MUST SEE TV: AHIP Hits the Nightly News To Discuss Costs and Set the Record Straight on Health Plan Profits
Posted by The Campaign on March 09, 2010 at 4:57 PM
CBS and ABC both reported on today's developments in the health care reform debate. Watch the full clips below which include important setting the record straight segments on health plan profits as well as good discussion on what is driving premium increases.
AHIP's Karen Ignagni on CBS Evening News:
AHIP's Robert Zirkelbach on ABC Evening News:
POLL VAULT: Latest Gallup Poll Shows Americans Most Concerned About Costs
Posted by The Campaign on March 09, 2010 at 2:46 PM
Gallup released its latest poll, and it shows among people who oppose the current reform legislation the biggest reason for opposition is the impact the legislation will have on costs.
Key findings:
There has been greater change in opponents' stated reasons for wanting to defeat the president's proposed healthcare legislation. Now, 20% of opponents say it will raise insurance costs, up from 9% in September. Nineteen percent currently believe the legislation will not address the real problems in the system, up from 10% in September.
Over time, healthcare reform opponents have increasingly come to doubt whether the legislation Congress is considering will control costs and really fix the problems that plague the healthcare system. Supporters are more hopeful that it will make insurance more affordable, but much of their support rides on their belief that all Americans should have insurance.
Full results, click here.
ICYMI: AHIP's New Ad - Pie
Posted by The Campaign on March 09, 2010 at 2:06 PM
AHIP today launched a new national television ad campaign that puts into perspective health insurance companies' contribution to rising national health care spending and urges Washington to focus on the true drivers of rising health care costs.
ICYMI: Slate's Tim Noah on Health Care Costs and Health Plan Profits
Posted by The Campaign on March 08, 2010 at 2:52 PM
While in general Tim Noah's recent article on Slate.com is off in many ways, he does have two very good points on health care costs and health plan profits.
Here they are:
On Health Care Costs: "Health insurers and other complain that the health reform bill does little to control doctor and hospital bills, especially in the private sector. That's true."
On Health Plan Profits: "Profit margins in the health insurance business aren't especially great. On Fortune magazine's list of the 53 most profitable industry sectors, health insurance ranks 35th."
FACT CHECK: Previous Medicare Advantage cuts caused seniors to lose their coverage
Posted by The Campaign on March 08, 2010 at 1:59 PM
FACT CHECK: Previous Medicare Advantage cuts caused seniors to lose their coverage
- According to CMS, enrollment in Medicare Advantage (then known as Medicare+Choice) experienced multi-year declines following enactment of the Balanced Budget Act of 1997.
- Between December 2001 and December 2002, Medicare Advantage enrollment declined by more than 900,000.
- From 1999 to 2003, nearly 2.4 million Medicare beneficiaries were impacted by plan withdrawals and service reductions. (Source: CMS Medicare Managed Care Geographic Service Area Reports)
What Happened Last Time: Following the Medicare Advantage cuts in the Balanced Budget Act of 1997, millions of seniors across the country saw higher premiums, a reduction in benefits, and loss of coverage:
- Medicare Cuts Threaten Florida HMOs (Orlando Sentinel, 1/31/1999)
"Now the Clinton administration is warning health-care providers that the president's proposed budget for fiscal 2000, due Monday, may call for even deeper cuts to Medicare...HMOs could also feel the pinch...If further cuts are made, more elderly and disabled people could lose their managed-care plans."
- Plunging HMO drug benefits leave Medicare patients in a pinch (The San Diego Union-Tribune, 2/27/2002)
"Beginning this year, however, HMOs placed a far heavier financial burden for drugs and other medical services on patients...The situation stems from limits imposed by federal legislation in 1997 that kept Medicare health plans from receiving health-cost reimbursement increases above 2 percent a year, despite soaring health care costs."
- Two More HMOs to Drop Medicare Patients in Louisiana (Times-Picayune, 7/16/1999)
"It is the second consecutive year that thousands of Medicare recipients have been displaced nationwide...after Congress voted to reduce reimbursements. Industry officials say more shakeouts are in the offing with another round of cuts on the horizon.
This year, Louisiana ranks behind only New York in the number of Medicare beneficiaries who will be forced to look elsewhere for the generous drug coverage and preventive health benefits of government-sponsored managed-care insurance."
