies.  So the more the revolving door revolves, the more we wonder about the <a href="http://hcrenewal.blogspot.com/search/label/corporatism">corporatism</a> of health care, about how health care seems to be increasingly run by an amorphous group of academic/ corporate/ government leaders whose loyalties may be more to each other than to academic and professional values, patients' and the public's health, and government of, by and for the people.

Another Revolving Door Variant: From Academia with Millions in Medtronic Royalties, to the White House, to the Health Care Service Corp

The revolving door spins, and where it will stop, nobody knows... In October, 2010, we noted questions about how Dr Stephen Ondra got to be ...

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Where is the risk?

That’s the question Thomas Cox, an RN with insurance experience and expertise, says should be asked about any health care financing mechanism. The whole idea of insurance is distributing risk widely so that it can be shared over a wide group of people and thus become manageable. That’s why people need insurance at all, and that’s also why schemes that put too much of the onus on individuals are a very bad idea – as has happened in recent years to a number of people,  the “insured” individual can incur costs that are more than he or she can bear. In general, insurance is most solid when it’s over a larger group. Each major increase in group size distributes the risk further and makes the healthcare financing system stronger. Cox has an <a href="http://www.afn.org/~sfcommed/JSM2011PaperFinal.pdf" target="_blank">interesting paper on this</a> which he presented at an American Statistical Association meeting. In general, large insurers are an order-of-magnitude more sound than small ones, and nationwide insurance systems (such as Medicare) have a distinct actuarial edge over state-based insurance (think, for example, California earthquake). For this reason, it’s a shame that the Affordable Care Act (ACA) has state exchanges as its primary mechanism rather than one single federal exchange; risk dispersal is inferior. Looking at the risk question, there’s a real problem with affordable care organizations (ACOs), which are one of the primary ways the ACA aims to keep down future costs. Essentially, ACOs are a form of capitation, and (Cox maintains and I think he’s right) capitation is essentially a mechanism to push risks down from the insurer or from Medicare to providers. Pushing risks to smaller groups is a terrible idea and will worsen the system. With ACOs having  smaller covered populations, they are far more subject to being the victim of events they can’t control, whether that’s having a large number of huge-cost, high-needs patients in a single year or having a large number of patients affected by an epidemic or natural disaster. Providers are not trained or qualified to manage risk well, nor do they have the financial reserves to do so.  Cox calls this <a href="http://www.biomedcentral.com/1472-6939/5/3/comments" target="_blank">“professional caregiver insurance risk.”</a>  Burdening providers with a task they are very ill-suited for is a truly bad idea. As Cox comments: <blockquote class="tr_bq">Pushing risks elsewhere removes the only real function we are paying insurance companies for.  If insurance companies are pushing down their risks elsewhere, we are paying them money for nothing of value. Insurance companies don’t provide healthcare – if they don’t manage risk either, what good are they? Of course, if they can sit there and siphon off profits without taking risks, it may not trouble profit-making insurers . . . but it should trouble the public [if they are] issuing policies, passing the insurance risks on to health care providers, and walking off with guaranteed profits year after year.</blockquote> And (particularly for the ACO that has been “unlucky” and has incurred larger-than-expected costs), the financial risk can be a force for corruption, pushing organizations toward denying care and undertreatment. Of course, with the enormous amount of unnecessary care and overtreatment in the US medical system today, some ACOs may indeed manage to give really good care for quite a while provided they are reasonably lucky. But this is a strategy with diminishing returns (as unneeded care dwindles in amount). At root, pushing down insurance risk to smaller entities is, Cox has persuaded me, a fundamentally flawed direction. And I’ll never look at a health care financing proposal in future without asking myself: “Where is the risk?”

Where is the risk?

That’s the question Thomas Cox, an RN with insurance experience and expertise, says should be asked about any health care financing mechanis...

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Fool Us Once, Shame on You, Fool Us Twice, Shame on Us - The Untrustworthy Pronouncements of Aetna's Former CEOs

