Category Archives: Privatization

BIG INSURANCE 2022: Revenues reached $1.25 trillion thanks to sucking billions out of the pharmacy supply chain – and taxpayers’ pockets

Posted on by • Posted in ACA, Affordability, Antitrust, Competition, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Policy, Healthcare Reform, Medicaid, Medicare, Medicare Advantage, Monopoly, Monopoly Behavior, Out of Pocket Expenses, Out-of-Network, Pharmaceutical Costs, Pharmaceutical Industry, Pharmacy Benefits Management, Prior Authorization, Privatization, Profit, Profit Motive • Leave a comment
https://healthcareuncovered.substack.com/p/big-insurance-2022-revenues-reached?utm_source=substack&utm_campaign=post_embed&utm_medium=web

HIGHLIGHTS

  • Big Insurance revenues and profits have increased by 300% and 287% respectively since 2012 due to explosive growth in the companies’ pharmacy benefit management (PBM) businesses and the Medicare replacement plans they call Medicare Advantage.
  • The for-profits now control more than 80% of the national PBM market and more than 70% of the Medicare Advantage market. 

In 2022, Big Insurance revenues reached $1.25 trillion and profits soared to $69.3 billion.

That’s a 300% increase in revenue and a 287% increase in profits from 2012, when revenue was $412.9 billion and profits were $24 billion.

Big insurers’ revenues have grown dramatically over the past decade, the result of consolidation in the PBM business and taxpayer-supported Medicare and Medicaid programs. 

Sucking billions out of the pharmacy supply chain – and taxpayers’ pockets

What has changed dramatically over the decade is that the big insurers are now getting far more of their revenues from the pharmaceutical supply chain and from taxpayers as they have moved aggressively into government programs. This is especially true of Humana, Centene, and Molina, which now get, respectively, 85%, 88%, and 94% of their health-plan revenues from government programs. 

The two biggest drivers are their fast-growing pharmacy benefit managers (PBMs), the relatively new and little-known middleman between patients and pharmaceutical drug manufacturers, and the privately owned and operated Medicare replacement plans they market as Medicare Advantage.

With the exception of Humana, Centene, and Molina, most of the companies that constitute Big Insurance continue to make substantial amounts of money selling policies and services in what they refer to as their commercial businesses – to individuals, families, and employers – but the seven companies’ commercial revenue grew just 260%, or $176 billion, over 10 years (from $110.4 billion to $287.1 billion). While that’s significant, profitable growth in the commercial sector has become a major challenge for big insurers – so much so that Humana just last week announced it is exiting the employer-sponsored health-insurance marketplace entirely. 

The insurers’ commercial businesses have stagnated because small businesses – which employ nearly half of the nation’s workers – are increasingly being priced out of the health insurance market. Most small businesses can no longer afford the premiums. The average premium for an employer-sponsored family plan – not including out-of-pocket requirements – was $22,463 in 2022, up 43% since 2012, which has contributed to the decades-long decline in the percentage of U.S. employers offering coverage to their workers.

The percentage of U.S. employers providing some level of health benefits to their workers dropped from 69% to 51% between 1999 and 2022 – including a dramatic 8% decrease last year alone. Growth in this category is largely the result of insurers “stealing market share” from each other or from smaller competitors.

As a consequence of this segment’s relative stagnation, PBMs and government programs have become the new cash cows for Big Insurance.

Spectacular PBM Growth

PBM HIGHLIGHTS

  • Cigna now gets far more revenue from its PBM than from its health plans. CVS gets more revenue from its PBM than from either Aetna’s health plans or its nearly 10,000 retail stores. 
  • UnitedHealth has the biggest share of both the PBM and Medicare markets and, through numerous acquisitions of physician practices, is now the largest U.S. employer of doctors.

PBMs are middlemen companies that manage prescription drug benefits for health insurers, Medicare Part D drug plans, employers, and, in some cases, unions. As the Commonwealth Fund has noted: 

PBMs have a significant behind-the-scenes impact in determining total drug costs for insurers, shaping patients’ access to medications, and determining how much pharmacies are paid. 

The Commonwealth Fund went on to say that PBMs have faced growing scrutiny about their role in rising prescription drug costs and spending. A big reason for the scrutiny – by Congress, state lawmakers and now also by the FTC – is that the biggest PBMs are now owned by Big Insurance.

Through mergers and acquisitions in recent years, three of the seven for-profit insurers – Cigna, CVS/Aetna, and UnitedHealth – now control 80% of the U.S. pharmacy benefits market.

They determine which drugs will be listed in each of their formularies (lists of drugs they will “cover” based on secret deals they negotiate with pharmaceutical companies) and how much patients will have to pay out of their own pockets at the pharmacy counter – in many cases hundreds or thousands of dollars – before their coverage kicks in. The PBMs also “steer” health-plan enrollees to their preferred or owned pharmacies (and, increasingly, away from independent pharmacists), thereby capturing even more of what we spend on our prescription medications.

Cigna, CVS/Aetna, and UnitedHealth now control 80% of the U.S. PBM market. Correction: this graph was initially published with inaccurate numbers. The source for this information can be found here.

Ten years ago, PBMs contributed relatively little to the three companies’ revenues and profits. But since then, the rapid growth of PBMs has transformed all of the companies. The combined revenues from their PBM business units increased 250% between 2012 and 2022, from $196.7 billion to $492.4 billion.

