In a survey
released by the public relations firm Porter/Novelli in February
1996, only 10% of consumers thought the managed-care industry was
"believable." That placed it a notch above the tobacco industry.
Being ranked near what may be America's least likable industry proved
to be a major shock to managed-care executives in a year of
relentless shocks. Wounded by the fire of consumer advocates, media
critics and lawmakers, managed care spent much of 1996 in retreat.
HMO MAKEOVER: ARE
MANAGED CARE'S EFFORTS TO OVERHAUL ITS IMAGE TOO LITTLE, TOO
LATE? Modern Healthcare May 12, 1997
I
contend that "managed care," as we currently know it, is inherently
unethical in its organization and operation. Furthermore, I maintain
that we have an industry which can exist only through flagrant
ethical violations against individuals and the public. Based on my
experience, a health plan's resistance to ethical correctives will be
proportionate to its reliance on ethical transgressions for its
"success."
----------------------------
Although the "managed care" industry is quick to defend its actions
with high-sounding justifications, their claims break down under
examination. MANAGED
CARE ETHICS: THE CLOSE VIEW PREPARED FOR U.S. HOUSE OF
REPRESENTATIVES COMMITTEE ON COMMERCE SUBCOMMITTEE ON HEALTH AND
ENVIRONMENT BY LINDA PEENO, M.D. The National Coalition of mental
Health Professionals and Consumers May 30, 1996 http://www.nomanagedcare.org/DrPeenotestimony.html
CONTENTS
The first managed care page describes the developing crisis in managed care and how corporate misconduct resulted in a massive backlash by the public, doctors and many politicians. This culminated in extensive litigation and pressure for restrictive legislation.
This second page examines the way the battle unfolded and how HMOs were able to marshal their money, their corporate political might, and their public relations skill to defuse the situation. They secured outcomes that at least on the surface seem to meet the community's demands and get the angry doctors on side.
They did so without destroying their
essential mode of operation. The competitive market system and the
pressure for profit remain the mode of operation through which health
services operate and care is delivered.
to
contents
By 2000 there were a number of big issues facing the HMOs and threatening to overwhelm them. In order of threat they were
The ERISA legislation was part of the patients rights legislation. HMOs would have been acutely aware of the devastating effectiveness of lawsuits against the corporate nursing home chains in Texas and Florida. If ERISA was repealed they would have struggled to deny care. The whole basis for managed care would have been eroded. They could afford to give away a great deal if they could keep ERISA.
The second major threat was the patient class actions. This would have cost them billions and sent their stock plunging. They knew what had happened to tobacco companies.
The class actions by doctors and the actions by attorney generals could be managed by giving undertakings and paying some fines in the usual way without admitting fault. The public anger was seen as a temporary public relations problem.
Clinton and the democrats were most supportive of the patients' rights legislation and reviewing ERISA. The battle was probably lost when George Bush won the election and terrorist activity focussed attention elsewhere.
Overall corporate power and strategy was successful in containing the crisis. Although they were forced to make concessions HMO power remains intact and by the middle of 2003 they were putting up prices, cutting costs and making a profit again. The political system was still espousing market solutions and trying once more to push Medicare patients into managed care.
In some states at least wealthier patients
and many doctors were voting with their feet and walking out of
managed care. This has happened periodically in the past but has not
been sustained. It does not provide a solution to the central
problems of health care in the USA - the uninsured and
under-insured.
to
contents
As we have seen economic models assume a mantle of ultimate reality and the theorists, market operators, and participants in the system seldom identify or confront the logical cause of the problems which ensue. Instead they identify problems in the way in which the market system has operated, usually that it is not sufficiently market like. Managed care is a complicated system of impersonal economic levers. Health care can never be adequately provided through market mechanisms so there must be compromises. As a consequence market protagonists can readily identify areas which can be made more competitive or more market like.
The earlier reports particularly the material enthusing about international expansion show a blind faith in the market model and the claims that managed care would produce cheaper and better care. Press reports describing the allegations about managed care were often sceptical and stressed the lack of proof and the possibility that it was a problem of perception rather than fact. The first response to the patient's rights movement was an Andrew Turner-like outburst about the evils of government regulation.
Public denial became counterproductive and gradually less aggressive. It was useless to deny what was happening. After the retirement of Huber from Aetna, the strategy was to admit there had been failures and promise reform. Public relations presented a kinder and more responsible company which realised it had made mistakes. Aetna dominated the market and where it led others followed.
Whatever the for profit HMOs were really thinking they adopted a heavily funded and sustained public relations exercise to change community perceptions and a lobbying campaign to counter the pressure the community was putting on politicians.
The for-profit groups vigorously opposed the legislative reforms. In contrast a coalition of not for profits seemed to welcome increased government control and surveillance. If for profits were restrained then not for profits would be under less pressure to compromise care. The only thing they did not want was increased litigation.
1997
Regulate us, please. Opening a major rift along ownership lines in the managed-care industry, a group of not-for-profit HMOs and consumer organizations led by Kaiser Permanente calls for new healthcare consumer-protection standards, which would be enforced by an "an appropriate government entity" with authority to the rules. The industry trade group, the American Association of Health Plans, calls such a move"micromanagement." 1997: THE YEAR IN REVIEW Modern Healthcare Dec. 22, 1997
Hospital executives who have survived the latest war between the two ownership sectors-fueled by the meteoric rise and nasty tumble of Columbia/HCA Healthcare Corp.-can warn managed-care managers about the pitfalls of not presenting a united front.But intra-industry squabbles are not the major concern. It's the call for greater federal regulation that should alarm any administrator who delivers, provides or finances healthcare. Kaiser, joined by Group Health Cooperative of Puget Sound, HIP Health Insurance Plans, Families USA and the American Association of Retired Persons, believes federal regulations can somehow help restore consumer confidence in managed care.
Balderdash. The only thing government policing ensures is red tape, micromanagement, confusing legal language and, ultimately, more rules. Kaiser essentially is saying protect us from ourselves. This is the same Kaiser that has been besieged of late by legal and labor woes, as well as claims that its quality of care is slipping. EDITORIALS: FEDERAL RULES WON'T CURE HMOS' CONSUMER-CONFIDENCE CRISIS Modern Healthcare Oct. 20, 1997
1998
In a move that they said should restore public confidence in their industry as it is buffeted by sharp partisan attacks, the HMOs endorsed a series of guarantees, including coverage of emergency room care, grievance and appeal procedures for patients and assured access to medical specialists.But the group said it was opposed to one major provision demanded by Democratic congressional leaders: a wide expansion of patients' ability to sue HMOs and insurance companies when medical benefits are improperly denied.
The coalition, known as the HMO Group, said that patients could resolve such disputes by appealing to an independent panel of medical experts, and that lawsuits would unnecessarily increase costs and reward lawyers.
The HMOs, which are mostly nonprofit organizations, supported legislation being developed by Sens. John Chafee, R-R.I., and Bob Graham, D-Fla. Coalition of H.M.O.s Is Willing to Accept Compromise Plan on Regulation New York Times July 14, 1998
This class power manifests itself in many different forms. One of them is the class composition of the top decision-making bodies of our government: 84 percent of cabinet members, 78 percent of the Senate, and 62 percent of the House over the last forty-two years have been members of the corporate class The Inhuman State of U.S. Health Care by Vicente Navarro (opening address at a seminar sponsored by the medical and public health students of the Johns Hopkins University, held in 2003.)