A small tempest in the larger US health care reform teapot was produced a few weeks ago when Ron Williams, former CEO of Aetna, declared in a <a href="http://online.wsj.com/article/SB10001424052702303734204577464713182634028.html">Wall Street Journal op-ed</a> that he no longer supported the health insurance mandate.  The "mandate" for all US citizens to buy health insurance, actually a relatively small tax that would be imposed on people without health insurance, was the central point of contention in the lawsuit before the US Supreme Court challenging the Affordable Care Act (ACA).  Immediate Past-CEO of Aetna Ron Williams' Abrupt Change of Mind on the Individual Mandate Williams wrote, <blockquote>Soon the U.S. Supreme Court will rule on the constitutionality of the Affordable Care Act. I am not a lawyer, or an expert on the Constitution. But as the chairman and CEO of a major health plan, I had a ringside seat to the entire health-care reform process. After much reflection, I have concluded that the federal individual mandate, which requires all Americans to purchase health insurance starting in 2014, will not be upheld. </blockquote> On this, Williams was soon proven wrong. The Supreme Court upheld the law. However, the tempest was not due just to Williams' reversal of his former opinion, but the role he actually played in pushing his former opinion into the passage of the law, which was really far more than being a "ringside" spectator. In an August 24, 2009 <a href="http://www.forbes.com/forbes/2009/0824/outfront-insurance-premiums-aetna-ron-williams-health-reform.html">article</a>, "Aetna's Ron Williams on Health Reform," Forbes' Dan Whelan noted, <blockquote>Williams, 59, is taking a surprisingly visible role in arguing for change in the health care system. He has met with Obama a half-dozen times (he shrugs off the surname gaffe), has testified four times in front of Senate committees this year and participates in shindigs set up by the many trade groups for which he's a director. Williams' position echoes that of the HMO industry generally: He's against a government-run plan but favors universal coverage and forcing insurers to take all comers.</blockquote> As Wendell Potter, the former head of public relations for large health for-profit health insurance company Cigna, who is now a strong industry critic, put it on <a href="http://wendellpotter.com/2012/06/flip-flop-on-healh-care-refrom-casts-president-as-modern-day-julius-caesar">his blog</a>, <blockquote>Ron Williams who possibly more than anyone else had persuaded the President to reconsider his campaign pledge to enact reform without making people buy coverage from a private insurer. Candidate Obama’s reform platform differed from those of Hillary Clinton’s and John Edwards’ in only one significant way: both Clinton and Edwards embraced the mandate, which Williams was championing, first behind the scenes and then publicly, on behalf of the insurance industry. Candidate Obama said he didn’t believe it was right for people to be forced to buy something they couldn’t afford. Williams was the industry’s most visible CEO on Capitol Hill during the debate on reform. He testified at numerous congressional hearings about how essential it was to move the millions of uninsured Americans into private health insurance plans and how an individual mandate was necessary to make that happen. He also never missed an opportunity to trash the idea of a 'public option' to compete with private insurance companies, which candidate Obama had said was essential 'to keep private insurers honest.' Capitol Hill was not the only place Williams was frequenting during the reform debate. In an August 2009 article in Forbes, Williams was quoted as saying that he already had met with the President six times. When I called the White House to confirm that, a top aide told me it was true Williams had been there many times, adding, 'We’ve found him to be one of the more reasonable ones.' </blockquote> Williams' recent seeming disavowal of the individual mandate raises the question of why anyone, much less President Obama, trusted him in the first place. After all, he was CEO of Aetna. 2001 Aetna CEO John Rowe Blamed Everyone Else for Health Care Problems In fact, perusal of my memory, and a few file folders suggested several previous cases in which Aetna CEOs issued pronouncements that should not have been trusted. First I recalled a meeting in 2001 at Brown during which the then Aetna CEO was honored by giving the Paul Levinger Lecture on "Good Health: Can We Afford It?" (See original Brown news release <a href="http://brown.edu/Administration/News_Bureau/2001-02/01-056.html">here</a>.) My memory is that of Dr Rowe blaming just about everybody other than the for-profit health care insurance companies for health care's ills. A Brown Daily Herald article (not currently on line, Baskin B. Health care getting harder to afford, Aetna chief tells Brown U. Brown Daily Herald, November 30, 2001) recounted him blaming "cost inflation," (presumably due to doctors and hospitals), and employers, for whom "quality doesn't matter." He only allowed that insurers were to blame for not giving "better service," but not either rising costs or poor quality. I also recall Dr Rowe being treated with great respect by the audience. After all, this was a prestigious lecture. However, his talk seemed just the least bit self-serving. If the audience had been aware of his record at the time, maybe we would have been more skeptical. Mount Sinai CEO Dr John Rowe Extolled Merger with New York University, Jumped to Become Aetna CEO as Merger Began to Fail By 1993, Dr Rowe was CEO of Mount Sinai Medical Center, and was seemingly at the vanguard of the movement for health care CEOs to be paid a lot. The New York Times <a href="http://www.nytimes.com/1993/04/05/us/top-charity-executives-earn-6-figures.html">reported</a> that the 1993 Chronicle of Philanthropy survey showed him to be the country's best paid non-profit CEO, bringing in total compensation of over $800,000 in 1993 dollars. By 1998, Dr Rowe's big project was pushing concentration of power in health care in the form of a proposed merger between New York University Medical Center and Mount Sinai. <a href="http://www.nytimes.com/1998/01/25/nyregion/after-earlier-failure-nyu-and-mount-sinai-medical-centers-to-merge.html">According to the New York Times</a>, the plan would be for Dr Rowe to become CEO of the combined entity. At the time, he said, <blockquote>The advantages of merging hospitals are so great, they far outweigh any hypothetical potential negative impact.</blockquote> The bond issue needed to finance the merger, however, ran into trouble by early 2000.  Soon after that, Dr Rowe seemingly demonstrated his lack of faith in it by jumping to the leadership of Aetna. It turned out, <a href="http://articles.courant.com/2000-10-19/business/0010191503_1_aetna-mount-sinai-nyu-health-quarterly-dividend">according to the Hartford Courant</a>, Aetna's offer was just to rich to turn down. <blockquote>Rowe got a $2 million sign-on bonus to leave Mount Sinai NYU Health and become chief executive of Aetna's health business, the document says. He will also get a $1.4 million retention bonus on July 3, 2001. Both bonuses are designed to replace money that Rowe forfeited by leaving the giant New York hospital system, Aetna spokeswoman Joyce Oberdorf said. In addition, Rowe will get an annual salary of at least $1 million and an annual bonus of $1 million to $3 million, depending on how well goals are met, under a three-year employment agreement with two possible one-year extensions. Rowe, who already received 25,000 shares of restricted Aetna stock and options on 500,000 shares, will get another 100,000 options. The new options will be granted when Aetna spins off its health business to shareholders, or on Jan. 1, 2001 -- whichever comes first. The exercise price will be about $72.73, or whatever price Aetna stock is trading at the time if it's higher than that.</blockquote> By 2001, the New York Times <a href="http://www.nytimes.com/2001/12/02/nyregion/celebrated-hospital-merger-a-union-in-name-only.html">referred</a> to the merger as existing "in name only." That year, the campuses resumed separate administration. The merger was officially terminated in 2008. Its failure was documented in an Academic Medicine article. (Kastor JA. Failure of the merger of the Mount Sinai and New York University hospitals and medical schools: part 2. Acad Med 2010; 85: 1828-32. Link <a href="http://www.ncbi.nlm.nih.gov/pubmed/20856095">here</a>.) If the Brown audience had known that the merger Dr Rowe extolled with such confidence was already failing, but that he was able to leverage his role in its development to go from the country's best paid non-profit CEO to a multi-million dollar a year insurance CEO, maybe we would have felt less guilt about our responsibility for health care's high cost, low access and poor quality. Aetna CEO Richard Huber's Failure to "Walk the Walk" In fact, searching through the files showed an even earlier example of an Aetna CEO talking out of two sides of his mouth. By 1998, an <a href="http://www.ama-assn.org/amednews/1998/amn_98/summ1109.htm">American Medical News article </a>documented the "rocky relations" between Aetna and physicians. By early 2000, Aetna CEO Richard Huber was known as "the managed care executive physicians love to hate," <a href="http://www.ama-assn.org/amednews/2000/03/13/mksb0313.htm">per the American Medical News</a>. His departure was <a href="http://www.ama-assn.org/amednews/2000/03/13/mkca0313.htm">characterized by then American Medical News Street Smarts columnist Dr Scott Gottlieb</a>, as partly due to how <blockquote>Huber talked out of one side of his mouth about his company's obsessive quest for 'quality' health care -- while out of the other he was screaming at doctors, hospitals and drug firms about controlling costs. Yet Aetna's medical costs were still creeping up. As Richard Huber learned, you can't talk the talk if you don't walk the walk. </blockquote> Summary So the unreliability of recent Aetna CEO Ron Williams' advocacy of the "patient mandate," was presaged by similarly untrustworthy pronouncement by two former Aetna CEOs. In each case, the remarks of the particular CEO seemed more designed to promote his immediate self-interest than to provide trustworthy opinion or policy advice. By the way, this summary should not be viewed as particularly an indictment of Aetna. I am sure I could find equally untrustworthy but self-serving pronouncements from the leaders of many other health care organizations. (Recall the visionary pronouncements of the failed and ultimately jailed CEO of the now vanished Allegheny Health Education and Research Foundation, see post <a href="http://hcrenewal.blogspot.com/2008/07/10-years-later-eerie-echo-of-fall-of.html">here</a>.) The recent Ron Williams reversal should serve, however, as a stark reminder that we, meaning physicians, other health care professionals, those who study health care and health policy, policy makers, and the public at large, should be very, very skeptical about any pronouncements about health policy by top executives of health care organizations. They as a group have shown themselves to be remarkably good at doing whatever it takes to buttress their immediate self-interest, including making apparently oracular but ultimately foolish policy pronouncements. The real question is why these pronouncements continue to be treated with reverence, if not as "visionaries,"  by health care professionals, health care and policy researchers, the news media, health care and medical journals, policy makers, politicians, and the public at large? Why has hardly anyone, besides yours truly, gone back to check the accuracy of their previous pontifications before swooning over their latest ones? Why has hardly anyone examined the accuracy of their predecessors' opinions, given that most executives these days seem to be subject to the same incentives to make things look good in the short term, and never mind the consequences?

Fool Us Once, Shame on You, Fool Us Twice, Shame on Us - The Untrustworthy Pronouncements of Aetna's Former CEOs

A small tempest in the larger US health care reform teapot was produced a few weeks ago when Ron Williams, former CEO of Aetna, declared in ...

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Health Care (Insurance) Reform Upheld, but Concentration and Abuse of Power Remain Largely Unaddressed

This may seem like sour grapes, but...  Numerous media reports say that the US Supreme Court has upheld the massive US health care "reform" law (look here for <a href="http://www.reuters.com/article/2012/06/28/us-usa-healthcare-court-idUSBRE85R06420120628">Reuters coverage</a> today, and here, for <a href="http://www.latimes.com/news/politics/la-pn-justice-roberts-leads-supreme-court-support-of-healthcare-law-20120628,0,3606595.story">the Los Angeles Times</a>, for example).  In my humble opinion, the law will likely increase acess to commercial health care insurance, although will likely not reduce the expense of such insurance, or address the misbehavior of many large insurance companies (for example, see our series of posts on <a href="http://hcrenewal.blogspot.com/search/label/Aetna">Aetna</a>, <a href="http://hcrenewal.blogspot.com/search/label/UnitedHealth">UnitedHealth</a>, <a href="http://hcrenewal.blogspot.com/search/label/WellPoint">WellPoint</a>, and the <a href="http://hcrenewal.blogspot.com/search/label/health%20insurance">insurance industry in general</a>, etc, etc). The law, as we summarized <a href="http://hcrenewal.blogspot.com/2010/03/health-care-reform-bill-and-health-care.html">here</a>, does contain a few provisions relevant to the concerns we raise on Health Care Renewal.  These include measures to improve disclosure of certain kinds of conflicts of interest affecting individual physicians and health care academics, and improved funding for comparative effectiveness research.  We hoped that the law would lead to a more rational way to fix payments to physicians that might supplant the secretive, procedure-happy RUC, but so far that hope remains unfulfilled.  However, as we wrote in 2010, the legislation will leave most of the other problems we discuss on <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a> untouched. We thus have one or two small steps for mankind in the US, but no reason for complacency. The news is not bad.  We are probably on balance somewhat better off with some health care insurance reform than none.  However, we are still a long way from meaningfully addressing concentration and abuse of power in health care. There will be no rest for the weary bloggers of <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>.

Health Care (Insurance) Reform Upheld, but Concentration and Abuse of Power Remain Largely Unaddressed

This may seem like sour grapes, but... Numerous media reports say that the US Supreme Court has upheld the massive US health care "ref...

