Democracy in the U.S. Health Care Reform Debate

Yesterday (October 13) I sent the following feedback to AHIP regarding K. Ignagni's performance in an interview on CNN:

This is just to express my deep concern regarding the interview of K. Ignagni by W. Blitzer on CNN this afternoon. Ms. Ignagni has demonstrated a disturbing lack of understanding of the research issues raised in the PWC report. I do hope that there is some other research expertise at AHIP. The instructions given to PWC are not clear, nor is the contractual arrangement between PWC and AHIP. It is also a very significant concern that the names of the researchers involved in the report are not mentioned on the document made available to the public. There seems to be no avenue for questions concerning data analysis or interpretation. I hope that in the future AHIP will be able to fund more competent research.

In other feedback to CNN I deplored the absence of a specific reference to the AHIP report in some of their reporting. There are two issues affecting the democratic process here:

1. A report without reference or authors is interpreted without an evidence base.
2. The confidential contract research executed and interpreted by an organization (PwC) with no accountability to show research competence creates misinformation to inform public opinion. Ms. Ignagni, herself paid to initiate misinformation, represented PwC as a "world-class research organization," while refusing to identify the conditions of this paid contract. No world-class research organization would consent to execute such a contract. Ms. Ignagni probably does not possess any competence in research methodology, nor do the authors of the report.

The health insurance industry has acted irresponsibly in this democratic process, mobilizing what the public in general would recognize as "authoritative research" in order to manipulate public opinion in their favor.

AHIP-PWC Report: Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage

A new headline on CNN, Pushback grows against insurance industry report, points out some significant criticisms of the AHIP-PWC report as self-serving and flawed.

This morning I identified a link where the much publicized report may be accessed:
Potential Impact of Health Reform on the Cost of Private Health Insurance Coverage (October, 2009). (Unfortunately the authors of the report are not listed.)

Review of the analyses in this report reveals methodological features that require comment. CNN has reported (Accessed October 13, 2009):
The report from the group America's Health Insurance Plans concludes that, under the Baucus plan, the costs of private health insurance would rise by 111 percent over the next decade. Under the current system, costs would rise by 79 percent, the report said.

This scenario is partially founded on the following proposition regarding the excise tax to be imposed on Cadillac plans. (See page 6 of the report.) This proposition appears spurious. (Certainly in the next ten years it would be reasonable to assume that the threshold values for assessment of the excise tax would be adjusted):

PwC also examined the impact of the excise tax on the mandated plans expected to be offered under the state health insurance exchanges detailed in the Senate Finance Committee Bill. We estimate that in many metropolitan areas, which tend to have higher than average medical costs, the lowest option plan (Bronze Plan) would be considered a "Cadillac plan" as early as 2016. By 2016 at least one of the mandated plans will be considered a "Cadillac plan" and be subject to the 40 percent excise tax in 17 of 50 states. By 2019 at least one of the mandated plans will be considered a "Cadillac plan" and be subject
to the 40 percent excise tax in 24 of 50 states.

The "baseline" assumptions for this scenario from the Senate Finance Committee Bill include a 6 percent annual trend (premium increase); 15 percent supplemental load for additional benefits, age, morbidity and other factors. Certainly the CBO should examine this industry financed report to evaluate data and assumptions at the foundation of its conclusions.

WellPoint Litigation II

In my last post, I highlighted litigation launched by Anthem, a subsidiary of WellPoint, against the state of Maine. This case raises a number of questions for further investigation of private health insurers' conduct in the U.S. health care services market:

What legal and other strategies are undertaken against state regulatory agencies to promote acceptance of annual rate revisions? How do state agencies respond to these initiatives. What public expenditures are required for these defensive regulatory actions? What proportion of premium revenues is spent on such litigation by private insurance companies against public authorities?

Why are individual policy holders more vulnerable to discriminatory rate increases than other classes of insurance purchasers? What issues and practices restrict the choices and mobility of individual policy holders among insurance alternatives? Consider the discovery of pre-existing conditions making it impossible for individuals to seek other coverage. In general - how do confidentiality and privacy laws prevent publication of systematic information on health insurance performance to guide individual choices?

