When the Healthcare Debate Dust Settles, the Insurance Monopoly Will Be the Biggest Problem of All

No matter how the health care reform debate turns out, the increasingly monopolistic health insurance industry, is going to emerge as the biggest problem of all. With fewer choices of carriers, employers are going to be forced to pay higher premiums for plans that'll become more restrictive than ever. Doctors and hospitals will be forced by their managed care agreements to provide more services (subject to more administrative hassles) for lower reimbursements than ever. The lack of competition will hurt patients and consumers in the end as higher deductibles and copayments will be jacked up by the insurance carriers to create further profits.

Where's the Justice Department? Whatever happened to anti-trust laws? How has the insurance industry been able to vault itself to a position that appears above those laws? Anyone know?

Employers Held Hostage by Managed Care Companies: An Escape Plan

Despite healthcare reform debate, rising medical plan costs continue to pummel U.S. employers. Corporate health plan costs are projected to increase again this year by more than 6%*. Since 1999, costs have increased by 134%**, nearly five times the rate of inflation.

"Ironically, during the same 10-year period, private insurers posted record profits, while holding their employer-clients as hostages, feeding them only soaring costs, poor service, and lots of excuses."

But one major east coast company just celebrated its 8^th straight year without a medical cost increase. In fact, while other companies reduced benefits to lessen crippling rate increases, this employer, whose medical plan covers 45,000 lives, actually enriched its benefits program. Today, its annual health plan costs per employee are 60% below the national average. These astonishing results were achieved without a major insurance company’s help. They simply eliminated the managed care middleman entirely and contracted directly with doctors and hospitals.

Cutting out the middleman is an age old idea, but when it comes to employer health plans, insurance carriers still hold employers hostage. Large managed care networks, controlled by profit-bloated and increasingly monopolistic private insurers, have emerged as the only means of coverage for employers. They’re also the dominant source of patient revenue for doctors and hospitals, so medical providers are held hostage, too. Consequently, the middleman controls both sides of the healthcare equation and effectively prevents buyer and seller from doing business directly with each other.

Though highly effective, direct contracting is still largely unknown to CEOs whose companies are held hostage. Whipsawed by relentless cost increases, their benefit departments still rely on profit-centric insurance companies for cost-containment strategies, most of which are based on conventional managed care networks and cost-shifting onto employees. As true hostages of the big carriers, employers have been brainwashed into believing there’s no viable alternative to the carrier’s approach. They’re convinced that if the big insurers like Blue Cross, United Healthcare, Cigna, and Aetna don’t have the answer, no one does. But direct contracting proves otherwise.

Direct contracting creates a “win-win” business relationship between employer and medical provider, the true “buyer” and “seller” in the managed care equation. By cutting out the managed care middleman, the employer and provider eliminate the inherent disadvantages and financial shortcomings found in commercial managed care contracts. The direct agreement saves the employer money without shortchanging the medical provider. It creates a strong, stable, long-term, and mutually beneficial business relationship.

Employer-owned networks are comprised of doctors and hospitals that provide medical care according to the employer’s health plan. For instance, the east-coast employer mentioned earlier has direct contracts in place with more than 10,000 physicians and 80 hospitals across 15 states. Direct agreements give employees and dependents easy access to medical care, while paying those providers quickly, fairly, and without administrative hassle.

Direct contracting bears no resemblance to the complex, adversarial, and financially disadvantageous network agreements forced upon medical providers by insurance companies. Direct networks truly unite physicians and employers in the goal of providing accessible and affordable medical care to employees, without the obstacles and costs found in commercial PPO networks.

As an alternative to HMOs, PPOs, and other commercial managed care approaches, directly contracting is a proven solution for employers who are desperate for relief from soaring costs. For employers held hostage by insurance carriers, direct contracting is a bold plan of escape. However, for such a plan to work, it takes strong leadership and a willingness to endure risks along the way. But for those companies that do, the rewards of freedom from the carriers can mean huge savings, happier employees, and better control over future health plan costs.

* According to Towers Perrin's 2009 Health Care Cost Survey, the average corporate health benefit expenditure in 2009 will be $9,660 per employee--an increase of 6% over 2008 figures.

** Kaiser Family Foundation Employer Health Benefits 2009 Annual Survey.

Where are Harry Reasoner and Howard K. Smith When You Need Them? Oh, That's Right, They're Dead (Sigh)

In the midst of all the news about healthcare reform, another story has emerged that I'm afraid has eclipsed the entire debate (at least for a few hours): Diane Sawyer may replace Charlie Gibson as anchor of ABC's World News Tonight!

Who's watching World News Tonight anyway? Ask their sponsors (99% of whom are pharmaceutical companies) and you'll find nary a soul under the age of about 60. The makers of Viagra, Nexium, Plavix, Lipitor, and other Rx's for "Over-the-Hillers" (like me) spend millions mononpolizing virtually every minute of commercials on WNT for the simple reason that they'll never reach such viewers through the internet.

But, just in case an occasional viewer under middle-age tunes in, WNT makes sure to say "visit ABCnews.com" as the tag line to every sentence they utter. Not to mention, the ABCnews.com graphic that's obnoxiously burned itself into my plasma TV's display.

I've watched ABC News on and off for the past 40 years and, frankly, it's never ever been as good as when Harry Reasoner and Howard K. Smith were at the helm. Now there were a couple of anchors! Oh well, I'll probably watch Diane, just like I watched Charlie, but never in the same way I watched Harry and Howard.

Whether it's Diane, Charlie, Katie, Brian, it really makes no difference anymore. Somewhere along the way, as prime-time news evolved into entertainment, these news anchors became entertainers. Nice to listen to and watch. Hard to really believe.

I suppose when I want the real story, the hard-facts, the truth, I'll just have to go to The Onion or The Huffington Post. Just kidding....

Obama's Handling of Healthcare Reform Issue: Same as Bank Bailout?

Arianna Huffington's article "Has Obama's Handling of the Bank Bailout Undermined Health Care Reform?" illuminates the impact that one major political issue can have on another. Unfortunately, it's true and sad that Obama's handling of the financial crisis has diluted the realistic need for reform down into a vague idealistic want.

However, unlike the financial crisis, most Americans have no realistic frame of reference for the healthcare crisis. No personal experience with the healthcare system itself. The financial meltdown touched virtually everyone, sick and healthy. From those with a few bucks to those who lost millions. But the shortcomings and injustices of healthcare seem to touch only those who use it. Considering the huge number of people who never see a doctor, the remainder's a pretty small basis for real support.

No wonder support for Obama has been so elusive. The strongest base he mobilized during the presidential campaign is comprised of mostly young, healthy people. There's no group whose lives are touched less by healthcare issues. For them, healthcare reform is, at best, ideological, unless they get sick and, even then, only gravely so.

Support from the young and healthy for reform of a system that seems to affect only the older and sickly, will require the same effort the Civil Rights movement needed in the 60's. Support from those who were not personally touched by racism grew only after the true injustices and inequality of the system were exposed. People today will respond to and mobilize around healthcare reform, but the administration and its supporters must expose the suffering that’s going on and stop waffling behind rhetoric.

Isn’t that how Ted Kennedy used to do it?