Tuesday, October 29, 2013

Obamacare: Meet the Real Death Panel

Recently, President Obama assembled a brain trust of health care industry CEOs to discuss the (ahem) rocky beginning of the Affordable Care Act (aka ACA, aka Obamacare). These sages included Bruce Broussard (CEO, Humana), Mark Bertolini (CEO, Aetna), and Joseph Swedish (CEO, WellPoint). It is worth taking a closer look at these three fellows, because they provide an insight into realities of Obamacare that its supporters tend to gloss over.
The Real Death Panel: Broussard, Bertolini, and Swedish. Power ties!

Bruce Broussard (CEO, Humana)

Mr. Broussard received some unwanted attention when it was disclosed that he had used $323,000 of company money to commute to work by aircraft. His total compensation is $2.9 million (source). When backers of Obamacare talk about the fact that insurers will be required to keep their profit margin to a minimum, they are conveniently leaving out revenue. It is revenue that makes the stock prices go up, pads Mr. Broussard’s salary, and supports his luxurious commute via private jet.
Mr. Broussard is notable for repealing the Law of Supply and Demand:

"I want to say that we are very positive [about] the fact that health care reform is going to expand coverage [demand]... But it is going to raise the cost of care (source)."
Mr. Broussard’s investment in the success of Obamacare is questionable. In Kentucky, Humana sent its individual market policy holders a letter urging them to renew their policies before 2014, and thereby avoid participating in Obamacare:

"The amendment purported to allow policyholders to keep their current plan for the 2014 calendar year and thereby avoid rate increases due to the ACA’s requirements that policies remove exclusionary riders and provide coverage for 10 categories of so-called essential health benefits (source)." 
In 2011, Humana was fined $3.4 million for failing to report Medicaid fraud. On multiple occasions, Humana has been fined for improperly colluding to fix the reimbursement amount paid to physicians. The company has also violated labor laws by requiring staff members to work additional hours with no pay. In 2001, a Texas jury found Humana guilty of wrongful death resulting from improper care of a woman with kidney disease (source).

Mark Bertolini, Aetna

Clearly, passage of ACA did not alarm the board of directors at Aetna. In 2012, Mr. Bertolini’s pay package nearly quadrupled, totaling $36.23 million (source). 

Mr. Bertolini has announced that, in order to offset new Obamacare taxes, premiums will be raised across the board (source). What are these taxes? To raise money to provide “affordable” insurance, Obamacare taxes so-called Cadillac health plans that are offered by some of the more generous employer-sponsored health plans (source). Thus, when people pay Obamacare premiums, they are subsidizing Cadillac health plans for which they are ineligible.

Aetna policyholder Kevin Roberts faced a year long struggle to convince Aetna to pay for medical care for his autistic child, despite the fact that this care is explicitly covered under the Aetna policy he purchased (source).

Aetna has been fined more than $1 million for deceptive advertising. Also, despite being under a contractual obligation to do so, Aetna failed to cover mental health care, pap test screening, mammography, and preventive care for children up to age six (source).

Joseph Swedish, WellPoint

WellPoint ousted Angela Braly because she wasn't bringing in enough money to satisfy Wall Street (source) and the company looked to Joseph Swedish to take her place. To lure Mr. Swedish away from his previous job at Trinity Health Corporation, WellPoint paid Swedish a salary of $1.25 million, with a bonus of as much as $3.75 million more, according to a company filing. He will also get stock options worth as much as $8 million and a payout of $3.56 million to make it worth his while to change jobs (source). 

WellPoint made the news in 2010 for leading the way in the practice of rescission. This refers to a practice of cancelling the policies of customers who develop expensive health conditions such as breast cancer (source). Obamacare enrollees are, according to the law, protected against this sort of mischief but it is worth pointing out this practice as an indication of WellPoint's level of corporate citizenship.

In 2013, WellPoint was fined $1.7 million for violating federal HIPAA laws and exposing confidential patient health data, social security numbers, dates of birth, and other information on its website (source). In 2012, WellPoint paid four and a half billion to buy out Amerigroup, and in doing so became one of the largest Medicaid providers in the country (source). As the Wall Street Journal points out, this is part of a larger trend in which private business and government are becoming increasingly intertwined. And that last sentence ought to be terrifying to the reader, because it brings to mind a dystopian future in which the rapacity of big business and the power-without-accountability that is our federal government merge to become a supercharged money-sucking juggernaut. But I digress.