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Huge Insurance Company WellPoint Settles Once Again, Providing a Window On the Ethical Questions Its Birth Presented

Another month, another question about the ethical conduct of for-profit insurance giant WellPoint.  WellPoint Settles Allegations its Predecessor Anthem Cheated its Former Policy-Holders This time the issue was how the company treated people insured by its now Anthem subsidiary a long time ago.  Here is the Reuters <a href="http://www.reuters.com/article/2012/06/15/us-wellpoint-settlement-idUSBRE85E1F020120615">version</a>: <blockquote>Health insurer WellPoint Inc has agreed to pay $90 million to settle a class-action lawsuit against its Anthem unit over accusations the company did not fairly compensate former members when Anthem was converted from a mutual company into a stock company.</blockquote> The Indianapolis Star <a href="http://www.indystar.com/article/20120616/BUSINESS03/306160003/WellPoint-settles-former-Anthem-policyholders-90M">noted</a>: <blockquote>WellPoint had fought the lawsuit for seven years in court. The lawsuit alleged that WellPoint's Anthem subsidiary underpaid policyholders who opted to receive cash instead of stock when the Blue Cross-Blue Shield franchisee converted in 2001 into a stock company.</blockquote> Of course, a WellPoint spokesman denied the company had done anything wrong, per Reuters, <blockquote>Anthem spokeswoman Kristin Binns said in an e-mailed statement. 'We continue to believe that in all ways the company acted appropriately and in the best interests of its former members,...' </blockquote>The Historic Context: the Conversion of Non-Profit Health Insurers into For-Profit Corporations This may seem very dry and only of historical interest, but consider the historical context. Per <a href="http://wendellpotter.com/deadlyspin/">Wendell Potter's Deadly Spin</a>, after the Clinton administration's failed attempt at health reform, leaders of previously non-profit Blue Cross and Blue Shield insurance plans saw a new opportunity. In the mid-1990s, <blockquote>the Blue Cross and Blue Shield Association took a little-noticed but monumental step. The trade group, a bastion of non-profit health insurers that included the founders of the modern health insurance system, modified its bylaws to permit members to convert into public-stock companies.</blockquote> Potter opined about the executives' main motivation for conversion to for-profit status, and then consolidation of the resulting companies, <blockquote>They would earn bigger pay packages for managing larger businesses, and if they could convert them to for-profit companies, they would earn even more.</blockquote> So, <blockquote>Fourteen Blue Cross plans, most of which dominated their state-wide markets, converted from nonprofits to for-profits, and by 2004 all fourteen wound up as wholly owned subsidiaries of WellPoint.... </blockquote>The Anthem Demutualization as a Step to WellPoint Executives' Enrichment Anthem began as a non-profit insurance company, Blue Cross/Blue Shield of Indiana. Its hired managers first converted it into a mutual insurance company, a company that was owned by its policy-holders, and hence somewhat a non-profit in spirit. Then the executives started to acquire other formerly non-profit Blue Cross and Blue Shield plans. Then they converted the mutual insurance company into a pure for-profit. The for-profit Anthem eventually acquired WellPoint, taking that company's name. The resulting company then had become the biggest for-profit US health care insurer. In 2003, as the acquisition of WellPoint was pending, the Indianapolis Star <a href="http://www2.indystar.com/articles/2/135877-3402-031.html">reported</a>: <blockquote>The top executive at Anthem Inc. will receive a $42.5 million stock-and-cash award for guiding the company as it became the state's largest firm and now stands to become the nation's largest health benefits company. Larry C. Glasscock will receive the merit-based performance award over the next three years on top of his salary, bonus and other compensation of $3.73 million last year. It's the most compensation Glasscock has received since he became the company's chief executive in 1999 and helped convert it to a publicly traded concern in 2001</blockquote> Furthermore, <blockquote>Award amounts of $16 million each went to Glasscock's two highest-ranking associates: executive vice presidents David R. Frick, an attorney and former Indianapolis deputy mayor, and Michael L. Smith, a former chief executive of moving company Mayflower Group. In addition, the president of Anthem Midwest, Keith R. Faller, will get a stock-and-cash award of $11.9 million, while Anthem Southeast President Thomas G. Snead Jr. got $4.36 million.</blockquote> The allegation that the company's hired managers failed to adequately reimburse policy-holders for the policy-owners' ownership interests in the mutual version of Anthem was the basis of the law-suit that was just settled. The Anthem demutualization was a key step in the formation of the WellPoint behemoth. Its creation was the rationale to make the executives listed above rich. The allegations made in the lawsuit just settled suggest that they earned these huge windfalls on the backs of the policy-holders who at one point thought it was their company, and formerly thought that their insurer was a benign non-profit organization. A Continuing Record of Ethical Misadventures Thus, the lawsuit just settled suggests that WellPoint was born in ethically questionable circumstances, and that its creation served more to enrich its hired executives, who may have started as hired leaders of mission-oriented non-profit organizations. So in retrospect maybe it is not so surprising that WellPoint's leadership has continued to generate a series of ethical questions. Since we began <a href="http://hcrenewal.blogspot.com/">Health Care Renewal</a>, we have noted that the company: <ul><li>settled a RICO (racketeer influenced corrupt organization) law-suit in California over its alleged systematic attempts to withhold payments from physicians (see 2005 post <a href="http://hcrenewal.blogspot.com/2005/07/wellpoint-settles-rico-law-suit.html">here</a>).</li><li>subsidiary New York Empire Blue Cross and Blue Shield misplaced a computer disc containing confidential information on 75,000 policy-holders (see 2007 story <a href="http://www.nytimes.com/2007/03/14/business/14insure.html">here</a>).</li><li>California Anthem Blue Cross subsidiary cancelled individual insurance policies after their owners made large claims (a practices sometimes called rescission).  The company was ordered to pay a million dollar fine in early 2007 for this (see post <a href="http://hcrenewal.blogspot.com/2007/03/wellpoint-fined-1-million-for-canceling.html">here</a>).  A state agency charged that some of these cancellations by another WellPoint subsidiary were improper (see post <a href="http://hcrenewal.blogspot.com/2007/07/more-than-half-of-wellpoints-policy.html">here</a>).  WellPoint was alleged to have pushed physicians to look for patients' medical problems that would allow rescission (see post <a href="http://hcrenewal.blogspot.com/2008/02/wellpoint-halts-attempts-to-have.html">here</a>).  It turned out that California never collected the 2007 fine noted above, allegedly because the state agency feared that WellPoint had become too powerful to take on (see post <a href="http://hcrenewal.blogspot.com/2008/07/wellpoint-settles-but-has-it-become-too.html">here</a>). But in 2008, WellPoint agreed to pay more fines for its rescission practices (see post <a href="http://hcrenewal.blogspot.com/2008/07/fines-re-statements-and-more-fines-just.html">here</a>).  In 2009, WellPoint executives were defiant about their continued intention to make rescission in hearings before the US congress (see post <a href="http://hcrenewal.blogspot.com/2009/06/managed-care-executives-will-not-limit.html">here</a>).</li><li>California Blue Cross subsidiary allegedly attempted to get physicians to sign contracts whose confidentiality provisions would have prevented them from consulting lawyers about the contracts (see 2007 post <a href="http://hcrenewal.blogspot.com/2007/11/physicians-and-contracts-cautionary.html">here</a>).</li><li>formerly acclaimed CFO was fired for unclear reasons, and then allegations from numerous women of what now might be called Tiger Woods-like activities surfaced (see post <a href="http://hcrenewal.blogspot.com/2008/01/more-managed-care-management-mumbo.html">here</a>).</li><li>announced that its investment portfolio was hardly immune from the losses prevalent in late 2008 (see post <a href="http://hcrenewal.blogspot.com/2008/10/if-this-is-how-wellpoint-has-managed.html">here</a>).</li><li>was sanctioned by the US government in early 2009 for erroneously denying coverage to senior patients who subscribed to its Medicare drug plans (see 2009 post <a href="http://hcrenewal.blogspot.com/2009/01/wellpoint-sanctioned.html">here</a>).</li><li>settled charges that it had used a questionable data-base (built by Ingenix, a subsidiary of ostensible WellPoint competitor UnitedHealth) to determine fees paid to physicians for out-of-network care (see 2009 post <a href="http://hcrenewal.blogspot.com/2009/02/wellpoint-settles.html">here</a>).  </li><li>violated state law more than 700 times over a three-year period by failing to pay medical claims on time and misrepresenting policy provisions to customers, according to the California health insurance commissioner (see 2010 post <a href="http://hcrenewal.blogspot.com/2010/02/argument-over-insurance-rate-hikes.html">here</a>). </li><li>exposed confidential data from about 470,000 patients (see 2010 post <a href="http://hcrenewal.blogspot.com/2010/06/wellpoint-dont-know-much-about-computer.html">here</a>) and settled the resulting lawsuit in 2011 (see post <a href="http://hcrenewal.blogspot.com/2011/10/still-more-ehr-chaos-pandemonium-bedlam.html">here</a>).</li><li>fired a top executive who publicly apologized for the company's excessively high charges (see 2010 post here).</li><li>California Anthem subsidiary was fined for systematically failing to make fair and timely payments to doctors and hospitals (see 2010 post <a href="http://hcrenewal.blogspot.com/2010/12/health-insurers-sanctioned-fined.html">here</a>).</li><li>management was accused of hiding the company's political contributions from the company's own stock-holders (see 2012 posts <a href="http://hcrenewal.blogspot.com/2012/04/some-of-wellpoints-owners-stockholders.html">here</a> and <a href="http://hcrenewal.blogspot.com/2012/05/wall-street-journal-defends-hired.html">here</a>).</li></ul>Meanwhile, top hired managers have continued to draw bloated compensation from the company.  For example, as we noted <a href="http://hcrenewal.blogspot.com/2012/04/some-of-wellpoints-owners-stockholders.html">here</a>, current WellPoint CEO Angela Braly got $13.2 million compensation, and received an additional $6.9 million from newly vested restricted stock units in 2011, despite falling company earnings. Summary: A Company Too Big to Manage Except to Enrich Its Executives Thus, we have seen an amazing string of incidents suggesting that company leadership has consistently put short-term revenues, and the resulting exaggerated management compensation, before stock-holders' interests, and before patients' interests.  Yet this pattern, so plain above, has largely not been assembled from its component pieces in public other than on Health Care Renewal.  Lack of perception of this pattern may explain why this incredible compilation of ethical missteps has failed to generate any calls for massive revisions in how this company is lead and governed, or perhaps calls to dismantle such a large for-profit company as unmanageable except as a source of nearly unlimited dollars for the enrichment of its top insiders. True health care reform would require the leaders of health care organizations to uphold the health care mission ahead of their own self-interest, and to be accountable to the organizations' owners, when they exist, and to patients and the public at large.

