Shame on AARP For Their Response to the Deficit Commission Co-Chairs' Report

The Co-Chairs of the President’s Deficit Reduction Commission are out with their preliminary recommendations.They’ve done a great job—they’ve offended about everyone!But we have a nearly impossible but unsustainable challenge in front of us if we are ever going to crawl out of this deep hole.It is not so much what is on their list as what this list tells us about just how fundamental the changes

UnitedHealth Knows How to Save $500 billion In the Medicare Program--So Why Do They Need the Extra Private Medicare Payments?

This from Erica Werner's AP story today:A major health insurer [United Health Group] says the government can save more than $500 billion in Medicare spending by sending patients to less expensive, more efficient doctors, reducing hospital visits by the elderly and cutting down on unnecessary care.So UnitedHealth knows how to save $500 billion in Medicare spending.Aside from the fact that all of

Medicare Advantage HMO Stocks Down Big This Week

Matthew Holt, publisher of the Health Care Blog, and I have been in a state of incredulity over Wall Street’s head in the sand view of the Medicare Advantage business for more than a year. See his post today, "I Don't Really Understand Wall Street, Part 98."Why was it that in the wake of a Democratic take-over of Congress in 2006 and Obama’s victory last November that HMO stocks heavily invested

Medicare Advantage Payments to Insurers--Baucus Zeroing In!

Senate Finance Chair Max Baucus (D-MT) released his health plan white paper last week.Buried in it was this regarding how private Medicare payments to HMOs should be changed:“Congress must act to level the playing field between traditional Medicare and Medicare Advantage payments and the Baucus plan would do so. Enacted in July 2008, MIPPA [the July physician fee fix that will end PFFS] took

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

The End of Medicare Private Fee-For-Service--the Questions to Ask the Health Plans During Earnings Season

Now that we know private fee-for-service (PFFS) is dead on January 1, 2011 in all but the most rural markets, how will the health plans who have significant PFFS business respond?UnitedHealth is the first health plan to report earnings this quarter and I thought they had the right answer. From their earnings call transcript (Ovations CEO commenting):We have had a strategy of deliberately

Health Insurance Industry Stupidity—It’s a Rout From Here On Out

Why the health insurance industry allowed itself to be put in the place they were put by the Democrats yesterday is beyond me.With the Senate voting 70-26, and the House 383-41, to override President Bush’s veto of the bill to erase the 10.6% Medicare physician fee cut and pay for it with changes that will end the Medicare private fee-for-service program in 2011, the health insurance industry’s

Senate Votes 69-30 To Rescind Medicare Physician Fee Cuts and Cut Medicare Advantage to Pay For It

Ted Kennedy came to the Senate floor and led Senate Democrats to an amazing victory in their first real attempt to rein-in private Medicare spending and rescind the 10.6% physician fee cuts.The veto-proof margin puts President Bush's threat to veto the Senate bill, that was approved by the House on another veto-proof 354-59 vote just before the holiday, in doubt. Why bother?I was not surprised to

Run For the Hills, the Doctors Are Coming, the Doctors Are Coming!!!!

What is the one thing no human being should want to be next week?A Republican Senator at a Fourth of July Picnic.In the most amazing turn of events I have seen in 20 years of following health care policy in Washington, DC, the Democrats have the Republicans backed into an awful corner over the issue of the July 1st automatic 10.6% Medicare physician fee cut and corresponding private Medicare cuts

A Flawed Defense of Medicare Advantage

If private Medicare is to be continued proponents had better make better arguments than Scott Gottlieb made on Tuesday's Wall Street Journal op-ed page.Gottlieb is a former Bush Administration CMS official and is currently at the American Enterprise Institute.The context of his arguments is that this week Congress is debating making cuts to the private Medicare Advantage program in order to pay

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

Wall Street Relieved Democrats Unable to Cut Private Medicare Advantage Payments This Week--Why?

Congressional Democrats tried to take a big bite out of private Medicare this past week in an attempt to pay for an 18 month fix to the upcoming July 1st 10.6% reduction in Medicare physician payments.The effort, led by Senate Finance Chair Max Baucus (D-MT) got only 54 of the 60 votes he needed to end debate and move the issue to a floor vote. While getting that floor vote would almost have

There Won't Be Any Health Care Reform Without Physician Payment Reform and There Won't Be Any Physician Payment Reform Unless the Docs Lead The Way

Physicians are facing a 10% Medicare fee cut on July 1st, a total of 15% in cuts on January 1, 2009, a cumulative total of 20% on January 1, 2010, and more each year thereafter.This spring the Senate Finance Committee is trying to solve the problem. In the short term, the idea is to reach out to future years, when they are betting the Congress would finally fundamentally reform the Medicare

What Good Has Private Medicare Done for Shareholders?

Wall Street seems to have lost faith in publicly traded HMOs.When the Medicare Modernization Act was passed in late 2003, it was seen as a major boon to the health plan business. Without a doubt the revenue and profits that have accrued from the privatization of Medicare have been more than substantial.But what good has Medicare privatization done for shareholders?The first week of January 2005,

Provider Payment "Food Fight"

For some time I have been saying that we are about to have a "food fight" between health care providers over who will sustain Medicare payment cuts--HMOs, docs, hospitals, nursing homes, durable medical equipment, and others.But even I was surprised by a recent email from the AMA that included this connection between provider payments and food:“While it’s unusual to think of farmers and hospitals

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

Another Government Study Questions the Medicare Advantage Business

You can now add the Government Accountability Office (GAO) to MedPAC and the CBO as highly respected government agencies who have issued reports questioning the cost effectiveness of the private Medicare program.This time, the GAO said:Insurers will receive $86 billion this year for the private Medicare plan--Medicare Advantage.Last year the government paid the private plans $8.3 billion more

How Profitable is Medicare Advantage? The United/Humana Deal in Las Vegas Says a Lot

UnitedHealth and Humana have announced that Humana will acquire UnitedHealth's Las Vegas Medicare Advantage business for $185 million.The transaction was important for United in order to get Justice Department approval of UnitedHealth's acquisition of Sierra Health Systems.That $185 million gets Humana only another 25,000 seniors--at a price of $7,400 a customer.

Employers Finally Figuring Out They Can Shift Retiree Costs to Medicare

Employers are finally showing signs that they have figured out they can take advantage of the generous Medicare payments to Medicare Advantage plans.With Medicare Advantage plans paid 13% more than for the same beneficiary under traditional Medicare, many seniors have figured out the benefits are better in the private plans. Private Fee-For-Service (PFFS) plans even get more than that.What is

Bush Budget Dead On Arrival But It Underscores the Trouble With Entitlements and The Choices That Must Be Made

President Bush is calling for $560 billion in cuts from Medicare over the next decade.He would make these cuts by reducing the payments doctors and hospitals would have received.What is amazing about the Bush budget numbers is that the administration is only trying to cut Medicare's annual growth rate from 7% to 5%. At one level, that ought to be easy. After all we aren't talking about reductions