Why should any rate of profit be guaranteed in a "free market economy"? How is this demand at the state level correlated with the insurer's dominant position in the state economy?

Further examination of WellPoint's record reveals other cases of public interest - for example:

Last year the California Department of Managed Health Care reached agreement with Anthem Blue Cross on contentious cases of rescission. (Accessed October 12, 2009)

Lawsuits filed over health insurers’ payments
for out-of-network care:
A group of health insurers have been named defendants in
multiple lawsuits stemming from payments made to
out-of-network providers.

One lawsuit was filed by the American Medical Association.
It claims thatWellpoint Inc. and others conspired to pay
reduced rates to out-of-network providers. Another lawsuit
was filed by Michael Roberts. Roberts’ lawsuit claims that as
a result of the scheme, consumers were forced to pay increased
costs associated with their care. The lawsuit filed by
Roberts names Wellpoint along with UnitedHealth Group
Inc., Ingenix Inc. and Blue Cross of California.
Roberts v. UnitedHealth Group Inc., No. 09-1886 (C.D.
Cal. complaint filed Mar. 19, 2009)
Counsel for Roberts: Christopher M. Burke, Kristen M. Anderson, Scott
& Scott L.L.P., 213-985-1274, Los Angeles.
Am. Med. Ass’n v. Wellpoint Inc., No. 09-2039 (C.D.
Cal. complaint filed Mar. 25, 2009)
Counsel for AMA: Edith M. Kallas, Joe R. Whatley Jr.,W. Tucker Brown,
Laurence J. Hasson, Whatley Drake & Kallas L.L.C., 212-447-7070,
New York; Stanley G. Grossman, D. Brian Hufford, Robert J. Axelrod,
Pomerantz Haudek Block Grossman & Gross L.L.P., 212-661-1100,
New York; Raymond P. Boucher, Helen Zukin, Michael Eyerly, Kiesel
Boucher Larson L.L.P., 310-854-4444, Beverly Hills, Cal.

Source: http://media.straffordpub.com/products/insurance-law-and-litigation-week/free-sample.pdf (Accessed October 12, 2009)

See also AMA Implicates WellPoint in Price-Fixing Plot at http://www.law360.com/articles/93856 (Accessed October 12, 2009)

An American Psychological Association Practice Update describes a class-action suit brought by state governments and solicits information from psychologists affected:

The complaint seeks damages under the Employee Retirement Income Security Act (ERISA), the federal antiracketeering law known as RICO and antitrust law for past underpayments. Further, plaintiffs will seek changes to make WellPoint’s out-of-network rate setting fairer and more transparent. (Accessed October 12, 2009 )

An investigative report- Underpayments to Consumers by the Health Insurance Industry - was published on June 24, 2009, by the SENATE COMMERCE COMMITTEE in its federal roles of oversight on interstate commerce and regulation of consumer products and services. This report found widespread reliance on Ingenix medical charge databases for calculation of out-of-network reimbursement rates as well as contract arrangements between Ingenix and insurers providing rate data specifically prohibiting disclosure of such information to consumers or doctors. Ingenix does not have any systematic procedures in place for validation of information included in the databases. More than 2 million federal employees and military families are enrolled in health plans affected.

(Accessible publications including what should be the public record are very difficult to find.)

WellPoint Litigation against the State of Maine

The lawsuit recently brought by WellPoint against the state of Maine has not been adequately covered in the conventional media. This case deserves to be more seriously researched to illustrate the market information culture created by private insurance companies in the United States. Documents related to regulatory decisions against Anthem Blue Cross and Blue Shield, a subsidiary of WellPoint, are publicly available on the website of the Bureau of Insurance - Department of Professional and Financial Regulation -of the State of Maine. The mission of the Bureau is to regulate the insurance industry to protect and to serve the public. Specifically the Bureau licenses insurance producers and companies, performs examinations and audits, reviews rates and coverage forms, investigates complaints, educates consumers about their legal rights and responsibilities, and sponsors programs to promote compliance with state laws. The Anthem rate filing for 2009 and the Bureau decision are publicly available even though WellPoint has consistently attempted to have this and related documents and proceedings treated as confidential.

