Linnaean Regulation in Health Insurance and Information Technology, Part II

[Ed. note: This is the second part (perhaps evident from the title) of a two part post. Though each could well stand on its own, the first part can be found here.]

Insurance Reporting and Classification

Reporting requirements may not seem like a notable accomplishment. Nevertheless, the trend toward monitoring the products and services offered by insurance companies is an important step toward accountability. HHS needs to impose some order, some translatable logic, on fields that have threatened to become enormously parasitic and unproductive by or masking the true nature of their commitments.

Consider the practical illegibility of the average insurance plan. A vanishingly small number of subscribers actually read such plans. A plan may have complex cost-sharing requirements that vary among in-network and out-of-network primary care doctors, specialists, surgeons, hospitals, and procedures. While a “great risk shift” makes consumers all the more responsible for their choices in health care, it’s hard to imagine anyone accurately mapping the true fiscal consequences of given disease episodes in an aggressively complex plan.

By setting “a minimum level of health benefits, called the essential health benefits, that must be offered by certain health plans.” As Jessica Mantel explains, the term “‘essential health benefits package’ means coverage that not only provides for the essential health benefits defined by the secretary, but also limits cost-sharing for coverage of the essential health benefits in accordance with the parameters specified in the statute.” The Cancer Action Network has applauded the ACA for promoting “more standardization in the scope and value of private health insurance coverage available.”

Similarly, setting a “medical loss ratio” involves a careful delineation of insurer payments and functions that actually contribute to care. As Tim Jost explained in Health Affairs:

Medical loss ratios have long been of interest primarily to investors. An insurer that could achieve a low MLR by holding down expenditures on health care for its enrollees was a good investment. . . . On November 22, 2010, the Department of Health and Human Services released its interim final rule implementing the requirements of the new section 2718 of the Public Health Services Act (added by section 10101 of the Affordable Care Act), entitled, “Bringing Down the Cost of Health Care Coverage.” This provision is usually referred to as the “medical loss ratio” (or MLR) requirement . . .

Section 2718 requires health insurers (including grandfathered but not self-insured plans) to report to HHS each year, the percentage of their premium revenue that the insurer spends on 1) clinical services for enrollees, 2) “activities that improve health care quality,” and 3) all other non-claims costs, excluding federal and state taxes and licensing or regulatory fees. . . .

Jost describes in details how the classification works, and how it is designed to encourage more responsible insurer behavior.

Setting a Standard for Electronic Medical Records

Electronic health records systems will also need to develop shared data management standards. EMR vendors long argued that they needed flexibility to innovate in order to best reflect doctors’ practices and improve the capture of medical information. However, there is a tension between untrammeled innovation by vendors at any given time and later, predictable needs of patients, doctors, insurers, and hospitals to compare their records and to transport information from one filing system to another.

One system may be able to understand “C,” “cgh,” or “koff” as “cough,” and may well code it in any way it chooses. But to integrate and to port data, all systems need to be able to translate a symptom into a commonly recognized code. Health care providers can only avoid getting “locked into” a system if they can transport their records from one vendor to another. Patients want their providers to seamlessly integrate records.

HHS rulemaking has lain a groundwork for this type of common language of medical recordkeeping. As Sharona Hoffman and Andy Podgurski explain,

To address this problem, it is necessary for all vendors to support what we will call a “common exchange representation” (“CER”) for EHRs. A CER is an artificial language for representing the information in EHRs, which has well defined syntax and semantics and is capable of unambiguously representing the information in any EHR from a typical EHR system. EHRs using the CER should be readily transmittable between EHR systems of different vendors. The CER should make it easy for vendors of EHR systems to implement a mechanism for translating accurately and efficiently between the CER and the system’s internal EHR format.

There are also important opportunities for standardization in the security field:

As is true for a common exchange format, standardized security policies and mechanisms are unlikely to be adopted by vendors and providers without a regulatory mandate. In order to facilitate compliance and provide vendors with clear guidance, the regulatory mandate might incorporate, by explicit reference, some established and emerging security standards, such as the Internet Engineering Task Force’s Transport Layer Security (“TLS”) standard or its Public-Key Infrastructure (X.509) standard.

The discussion can quickly become technical, and it is difficult to explore all the ins and outs of the process. But the underlying purpose is clear: to develop some standard forms of interacting in a realm where “spontaneous order” is unlikely to arise and “network power” could lead to lock-in.