Honorable Mention: Other Attendees of the Obama Meeting

Karen Ignagni, America’s Health Insurance Plans (AHIP)

AHIP is a lobbying group for health insurance companies. Before Obamacare became law, it seemed as though President Obama and AHIP were on opposite sides of the issue, and Ms. Sebelius even sent them a nastygram to complain about its tactics. In 2009, the president devoted one of his radio addresses to denying AHIP's allegation that Obamacare would increase the cost of policies in the individual insurance market (source). So it's surprising that AHIP received an invite from the White House. What's not surprising is that the cost of individual policies has gone up.

AHIP is currently led by Karen Ignagni. Mrs. Ignagni declared, prior to the passage of Obamacare, that America’s health insurers would be able, under Obamacare, to offer individual health insurance plans at a lower price. But she had to say stuff like that because at the time, there was still talk of a public option and she needed to stop that tout de suite (source). Once the public option was taken off the table, insurance company stocks went up 20%.

Mrs. Ignagni also claimed that AHIP members could get better prices than the federal government on pharmaceuticals for Medicaid recipients, but in reality, paying AHIP members to buy medications is (as one might expect) a more expensive approach (source). In other words, there are people out there who are willing to profiteer off Americans who are blind, physically disabled, or who are the poorest of the poor (i.e., Medicaid recipients).

Bernard Tyson, Kaiser Permanente.

Kaiser made the news recently for demoting a nurse working in Kaiser Hospital, because she has breast cancer, allegedly in the hope of convincing her to quit (source). Kaiser has also been found guilty of overcharging Medicare for reimbursements (source). Now, if I were given the task of picking companies to participate in providing affordable healthcare to Americans, I'd automatically disqualify a company that has a record of stealing taxpayer money. But that's just me.

Michael Neidorff, Centene Corporation.

Another invitee to President Obama’s council of sages was Michael Neidorff, CEO of Centene Corporation. He earned between $8.5 million and $10 million in 2012 (source), (source). It’s actually hard to tell how much folks like him make, because they benefit from various bonuses and payouts that vastly exceed their base salaries.

Centene is “a provider of managed Medicaid programs, [and] offers health plans in 18 states.” It “posted a 2011 profit of $111.2 million on revenue of $5.3 billion. The company reported first-quarter 2012 net earnings of $24 million on revenue of $1.7 billion (source).” You read correctly. You might have been under the impression that Medicaid is like Medicare or Social Security, with low administrative costs, but that is not the case. Companies can and do earn big money from Medicaid.
In Illinois, state records show that Centene gave $100,000 to the Democratic Governors Association on July 26, 2010 — two months before the firm received contracts to provide Medicaid services in three Illinois counties (source). 

Despite the alleged safeguards built into the Obamacare legislation, Peach State Health Plan, a Centene subsidiary, was recently fined $3.7 million for engaging in practices that put Medicaid patients at risk of death. If “risk of death” sounds like hyperbole, what I am discussing here is delays in prior authorization for medical services. Sometimes a delay means that a claim is denied and must be resubmitted. If you are living with cancer, delays in treatment can harm your chances of survival (source) (source). Psychiatrists spend 1 million hours a year on the phone trying to get prior authorizations, and emergency psychiatric patients who are at risk of suicide or who are at risk of harming other people are prevented from receiving care for hours (source). This makes health care more expensive to society and less efficient, but it does save health insurance companies some money. 

The hefty penalty centered on Peach State's inability to grant ‘prior authorization’ for medical services within two weeks -- the national standard for the time a health-care plan should take to grant or deny coverage to a patient. Peach State was failing to meet that target almost 20 percent of the time, potentially putting patients who needed coverage for medications, tests or other critical medical services and equipment at risk, according to sources close to the situation (source).
It has been alleged that “senior executives at Centene used their access to insider information” to sell “more than 374,000 shares of stock from Feb. 7 to June 8 [2012], resulting in total proceeds of nearly $18 million.” Shortly after that sell-off, the price of Centene stock fell $1.65 a share (source). Here is an example of a health care organization wheeling and dealing like a Wall Street bank, and possibly angling to be one of tomorrow’s “too big to fail” institutions. So it goes.

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