In 1999 Anthem, a subsidiary of WellPoint, bought the Blue Cross and Blue Shield not-for-profit health plans operating in Maine and transformed them into a for-profit business. Since that time premium rates paid into the plans by average individual subscribers have increased 4 fold. (There are approximately 12,000 individual subscribers to Anthem health insurance products in Maine.) The rate increase submitted to the Maine Bureau of Insurance in 2009 was 18.2% to guarantee Anthem a minimum profit margin of 3%. This increase has been rejected as unfair and excessive in favor of an increase of just 10.9%. Anthem is suing the State of Maine for this regulatory action judged discriminatory.

Brave New Films has posted a very informative video account of this suit. See also Sick for Profit:





The Main Public Broadcasting Network aired the story: "Anthem Sues State of Maine over Rate Hike Request Denial" on October 5. The Columbia Journalism Review published an article entitled WellPoint versus the State of Maine on October 9 giving some additional details about the litigation.

Health Information Exchange Update

As already discussed in earlier posts, the eHealth Initiative has published a series of annual reports on the progress of RHIOs across the United States. The most recent report, "Migrating toward Meaningful Use: The State of Health Information Exchange" presents the results of the 2009 Sixth Annual Survey of Health Information Exchange. A review of this report reveals some serious methodological considerations affecting interpretation of study results. Current U.S. policy for health care system reform is founded on the proposition that emerging RHIO networks will coalesce into a national health information infrastructure for HIE. There still is no evidence base to substantiate this proposition, and as pointed out earlier, there is no business model for development of sustainable RHIOs.

The summary results of the 2009 survey claim a 40% increase in the number of "advanced or “operational” initiatives exchanging information," as well as positive impact on efficiency of care and return on HIE investment. Evaluation of the sample described in the full report shows however that the increase in number of initiatives (n=150 organizations - up from 130 in 2008) is based on a shift in the earlier sample. In the report section on study methodology, it is stated that 344 individuals responded to the survey announced through a variety of media and incentivized with $10 Starbucks Cards. It is not clear how these individuals were qualified to respond to survey questions, and there was no control for variance in responses due to different positions held by respondents. After review of responses received, 150 HIE initiatives were judged valid to be included in the analysis although there was no systematic verification of information provided by individuals completing the survey, and no uniform definition of an HIE initiative.

Although authors of the study attempted to obtain responses from all organizations responding to the survey in 2008, only 66 of the earlier sample responded in 2009, while 84 (more than half) of the 2009 sample were new respondents. This shift indicates a highly significant "mortality" rate among HIE initiatives which is not even addressed by the study authors - except as they state that 43 of these initiatives appear to continue their pursuit of HIE. Such "mortality" may suggest the lack of sustainability in business model design. Some of the data presented seem to corroborate this interpretation. While public funds seem very significant in initial HIE start-up (See figure 12.) - including federal, state and local government grants and contracts (n=99) - private payers contribute to start-up much less frequently (n=26). Ongoing sources of revenue shown in figure 13 indicate the withdrawal of public sector funding. This pattern is particularly interesting in light of the exchange of data for insurance enrolment, claims, and eligibility determination (See figure 9.). HIE seems heavily focussed on the management of the financial dimension of health care (n=52). While public funding is mobilized for HIE start-up, the private sector appears to benefit disproportionately from services offered. For example, the Utah Health Information Network is well developed for coordination of information for payers, but offers virtually no clinical services at this time. This network is also characterized as "uniquely Utah", with no provision for future linkage outside the state.

The Directory of Health Information Exchange Initiatives offers a useful database for further examination of emerging RHIOs.

CCHIT has made available a presentation of its New 2011 Certification Programs, including HIE, but there is increasing recognition of the need for a national health information infrastructure. There will be much waste in certification fees paid for an uncertain and ill defined process. Without necessary and sustained public investment in infrastructure, the promise of health information exchange across the U.S. will remain unfulfilled. While some experts and lobbyists claim that this promise will be realized within a time frame of two years, many understand that the ideologically charged debate concerning infrastructure design and implementation will probably extend well beyond 2014. Unfortunately for American patients and taxpayers, many business opportunities reside in the prevailing confusion of future scenarios for U.S. health care reform.