Huge Insurance Company WellPoint Settles Once Again, Providing a Window On the Ethical Questions Its Birth Presented

Another month, another question about the ethical conduct of for-profit insurance giant WellPoint. WellPoint Settles Allegations its Predec...

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A Camel Through the Eye of a Needle - at Non-Profit Health Insurers

It is time to drag out that well-worn phrase,...  sometimes you just cannot make this stuff up.  Recently, the New York Post <a href="http://www.nypost.com/p/news/local/nonprofit_execs_healthy_wealthy_UhdbNKvMXTqbBIhLjrZ4yO">reported</a> about executive compensation at some non-profit health maintenance organizations/ health insurance companies in New York.  To wit, FidelisCare <blockquote>At one Catholic-run health insurer for the needy, charity starts in the executive suite. Mark Lane, the CEO of the Fidelis Care/New York State Catholic Health Plan, receives a $1.1 million salary plus another $864,000 in retirement pension and other benefits, The Post has learned. His total compensation comes to nearly $2 million. Fidelis is a tax-exempt, not-for-profit HMO serving 750,000 patients throughout the city and state who mostly qualify for Medicaid, the public insurance program for the needy. That means nearly all of Fidelis’ revenues come from taxpayers. Meanwhile Fidelis’ executive vice president and chief operating officer, the Rev. Patrick Frawley, an ordained Catholic priest, is paid $587,249. Frawley received more than $900,000 in other retirement and deferred benefits — raising his total compensation to $1.54 million, according to IRS filings. That’s a lot of pennies from heaven. 'It’s shocking to me,' said a source familiar with Catholic health charities.</blockquote>Amazingly, the justification that was trotted out in this case was just of the "our CEO is brilliant" variety, but in this case, provided by a Bishop: <blockquote>Fidelis defended the salaries of its top officers, who oversee a $3 billion operation. Bishop Joseph Sullivan, a member of Fidelis’ board of trustees who formerly served as chairman, called the compensation 'generous but fair.' He said the goal is for salaries to be at the '75th percentile' of rivals. “Our ability to continue to grow is based on the quality of leadership. You get what you pay for. Lane and Father Frawley are worth every penny,” Sullivan said. Fidelis also issued a statement explaining that Frawley, after serving in pastoral roles for 25 years, was granted release from his priestly assignment to pursue a career in health care.</blockquote> So much for a vow of poverty, even at a non-profit providing health care mainly to the poor. EmblemHealth On the other hand, executives of secular, but still non-profit health insurers do even better, <blockquote>Anthony Watson, CEO of EmblemHealth, gets a compensation package of $8.5 million — about half in salary and bonuses and the rest in retirement and deferred benefits, according to IRS filings. Two other EmblemHealth executives also snagged multimillion-dollar compensation packages.</blockquote>Summary We have <a href="http://hcrenewal.blogspot.com/2011/10/peer-benchmarking-lake-wobegone-effect.html">noted before </a>how the "peer benchmarking process," setting executive (but not necessarily other) compensation based on a comparison with compensation at other, often highly selected organizations, coupled with the "Lake Wobegone Effect," the belief that one's own executives are always above average, will lead to inexorable rises in executive pay, regardless of performance, or whatever else is going on in the world. The Bishop's assertion that Fidelis' executive compensation should be at the seventy-fifth percentile, because of the "quality of leadership," not further described, is a perfect example of these phenomena. It is striking to see these phenomena at a non-profit organization whose <a href="http://www.fideliscare.org/aboutus/index.aspx">mission</a> is: <blockquote>to ensure that every resident, regardless of income, age, religion, gender, or ethnic background, has access to quality health care, provided with dignity and respect.</blockquote> So, ad infinitum, I repeat.... health care organizations need leaders that uphold the core values of health care, and focus on and are accountable for the mission, not on secondary responsibilities that conflict with these values and their mission, and not on self-enrichment. Leaders ought to be rewarded reasonably, but not lavishly, for doing what ultimately improves patient care, or when applicable, good education and good research. On the other hand, those who authorize, direct and implement bad behavior ought to suffer negative consequences sufficient to deter future bad behavior. If we do not fix the severe problems affecting the leadership and governance of health care, and do not increase accountability, integrity and transparency of health care leadership and governance, we will be as much to blame as the leaders when the system collapses.

A Camel Through the Eye of a Needle - at Non-Profit Health Insurers

It is time to drag out that well-worn phrase,... sometimes you just cannot make this stuff up. Recently, the New York Post reported about...

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RUCing About - Conflicts of Interest Affecting the Members of the RBRVS Update Committee

