MassCare: Ominous Developments in the Precursor to ObamaCare

So in early April, Governor Deval Patrick’s Division of Insurance rejected most of the rate increases for individual and small business plans which Mass insurers requested, marking the first time the state had flexed its authority in this way.
But, though most of us have a love/hate view of them, insurers are just the man in the middle. Note that Patrick’s action in freezing premiums, which meets with the approval of the Obama admin, did nothing to address the underlying reason for cost increases. What it did do is pile ever more losses on the industry which, as it was, had entered 2010 in the red.
Sure enough, six weeks later, in mid May,

The four major Massachusetts health insurers yesterday posted first-quarter losses totaling more than $150 million, with three of them blaming the bulk of the losses on the Patrick administration’s decision to cap rate increases for individuals and small businesses.
The carriers attributed $116 million of their $152 million in losses to the April 1 ruling by the state Division of Insurance to deny most proposed premium increases for the so-called small-group market.

The next step for the carriers, naturally, is to attempt to pass the losses along to providers.

Massachusetts health insurers say they want to freeze or slash payments to some hospitals and large physician groups this year, setting up the toughest contract negotiations in memory and creating the potential for disruptions in where patients get their care. …
Unlike in past years, insurers believe they have widespread backing from politicians, regulators, and employers to aggressively push back against large price increases, even if it means some unhappy providers drop out of insurers’ networks, forcing patients to find new doctors and hospitals.

Whoops. Sounds like Bay Staters may be on their way to losing their right to choose (… a doctor, anyway).
Now the latest development (h/t Michael Graham). The Patrick administration has moved to place three carriers into administrative oversight.

State officials said they sent letters to three health insurers earlier this year asking them to accept more intense oversight and supply additional data because of concerns about their financial health.
One of the insurance companies has agreed to administrative oversight, while regulators are negotiating details with the other two, the officials said. Administrative oversight is a first step regulators take when they determine there is a need to monitor the financial condition of insurance carriers more closely. It does not mean the companies are insolvent.
Officials said the heightened concern is related to the fragile economy, which caused several major insurers to lose money in 2009.

Really, a fragile economy? Or something else, like a government has taken a strangle-hold on your business? Michael Graham:

Was it really the “fragile economy” that’s causing Massachusetts insurance companies to go broke, as the Patrick administration claims? Or is it the lousy Romney-Care plan they’re working under, and the fact that more and more people are getting services they’re not paying for? Those costs are being shifted onto taxpayers and the insurance companies.

In Massachusetts, we are getting a real life preview of what will happen when, in four years, under Congress’ orders, MassCare becomes a national pandemic. It’s not pleasant. Can we please observe, learn and react accordingly, even if it means a “drastic” course change (back to the status quo)?

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Stuart
Stuart
11 years ago

>insurers are just the man in the middle.
No, Monique, despite the Conservative Supreme Courts decision on Corporations being people, they are not! They are rather multi-billion dollar corporations.
What happened to death panels? Insurance companies are the real death panels, but now they are just a friendly man in the middle? Amazing!
Now, let’s play along here. Romney, a likely GOP Conservative candidate for Prez, both created and signed the Ma. plan into law. Scott Brown, darling of the right, supported and voted for it.
And now…….you hop onto it as the disaster which is about to hit the rest of the country?
Honestly, can you see the irony in that?
BTW, I have a friend whose Ma. policy went down in price this year because the state refused to accept the rise that his company asked for.
Of course, in reality Ma. nor any other state will be able to get ahold of health care costs as long as they are not addresses on a systemic and federal level. That has always been evident.

michael
michael
11 years ago

I see a catch 22 in regard to health care. The indistry is the #1 employer in RI. Medicaide eats up huge percentage of the state budget. If less people use the health care system, less jobs are created but the state saves money.
I see emergency rooms in Providence, RIH, Miriam, Roger Williams, Hasbro, Fatima, The VA and Woman and Infants filled to overflowing every day. Most of the people there will get better without medical intervention, or at the minimum a quick doctors visit. But take that stream of revenue out of the system and a lot of people stand to lose a lot of money.
What a mess.

