qotd: Wellmark Blue Cross and Blue Shield placing greater squeeze on patients

Wellmark

September 28, 2016

Wellmark announces individual ACA market changes in Iowa and South Dakota

Wellmark Blue Cross and Blue Shield announced today it will make changes in the individual Affordable Care Act (ACA) market in Iowa and South Dakota.

For the past two years, Wellmark members with individual ACA plans have endured double-digit increases. In addition, Wellmark has lost approximately $99 million over the same time period in the individual market in Iowa and South Dakota.

"Wellmark's mission is to create affordable health insurance for people to access quality health care. And, for the majority of the past 75 years, we've been able to achieve that," said Wellmark Chairman and CEO John Forsyth. "However, it's apparent that continuing to offer plans with broad networks, combined with the rich benefits of the ACA, is not consistent with managing continually rising costs. While we could seek additional premium increases to mitigate rising costs, this is not sustainable for our members' pocketbook."

Iowa changes

In Iowa, Wellmark will narrow its product choices to offer plans that are lower priced and encourage health care delivery by Iowa providers. Specifically, Wellmark will no longer offer gold tier plans nor will the company promote individual under 65 plans that use its Preferred Provider Organization (PPO) network in Iowa.

Wellmark will also continue its plans to introduce a new, simplified HMO plan called Blue Simplicity℠. This plan is like no other on the market today and is designed to help consumers understand the true value of care through simple copay plans – providing members with transparency and predictability of cost as they seek and use medical services.

South Dakota changes

In South Dakota, Wellmark will no longer offer individual Affordable Care Act (ACA) plans effective Jan. 1, 2017.

"Although the ACA has done many positive things, it has also had its challenges and those challenges vary by state," said Forsyth. "Fortunately, in 2017, the ACA gives states the ability to begin addressing those challenges with the goal of stabilizing the individual under 65 health insurance market. We look forward to working with Iowa and South Dakota policymakers on those solutions in the near future."

https://www.wellmark.com/about/newsroom/2016/09/28/wellmark-announces-individual-aca-market-changes-in-iowa-and-south-dakota

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Comment by Don McCanne

The largest health insurer in Iowa, Wellmark Blue Cross and Blue Shield, is discontinuing their more comprehensive gold tier plans and is discontinuing the promotion of its PPO plans with wider provider networks. They are also introducing a new HMO plan "designed to help consumers understand the true value of care through simple copay plans" (i.e., making them better shoppers by having to bear more of the costs). These changes are compounding the two problems plaguing insurance purchasers today: requiring higher out-of-pocket spending for health care, and narrowing the selection of health care providers covered by the plans.

This is a one-way path designed to keep insurance premiums as competitive as possible. As Chairman and CEO Forsyth states, "continuing to offer plans with broad networks, combined with the rich benefits of the ACA, is not consistent with managing continually rising costs." Insurers are not going to cover more out-of-pocket costs by increasing the actuarial value of their plans (percent of costs they will pay), and they are not going to expand their networks when they can negotiate lower prices by promising provider exclusivity.

Look, as long as we leave these people in charge, we can anticipate that they will engage in strategies that will protect and improve their own market advantage. If we had our own public program, our stewards who work for us would be engaging in strategies that would ensure our access to the health care that we need. There really is a difference. If only for selfish reasons, we should prefer the latter. The fact that it helps everyone else is a bonus.

qotd: Drug firms gouge taxpayers by gaming Part D catastrophic coverage

Associated Press

July 25, 2016

Pricey Drugs Overwhelm Medicare Safeguard

By Ricardo Alonso-Zaldivar

A safeguard for Medicare beneficiaries has become a way for drugmakers to get paid billions of dollars for pricey medications at taxpayer expense, government numbers show.

The cost of Medicare's "catastrophic" prescription coverage jumped by 85 percent in three years, from $27.7 billion in 2013 to $51.3 billion in 2015, according to the program's number-crunching Office of the Actuary.

Medicare's catastrophic coverage was originally designed to protect seniors with multiple chronic conditions from the cumulatively high costs of taking many different pills. Beneficiaries pay 5 percent after they have spent $4,850 of their own money. With some drugs now costing more than $1,000 per pill, that threshold can be crossed quickly.

Lawmakers who created Part D in 2003 also hoped added protection would entice insurers to participate in the program. Medicare pays 80 percent of the cost of drugs above a catastrophic threshold that combines spending by the beneficiary and the insurer. That means taxpayers, not insurers, bear the exposure for the most expensive patients.

Concerns about catastrophic costs undercut the image of Medicare's prescription program as a competitive marketplace in which private insurers bargain with drugmakers to drive down prices.

"The incentive is to price it as high as they can," said Jim Yocum, senior vice president of Connecture, Inc., a company that tracks drug prices. Medicare is barred from negotiating prices, "so you max out your pricing and most of that risk is covered by the federal government."

http://hosted.ap.org/dynamic/stories/U/US_MEDICARE_PRICEY_DRUGS

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Comment by Don McCanne

When the Medicare Part D program covering drugs was designed, conservatives were in control of the government. As a result it was decided that the ideology of competition in the marketplace should be used to improve value rather than using government administered pricing. Today's message demonstrates once again that markets do not work in health care.

Congress knew that they would have to protect the private insurers from adverse selection - that patients with multiple chronic conditions could place an extra burden on the insurers with whom they enrolled. Thus they established catastrophic coverage with the government (taxpayers) paying 80 percent of the costs over a given threshold. This was not to protect the patients, but rather it was to protect the insurers. That is, it was not to protect the taxpayers who finance much of the program, but rather it was to protect the participants in the marketplace - the drug manufacturers, insurers, and pharmacy benefit managers - using our taxpayer funds.

Under the catastrophic coverage, insurers pay 15 percent, patients pay 5 percent, and the taxpayers pay 80 percent. This allows the drug companies to drive their prices sky high. The 15 percent paid by the insurers is closer to the reasonable price of drugs and so they have less incentive to negotiate better prices, since most of it is being paid by the government anyway. The 5 percent paid by the patient is accepted as a necessary "skin in the game" contribution so patients will not fill prescriptions that they allegedly "do not really need" (a flawed policy concept). The 80 percent paid by taxpayers perpetuates the highly dysfunctional, fragmented financing system in the U.S. - using government money for private solutions - that has driven our health care spending up to levels much higher than all other nations.

The magic of the marketplace in health care is a fraud. Taxpayers pay far less for drugs purchased by the government for Medicaid and the VA system. Other nations with greater government oversight of their health care systems also pay much less.

With a well designed single payer national health program, our nation's pharmacy bill would be fair, and everyone would get the drugs they need. With the price of many drugs now exceeding median household income, you would think there would be a demand to fix our health care financing system. You would think so, but where's the action?