- More Health Plans Quit Medicare; 711,000 Elderly, Disabled to Lose Broad HMO Coverage (The Washington Post, 6/30/2000)
- BCBS follows trend, drops area Medicare HMO (Jacksonville Business Journal, 9/13/2002)
"Even federal officials admit the program is underfunded. The Medicare Plus Choice program is in ‘bad shape,' said Thomas Scully, administrator of the Centers for Medicare and Medicaid Services."
- Dozens of HMOs Quit Medicare, Patients Face Upheaval (Washington Post, 10/4/1998)
- Seniors in California's Central Valley See Medicare HMO Options Reduced (The Fresno Bee, 3/20/2002)
- Elderly will be forced to change health plans as HMOs plan to withdraw from Medicare (The Philadelphia Inquirer, 6/29/2000)
- Medicare HMO Bills Will Grow: Premiums, Higher Fees Should Start by Jan. 1 (Orlando Sentinel, 11/5/1999)
"Since the cuts, health insurers have bailed out of the Medicare HMO business at alarming rates...The Medicare cuts are being felt most in states such as Florida with large numbers of retirees."
- Many H.M.O.'s For the Elderly Cut or Abolish Drug Coverage (The New York Times, 1/25/2002)
- HMO Cuts Coverage of 11,000 Seniors (The Boston Globe, 7/6/2000)
- California-Based HMO to Drop Medicare Coverage in Three Arizona Counties (The Arizona Republic, 6/30/2000)
FACT CHECK: Seniors in Medicare Advantage Receive Higher Quality Care
Posted by The Campaign on March 08, 2010 at 1:57 PM
Seniors in Medicare Advantage spent fewer days in a hospital, were subject to fewer hospital re-admissions, and were less likely to have “potentially avoidable” admissions, for common conditions ranging from uncontrolled diabetes to dehydration, according to an analysis of publicly available AHRQ data.
The study analyzed statewide datasets on hospital admissions in California and Nevada compiled by the Agency for Healthcare Research and Quality (AHRQ). The unique data in these states allows for direct comparisons of utilization rates among enrollees in Medicare Advantage plans and in FFS Medicare. These comparisons were adjusted for health status using the Medicare risk score process for age, sex, and 70 Hierarchical Condition Categories that are used as a basis for Medicare risk adjustment. Key findings from the report include:
- Medicare Advantage beneficiaries in California spent 30 percent fewer days in the hospitals than patients with FFS Medicare, and in Nevada, seniors in Medicare Advantage plans spent 23 percent fewer days in the hospital.
- Medicare Advantage enrollees were re-admitted to the hospital in the same quarter for the same condition 15 percent less often in California and 33 percent less often in Nevada compared to FFS Medicare.
- In both California and Nevada, seniors in Medicare Advantage were 6 percent less likely than seniors in FFS Medicare to be admitted to the hospital for conditions described by AHRQ as “potentially avoidable,” such as dehydration, urinary tract infection, or uncontrolled diabetes.
Press Release | Full Report (updated)
This analysis follows a previous AHIP study comparing utilization rates among patients in eight Medicare health plans compared to seniors in FFS Medicare. This study among seniors with certain chronic conditions also found that:
- Medicare Advantage beneficiaries spent an average of 18 percent fewer days in the hospital than seniors in FFS Medicare.
- Seniors in Medicare Advantage had an average of 27 percent fewer visits to the emergency room than those seniors in traditional Medicare.
- Seniors enrolled in Medicare Advantage health plans also experienced a 42 percent lower rate of hospital re-admissions than those seniors in FFS Medicare.
- Avoidable admissions to the hospital were 13 percent lower among seniors in Medicare Advantage plans than those in traditional Medicare.
