Betting on Health Care Reform

At least investors think health care reform will be happening some time soon.  The Wall Street Journal reported that managed care stocks fell after Obama asked Congress to take an up or down vote Wednesday afternoon.  It might be wishful thinking (or dreadful, depending on which way you look at it) for the investors who are moving their investments from managed care plans.  With Congress members still treating health care reform as a game of cat and mouse, whether a vote will happen and whether the vote will be for reform is yet to be determined.

Take for instance Nathan Deal, a Republican from Georgia, who is purposely postponing his resignation from the House until a vote on health care happens so that he can get his nay vote in.  Then, there is the promise from Senate Republican leader Mitch McConnell to repeal health care reform before it has even been passed.  And despite Wall St. estimations to the contrary,  with the complications of reconciliation, the prospect of getting a bill that actually creates a mass exodus out of managed care seems at least somewhat iffy.

Interestingly, as the Washington Post revealed on Wednesday, private insurance companies, such as the infamous WellPoint, will be the primary beneficiaries of a failed health care reform attempt.  As Ezra Klien stated:

The argument is simple: Wellpoint’s business model is uncommonly concentrated in the individual and small-group markets. Those are the exact markets that health-care reform will drastically change. Those are the markets where people get rejected for preexisting conditions, where insurers spend 30 cents of every premium dollar on administration and where rate hikes are volatile and constant. Health-care reform wants to change all of that, and if it does, Wellpoint’s business model will be changed, too.

It would seem, then, that health care reform would not be difficult to carry through in considering who stands to win and who stands to lose if reform is not passed.  One of the major barriers is the Republicans’ animosity towards using reconciliation to pass a final health care bill, an idea they consider foreign to the democratic process.  However, as NPR just reported this past week, reconciliation is not “unprecedented,” and in fact, it has been used many times in the course of our country’s history to pass similar bills.  COBRA, Children’s Health Insurance Program (CHIP), and changes to Medicare have all happened through reconciliation.  Moreover, between 1981 and 2008, 16 out of 21 reconciliation bills were Republican initiatives.

Without a final vote on health care soon, many worry that the momentum will be lost.  Many members of Congress, steadfast in their platform promises, are not helping the process move any quicker.  In the meantime, insurance companies continue to prosper; Americans continue to pay the price.

High-Risk Pools: a Precarious Pillar of Republican Reform

At the Health Summit last week we were able to more fully observe the Republican vision for reforming health care. A constant idea that the Republican leadership came back to was the concept of “high risk pools.” But what are high risk pools, and what potential do they have to lower costs?

High-risk pools are state-run programs that provide insurance for those who suffer from pre-existing conditions or have some other issue that makes them “medically uninsurable.”  They are often utilized by those in limbo who were previously covered by an employer’s group coverage, but for whatever reason are now relegated to the veritable disaster that is the individual market. Currently, 34 states have high-risk pools, with the combined number of insured from those pools at 200,000. (See Kaiser Family Foundation, State High Risk Pools: An Overview). As noted by Kaiser, coverage is typically at 125% to 200% of the standard market rate for health insurance.  In some states, the high-risk pool insurance costs as much as $14,000 per year. Thirty states offering high-risk pool coverage have waiting periods before pre-existing medical conditions can be covered.

Edmund Haislmaier of the Heritage Foundation has provided a succinct and helpful discussion of the relationship between high-risk pools and the related concept of “reinsurance.”  Haislmaier breaks down these risk-transfer tools into two groups: “inclusionary” and “exclusionary” risk-transfer mechanisms:

The “exclusionary” mechanisms segregate high-risk individuals from the low-risk population, subsidizing them in a separate pool. The “inclusionary” mechanisms keep high-risk individuals in the same pool as everyone else but seek to redistribute and/or subsidize their more expensive claims.

A common exclusionary mechanism is a state-run “high-risk pool” for the individual health insurance market. The pool offers coverage to people who have been refused coverage in the individual market due to poor health status. Although coverage carries high premiums, the premiums are not enough to cover the cost of claims by enrollees. To make up the difference, lawmakers use a mix of assessments on private insurers and public subsidies. In some states, the losses are funded entirely out of assessments on insurers and, thus, ultimately included in the premiums paid by everyone with health insurance coverage. In other states, the losses are funded primarily out of general revenue appropriations and, thus, are ultimately born by all the state’s taxpayers. Still other states use a mix of both funding sources.

Inclusionary risk transfer mechanisms operate on essentially the same principle, except that high-cost individuals are not given separate coverage. Instead, some portion of their claims is pooled and then proportionately redistributed among the carriers in the market. As with high-risk pools, public subsidies may also be used to offset some of the cost of claims. This type of mechanism is often called, somewhat inaccurately, a “reinsurance pool.” A more precise termed is “risk-transfer pool.”

Notably, Haislmaier recognizes that high-risk pools offer little help when it comes to the true goal of health reform: reducing costs:

Regardless of design, risk transfer mechanisms only shift or redistribute costs among funding sources. Specifically, risk transfer mechanisms offer ways to more equitably redistribute the costs of a small number of expensive cases or individuals across a broader population. While these features enable health insurance markets to function more smoothly, they are not a solution for controlling health care costs in general.

This is noteworthy coming from the Heritage Foundation. However, to be sure, high-risk pools are not peculiar to Republican health reform proposals. Both the House and the Senate bills provide for high-risk pools. The follow table is from The Kaiser Foundation’s paper “High-risk Pools: An Overview”:

The important row of the above table is “Timeline.” Whereas the House and Senate bills utilize high-risk pools as a temporary measure to provide insurance to those with pre-existing conditions before the exchanges take shape, the Republican proposal would implement risk transfer mechanisms as the primary means by which individuals with pre-existing conditions can obtain coverage. For those purchasing on the individual market, the Republican proposal would provide federal funding for state-run high-risk pools. Reinsurance mechanisms would operate in the small group market.

This is in contrast to both the House and Senate proposal which both prohibit the insurance exchanges  from denying coverage because of an applicant’s pre-existing condition–thus negating the need for high-risk pools.  Instead of subsidizing high-risk pools that would segregate the sick from the healthy, the individual mandate in the Democrats’ bill would ensure that the costs of high-risk and currently sick individuals would be spread throughout the exchange.

As Haislmaier noted, it is unclear how risk transfer mechanisms would lower health care costs. For example, whereas exchanges would increase competition by making the purchase of health insurance more accessible, high-risk pools and reinsurance would not alter the current maze that is the individual insurance market.   It is somewhat remarkable that the Republicans opt for high-risk pools instead of a proscription against pre-existing condition preclusions, especially given the public disdain for pre-existing condition preclusions. But the Republicans have little choice. Since they are wholly opposed to the individual mandate, insurers and states running high-risk pools under the Republican plan would not have healthy individuals paying into the system to offset the cost of sick insureds.