David P
David P
11 years ago

Stuart: Did you even read the post? Your comments appear totally unresponsive. Monique never said the insurance companies are friendly. They are businesses. They aren’t your friend or your kindly uncle but they aren’t mustache-twirling cartoon villains either. Corporations are just one means by which individuals can pool resources in an attempt to turn a profit by offering goods and services that are in demand. They aren’t people, which means they have an option you and I don’t. They can choose not to exist. If the government will not allow a business to charge enough to make a profit it simply stops doing business. “Death panel” may be an overly dramatic term but it represents a basic law of economics: demand is unlimited, supply is not. There has to be some mechanism by which scarce goods are allocated among a population. In a competitive market, the mechanism is price. Prices rise and fall until the quantity demanded of a certain good equals the quantity supplied. For many reasons, some good and some not, the perfect competitive market is a rarety. But the further we get away from a free market, the more that rational market distribution gets replaced by political considerations. So yes, insurance companies do make decisions about who gets what care and who doesn’t. However, when there are multiple insurers to choose from, each company has an incentive to provide the best service at the lowest cost. That incentive is weakened when government erects barriers to competition like price controls and mandated coverage. If the government manages to drive private insurers out of business then there will be only one insurance provider, the state. The state is not subject to market discipline, it confiscates its revenue by force and dictates the terms under which it provides service. It… Read more »

Stuart
Stuart
11 years ago

>>>Corporations are just one means by which individuals can pool resources in an attempt to turn a profit by offering goods and services that are in demand
Nice theory, but it does not address the fact that these corporations tend to make profits for unseen and uninvolved people – called stockholders! In fact, that is their sole purpose!
As to Romneycare…….the only fair thing to compare it against might be what Monique wants…the status quo! Ok, with the status quo our premiums more than doubled under Bush. That is no solution.

David P
David P
11 years ago

Stuart:
Of course corporations make money for stockholders. Who else would I be referring to? But what’s your point? Stockholders are people (or unions or pension funds or other entities) who have funds to invest but not the expertise to put those funds to use. The stockholders purchase shares in a corporation, which hires executives and other experts who have the talent to produce goods and services using the stockholders’ capital. If they do their job properly, they make profits which are shared by the stockholders. The modern economy would not be possible without corporations since they are the only way to amass the capital needed to take advantage of economies of scale.
Secondly, why do you assume Monique, or anybody else for that matter, wants to maintain the status quo? This is a straw man argument. There have been many suggestions, including on Anchor Rising, to reform health care without resorting to massive government intervention. For example, what about creating a national health insurance market? We could adjust the tax incentives to decouple health insurance from employment so that consumers could choose their own plan instead of taking whatever their employers offer. We could dial back on the plethora of mandates so that people could choose lower-cost plans with fewer benefits. We could design plans that are true insurance plans i.e., they cover unexpected emergencies but not regular annual checkups. It is supreme arrogance to assume that Obamacare is the only alternative to the status quo.

joe bernstein
joe bernstein
11 years ago

It looks like Stuart has a little identity crisis.
He rails against corporations,but never misses a chance to brag about his acumen at investing,thus filling his pockets.
Again Stuart gets caught in his web of prevarication.

Stuart
Stuart
11 years ago

>Secondly, why do you assume Monique, or anybody else for that matter, wants to maintain the status quo? Uh, maybe because she says so in this and many other posts…. Just saying……. “Can we please observe, learn and react accordingly, even if it means a “drastic” course change (back to the status quo)?” If she really has a better idea than Romney and Scott Brown, we should hear it in detail…and, no, tort reform” would not even save the increases we see in one year, let alone solve the problem! Let’s be honest. This is another situation where big business is making so much money that they could care less if tens of millions of Americans go broke, get sick or die…because they are once removed from it. They could also care less if American business as a whole becomes less competitive – which we do because we have the highest employee health care costs in the world. All they care about is the next quarters profit and how many claims they can avoid paying. That is the nature of the beast. Yet Monique seems to think the corporate nature of ALL health care (not just insurance) is just a harmless factoid. Sorry, it is a large part of the problem, IMHO. You don’t have to agree, but this is not a far-our leftist theory. I have family members and friends who are family doctors, some even republicans (well, they no longer call themselves that since Bush), and they agree. This country is eating itself alive from the inside due to greed and selfishness. Yet some, like Monique, seem to argue that if only we could become more selfish and more greedy and go back to Bush/Cheney policies (double digit yearly increases), everything would be just fine. You see, in… Read more »