Increasing sums were spent on marketing, on funding political campaigns and on intense lobbying. The business groups had plenty of grateful supporters among politicians. Republicans particularly President Bush were corporate and free market advocates. They were opposed to relaxation of the ERISA laws. Bush stated that he would not sign off on legislation which did this.
The corporate groups set out a program of self regulation by the marketplace and promoted it. At the same time they vigorously opposed legislation which would restrict their activities. The last thing they wanted was public oversight. In 2003 Vincente Navarro gave an excellent review of the power of what he calls the corporate class. Above and below are short extracts from part of the analysis.
Corporate and Political power
2003
Another way that class power is reproduced in our political system is through the privatization of the electoral process. "Here again, we in the United States are quite unique. In no other country does money play such a key role in the electoral process. As Senator Mikulski said recently, "money is the milk of politics." And most of that money comes from the corporate class: in 2000, 92 percent of the soft money that went to the key members of Congress who make decisions about health care and financial matters came from large insurance, banking, and employers associations, hospital corporations, pharmaceutical firms, and professional associations, such as the AMA."
-----------------------------
The profits of the medically related industries, such as the health insurance industries, have reached an all-time high during the administration of George W. Bush, the most class-conscious U.S. president since Hoover. The Inhuman State of U.S. Health Care by Vicente Navarro (opening address at a seminar sponsored by the medical and public health students of the Johns Hopkins University, held in 2003.)
Marketing
1997
But it has begun fighting back. Led by its chief trade group, the American Association of Health Plans, the managed-care industry launched a campaign late last year to improve its standing with consumers, payers and physicians. By doing so, it hopes to turn back the tide of restrictive legislation pushed by the storm of negative publicity in 1996. HMO MAKEOVER: ARE MANAGED CARE'S EFFORTS TO OVERHAUL ITS IMAGE TOO LITTLE, TOO LATE? Modern Healthcare May 12, 1997
1998
A growing number of health plans, employers, pharmaceutical manufacturers and healthcare systems are joining a new coalition to counteract criticism of managed care.
Sean Sullivan, founder and chief executive officer of the Dallas-based Health Care Information Institute, said the coalition will try to reverse the perception created by politicians and the media that "with managed care we have plunged into a new Dark Age from a former (healthcare fee-for-service) golden age. DEFENDING MANAGED CARE: COALITION WORKS TO REVERSE HEALTH PLANS' NEGATIVE IMAGE Modern Healthcare Oct. 26, 1998
The managed care industry, battered by attacks from politicians and the news media, will more than double its marketing spending next year to present its side of the story.
"Our surveys indicate that the number of people skeptical to hostile to managed care is growing,'' said Andy Morrison, VP of WellPoint Health Networks and president of the Coalition for Affordable Quality Healthcare. "We want a better environment to market our products.''
------------------------------
The same group of companies four years ago sponsored the successful "Harry & Louise'' ads, also from Goddard/Classen, that battled the Clinton administration's healthcare initiative. HEALTH GROUP EYES SHOPS FOR $20 MIL DOSAGE OF MARKETING Advertising Age, November 16, 1998
1999
A consortium of HMOs in Albany, NY, are launching an advertising campaign "to improve their bruised reputations," the Albany Times Union reports. ALBANY HMOS: LAUNCH IMAGE CAMPAIGN Health Line February 1, 1999
"It is incumbent upon the industry to find better ways to communicate with the public,'' said Mr. Kahn, the president of the trade association. ''It is our problem, and we need to deal with it directly.'' Spectacular Rise in HMOs' Unpopularity Fuels the U.S. Cry of Patients' Rights International Herald Tribune (Neuilly-sur-Seine, France) October 12, 1999
Private sector initiatives - getting in first but giving way when you have to.
1997
The introduction of two bills requiring coverage of some emergency room services without prior authorization came as the American Association of Health Plans board, meeting in Washington, approved a policy that would give the managed-care group the authority to deny membership to health plans that don't abide by quality standards.
The measure is another step in the AAHP's attempts to head off more federal oversight of managed-care plans. 2 BILLS CALL FOR REQUIRED ER SERVICES Modern healthcare March 3, 1997
1999
Aetna U.S. Healthcare, the big managed care company, said yesterday that it would voluntarily allow its health plan members in 30 states to have outside reviews of decisions that deny them necessary or experimental care.
Under the plan, members of Aetna health maintenance organizations can request external reviews after being rebuffed inside the company. Aetna promised that the reviews would be decided within 60 days.
Aetna announced the program, which is to take effect by June 30, against a background of demands for tighter regulation of managed care in Congress and many states. Insurance industry trade groups oppose government regulations and support voluntary programs like those of Aetna and a number of regional companies. Aetna to Allow Outside Reviews of Care Denials The New York Times January 13, 1999
HMOs must let patients appeal denials of care to outside experts if they want a seal of approval from the nation's largest accrediting group.
It's the latest in a string of private initiatives boosting the idea of external reviews, which both supporters and critics of managed care have come to support as a way to assure consumers they won't be unfairly denied treatment for financial reasons.
The National Committee on Quality Assurance, which accredits about half of the nation's health maintenance organizations, plans to require these independent reviews beginning next year.
Congress is in the midst of considering regulations for HMOs, and mandatory external review is among the most popular provisions. Even business leaders who disdain federal mandates acknowledge that many consumer complaints could be resolved if they could be taken to independent experts who do not work for the HMO. HMO Group Requiring Outside Reviews The New York Times March 16, 1999
This week's extraordinary announcement by the United Health Group that it will let practicing physicians make medical necessity decisions is a tribute to the growing HMO accountability movement and the shift on Wall Street that it has provoked.
Only Wall Street could force the nation's second-largest health insurer to heed patients' concerns about unnecessary intrusion by HMO bureaucrats and to admit that corporate bureaucrats cost more than they save. Yet only the growing HMO liability movement could cause HMOs and their investors to be as serious about managing care as they have been about making profits.
United Health's move comes as Wall Street is increasingly questioning how HMOs will weather a growing wave of class-action suits and new state laws - - - .
------------------------
The California change comes after years of turmoil. Huge companies have taken the local, nonprofit HMO model and created national, investor-owned firms with a propensity to emphasize short-term profit over quality health care. In the mid-1990s, these public companies crowded out California's nonprofit, doctor-run HMOs--then a gold standard for prepaid health care--in a frenzy of slashed
premiums, big advertising budgets and skimpy care. COMMENTARY; QUALITY IS NOW A FACTOR IN HMO CARE; --- MEDICINE: MARKET PRESSURES, STEPS TO HOLD INSURERS ACCOUNTABLE ARE FORCING HMOS TO PUT PATIENTS OVER PROFITS. Los Angeles Times November 11, 1999
2001
The once-harmonious relationship between doctors and Aetna had grown "contentious, to say the least," Donaldson (Aetna's new chairman) told the Connecticut State Medical Society last May. Aetna had become the undisputed bully of the managed health-care industry, dictating how much doctors should be paid and how they should treat their patients.
But, now, Donaldson said, there would be "a sea change in our corporate attitude toward working with your profession."