Of course, there are important differences between the EHR and health insurance landscapes. Symptoms refer to conditions that are, by and large, objective. (One can even imagine ubiquitous video cameras and sensors creating something like a complete patient record (or medical life log) for patients who consent to that type of monitoring.) Insurance contracts, by contrast, do not have the same “ontological firmness.” They must contemplate vague and open-ended spells of illness.

Nevertheless, a process similar to common exchange representation is now going on in the consumer affairs office of HHS. As the Office of Consumer Information and Insurance Oversight lays ground rules for ACA implementation, it must decide on some basic questions: what counts as insurance? What is a deductible? The ultimate goal is to require insurers to convey with far more precision what services they truly cover. The health insurance and health IT landscapes will only become governable when practices are nameable, classifiable, and comparable.

X-Posted: Concurring Opinions.

Linnaean Regulation in Health Insurance and Information Technology, Part I

I was recently listening to Health Affairs’s “Newsmaker Breakfast with Karen Pollitz.” She gave a fascinating presentation on the challenges she faces as she develops HealthCare.Gov as a portal for information about health insurance. As I noted a few years ago, health insurers can easily mislead consumers about the nature of their coverage, and disclosure charts can be very helpful.

But even disclosure charts run up against the slipperiness of language. Pollitz noted that for some plans, a “deductible” was not really a deductible; you could easily spend much more out-of-pocket on health care than the stated “deductible level” before coverage kicked in.

How can an individual make an informed choice when words lose their meaning in a tangle of qualifications and conditions? At what point does a deductible cease being a deductible? While this might seem like a relatively technical question of insurance regulation, it is reflects a more general information-gathering problem that will confront regulators in coming years. Scientists could only predict and control aspects of the natural world when they could be named and classified. Any successful regime of healthcare reform will depend, at a bare minimum, on a flexible yet standardized classification system that can map what health insurers are doing. Like Linnaeus patiently organizing a welter of living forms, regulators will need to taxonomize pullulating permutations of insurer practices.

The Rise of Health Care’s Middlemen

The United States leads the world in payments to private insurance providers. The industry has extraordinary power over access to health care. In 2010, long-standing dissatisfaction with the sector culminated in the Patient Protection and Affordable Care Act (ACA). Congress rejected changes like a public option in healthcare, in favor of a complex and reticulated statutory scheme to better regulate insurers. There have not been dramatic changes in the way that health insurance companies are run, and their stock prices tended to rise as reform became more certain.

The ACA has set in motion dozens of regulatory proceedings. The government also allocated $20 billion toward equipping all medical offices with electronic health records in the 2009 stimulus bill, the American Reinvestment and Recovery Act. Health regulators must now try to catch up with technologically advanced intermediaries in insurance and IT fields.

Immediately after the ACA passed, naysayers on both left and right complained that divisions like OCCIO were unprepared for their new regulatory roles. Perhaps the most compelling case for repealing the ACA is a belief that regulatory agencies will inevitably be captured, or overwhelmed with information from far far better funded attorneys and lobbyists representing insurance and IT firms.*

Nevertheless, the ACA has catalyzed one very important process: the development of an infrastructure of monitoring and reporting that will be necessary for any future informed regulation. It’s shocking to consider how inadequate past reviews were here. As of 1997, the “US Department of Labor had resources to review each employer-sponsored group health plan under its jurisdiction once every 300 years.” The Bush years did not significantly address that shortage. Moreover, “state insurance department staff levels declined 11% in 2007 while premium volume increased 12%.” The personnel simply haven’t been around.

Starting essentially from scratch, Pollitz and her fellow regulators are engaging in a painstaking rebuilding of the foundations necessary for substantial regulation. Having long neglected even to closely monitor the sharp practices of health insurers, federal regulators are now beginning new programs of surveillance.**

*The latter point does appear to be valid with respect to the public record now being compiled in dozens of rulemaking processes. In rule after rule, industry comments overwhelmingly dominate public interest or academic contributions. It’s sad to think that groups like Campaign for America’s Future, or labor unions, having spent so much time getting the ACA passed, are now ceding much of the regulatory field to insurers. On the other hand, given the Administration’s recent appointments, and recent McSurance waivers, who knows whether good comments would have an impact.