David P
David P
11 years ago

Stuart: It’s interesting you raise the issue of increasing health care costs since Obamacare doesn’t even claim to do anything about controlling them. In fact Massachusetts has seen its health costs rise at about twice the national average since Romneycare was instituted. And where do you get the idea that big business and big government are somehow hostile to each other? Big business recognized the value of government regulation over one hundred years ago. Progressives like to tell themselves stories about how brave muckrakers and activists tamed an out-of-control meatpacking industry with federal regulation. The fact is that the large meatpacking firms were fully supportive of regulation because they knew that they could absorb the costs, that the USDA seal of approval would be a marketing advantage; and that there smaller competitors would be driven out of business by the compliance costs. Similarly, the large health insurers were fine with Obamacare provided they got what they wanted – the individual mandate. If everyone is forced to buy their product they don’t have to worry about cost containment. And look at how closely Congress is consulting with firms like Goldman Sachs as it writes its financial services “reform.” Neither business nor government is inherently evil or good. Both are composed of people who are subject to all the temptations to which the flesh is heir. The best way to control both of these institutions is to make sure that power is diffuse. With business that means a free market in which the government does not play favorites with invidual industries or firms. With government that means fracturing the power through constitutional limits, separation of powers and federalism. Your final paragraph notwithstanding, American conservatism is about as far from authoritarian as you can get. American conservatives revere the rule of law, as… Read more »

Stuart
Stuart
11 years ago

>Massachusetts has seen its health costs rise at about twice the national average David, would you not think that covering 98% of a states residents would cost more than in Texas, where 25% or more are not covered or under insured? Of course the answer is yes. It would have cost BP more to have the problem tests on the blowout preventer and have an acoustic switch. But you surely understand where the “savings” of those other states in terms of price increases is coming from, right? Yep, increased medicare payments from the Federal Government! It is a shell game, David, and any reasonable look at the entire system will show you that. I am the first one who suggested that Ma. or any state can never beat the system in terms of PRICE…can’t happen. But they did 100% succeed in terms of coverage, which I think we should give Scott Brown, Romney and Obama (eventually) credit for Covering everyone is only a first step. The other part is actually harder….or I should say other parts. Many of these are public health related…education, community clinics (all in Obamas bill). As to business and government, I 100% agree. It is the people on the inside and outside which make either a force for good or evil. When I had employees, I gave them health care, life insurance, paid vacation, profit sharing and decent wages and working conditions. That is enlightened business, IMHO. It is not the insurance company per se, just like it is not the US Soldier who fights for a cause backed by lies (one business and one government example)….it is the SYSTEM which puts them up to it. Universal Health Care in the USA, if and when it comes, is likely to be 90% plus a factor of… Read more »

David P
David P
11 years ago

It’s one thing to make sure everyone in the sandbox plays nice. It’s something else entirely to have a government stooge making sure everyone’s sand castle looks exactly the same.

Stuart
Stuart
11 years ago

>>everyone’s sand castle looks exactly the same.
Well, if the industry was not selling us sand castles and calling them luxury condos, we’d not have to worry about that!
However, it is now pretty much proven that “free market health care” is a failure. This, BTW, is a new experiment – started only under Nixon when he did the bidding of Kaiser (Now Kaiser Permanente).
Before that we did OK as compared the rest of the world. That is because ALL hospitals and insurance outfits were non-profits. Once we let the investment bankers and for-profit corps into there, they did what they always do….raised the prices, fired people, and made sure to line their pockets.
Let me know how Enron worked out! That was, BTW, an experience in “free market” utilities.