Since 2007, we have been <a href="http://hcrenewal.blogspot.com/search/label/RUC">writing</a> about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to get effective control over how Medicare pays physicians. The RUC has been accused of setting up incentives that strongly favor invasive, high technology procedures while disfavoring primary care and other "cognitive medicine." Despite the central role of (perverse) incentives in raising health care costs while limiting access and degrading quality, there was surprisingly little discussion about the pivotal role played by the RUC until the formation of the "<a href="http://replacetheruc.org/">Replace the RUC</a>" movement (see post <a href="http://hcrenewal.blogspot.com/2011/03/getting-out-of-our-ruc-open-letter-to.html">here</a>).  Recently, the leaders of Replace the RUC scored a journalistic coup by putting the current list of RUC members publicly on-line.  As we have <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">discussed</a>, previously the membership of this committee was kept very obscure, although the committee argued it was not exactly secret.  Some Google searching suggests one possible reason that the RUC was in no hurry to disclose its own membership.  It appears that many of the RUC members have significant conflicts of interest with respect to their roles as de facto setters of the rates at which physicians are paid by the government. The RUC Members and Their Financial Relationships Below is the list of the current RUC membership (from<a href="http://careandcost.files.wordpress.com/2011/04/ruc-composition.xlsx"> this link</a>), and relevant conflicts of interest obtained by Google searching.  Note that for each member, I first give the name, affiliation relevant to the RUC, location, and first year of membership as provided by the link above.  Then I list relevant financial relationships that appear to present conflicts of interest. - Barbara Levy, MD Chair, RVS Update Committee Federal Way, WA 2000 Consultant/Advisory Boards: Conceptus; AMS; Covidien; Halt Medical; Gynesonics; Idoman Medical (hysteroscopic surgery and sterilization, endometrial ablation, electrosurgery, vaginal hysterectomy) per <a href="http://www.uptodate.com/contents/obstetrics-gynecology-and-womens-health/peer-reviewers?topicId=226">UptoDate</a> - Bibb Allen, Jr., MD American College of Radiology (ACR) Birmingham, AL 2006 - Michael D. Bishop, MD American College of Emergency Physicians (ACEP) Bloomington, IN 2003 - James Blankenship, MD American College of Cardiology (ACC) Danville, PA 2000 Lecture fees from Sanofi-Aventis per <a href="http://www.nejm.org/doi/full/10.1056/nejmoa0802944#t=article">New England Journal of Medicine</a> - Robert Dale Blasier, MD American Academy of Orthopaedic Surgeons (AAOS) Little Rock, AK 2008 - Joel Bradley, MD American Academy of Pediatrics (AAP) Brentwood, TN 2008 Medical Director, Americhoice by UnitedHealthcare, per <a href="http://www.acopeds.org/meetings/2009fop/2009FoP.pdf">AAP conference brochure</a> - Ronald Burd, MD American Psychiatric Association (APA) Fargo, ND 2006 - William F. Gee, MD American Urological Association (AUA) Lexington, KY 2010 Member, Physician Advisory Board, Aetna <a href="http://www.aetna.com/about-aetna-insurance/initiatives/physician-advisory-board/physician-advisory-current-board-members.html">per Aetna</a> - John O. Gage, MD American College of Surgeons (ACS) Pensacola, FL 1991 - David F. Hitzeman, DO American Osteopathic Association (AOA) Tulsa, OK 1996 - Peter A. Hollmann, MD CPT Editorial Panel (AMA/CPT) Providence, RI 2003 Medical Director, Blue Cross and Blue Shield of Rhode Island, per <a href="http://www.rimed.org/bio-hollmann.asp">RI Medical Society</a> - Charles F. Koopmann, Jr., MD American Academy of Otolaryngology-Head and Neck Surgery (AAO-HNS) Ann Arbor, MI 1996 - Robert Kossmann, MD Renal Physicians Association (RPA) Santa Fe, NM 2009 Member of Advanced Renal Technologies Advisory Board, Network 15 Medical Advisory Board, Baxter Home Dialysis Advisory Board, Fresenius Medical Advisory Board per <a href="http://www.renalmd.org/page.aspx?id=1408">Renal Physicians Association</a> - Walter Larimore, MD American Academy of Family Physicians (AAFP) Colorado Springs, CO 2009 - Brenda Lewis, DO American Society of Anesthesiologists (ASA) Cleveland, OH 2009 - J. Leonard Lichtenfeld, MD American College of Physicians (ACP) Atlanta, GA 1994 Member, Physician Advisory Board, Aetna per <a href="http://www.aetna.com/about-aetna-insurance/initiatives/physician-advisory-board/physician-advisory-current-board-members.html">Aetna </a> - Scott Manaker, MD, PhD American College of Chest Physicians (ACCP) Philadelphia, PA 2010 Consultant to Pfizer and Johnson and Johnson. Owns stock in Neose Technologies, Pfizer, Johnson & Johnson, and Rohm and Haas per <a href="http://chestjournal.chestpubs.org/content/134/4/680.full.pdf">Chest</a> - Bill Moran, MD Practice Expense Review Committee Oklahoma City, OK 2000 - Guy Orangio, MD American Society of Colon & Rectal Surgeons (ASCRS) Atlanta, GA 2009 - Gregory Przybylski, MD American Association of Neurological Surgeons (AANS) Edison, NJ 2001 Stock Ownership: United Healthcare (300 shares);  ...  Scientific Advisory Board: United Health Group (B, Spine Advisory Board) per <a href="http://www.nassannualmeeting.org/Documents/AM11_Prelim.pdf">NASS meeting</a> - Marc Raphaelson, MD American Academy of Neurology (AAN) Leesburg, VA 2009 personal compensation for activities with Jazz Pharmaceuticals and Medtronics as a speakers bureau member or consultant per <a href="http://www.marathonmultimedia.com/store/products_pdfs/disclosures/aan10/1FC.001.pdf">AAN</a> - Sandra Reed, MD American College of Obstetricians and Gynecologists (ACOG) Thomasville, GA 2009 GlaxoSmithKline Consulting, $1750 in 2009, $1500 in 2010 per ProPublica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> - Daniel Mark Siegel, MD American Academy of Dermatology (AAD) Brooklyn, NY 2003 Vivacare Dermatology Advisory Board, 2006 – present. Photomedex Scientific Advisory Board, 2006-present, Ad Hoc consultant to ClickDiagnostics, per<a href="http://www.encite.us/pdf/dansiegel_cv.pdf"> Encite CV</a> DermFirst-Shareholder, Logical Image – Consultant, Vivacare - Consultant per <a href="http://www.mohssurgery.org/files/conf/papers/2009%20ACS%20Physician%20Session/SIEGEL-EHR%202014%20is%20Closer%20Than%20You%20Think.pdf">MOHS Surgery</a> - Lloyd S. Smith, DPM Health Care Professionals Advisory Committee Bethesda, MD 2007 - Peter Smith, MD Society of Thoracic Surgeons (STS) Durham, NC 2006 Eli Lilly, Consulting, $1500 in 2009, $1990 in 2010 per Pro Publica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> Advisor or consultant to Bayer per <a href="http://www.medscape.org/viewprogram/7877">Medscape</a> - Susan Spires, MD College of American Pathologists (CAP) Lexington, KY 2007 - Arthur Traugott, MD American Medical Association (AMA) Champaign, IL 2006 - James Waldorf, MD American Society of Plastic Surgeons (ASPS) Jacksonville, FL 2008 - George Williams, MD American Academy of Ophthalmology (AAO) Royal Oak, MI 2009 Advisory Team, <a href="http://www.retro-sense.com/advisors.html">RetroSense Therapeutics</a> Shareholder and consultant for ThromboGenics Ltd. and holds intellectual property on the use of plasmin per <a href="http://www.revophth.com/content/d/retinal_insider/c/26258/">Review of Opthamology</a> Alcon Laboratories, consultant, lecturer; Allergan, consultant, lecturer; Macusight, consultant, equity owner; Neurotech, consultant; Nu-Vue Technologies, equity owner, patent/ royalties; OMIC- Ophthalmic Mutual Insurance Company, employee; Optimedica, consultant, equity owner; Thrombogenics, consultant, equity owner per <a href="http://www.aao.org/meetings/annual_meeting/subspecialty/upload/09-Financial-Disclosures-Subspecialty-Day.pdf">AAO meeting</a> Pfizer, “Professional Advising,” $5534 in 2009 per Pro Publica Dollars for Docs search through <a href="http://projects.propublica.org/docdollars/">here</a> Summary There you have it.  A substantial proportion, almost half, 14 of 29 members of the RUC have financial relationships with pharmaceutical companies, biotechnology companies, device companies, companies that directly provide health care, and health care insurance companies.  As we have noted in our <a href="http://hcrenewal.blogspot.com/search/label/RUC">previous discussions</a> of the RUC, that committee has been accused of being the de facto controller of how the US government pays physicians.  In that role, it has been accused of favoring procedural care rather than cognitive or primary care by increasing the relative financial incentives for the former over the latter.  This may be one of the most important reasons for the expensive, high-technology, procedural-heavy style of care in the US, which has likely been a major driver for increasing costs, declining access and stagnant quality. It seemed obvious that a committee dominated by a majority of physicians who perform procedures would tend to favor bigger financial incentives for procedures.  But now it appears the committee also includes a substantial number of people who work part-time or have ownership interests in companies that also stand to benefit from increasing use of procedures.  Procedures drive increased consumption of drugs, supplies and devices, and lead to larger revenue for hospitals and clinics.  Thus these financial relationships could reasonably be suspected of even further distorting the committee's decision-making in favor of procedures. I was surprised how many RUC members have financial ties to health care insurance companies.  Such companies are not usually thought of as beneficiaries of high-technology, procedural care.  However, if one conceives of their revenue as a percentage of health care costs, perhaps they are.  Furthermore, one can only wonder if the links between the RUC and health care insurance companies have anything to do with how such companies have apparently unquestioningly adapted the RBRVS system controlled by the RUC? The prevalence of conflicts of interest among RUC members highlight the need for a more accountable, transparent and honest system to manage how the government pays physicians, and a need for more transparency and accountability in the relationship among the government, health care insurance, and physicians.  As we have previously <a href="http://hcrenewal.blogspot.com/2011/02/replace-ruc.html">noted</a>,  there are still many unanswered questions about the RUC: - How did the government come to fix the payments physicians receive? Government price-fixing has not been popular in the US, yet this has caused no outcry. - Why is the process by which they are fixed allowed to be so opaque and unaccountable? Why are there no public hearings on the updates, and why is there no input from practicing physicians or organizations other than those related to the RUC? - How did the RUC become de facto in charge of this process? - Why does the AMA [keep the membership of the RUC so opaque, and] give no input into the RUC process to its general membership? - Why is the RUC membership so dominated by procedural specialists? Why were primary care physicians, who made up at least a sizable minority of physicians when the update process was started, not represented according to their numbers? - Why has there been so little discussion of the RUC and its responsibility for an extremely expensive health care system dominated by high-technology, expensive, risky and invasive procedures? Stay tuned, maybe these will be answered in our life-times....

RUCing About - Conflicts of Interest Affecting the Members of the RBRVS Update Committee

Since 2007, we have been writing about the secretive RUC (RBRVS Update Committee), the private AMA committee that somehow has managed to ge...