Why Angela Braly, CEO of the WellPoint Insurance Co., Deserves a Raise

Angela Braly, CEO of  health insurance giant WellPoint, deserves a raise. As regular readers of this column know, Ms. Braly did not make as much as Aetna’s Ronald A. Williams in 2008.

In a post written back in May of 2009 I noted of Insurance Company CEO Total Compensation:

Aetna’s Ronald Williams received $24,300,112 last year. That’s $467,309.85 per week. That’s a house. Maybe not a house that Mr. Williams would live in, but a house nonetheless. The man makes a house a week. And interestingly enough, if Mr. Williams were to eschew the purchase of a house on any given week and instead look to deposit the money in a bank– in order to remain FDIC insured (up to $250,000)– he would actually need to open more than one account–every week. Lest we lament the fate of the other CEOs on the list, in 2008 Ms. Braly had to get by on $189,311.76 per week….

Less than half of what Mr. Williams brought in, in 2008 Ms. Braly was forced to make ends meet on $9,844,212.

In 2007, her first year on the job: $9,094,271. Which, for those keeping score at home, is $174,889.83 per week. Her predecessor at Wellpoint, Larry Glasscock, received  $23,886,169 in total compensation in 2006. Again, in 2008 Ms. Braly had to get by on $189,311.76 per week. True, it was $14,421.93 more per week than she had made the year prior, but that won’t be nearly sufficient for this year.

So why does Angela Braly deserve a raise? Pay so high that the  FDIC limits on insurance (yes, it’s somewhat ironic) won’t work for her weekly paycheck? Because WellPoint subsidiary Anthem Blue Cross of California has found the audacity to raise individual insurance premiums in that state 39%. That’s right, 39%. This, according to Secretary of Health and Human Services Kathleen Sebelius, “as WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.”

Profits “soar,” raise rates. What more could Wall Street want?

Secretary Sebelius has demanded “justification” for the increase. In a letter sent to the Wellpoint subsidiary Anthem Blue Cross, she writes:

One of the biggest pressures facing families, businesses and governments at every level are skyrocketing health insurance costs.  With so many families already affected by rising costs, I was very disturbed to learn through media accounts that Anthem Blue Cross plans to raise premiums for its California customers by as much as 39 percent. These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians, many of whom are already struggling to make ends meet in a difficult economy.

Your company’s strong financial position makes these rate increases even more difficult to understand. As you know, your parent company, WellPoint Incorporated, has seen its profits soar, earning $2.7 billion in the last quarter of 2009 alone.

And there you have it, profits soar, raise rates, the stock soars–as will, presumably, Ms. Braly’s stock options. She won’t have “to get by on $189,311.76 per week” for all that much longer. With that kind of move it’s only a matter of time before she finds herself in Mr. Williams’ neighborhood.

Now that the healthcare reform debate awaits its Summit, from the vantage point of its nadir, one might imagine other Insurance Company CEO’s to embark upon a similar strategy. Good thing we jettisoned all those proposed pesky insurance regulations contained in the House & Senate bills.

Because it never gets old to me, here’s the list of Insurance Company CEO Total Compensation:

Res Ipsa Loquitur.

Ins. Co. & CEO With 2007 Total CEO Compensation

• Aetna Ronald A. Williams: $23,045,834
• Cigna H. Edward Hanway: $25,839,777
• Coventry Dale B. Wolf : $14,869,823
• Health Net Jay M. Gellert: $3,686,230
• Humana Michael McCallister: $10,312,557
• U.Health Grp Stephen J. Hemsley: $13,164,529
• WellPoint Angela Braly (2007): $9,094,271
  L. Glasscock (2006): $23,886,169

Ins. Co. & CEO With 2008 Total CEO Compensation

• Aetna, Ronald A. Williams: $24,300,112
• Cigna, H. Edward Hanway: $12,236,740
• Coventry, Dale Wolf: $9,047,469
• Health Net, Jay Gellert: $4,425,355
• Humana, Michael McCallister: $4,764,309
• U. Health Group, Stephen J. Hemsley: $3,241,042
• Wellpoint, Angela Braly: $9,844,212

See Nonprofit Health Related CEO Compensation Here.

An Overview of Exchanges under the House and Senate Bill

On January 8th, 2010, the Alliance for Health Reform and The Commonwealth Fund  co-sponsored and moderated a panel discussion on the health insurance exchanges that are being proposed in both the House and the Senate health reform bills. The panel consisted of Washington and Lee professor Timothy Jost, John Kingsdale of the Massachusetts Commonwealth Health Insurance Connector Authority, and Philip Vogel of the Connecticut Business and Industry Association (CBIA), which runs the non-profit CBIA Health Connections, a health insurance exchange for the state of Connecticut.

The co-sponsors have uploaded all of the event’s materials, including a webcast of the entire event, as well as all of the powerpoint slides and papers. All of this information can be found here.

Professor Jost and the Commonwealth fund created detailed charts comparing the differences between the two bills. Below is a reproduction of Professor Jost’s chart, which can be viewed by clicking on the thumbnails.

Both the House and the Senate bills would create new health insurance exchanges that would help consumers and employers navigate the purchase of health insurance. Though the common thread of a regulated marketplace runs through both bills, all three panelists noted the stark difference in the vision and implementation of the exchanges under the respective bills.

Below are some of the key distinctions between the two bills.

The House Bill — Public Option with Opt-Out Possibility

The House’s bill, H.R. 3962 (click here for entire pdf) provides for a federal exchange that would essentially eliminate the individual marketplace for health insurance going forward. A public plan would be offered that would reimburse providers at negotiated rates between those of Medicare and commercial rates. The applicable section of the House’s bill is Title III, entitled Health Insurance Exchange and Related Provisions.

Title III of the House Bill would create the Health Choices Administration with a Commissioner who would oversee the exchange. Citing Section 301 and 308 of the Bill, Professor Jost notes on page 17 of his paper:

The exchange operates at the national level, established within a new Health Choices Administration. The Commissioner of the HCA can, however, permit individual states or groups of states to administer an exchange within their territory in place of the national exchange if specific requirements are met, subject to revocation if the state ceases to meet the requirements of the bill. Even if the HCA delegates exchange authority to a state, the Commissioner retains enforcement authority and can further specify functions retained by the Commissioner and not delegated.