David P
David P
11 years ago

The point I’ve been trying to make since this began is that what we have in health care is nothing like a free market. I’m not even advocating that we have an actual free market in health care. But the problems of access and affordability that we are experiencing are the result of too much government interference, not too little. Obama is like an eightteenth century doctor who discovers that previous efforts to bleed his patient have not worked so he decides to bleed him again in the hope of making him well.
Likewise, Enron had little to do with the free market. Enron gamed the system because we created a system that could be gamed.
If you can’t tell the difference between a sand castle and a luxury condo I’m afraid there’s very little the government can do to help you short of institutionalizing you.

Stuart
Stuart
11 years ago

Oh, I can tell the difference between getting a value and getting screwed…it’s just that I can’t start my own hospital and pharma company, so I have to take what they offer.
Every year my premiums go up, often double digit, and every year what the insurance covers goes down. The newest trick is to raise the exceptions and deductibles so high that the 12K per year I pay does not even cover basic care like physicals and doctor visits! As a result, I am unlikely to go to the doc as much…well, I can always order drugs from India online, right?
No, Obama is not like the doctor that tries the same thing or goes back to the old way. That is the status quo that Monique seeks!
Obama is more like the advancement of the medical profession itself….that is, if what is being done does not work, you try something else which may work better. It would be pretty hard to do much worse when the patient already largely died….that is, with health care costs hitting 20 percent of GDP…..outrageous!

Warrngton Faust
Warrngton Faust
11 years ago

Stuart writes:
“No, Obama is not like the doctor that tries the same thing or goes back to the old way.”
“First, do no harm”
Your attacks on Monique are becoming tiring.
She does not claim to be an expert, but she does present an intersting array of facts.

Stuart
Stuart
11 years ago

>but she does present an intersting array of facts.
I don’t think so. She provides complaints without solutions, which is my point! Anyone can copy and paste news stories from rightie sources….as it appears she and justin enjoy immensely. It takes a better intellect to actually see if something can be improved in the real world, and offer those improvements.
Better yet, perhaps she could point to another country in the world that is approaching paying 20% of GDP for health care that is not covering 15% of the population? Well, unfortunately there is none!
I guess, in the end, the question is whether the right are “doers” or “John Galts” – or whether they are complainers, you know…those “nattering nabobs of negativity”. So far, I see the 2nd. Monique complains without solutions (except the status quo) and Justin throws some long sentences around as his solution to any problem (comes down to faith, I guess)…..
IMHO, if one cannot defend their position by clearly articulating a REAL WORLD solution which is politically possible….then they are simply acting as Ideologues.
Do you agree? Or is just complain and seeing the problem(s) enough to impress you?

David P
David P
11 years ago

Stuart
It looks like you’ve built yourself a nice little ideological castle there. Any criticism of Obamacare is illegitimate unless accompanied by politically viable alternatives and you seem to set yourself up as the arbiter of what is politically viable. The reason that people take positions and argue them in a republic is to change what is politically viable. Since this post went up a number of suggestions have been made as to how to increase the availability of health care while simultaneously lowering cost and increasing personal liberty. Will they work as advertised? Maybe. Maybe they would require further refinement. In a true federal system, one or more states might implement free market health care reform and see what happens. We can already see what’s happening in Massachusetts but you choose to close your eyes to it. BTW if you check the links in Monique’s post, you will see the story comes from the Boston Globe, not some “rightie source.”
Polls still show that the American people oppose Obamacare by approximately 10 points. That would seem to support the political viability of going in a different direction.
Your admiration for European style socialized medicine seems to ignore the fact that providing “coverage” is not the same as providing care. Recently the Quebec Supreme Court essentially ruled that province’s health care system a failure since, in the court’s words, it provides access to a waiting list, not to health care. That’s because the only government can seem to reduce costs is to cut back on the services it provides. Only the private sector consistently manages to improve quantity and quality while simultaneously reducing price.

