Posts by Author - Michael

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Obama Health Care Summit Draws GOP Fire

Wednesday, February 17th, 2010

Ahead of a planned televised White House summit on health care reform, the Obama Administration is defending its decision to open the event to public scrutiny while reassuring Republicans the event is not a trap to score political points with voters.

With his sweeping health care reform effort struggling in the face of united Republican opposition and continued public skepticism, Obama has invited Republican leaders to the meeting on February 25, which will be nationally televised. Before the meeting next week, President Obama said he would post his own personal proposal for an overhaul online and asked Republicans to do the same.

“Everybody that’s in Washington that works in the executive branch and the legislative branch was sent here as part of representative democracy to solve problems,” White House spokesman Robert Gibbs said to reporters at Tuesday’s daily briefing. “That’s what this is intended to do.”

“The president will lay out his ideas, and I would expect that Republicans will, and others will, lay out their solutions,” he said.

The Obama administration on Friday invited 12 Democratic members of Congress and nine Republicans to the conference on revamping the $2.5 trillion U.S. healthcare system, an issue central to the Democratic president’s domestic agenda. Republicans have said they will attend, but they are wary that the White House is trying to set a political trap for them, perhaps in an effort to blame Republicans if the healthcare effort falters.

Republicans in Congress have demanded that healthcare bills reached by Democrats in the House of Representatives and Senate be scrapped, something the Obama Administration has said it is not willing to do after months of debate and difficult compromise.

Gibbs did not give a date for the release of the White House plan, saying only that it would be posted in enough time to allow for the American public to be review it.

Signaling a deliberate shift in focus on the debate from health care reform and health insurance reform, Gibbs said the backdrop of the meeting will be rising insurance rates. The White House has pointed to health insurance premium increases of up to 39 percent for some California customers of WellPoint Inc.’s Anthem Blue Cross individual and group health insurance plans as evidence for passing a major healthcare reform.

WellPoint has said the higher prices reflect greater medical costs and are in line with competitors. The company, strung by the criticism, said over the weekend it would postpone the rate increase by two months.

With millions of Americans lacking affordable health insurance plans, polls show a high level of frustration as the public watches the abortive reform process at a time of economic crisis and high unemployment that has eroded support for Obama. Meanwhile, Democrats are under pressure to produce results on health reform before elections in November. The entire House and more than a third of seats in the Senate are up for grabs.

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Group Health Takes A Hit: Humana Latest To Announce Job Cuts

Wednesday, February 17th, 2010

Little more than a month after Philly-based Aetna announced it would lay off an additional 1,250 workers after it issued a similar pink slip notice to 900 employees last November, Humana announced today it would be cutting 2,500 people from its payrolls after losing 11 percent of its enrollments in group health plans. The layoffs amount to about 5 percent of its workforce.

In making the announcement, Aetna president and CEO Michael McCallister said, “This regrettable but necessary reduction in our work force is a direct result of Humana’s need to align the size of our company with that of our membership.”

Humana said most of the cuts would come from attrition, outsourcing some of its business functions and not filling open positions, but told investors it expects to ramp up operations in Medicare and its mail-order pharmacy unit; both of which posted stronger financial results. For the quarter ending December, 2009, Humana posted a 44 percent profit, mostly attributed to growth in its Medicare business.

The move comes at a pivotal time for group health insurance companies, as leading economists and Wall Street analysts report that the U.S. economy is starting to show signs of job growth while Congress is scrapping its health care reform initiatives and starting over. Industry observers expect the U.S. government to introduce changes to the health insurance industry that would, in effect, make it more affordable for individuals to purchase individual and family health insurance policies directly from carriers and brokers. If passed, the change is likely to put an even larger financial dent in the group health insurance market.