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Logical Fallacies in Support of Payments for Board Members of Non-Profit Health Insurers

The kerfuffle over the huge golden parachute given the departing CEO of an ostensibly non-profit Massachusetts health insurer/ managed care organization continues to evolve (see posts <a href="http://hcrenewal.blogspot.com/2011/03/massachusetts-blue-cross-blue-shield.html">here</a> and <a href="http://hcrenewal.blogspot.com/2011/03/some-dare-call-it-corruption.html">here</a>), providing some new insight into governance problems afflicting health care organizations.  One of the issues that aroused initially aroused concern was that Massachusetts Blue Cross Blue Shield paid the members of its board of trustees substantial amount, an unusual practice for a non-profit organization.  Board members who feel they owe their pay to the CEO they are supposed to be overseeing might be particularly inclined to over pay that same CEO. Nonetheless, the Boston Globe just <a href="http://www.boston.com/business/healthcare/articles/2011/03/31/two_health_insurers_boards_opt_to_keep_accepting_pay/">reported</a> that other non-profit Massachusetts health insurers were defending their payments to board members: <blockquote>The state’s second- and third-largest health insurers said yesterday their board members have decided to keep paying themselves five-figure annual fees despite objections from the state attorney general and an inquiry into directors’ compensation at nonprofit health plans.</blockquote>The rationales for these decisions were fascinating, amounting to four variations of special pleading, plus an appeal to tradition. Special pleading: Our board members are experienced and independent <blockquote>'Good governance is advanced by the recruitment and retention of experienced, independent, reasonably compensated directors,' Harvard Pilgrim said in its statement. 'In 2010, our board worked more than 2,000 hours.'</blockquote> I doubt any non-profit organization would admit to not wanting experienced, independent board members,  but very few other non-profits pay their board members. Asserting that board members of the Massachusetts insurance companies especially deserve pay because of characteristics they share with other members of other boards who are not paid amounts to <a href="http://www.nizkor.org/features/fallacies/special-pleading.html">a special pleading</a>. The second statement seems just to be a simple exaggeration, since 2000 hours a year implies that the board members work there full-time (40 hours/week * 50 weeks = 2000 hours).   Special Pleading: Our board members are skilled and experienced <blockquote>Wellesley-based Harvard Pilgrim, however, said in its statement that board members 'apply their specialized experience and skills in the areas of medicine, accounting, finance and law, to support our company and its mission. Our board serves as responsible, independent fiscal stewards for our members’ premium dollars.'</blockquote> Again, board members of all sorts of non-profit organizations could be described in similar terms. So using this as an argument for paying board members when members with the same attributes of other boards are not paid is another special pleading. Special Pleading: Our boards have great responsibility <blockquote>Tufts, based in Watertown, said its board believes there is 'an additional overlay of responsibility' for directors of a health insurance company. 'Unlike the directors of other nonprofits, they are subject to distinct regulatory considerations,' the Tufts statement said. 'Therefore, compensation for time, commitment and skill of top talent is a responsible approach for the oversight of an organization that provides health care coverage to hundreds of thousands' of members.</blockquote> Of course, boards of hospitals have their own "distinct regulatory considerations," as do boards of academic institutions  Boards of hospitals are also responsible for the health of their patients and boards of academic institutions are responsible for the education of their students. So this is a third example of a special pleading. Special Pleading: Our responsibility, our time, our effort Appeal to Tradition: Our tradition is to pay directors <blockquote>The history and tradition of nonprofit health plans is to pay [directors] in this state. These are people from various walks of life who bring a skill set. These are not political hacks. . . . It’s because of the responsibility, the time, the effort, and the work you have to put into it. It’s a lot of homework.</blockquote> It is true that the four non-profit Massachusetts health insurers all apparently did pay their board members, although in many other states, members of the boards of non-profit health insurers were not paid. But in the absence of any further argument that Massachusetts organizations were right when the others were wrong, this amounts to <a href="http://www.nizkor.org/features/fallacies/appeal-to-tradition.html">an appeal to tradition</a>.   The rest of this personal statement was again a special pleading.  Summary Board members of non-profit organizations generally are said to have three duties, as <a href="http://www.boardsource.org/Knowledge.asp?ID=3.364">per BoardSource</a>: - The Duty of Care: "a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization." - The Duty of Loyalty: "a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization." - The Duty of Obedience: "The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization." The notion that boards stewarding non-profit organizations, including health care organizations, have these core responsibilities seems to have become increasingly ignored and forgotten in an increasingly commercialized health care environment.  Simply fulfilling these duties should not be regarded as exceptional board service, and certainly not so exceptional as to require pay.  The fallacious arguments made on behalf of lucrative payments given to members of the boards of two of the more highly regarded non-profit health insurance corporations in the country indicate how low governance and stewardship of health care organizations has sunk. Again, we need governance of health care organization by people who understand their fundamental duties, who are willing to be accountable, and who put their organizations' mission ahead of personal gain.  Those who profess concern about the stewardship of health care need not go far to find examples of fundamental misconceptions about what such stewardship involves.  We need to restore core values of governance to our health care organizations.

Logical Fallacies in Support of Payments for Board Members of Non-Profit Health Insurers

The kerfuffle over the huge golden parachute given the departing CEO of an ostensibly non-profit Massachusetts health insurer/ managed care ...

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Wendell Potter on "Insurers’ Cynical Calculations on the Cost of Doing Business"

<a href="http://wendellpotter.com/2011/03/insurers%E2%80%99-cynical-calculations-on-the-cost-of-doing-business">On his blog</a>, Wendell Potter, former head of public relations for CIGNA, discussed big health insurance/ managed care organizations' attitudes toward paying financial penalties for wrong-doing: <blockquote>Having served as head of PR for two of the country’s largest health insurers — CIGNA and Humana — I know from personal experience that such fines are not widely considered newsworthy. Insurers know this, and so, annoying as being charged with breaking the law might be, they largely shrug off the fines and the threat of a day’s worth of bad publicity that occasionally accompany them. They are perfectly willing to risk being caught because they long ago realized that the fines are never severe enough to make them radically change the way they do business. Such a change would involve dealing more honestly with both their customers and the doctors who provide care to the people they insure.</blockquote> We have frequently discussed the parade of <a href="http://hcrenewal.blogspot.com/search/label/legal%20settlements">legal settlements</a> involving major health care organizations, including drug, device, biotechnology companies, and hospitals and health care systems as well as insurers and managed care organizations. We have repeatedly noted that fines or payments imposed on these organizations seem to have little deterrent effect. Now we have some documentation that this is true from someone who used to be in the belly of the beast. So I get to repeat:  we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Wendell Potter on "Insurers’ Cynical Calculations on the Cost of Doing Business"

On his blog , Wendell Potter, former head of public relations for CIGNA, discussed big health insurance/ managed care organizations' att...

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How Large Health Care Organizations Set the "Rules of the Game" to Dominate Health Care