--------------------------
The result (of Aetna's previous strategy) so far has been bitter disappointment, critics and Aetna executives agree. And along the way the 148-year-old company long known as "Mother Aetna" has become a symbol of what's wrong with America's health-care system.
Doctors, tired of being second-guessed in treatment decisions, have taken Aetna to court or fled its network, as a group of 90 Northern Virginia physicians did last month. Inova Medical Group, which had 20,000 Aetna HMO patients, said it couldn't provide appropriate care at the rates Aetna offered.
-----------------------------
"Mother Aetna is the ugliest of the ugly sisters in the HMO business," he (a doctor) said.
-------------------------------
Patients complain that Aetna's HMO doesn't address their medical needs, pay their bills promptly -- or even respond properly to their questions. Their complaints have resulted in several class-action lawsuits.
------------------------------
In recent interviews in Aetna's sprawling, gold-domed headquarters, Donaldson and Rowe talked about moving swiftly to undo their predecessors' mistakes. As Donaldson put it, "we bit off more than we could chew" in the rush to become the dominant player in managed care. The result, he added, was a health-insurance giant that became "unbending and tough and hard in an attempt to control costs." Aetna's Unmet Claims : Insurer's Makeover Has Come Up Short On Promise of Change, Long on Lawsuits Washington Post February 25, 2001
2002
A collaboration of California health plans, medical groups and employers is expected this week to unveil a statewide healthcare initiative that uses money from insurance premium increases to reward physicians for improving the quality of patient care.... Bonus time : California association plans to reward physicians for good patient care. Modern Healthcare - Jan 15, 2002
2003
Aetna has been cutting expenses since 2001, when it reported a net loss of $293 million. For the first quarter, it reported a profit of $321 million.
----------------------------
For the doctors, one of the most significant changes was Aetna's acceptance of general guidelines for treatment that have been developed by the American Medical Association. Those guidelines require that decisions on care be based on a physician's prudent clinical judgment. In the past, Aetna approved treatment based on what it thought was the least costly approach among scientifically proven procedures. Now, the company will combine these concepts. Aetna Agreement With Doctors Envisions Altered Managed Care The New York Times May 23, 2003
Six months after tussling bitterly over reimbursement rates, Blue Cross and Blue Shield of Illinois is slowly mending its relationship with Advocate Health Care under a novel, two-year contract that rewards the hospital system for meeting specific performance goals in lieu of the 15% rate increase it originally had demanded
---------------------------
HMOs since have steadily expanded their networks and scrapped controversial ''gatekeeping'' tactics, eager to mend their images and lure back members (April 15, 2002, p. 30). But with premium increases once again rising at double-digit rates, most have begun looking for new--and more publicly palatable--ways to cut costs.Blue Cross of California, based in Woodland Hills, garnered a great deal of good will in July 2001 when in a very public move it scrapped its utilization-based incentives and began rewarding medical groups in its HMO based on patient satisfaction. Last year, it launched a broader bonus program for individual doctors in its PPO.
Although the insurer has yet to complete its first annual payout, it's already seeing significant results, including fewer coverage appeals from members and a greater emphasis on preventive care. ''It's like night and day,'' says Michael Belman, Blue Cross' medical director of quality management. ''(The medical groups) are actively making a greater effort to improve their scores.''
------------------------
Since then, several other insurers have begun rolling out pay-for- performance programs, each with their own twist.
----------------------
Industry observers, however, emphasize that the future of the pay-for-performance movement will hinge on the industry's ability to develop a single, standardized set of quality-improvement guidelines.''We need coordination, not 20 different quality programs from 20 different health plans,'' says the CMA's Warren. A rewarding relationship; Hospitals and docs are seeing more of their pay tied to performance based on quality measures and other contractual objectives Modern Healthcare June 9, 2003, Monday
Lobbying
1997
The Texas state legislature seems likely to pass a law permitting patients to sue HMOs if the HMOs' restrictions on treatment can be shown to have caused harm, but the governor, George Bush Jr. (the son of the former U.S. president), will probably veto it. One of Bush's friends and political donors is a wealthy Dallas businessman who holds large shares in several for-profit hospital chains. Miscellaneous notes from the field: Modern Healthcare May 1997
1998
Lobbyists for big business, small business and health insurance companies Wednesday unveiled a $1 million campaign to block bipartisan legislation intended to protect the rights of patients.
The lobbyists said such legislation, far from protecting patients, would increase the cost of health care and health insurance, so that many employers would cut back coverage.
President Clinton and lawmakers from both parties, led by Rep. Charlie Norwood, R-Ga., have been pushing a variety of proposals to help patients and regulate health plans, especially health maintenance organizations.
Many politicians contend that such legislation will prove irresistible in this election year. But a coalition of business groups said Wednesday that they would fight back, in an effort to kill any new federal requirements that guarantee patients a choice of doctors or other rights.
The coalition includes the National Federation of Independent Business and the Health Insurance Association of America, which led efforts to kill Clinton's proposal for universal health insurance in 1994. Campaign to Block Patients' Rights Legislation Unveiled The New York Times January 22, 1998
Dan Danner, chairman of the Health Benefits Coalition, who is also vice president of the National Federation of Independent Business, said the coalition had spent "a little over $2 million" on lobbying and advertising against HMO bills. In addition, he said, "our member organizations have probably spent another $1 million on advertising, and that does not include the cost of staff work and time spent on fax, phone calls, direct mail and tens of thousands of action alerts."
-------------------------
Johanna Schneider, a spokeswoman for the Business Roundtable, which represents 200 large companies, said the group had spent $1 million on its own radio and newspaper advertisements against HMO legislation. The coalition and the Business Roundtable ran advertising in 23 states, she added. Bill Defining Patients' Rights Dies in Senate The New York Times October 10, 1998
2000
The health-care industry spent the most on federal lobbying from January 1999 through June 1999, shelling out $95.5 million.
-----------------------------
The heavy spending "underscores the fact that everything in health has become big money and big politics," said Drew Altman, president of the Kaiser Family Foundation, a nonprofit research group that tracks public opinion on health issues. "It also reflects the fact that there are so many big health issues in play" in Congress. HEALTH-CARE INDUSTRY TOPS LOBBYING'S BIG SPENDERS; TECHNOLOGY, FINANCE INDUSTRIES ALSO CITED AS MAJOR INFLUENCES The Times-Picayune January 9, 2000
As a November vote on the universal health care ballot initiative approaches, the Bay State's largest health insurance providers have begun pouring hundreds of thousands of dollars into defeating the measure, which they fear would be disastrous for health care in Massachusetts.
In recent weeks, Aetna U.S. Healthcare Inc., Blue Cross Blue Shield of Massachusetts, Harvard Pilgrim Health Care Inc. and Tufts Health Plan Inc have ponied up between $100,000 and $250,000 apiece, according to documents filed with the state Office of Campaign and Political Finance.
In all, opponents of the measure, which would affect HMOs and, ultimately, lead to universal health care, have raised nearly $1 million--most of it coming in August--to kill the measure, known as Question 5.
The money has streamed in even though supporters of the referendum have less than $5,000 in the bank.