**For more on the importance of ongoing surveillance in complex business environments, see Larry Cata Backer on SarBox, and the last part of my earlier post on high finance.

Part II

X-Posted: Concurring Opinions.

Mini-Med and the Hidden Backstop

We started the Health Reform Watch Blog at Seton Hall two years ago in part because I worried that, whatever legislation emerged from the 111th Congress, it could be severely compromised during the implementation process. As HHS continues the Herculean task of promulgating rules based on the text of the ACA, and adjudicating disputes, it is bound to make some mistakes. I am glad to say that one of our bloggers commented on one of those mistakes a couple months back, well before it got the spotlight of Congressional hearings that it deserves.

Mini-med health plans are characterized by low premiums and very low payment caps. At McDonald’s, low-level employees can get $2,000 a year of coverage for $680.68 of premiums; as Tim Noah reports, “$24 per week for a policy with a $5,000 ceiling and $32 per week for a policy with a $10,000 ceiling.” Mini-meds faced several regulatory hurdles this year, as Noah explains:

Annual limits on payouts are already being phased out under the health care law; as of Sept. 23, they aren’t allowed to fall below $750,000, which is a whole lot more than McDonald’s’ $2,000, $5,000, or $10,000. But HHS signaled it was willing to grant waivers to mini-meds. Then the mini-meds fell afoul of another pending regulation concerning the “medical-loss ratio”; i.e., how much revenue insurers spend on health benefits as opposed to overhead or dividends to stockholders.

The rule requires health insurers to spend between 80 percent and 85 percent of their revenue on medical care. No can do, McDonald’s told HHS in an e-mail obtained by the Wall Street Journal’s Janet Adamy. The high turnover rate among McDonald’s’ employees, the company said, occasions lots and lots of paperwork, so we can’t keep our administrative costs down relative to our payouts, which—in case you hadn’t noticed—are pretty darned low to begin with. On these dubious grounds, HHS granted the mini-meds an exemption through 2011 that could easily stretch to 2014.

Reporting on yesterday’s Senate Hearing on the mini-med plans, Noah describes one employee’s experience with this exciting, flexible market innovation:

Eugene Melville, a witness who works part-time for a big-box retailer . . . said he purchased through his employer a mini-med policy from Aetna with a $20,000 annual limit. In July, Melville said, he went to the doctor “for what I thought was an injury from a car accident.” The doctor noticed a lump in Melville’s neck, ordered up a biopsy, and diagnosed Melville with oral cancer. Melville figured he had close to $20,000 left to spend on the recommended treatment, but he quickly learned that within that $20,000 ceiling there were smaller ceilings–$2000 on hospital lab tests, surgical supplies, and drugs; $2000 for outpatient treatments such as chemotherapy—that effectively prevented him from using his mini-med insurance at all. Eventually he enrolled in a program for the medically indigent that did not offer the surgical options recommended by his doctor. The kicker, Melville said, was that Aetna sent him a letter suggesting that his oral cancer was a preexisting condition.

As I noted in 2008, supercheap plans have many social costs. MiniMed providers call their offerings “health insurance,” but they skip out when the really serious bills start. Then it’s up to the state to force hospitals to provide care via EMTALA, or providers to seek some way of providing uncompensated care. Medicaid, charity care, other subsidies—all form the hidden backstop that make mini-med function as a nice bonus to the minimally ill, and a fig leaf of “insurance provision” for firms shamed into some semblance of social responsibility. Just like the Fed’s long-stonewalled 2008 commercial paper intervention helped McDonald’s weather financial storms, the hidden backstop of government-funded health care saves it from the embarrassment of watching its employees die from lack of treatment if their McSurance fails to pay for more than a half-day at the hospital. In both cases, a titan of the “free market” is ultimately dependent on government intervention.

Health Reform Watch blogger Corey Klein worried about the implications when the waivers were granted in October:

Remember, a poll by the Associated Press reminds us that Americans who believe the health care bill did not go far enough outnumber those who believe the health care law went too far two-to-one. . . . [But] [t]he McDonald’s episode could be the start of many unintended consequences of the health plan. If the administration is so quick to buckle to private insurers demands, then what hope does the health care law have of actually making a difference in how American’s get their health care?