Thus, the House’s bill would create an exchange system that is fairly centralized and regulated, but with added flexibility. If the states fail to implement their own exchange then HHS will implement an exchange for them. Only those policies considered “grandfathered” could be sold outside of the exchange, and such “grandfathering” can only occur in the individual market. (See Section 202). Insurance offered inside the exchange would fit into one of four tiers: basic, enhanced, premium, and premium plus. (See Section 303). These tiers would correspond to different actuarial values of the plans. Subsidies would be provided on a sliding scale that is determined by the purchaser’s income.

The House bill would also limit the medical loss ratio of plans offered in the exchanges to 85 percent, largely prohibit the rescission of contracts, eliminate lifetime coverage limits, eliminate pre-existing condition exclusions, as well as require guaranteed issue and renewal of plans. Variations in premiums based on the age of the insured could only vary by a maximum of 2:1.

Not all of the panelists agreed with every provision. For example, Mr. Vogel took issue with the dependence on the medical loss ratio in regulating the market, instead arguing for a greater reliance on the “claim dollar” as a guide post.

Whether offered inside the exchange or grandfathered, all plans must meet certain requirements in terms of essential benefits, which would be determined by HHS, and would be based on the recommendation of the Health Benefits Advisory Committee–a public/private hybrid entity.

• Click here to jump to section 223 outlining the Health Benefits Advisory Committee

These benefits would include hospitalization, outpatient care, prescriptions drugs, equipment, and a host of other benefits.

• Click here to jump to the section 222 which details the essential benefits.

The House bill would also impose rules regarding the transparency of the plans offered in the exchange by requiring certain information about the plans to be disclosed.

The Senate Approach — No Public Option; Multistate Substitute Would Exist

For whatever reason, the Senate crafted a more complicated framework of exchanges.

A crucial point of divergence from the House bill is the Senate bill’s lack of a federally financed public plan offered through the exchange. However, as discussed below, part of the Senate plan attempts to act as a substitute. Another area of divergence is that existing individual and group plans may continue alongside newly created exchanges, in addition to any grandfathered plans. This is in stark distinction to the House bill that would eliminate some existing policies. Though as noted, the House bill would allow for some grandfathering.

The Senate’s exchange framework is based on section 1001 of the bill which provides that HHS will, with the help of the National Association of Insurance Commissioners (NAIC), craft standards regarding the minimum benefits and other aspects of the plans sold through the various exchanges.

In terms of the Senate’s framework for exchanges, it is as follows. The Senate bill will allow for a number of exchanges that would exist on variety of different governmental levels. Whereas the House bill envisions a more federal exchange system, the Senate bill would instead allow for state-based exchanges, multistate exchanges (i.e. regional), or substate exchanges.

• Click here for a pdf version of Senate bill, as passed.

State-based Exchanges
For the individual and the small group markets, the Senate bill would require each state to create a American Health Benefit Exchange for individual purchasers of insurance, and a Small Business Health Options Program (SHOP) for small businesses purchasers. HHS would regulate these exchanges (See section 1321(a)(1)). These exchanges would be governed by regulations promulgated by HHS, unless the states adopt alternative standards that the HHS finds acceptable.

The state may combine the individual market exchanges with the small business (SHOP) exchanges. Additionally, states have the flexibility to establish regional exchanges or smaller subsidiary exchanges that target specific geographic areas within the state. (See Section 1311(f)). If the states do not create a system of either separate exchanges for individuals and small business, or some combination, HHS will establish an exchange or utilize a non-profit insurer to fill the void. See 1321(c).

The multistate exchanges are important, as they may mollify those who have been touting the idea of interstate health insurance offerings as a panacea for the woes of U.S. health insurance.

Regardless of how any states’ exchange(s) plays out, many of the important provisions of the Senate’s bill such as certain minimum benefits, the ban on lifetime or annual dollar limits, the ban on rescission, and medical loss ratio requirements would apply across the landscape of exchanges.

State Opt-Out Possible
Under the Senate bill, the states would be eligible in 2017 to opt-out of the federal requirements listed above if they can demonstrate that they are providing affordable coverage that is at least as affordable and comprehensive as the Bill requires. Alternatively, the state may be allowed to create a “public health plan” for those under 200% of the federal poverty level. Under this arrangement, the federal government would compensate the state for 95 percent of what would have been provided through premium tax credits as well as cost-sharing reduction payments. (See Section 1331).

Multistate plans: A Compromise?
One major amendment passed on December 24th was section 1334 which amended section 1333 which dealt with multistate exchanges. Under section 1334, The Office of Personnel Management (OPM)–the agency that governs the federal employees health benefit program (FEHB)–will enter into contracts with insurance carriers to offer at least 2 multistate plans through each exchange in each state. (See 1334(a)(1)). These plans will cover the individual and small group market. At least one of those plans must be a non-profit insurance plan, and must be in accordance with the general standards set forth for health insurance plans.

Though there would be a minimum level of benefits and protections required for all plans, the States would be entitled to offer multistate plans with more substantial benefits. However the state will have to defray the costs of the additional benefits.

Unlike the House bill which eliminates the state-based individual market, the Senate bill envisions exchanges that would co-exist with both the individual and small-group markets, and operate under the same rules. Though the Senate bill allows for flexibility, the subsidies provided by the federal government could only apply to insurance plans sold through the exchange.

One of the most important and controversial sections of the amended Senate bill is section 1334(a)(4), which specifies that, in administering the multistate plan, OPM will have the same bargaining power as they currently have for plans offered in the FEHB. Thus, OPM would be able to negotiate for a specified medical loss ratio and profit margin, as well as specified premium rates and any other terms in the “interest of the enrollees.” The goal is for these plans to be offered nationwide. Whether the OPM-run exchange will succeed is obviously yet to be determined, but some like Professor Timothy Jost are worried that the Senate’s plan to allow some plans to operate outside of the exchange complicates the federal government’s job in risk adjustment.

‘Taking Aim’ at Insurance Co. Executive Compensation

Over the weekend, the Associated Press published a story that told us: “Senate Takes Aim at Insurance Company Executive Pay.”

We’ve taken aim at Insurance Company executive compensation before here on Health Reform Watch, and you can find our article linked here in this interesting article by Morton Mintz at the Nieman Foundation for Journalism at Harvard University’s Nieman Watchdog (or even at the bottom of the Huffington Post posting of the A.P. story, after WSJ).

What Mintz points out is worth noting: he says of Ronald A. Williams, CEO of Aetna:

If Williams would care to justify his compensation — $64,857.46 a day, every day of the year; $2,702.39 an hour every hour of every day — I’d gladly extend him the opportunity to do so.