Changes in PBM revenues between 2012 and 2022 for UnitedHealth Group, Cigna, and CVS/Aetna (Editor’s note: Cigna acquired PBM Express Scripts in 2018. To reflect revenue growth, Express Scripts’ pre-acquisition 2012 revenues are included in the Cigna total for that year.)

PBM Profit Generation

The PBM profit growth at the three companies over the past decade was even more dramatic than revenue growth. Collectively, their PBM profits increased 438%, from $6.3 billion in 2012 to $27.6 billion in 2022.

As a result of this fast growth, more than half (52%) of three companies’ profits in 2022 came from their PBM business units: Cigna’s Evernorth, CVS/Aetna’s Caremark, and UnitedHealth’s Optum. Cigna now gets far more revenue and profits from its PBM than from its health plans. And CVS gets more revenue from its PBM than from either Aetna’s health plans or its nearly 10,000 retail stores. (The companies’ business units that include their PBMs have also moved aggressively in recent years into health-care delivery through acquisitions of physician practices, clinics, dialysis centers, and other facilities. Notably, UnitedHealth Group is now the largest U.S. employer of physicians.)

Huge strides in privatizing both Medicare and Medicaid

GOVERNMENT PROGRAMS HIGHLIGHTS

  • More than 90% of health-plan revenues at three of the companies come from government programs as they continue to privatize both Medicare and Medicaid, through Medicare Advantage in particular.
  • Enrollment in government-funded programs increased by 261% in 10 years; by contrast commercial enrollment increased by just 10% over the past decade.
  • Commercial enrollment actually declined at both UnitedHealth and Humana.
  • 85% of Humana’s health-plan members are in government-funded programs; at Centene, it is 88%, and at Molina, it is 94%. 

The big insurers now manage most states’ Medicaid programs – and make billions of dollars for shareholders doing so – but most of the insurers have found that selling their privately operated Medicare replacement plans is even more financially rewarding for their shareholders.

Revenue growth from government programs has been dramatic over the past 10 years. (Note the numbers do not include revenue from the Medicare Part D program, federal subsidy payments for many ACA marketplace plan enrollees, or Medicare supplement policies.)

This is especially apparent when you see that the Big Seven’s combined revenues from taxpayer-supported programs grew 500%, from $116.3 billion in 2012 to $577 billion in 2022.

These numbers should be of interest to the Biden administration and members of Congress, many of whom are calling for much greater scrutiny of the Medicare Advantage program. Numerous media and government reports have shown that the federal government is overpaying private insurers billions of dollars a year, largely because of loopholes in laws and regulations that enable them to get more taxpayer dollars by claiming their enrollees are sicker than they really are. The companies also make aggressive use of prior authorization, largely unknown in traditional Medicare, to avoid paying for doctor-ordered care and medications.

In addition to their focus on Medicare and Medicaid, the companies also profit from the generous subsidies the government pays insurers to reduce the premiums they charge individuals and families who do not qualify for either Medicare or Medicaid or who work for an employer that does not offer subsidized coverage. But many people enrolled in those types of plans – primarily through the health insurance “marketplaces” established by the Affordable Care Act – cannot afford the deductibles and other out-of-pocket requirements they must pay before their insurers will begin paying their medical claims. 

Dramatic Enrollment Shifts

Changes in health-plan enrollment over the past decade show how dramatic this shift has been. Between 2012 and 2022, enrollment in the companies’ private commercial plans increased by 10%, from 85.1 million in 2012 to 93.8 million in 2022. 

By comparison, growth in enrollment in taxpayer-supported government programs increased 261%, from 27 million in 2012 to 70.4 million in 2022. 

For-profit insurers dominate the Medicare Advantage market. Note that Anthem mentioned above is now known as Elevance. It owns 14 of the country’s Blue Cross Blue Shield plans. 

Within that category, Medicare Advantage enrollment among the Big Seven increased 252%, from 7.8 million in 2012 to 19.7 million in 2022. 

Nationwide, enrollment in Medicare Advantage plans increased to 28.4 million in 2022 (and to 30 million this year). That means that the Big Seven for-profit companies control more than 70% of the Medicare Advantage market. 

UnitedHealth, Humana, Elevance, and CVS/Aetna have captured most of the Medicare Advantage market since the Affordable Care Act was passed in 2010. 

The remaining growth in the government segment occurred in the Medicaid programs that a subset of the Big Seven (UnitedHealth, Elevance, Centene, and Molina in particular) manages for several states.

A few other facts and figures to keep in mind as Big Insurance thrives:

  • In 2023, U.S. families can be on the hook for up to $18,200 in out-of-pocket requirements before their coverage kicks in, up 43% since 2014 when it was $12,700.The Affordable Care Act allows the out-of-pocket maximum to increase annually – 43% since the maximum limit went into effect in 2014.
  • 44% of people in the United States who purchased coverage through the individual market and (ACA) marketplaces were underinsured or functionally uninsured.
  • 46% of those surveyed said they had skipped or delayed care because of the cost.
  • 42% said they had problems paying medical bills or were paying off medical debt.
  • Half (49%) said they would be unable to pay an unexpected medical bill within 30 days, including 68% of adults with low income, 69% of Black adults, and 63% of Latino/Hispanic adults. 
  • In 2021, about $650 million, or about one-third of all funds raised by GoFundMe, went to medical campaigns. That’s not surprising when you realize that in the United States, even people with insurance all too often feel they have no choice but to beg for money from strangers to get the care they or a loved one needs. 
  • 62% of bankruptcies are related to medical costs. 
  • Even as we spend about $4.5 trillion on health care a year, Americans are now dying younger than people in other wealthy countries. Life expectancy in the United States actually decreased by 2.8 years between 2014 and 2021, erasing all gains since 1996, according to the Centers for Disease Control and Prevention. 