----------------------------------
Meanwhile, fund raising by the supporters of the ballot initiative has lagged considerably behind its opponents. Health care ballot foes open wallets Boston Business : Week of September 18, 2000
The corporations were willing to give ground on some patient's rights legislation once they realised it was inevitable in order to hold the fort on ERISA. There was a prolonged and bitter political battle federally and in the states. This often crossed party lines. Legislative effort dragged on for a long time and came in dribs and drabs. The corporations led by Aetna did a mea culpa and voluntarily introduced many of the demanded changes hoping to keep these in market rather than government hands. This was good public relations.
In the end there was some erosion of the ERISA regulations, particularly in some states. The alternative of a right to independent arbitrators was preferred and in some states at least it seems that it was very difficult to get past this to the courts. The courts insisted on arbitration and needed to be shown that it had failed. This effectively protected the HMOs from the massive punitive damages juries would have awarded.
A variety of patient protection and patient rights laws were passed federally and by the states which seem to be a compromise between competing forces. Whether these will be effective remains to be seen. In 2003 the issues are still not fully resolved and judges still give differing rulings.
What is revealing is that citizens should be so distrustful and so united in the pursuit of legislation to protect them from those sections of the community which the community has charged with their protection and care - and that the corporations should be so threatened by vulnerable citizens whom they have undertaken to care for. What sort of a society is this?
1997
Following in the wake of national benefit mandates enacted last year, congressional Democrats last week introduced legislation to restrict health plans' ability to deny access to emergency care.
------------------------
The second bill, sponsored by Sen. Edward Kennedy (D-Mass.) and Rep. John Dingell (D-Mich.), goes beyond mandating coverage to emergency room care to encompass numerous issues related to health plan practices.
It would require that plans:
- Ease access to specialists.
- Publicly report quality data.
- Give incentives to physicians to cut down on unnecessary healthcare services and conform to standards in the Medicare program.
- Eliminate "gag clauses" that restrict what physicians can tell HMO enrollees about treatment options.
President Clinton has said he will sign legislation that would ban gag clauses. 2 BILLS CALL FOR REQUIRED ER SERVICES Modern healthcare March 3, 1997
If the volume of legislative proposals being submitted in Congress is any indication, regulation of managed-care plans will be a hot topic next year.
But given the political fissures that have opened over the issue, it's less certain whether anything will pass. WASHINGTON REPORT: POLITICAL FOOTBALL: MANAGED-CARE REFORM LOST AMID PARTISAN SQUABBLING Modern Healthcare Nov. 10, 1997
1998
Stretching across party lines, overwhelming majorities of Americans tell pollsters that they want health plans to provide easier access to specialists and emergency rooms, and to provide appeal mechanisms when claims are denied.
The drive to enact such consumer protections has spawned legislation in statehouses across the country, and is expected to be one of the hottest issues in Congress this year.
--------------------
Norwood says he wants to make managed care more accountable and flexible. What is surprising is how he intends to do it: He wants to impose federal regulations and give people the right to sue their health maintenance organizations.
It is a popular idea in both parties. In one year, he has amassed 224 co-sponsors for his bill, from urban liberals to rural conservatives, almost equally split between Republicans and Democrats. Sen. Alfonse D'Amato, R-N.Y., is sponsoring the measure in the Senate, and Kennedy says he thinks it is a good idea. Regulation of Managed Health Care Becoming Hot Issue The New York Times February 12, 1998
Public anger over the state of managed care has burst into this year's election campaigns as a major issue, up there with perennials like education, crime and Social Security. In speeches and television advertising, Democrats and a few Republicans are seizing on consumer complaints and calling for a sweeping "patients' bill of rights."
In at least a score of states, including New York, California, Texas, Florida and North Carolina, candidates in primaries and general elections for governor and Congress typically are promoting access to more doctors, a right to appeal managed-care organizations' decisions on restricting care to impartial tribunals, and freedom to sue the organizations for malpractice. Voters' Anger at H.M.O.'s Plays as Hot Political Issue The New York Times Company May 17, 1998
The struggle over patients' rights legislation has scrambled old alliances and created some extraordinary new ones. It is throwing together doctors, trial lawyers and consumers, and pitting them against insurers and managed care companies, who in many cases are fighting each other over how much regulation they can take. Patient Rights Debate Engenders Unlikeliest of Alliances The New York Times July 21, 1998
With health legislation stuck on Capitol Hill, President Clinton announced new protections for patients in Medicaid HMOs Thursday, continuing to press what has become a major issue in Democratic and GOP campaigns across the country.
-------------------------------
Clinton said the administration was extending patient protections to 15 million people in Medicaid, the health insurance program for the poor, which is increasingly steering people into health maintenance organizations and other managed care plans. He already took similar action for Medicare beneficiaries.
The new rules require states to give Medicaid recipients a choice of HMOs if they require them to go into managed care.
Medicaid also must guarantee patients the right to appeal if they are denied care and give people easy-to-understand information about their benefits.
And Medicaid HMOs must pay for reasonable emergency room visits, allow women direct access to gynecologists, and let people with severe medical conditions see specialists without having to go to a primary care doctor first, under the measure. Patient Rts. Issue Goes to Medicaid The New York Times September 17, 1998
Legislation to give patients more power in dealing with health insurance companies died Friday, a casualty of heavy lobbying by the insurance industry and of the sex scandal that has enveloped President Clinton.Supporters and opponents said similar legislation would be back in 1999. But this year's struggle shows once again how difficult it is to pass health care legislation affecting doctors, patients, lawyers, insurers and employers of all sizes.
----------------------------
The House passed a bill to define patients' rights and regulate HMOs in July. But in the Senate, Democrats and Republicans had such profound disagreements that they could not even get such legislation to the floor for debate.
-------------------------------
The coalition began its lobbying and advertising campaign on Jan. 21, the day of the first news reports about the president's affair with Monica Lewinsky. Clinton gave many speeches about HMO legislation, but his fight for the legislation suffered as he devoted more and more of his energy to fighting for the survival of his presidency. Bill Defining Patients' Rights Dies in Senate The New York Times October 10, 1998
The issue is whether patients should have the right to sue an insurance company that makes a damaging error. The evidence is an Aetna training video that implies the company gives more attention to cases in which patients already have that right
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Consumer groups have long argued that insurance companies will be less likely to deny legitimate claims if they fear a big jury verdict. This week, Court's group is sending a transcript of the video to every member of Congress. Consumer Groups Eye Insurance Video The New York Times October 12, 1998
While action on developing a patients' bill of rights seems to be stalled on the federal level, North Carolina has made some progress in regulating HMOs. Under a new state law, a patient has the right to request a review of any HMO decision, policy or action that affects him. NEW LAW HELPS CONSUMERS APPEAL THEIR HMO'S ACTIONS Business Journal Serving Charlotte & the Metropolitan Area; October 12, 1998
1999
Who should control patient care -- doctors at the patient's bedside or doctors working for the patient's insurance company? The Senate Labor Committee appears poised to answer "neither" when it votes this week on patient protections.
The committee plans to turn the ultimate decision in cases where bedside physicians and insurance companies disagree over to expert panels, some at faraway academic medical centers.
Exactly how to implement external review remains controversial. But if the idea is handled creatively, it could sweep away the brawl over legal liability that doomed last year's efforts to pass a patients' "bill of rights."