Insurers that issue work-based health insurance plans have struggled over the past year to increase revenues, as the economic recession continues to wipe away jobs from the private sector. In addition to the job cuts at Humana and Aetna, other health insurance companies that specialize in group plans; such as CIGNA and Wellpoint, have eliminated more than 1,000 jobs in the past year. President Obama recently announced new banking and grant programs aimed at small business owners in hopes of staging a revival in the national job market.

Anthem Blue Cross of California, among other health insurance plans administered by Wellpoint, announced today it would cancel its previously announced investor conference that had been scheduled next Tuesday so it could prepare for a Congressional hearing prompted after the company said it would hike insurance premiums by 38 percent in May.

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Health Insurance Web Searches Spike, Says ComShare

Tuesday, February 16th, 2010

If there ever was a proof-positive sign the economy and its lingering layoffs are driving people to find their own health insurance plans, this is a big one.

ComScore, the people who measure all-things-online (working behind the iron curtains at Google, Yahoo! and other search engines) just released a study of online health insurance activity in 2009. The study found that nearly 24 million Americans visited a health insurance company Web site during the fourth quarter of 2009, representing 10 percent of the total U.S. online population.

Aetna led the pack of health insurance companies that attracted the most traffic with nearly 5 million visitors during October, November and December of 2009, followed by Blue Cross Blue Shield sites with 4.1 million visitors (17.4 percent penetration). Kaiser Permanente clocked in with 3.1 million; UnitedHealthcare snatched 2.2 million visitors; CIGNA got 2.6 million and Wellpoint sites attracted a combined count of 2.2 million homepage hits.

All things considered, the Web is growing as the primary source of information people turn to first about everything. Internet searching has grown to 175 million per hour, according to comScore stats. In December 2009 alone, there were 131 billion Internet searches conducted around the globe. Health insurance companies comprise a small piece of the whole Internet search world, but significant nonetheless.

“Consumers are increasingly turning to the Internet as one of their first destinations to research health insurance, whether it is gathering information to evaluate options or seeking answers to questions concerning their current provider,” said comScore director Susan Engleson in a press release accompanying the stats. “Having a strong online presence serves as both a gateway to consumers as well as an important branding opportunity for health insurance organizations.”

A Stanford University study following some 66,000 Americans and their use of the Internet for individual health insurance found very similar results. An excerpt of “Consumers’ Use of the Internet for Health Insurance” reveals greater opportunities for health insurance companies to attract more traffic to their Web sites:

“Analysis of Internet applications for consumer health has focused on the extent to which people use the Internet for information about health and healthcare. The role of the Internet in the relationship between consumers and health plans has received considerably less attention. Nevertheless, the potential impact of Internet applications in this area is large. Health insurance is a complex and information-intensive product, requiring extensive coordination among consumers, patients, insurers, and providers. In theory, consumers, purchasers, and health plans could benefit substantially from technological innovation that either improved the ability of consumers to obtain information about the types of health insurance available to them or reduced the cost or increased the quality of health insurance products.”

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Outcomes Driven Medicine: UnitedHealthcare Speeds Ahead

Wednesday, February 10th, 2010
The buzz in health care for hospitals and health insurance companies these days is outcomes- and evidence-based medicine. If the deepest cost-cutting proposals of health care reform on the table in D.C. come  to pass, doctors, hospitals and essentially any company that delivers direct medical care services could eventually be held to a set of standards set by companies who compile results of controlled research studies about patient protocols and disease management practices that deliver the best possible physical outcome.

Under this system, if a doctor doesn’t follow the protocols, medical health insurance companies don’t pay the bill.

UnitedHealthcare became the first major health carrier to announce its intent to dollect data from doctors and share it amongst all their contracted providers. Beginning today, United’s Oncology Care Analysis is aggregating data from more than 2,600 oncologists and 8,600 patients diagnosed with breast, colon or lung cancer. After the data is analyzed against an alliance of 21 participating U.S. cancer centers, known as the National Comprehensive Cancer Network (NCNN), it’s distributed to United’s network providers as a soft mandate at this point in time, to follow the recommendations when treating patients with similar medical demographics.