BOTTOM LINE: 

The companies that comprise Big Insurance are vastly different from what they were just 10 years ago, but policymakers, regulators, employers, and the media have so far shown scant interest in putting their business practices under the microscope.

Changes in federal law, including the Medicare Modernization Act of 2003, which created the lucrative Medicare Advantage market, and the Affordable Care Act of 2010, which gave insurers the green light to increase out-of-pocket requirements annually and restrict access to care in other ways, opened the Treasury and Medicare Trust Fund to Big Insurance. In addition, regulators have allowed almost all of their proposed acquisitions to go forward, which has created the behemoths they are today.

CVS/Health is now the 4th largest company on the Fortune 500 list of American companies. UnitedHealth Group is now No. 5 – and all the others are climbing toward the top 10. 

When Profits Kill: The Deadly Costs of Treating Healthcare as a Business

Posted on by • Posted in Affordability, Excessive Executive Compensation, Executive Compensation, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Policy, Healthcare Reform, Medicare, Medicare Advantage, Medicare Denials, Medicare for All, Private Equity, Privatization, Profit, Profit Motive, Public Interest, Public Trust, Single Payer Health System • Leave a comment
https://hartmannreport.com/p/when-profits-kill-the-deadly-costs-e1a?utm_source=post-email-title&publication_id=302288&post_id=152812043&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

The recent assassination of the CEO of UnitedHealthcare — the health insurance company with, reportedly, the highest rate of claims rejections (and thus dead, wounded, and furious customers and their relations) — gives us a perfect window to understand the stupidity and danger of the Musk/Trump/Ramaswamy strategy of “cutting government” to “make it more efficient, run it like a corporation.”

Consider health care, which in almost every other developed country in the world is legally part of the commons — the infrastructure of the nation, like our roads, public schools, parks, police, military, libraries, and fire departments — owned by the people collectively and run for the sole purpose of meeting a basic human need.

The entire idea of government — dating all the way back to Gilgamesh and before — is to fulfill that singular purpose of meeting citizens’ needs and keeping the nation strong and healthy. That’s a very different mandate from that of a corporation, which is solely directed (some argue by law) to generate profits.

The Veterans’ Administration healthcare system, for example, is essentially socialist rather than capitalist. The VA owns the land and buildings, pays the salaries of everybody from the surgeons to the janitors, and makes most all decisions about care. Its primary purpose — just like that of the healthcare systems of every other democracy in the world — is to keep and make veterans healthy. Its operation is nearly identical to that of Britain’s beloved socialist National Health Service.

UnitedHealthcare similarly owns its own land and buildings, and its officers and employees behave in a way that’s aligned with the company’s primary purpose, but that purpose is to make a profit. Sure, it writes checks for healthcare that’s then delivered to people, but that’s just the way UnitedHealthcare makes money; writing checks and, most importantly, refusing to write checks.

Think about it. If UnitedHealthcare’s main goal was to keep people healthy, they wouldn’t be rejecting 32 percent of claims presented to them. Like the VA, when people needed help they’d make sure they got it.

Instead, they make damn sure their executives get millions of dollars every year (and investors get billions) because making a massive profit ($23 billion last year, and nearly every penny arguably came from saying “no” to somebody’s healthcare needs) is their real business.

On the other hand, if the VA’s goal was to make or save money by “being run efficiently like a company,” they’d be refusing service to a lot more veterans (which it appears is on the horizon).

This is the essential difference between government and business, between meeting human needs (social) and reaching capitalism’s goal (profit).

It’s why its deeply idiotic to say, as Republicans have been doing since the Reagan Revolution, that “government should be run like a business.” That’s nearly as crackbrained a suggestion as saying that fire departments should make a profit (a doltish notion promoted by some Libertarians). Government should be run like a government, and companies should be run like companies.

Given how obvious this is with even a little bit of thought, where did this imbecilic idea that government should run like a business come from?

Turns out, it’s been driven for most of the past century by morbidly rich businessmen (almost entirely men) who don’t want to pay their taxes. As Jeff Tiedrich notes:

“The scariest sentence in the English language is: ‘I’m a billionaire, and I’m here to help.’”

Rightwing billionaires who don’t want to pay their fair share of the costs of society set up think tanks, policy centers, and built media operations to promote their idea that the commons are really there for them to plunder under the rubric of privatization and efficiency.

They’ve had considerable success. Slightly more than half of Medicare is now privatized, multiple Republican-controlled states are in the process of privatizing their public school systems, and the billionaire-funded Project 2025 and the incoming Trump administration have big plans for privatizing other essential government services.

The area where their success is most visible, though, is the American healthcare system. Because the desire of rightwing billionaires not to pay taxes have prevailed ever since Harry Truman first proposed single-payer healthcare like most of the rest of the world has, Americans spend significantly more on healthcare than other developed countries.

In 2022, citizens of the United States spent an estimated $12,742 per person on healthcare, the highest among wealthy nations. This is nearly twice the average of $6,850 per person for other wealthy OECD countries.

Over the next decade, it is estimated that America will spend between $55 and $60 trillion on healthcare if nothing changes and we continue to cut giant corporations in for a large slice of our healthcare money.