“Justify his compensation.” The truth is, I have honestly tried to imagine what an Insurance Co. executive could possibly do during the course of any given day to warrant that kind of compensation. Williams’ official bio tells us that:

Under his leadership, Aetna has sought to make a positive impact on health care in America by serving as a catalyst for change, focusing the industry, public policy leaders, physicians and employers on issues aimed at increasing access and affordability.

As a job description, I’m not entirely sure what qualifies as seeking “positive impact” or “serving as a catalyst,” but I’m pretty sure the following, as described by Mr. Mintz, will not qualify as aiming at “increasing access and affordability.”

Now, as I just read in Huffington Post, “Aetna is planning to force up to 650,000 clients to drop their coverage next year as it seeks to raise additional revenue to meet profit expectations.” Maybe he [R.Williams] can justify that, too.

Mintz goes on to list the numbers, but then makes an additional point worth noting regarding the totals:

Others in similar positions are also raking it in. I’ve learned from Seton Hall University School of Law’s Health Reform Watch that Williams’s 2007 compensation of $23,045,834 was nearly $2.8 million less than Cigna CEO H. Edward Hanway’s $25,839,777. Also in 2007, Coventry’s Dale B. Wolf received $14,869,823, United Health group’s Stephen J. Hemsley $13,164,529, Humana’s Michael McCallister $10,312,557, WellPoint’s Angela Braly $9,094,271. and Health Net’s Jay M. Gellert $3,686,230. Total 2007 pay for seven health-insurance CEOs: $100,130,021.

In 2008, Williams led the pack, with $24,300,112, followed by Hanway, $12,236,740; Braly, $9,844,212; Wolf, $9,047,469; McCallister, $4,764,309; Gellert, $4,425,355, and Hemsley, $3,241,043. Total 2008 pay for the seven: $67,859,240.

Suppose the seven had been paid, say, only $1 million each. That compensation would have enabled significant premium reductions — in 2007, of roughly $93 million; in 2008, of about $61 million — that would have enabled purchase of coverage by many of the 45,000 Americans whose deaths each year are linked to lack of health insurance.

Seven execs, two years’ compensation, $154 million in excess of $1 million per year.

Having said that Articles Editor of the Yale Law Journal, Aaron Zelinski, makes some very interesting and worthwhile points over at the Huffington Post regarding some of the shortcomings in the proposed Senate measure to curb Insurance Co. exec compensation. The subject readily lends itself to political grandstanding, and the Senate bill looks only to change the corporate tax deduction of health insurance executive compensation. Zelinski’s article, “Political Grandstanding: Excessive Compensation and the Health Care Bill,”  is well worth reading and well worth quoting at length. He writes:

Currently, publicly held corporations can effectively deduct unlimited amounts of executive compensation from their federal corporate income tax returns. Although Section 162(m) of the Internal Revenue Code purports to limit such deductions to $1,000,000 annually per executive, Section 162(m)(4) contains a loophole large enough to sail a mega-yacht through: Deductions are still allowed for any “performance based” pay, no matter how high.

The Internal Revenue Service has interpreted 162(m)(4) to allow almost any compensation plan to pass muster, even when executive compensation is tied to comically low performance metrics. Thus, Section 162(m) has become largely a dead letter; unlimited amounts of executive compensation can be structured as performance-based and therefore deducted for federal income tax purposes.

The current Senate health care bill seeks to revive Section162(m) by removing the “performance based” exceptions. However, the bill applies only to corporate salaries paid to health insurance executives, not to compensation for employees in any other industry.

Under the bill, health insurance companies would only be able to deduct compensation below $500,000 (or, under a pending amendment by Senator Blanche Lincoln of Arkansas, $400,000). More importantly, health insurance companies would be denied the Section 162(m)(4) loophole for performance-based pay. These insurance companies could still pay their executives large amounts, but taxpayer money would no longer subsidize such salaries via corporate income tax deductions.

Zelinski further states:

“Unfortunately, the Senate Democrats’ decision to target only the compensation paid to insurance executives belies an unwillingness to address the broader issue at hand: the taxpayer’s subsidy of excessive executive compensation via tax deductions.”

He also points out that “the proposed changes will do nothing substantial to address health care costs, since executive compensation is a minuscule fraction of such costs.”

I think Mr. Zelinski has a point; the net taxpayer result of this provision will certainly not cure what ails us as a country healthcare wise –but, grandstanding aside, it may be a step in the right direction. Some things seem more a matter of principle than money– and if they could speak, I wonder what those 45,000 Americans whose deaths each year are linked to lack of health insurance would say when looking at Ronald Williams’ pay.

Genetic Discrimination and the Future of Health Insurance

Have health insurance companies outlived their useful life?

The Genetic Information Nondiscrimination Act (GINA) is taking effect.  The employment provisions are effective on November 21.  The health coverage provisions began to apply on May 21, 2009, with group coverage required to comply with on the start of the plan or policy year following that date.  As a Monday NYT story describes,  the purpose of GINA is to prohibit discrimination in employment and health coverage on the basis of genetic condition.  The Times cites examples of denial of coverage on genetic grounds;  some additional “horror stories” are told of people denied coverage due to a genetic marker for a medical condition.

Genetic discrimination is widely regarded as an “unfair” basis on which to deny health coverage.   As then-President George W. Bush explained in 2001:

Genetic discrimination is . . . unjustified — among other reasons, because it involves little more than medical speculation. A genetic predisposition toward cancer or heart disease does not mean the condition will develop. To deny employment or insurance to a healthy person based only on a predisposition violates our country’s belief in equal treatment and individual merit.

This assessment seems to match our general sense of fairness.  But why is a genetic predisposition different from other predispositions for insurance underwriting purposes?  Does hypertension mean that stroke or heart attack will develop?  Does the occurrence of a heart attack mean that another will occur?  Not necessarily, but both are statistically valid indicators of future health costs, as are some genetic predispositions.  One person’s medical speculation is another’s actuarial probability.  So why ban the use of genetic information, but not the use of preexisting illness?  Or, for that matter, age and gender?

GINA passed overwhelmingly, but Congress has otherwise been slow to limit health-based underwriting.  Part of the explanation for carving out genetic information is its novelty, and the fact that one’s DNA is never one’s “fault.”  But manifestation of genetic conditions is also not one’s fault, and GINA has nothing to say about underwriting based on symptomatic genetic disease.  Maybe a more powerful force behind GINA’s passage was researchers’ fear that genetic discrimination would drive test subjects away from genetic research.  Dr. Francis Collins, then-Director of NIH’s National Human Research Genome Institute, testified to this concern:

[T]he science of genomic medicine is rocketing forward. But fear of genetic discrimination threatens to slow both the advance of such groundbreaking biomedical research and the integration of the fruits of that research into our nation’s health care.