Noah concludes that “what [McDonald's] call[s] health insurance wouldn’t meet the fiduciary standards of a second-rate Christmas club.” Let’s hope this ill-advised 2011 waiver doesn’t last into 2012.

HHS Releases Much Anticipated Medical Loss Ratio Regulations

Closely resembling model regulations recently released by the National Association of Insurance Commissioners, the Obama administration today released regulations implementing the provisions of the ACA which govern the amount of each premium dollar that health insurers must spend on medical care. This amount that must be spent on actual health care or quality improvement (as opposed to administrative costs or dividends) is known as the medical loss ratio.

The ACA requires that health insurers spend at least 80% of premium revenue on treatment or quality improvement in the small group market, and 85% in the large group market. The statute also provides that the premium dollars required to be spent on health care or quality improvement, but which are not in fact spent on such services, must be rebated to the insured.

Healthcare.gov’s factsheet on medical loss ratios states that:

In 2011, the new rules will protect up to 74.8 million insured Americans, and estimates indicate that up to 9 million Americans could be eligible for rebates, starting in 2012, worth up to $1.4 billion.  Average rebates per person could total $164 in the individual market.

One aspect of the regulations that has caught the attention of many is a provision allowing health insurers to include the money they spend on federal taxes towards their medical loss ratio — essentially making it easier for insurers to meet the requisite level. As Bloomberg reports:

U.S. health insurers can include the cost of federal taxes in determining whether they spend enough on patient care, increasing the amount that can be kept for administration or profit under new rules. Company shares rose.

Bloomberg , quoting the U.S. Health and Human Services Department, also notes that insurance companies may receive favorable treatment in terms of the timing of the MLR rules:

Health plans led by Indianapolis-based WellPoint Inc. may also win delays from the spending requirements if individual states show the federal government that the so-called medical- loss ratio rule will destabilize insurance markets.

HHS has provided a number of resources on the medical loss ratio regulations, including:

• A News Release
• A Fact Sheet
• The Regulation (pdf)

Barring any of the possible delays mentioned above, the rules are slated to go into effect in 2011, with rebates, if any, being provided in 2012.

Medical Loss Ratios

Beginning January 1, 2011, the Patient Protection and Affordable Care Act (PPACA) requires all health insurance plans to spend a set percentage of their aggregate premium income on medical claims and “quality improvement expenses”–85% for large group plans, 80% for individual and small group plans.  This set aside provision is known as a “medical loss ratio” or “minimum loss ratio” (MLR).  Should a health plan spend even slightly less than the required MLR, it must reimburse its customers, pro rata.

Many states already have MLR-based insurance rate regulations, often around 50% to 60%.  Other states have ratios much closer–or in New Jersey’s case, equal–to what PPACA will soon require.  The big difference will be how those MLRs are calculated.  For that, Congress turned to the National Association of Insurance Commissioners (NAIC).

The NAIC submitted its final recommendations to HHS on October 14, after months of conference calls and minor revisions. PPACA actually calls for NAIC to define terms and methodologies to implement the MLR requirement under the law, subject only to certification by HHS.

• The NAIC excludes federal and state taxes from premium revenues, despite being told by the congressional committee chairs responsible for PPACA that the reform law intended only to exclude new federal premium taxes. Taxes paid on investment income would still be counted as revenue under the NAIC’s recommendations.
• For smaller carriers, the NAIC recommends a “credibility adjustment” of up to 8.3% added to actual claim and QI expenses, should their loss ratios be sub-regulation. This is meant to account for the increased difficulty of predicting future claims for smaller risk pools. Plans covering 75,000 lives or more would not be eligible for credibility adjustments. (The commissioners declined a “last-minute” proposal to allow adjustments for larger carriers.)
• In 2011, the NAIC does not think the super-small carriers–those covering fewer than a thousand lives–should pay rebates at all.
• Medical spending must be calculated state-by-state, and not nationally. Some large insurers pushed hard to have it the other way.

Obviously, the state commissioners are wary of the adverse effects uniform MLR requirements might have on small insurers.

As Timothy Jost, a consumer representative to the NAIC has noted, allowing smaller carriers some elbow room on the MLR calculations doesn’t run counter to the reform statute’s legislative purpose.  PPACA already allows HHS to temporarily “adjust” MLRs for individual plans to account for carriers in states with higher administrative costs.  The purpose of MLR regulations isn’t to mail rebate checks to consumers, but to ensure that the lions share of premium revenue is spent on actual medical care.