United is billing the reports as a way to help improve the quality of cancer care by showing how well a particular patient is complying with their medications or sharing inromation about procedures performed by other specialists. At this point, the medical sata sharing initiative will be limited to United’s cancer patient group — which accounts for $2.5 billion of United’s annual spending.

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Small Biz Owners Sick Over Health Reform

Tuesday, February 9th, 2010

Management consulting giant George S. May International just released a survey indicates small business owners are sick over health care reform. Literally.

May interviewed 713 owners of small businesses (companies with less than 100 employees) to get their opinions about the economic recession, health insurance for their employees and the future of their operations. More than 50 percent of respondents indicated that they have experienced “negative health effects” – both physically and mentally – since the recession and resulting debate in Washington started. Another 27 percent of small business owners surveyed said they do not have financial resources or sources of bank lending to keep their businesses afloat during the next quarter.

Further investigation of the data concludes that 80 percent of all business owners who responded give their businesses only 9 months until they could be forced to close their doors. Although the results of the survey show small business owners aren’t all that optimistic about the future, Paul Rauseo, managing director of George May, indicated that there are options for affordable health insurance for themselves, group health insurance for their employees and banks ready to lend. But business owners need to be willing to stick it out and seek advice when it’s necessary.

“Small business owners can be victims or victors,” said Rauseo. “And, we’re here to show them that they can, in fact, be victors if they start paying attention to the business side of the business and reach out for management help.”

Some entrepreneurs are taking extreme measures to keep their businesses afloat. The survey showed a little less than half of business owners surveyed had not taken a salary last year, 20 percent were using money from 401Ks to pay business expenses and 80 percent laid off employees during 2009.

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Anthem Blue Cross Hikes Rates By A Third In California

Tuesday, February 9th, 2010
One of California’s biggest health insurance carriers, Anthem Blue Cross, will increase  its individual health insurance premiums by nearly 40 percent starting next month.

The announcement came within hours of the Obama Administration’s call for Congressional Republicans and members of his own party to meet at the White House for a televised summit on moving forward with health care reform. President Obama appeared to use the announcement as political proof that health care reform is “essential,” while his Secretary of Health and Human Services denounced the insurance carrier in a statement later in the say.

“As we continue the health insurance reform debate in Washington, this announcement reminds us that too many Americans can be left with unaffordable insurance each time the rates of rules change in the private market,” said Sebelius. “It’s clear that we need health insurance reform that will give American families the secure, affordable coverage they need.”

Meanwhile back in Anthem’s home state, California Insurance Commissioner Steve Poizner publicly scathed the company and urged individuals looking for affordable health insurance plans to compare rates with other carriers. Poizner said he was “Alarmed” by the larger-than-expected rate increase and said his department would examine Anthem’s actions in the coming days.

Health insurance is regulated in the individual states where they are sold. In Calfornia, state law requires that health insurance companies spend at least 70 percent of every dollar earned from their premiums on medical care. Poizner said he has hired an outside actuary to review Anthem’s increase “to ensure they are complying with this state law. If we find that their rates are excessive, I will use the full power of my office to being these rates down.”

Complicating Anthem’s justification for the increase, its parent company, Wellpoint Inc. announced it had earned $2.7 billion during the previous business quarter. Neither Anthem nor Wellpoint made a public statement to the news media about its rate plan at the time this story was published.

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Insurance Without Borders: Will Buying Health Plans Across State Lines Help?

Monday, February 8th, 2010

With health care legislation on perpetual pause in Congress, Republicans are proposing some new ideas for getting the deal done. From hybrid health insurance exchanges to mandates requiring everyone to be covered, the debate has shifted to what is likely to close the debate and get a bill on the President’s desk: allowing Americans to buy health coverage across state lines.

Currently, people can buy health policies only from health insurance companies licensed by the states in which they live. This is why you find, for instance, Blue Cross and Blue Shield plans that are essentially privatized entities incorporated and sold exclusively in the states in which they are sold. Auto and home insurers have used this same approach for years.

