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Storm clouds a-brewin over CO health reform
Contributed by: Fran Miller on 2/29/2008

For the past year we have all been entranced with Colorado's 208 Blue Ribbon Commission on Health Care, which resembled a Cirque de Soleil performance under the big tent.

Our hope in all of this, of course, was that the Commission would craft a strategy to lower health care costs to enable the 750,000 uninsured in the State to obtain health coverage. Instead, the Commission proposed a multi-billion dollar tax subsidy that would flow through insurance companies and have the net effect of eliminating the bad debts and charity obligations of Colorado for-profit hospitals.

Disappointed as we were, at least it was a yeoman's effort in the name of a good cause. Now, major events at the national level have transpired that bring the integrity and motivations of the Colorado Commission's work into question.

Business Week magazine, this week-end, reported that on February 13, 2008, the Attorney General of State of New York announced an intent to sue United Health Care, the parent owner of Ingenix, who in turn owns Lewin Group. Lewin was the consulting firm that Colorado used to model its numbers and develop recommendations. This is a complex situation involving hospital reimbursement and insurance company payments.

What has been happening is that insurance companies around the nation have been reimbursing hospitals far less than what they charge. The difference is in-turn billed to patients who are often surprised because they thought once they covered the copayment the insuror would cover the rest of the bill. In Colorado it is hundreds of millions of dollars and nationwide the number is hundreds of billions of dollars.

Hospitals are reimbursed by Medicare and Medicaid 25% to 40% less than what it costs them to provide care. But, insurance companies pay 25% to 40% less than retail rates(aka, billable charges). It is the consumer, both those who are insured and uninsured who have to pay the difference.

A major rub has been that the self-pay patient, who is often uninsured, is routinely billed far higher than everyone else because he lacks leverage in the market. He also pays higher insurance premiums than those who get group rates.

Imagine a poker game with hospitals and insurance companies at the table. They are playing Texas hold'em. The hospitals are trying to figure out how to raise their rates, both in terms of what their competitors charge, but also to the maxium of what the insurance companies will pay.

The insurance company players are trying to figure out what it really costs to do a hernia operation and what minimum they can get away with paying. This game, however, cannot be played without information, and that is where United's Ingenix and Lewin enter the game as the dealer. The patient in this game gets to serve the free drinks.

Lewin Group has, for years, plied its trade using Medicare and Medicaid data, which is publically available. By consulting they also get the inside track on other valuable data. Ingenix, which sells coding information supplies the data necessary to optimize reimbursement and determine reasonable and customary billing rates.

United Healthcare is one of the nations largest insurance companies. So, the vicious cycle which leads to round-after-round of health care price and insurance premium increases is facilitated by these very consultants and financial intermediaries. The game could not go-on, otherwise.

It is a cycle in which the consumer pays, not only in terms of premiums, deductibles and copayments, but also in terms of less take home pay to fund ever rising health entitlement programs for the elderly and poor. This complex system is rife with financial intermediaries and their parasite consultants and information vendors who feed off the system. I consider them people of the lie.

I don't know whether the smoke in New York is indicative of a fire in Colorado. But, what is clearly obvious is that United Healthcare and its subsidiaries Ingenix and Lewin are in the thick of it. A worst case scenario is that Colorado, along with other states seeking to reform health care programs such as Medicaid and the uninsured were intentionally set-up and compromised by the agendas of insurance companies and health providers.

We need to be reminded that when Enron and a host of other large corporations failed back in the 1990s, it was their accountants and consultants who enabled the deceit. Arthur Anderson, the largest public accounting firm in the World, at the time, went bankrupt as a result. And, when the savings and loan crisis of the 1980s occurred, it was law firms and accounting firms who were complicit in the crimes. Now with the sub prime debacle we are realizing that it is a host of financial intermediaries and brokers who supplied oxygen to the fire.

Colorado made tragic and fatal mistakes when it formed the 208 Blue Ribbon Commission. First, certain legislators who are closely tied to the health insurance industry were behind the legislation. Second, having an insurance broker/consultant as the Commission's chair was highly suspect. Then, using a consulting firm whose skirts are dirty may now serve to turn the whole affair into a casino with a bordello upstairs.

There is little doubt that most of the Commissioners and staff labored like galley slaves trying to come up with a good set of recommendations. That Colorado has increasingly trended liberal, it should also be no surprise that the majority of the members of the Commission were bona fide socialists. But, they had integrity even as they tried to drive forward into the future looking out the rear view mirror through rose-colored glasses.

As for the host of providers, insurers, consultants, premium-takers and money-changers who have turned the health care industry into an amoral extractives industry? I hypothesize that they took our watch and told us the time. Did they do anything illegal? Not breaking the law is the floor on morality, not the ceiling. The Commission's affairs should have been a sacred obligation. Like I said, where there is smoke there is usually fire and this time I think we will find the stagecoach burning, the passengers killed and the strong-box hijacked by road agents.



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CONTRIBUTOR INFORMATION

Fran Miller

Parker , CO

Fran Miller has posted 106 stories and 14 comments since joining on 9/28/2007. Fran Miller 's average story rating is 4.78.
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