Till 2007

MCM will be taking a vacation till January 2. To all – best of the season, rest up, we have a lot to do next year.

How HMOs make money

It’s called “managing the delta.”
The health plan business is pretty healthy these days, and the reason is simple – HMOs are keeping health care cost increases under 6% while increasing premiums by 7%+.
Sure, expense management is key, but so is revenue management. The question is, can HMOs manage cost increases for more than a few quarters? History indicates Not.
Thanks to Bob Laszewski for doing the heavy lifting by explaining how this happens.

Even more Mystified

A couple of sources informed me that the company CorVel bought in California is actually a Work Comp claims company – a third party administrator or TPA.
This is really confusing. Not only does CorVel sell their services to TPAs, but the TPA business in California is in the tank these days. While this may have helped CorVel get a good price, it also means opportunities are limited.
Not only does the stock price bewilder me, so does the strategy.

An expert joins the health blog-o-sphere

Bob Laszewski is one of the best-connected and most perceptive people on the national health care policy scene. He’s also a good friend. Bob recently joined the health blogging world and is posting at Health Policy and Marketplace Review.
Bob’s background is impressive – former head of two life and health insurers, founder of an international health policy advocacy group, consultant to Congressional committees and often cited on NPR, the McLaughlin Group, the NewsHour, and the Sunday morning news shows.
His most recent post is on health care cost trends, and the puzzling drop in health insurance premium increases. Well worth the read.

Improving Wyden’s Healthy Americans Act

There is one significant blind spot in Sen. Ron Wyden’s (D OR) Healthy Americans Act – because the benefit plan is based on the one enjoyed by Congresspeople and Federal employees, it fails to consider that many Americans can’t afford the maximum out-of-pocket limit, while to others it is a mere pittance .
The problem with the FEHBP and Congressional plan is all those folks have jobs so they can afford deductibles. A lot of folks working at Walmart can’t. As presently constructed the plan looks a little, well, elitist.
The fix is simple.

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Community rating

I’ve been virtually talking with other interested parties and staff from Sen. Ron Wyden’s (D OR) office about his Healthy Americans Act and how it deals with pricing. Here’s my preliminary take.
There are two core concepts central to HAA’s viability. First, universal coverage. If everyone has coverage, than there is no (or at least a lot less) need for providers to charge folks with insurance more to cover their losses incurred when they treat people without insurance. Cost-shifting drives up health insurance costs for those folks fortunate and employed enough to have coverage.

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UPDATE – Other thoughts on Wyden’s Health plan

Here’s a synopsis of the initial reactions from the health blogosphere to Sen. Ron Wyden’s (D OR) Healthy Americans Act.
Ezra Klein notes that insurance companies will have to compete on quality and low cost instead of medical underwriting and risk selection. I’d agree but note that HAA should push health plans to take all those dollars they have been investing in risk selection and broker commissions and invest them in care management. Health plans talk a lot about managing care, but few are really doing anything innovative or productive.

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