Oh, and quality improvement.

In states like New Jersey, determining the actual loss ratio for a plan is a matter of simple math, dividing the total amount of claims paid by the total amount of premium revenue collected.  Under the NAIC’s pre-reform rubric, the loss equals incurred claims plus the amount the carrier sets aside to pay future claims (the “contract reserves”).

The PPACA loss ratio, however, can include more than just claims paid in the numerator-namely, “activities that improve health care quality” or quality improvement (QI) expenses.

The commissioners settled on this basic definition for QI expenses:

“[E]xpenses, other than those billed or allocated by a provider for care delivery (i.e., clinical or claims costs), for all plan activities that are designed to improve health care quality and increase the likelihood of desired health outcomes in ways that are capable of being objectively measured and of producing verifiable results and achievements.”

The NAIC reigns in this fairly broad definition with four basic qualifications:

• QI expenses “must be directed toward individual enrollees or may be incurred for the benefit of specified segments of enrollees. . . . [S]uch activities may provide health improvements to the population beyond those enrolled in coverage as long as no additional costs are incurred due to the non-enrollees other than allowable QI expenses associated with self insured plans.”
• “QI expenses should be grounded in evidence-based medicine, widely accepted best clinical practice, or criteria issued by recognized professional medical societies, accreditation bodies, government agencies or other nationally recognized health care quality organizations.”
• QI expenses “should not be designed primarily to control or contain cost, although they may have cost reducing or cost neutral benefits as long as the primary focus is to improve quality.”
• QI activities must be “primarily designed to achieve the following goals set out in Section 2717 of the PHSA and Section 1311 of the PPACA:

✓”Improve health outcomes including increasing the likelihood of desired outcomes compared to a baseline and reducing health disparities among specified populations;

✓”Prevent hospital readmissions;

✓”Improve patient safety and reduce medical errors, lower infection and mortality rates;

✓”Increase wellness and promote health activities; or

✓”Enhance the use of health care data to improve quality, transparency, and outcomes.”

The proposal goes on to explain, in detail, what it considers to be the parameters of those five requirements.  Some ambitious examples include various “[a]ctivities to identify and encourage evidence based medicine . . . .”  Such expenditures, aimed at improving the quality of care received by patients, are welcomed by most consumer advocates.

Other expenses are of less obvious value to the consumer.  Nurse hotlines, for example, are often criticized as being administrative, cost-cutting expenditures dressed up to seem more beneficial to consumers than they are.  The NAIC’s recommendations include “face-to-face, telephonic or web-based interactions” as QI expenses, so long as they accomplish one of the goals listed under the “Improve health outcomes” or “Increase wellness” categories.

The problem with nurse hotlines isn’t that they can’t benefit consumers, but that it will be difficult for state and federal regulators to be sure that they are.

For instance, last summer, our family doctor told my wife she might need some minor hand surgery; baffled by what kind of person did such a thing, I called our insurer’s nurse hotline and learned that--of course–hand surgeons do hand surgery.  The nurse then gave us the numbers and addresses of the nearest hand surgeons who accepted our insurance.  This saved us time, no question. But it’s also information we could have gotten by, say, calling a hospital or calling back our general practitioner.

Having happened in 2010, my insurer most likely has to recognize the hotline as an administrative expense, inapplicable to its medical loss percentage.  In 2011, if HHS adopts/certifies the NAIC’s recommendations whole cloth, the hotline may or may not be counted in the MLR depending on whether its “primary focus” is determined to actually improve quality or merely reduce the insurer’s expenses.

But how can regulatory agencies know for sure?  The line is seemingly somewhat open to interpretation. And this, of course, is only one example. If this is the new landscape of health care finance, you can bet that insurers will be hard at work attempting to “re-cast” administrative roles into “quality improvement” functions. It would seem as though someone, somewhere, has to be monitoring QI expenses very carefully.  At least half of the states have made their disinterest pretty clear.

Reform Rodeo

1. HRW’s Frank Pasquale’s post on reciprocal transparency — the idea that companies and other entities should be more transparent with respect to their data collection practices as patients become more transparent — is featured on The Health Care Blog.

