WellPoint's respite from criticism will be short-lived

June 24, 2013
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All holidays must come to an end. And America’s health insurers, including Indianapolis-based WellPoint Inc., should expect no different.

WellPoint and its peers have been enjoying a nice break from their long-running status as Public Enemy No. 1 in the nation’s health care debate. Recent attention has focused heavily on hospitals and doctors and the chaotic prices they charge.

As readers of The Dose know, I have made my own modest contribution to this shift in focus.

This shift has occurred, I believe, because the 2010 Patient Protection & Affordable Care Act put health insurers on a tighter leash, preventing them from engaging in their most controversial practices of the past.

No longer are insurers denying coverage for pre-existing conditions. When their premiums are now higher than 80 percent or 85 percent of medical claims, they refund the difference.

At the same time, health insurers have been able to keep premiums lower because health care costs have not been rising as fast as they had been—in fact, they even dropped in April, the first such dip since 1975. To no surprise, fewer families now report that they are struggling with medical bills.

Certainly hospitals deserve some credit for that trend—although most studies have credited either the slow-growing economy or the shift to high-deductible health plans.

Instead, with the health insurers on the sidelines, the main players left in the field to criticize have been the hospitals.

Right on cue, Steve Brill came out with his monumental article in Time magazine, which strung together a series of vivid anecdotes about how some hospitals—though certainly not all—aggressively mark up their services, taking advantage of the uninsured or those seriously ill with cancer.

Then came the Obama administration’s May release of Medicare data showing that hospital pricing varies wildly for no apparent reason. I have tried to explain how those variations came to be and, at the same time, how the data released is not terribly helpful.

Even the Healthcare Financial Management Association—the financial gurus working for hospitals and doctors—has now recognized the problem. HFMA announced the formation last week of a task force to address the issue of price transparency among its members.

“People want to know why health care costs what it does and what we’re doing about it,” said Joe Fifer, president of HFMA. “We need to move beyond the rhetoric.”

But I don't expect hopsitals to remain the public bad guys. It’s always easier to criticize the financier rather than the actual provider of services. That’s especially the case in health care, where hospitals and doctors literally save lives every day and health insurers have defined their job, as former WellPoint CEO Angela Braly once put it, as being the "disciplinarians" of the health care world. That will never make them popular, as Braly herself acknowledged.

As one case in point, WellPoint’s California subsidiary, Anthem Blue Cross, recently said it will raise premiums on small-business customers 11.5 percent next year. It blamed rising prices from health care providers.

In response, California Commissioner of Insurance Dave Jones said Anthem should be excluded from California’s newly created exchange for small-business health insurance policies.

"Anthem has engaged in a pattern of excessive and unjustifiable rate increases for its small employer customers and therefore they should not be permitted to participate in California's small employer health Exchange,” Jones said in a prepared statement.

The folks at WellPoint should expect California to be a harbinger of things to come.
 

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  • Post 2014
    Everything in health care is about to change. Don't be surprised next year if the line between payer and provider of health care starts to blur. If you can't underwrite risk then you are only left with managing it. This is what is about to happen. Managed Care! Health plans going to go back to the look like HMO of 80's. Don't be surprise if you Doctor's name is listed on your insurance card. www.indianahealthinsurance.com
    • HMOs making a comeback
      Tony, You're exactly right that we're going to see a return of managed care. It was, indeed, successful at controlling health care spending in the mid-1990s. But it also proved extremely unpopular. And I think payers got the blame more than providers. We'll see what happens if organizations like Franciscan ACO or IU Health ACO start getting a backlash from patients, whether providers suffer reputationally this time. I suspect, however, that a patient that has a bad experience at say, IU health, but is a member of an Anthem ACO, will blame Anthem before he or she blames IU Health. But I could be wrong. We'll have to watch and see.

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    1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

    2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

    3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

    4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

    5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

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