Democrats and Republicans acknowledge the need to respond to patient complaints that health plans persistently deny them reimbursement for necessary medical care. The number of such complaints is small, but the ones with merit can reflect shockingly callous behavior by health plans. ECONOMIC SCENE External Review of Patient Care Still Undecided The New York Times March 18, 1999
IN 1994, House Republicans scrambled to their current majority after helping to torpedo President Clinton's plan for universal health insurance. On October 7th, 68 of them defied their party leaders by voting for a bill that looked, in some ways, suspiciously like the old Clinton plan, and had the president's full backing.The House bill (a more limited version of which was passed in the Senate in July) would set national standards for health insurance, which at present is subject mostly to state regulation. It would guarantee patient access to emergency care and medical specialists, and would allow consumers in group health plans -- on payment of an extra premium -- to use outside doctors. Most important, it would give patients the right to sue their health maintenance organisations (HMOs) for denying or failing to provide proper care. A right to sue The Economist October 16, 1999
2000
President Bush will veto a bill giving patients new rights to sue health plans unless it is changed, a senior White House official said Sunday as the US Senate, now under Democratic control, prepared to take up the measure. WHITE HOUSE REPEATS THAT PATIENTS' RIGHTS BILL IS UNACCEPTABLE The Foundation for Taxpayer & Consumer Rights www page June 2000
2001
Patients' rights legislation cleared a major hurdle in the Senate yesterday as Democrats handily defeated a Republican proposal to exempt employers from all health care lawsuits, boosting the prospects for compromise and for passage of the long-stalled measure.
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In another sign of the president's new willingness to compromise, government officials said Bush will relax his opposition to lawsuits against health maintenance organizations by endorsing today a new House Republican leadership bill that would permit suits in state courts under certain circumstances. Bush had initially insisted that the lawsuits should be restricted to federal courts.
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While there is broad agreement between the two parties over much of the legislation, the liability issue has emerged as a major obstacle. Battle of Anecdotes: David S. Broder on how the patients' rights debate is being framed. Washington Post June 27, 2001
2003
The ruling, issued last week by the United States Court of Appeals for the Second Circuit, in New York, said that health maintenance organizations and their medical directors could be sued for medical malpractice when they made decisions about the treatment of a patient.In the past, courts have often rejected such claims, saying they were precluded by the federal law on employee benefits. But the appeals court said those precedents were no longer binding because the Supreme Court had established a new framework for analyzing the issue in a 2000 case, Pegram v. Herdrich.
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But the opinion is likely to influence judges in other parts of the country because it comes from a respected court and provides a comprehensive analysis of H.M.O. liability after several recent Supreme Court decisions. A Court Expands the Rights of Patients to Sue H.M.O.'s New York Times February 17, 2003
The second major threat to the HMOs was class actions by patients. One of the major problems in patient care is the diversity of diseases and problems. It is therefore difficult to find the common ground needed for either government or class actions. Complainants welcome class actions because it gives them collective power and only one court action to prove fault.
Corporations in contrast challenge the definition of the class in order to bog the whole process down in multiple individual court actions - each must prove fault. They were successful in challenging the declaration of class by patients.
The patients' only resource was individual arbitration and or individual actions if they could get past ERISA. These class actions gradually faded away, and share prices increased as a consequence.
2000
This week's unanimous U.S. Supreme Court ruling, that an HMO cannot be held accountable in federal court when its financial incentives to doctors for limiting treatment injure a patient, is only the latest blow in the ongoing assault on the rights and options of consumers to challenge repugnant, bedrock corporate practices.Justice David H. Souter wrote for the court that the HMO industry would collapse without such financial incentives and "The federal judiciary would be acting contrary to the congressional policy ... if it were to entertain (a claim) portending wholesale attacks on existing HMOs solely because of their structure." In other words if HMOs or any other corporation occupies morally questionable ground for long enough the companies can have possession of it.
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Such fallacious reasoning, gaining popularity elsewhere, is leading to the evisceration of the rights of individuals to challenge unethical, systemic corporate practices well beyond the HMO arena. This Thursday, for instance, the United States Senate Judiciary Committee will vote to limit the ability of injured consumers to band together to hold any corporation accountable through class action lawsuits
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This legislative assault on individuals' rights is of particular import for HMO patients. The U.S. Supreme Court ruling this week closed down federal court as an avenue to invalidate systemic HMO cost-cutting practices. The only hope for injured patients seeking to challenge systemic HMO abuses are state courts, where several class action cases are pending against HMOs for unfair business practices. S.353 would pluck these cases out of state court and subject them to far more onerous federal hurdles and delays, dealing potentially deadly blows. Limit on Class Action Suits Will Eviscerate Consumer Rights The Foundation for Taxpayer & Consumer Rights Jun 14, 2000
2002
A federal judge yesterday dismissed several charges against the nation's largest health insurance companies, but he said plaintiffs could proceed with accusations that the insurers had violated federal fraud and pension laws.Judge Federico Moreno of the United States District Court in Miami ruled that plaintiffs representing many health plan subscribers could proceed with claims of fraud under RICO, the Racketeer Influenced and Corrupt Organizations Act, against Aetna Cigna and United Healthcare.
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Lawyers on both sides said the next important step would be a decision on whether the lawsuits would be accorded class-action status. U.S. Judge Dismisses Several Accusations Against Health Insurers New York Times February 21, 2002
2003
On Sept. 26, 2002, U.S. District Court Judge Federico Moreno refused to allow class-action status for fraud suits filed by millions of HMO members; however, in the same ruling he approved class-action status for up to 600,000 physicians suing for similar charges. - - - - - But Moreno said HMO members will have to sue their health plans individually - - - HMOS: WITHOUT CLASS-ACTION STATUS, PATIENTS DROPPING SUITS American Health Line May 2, 2003 Friday
In related news, health insurers such as Aetna, Cigna and UnitedHealth have been "quietly" settling individual consumer lawsuits following the lawsuits' failure to gain class-action status, the Hartford Courant reports. Under the settlements, in which the companies have acknowledged no wrongdoing, the HMOs have paid only "token amounts," ranging from $2,500 to $20,000, according to the Courant (Levick, Hartford Courant, 5/20). On May 2, the Courant reported that attorneys representing individual HMO members have been dropping lawsuits after they were denied class-action status. ADA: SUES SIX HEALTH PLANS OVER ALLEGED IMPROPER PAYMENTS American Health Line May 21, 2003
Doctors across the USA mounted a series of actions against the large HMOs. These were consolidated into class actions. The circumstances in all were almost identical as was the corporate fault complained of. The class was accepted by the court. Aetna led the way in negotiating a settlement with the doctors during 2003. They gave undertakings to behave more responsibly and made a small payment to the doctors. Aetna trumpeted this as the new kinder more ethical face of the company. This is a tactical victory for the HMOs as it brings the doctors into the corporate fold. They will not be anxious to support increased lawsuits by patients.
The doctors claimed this as a victory which would make practising under managed care more tolerable and would allow them to protect the interests of their patients. How effective they will be remains to be seen. Their track record in protecting patients from corporate greed is not good.