So, is GINA’s incursion into health insurers’ common freedom to charge more for those likely to be sick an anomaly?  It does seem to run afoul of what Donald Light, in 1992, wryly called the “inverse coverage rule”:

the inverse coverage law: the more people need coverage, the less coverage they are likely to get, or the more they are likely to pay for what they get.

Increasingly, Americans seem to have had it with business models premised on denying care to those most in need.   A recent WSJ/NBC poll found that the most popular currently proposed reform provision “by a mile” was that forbidding exclusions for pre-existing medical conditions.

Here’s a modest proposal.  It is time to end insurers’ use of risk selection.  Insurers face steady erosion in their ability to risk-select as that practice increasingly rubs against our basic moral principles.  In addition, health coverage is less and less like “insurance,” as routine care is covered, and as it is easier and easier for insurers and consumers alike to discern who is likely to need to draw down on the “insurance” pool.   Insurers already do a great deal of their business, without bearing risk or using risk selection to generate income, administering self-funded plans for large employers (as ASOs or TPAs).  It is time for government to bear the risk (which it increasingly does anyway), and for insurers to be set to tasks that add social value.  They add value in their ability to form, maintain, and administer provider networks.  Why should their profit or loss depend on their ability to identify and exclude the needy?   Clearly health reform in 2009 won’t get us this far, but let’s start admitting it: exclusion from coverage and care on the basis of need for health care should not be a business model supported in America.

Another Call for Women’s Action on Health Care Reform

Just a little over a month ago, Michelle Obama called upon women to take action to make sure their representatives would vote for health care reform.  This past week, Michelle made another request for women to respond to the national health reform debate during a breast cancer event at the White House.  As the debate seemingly winds towards a conclusion of reform, still, women are unsure that health care reform will actually accomplish that which really needs to be done to help women access better, more comprehensive health care.  While mom’s of America are saying the current health care reform proposals do not include their needs, the National Women’s Law Center exclaims “I am not a preexisting condition.”

The National Women’s Law Center released a second report this month on the affect of gender bias and discrimination in health insurance on women’s lives.  Their report includes an analysis of the discrepancies in health care access between men and women as well as an updated state-by-state comparative chart of states that still allow gender-rating and pre-existing condition discrimination in their health care plans.  Another interesting aspect of the report is the information on states that have, as of late,  reformed their health care systems to be more inclusive of women’s access to health care. One might wonder if the reformation was spurred or enabled in part as a result of the initial report’s publicity.

If you’re wondering about how your state fares in relation to women’s health care issues, be sure to check the most recent NWLC Report as well as Kaiser’s www.statehealthfacts.org.  Also, the Commonwealth Fund has just released a new report comparing the various Congressional health reform bills of 2009.  The report shows that the proposals which seem to pay most (though not enough) attention to women’s health care needs are that of the Senate Health, Labor, and Pensions Committee and the House of Representatives Tri-Committee, which both hope to establish an Office of Women’s Health.  All of these online resources are a great way to get more information and find out where holes in the health reform bills still need to be filled.

To be able to voice direct concerns, the organization Women of Color United for Health Care Reform is hosting a call-in day on Tuesday, October 27^th that will directly connect women to their respective Senators and Representatives.  The calls will be a chance for women to tell their Congress members what they want from health care reform and why allowance of pre-existing conditions denials and gender-rating are not acceptable.  Such calls worked well earlier this month in an event organized by Organizing for America, which enabled callers to tell Congress that they wanted health care reform– with many saying they that really wanted a public option.

Action needs to be taken– and the Obama Administration is asking for exactly that from women.  Though women are most often the health care decision makers in the family unit, men are also needed to voice their concerns:  why their mothers, daughters, wives, and sisters deserve a health care plan that serves their needs.  Call in on Tuesday, the 27^th and let Congress know what’s on your mind.

Autism, Autistic-Like, and Health Insurance Reform

In his post Implementing Reform: Children with Special Health Care Needs, Professor John Jacobi notes that providing “health insurance” to children with special health care needs (”CSHCN”) does not ensure that their needs will be met.  Many private health insurance plans do not cover services such as occupational, physical, or speech therapy for CSHCN.  Private plans frequently limit coverage for such therapies to otherwise healthy children who need therapy to facilitate their recovery from an illness or injury.

Through their power to regulate insurance, states can require private plans to extend coverage for needed therapies to CSHCN.  For example, in legislation passed earlier this year, New Jersey became one of an estimated 15 states to specifically require insurers to provide treatment for individuals with autism.  Children with autism have benefited from a wave of recent legislation — 8 states enacted laws related to autism and insurance coverage in 2009 alone.  Children with other special needs have been largely left behind.  Many go without services; others may be shoehorned into an inappropriate autism diagnosis.  A recent documentary, Autistic-Like, tells the story of parents pressured to accept an autism diagnosis in order to access state-funded services for their son.  While New Jersey’s autism mandate is admirably broad, requiring private insurers to cover occupational, physical, and speech therapy for individuals with “autism or another developmental disability,” other states’ mandates are strictly limited to children on the autism spectrum.

Insurance mandates are attractive to legislators because they are off budget.  They are not, however, without cost.  The Council for Affordable Health Insurance, an insurance industry association, estimates that “an autism mandate increases the cost of health insurance by about 1 percent.”  Mandates like New Jersey’s, which extends beyond autism, could lead to even greater cost increases.  Piecemeal reform that privileges some special needs over others has costs of its own, however, not the least of which are borne by children living with labels that do not fit.

More Institutional Health Economics, Please!

Today’s Nobel Prize award for institutional economists Oliver Williamson and Elinor Ostrom is a welcome step toward methodological pluralism in the profession. Both have looked outside markets to understand the organization of economic life. Ostrom is not even an economist–she is a political scientist by profession. As Bob Shiller observes:

This award is part of the merging of the social sciences. Economics has been too isolated and too stuck on the view that markets are efficient and self-regulating. It has derailed our thinking.

According to the NYT, “The Nobel judges, in their description of Mr. Williamson’s and Ms. Ostrom’s achievement, said that ‘economic science’ should extend beyond market theory and into actual behavior, and the two award winners, in their empirical work, had done this.”