Remember when Allstate and its Good Neighbor competitor dropped coverage on houses in hurricane-prone Florida and other coastal states? Insurance companies can cut bait in states where they have a subsidiary company underwriting their policies. Allstate wasn’t writing your policy, Mr. Homeowner. It was Allstate Floridian – a separate, but equally capitalized company that was set up to take cover when floods rolled in.
The Republican idea of buying health insurance across state lines has been altered a bit, but it is incorporated into the Democrats’ House and Senate bills, and expected to be the centrepiece of any health care legislation that wins final passage.

Congressional Republicans have proposed the concept in the past and Sen. John McCain, R-Ariz., embraced it as part of his 2008 presidential campaign. Advocates — including some insurers and small business groups — say it would give the more than 17 million Americans who buy individual coverage a greater choice of plans and the possibility of lower prices.

But critics, including the National Association of Insurance Commissioners say the provision would erode state government consumer protections, leave policyholders with inadequate coverage and could actually lead to higher premiums for some people. On the flip-side, allowing people to buy health insurance from any company regardless of where they call home would encourage competition for your business. That usually leads to lower prices and, in effect, more affordable health insurance for all.

Regardless of what Congress decides to do about health care reform, there are options readily available. Insurance companies report an increase in short term health insurance which in essence, provide guaranteed coverage for major medical expenses for a pre-determined amount of time. With the rise in unemployment and prospects of new job growth ever-stagnant, we can expect to see short term medical plans grow in popularity and affordability.

No matter how you slice it, insurance by its very nature is risk. Risk breeds fear. Fear breads inaction.
Critics say that selling insurance across state lines might not save much money, and point to a 2005 CBO report that says: “if only those benefit mandates imposed by the states with the lowest-cost mandates were in effect in all states, the price of individual health insurance would be reduced by about 5 percent, on average.”
But when you consider the cost of a major medical insurance plan for a chronically ill individual can approach an average of $400 per month, that 5 percent “on average” is money in the bank.

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Pharmacy Profits Up In Down Economy

Monday, February 8th, 2010

Investor backlash over its aggressive acquisition and merger strategy in recent months, CVS Caremark Corp (CVS.N) said recent problems at its pharmacy benefits management unit have been corrected and it posted a slightly better-than-expected rise in quarterly profit, driving the company’s shares up as much as 8.8 percent. CVS also said 2010 earnings could top analysts’ views.

Just three months ago, CVS shocked investors when it said the pharmacy benefits business (formerly Caremark) which administers prescription drug benefits for employers and health insurance companies and operates a large mail-order pharmacy, lost out on about $4.8 billion of business heading into 2010, leading to the departure of the unit’s president. Investors appeared to be unconcerned that total sales missed analysts’ projections, as sales at its retail drugstores that have been open at least a year far outpaced recent results at larger rival chain Walgreen Co (WAG.N).

CVS Chief Financial Officer Dave Denton told Reuters during the earnings conference call that consumers were still “very cautious” with regard to their spending, which could affect CVS stock value in future quarters.

Retail pharmacies are taking a hit on in-store, non-drug items as the current economic recession continues to drag. Non-drug items like groceries, photo finishing and the like account for more than one half of a typical pharmacy’s profit. Last week, Walgreen posted its second consecutive monthly drop in same-store sales, with January falling 1.1 percent, while smaller Rite Aid Corp’s (RAD.N) same-store sales have fallen for eight months in a row.

CVS had no new comments about the U.S. Federal Trade Commission’s investigation into some of its business practices, which followed its acquisition of Caremark.

CVS and Walgreens have recently launched retail medical clinics in many of their locations to participate in insurance company networks that pay benefits on individual and group health insurance plans when walk-in, immediate care clinics are used for routine medical care. The clinics were very popular during the recent U.S. H1N1 Flu outbreak when vaccines were made available at CVS, Walgreens and other retail drug chains.