2003
A Kentucky judge, Joseph Bamberger of the Boone County Court, has issued an order permitting Kentucky physicians to pursue a price fixing class action case against the area's largest HMOs. LEGAL ISSUES: Kentucky judge rules against HMOs Managed Care Weekly Digest March 17, 2003
Cigna and attorneys for thousands of physicians nationwide on April 10 will enter mediation to discuss a proposed settlement of a class-action lawsuit filed against the health insurer in Illinois CIGNA: TO ENTER MEDIATION IN ILLINOIS CLASS-ACTION LAWSUIT American Health Line March 31, 2003 Monday
Aetna on Thursday became the first of nine health insurers named in the class-action lawsuit to reach such an agreement. The lawsuit alleged the firm's business practices cut payments to physicians and interfered with patient care.
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Doctors said the settlement, which also creates new payment procedures and a foundation to improve health care, will pressure the other defendants to reach similar accords.
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In a statement, lawyers for the eight remaining insurers said they intend to "defend the case vigorously'' and expect the class certification to be overturned on appeal. Officials Praise Aetna's $170M Settlement The New York Times May 23, 2003
Cigna will pay up to $200 million in back claims to over 600,000 physicians to settle a class-action lawsuit brought against the firm in Illinois federal court. Cigna used a software program called "Claimcheck" that reduced or eliminated payments for legitimate services. A separate class-action lawsuit is underway in Miami federal court against Cigna and seven other HMO's for allegedly rejecting claims for necessary treatments as part of a racketeering conspiracy. Cigna will also pay $24.5 million to settle allegations of Medicare fraud at a hospital it owns (Lovelace Hospital) in New Mexico. The settlement is the largest that the Justice Department has ever reached against a single hospital. Criminality in Managed Care May 23, 2003 AP Newswires
Aetna Chair Dr. John Rowe yesterday said that the company has agreed to pay $100 million to the physicians, $20 million to establish a foundation to improve the quality of health care and $50 million to cover the cost of the legal fees of the plaintiffs. The settlement also will provide an estimated additional $300 million to the physicians through improved automated systems that will eliminate some reimbursement reductions and expedite payments. - - - - Aetna does not admit wrongdoing in the settlement, which will involve about 18 medical societies and associations nationwide.
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Several physicians groups yesterday called the Aetna settlement a "historic action" that will allow doctors to spend more time with their patients and improve the likelihood that patients will receive coverage for treatments recommended by physicians. AETNA: CONFIRMS SETTLEMENT WITH 700,000 PHYSICIAN American Health Line May 23, 2003
Some of the nation's largest managed-care firms vowed to continue to fight a racketeering lawsuit filed against them by 600,000 doctors, despite Aetna Inc.'s announcement that it would pay $470 million to settle the case. HMOs Vow to Continue Fighting Doctors' Suit Los Angeles Times May 25, 2003
America's increasingly militant doctors won a key battle against health insurers last week, when Aetna agreed to a $470 million settlement with about 700,000 physicians who claimed the insurer systematically reduced their payments and interfered with their treatment of patients.
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In its landmark settlement, Aetna agreed to revamp its payment system, reduce doctors' administrative hassles, create a foundation to focus on patient safety and establish a ''National Advisory Committee of Practicing Physicians'' to provide guidance to Aetna on key issues involving doctors. Landmark deal; Aetna agrees to $470 million settlement with docs Modern Healthcare May 26, 2003
A federal judge in Miami gave Aetna preliminary approval yesterday for a $170 million plan to settle assertions by 700,000 doctors that the company unfairly cut reimbursements.
The settlement approved by Judge Federico Moreno of United States District Court gives physicians $100 million. Aetna, which is based in Hartford, also agreed to pay $20 million to create a foundation to address health care problems and $50 million in legal costs.
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Doctors also said Aetna interfered in patient care and required too much paperwork. Aetna Settlement With Doctors Wins Approval of Federal Judge New York Times May 30, 2003
Medical societies suing the major health plans hope their newly won settlement with Aetna will be the basis for a dramatic change in the way managed care deals with coverage decisions and physician payments.
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They say Aetna has basically agreed to AMA-CPT guidelines for processing claims and to a definition of ''medical necessity'' for coverage decisions that closely mirrors the AMA definition. Aetna settlement could change managed care Modern Physician June 1, 2003, Sunday
A class action settlement between Independence Blue Cross and the Pennsylvania Orthopaedic Society is expected to change payment practices for physicians in the Philadelphia area in much the same way Aetna's recent class action settlement with medical societies will for doctors nationwide. Pa. Blues plan pledges to alter pay practices Modern Physician July 1, 2003
Attorneys for many other big health plans, including UnitedHealth Group Inc. and WellPoint Health Networks Inc., have vowed to fight the charges. Settlement Unlikely With Cigna, Doctors Los Angeles Times July 8, 2003
Attorneys for Cigna and about 700,000 physicians on Tuesday said that by September the two sides hope to reach agreement on a revised settlement of a class-action lawsuit CIGNA: SETTLEMENT EXPECTED IN SEPTEMBER IN ILLINOIS SUIT American Health Line July 9, 2003
The settlement calls for Aetna to pay $4 million to 40,000 to 50,000 dentists and $1 million to the ADA Foundation, a charitable group. Aetna, Dentists Settle Class-Action Lawsuit Los Angeles Times August 20, 2003
Several of the nation's largest HMOs yesterday for the second time asked U.S. District Judge Federico Moreno to dismiss a lawsuit brought against them by 600,000 physicians nationwide who allege they were "routinely cheated" on payments for services, MANAGED CARE: HMOS AGAIN ASK JUDGE TO DISMISS PHYSICIANS'; LAWSUIT American Health Line August 20, 2003
In 2002, the Connecticut State Medical Society joined colleagues around the U.S. in a class-action lawsuit against the industry accusing insurers of shortchanging doctors and overruling their medical decisions. The case is pending in U.S. District Court in Miami, Florida. LEGAL ISSUES: Lawsuits, complaints turn up the heat on insurers in Connecticut Managed Care Weekly Digest September 1, 2003
Most of the court actions by attorney generals were still ongoing in September 2003. A few matters have been settled with nominal payments and undertakings.
The first and most interesting settlement was in Texas in 2000. The attorney general Morales was a long term campaigner against corporate behaviour and had taken many of the giants to court and won settlements. Unexpectedly, a week before he retired in December 1998 he commenced a court action against all of the major HMOs locking his successor into the action against them.
George Bush Jnr became governor of Texas around this time. The republicans were far more pro health care corporations than the democrats and had received large donations from Aetna and other corporations. There were suggestions that the new attorney general was involved in these donations in some way. In any event a settlement was negotiated with the HMOs. Both claimed it as a success and as setting a new path for the future.
When the medical profession and other attorney generals studied it they were critical and so was Morales. The attorney generals indicated that they would not settle on similar terms.
Texas
2000
Aetna, the nation's largest managed-care insurer, settled a lawsuit in Texas yesterday by agreeing to change several practices that doctors and consumer advocates portrayed as undermining patient care, like rewarding physicians who stayed within cost limits.
Aetna said it was ready to make similar changes in other states, but officials in New York and Connecticut said that, on first look, the Texas concessions were not far-reaching enough to satisfy their concerns.
The changes were the first since the company's new chief executive, William H. Donaldson, pledged last month to improve Aetna U.S. Healthcare's relations with doctors.