There is a great need for more of this type of work in health economics. Joe White’s Markets and Medical Care: The United States, 1993–2005 is one good exemplar of needed work here; he eschews “discussions of how economic theory can be applied to medical care production and delivery” and instead “focuses on ‘the market’ in its actual, not theoretical, form, as it existed in the United States.” White describes case after case where consolidation, not medical need, drove industry structure. He leaves the reader with a clear and convincing image of a space where varying levels of provider and insurer power, not productivity, is the key to understanding changes in the profitability of services. I’ve seen few better brief explanations of rising medical costs than the following: Read more

Domestic Violence Victims Denied Coverage by Insurance Companies; Meanwhile, Verizon Takes a Stand of its Own

The thought of it might have kept Michelle Obama awake at night, but it’s a real issue that happens more often than is recognized.  Insurance companies can deny coverage to men and women who have been victims of domestic violence. They often do.  Through detailing the story of a 52-year-old attorney who was denied health insurance due to a past incidence of domestic violence, a recent article by Kaiser Health News helps to illustrate the prevalence of such practices among insurance providers.

Last Tuesday, House Speaker Nancy Pelosi addressed the treatment of domestic violence as a pre-existing condition before Congress.  She said that Democrats were no longer going to accept this practice and promised that such would be banned in forthcoming health care reform legislation. Another Democrat engaged in the fight is Senator Patty Murray of Washington, who is a member of the Health, Education, Labor and Pensions (HELP) Committee.  In 2006, Murray attempted the same type of reform by introducing an amendment to ban domestic violence as a pre-existing condition; the amendment did not pass. One of the “no” votes came from Senator Michael Enzi of Wyoming.  He’s still on the HELP Committee and sits there now as its  highest ranking Republican.

Some states have already taken the matter into their own hands, but 8 states and the District of Columbia still do not disallow insurance companies to reject coverage to men and women who have been victimized by domestic violence.  Read more

Why is Health Insurance So Difficult?

A recent collaboration between Kaiser Health News and the LA Times has produced an interesting article on “Insurance Speak.” The article, “Confusing Insurance Jargon Prompts Calls for Reform,” is well worth a quick read. It details the plight of one man attempting to negotiate the terrain between medical provider and insurer while attempting to have his injured knee mended. Perhaps reminiscent of Cool Hand Luke, “a failure to communicate” seems to have been responsible for much of the delay. The man with the busted knee speaks of “an unbelievable number of phone calls” and aggravation that lasted months. The story is not an unfamiliar one; and the actual meaning of insurance terms can be rather difficult to decipher–with or without a painful injury. But the crux of the article goes to a much larger point than that of one more illustrative anecdote: the process of filing and being paid for an insurance claim can be difficult. And the question that begs is: Why?

The Kaiser/LA Times article states

Insurance experts say even they often have trouble figuring out how to select a health plan, use the benefits, choose a doctor, calculate out-of-pocket costs, resolve disputes and find ways to save money. “I have a hard time with this stuff,” said Janet Ohene-Frempong, a Philadelphia consultant who works with health plans on their consumer communications. “It’s daunting at best.”

Wendell Potter, a former health insurance communications executive, told a Senate committee in June, “There are many ways insurers keep their customers in the dark and purposely mislead them.” Insurers, he said, “make it nearly impossible to understand — or even to obtain — information [consumers] need.”

Making matters worse, large numbers of consumers lack sophisticated reading and number skills. Add to that the growing population of immigrants with limited English language ability, and you have a “perfect storm” for healthcare, said Dr. Ruth Parker, a medical professor at Emory University.

This Insurance Speak translator chart in the Kaiser/La Times piece is worth a quick look.

And again, the question is why? Why is it so difficult? The obvious answer, it would seem, is money: to purposely obfuscate: to cloud the process in a shroud of confusion designed to make the process more difficult–to make people give up on claims surrounded by language they don’t understand. And to test this hypothesis, I wanted to gather data and provide links to what percentage of claims are “given up on” by consumers after an initial denial. What is the rate of attrition for claims? Hard as it may be to believe–those numbers do not seem to be available–as the numbers on denials are, for the most part, not available. This article from the Huffington Post, “In Health Care, Number of Claims Denied Remains a Mystery,” reports

“This is one of the dark corners of the black box that is private health insurance,” said Karen Pollitz, a professor at the Georgetown University Health Policy Institute.

Data on how often insurance claims are denied — and for what reasons — is collected and analyzed by the insurance companies themselves. But except in California, the companies aren’t required to provide those records to any state or federal agency. “The number is knowable, but not known by regulators or policy makers or patients,” Pollitz said.

Estimates range from 10 to 15% nationwide for denials. But in California, where denial numbers must be reported, a recent tabulation from 2002 to 2009 calculated the denial rate to be 22%.  That number, however, is said to include doctors’ resubmissions of unpaid claims. California Attorney Jerry Brown is said to have launched an investigation into the denial rates of many of the state’s largest insurers.

The common estimate for consumers challenging (or even questioning) denials is 1% . Of those who do question, appeal to their insurers and are denied, then appeal to state boards, roughly 37% of those external appeals require the insurer to pay according to AHIP.

This recent data from New Mexico via McClatchey (Albuquerque Journal ) affirms the relatively rare occurrence of internal appeals to insurance denials–and even rarer instances of external appeals to state boards. It also makes note of a rather large success rate for those who do appeal. But importantly, because the data for total denials and the reasons proffered for such were not available to New Mexico officials–we are still ultimately left to work with either the estimates of 10 to 15 %  or the California number (including unpaid Doctor resubmissions) of 22% when trying to get a handle on denials and “rates of attrition.” Still, the article proves instructive:

A total of 3,467 internal appeals were reported by New Mexico insurers in 2008, with more than 2,400 involving administrative issues, such as claim reimbursement or payment. The rest pertained to medical necessity or coverage, the state report showed.

There are no state numbers to show how many New Mexicans with private health insurance were denied coverage or benefits to begin with.

and

Consider the data in a first-ever report compiled by state regulators:

It shows consumers filed more than 1,000 internal appeals in 2008 in New Mexico after health insurance companies concluded that the treatment wasn’t covered by their policies or wasn’t medically necessary.

Compared with the millions of claims submitted to the four major private insurers in New Mexico Presbyterian, Lovelace, Blue Cross and Blue Shield, and United HealthCare that’s a minuscule percentage.

Also, in roughly half of those appeals, the companies reversed the denials after an internal review.

The state Insurance Division where consumers can appeal an insurance company’s final denial held just seven hearings involving appeals of disputed medical care last year. Five of those were decided in the consumers’ favor; two in favor of the health plan.

The division doesn’t keep information on total denials, but Insurance Superintendent Morris “Mo” Chavez said he has seen no systemic problems in New Mexico.

