Fwd: qotd: Anthem Blue Cross learns how to control costs

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-------- Original Message --------
Subject: qotd: Anthem Blue Cross learns how to control costs
Date: Fri, 21 Sep 2012 12:10:19 -0700
From: Don McCanne <don@mccanne.org>
To: Quote-of-the-Day <quote-of-the-day@mccanne.org>



Los Angeles Times
September 21, 2012
Cedars-Sinai and UCLA cut from Los Angeles health plan
By Chad Terhune

Two of the most prestigious names in Southern California healthcare —
Cedars-Sinai and UCLA — are getting shut out of a major insurance plan
for being too expensive.

In a bold cost-cutting move, Anthem Blue Cross has eliminated doctors
affiliated with the hospitals from a health plan offered to about 60,000
employees and dependents at the cash-strapped city of Los Angeles.

The city opted for Anthem's plan because it will save $7.6 million in
annual premiums next year by excluding physicians from the two
institutions known for tending to the Southland's rich and famous.

"Purchasers are sending a signal that certain prices are just
unaffordable," said David Lansky, chief executive of the Pacific
Business Group on Health, which represents large companies such as Walt
Disney Co. "We want great teaching and medical research institutions to
survive. Whether that should happen by charging everyone in society a
higher rate for routine services is more debatable."

"Implementation of the narrow network was a difficult choice, but one
made necessary by the city's fiscal constraints," a city spokesman said.
Los Angeles is expected to be the biggest employer to offer Anthem's
Select plan.

Officials at Cedars-Sinai and UCLA criticized the rationale for the
move, saying the increased costs are tied to their world-class medical
research and cutting-edge treatments in areas such as cancer or organ
transplants that benefit the entire community.

Thomas Priselac, chief executive of Cedars-Sinai Medical Center, said
these exclusions offer a "false economy" because they don't reduce costs
in the healthcare system overall.

"It just pushes the cost onto those who continue getting care at those
facilities," Priselac said. "Secondly, it doesn't recognize the reason
why places like Cedars and UCLA are more expensive than the typical
community hospital."

For its part, UCLA said its hospitals treat a large number of patients
in Medi-Cal, the government program for the poor and disabled.

"Other providers don't have to deal with the expenses UCLA has to deal
with," said Santiago Muñoz, chief strategy officer for the UCLA Health
System.

Anthem isn't alone in pursuing this strategy. Many insurers are
aggressively pitching these sharply limited networks, which offer fewer
choices and lower-priced doctors and hospitals, as a cost-cutting tool
at a time when U.S. health insurance premiums have climbed three times
as fast as inflation and wages over the last decade.

Industry giant WellPoint Inc., which owns Anthem Blue Cross in
California, offers plans that include as few as 30% of the company's
full list of providers.

http://www.latimes.com/business/la-fi-hospital-costs-20120921,0,4069159,full.story


Comment: The explosion in limited-network private insurance plans is
taking choice away from more and more patients. The business tools that
private insurers use to control costs are very different from the
patient-service tools of a single payer national health program. Not
only do the private insurers' tools restrict patients' care, but they
are also quite ineffective in controlling overall spending, as is
demonstrated by the fact that our health care costs are about twice the
average of other nations.

Under a single payer system, all legitimate costs are paid by the
government and are not linked to specific health plans assigned to
different individuals - a very inefficient and fragmented method of
financing health care. Using the example of UCLA, there would be no
tiers of private coverage and no problem with an underfunded Medicaid
program. The hospital costs would be globally budgeted, just as are
police and fire departments. Separate, extraordinary costs of research
functions would be funded through our National Institutes of Health.
Education grants can be provided through the global budgeting process
since house staff members are, from a financing perspective, really just
low-paid hospital employees.

We need to get WellPoint/Anthem Blue Cross and their ilk out of our
health care and out of our lives. Let's improve our own Medicare program
and then provide it for everyone.