Will it Be the Bond Market That Finally Forces Serious Health Care Financing Change?

When will the Congress and the White House finally make the hard decisions in order come to grips with the federal deficit problem?When will we finally deal with real health care reform and get the entitlements, and with them the private health care cost issue, under control?My focus on trying to answer those questions has always centered on what's going on in the health insurance market: When

Managed Care: Because I'm A Scorpion, And It's In My Nature - An Editorial On Health Reform

Carl McDonald is a Managing Director at Oppenheimer & Company. He is one of the most followed health insurance industry analysts who can regularly make stock prices rise and fall with his comments. Today, he and colleague James Naklicki offer an "editorial" on the current health care proposals pending in Congress. I will suggest that their analysis of the impact of potential "reform" on consumers

Market Capitalism and Health Care--It Will Never Be the Same

Washington Post business page columnist Steven Pearlstein's Friday column, "Toward a New International Capitalism," caught my eye.Here's a snippet:"From the Latin American debt crisis of the 1980s to the Asian financial crisis of the 1990s to the Internet craze at the turn of the century to today's economic conflagration, the past 20 years have provided ample evidence that uncontrolled flows of

The Long-Term Viability of Medicare Advantage--Why Aren't the Analysts Asking for the Numbers to Add-Up?

I have been struck by the optimism regarding private Medicare presented by health plan executives during the recent earnings season and the analysts failure to press them on just how their numbers will add-up to sustain the long-term viability of a private Medicare strategy.The typical private Medicare health plan operates on a medical cost ratio in the mid-80s. Let's assume 86% for medical costs

"Wall Street Comes to Washington"

The event I look forward to every year is "Wall Street Comes to Washington," Paul Ginsburg's (Center for Studying Health System Change) annual merging of Wall Street and policymakers in a lively discussion of health care from both perspectives.The last few years I have gotten to participate on the health insurance market panel. The session also had a panel concentrating on hospital, physician,

Coventry Health--Another Reminder That This Isn't an Easy Business

Here are some comments from a first quarter earnings call Coventry management would sure like to take back.Yesterday, Coventry reported that its Medicare private fee-for-service business will miss its second quarter medical cost ratio projections by more than 300 basis points and that it will miss its prior second quarter estimates for its commercial medial cost ratio by a whopping 200 basis

Coventry Health Care--What the Heck Is Going On?

When WellPoint, Humana, United, and others had earnings warnings this spring I pointed out their issues were largely unrelated and amounted to more rounding errors as the helpful five year deceleration in health care trend came to an end and the business just wasn't as easy.But today, Coventry hit us with a 300 - 340 basis point adjustment in their expected Medicare Advantage medical loss ratio

HMO Executive Earnings Are the Subject of Criticism--37 Execs Paid $277 Million in 2007

I have had two different emails today on the subject of health plan executive compensation.The first cited a link to an article in the Baltimore Sun that reports the $17.65 million severance settlement with the former CEO of CareFirst (Maryland Blue Cross) is under scrutiny by the State of Maryland.The second was a reference to an Industry Radar post that compares HMO executive compensation from

Wall Street Continues to Be Disappointed in Managed Care--Just Where Did They Think It Was Headed in the First Place?

United Health's earnings and revenue grew by 7% this quarter year over year and the stock fell by almost 10% yesterday.I'd hate to see them really screw up.United is the first to admit that they have some service and persistency issues but the fundamentals of their business continue on track.Wellpoint followed with another disappointing report today.Wall Street finally seems to be figuring out

Nonprofit Hospitals Hardly Unprofitable––A Bad Time to Find Out Hospitals Are Making Big Money

Senator Charles Grassley (R-IA) has for years been complaining that non-profit hospitals have lost their way--that the tax benefits they get, originally intended to help pay for their charity care, simply aren't going to charity care anymore.Last Friday, the Wall Street Journal ran a front page story on the enormous profits many of the nonprofit hospitals are recording. The article made a number

Health Plan Stock Prices Hard Hit Recently--Then There is John McCain

The recent hit HMO stocks have taken in the market has come because Wall Street has the jitters over revised earnings outlooks. Many health plan stocks have fallen by 50% in recent weeks.The Street is right to worry that the health plans are going to have difficulty pumping out more of the great and predictable earnings we've seen from them in recent years. But they also continue to miss a very

Today's HMO Carnage on Wall Street

Maybe times have been just too good for so long that people have forgotten just what a challenging business this can be.After easy profits for the industry during a multi-year period when trend rates fell, today Wellpoint let us know nothing can be taken for granted.When the trend rate is steadily falling a monkey can make money. If an employer sees their claims go up by 9% the year before, it's