2. On KevinMD.com, Maggie Mahar discusses what she thinks would happen if health reform is killed.

3. At the New England Journal of Medicine, Timothy Jost discusses recent rules governing the controversial restrictions on medical loss ratios.

4. Kaiser Health News has a short video up of their interview with the AMA’s president, Cecil B. Wilson, where they discuss the AMA’s new strategy regarding the “doc fix” that is set to cut physician reimbursement by up to 30 percent by Dec. 1st.

5. Chris Fleming at the Health Affairs Blog describes a new Health Policy Brief from Health Affairs and the Robert Wood Johnson Foundation that covers the new process of “grandfathering” insurance plans under the health reform statute.

McDonald’s Balks, Gets Waiver to Continue Serving Up McSurance to Employees

On Oct. 5, the Department of Health and Human Services granted waivers exempting employers from complying with certain provisions of the health care law, according to Bloomberg.  News of the waivers came just days after the Wall Street Journal reported that McDonald’s had warned federal regulators that it would drop health insurance for nearly 30,000 hourly restaurant workers unless regulators waived the requirement that companies provide a minimum of $750,000 of coverage next year, increasing incrementally to unlimited coverage in 2014.

The health care bill also requires that 80 to 85 percent of health care premiums must be spent on benefits, as opposed to administrative costs. According to the WSJ article:

“McDonald’s and trade groups say the percentage, called a medical loss ratio, is unrealistic for mini-med plans because of high administrative costs owing to frequent worker turnover, combined with relatively low spending on claims.”

Mini-med plans, such as the plans McDonald’s offers to its hourly restaurant workers, typically have low premiums and low caps on benefits. The basic plan at McDonald’s costs about $700 per year and caps out at $2,000. The better plan costs roughly $1250 and caps out at $5000, and the best plan caps $1700 per year and caps out at $10,000. Yes, that’s a yearly max benefit to premium ratio of less than 3 to 1 for the basic plan, 4 to 1 for the better, and roughly 6 to 1 for the best. You don’t have to be an actuary to conclude that those ratios bode well for health insurance as a profitable concern– for the insurer. And it is not hard to imagine why an 80 to 85% medical loss ratio requirement would seem onerous to a company which provides an insurance policy which by definition maxes out at 33%.

The Wall Street Journal quoted Jerry Newman, a professor at State University of New York at Buffalo who penned “My Secret Life on the McJob” after working undercover at a McDonald’s, who said the mini-plan could be a life saver. “The packages maybe could be better, but for a start, they’re quite good,” he told WSJ.

Are they? Kate Pickert, who writes for Time Magazine, criticized the so-called mini-med plans:

“The Wall Street Journal described the McDonald’s coverage episode as an “unintended consequence,” but killing off plans like those offered by the fast food chain couldn’t have been more intentional. Policy experts have long known that “mini-med plans,” also known as “limited medical benefit plans,” rarely end up being a good deal for those who buy them. If you have a real medical need — like a broken bone or surgery — this insurance doesn’t come close to covering it. If you only use the coverage for a few doctor appointments, you would have been better off paying cash. Consumer advocates — including some attorneys general and state insurance commissioners — have sought to curb these plans for years.”

Judging by how quickly McDonald’s request for a waiver was granted, it seems like politicking is at play. From the Bloomberg story:

“The big political issue here is the president promised no one would lose the coverage they’ve got,” Robert Laszewski, chief executive officer of consulting company Health Policy and Strategy Associates, said by telephone. “Here we are a month before the election, and these companies represent 1 million people who would lose the coverage they’ve got.”

However, there’s one more piece of the puzzle. What about those who cannot afford a decent plan? Where do they turn? I have a feeling we have not heard the last of the public option debate. The McDonald’s episode could be the start of many unintended consequences of the health plan.

If the administration is so quick to buckle to private insurers demands, then what hope does the health care law have of actually making a difference in how American’s get their health care? Perhaps the real problem is in the gap between now and 2014 when the law fully takes effect. Still, questions remain as to whether the health care law was strong enough to begin with. Remember, a poll by the Associated Press reminds us that American’s who believe the health care bill did not go far enough outnumber those who believe the health care law went too far two-to-one. President Obama ran his campaign on a public option and has since stated that the public option was never integral to his plan for health care reform.  The gaps that will lie between what the health care law requires and what employers are currently willing to offer under the new law will seemingly need to be somehow filled.

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