On the other hand, Senator Bernie Sanders’ single-payer Medicare For All plan would only cost $32 trillion over the next 10 years. And it would cover everybody in America, every man woman and child, in every medical aspect including vision, dental, psychological, and hearing.

Currently 25 million Americans have no health insurance whatsoever.

If we keep our current system, the difference between it and the savings from a single-payer system will end up in the pockets, in large part, of massive insurance giants and their executives and investors. And as campaign contributions for bought off Republicans. This isn’t rocket science.

And you’d think that giving all those extra billions to companies like UnitedHealthcare would result in America having great health outcomes. But, no.

Despite insanely higher spending, the U.S. has a lower life expectancy at birth, higher rates of chronic diseases, higher rates of avoidable or treatable deaths, and higher maternal and infant mortality rates than any of our peer nations.

Compared to single-payer nations like Canada, the U.S. also has a higher incidence of chronic health conditions, Americans see doctors less often and have fewer hospital stays, and the U.S. has fewer hospital beds and physicians per person.

No other country in the world allows a predatory for-profit industry like this to exist as a primary way of providing healthcare. Every other advanced democracy considers healthcare a right of citizenship, rather than an opportunity for a handful of industry executives to hoard a fortune, buy Swiss chalets, and fly around on private jets.

This is one of the most widely shared graphics on social media over the past few days in posts having to do with Thompson’s murder…

Sure, there are lots of health insurance companies in other developed countries, but instead of offering basic healthcare (which is provided by the government) mostly wealthy people subscribe to them to pay for premium services like private hospital rooms, international air ambulance services, and cosmetic surgery.

Essentially, UnitedHealthcare’s CEO Brian Thompson made decisions that killed Americans for a living, in exchange for $10 million a year. He and his peers in the industry are probably paid as much as they are because there is an actual shortage of people with business training who are willing to oversee decisions that cause or allow others to die in exchange for millions in annual compensation.

That Americans are well aware of this obscenity explains the gleeful response to his murder that’s spread across social media, including the refusal of online sleuths to participate in finding his killer.

It shouldn’t need be said that vigilantism is no way to respond to toxic individuals and companies that cause Americans to die unnecessarily. Hopefully, Thompson’s murder will spark a conversation about the role of government and the commons — and the very real need to end the corrupt privatization of our healthcare system (including the Medicare Advantage scam) that has harmed so many of us and killed or injured so many of the people we love.

https://www.youtube-nocookie.com/embed/DzaxEt4L9II?rel=0&autoplay=0&showinfo=0&enablejsapi=0

Trump picks HHS and CMS nominees

Posted on by • Posted in Center for Medicare and Medicaid Services (CMS), Dept of Health and Human Services (HHS), Health Insurance Industry, Health Policy, Healthcare Reform, Medicare Advantage, Pharmaceutical Industry, Pharmacy Benefits Management, Privatization, Profit, Profit Motive, Public Health, Vaccine, Vaccine Hesitancy Rate • Leave a comment

https://www.kaufmanhall.com/insights/blog/gist-weekly-november-22-2024

Last week, President-elect Donald Trump announced that Robert F. Kennedy, Jr. would be his nominee for Secretary of Health and Human Services (HHS). He followed this up on Tuesday with his selection of Dr. Mehmet Oz as his nominee for the Centers for Medicare and Medicaid Services (CMS) Administrator. If confirmed, the two men would replace Xavier Becerra and Chiquita Brooks-LaSure, respectively.

Kennedy, who ended his independent presidential campaign and endorsed Trump in August, has become known for his heterodox views on public health, including vaccine skepticism and opposition to water fluoridization.

Dr. Oz, first famous as a TV personality and more recently a Republican candidate for Pennsylvania Senator, is a strong proponent of Medicare Advantage, having co-authored an op-ed advocating for “Medicare Advantage for All” in 2020.

The Gist: 

These nominees, especially Kennedy, hold a number of personal beliefs at odds with the public health consensus. 

They are both likely to be confirmed, however, as the last cabinet nominee to be rejected by the Senate was John Tower in 1989. (This does not include nominees who have chosen to withdraw themselves from consideration, as former Representative Matt Gaetz has just done.)

Should they be confirmed, they will be responsible for implementing not their own but President Trump’s agenda, the specific priorities of which also remain relatively undefined. 

However, possible consensus points between Trump and his nominees include public health cuts and deregulation, greater scrutiny of pharmaceutical companies, and a favoring of Medicare Advantage over traditional Medicare.

    The Four Core Pillars of Trump Healthcare 2.0

    Posted on by • Posted in ACA, Affordability, Health Policy, Healthcare Reform, Pharmacy Benefits Management, Price Transparency, Private Equity, Privatization • Leave a comment
    The Four Core Pillars of Trump Healthcare 2.0

    While speculation swirls around key cabinet appointments in the incoming Trump administration, much is being written about how things might change for industries and the companies that compose them. Healthcare is no exception.

    Speculation about possible changes originates from media coverage, healthcare trade associations, law firms, consultancies, think tanks and academics. Their views are primarily based on Trump Healthcare 1.0 initiatives (2017-2021), presumed Trump 2.0 leverage in the U.S. Senate, House and conservative Supreme Court and a belief by the Trump-team leaders that their mandate is to lower costs for “everyday Americans” and tighten border security.

    Thus, Trump Healthcare 2.0 policy changes will be extensive, leveraging legislation, executive orders, agency administrative actions, court decisions and appropriations processes to reset the U.S. health system.

