Insight, analysis & opinion from Joe Paduda

Dec
14

Health plans’ two-faced approach

According to AHIP, over the last ten years, private insurers’ hospital costs in California are up 159%.
One hundred and fifty nine percent.
Instead of an intelligent and helpful discussion of the causes and impact, there’s an all-too-familiary orgy of finger-pointing and ‘oh yeah, sez you’ as hospitals blame insurers and insurers wail about the unfairness of it all and everyone complains about Medicare.
Time to call Whine-one-one…
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Here’s what we should be focusing on.
1. Clearly (some) private insurers and health plans cannot – or more likely will not – do anything to control hospital costs. For all their bitching and complaining, this is yet more evidence that health plans have not fulfilled their primary mission – control costs and deliver quality care.
Here’s how a healthplan exec put it: “The report’s focus on California hospital costs just reinforces what we have been saying the past couple of years. Steep increases in medical costs must be addressed. Our country and state cannot sustain this kind of growth,” said Patrick Johnston, president of California Association of Health Plans.
No kidding. I don’t get the AHIP strategy – bitch about government intervention then complain that outrageous health care cost inflation isn’t your fault.
2. Private insurers are clearly asking for help from government – the same government they pillory in their multi-gazillion dollar PR and lobbying campaign as too incompetent to run a health plan.
3. Controlling costs will require health plans to build small, tight, highly-managed networks of excellent providers, an approach most seem quite unwilling to pursue, citing the ‘managed care backlash’ from the late nineties. (there are a few notable exceptions)
Execs, that was then, and this is now.
4. If health plan execs think their life is tough, they should sit behind the desk of a work comp claims exec. Work comp is getting murdered by facility costs; many payers would kill for a 159% increase over a decade.
Last week Kaiser Health News reported several large health plans appear to be frustrated with AHIP and are looking to set up their own DC lobbying entity – albeit one that is a ‘subcommittee’ within AHIP. Evidently they feel the smaller health plans and not-for-profits have hijacked AHIP and aren’t representing their interests.
Bob Laszewski sees a historical parallel: “This reminds me of the early 1990s. In the wake of the insurance industry being made to be the bad guys during the Clinton Health Plan debate, many of the largest members exited the historically dominant Health Insurance Association of America (HIAA) for the competing HMO dominated trade association.
At the time, many observers saw a cynical irony in the move; it was those dominant members that drove much of the policy that got the industry in trouble.”
What does this mean for you?
At this rate we’ll all be covered by the VA health plan in a decade – which is just fine with me. They are the only ones that consistently control costs and deliver quality care.


One thought on “Health plans’ two-faced approach”

  1. “health plans have not fulfilled their primary mission – control costs and deliver quality care.” What? Their primary mission is to extract profit from the system. They take a cut from each and every increase that comes their way. Would you rather have a percentage of a $Million or a $Billion? There is little incentive to control costs. Many are on “piecework” (fee for service) too, paid per claim. They DON’T deliver care; they handle claims. . . . and often not that well.

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Joe Paduda is the principal of Health Strategy Associates

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