The notion that health care is increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values"(1) just made it into a main-stream, large circulation US medical journal.  A brand new commentary in the American Journal of Medicine(2) by Supri and Malone declared: <blockquote>To explain why we have the most expensive health care system in the world and yet one of the lowest performing, we need to take a perspective that focuses on the US institution of medicine as a whole. We expose the hidden rules by which this institution operates and discuss how its powerful organizations shape, control and perpetuate this ailing system.</blockquote> The article then described the main types of large, powerful health care organizations: <blockquote>The US institution of medicine is not a single, comprehensive and cohesive system of health care. Instead, it is comprised of a myriad of large and powerful organizations, including <a href="http://hcrenewal.blogspot.com/search/label/health%20insurance">insurance companies</a>, <a href="http://hcrenewal.blogspot.com/search/label/managed%20care%20organizations">Health Maintenance Organizations</a> (HMOs), corporate for-profit hospital chains, and <a href="http://hcrenewal.blogspot.com/search/label/pharmaceuticals">pharmaceutical companies</a>. This institutional structure is large and vast, and has over the years become ever more labyrinthine. </blockquote> Note that there are even more kinds of large and powerful health care organizations, including non-profit <a href="http://hcrenewal.blogspot.com/search/label/hospitals">hospitals</a> and <a href="http://hcrenewal.blogspot.com/search/label/hospital%20systems">hospital systems</a>, <a href="http://hcrenewal.blogspot.com/search/label/employers">employers</a> acting as payers for health care, <a href="http://hcrenewal.blogspot.com/search/label/government">government agencies</a>, <a href="http://hcrenewal.blogspot.com/search/label/medical%20devices">device</a> and <a href="http://hcrenewal.blogspot.com/search/label/biotechnology">biotechnology</a> companies, <a href="http://hcrenewal.blogspot.com/search/label/Healthcare%20IT%20failure">health care information technology companies</a>, <a href="http://hcrenewal.blogspot.com/search/label/public%20relations">public relations firms</a>, <a href="http://hcrenewal.blogspot.com/search/label/medical%20education%20and%20communication%20companies">medical education and communication companies</a>, <a href="http://hcrenewal.blogspot.com/search/label/contract%20research%20organizations">contract research organizations</a>, <a href="http://hcrenewal.blogspot.com/search/label/medical%20societies">professional societies</a>, <a href="http://hcrenewal.blogspot.com/search/label/patient%20advocacy%20groups">patient advocacy groups</a>, accrediting bodies, health care charities, etc, etc, etc.  But the point is that the large organizations, not the patients, the physicians, nor the public dominate. Supri and Malone suggested that each kind of organization sets the "rules of the game," that is, the priorities important to the organization, which are very different from the core values that many of us believe ought to guide health care: <blockquote>Not only is the institutional structure large, it is dynamic, and actively creates, shapes, and maintains the institution of medicine. It does this through what we call setting the “rules of the game”; that is, by imposing the terms by which the system operates.</blockquote> For example, <blockquote>Insurance companies have set the rule 'restrict choice and coverage.' They enact this through their elaborate system of copayments and deductibles, exclusion clauses and loopholes, each designed to deter patients from claiming the health care they need, and to override physicians' medical judgment.</blockquote> Similarly, it cited the rules for managed care, "manage care," that is, "restrict utilization of health care" regardless of patients' needs; the pharmaceutical industry, "charges as much as we want, because insurance will pay;" and "corporate hospital chains ... test as much as we want, because insurance will pay." Thus it made the point that US health care now is driven by the priorities of large organizations whose interests at best may disregard and at worst may conflict with providing the best possible care for individual patients. Further, the resulting complexity is to the benefit of the large organizations: <blockquote>As each organization has created its own 'rules of the game,' the institution of medicine has grown into a complex entity that few really understand. This very complexity actually works to the advantage of the organizations that comprise the system, creating an operating environment that allows them to siphon off billions of dollars. It is one of the main reasons why the cost of health care has spiraled out of control. </blockquote> This is very important, and suggests that the system will just become more bureaucratic, complex and opaque until it finally collapses. Finally, it raised the point that the organizations collude to promote their priorities at the expense of patients' and the public's health: <blockquote>Although each organization sets their 'own rules of the game,' they are also strongly and deeply interlinked, and cooperate and collaborate to protect the system of health care that they have devised, so that it remains intact and continues to serve their own interests.</blockquote> Although  Supri and Malone did not differentiate the leadership of large organizations from the organizations themselves, we have pointed out that the top leaders of various kinds of organizations seem to think alike, becoming a sort of de facto executives' guild, with a "<a href="http://hcrenewal.blogspot.com/search/label/superclass">superclass</a>" of oligarchs at its pinnacle.  The guild may be enabled by these leaders' often <a href="http://hcrenewal.blogspot.com/search/label/executive%20compensation">huge compensation</a> and other benefits and corporate arrangements that keep them shielded from the vicissitudes of daily life that patients, health care professionals, and lower level organizational employees must face.  Furthermore, the leadership of these organizations is often interlinked, for example, by leaders of one organization serving on boards of <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20directors">directors</a> or <a href="http://hcrenewal.blogspot.com/search/label/boards%20of%20trustees">trustees</a> of others. It is so nice for us at Health Care Renewal to have some company. It is a very important blow to the <a href="http://hcrenewal.blogspot.com/search/label/anechoic%20effect">anechoic effect</a> for these sorts of views to appear in a mainstream medical journal. When I interviewed a motley group of physicians and health care professionals in the early part of the 21st century, many expressed concerns about how medicine had been taken over by large organizations which did not honor its values. The article published in 2003(1) in Europe which tried to summarize their concerns probably could not have been published at that time in the US, but its publication remote from its main topic only made it more anechoic. It may be that an article published in a respected American journal will generate some more echoes. Here is hoping that Health Care Renewal can help create some such echoes.  Obviously, those who lead large organizations in health care will not be happy about that, so it is possible this article's appearance in a main-stream journal may incite some pushback, perhaps generated by the public relations machines of the large health care organizations (see <a href="http://hcrenewal.blogspot.com/2011/02/health-care-corporate-disinformation.html">this post</a> about how Wendell Potter's excellent <a href="http://wendellpotter.com/deadlyspin/">Deadly Spin</a> documented how large organizations use propaganda and disinformation to undermine viewpoints that threaten their domination.) In conclusion, I strongly support Supri and Malone's final sentiments: <blockquote>The sum of the 'rules of the game' devised by these organizations has resulted in a fragmented, haphazard and broken system of health care. Reform is long overdue, and demands root and branch transformation of the 'rules of the game' governing the US institution of medicine. This requires us to understand these rules, who is setting them, and how these rules are being used to exploit the system of medicine. Only then can we begin to heal our ailing health care system.</blockquote>Well said! But now almost 8 years since the publication of "A Cautionary Tale," we still have a long way to go. References 1.  Poses RM. A cautionary tale: the dysfunction of American health care.  Eur J Inte Med 2003; 14: 123-130.  Link <a href="http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6VSB-48D4VTD-D&_user=489286&_coverDate=03%2F31%2F2003&_rdoc=1&_fmt=high&_orig=gateway&_origin=gateway&_sort=d&_docanchor=&view=c&_searchStrId=1699586911&_rerunOrigin=google&_acct=C000022678&_version=1&_urlVersion=0&_userid=489286&md5=52787b7440a81ac69b0bffe22ddbe5ff&searchtype=a">here</a>. 2.  Supri S, Malone K. On the critical list: the US institution of medicine. Am J Med 2011; 124: 192-193.  Link <a href="http://www.ncbi.nlm.nih.gov/pubmed/21396498">here</a>.

How Large Health Care Organizations Set the "Rules of the Game" to Dominate Health Care

The notion that health care is increasingly "dominated by large, bureaucratic organizations which do not honor ... [its] core values...