Despite New Mexico Insurance Superintendent Chavez’s observation (or lack thereof) and the inexplicable lack of actual numbers for total denials, lets do some quick and simple math regarding the numbers we do have. Mr. Chavez tells us that there were “millions” of claims in 2008. Let’s use the most conservative configuration of that term–2. And let’s use the more conservative estimate of claim denial–10%.

10% of 2,000,000 claims = 200,000 claims denied in New Mexico in 2008.

Only 3,467 internal appeals were reported in 2008. That means that, conservatively estimated, only 1.7% of the claims denied filed an internal appeal.

That’s a small number by anyone’s standard. Less than 2% of those denied coverage appealed the denial internally to their insurance company. And the number who go on to appeal externally in 2008 was 7. Not 7%, but 7 actual claims.

Now what was the question again? Oh yes, the question was: Why is it so difficult to understand “Insurance Speak?” So difficult to navigate a claim? Resolve a dispute?

Perhaps the answer lies within the numbers– numbers we can’t see but are left to guess at. Numbers like “Less than 2% appeal internally; almost no one appeals externally.”

According to Kaiser/LA Times:

“The Senate health committee bill would require insurers to meet new standards for honesty and transparency in marketing materials, forms and benefits information provided to plan members.”

According to the Huffington Post:

“The main health-care reform bill being considered in the House does seek to address the matter. It would require health insurance companies to report data on claims policies, practices and denials to a central commissioner.”

Maternity Care and Health Care Reform

In the last few weeks, health reform has been receiving more public attention than it had before, much of which can be attributed to President Obama’s efforts to unify Congress in passing a bill.  For consumers, the politics of reform have helped to blur the defining components of each reform bill, leaving them unsure of what their health care insurance will or will not cover (let alone how they will pay for it) if reform is passed.  This is a real frightening thought considering that consumers will be the ones directly affected by whatever Congress decides.  In most American family units, the women make the majority of health care decisions for the rest of the family; women also have a lot at stake when it comes to their own health care access.  For these reasons, it is essential for women to understand and know what their legislators are planning for their health.

One of the areas of women’s health care that certainly needs to be reformed is maternity care.  Currently, women in the individual market can be denied health coverage if they seek coverage after becoming pregnant.  And that’s not the only  pregnancy related preexisting condition out there - if you’ve had a C-section before, you could be charged far greater premiums or even denied health coverage altogether.  It may seem that women who are uninsured are the only ones that would have to deal with such scenarios; however, women with insurance from the individual market or employer-based insurance face similar challenges in accessing care.  Read this story about a woman who had coverage through a private insurer and still had to pay $22,000 for having a baby.

Among the different types of private insurance that women have (or can have), there are major discrepancies with regard to maternal health coverage.  You are most likely best-off if you have employer-based insurance; best being a relative term.  Protection from discrimination in employer-based coverage exists through the Pregnancy Discrimination Act of 1978, which made any pregnancy-based discrimination unlawful.  However, the individual market is another story altogether.  The Pregnancy Discrimination Act and a number of other consumer safeguard regulations do not apply to the individual market.  States allow for insurance companies in the individual market to calculate premiums based on categories like gender, age, and pregnancy status.

The issue of access to maternity care for uninsured women, however,  is surely the case of the worst-off.  The obvious translation here is poor prenatal care, which is a vital aspect of not only the mother’s health but the child’s as well.  Considering the fact that our country has one of the highest infant mortality rates among developed nations, the need for reform to address maternity care for the uninsured is a serious one.  While Medicaid is able to assist in covering some of these uninsured women, a large overhaul of the maternity health care services of public programs like Medicaid should be requisite within national health care reform.

Congressional health reform proposals have not yet fully revealed what they will do to ameliorate the maternity health challenges that women face in our country.  However, we do know that certain systems have historically served women’s maternity health care needs better than others.  At this point in the national health care reform stage, women should be particularly concerned with the type of reform that Congress will pass.

Any health reform or insurance plan legislation which fails to provide access to care to ensure healthy pregnancies should be seen as strongly suspect-as this fundamental disregard for the basic needs of women (and children), dire in itself, would surely be a harbinger for a further disregard of women’s rights going forward.

Risk, Reward, and Rationality in the Health Care Debate

I agree with Andrew Koppelman’s analysis of resistance to health insurance reform. But Red America’s implacable opposition to the plans now debated in Congress has deeper ideological roots in a love of risk. As Thomas Edsall has observed, “A problem for Democrats … is the long tradition in the US of … venerating risk … and of a deep commitment to untrammeled individualism.”

Even more frustrating for Democrats, the left’s hard-won victories to reduce risk have left many people assuming that they can’t gain much from reform. Consider four “backstops” that leave many people unworried about losing insurance:

1) Bankruptcy: Republicans worked hard to water down bankruptcy protections during the Bush years. Nevertheless, these laws still protect many consumers. As health law expert Timothy S. Jost writes, “Ultimately, the federal bankruptcy code must also be seen as our federal catastrophic health care program.”

2) Medicare: Thanks to LBJ and an overwhelming Democratic majority in the 89th Congress, the elderly already have access to federal health insurance, and are wary of any coverage expansion that could drain resources from the program. Here the GOP’s anti-spending and family values wings have formed a pincer movement that has whiplashed Democrats. First, fiscal conservatives used CBO’s dubious cost estimates to demand “real savings” to pay for reform. Dreaming of bipartisanship, Obama’s technocrats seized on the Dartmouth studies to argue that up to a third of all medical spending, including Medicare, is wasted, and that reform of the delivery system could rationalize that spending. At that point the GOP’s “family values” wing associated reform with death panels, rationing, and “pulling the plug on grandma.”

3) EMTALA: Can a relatively well off person “rationally choose” to be uninsured? As Jost notes, as of 2004, “many of the uninsured are in fact reasonably well-off—8.4% are from households that earn $75,000 or more per year.” To the extent this group is calculating the costs and benefits, it’s likely counting on the Emergency Medical Treatment and Active Labor Act of 1986 (EMTALA) to force hospitals to “screen and stabilize” those who come to their emergency rooms. Of course, once you’re stabilized, the duty to care is over, but few people think very clearly about what it is like to slowly (and stably) die of cancer while the only effective treatments are too expensive to pay for.

4) Medicaid: Finally, we come to another element of the social safety net many people think they can fall back on: Medicaid. Benefits aficionados know that only the categorically eligible can rely on it. Some reform proposals would replace the “numerous statutory and regulatory pathways for establishing eligibility” with a simple income test. But for now, those among the populace who just assume that Medicaid covers all the poor may believe they would have little to gain from reform even if they did face crippling medical bills. (They’re probably also unaware of Medicaid’s pitifully low reimbursement rates–but more on that later.)