Full Report (updated) | Slide
FACT CHECK: What They Are Saying About Health Plan Profits
Posted by The Campaign on March 08, 2010 at 7:39 AM
Independent experts and economists all agree -- health plan profits are not driving health care costs or premiums higher. Here are what some of the experts are saying:
Alwyn Cassil, Center for Studying Health System Change:
“‘…this idea that (taking) this $12 billion that they have in profits … would fix our health-care spending problems is just a pipe dream.’” (Louisville Courier-Journal, Health insurers defend profits, 02/21/10)
Henry Aaron, Senior Fellow, Brookings Institution:
“‘Insurance company profits in the large picture have very little to do with the overall rising cost of health care,’ said health care expert Henry Aaron, a senior fellow at the Brookings Institution.” (ABC News, Health Insurance Profits: Not So Outrageous After All?, 11/10/09)
Kaiser Health News:
“With the nation’s health care spending estimated at $2.5 trillion this year, even the elimination of insurers’ profits and executive compensation would lower health care spending by just 0.5 percent.” (Kaiser Health News, Ad Audit: What If?, 06/19/09)
Jeff Jacoby, The Boston Globe:
“To such overheated agitprop, the only useful response is a cold shower of facts, and the Associated Press supplied a timely one last week. For all the impassioned talk about obscene profits and bodies piling up, reports AP’s Calvin Woodward, ‘health insurance profit margins typically run about 6 percent’ of revenue, a return ‘that’s anemic compared with other forms of insurance and a broad array of industries.’” (The Boston Globe, Jeff Jacoby, Hyperbole in the health debate, 11/01/09)
Rick Newman, U.S. News & World Report:
“...on the whole, blaming insurance firms for runaway healthcare costs is a weak argument, because the insurance industry isn’t all that profitable to start with.” (U.S. News & World Report, Why Health Insurers Make Lousy Villains, 08/25/09)
Steve Pearlstein, The Washington Post:
““Health insurance companies aren’t ridiculously profitable over time.” (The Washington Post, Weekly Q & A, 10/28/09)
Associated Press:
“Health insurance profit margins typically run about 6 percent, give or take a point or two. That’s anemic compared with other forms of insurance and a broad array of industries, even some beleaguered ones.” (Associated Press, FACT CHECK: Health insurer profits not so fat, 10/25/09)
Dr. Peter Kongstvedt, Economics Professor, George Mason University:
“Insurance companies are not the major drivers of cost inflation.” (CBS News)
Ezra Klein, The Washington Post:
“...it’s hard to see how [health plan profit margins of 3.3%] are a primary driver of health-care spending, much less the growth in health-care spending.” (The Washington Post, Ezra Klein, Profits and the Insurance Industry, 09/10/09)
Rick Newman, U.S. News & World Report:
“Some reformers want health insurers to simply hand over a chunk of their profits to help lower premiums and overall healthcare costs. The Senate Finance Committee bill, for instance, would levy a $6.7 billion annual fee on insurers to help pay for reform, in addition to fees on drugmakers and device manufacturers. But insurance companies aren’t the cash cows some imagine them to be. The profit margin for health insurance companies over the past year was 3.4 percent, according to the research firm Morningstar. That’s better than the median of 2.2 percent, but it ranks only 87th out of 215 industries. Drugmakers, by contrast, have a profit margin of 16.4 percent.” (US News & World Report, Why More Competition Won’t Fix Healthcare, 10/29/09)
The New York Times:
“The president said that health insurance companies were making ‘record profits.’ America’s Health Insurance Plans, the main lobby for insurers, contends that ‘for every $1 spent on health care in America, approximately one penny goes to health plans’ profits.’” (The New York Times, Experts Dispute Some Points in Health Talk, 07/23/09)
Les Funtleyder, Health Care Analyst:
“‘2008 was a terrible year. So the comparisons, while numerically correct, leave out a bit of context.’ Health care analyst Les Funtleyder at Miller Tabak says millions of people lost coverage last year because they lost their jobs, not because insurers purged their rolls.” (Marketplace, Insurer profits rise while coverage falls, 02/12/10)
Bill Frezza:
“If you took all the profits that all the health insurance companies made in 2009 and used them to pay for medical care in 2010 you would cover the country's medical bills for ... two days. Then what?” (RealClearPolitics.com, Why Washington Can't Reform Healthcare, 02/15/10)
FACT CHECK: Putting Health Plan Profits in Perspective
Posted by The Campaign on March 08, 2010 at 7:32 AM
Health plan profits continue to be a focus of the reform debate. Here are some important facts about health plan profits:
Analyzing 13 of the 14 health plan companies on the Fortune 500 list (these 13 have filed their initial year-end financial statements with the SEC) the profit margin for these 13 companies averages 3.19 percent for 2009 -- for 2008 it was 2.3 percent for these same 13 companies.
- Six of the 13 companies actually saw a decline in their profit margin - averaging a decline of 48.7% in profit margin from 2008 to 2009.
For the five largest health plans (determined by market cap), the average profit margin for 2009 is the second lowest from 2005-2009 - 2008 was the worst year.
- 2009 - 5.2% (4th)
- 2008 - 3.2% (5th)
- 2007 - 5.6% (2nd)
- 2006 - 5.4% (3rd)
- 2005 - 6.4% (1st)
According to Yahoo! Finance's analysis of the latest quarterly data, the net profit margin for the entire health care sector is 13.26%. Using the same index, health plans have a 4.3% net profit margin - 208% less than the entire health care sector.