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Bowing to recently passed laws in most states that require outside reviews, Aetna had earlier established external review for denials of other types of care that are deemed medically unnecessary.
Aetna will also publish a pamphlet explaining how it pays doctors in Texas, and it will establish a company ombudsman to support customers who have health insurance complaints. The attorney general's office will oversee the agreement.
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Mr. Blumenthal, who has sued Physicians Health Plan, a big Connecticut-based H.M.O., said the practice of paying a set amount for each patient should be ended for all doctors -- not just those with relatively few H.M.O. patients.
Scott Brown, a spokesman for Mr. Spitzer, said his investigation would also continue. The New York attorney general has been examining Aetna's methods of approving or denying payment for care. Aetna Settles Texas Suit Over Doctors' Cost Rules New York Times April 12, 2000
Under yesterday's deal between Aetna U.S. Healthcare and Texas Attorney General John Cornyn, Aetna can't fine doctors who exceed medical budgets or give them bonuses for staying within limits.
Cornyn's predecessor, Dan Morales, sued Aetna and five other HMOs in 1998, accusing them of illegally compensating doctors who limited medical care and penalizing those who didn't. Incentives for docs feared by patients The Boston Herald April 12, 2000
The settlement between Aetna U.S. Healthcare and the Texas attorney general that both sides called a "landmark" model for the rest of the nation has run into stiff opposition from some physicians and other state attorneys general.
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Both Aetna and the current attorney general, John Cornyn, described the settlement as a groundbreaking deal that could become a model for the rest of the nation and would improve care to Aetna patients and members of other health plans that might agree to similar settlements.
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Kim Ross, chief lobbyist for the Texas Medical Association, said, "We have a number of concerns and will be seeking clarification as to the intent of the settlement" from Mr. Cornyn's office.
Richard Blumenthal, the attorney general of Connecticut, who is investigating certain practices of Aetna, said the Texas agreement "perpetuates and disguises two central failings endemic to the industry, undisclosed financial incentives for doctors to limit care and undisclosed criteria for discouraging claims."
"I think the hype and exaggeration that accompanied the announcement typified the industry's avoidance of truth and candor," he said
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But Mr. Morales said the settlement let Aetna off the hook. "I suppose the most troublesome aspect is the complete absence of any administrative sanctions, fine or penalty."
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The Aetna settlement came two weeks after Mr. Cornyn was the host at a fund-raiser in Austin for the Republican Attorneys General Association, a group that has solicited money from corporations, - - - - - -.- - - - Federal Election Commission records show that account has taken in $65,000 from Aetna since December, although Aetna declined to say whether that was donated through the attorneys general association. Physicians Fault Aetna U.S. Healthcare Settlement in Texas New York Times April 21, 2000
Other US states
1997
More bad news for managed care. In the span of a single week, Texas passes first-in-the-nation legislation to strip managed-care plans of their immunity against lawsuits in state court alleging patient harm from treatment decisions, the New York State Insurance Department launches an investigation into the claims-paying practices of HMOs and other health insurance companies, and Connecticut passes a bill offering patients the chance to overrule their health plans if they are denied coverage for medical treatments. 1997: THE YEAR IN REVIEW Modern Healthcare Dec. 22, 1997
2002
Georgia's insurance commissioner slapped Humana Employers Health Care of Georgia Inc. with the state's largest fine yet for violation of prompt-payment laws.Humana's fine of $400,000 is its second one in the past two years in Georgia. In 2000, Humana's share of $133,000 in fines against managed care companies for delayed payments was $15,000. News in brief Georgia fines Humana $400,000 American Medical News Feb. 11, 2002
In the past 3 years, eight Connecticut health insurers were fined a total of nearly $500,000 for breaking state laws over delays and denials of payments and at least six have agreed to policy changes to comply, according to a review by The Sunday Republican of Waterbury, Connecticut. LEGAL ISSUES: Lawsuits, complaints turn up the heat on insurers in Connecticut Managed Care Weekly Digest September 1, 2003
Aetna followed Columbia/HCA and Tenet Healthcare in doing a mea culpa, acknowledging their past failures and promising to do better in the future. Others will have little choice but to follow.
The thrust of the community's political effort was soon diverted by the September 11 bombing of the World Trade Centre and the wars in Afghanistan and Iraq. Support swung behind President Bush.
The democrats are hoping to make domestic issues, particularly health the focus of the next election. It seems likely that problems in these two conquered nations will remain the focus of political activity and that the ongoing problems in Iraq rather than domestic issues may bring Bush down.
There is currently a medical and community move for a single payer health system modelled on that in Canada but if the Clinton reforms are a guide to democrat party policy and resolve then we should not expect major changes in health care. Corporations perceive this sort of system as a major threat and have mounted costly campaigns to defeat state referendums for universal insurance.
There is little criticism of attempts to once again use market forces to address the problems created by market forces. Only critics like Robert Kuttner do so. In an extract on the first managed care page he clearly identifies market forces as the problem. His comments from the same article on the market solution follow here
2000
Third, managed care has become too heavy-handed. Both the center and the right would add new patients' rights legislation and rely on greater market competition to reward virtuous and efficient plans, and discipline the harsher ones.
Indeed, Republicans and centrist Democrats alike would use market forces, to deal with all three perceived problems. Federal budget balancers would resolve the Medicare shortfall by converting Medicare into a "premium support" program that herded the elderly into managed care plans.
This basic strategy is also the centrist solution to the problem of the uninsured. Bill Bradley would give low-income people the right to buy private insurance, assisted by a government subsidy. The health insurance industry, seeing a new market of 44 million Americans, is suddenly very solicitous of the uninsured.
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The Clinton plan is a patchwork of tax credits and subsidies for different population groups. It proliferates programs but does not lead to secure, seamless coverage.
What the various approaches have in common is that they reinforce the present system of private insurance and managed care. If anything, they rely even more heavily on market forces to contain costs and, in theory, to hold plans accountable to consumers.Herewith a very different view of the crisis in health care: Greater reliance on market forces cannot be the solution because marketization is the main problem.
(see previous extract here)
Any increases in government health outlay should move us toward universal, social provision, and away from the false idol of "competitive reform" and the travesty of private, for-profit managed care. Some forms of incrementalism are worse than nothing. Incremental Reform Toward What? By Robert Kuttner The American Prospect February 14, 2000
It is clear that the market and the HMOs believe that they have satisfactorily resolved the conflicts with doctors, escaped the threat of class actions from patients and successfully defused the political threat to allow effective legal action by patients and damaging restrictions on activities by patient rights legislation. The community did not get all they wanted. At best it was a compromise with some gains.
Rapidly rising profits, based on a willingness to rapidly increase premiums and continue cost cutting, as well as rising share prices are a good measure of this new confidence.
It is difficult to determine exactly what the outcome was from the press reports alone. This new confidence leads one to suspect that self regulation, arbitration and relatively ineffective patients rights have been dressed up in fine words as the solution to the problems. HMOs remain the lynch pin of the US market system and still generate profits by withholding care or by cutting quality.
An article in the Washingtom Post September 12th confirms that the thrust for patients' rights legislation quietly died away but that some limited gains were made in the process. Citizens won a few battles but the HMOs won the war. The competitive pressures remain. Efforts to contain these pressures in other sectors of the marketplace have been ineffective. They have not worked. We should remain sceptical. Time alone will tell.