    Context:

    The red shift that enabled the 45th President to regain the White House was fueled by discontent and fear: discontent with prices paid by ordinary consumers and fear that illegal immigration was an existential threat. Abortion was an important concern to women but inflation and prices for gas, groceries, housing and healthcare mattered more. Exit polls indicate voter concern about how Trump 2.0 economic policies (tariffs et al) might inflate consumer prices or add up to $7 trillion to the national debt was low. And the fate of the Affordable Care Act was a non-issue: assurance about protection for pre-existing condition coverage neutered attention to other elements of the ACA that will get attention in Trump Healthcare 2.0 (i.e. subsidies, short-term plans, et al).

    The Four Pillars of Trump Healthcare 2.0 Policy Changes

    The new administration is inclined toward a transactional view of the U.S. health system. It does not envision transformational change; instead, it sees opportunity for the system to perform significantly better. Its policies, leadership appointments and actions will be predicated on these four pillars:

    • Access to the U.S. healthcare system is a right to be earned. Fundamentally, Trump Healthcare 2.0 builds on its moral conviction that there should be NO FREE LUNCHES whether it’s illegal immigrants or patients who use the health system without doing their part. Trump Healthcare 2.0 will advance mechanisms to enable self-care, increase personal responsibility, promote cheaper/better alternatives to traditional insurance and health delivery and challenge lawmakers to limit financial support to free-loaders. The fundamental notions of public health and community benefit will be revisited and restrictions enacted.
    • The status quo is not working. Change is needed. Polls show the majority of Americans are dissatisfied with the health system. Affordability is their major concern: escalating, inexplicable costs are forcing their employers to share more responsibility. Trump Healthcare 2.0 will implement changes that lower spending and costs for consumers and employers. They’ll leverage coalitions of working-class voters and businesses to enact policies that expose waste, fraud and abuse in the system and direct the U.S. Department of Health & Human Services to streamline its structure and prioritize cost-effectiveness (the HHS Strategic Plan for 2022-2026 is up for review).
    • Private solutions solve public problems better than government. Trump Healthcare 2.0 posits that government is broken including the federal and state agencies that control healthcare oversight and funding. Reducing regulatory barriers to consolidation and innovation and lessening risks for private investors whose ventures align with Trump Healthcare 2.0 priorities will be foci. Fundamentally, Trump Healthcare 2.0 believes the private sector is better able to address problems than government bureaucrats: key Trump Healthcare 2.0 leadership positions will be filled by successful private sector operators instead of re-cycled DC luminaries desiring attention.
    • Price transparency fuels competition and value. Trump Healthcare 1.0 mandated hospital price transparency via its 2019 Executive Order: Trump Healthcare 2.0 will expand the scope and usefulness of price transparency mandates in hospital, ancillary and outpatient services, physician services, insurance and others. It will facilitate accelerated use of Artificial Intelligence in decision-making by consumers, providers and payers. It will expand timely access to data on prices, direct costs, overhead, executive compensation, outcomes, user experiences and other elements of care management provided by hospitals, physicians and other providers. And it will move quickly to implement site neutral payments in the 119th Trump Healthcare 2.0 holds that providers, insurers and drug companies are not inclined to transparency despite strong support from elected officials and voters. They’ll advance these policy changes anticipating pushback from industry insiders. Trump Healthcare 2.0 believes price transparency in healthcare will produce transformational changes that enable more competition and lower costs.

    Looking ahead:

    The Trump 2.0 team’s immediate task is to assemble its Cabinet: that’s taken prior administrations 38 days on average to complete. In tandem, temporary fixes for CMS’ pending Physician Pay Cut and telehealth expansion will pass as Congress’ lame duck session begins this week.

    Looking to 2025, the Trump Healthcare 2.0 team will focus initially on issues in Congress where Bipartisan support appears strong i.e. regulation of PBMs, implementation of site neutral payment policies, expansion of drugs subject to Inflation Reduction Act’s pricing limits and perhaps others. It will plan its legislative agenda coordinating with key committees (i.e. Senate HELP, House Ways and Means et al) and outside groups that share its predisposition.  And it will use its political clout to build popular support for healthcare reforms that respond directly to consumer (voter) concern about affordability.

    Trump Healthcare 2.0 will bring heightened transparency to the health system and be premised on pillars that are popular with working class voters. It will not be a duplicate of Trump Healthcare 1.0: it will be much more.

    CVS CEO to Wall Street: People in Medicare Advantage Are in for a World of Hurt as We Focus on Profits

    Posted on by • Posted in 2024 Election Issues, CVS Health, Health Insurance Coverage Adequacy, Health Insurance Denial, Health Insurance Industry, Health Insurance Premiums, High Deductible Health Plans, Investor Expectations, Medicare, Medicare Advantage, Out of Pocket Expenses, Privatization, Wall Street • Leave a comment
    https://wendellpotter.substack.com/p/cvs-ceo-to-wall-street-people-in?utm_source=post-email-title&publication_id=255152&post_id=144587223&utm_campaign=email-post-title&isFreemail=true&r=59t65&triedRedirect=true&utm_medium=email

    ALSO: We’re premiering our Magic Translation Box to help you decipher corporate jargon and understand what’s coming down the pike.

    If you are enrolled in an Aetna Medicare Advantage plan, now might be a good time to get more nervous than usual.