According to Yahoo! Finance's analysis of the latest quarterly data, the net profit margin for drug makers was 21.3% compared to 4.3% for health plans - 395% less.
According to Fortune Magazine, the health insurance industry had a profit margin of 2.2% in 2008, ranking them 35th on the Fortune list of industry profits. This is below pharmaceuticals (#3, 19.3%), medical products and devices (#4, 16.3%), and medical facilities (#34, 2.4).
5 drug companies had profit margins of more than 20%
14 companies had profit margins of more than 10% -- which is more than double the health plan industry average
The average profit margin for health plans 3.19% vs. 18.67% for drug companies
The highest profit margin health plan company: 7.3% vs. 47.48% for a drug company.
One company had more profits than the entire health plan industry
The top two highest profit drug companies had almost double the entire profits for the health plan industry
Click here for a document putting health plan profits in perspective.
MUST SEE TV: AHIP's Mike Tuffin on CNBC Discussing Rising Medical Costs
Posted by The Campaign on March 04, 2010 at 11:29 AM
AHIP's Mike Tuffin appeared on CNBC this afternoon along side NAIC's Sandy Praeger to discuss what is driving premium increases as well as putting in perspective health plan profits.
Watch the full clip below:
ICYMI: AHIP's Letter to Secretary Sebelius
Posted by The Campaign on March 04, 2010 at 10:25 AM
Yesterday, AHIP's President and CEO Karen Ignagni sent a letter to HHS Secretary Kathleen Sebelius outlining concerns about rising medical costs, the impact this has on premiums and things that can be done to slow the growth rate.
Here are some key excerpts from the letter:
"But for months health plans have been raising concerns about far more needing to be done in health care reform legislation to bring costs under control, because we were seeing disturbing increases in unit costs in the marketplace. We also have raised strong concerns about what happens when costs increase and younger and healthier people leave the pool. These concerns no longer are conjectural; they are being borne out in the data."
"With respect to why premiums are increasing, we believe the data clearly show that premiums are increasing primarily because of soaring medical costs and a slowdown in the economy."
"...the Department’s recently released analysis of 2009 health expenditures found that rising costs for hospitals, physicians and prescription drugs have led to the largest growth in health care spending as a share of GDP since the government started keeping track of these data 50 years ago. [1] Just last week Health Affairs[2] published an analysis that showed that hospitals and physicians have enhanced their significant bargaining clout in a way that works against consumers."
"The data also put in perspective health plans’ profits and administrative costs. Indeed, the Department’s analysis showed that in 2009 the portion of premiums that went toward health plans’ administrative costs and profits declined for a second year in a row. [1] Fortune Magazine’s 2009 analysis of industry profits showed that health plans’ profit margin was 2.2 percent, ranking it far below other health care industries.[2] Yahoo! Finance’s latest analysis of quarterly financial data shows the average profit margin in the health insurance industry is 3.4 percent, compared to 11 percent for the entire health care sector.[3] "
"We have long advocated that a public-private process be established to develop a road map to take 1.5 percentage points off the future rate of growth in total health care costs.... Such an effort would help reduce the deficit, improve the stability of Medicare, and control the future cost of coverage for those under age 65, including small businesses and individuals."
"Recognizing the important dual responsibility of state insurance commissioners in protecting consumers and ensuring the financial stability of insurers in the marketplace, we are also committed to working with the National Association of Insurance Commissioners (NAIC) to help develop a uniformity of process and more transparency for consumer."
Click here for the full letter.
[1] Christopher J. Truffer, Sean Keehan, Sheila Smith, Jonathan Cylus, Andrea Sisko, John A. Poisal, Joseph Lizonitz, and M. Kent Clemens, Health Spending Projections Through 2019: The Recession’s Impact Continues, Health Affairs Web Exclusive, February 4, 2010.
[2] Berenson, R., Ginsburg, P., and Kemper, N., “Unchecked Provider Clout In California Foreshadows Challenges To Health Reform”, Health Affairs 29 (April 2010): 1-7.
[1] Truffer, February 4, 2010.
[2] Fortune 500, “Top Industries: Most profitable”, Fortune, May 4, 2009.
[3] Yahoo!Finance, Yahoo.com, http://biz.yahoo.com/p/5qpmd.html