Stuart
Stuart
11 years ago

Well, David, speaking of intellectual honesty, I’m sure you are aware that polls have absolutely nothing to do with reality! Heck, a poll of Americans would still suggest Iraq had something to do with 9/11.
Polls are driven by what the political leaders and the media vomit out each day. In the case of health care, that means the GOP and said Large Corporations spending untold amounts of time and money to convince those who cannot think for themselves, what they should think!
As to the current Federal Health Care initiatives, I think it is always fair to offer alternative ideas and suggestions. However, when the opposition did not do so – only saying either status quo or code words for the same (free market, incremental improvement), then they have absolutely no leg to stand on.
Heck, the homeless dude on the corner CAN tell me how to succeed in life, but that does not mean I should take him seriously.
You cannot possibly think, given the last decade or more, that the “free market” solutions of the GOP have been a good thing for our economy, can you? Many people, right or left or independent, have been RUINED by the combination of Wall Street, Health Care Corporations and the other fine results of unregulated markets. Now we have the same forces causing untold environmental damage, deaths and scorched earth (see: mining and oil disasters).
So, yeah, go ahead and criticize all you like – but unless you can point to the successes of the right and the “anti-everythings”, you don’t deserve to be listened to.
Everything we need to know we learned in fairy tales, in this case the Boy who Cried Wolf (the right in general) and the Emperors New Clothes (Bush)

Stuart
Stuart
11 years ago

Well, here is the status quo again:
“Companies that offer health plans will see their costs jump 9% in 2011, and most employees will pay higher deductibles as a result, said a report released Monday.”
For those who have a tough time with math, increases of 9% a year compounded means your premiums double within 8 years.
Sure, Monique, it’s working out fine with the status quo. The average per person expense in this country was 4200 in 1999, is about 8500 at last measurement and now will be about $17,000 in 8 years with the status quo. That means a family with four members will cost (not spend, but cost) $64,000 a year in health care average in 2019.
Conservatives cry about how then just KNOW the country is going broke, yet they fail to see that the main causes are:
1. War and Security
2. Health Care
3. Pressure on Wages by large corporations (offshoring, etc.)
Somehow, they look at those real causes and instead conclude that some Mexican immigrant cleaning hotel rooms is at fault.
Amazing. Whatever happened to reason and logic and common sense? Out the window with talk radio?

Warrington Faust
Warrington Faust
11 years ago

Stuart writes:
“Sure, Monique, it’s working out fine with the status quo. The average per person expense in this country was 4200 in 1999, is about 8500 at last measurement and now will be about $17,000 in 8 years with the status quo. That means a family with four members will cost (not spend, but cost) $64,000 a year in health care average in 2019.”
You have jmust discovered what the government knows.
First of all, using an “average” is misleading. An “average cost” is not an “average cost per person”. Everyone who studies health costs knows that about 90% of medical costs are incurred in the last 5 years of life. As new methods are developed, those costs for the elderly will go up. So, your “average” person is not expending the sums you would have us believe. What was the value of medical care you received last year?
So, the only way the government can efficiently cut costs is to reduce care for the elderly. That is what European countries do and it is reasonable to asuume that is what we will do.
I think Monique knows this, but is not mentioning it.

Stuart
Stuart
11 years ago

Well, here is the status quo again:
“Companies that offer health plans will see their costs jump 9% in 2011, and most employees will pay higher deductibles as a result, said a report released Monday.”
For those who have a tough time with math, increases of 9% a year compounded means your premiums double within 8 years.
Sure, Monique, it’s working out fine with the status quo. The average per person expense in this country was 4200 in 1999, is about 8500 at last measurement and now will be about $17,000 in 8 years with the status quo. That means a family with four members will cost (not spend, but cost) $64,000 a year in health care average in 2019.
Conservatives cry about how then just KNOW the country is going broke, yet they fail to see that the main causes are:
1. War and Security
2. Health Care
3. Pressure on Wages by large corporations (offshoring, etc.)
Somehow, they look at those real causes and instead conclude that some Mexican immigrant cleaning hotel rooms is at fault.
Amazing. Whatever happened to reason and logic and common sense? Out the window with talk radio?

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