    Wall Street is not happy with Aetna’s parent, CVS Health. In response to that unhappiness, triggered by the company’s admission that it has been paying more claims than usual, CVS execs have promised to do whatever it takes to get profit margins back to a level investors deem suitable. 

    That means the odds have increased that Aetna will refuse to cover the treatments and medications your doctor says you need. It also means CVS/Aetna likely will increase your premiums next year and might dump you altogether. The company has a long history of doing just that, as you’ll see below. 

    Medicare Advantage companies in general are facing what Wall Street financial analysts call headwinds, and those winds are now coming from several sources: increased Congressional scrutiny of insurers’ business practices, Biden administration efforts to end years of overpayments that have cost taxpayers hundreds of billions of dollars, enrollee discontent, and a gathering storm of negative press. 

    To understand the pressures CVS CEO Karen Lynch and her C-Suite team are under to satisfy the company’s remaining shareholders (many have fled), you need to know and understand what they told them in recent weeks–and what she undoubtedly will have to say again, with conviction, this coming Thursday when CVS holds its annual meeting of shareholders. You can be certain Lynch’s staff has prepared a binder chock full of the rudest questions she could face from rich folks (mostly institutional investors) who’ve become a little less rich in recent months as the golden calf calf called Medicare Advantage has lost some of its luster. (My former colleagues and I used to put together such a CEO-briefing binder during my Cigna days, which coincided with Lynch’s years at Cigna.)

    To help with that understanding, we’re introducing the HEALTH CARE un-covered Magic Translation Box (MTB). We’ll fire it up occasionally to decipher the coded language executives use when they have to deal with analysts and investors in a public setting. We’ll start with what Lynch and her team told analysts on May 1 when CVS announced first-quarter 2024 results that caused a stampede at the New York Stock Exchange.

    Lynch: We recently received the final 2025 (Medicare Advantage) rate notice (from the Center for Medicare and Medicaid Services), and when combined with the Part D changes prescribed by the Inflation Reduction Act, we believe the rate is insufficient. This update will result in significant added disruption to benefit levels and choice for seniors across the country. While we strive to deliver benefit stability to seniors, we will be adjusting plan-level benefits and exiting counties as we construct our bid for 2025. We are committed to improving margins.

    Magic Translation Box: Can you believe it? CMS did not bend to industry pressure to pay MA plans what we demanded for next year. We only got a modest increase, not enough, in our opinion, to protect our profit margins. To make matters worse, starting next year we won’t be able to make people enrolled in Medicare prescription drug plans (Part D) pay more than $2,000 out of their own pockets, thanks to the Inflation Reduction Act President Biden signed in 2022. So, to make sure you, our most important stakeholder, once again have a good return on your investment, we will notify CMS next month that we will slash the value of Medicare Advantage plans by reducing or eliminating some benefits, like dental, hearing and vision, that attract people to MA plans in the first place. And, for good measure, we’ll be dumping Medicare Advantage enrollees who live in zip codes where we can’t make as much money as we’d like. For them: too bad, so sad. For you: more money in your bank account. And for extra good measure, to keep seniors from blaming greedy us for what we have in store for them, our industry will be bankrolling dark money ads to persuade voters that Biden and the Democrats are the bad guys cutting Medicare. 

    Later during CVS’s earnings call, CFO Thomas Cowhey reiterated Lynch’s remarks about reducing benefits.

    Cowhey: So, we’ve given you all the pieces to kind of understand why we think it (Medicare Advantage) will lose a significant amount of money this year. But as you think about improvement there, obviously there’s a lot of work that we still need to do to understand what benefits we’re going to adjust and what ones we can and can’t…To the extent that we don’t believe we can credibly recapture margin in a reasonable period of time, we will exit those counties…(And) as we’ve all mentioned we’re going to be taking significant pricing actions and really it’s going to depend on what our competitors do.

    Magic Translation Box: We’re under the gun to figure this out because we have to notify CMS by June 3 how much we will increase Medicare Advantage premiums and cut benefits next year and which counties we’ll abandon altogether. We’ll also be watching what our competitors do, but we know from what they’ve been telling you guys that they, too, will be dumping enrollees, hiking premiums and slashing benefits. 

    To make sure investors couldn’t miss what they were saying, Lynch jumped back into the conversation to make clear they knew they were #1 in her book:

    Lynch: I’m just going to reiterate what I said in my prepared remarks. (You can bet what follows were prepared, too.) We are committed to improving margin in Medicare Advantage [emphasis added] and we will do so by pricing for the expected trends. We will do so by adjusting benefits and exiting service counties. And we are committed to doing that.

    Magic Translation Box: Have I made myself clear? We will do whatever it takes to deliver the profits you expect. We will keep a closer eye on how much care people are trying to get and we’ll swing into action faster next time if we see evidence of an uptick. There will be carnage, but you guys rule. You mean a lot more to us than those old and disabled people who don’t have nearly as much money as you do in their bank accounts. 

    This will not be the first time Aetna has dumped health plan enrollees who were a drain on profits. In 2000, when Medicare Advantage was called Medicare+Choice, Aetna notified the Clinton administration it would stop offering Medicare plans in 14 states, affecting 355,000 people, more than half of Aetna’s total Medicare enrollment at the time. Other companies, including Cigna, did the same thing. My team and I wrote a press release to announce that Cigna would be bailing from almost all the markets where we sold private Medicare plans.

    We of course blamed the federal government (i.e., the Democrats) for being the skinflints that made it necessary to bail. Our CEO at the time, Ed Hanway, said the government just couldn’t be relied upon to be a reliable “partner.” 