None of these so-called backstops will help everyone, all the time. But one can imagine a risk-loving, red-blooded American wanting to roll the dice on them rather than endure the type of bureaucratic assessments and applications that will gradually poke and prod the uninsured making between 133% and 400% of the poverty level toward buying their own coverage on an exchange. Indeed, under the Senate HELP Committee’s proposal, a family making 400% of the poverty level could be responsible for paying up to 12.5% of their income in premiums, for insurance that leaves them liable for paying $11,600 in out of pocket expenses. That’s a worst case scenario of paying 26% of income for health care–better than bankruptcy, but potentially tantamount to the same thing in a country where the bottom half of the population has virtually no net worth. (And that cost-sharing estimate assumes the medical component of the CPI does not increase.)

The really appealing goal of reform–a strong public option that would be part of an exchange open to all–appears to be more of a bargaining chip than a firm commitment for the Obama Administration. Strategically, if your goal is to get “something” through Congress, this makes a great deal of sense: Republicans and some waivering Democrats think a public option smacks of socialism. But as a political matter, it is draining support for reform. People can understand a public option, and building support for it might have been as decisive to Democrats’ fortunes as FDR’s reformulation of the American social contract in the 1930s. Sadly, Obama’s technocrats appear more attracted to wonk-talk like “bending the cost curve” than the forceful moral case for collective responsibility for health. Only the President can correct that course. It takes an ideology to beat an ideology.

X-Posted: Balkinization.

The Lewin Group: Cited Often, Owned by UnitedHealth

In a recent Chicago Tribune article, “Health-care reform: Medical insurers poised to reap a healthy ‘bonanza,’”   the following paragraph concerning The Lewin Group caught my eye

One of the Democratic proposals that most concerned insurers was creation of a “public option” government-sponsored insurance plan. The industry launched a campaign on Capitol Hill, distributing arguments opposing the government option that often were grounded in a study published by The Lewin Group, a health policy consulting firm owned by UnitedHealth.

In an effort to stay abreast, I read a fair amount of opposition commentary–and “The Lewin Group” comes off the lips of Republicans and others opposed to the Public Option often enough. Although The Lewin Group connection with UnitedHealth has been made public by a number of sources, I’m not sure that it’s common knowledge. And perhaps, as always, when dealing with information–especially information doing duty as a foundation upon which Medical Insurers stand “poised to reap a healthy bonanza”–considering the source– and considering that the source of that information is owned by one of the nation’s largest insurers– may be worth a moment or two.

This description of The Lewin Group comes from The Lewin Group in their Testimony before the before the Energy and Commerce Committee, U.S. House of Representatives, dated June 25, 2009, and updated July 9, 2009

The Impact of the House Health Reform Legislation on Coverage and Provider Incomes

About The Lewin Group

The Lewin Group is a health care and human services policy research and management consulting firm. We have over 25 years of experience in estimating the impact of major health reform proposals. The Lewin Group is committed to providing independent, objective and nonpartisan analyses of policy options. In keeping with our tradition of objectivity, The Lewin Group is not an advocate for or against any legislation. The Lewin Group is part of Ingenix, Inc.,which is a wholly owned subsidiary of the UnitedHealth Group. To assure the independence of its work, The Lewin Group has editorial control over all of its work products. (emphasis added)

The Lewin Group was purchased by Ingenix (and thus UnitedHealth) in 2007, somewhat presciently in time for the Health Care debate. I do not doubt that The Lewin Group has a stated and formal editorial control over its work products; I do doubt that it looks to bite the hand that feeds it. And I would suggest that as an arm of UnitedHealth, despite Mr. Kellar’s claims above, self decapitation– at least in the corporate world– is less a “mystery” than it is an illusion.

A recent Washington Post article also noted The Lewin Group’s relationship to its immediate parent

Ingenix, a UnitedHealth subsidiary that was accused by the New York attorney general and the American Medical Association, a physician’s group, of helping insurers shift medical expenses to consumers by distributing skewed data. Ingenix supplied its parent company and other insurers with data that allegedly understated the “usual and customary” doctor fees that insurers use to determine how much they will reimburse consumers for out-of-network care.

In January, UnitedHealth agreed to a $50 million settlement with the New York attorney general and a $350 million settlement with the AMA, covering conduct going back as far as 1994.

Ingenix chief executive Andrew Slavitt said the Ingenix data was never biased, but Ingenix nonetheless agreed to exit that particular line of business. “The data didn’t have the appearance of independence that’s necessary for it to be useful,” Slavitt said.

This may give us some idea of where Mr. Slavitt’s bar for data’s  “appearance of independence that’s necessary for it to be useful” is set. But there is of course a possible difference to be had between “useful” and “valid” and “valid as used.”  Distinctions the video below, as well as the Chicago Trib article, may help to clarify.

It should be noted, however, that according to WaPo,

Lewin Group Vice President John Sheils said his firm had nothing to do with the allegedly flawed Ingenix reimbursement data. Lewin has gone through “a terribly difficult adjustment” since it was bought by UnitedHealth in 2007, because the corporate ownership “does create the appearance of a conflict of interest.”

“It hasn’t affected . . . the work we do, and I think people who know me know that I am not a good liar,” Sheils said.

Mr. Sheils also noted to WaPo that those who pay for studies also have the option of “burying” those studies:

But not all of the firm’s reports see the light of day. For example, a study for the Blue Cross Blue Shield Association was never released, Sheils said.

“Let’s just say, sometimes studies come out that don’t show exactly what the client wants to see. And in those instances, they have [the] option to bury the study — to not release it, rather,” Sheils said.

I wonder if UnitedHealth gets the in-house rate.

The Wonk Room v. AHIP on Insurer Profits

Very interesting article by Igor Volsky over at The Wonk Room on Health Insurer profits and the recent campaign by AHIP to “contextualize” those numbers. I highly recommend you take a look, as Volsky puts Insurer profit, medical loss ratios and CEO compensation in a readily digestible (even if sickening) format while taking AHIP’s “Fact Check” to task.

I do, however, have a contention: for CEO compensation, the source relied upon–Modern Health Care– failed to include “Options Granted” during the course of the year. Not merely a matter of accounting,  for someone like Ronald A. Williams of Aetna, that number added $13,537,365 to his Compensation of “10.8 million.” Add in the $101,487 for “personal use of a corporate aircraft and vehicle, as well as financial planning and 401(k) company matches” and we then have Total Compensation in 2008 for Mr. Williams of $24,300,112 — or, as we’ve posted before, $467,309.85 Per Week.

You can read The Wonk Room article here:

Health Insurance Industry Fudges Data To Downplay Its Astronomical Profits

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