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"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance.  The right tends to disparage all aspects of "government-run" health care, and in the case of insurance, uses the alleged faults of the two big US government health insurance programs as examples.  (Medicare is a federal government health insurance program for the elderly and disabled. Medicaid is federal-state program for the poor.)  For example, per the Associated Press <a href="http://www.businessweek.com/ap/financialnews/D9LTA0UO2.htm">via BusinessWeek</a>, from a currently prominent Republican hopeful for President, former Minnesota Governor Tim Pawlenty, <blockquote>The former Minnesota governor was the latest politician to participate in the Health Policy Grand Rounds program that Dartmouth-Hitchcock Medical Center has organized for its staff during the past two presidential campaign cycles. Using Medicare and Medicaid as examples, he criticized the notion that government-run health care will produce efficiency and said the answer lies in empowering consumers.</blockquote> Republican Congressman Darrell Issa (California) <a href="http://issa.house.gov/index.php?option=com_content&view=article&id=271:rep-darrell-issa-the-lackluster-record-of-government-run-health-care&catid=23:opinion-editorials">wrote</a> in 2010: <blockquote>an expansion of the federal bureaucracy at that rate will greatly increase the incidence of waste, fraud and abuse in health care. Already Medicare, which accounts for 14% of all federal spending, is rife with waste, fraud and abuse. Even Attorney General Eric Holder has said, 'By all accounts, every year we lose tens of billions of dollars in Medicare and Medicaid funds to fraud.' A recent analysis by the Government Accountability Office (GAO) estimated that federal subsidy programs cost taxpayers about $100 billion every year in improper payments, with Medicare and Medicaid accounting for more than half of that.</blockquote> The left may advocate for government-run, "single-payer" insurance programs, perhaps using the alleged benefits of Medicare and Medicaid as examples. Scholarly articles about health care policy may refer to Medicaid as a government "single-payer" system.  (For example, see: Robinson JC. The commercial health insurance industry in an era of eroding employer coverage. Health Aff 2006; 25:1475-1486. Link <a href="http://content.healthaffairs.org/content/25/6/1475.short">here</a>.) In any case, I suspect most of us think of Medicaid as an example of "government-run" health care insurance, regardless of whether we believe that is a good or a bad thing. Yet the reality may be more complex. Two recent stories, one a follow-up on an old Health Care Renewal post, provide some dots to connect. Connecticut HUSKY Medicaid Program In 2007, we <a href="http://hcrenewal.blogspot.com/2007/11/health-plans-programs-cancelled-for.html">posted</a> about how the state of Connecticut was going to end participation in the HUSKY state Medicaid program for poor children by four insurance companies/ managed care organizations.  They apparently refused to provide information about payments to physicians and denial of payments for prescription drugs to the state.  The two largest organizations involved were Anthem Health Plans (a subsidiary of WellPoint), and Health Net.  At the time, we noted that this case provided an example of the lack of transparency exhibited by major health organizations. Late last year, the Connecticut Mirror <a href="http://www.ctmirror.org/story/8085/husky-managed-care-company-profits">documented </a>more criticism of the HUSKY program based on a report that showed that participating companies were making big profits from it (but perhaps not from other state Medicaid programs):  <blockquote>The three managed care companies in the state's HUSKY insurance program for low-income children and families recorded profits of $18.8 million last year, according to figures released by the state Department of Social Services. In one part of HUSKY, the insurers made margins of at least 20 percent and spent less than 72 percent of their revenues on medical care. The figures released this month drew criticism from members of the Medicaid Care Management Oversight Council, who are in the midst of considering moving HUSKY out of managed care.</blockquote> In more detail, the relevant numbers were: <blockquote>AmeriChoice, part of UnitedHealthcare, spent 62 percent of its revenue on medical care and posted a 22.9 percent profit margin in the HUSKY B program. By contrast, the federal health reform law sets minimum medical care ratios for insurers of 80 percent or 85 percent, depending on the type of plan. The provision does not apply to Medicaid plans, but was cited as a benchmark in the council's discussion. None of the insurers met those benchmarks in HUSKY B, which covers children whose family income does not qualify for Medicaid. Last year, it covered between 13,000 and 16,000 children, many whose families earned below 300 percent of the federal poverty level. Aetna spent 70.5 percent on medical care and made a 20 percent margin, while Community Health Network of Connecticut, a non-profit with far more enrollees than the other insurers, spent 71.8 percent of its revenues on medical care and made a 20.6 percent margin. Margins were lower, and medical care ratios higher, in HUSKY A, a Medicaid program that enrolled as many as 358,088 children and adults in 2009. Community Health Network reported a 95.1 percent medical care ratio and a -0.3 percent margin. AmeriChoice spent 86.3 percent of its revenue on medical care and achieved a 3.5 percent margin, while Aetna had an 83.9 percent medical care ratio and 6.5 percent margin. Overall, the medical care ratio was 90.7 percent for both HUSKY programs and all three insurers. The overall margin was 2.3 percent.</blockquote> The insurers involved defended themselves by noting to participate in HUSKY they also had to participate in another program, Charter Oak Health Plan, "on which they lose money." Last month, it looked to be the end of managed care in these Medicaid programs, again as <a href="http://www.ctmirror.org/story/11427/malloy-administration-moving-husky-out-managed-care">reported</a> by the Connecticut Mirror: <blockquote>The Malloy administration announced plans Tuesday to move the HUSKY and Charter Oak health programs out of managed care and increase care coordination in the state's other Medicaid programs, an effort officials said would save money while giving the state more control over health programs that serve more than 500,000 people. </blockquote> This article also noted: <blockquote>In the current system, the state pays three managed care companies set fees for each HUSKY and Charter Oak member every month, and the companies use the money to pay medical claims. Critics say it gives the managed care companies an incentive to deny care since they get to keep the money not spent on medical costs.</blockquote> So let us deal directly with the cognitive dissonance generated by these articles. In the ongoing US health reform debate, Medicaid is usually discussed as a "government-run" health care (insurance) program. Yet these news articles from Connecticut suggest at least in that state, part of Medicaid was out-sourced to mostly large, national, for-profit health insurance companies/ managed care organizations. Furthermore, as noted just above, these corporations seemed to be mainly calling the shots in how their part of Medicaid was run. So is this "government-run" health care (insurance)? But wait, there is more.... Minnesota Medicaid Controversy Last month, the Politics in Minnesota web-site ran a <a href="http://politicsinminnesota.com/blog/2011/02/picking-the-lock-on-hmos-%E2%80%98black-box/">report</a> on an unlikely reformer: <blockquote>Dave Feinwachs is no stranger to the Capitol. For three decades he was the general counsel to the Minnesota Hospital Association. In that capacity, he negotiated with state agencies and testified regularly before legislative committees on health care issues. But early last year, Feinwachs said, he was ordered by his superiors at the hospital association not to provide any further testimony at the Capitol. The reason for the muzzle: his vocal insistence that health maintenance organizations (HMOs) should contribute money to help salvage the state’s General Assistance Medical Care program for indigent adults. Feinwachs says he abided by the prohibition on testimony before legislative committees, but apparently it was not enough to keep him in the good graces of his employer. In November he was fired as the group’s principal attorney. Feinwachs will not discuss the reason for his termination, citing potential litigation. But it almost certainly had something to do with his ongoing zealous campaign to force greater transparency and accountability on the state’s HMOs - primarily Blue Cross & Blue Shield, HealthPartners, Medica and UCare - which receive roughly $3 billion annually to run health plans for many of the state’s poorest residents.</blockquote> So here we go again. This article suggested that Minnesota had out-sourced a very large part of its Medicaid program. Furthermore, it also appears that the state government knows little about what happens to the money it hands over: <blockquote>In the next two years, Minnesota is slated to funnel about $6 billion to the state’s HMOs to provide health care for 550,000 of the state’s poorest residents. To put that figure in perspective, it is nearly 20 percent of the state’s expected 2012-13 general fund revenues - and nearly identical to the state’s projected $6.2 billion deficit. In coming up with a solution to Minnesota’s financial crisis, Feinwachs and others believe, legislators must at least have a clear accounting of this massive pot of health care dollars. HMOs, meanwhile, are not exactly yearning for scrutiny, especially as they launch a pitch to administer even more of the state’s health care spending.</blockquote> In addition, there is reason to believe that Minnesota may be paying a significant amount for administration: <blockquote>Feinwachs believes that the administrative overhead collected by HMOs could be in the neighborhood of 16 percent. He concedes, however, that this is no more than a 'guesstimate' pieced together from the limited information that is publicly available.</blockquote> Then, there is reason to suspect that the private (and nominally not-for-profit) HMOs that Minnesota pays to run Medicaid have resisted accounting for how the money they got was spent: <blockquote>Past attempts to bolster accountability and transparency for HMOs have largely run into a brick wall. For instance, when legislators considered requiring the health plans to chip in on a plan to restore the General Assistance Medical Care program last year, they were told by officials from the Department of Human Services that such a move would be illegal. Efforts to provide more financial disclosure have been rebuffed by the argument that such information is proprietary and not subject to the state’s data practices rules. The complexity of Minnesota’s patchwork of publicly funded health care plans, which very few individuals clearly understand, has also helped forestall changes. 'We can’t let the complexity of data and information beat us down, and I think that’s what happened in the years past,' Hosch said. 'The systems almost seem like they’re deliberately complex in order to confuse us.'</blockquote> Apparently in these parlous financial times, Mr Feinwachs got some attention. Last week, the state Governor announced his willingness to dig into the results of the state's out-sourcing of Medicaid, per the Minneapolis Star-Tribune: <blockquote>It's high time that Minnesota started treating its nonprofit health plans for what they are -- some of state government's largest vendors. Reforms announced this week by Gov. Mark Dayton's office are a promising first step toward scrutinizing health plan contracts for savings and finding new ways to rein in Minnesota's soaring medical costs. Managing care for more than 500,000 low-income, disabled and elderly Minnesotans enrolled in state public health programs is a $3.1 billion-a-year business for health plans in Minnesota, with the state and federal government jointly footing the bill. Over the past decade, the state's portion of this outsourced care has increased from 5 percent to 11 percent of the state budget, according to Dayton's office. The state also has more than 249,000 people -- typically the sickest of the sick -- in a fee-for-service public program. That spending is also ripe for a cost-savings review. On Wednesday, Dayton announced plans to do what good business leaders do in difficult financial circumstances. His administration is going to start driving harder bargains with health plans. Key parts of the plan include making the contracting system more competitive, making financial information more transparent, and doing deeper auditing of plans' books to analyze administrative and medical expenses.</blockquote> So again in Minnesota, it appeared that the state had out-sourced a large proportion of its Medicaid program, covering apparently two-thirds of the state's Medicaid patients. It appears that knowledge of the out-sourcing of most of Medicaid was relatively anechoic, and that even the state's former Governor Pawlenty was unaware of it (see his comments in introduction to this post). Despite the amounts of money and the numbers of people involved, up to now the state government had apparently very little information about how billions of dollars were being spent by private, albeit nominally non-profit health insurance companies/ managed care organizations. Summary Two cases from two states suggest that some proportion of Medicaid, perhaps a very large proportion, has been out-sourced to private corporations, both nominally non-profit and for-profit. In fact, a Washington Post <a href="http://www.washingtonpost.com/wp-dyn/content/article/2010/07/07/AR2010070703560.html">article</a> last year suggested that 70% of Medicaid patients are in managed care plans, most of which are likely out-sourced, not run by state Medicaid agencies. Our two cases above further suggest that government officials may know little about how the money given to these corporations was spent, and how the corporations managed the supposedly "government-run" health insurance. So much for the notion that the US Medicaid program is "government-run" health insurance.  Whether one believes that government bureaucrats are good or bad at running health care, it seems that most Medicaid patients' care is managed by corporate, not government bureaucrats. The likelihood that a substantial proportion of Medicaid patients actually get their health care coverage from corporations, be that non-profit or for-profit, raises some important questions. - What proportion of the government funds provided these corporations goes to health care versus administration, overhead, etc? -  What then is the proportion of all Medicaid money spent on health care versus administration, overhead, etc at the federal, state, and corporate levels? -  What proportion of the revenue of major health insurers/ managed care organizations actually comes from tax-payers via Medicaid? -  To what extent do health insurers/ managed care organizations influence clinical care through their role implementing Medicaid? -  How transparent are their finances and their implementation of Medicaid? -  How well are they supervised and regulated by national and state government? Meanwhile, it appears that there is far more overlap between government and corporate health insurance and managed care than most of us realized.  That suggests the usual debate between the foes and proponents of "government-run" health care (insurance) was vastly too simplistic.  Maybe some of those involved in the debate should have known that.    Meanwhile, the concerns I <a href="http://www.ejinme.com/article/S0953-6205%2803%2900029-3/abstract">discussed</a> in 2002 that "health care has become dominated by large, bureaucratic organizations" appear increasingly well-founded.  This domination seems to be increasingly facilitated by collaboration - or should that be collusion? - among government and private bureaucracies.  The danger, as we have repeatedly discussed, is that the leaders of these bureaucracies may feel increasing loyalty to the managers' and executives' guild, and decreasing pressure not to fulfill their own and their cronies' self-interest.  We need at least to have some frank discussions about the increasing corporatism of health care and all of society, and what to do about it.

"Government-Run Health Insurance" Run by Corporations? - Two Medicaid Examples

In the US, there seems to have been a constant argument between right- and left-wingers over "government-run" health insurance. T...

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