    Back then, just a relatively small percentage of Medicare beneficiaries were in private plans. Today, more than half of Medicare-eligible Americans are enrolled in a Medicare Advantage plan, which means the disruption could be much worse this time. Some people in counties where Aetna and other companies stop offering plans likely will not find a replacement plan with the same provider network, premiums and benefits.

    But in most places, those who get dumped will be stuck in the volatile, often nightmarish Medicare Advantage world, unable to return to traditional Medicare and buy a Medicare supplement policy to cover their out-of-pocket obligations.

    That’s because in all but a handful of states, seniors and disabled people will not be able to buy a Medicare supplement policy as cheaply as they could within six months of becoming eligible for Medicare benefits. After that, Medicare supplement insurers, including Aetna, get their underwriters involved. If your health isn’t excellent, expect to pay a king’s ransom for a Medigap policy.

    The Heritage Foundation’s Medicare and Social Security Blueprint

    Posted on by • Posted in Deceptive Advertising, Health Insurance Coverage Adequacy, Health Insurance Industry, Health Policy, Lobbyist, Marketing Deceptive, Medicare, Medicare Advantage, Out of Pocket Expenses, Political Lobbying, Privatization, Social Security, The Heritage Foundation • Leave a comment
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    If Congress in the next year or two succeeds in transforming Medicare into something that looks like a run-of-the mill Medicare Advantage plan for everyone – not just for those who now have the plans – it will mark the culmination of a 30-year project funded by the Heritage Foundation.

    A conservative think tank, the Heritage Foundation grew to prominence in the 1970s and ’80s with a well-funded mission to remake or eliminate progressive governmental programs Americans had come to rely on, like Medicare, Social Security and Workers’ Compensation. 

    Some 30 million people already have been lured into private Medicare Advantage plans, eager to grab such sales enticements as groceries, gym memberships and a sprinkling of dental coverage while apparently oblivious to the restrictions on care they may encounter when they get seriously ill and need expensive treatment.  That’s the time when you really need good insurance to pay the bills. 

    Congress may soon pass legislation that authorizes a study commission pushed by Heritage and some Republican members aimed at placing recommendations on the legislative table that would end Medicare and Social Security, replacing those programs with new ones offering lesser benefits for fewer people.

    In other words, they would no longer be available to everyone in a particular group. Instead they would morph into something like welfare, where only the neediest could receive benefits.  

    How did these popular programs, now affecting 67.4 million Americans on Social Security and nearly 67 million on Medicare, become imperiled?

    As I wrote in my book, Slanting the Story: The Forces That Shape the News, Heritage had embarked on a campaign to turn Medicare into a totally privatized arrangement. It’s instructive to look at the 30-year campaign by right-wing think tanks, particularly the Heritage Foundation, to turn these programs into something more akin to health insurance sold by profit-making companies like Aetna and UnitedHealthcare than social insurance, where everyone who pays into the system is entitled to a benefit when they become eligible.  

    The proverbial handwriting was on the wall as early as 1997 when a group of American and Japanese health journalists gathered at an apartment in Manhattan to hear a program about services for the elderly. The featured speaker was Dr. Robyn Stone who had just left her position as assistant secretary for the Department of Health and Human Services in the Clinton administration. 

    Stone chastised the American reporters in the audience, telling them: “What is amazing to me is that you have not picked up on probably the most significant story in aging since the 1960s, and that is passage of the Balanced Budget Act of 1997, which creates Medicare Plus Choice” – a forerunner of today’s Advantage plans.

    “This is the beginning of the end of entitlements for the Medicare program,” Stone said, explaining that the changes signaled a move toward a “defined contribution” program rather than a “defined benefit” plan with a predetermined set of benefits for everyone. “The legislation was so gently passed that nobody looked at the details.” 

    Robert Rosenblatt, who covered the aging beat for the Los Angeles Times, immediately challenged her. “It’s not the beginning of the end of Medicare as we know it,” he shot back. “It expands consumer choice.” 

    Consumer choice had become the watchword of the so-called “consumer movement,” ostensibly empowering shoppers – but without always identifying the conditions under which their choices must be made.

    When consumers lured by TV pitchmen sign up for Medicare Advantage, how many of the sellers disclose that once those consumers leave traditional Medicare for an Advantage plan, they may be trapped. In most states, they will not be able to buy a Medicare supplement policy if they don’t like their new plan unless they are in super-good health. 

    In other words, most seniors are stuck. That can leave beneficiaries medically stranded when they have a serious, costly illness at a time in life when many are using up or have already exhausted their resources. I once asked a Medicare counselor what beneficiaries with little income would do if they became seriously ill and their Advantage plan refused to pay many of the bills, an increasingly common predicament.  The cavalier answer I got was: “They could just go on Medicaid.”

    The push to privatize Medicare began in February 1995 when Heritage issued a six-page committee brief titled “A Special Report to the House Ways and Means Committee”, which was sent to members of Congress, editorial writers, columnists, talk show hosts and other media.  Heritage then spent months promoting its slant on the story. Along with other right-wing groups dedicated to transforming Medicare from social insurance to a private arrangement like car insurance, Heritage clobbered reporters who produced stories that didn’t fit the conservative narrative.

