Archive for November 19th, 2010

Dominant Hospital Systems Appear To Be Driving Community Healthcare Costs.

Friday, November 19th, 2010

Modern Healthcare (11/19, Evans, subscription required) “Private insurers pay significantly more to some hospitals than others within the same market and hospital prices vary widely across the US, a new study found.” The Center for Studying Health System Change “analyzed hospital rates as a percentage of Medicare rates across eight markets and results suggest some hospitals have market clout to raise rates.” The study “also found variation in outpatient payments for seven of the eight markets.”

        The Milwaukee Journal Sentinel (11/19, Boulton) reports that the analysis “looked at hospital and physician rates and was based on data from insurers Aetna, Anthem Blue Cross Blue Shield, Cigna and UnitedHealth Group. The markets were Milwaukee; Cleveland; Indianapolis; Los Angeles; Miami-South Florida; Richmond, Va.; San Francisco; and rural Wisconsin.” The health insurers included in the study “paid rates ranging from 167% to 333% of what Medicare pays for inpatient care and from 234% to 439% for outpatient care in the Milwaukee area.”

        The NPR (11/19, Rau) “Shots” blog reports, “The work by the Center for Studying Health System Change used actual insurance payments from four large insurers and benchmarked them against Medicare payments to take into account differences in cost of living and wages.” The results appear to “support the argument that some high-priced hospitals are getting the upper hand with insurers,” and “builds on previous work of the author, Paul Ginbsurg, making the case that regions with a few powerful hospital systems are able to negotiate much higher rates than places with a lot of competition.”

        The Indianapolis Star (11/19, Rudavsky) reports that Anthem’s Dr. David Lee pointed out that the presence of several “dominant hospital systems” only served “to really drive up the cost of healthcare for the entire community.”

        The Wall Street Journal (11/19, Mathews, subscription required) “Health Blog” reports that the American Hospital Association has called the analysis “too deeply flawed to be a usable policy tool,” and says that the various methods used by each insurer to generate the study didn’t definitively show that hospitals wield the clout to affect insurance rates.

        Modern Healthcare (11/19, Evans, subscription required) reports that AHA president and CEO Richard Umbdenstock called the analysis “at best, unreliable” in a prepared statement.

80 to 100 Million Could Lose Current Coverage

Friday, November 19th, 2010

November 12, 2010

An analyst from McKinsey & Company knocked the socks off insurance company executives yesterday when she told them the new health law will bring “fundamental disruption to the health care economy” — so much so that “something in the range of 80 to 100 million individuals are going to change coverage categories in the two years post-2014.”

They will lose their employer coverage, move into exchanges, or go on to Medicaid. This would be an extraordinary disruption that will cause widespread outrage.

Allisa A. Meade of McKinsey didn’t stop there in saying the markets are going to be upended. She told the meeting of America’s Health Insurance Plans in Chicago on Thursday that the health law also will create a subset of 30 to 40 million people who could be called an “outlaw market” of Americans who choose not to buy coverage and to pay a tax penalty instead.

According to Congressional Quarterly, “Meade said that population is likely to be healthier and wealthier than other Americans and that it might offer an economic opportunity to plans to sell low-cost products.

“It’s not clear, however, to what extent such plans would be permitted under the law. Another potential concern would be a possible stigma attached to selling plans to people who do not comply with the health law,” John Reichard of CQ reported.

This is unbelievable! Is ObamaCare going to create a nation of outlaws?

McKinsey also predicts many employers will drop coverage because it will make more economic sense to pay a penalty that is lower than the cost of providing coverage. Depending upon how many do, the individual market for health insurance could grow by up to 300 percent. Whatever actually happens, Meade said companies in essence must start from scratch in their individual insurance divisions because that market will change so dramatically

Editor’s Note: Article obtained from