2003
Riding a wave of growing prosperity in health insurance, Aetna reported a 28 percent increase in profit in the second quarter, joining three other industry giants that have reported better-than-expected results in the last two weeks.
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Since mid-July, the UnitedHealthcare Group, the nation's largest health insurer; WellPoint Health Networks, the second largest; and Humana Inc., another big insurer, have reported better second-quarter results than analysts anticipated. Aetna Profits Are Up 28% as Health Insurers Prosper New York Times July 31, 2003
We are still facing the challenge of rising health-care costs." Mr. Matsunobu also offers, in justifying the profit increase, that Kaiser was "better able to utilize hospital resources and control the number of outside referrals, which helped control expenses."
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Last year The Foundation for Taxpayer and Consumer Rights (FTCR) called for an investigation into unfair rates in response to a Goldman Sachs report projecting increased health insurer profits through 2006. "It is unconscionable that HMOs continue to gouge businesses and consumers with high premiums while they block access to necessary medical care," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. "State regulators should examine unfair rate setting in HMO premiums. State legislators should realize that HMOs are raising premiums to increase their own profitability at the expense of patient health."
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Not only is Kaiser under public scrutiny for reporting high profits while raising costs to its members, but the HMO is also the focus of a number of ethical issues regarding treatment of their patients by placing profit over necessary health care. Careless or Less Care? Kaiser's high profits give strong warning yet regulators appear to stand fast By Mike Fleming - Axcess Business News ? July2003
Health insurance premiums are expected to rise an average of 15% in 2004, the same increase seen this year, according to a new survey by benefits consultant Hay Group, Philadelphia. Many employers will make workers foot the bill for the entire increase, Hay said Premiums on the rise Modern Healthcare August 25, 2003
The state's nine largest HMOs made $90.7 million through June 30, despite losing 9 percent of their members since the end of last year.
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Half the till was taken by nonprofit Kaiser Permanente of Colorado, which made $46.1 million - - .
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"This is pretty consistent with what is happening around the country, which is that HMOs have been raising their premiums so fast that they have been able to for the moment -- and I underline that ... get comfortably ahead of the increase in medical costs," said Allan Baum-garten, editor of Managed Care Review.
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Kaiser said it improved its finances by containing outside medical costs and appropriately managing staffing levels. Kaiser's members also have spent less time in the hospital compared to last year. Kaiser snags largest share of HMO profits Denver Business Journal August 29, 2003
NEARLY THREE YEARS later, the government provides no federal safeguards for Americans in managed-care plans. Yet the crusade for patients' rights has faded from view, both at the White House and in Congress.Apart from one sentence in his State of the Union address in January, Bush has not mentioned the topic all year. The father of the patients' rights movement in Congress, Rep. Charles Whitlow Norwood Jr. (R-Ga.), resurrected legislation in March so half-heartedly that he decided not to seek any co-sponsors. In the Senate, the issue's main champions have not even gone through the motions of filing a bill.
It was two years ago that the drive to protect the nation's patients crested, when Bush and Norwood reached an agreement on the issue's most divisive aspect: how much recourse to give patients in the courts if their health plans deprive them of care. The House accepted the surprise deal, but more than a year of negotiations between the White House and the Senate quietly ended in an impasse.
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Its disappearance also attests to the limited attention span of policymakers and advocacy groups as fresh issues emerge. At the same time, the issue has dimmed as a political cause in part because the health care industry, states and courts have produced changes even though Congress did not act.
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Edward M. Kennedy (D-Mass.), countered: "When you've got a situation where Republicans control all the levers of power in Washington, and the insurance industry [is] calling the tune, it would be impossible to get a good bill through the House and the Senate."
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In a parallel trend, the nation’s courts have become more accepting of lawsuits against health plans by disgruntled patients. Courts had long held that managed-care plans were largely shielded from litigation as a side effect of a 1974 federal law governing employee health benefits.For patients' rights, a quiet fadeaway : Hill partisanship, HMO changes cooled a crusadeTHE WASHINGTON POST September 12, 2003
There have over the years been repeated suggestions that managed care is declining and that patients are reestablishing a community controlled market. These usually come from medical groups documenting a return to fee for service medicine by private doctors and patients willing and able to pay more.
The problem with this is that going back to something which had the problems which precipitated managed care is not a solution. It does not resolve the problems of the poor and the underinsured which managed care was started in the 1940's to address. However bad managed care has been, the central problem has been and remains the uninsured and the underinsured. This is not the HMOs fault but they have played a very active part in stopping attempts to address the problem and in making life more difficult for this section of the population.
Like Kuttner I argue that the failures in the system will not be resolved until the centrality of the share market in causing the problems is recognised. This means some form of universal insurance and the introduction or return to some form of community or not for profit dominated system.
Nonmedical readers of my web pages are often critical that I do not openly support their aggressive legal actions to address the problems and discipline the system. This is because I believe that the solution lies in a more civil society and in making health care into a community but not government provided and controlled service. This requires more trust not less and confrontational and aggressive law suits destroy trust. This does not mean that fair access to the courts should be denied but that it should be seldom needed. Patients and the community should have ready input into, and a measure of control over how the system operates. It should be responsive.
Clearly while health care remains a competitive marketplace activity then the only effective control is the customer or patient. She must be empowered if she is to fulfill her role in controlling cost and quality and penalising unsavoury conduct. In no other sector of the market is the customer disempowered and discriminated against in this way. The willingness of corporations to hide behind legal restriction of basic rights and politicians' willingness to support legislation restricting basic legal rights makes a mockery of their marketplace justifications. If they are to harness market forces and make health care more market like then customers must have all their rights restored.
2003
"In a state like California, that led the charge into managed care, the retreat really has now sounded for managed care," said Kevin Grumbach, MD, principal author of the CWI report, "California Physicians 2002: Practice and Perceptions," and director of research at the University of California, San Francisco, Center for the Health Professions.Doctors in the state are feeling more empowered to exclude HMOs and limit their practices to patients willing to pay cash upfront or those from preferred provider organizations or point-of-service organizations, said Dr. Grumbach, an associate professor in the Dept. of Family and Community Medicine at UCSF.
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Less affluent people are tending to retain their HMO coverage and are having trouble finding doctors while upper-middle-class employees in group plans are opting for more flexible plans, frequently paying more out of pocket for care, Dr. Grumbach said.Only 58% of California doctors accept new HMO patients. More California physicians rejecting new HMO patients American Medical News January 2003 (Source: The Center For the Health Professions, University of California, San Francisco)
As health insurers rack up 28 percent to 78 percent increases in second-quarter net profits, small group employers (2-50 employees) face 2004 double-digit cost hikes.
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During the last five years, 110,000 small businesses dropped employee health coverage, leaving 700,000 Floridians uninsured, according to the Florida Division of Insurer Services in Tallahassee. Coping with surging costs South Florida Business Journal August 29, 2003
Lobbyists for the health insurance industry praised Congress for its efforts to inject market forces and competition into Medicare. But they said Congress needed to change the rules for such competition and to increase payments for private plans to make Medicare an attractive business proposition. Private Health Insurers Begin Lobbying for Changes in Medicare Drug Legislation New York Times July 1, 2003