    The right-wing Media Research Center singled out journalists who didn’t use the prescribed vocabulary to describe Heritage plans. Its newsletter criticized CBS reporter Linda Douglas when she reported that the senior citizens lobby had warned that the Republican budget would gut Medicare. The group reprimanded another CBS reporter, Connie Chung, for reporting that the House and Senate GOP plans “call for deep cuts in Medicare and other programs.”  Haley Barbour, then Republican National Committee chairman, vowed to raise “unshirted hell” with the news media whenever they used the word “cut.” He wined and dined reporters, “educating” them on the “difference” between cuts and slowing Medicare’s growth.  Former Republican U.S. Rep. John Kasich of Ohio, who chaired the House budget committee, called reporters warning them not to use the word “cut,” later admitting he “worked them over.”  

    As I wrote at the time, by fall of that year reporters had fallen in line.  Douglas, who had been criticized all summer, got the words right and reported that the Republican bill contained a number of provisions “all adding up to a savings of $270 billion in the growth of Medicare spending.”

    Fast forward to now. The Heritage Foundation’s Budget Blueprint for fiscal year 2023 offered ominous recommendations for Medicare, some of which might be enacted in a Republican administration. The think tank yet again called for a “premium support system” for Medicare, claiming that if its implementation was assumed in 2025, it “would reduce outlays by $1 trillion during the FY 2023-2032 period.” Heritage argues that the controversial approach would foster “intense competition among health plans and providers,” “expand beneficiaries’ choices,” “control costs,” “slow the growth of Medicare spending,” and “stimulate innovation.”

    The potential beneficiaries would be given a sum of money, often called a premium support, to shop in the new marketplace, which could resemble today’s sales bazaar for Medicare Advantage plans, setting up the possibility for more hype and more sellers hoping to cash in on the revamped Medicare program. Many experts fear that such a program ultimately could destroy what is left of traditional Medicare, which about half of the Medicare population still prefers.  

    In other words, most seniors are stuck. 

    That can leave beneficiaries medically stranded when they have a serious, costly illness at a time in life when many are using up or have already exhausted their resources. I once asked a Medicare counselor what beneficiaries with little income would do if they became seriously ill and their Advantage plan refused to pay many of the bills, an increasingly common predicament.  The cavalier answer I got was: “They could just go on Medicaid.”

    The push to privatize Medicare began in February 1995 when Heritage issued a six-page committee brief titled “A Special Report to the House Ways and Means Committee”, which was sent to members of Congress, editorial writers, columnists, talk show hosts and other media.  Heritage then spent months promoting its slant on the story. Along with other right-wing groups dedicated to transforming Medicare from social insurance to a private arrangement like car insurance, Heritage clobbered reporters who produced stories that didn’t fit the conservative narrative.

    The right-wing Media Research Center singled out journalists who didn’t use the prescribed vocabulary to describe Heritage plans. Its newsletter criticized CBS reporter Linda Douglas when she reported that the senior citizens lobby had warned that the Republican budget would gut Medicare. The group reprimanded another CBS reporter, Connie Chung, for reporting that the House and Senate GOP plans “call for deep cuts in Medicare and other programs.”  Haley Barbour, then Republican National Committee chairman, vowed to raise “unshirted hell” with the news media whenever they used the word “cut.” He wined and dined reporters, “educating” them on the “difference” between cuts and slowing Medicare’s growth.  Former Republican U.S. Rep. John Kasich of Ohio, who chaired the House budget committee, called reporters warning them not to use the word “cut,” later admitting he “worked them over.”  

    As I wrote at the time, by fall of that year reporters had fallen in line.  Douglas, who had been criticized all summer, got the words right and reported that the Republican bill contained a number of provisions “all adding up to a savings of $270 billion in the growth of Medicare spending.”

    Fast forward to now. The Heritage Foundation’s Budget Blueprint for fiscal year 2023 offered ominous recommendations for Medicare, some of which might be enacted in a Republican administration. The think tank yet again called for a “premium support system” for Medicare, claiming that if its implementation was assumed in 2025, it “would reduce outlays by $1 trillion during the FY 2023-2032 period.” Heritage argues that the controversial approach would foster “intense competition among health plans and providers,” “expand beneficiaries’ choices,” “control costs,” “slow the growth of Medicare spending,” and “stimulate innovation.”

    The potential beneficiaries would be given a sum of money, often called a premium support, to shop in the new marketplace, which could resemble today’s sales bazaar for Medicare Advantage plans, setting up the possibility for more hype and more sellers hoping to cash in on the revamped Medicare program. Many experts fear that such a program ultimately could destroy what is left of traditional Medicare, which about half of the Medicare population still prefers.  

    In a Republican administration with a GOP Congress, some of the recommendations, or parts of them, might well become law. The last 30 years have shown that the Heritage Foundation and other organizations driven by ideological or financial reasons want to transform Medicare, and they are committed for the long haul.  They have the resources to promote their cause year after year, resulting in the continual erosion of traditional Medicare by Advantage Plans, many of which  are of questionable value when serious illness strikes. 

    The seeds of Medicare’s destruction are in the air. 

    The program as it was set out in 1965 has kept millions of older Americans out of medical poverty for over 50 years, but it may well become something else – a privatized health care system for the oldest citizens whose medical care will depend on the profit goals of a handful of private insurers. It’s a future that STAT’s Bob Herman, whose reporting has explored the inevitable clash between health care and an insurer’s profit goals, has shown us.

    In the long term, the gym memberships, the groceries, the bit of dental and vision care so alluring today may well disappear, and millions of seniors will be left once again to the vagaries of America’s private insurance marketplace.