A study issued last week by labor consortium Change to Win, which pushed for the FTC to examine the CVS and Caremark merger, said CVS charges the U.S. government more for some generic drugs than participants in its retail generic discount program pay. Denton, who called the report “a lot of rhetoric,” said the government is pleased with CVS’s pricing and service. Other major mail order pharmacy programs have since revised their pricing structures, offering similar discounts on refills regardless of whether a generic is substituted for a name brand prescriptions.
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How Portable Are Your Medical Records?

Monday, February 8th, 2010

The University of California at San Francisco is the latest source of a potential patient medical record mishap after a laptop was stolen and later recovered earlier this week.

Officials with the university’s medical center said that personally identifiable information and confidential medical records from some 4,000 patients went missing from an employee’s luggage following a domestic flight on November 30. His computer was recovered on January 3, though no information was given about how far or where the computer traveled during its month-long hiatus. Investigators have not yet determined whether any of the information contained on the laptop was compromised or otherwise copied from the laptop hard drive, but the university said data including patient names, health insurance plans, social security numbers and other medical information is most likely compromised.

This is the second incident of a patient data breach stemming from the University of California at San Francisco in recent days. Last month, a university professor admitted that he was the victim of a phishing scheme in which some 600 patients’ information was sent over the Internet to an undisclosed server by mistake. Insurance company Kaiser Permanente recently informed 15,000 of its health insurance subscribers that it lost sensitive information, also from the company’s laptop computers and external, portable hard drives (including one that was stolen from an employee’s automobile) between 2008 and 2009.

Such high-profile incidents of medical records breaches are likely to become a side-debate in the battle over health care reform. Some Senators have publicly called for a review and update of current HIPPA laws that do not adequately address data storage requirements now that health insurance companies and medical providers are storing information on servers that are housed away from their own facilities.

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Pharma Takes A Hit: Reform Taxes Overseas Prescription Profits

Friday, February 5th, 2010

With health care reform likely off the table this year, aside from a few legislative tweaks for health insurance companies, one of the biggest former beneficiaries of what was to become a major overhaul of the U.S. health care system will be feeling the pain.

Big U.S. pharmaceutical companies learned Friday that they will most likely face huge new taxes on what was once untouchable profit: overseas sales of presciption medications. New York-based Pfizer, the largest medical research and manufacturer in the U.S., will be hit the hardest. With nearly 90 percent of its income residing from overseas sales, the company and other large medicine makers are staring down the barrel of a corporate tax gun. Current proposals in Congress call for as much as a 35 percent tax on at least some of its foreign profit if President Obama’s idea gains traction.

Pharmaceuticals are often criticized for holding lengthy rights on patents for the drugs they manufacture. Since generic drugs are cheaper for those with and without affordable health insurance, the pressure is on the pill makers to shorten their exclusive rights on the drugs they sell since Obama is also looking at generating tax revenue by penalizing companies that park on their patents too long. The proposals seemingly shocked big pharma, dragging down Wall Street stocks for a bit on Friday morning.

In an interview with the New York Times, economist and former Treasury Department official Martin Sullivan said pharmaceutical companies will soon suffer the same chokehold that many lucrative and wealthy Americans parking money overseas suffered soon after Obama took office.

“Typically when a pharmaceutical company develops a new drug, it transfers it to a holding company in a tax haven like Bermuda or the Cayman Islands, usually on very favorable terms,” said Sullivan. “it pretty much came out of the blue…There’s a tremendous amount of income taken out of the U.S. and put into the tax haven. This proposal seems targeted to just that type of situation.”

The change in tone over health care reform was perhaps the biggest about-face for pharmaceutical companies, who agreed under the original health care reform bill to pay $8 billion per year in drug discounts in exchange for getting access to new business from tens of millions of uninsured Americans who would have received access to more affordable health insurance. The pharmaceutical industry is an estimated $246 billion business, according to the government statistics.

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