United Healthcare defends itself?

CEO Andrew Witty issued United Healthcare's first official response to the recent outpouring of public criticism of the insurer's practices.

The gist of his comments focused on blaming hospitals and drug companies for the rising cost of healthcare. In one specific quote Witty states:"Fundamentally, healthcare costs more in the U.S. because the price of a single procedure, visit, or prescription is higher here than it is in other countries. […] The core fact is that price, more than utilization, drives system costs higher.”

Witty took an indirect shot at hospitals, saying there are “participants in the system who benefit” from higher prices even as others work to fix the problem. He said patients would benefit from cheaper sites of care, but that threatens revenue streams for organizations that depend on charging more for care!

That is a reference to longstanding efforts in Congress, fiercely opposed by hospitals, to equalize Medicare payment for certain services provided at hospital outpatient departments with those provided in physician offices.

These criticisms of hospitals illustrate Witty's fundamental misunderstanding of the health system's dependence on the flawed cross subsidization system - because it drives healthcare's problems. Witty's focus on hospital prices is misguided.

Hospital payments have little to do with prices. For example, Medicare and Medicaid account for 70-80 percent of hospital payments. Those payments are regulatory and have nothing to do with hospital prices. These government payments pay hospitals less than costs. The most recent American Hospital Association studies indicate that government payments only cover 80 percent of hospital costs. So private insurers do pay higher prices to cross subsidize these inadequate government payments. The bottom line is that hospital profits are very modest while United Health’s profits are robust and increasing.

In fact, United is exacerbating the cross-subsidization problem by paying hospitals less than Medicare for United Medicare patients.

The article also discusses the fact that United Healthcare’s medical loss ratio is increasing - which supposedly means United is making less profit. However, one way United increases the medical loss ratio is by acquiring physician practices. They make money off physician practices and use the cost of those practices to raise their medical loss ratio.

Finally, United asserts that their Medicare Advantage plans are good for consumers. The truth is Medicare advantage plans cost Medicare 108 percent of traditional Medicare - costing taxpayers billion. At the same time United aggressively limits patient choices for care and routinely denies coverage.

United Health’s defense of its operations leaves much to be desired.

Thoughts on the murder of United Healthcare's CEO

This editorial opinion by the Wall Street Journal regarding the murder of United Healthcare CEO Brian Thompson misses the point. The murder of this CEO was not justified. However, the anger of US citizens about a dysfunctional health system is justified.

This opinion seems to make numerous excuses for private insurers and blames Congress. Both parties are guilty. The opinion recites a litany of problems in healthcare without suggesting that someone is responsible for the US health system. The real issue this opinion ignores is that Americans have reached a breaking point—the abuses of the healthcare system on patients and caregivers have pushed people over the edge. The outpouring of arguments over healthcare injustices and the lack of serious solutions is why someone was compelled to make a statement for society by murdering a CEO.

Wake up Congress and healthcare leadership - significant changes to the health system are needed quickly.

Solutions start with simplification and a single payment model that rewards the correct behavior. Today’s payment model, based on a highly complex coding system, actually discourages doctors from talking with patients and each other. It encourages fraud and abuse with a complicated coding system that no matter how many regulations we add encourages bad behavior.

We need to focus on simple solutions that encourage good patient care, not denials. Go to www.thejourneys-end.org for some practical solutions.

Connecting the dots on Medicare Advantage plans

Let me briefly connect some dots on the Wall Street Journal’s recent coverage of private Medicare Plans known as Medicare Advantage (MA) plans.

The investigation in this 11/14 article concludes that the sickest patients eligible for Medicare are “fleeing” MA plans because of inadequate insurance coverage. At the same time, these private plans collect 20 percent more from the taxpayers for their patients because the MA plans claim they care for sicker patients. The MA plans use coding to assert that their patients are sicker.

This 10/24 WSJ article offers compelling evidence that the MA plans manipulate the coding system (rather than care for sicker patients) to receive higher taxpayer payments. To make matters worse, MA plans also pay less to doctors and hospitals for care than regular Medicare. They achieve this outcome by denying claims and paying providers lower payments. This lower payment level has caused providers to cancel contracts with MA plans because they are losing too much money on these contracts, as noted in this USA Today article.

In summary, taxpayers and Medicare are overpaying MA plans by billions of dollars, and patients and providers are being harmed by these plans. The coding system, which is ridiculously complicated and easily manipulated, makes all this abuse possible. These abuses will continue as long as healthcare utilizes coding to determine insurance and provider payments. Alternatives to coding exist for paying providers and insurers.

Visit www.thejourneys-end.org to learn more about these options. Hopefully, the new Administration will be open to these innovative solutions.