Friday, May 1, 2009

Health plans - Private Health Plans in Trouble

The nation’s 1500 private health plans are in deepening trouble for these reasons.

• Membership is dropping at the rate of 2% to 3% each quarter across the board for the Blues, Anthem, Wellpoint, United, Aetna, Tufts, Harvard Pilgrim, and other plans, large and small.

• Profits are declining.

• The recession is causing employers to drop health plans.

• The day of raising premiums to compensate for dropping membership is over.

• The Obama administration's reform policies of play-or-pay and a National Insurance Exchange featuring a public plan competing with private plans threatens private plans because private plans with their overhead can’t compete with a low-cost government plan.

• Hospitals and physicians are fed up with mounting accounts receivable (58 days and 38 days respectively from charge to receipt of payment), largely due to their perception that the plans are holding onto the "float" (new electronic processing systems should make it possible to shorten payment delays to 7 days.)

• Polls indicate the public would welcome a competing public plan and do not believe the private plans justifications for their high costs.

With regard to the latter, voters overwhelmingly support choice of private or public health insurance plan. A new poll conducted by Lake Research Partners on behalf of Health Care for America Now (HCAN), a private plan opponent, found “intense and widespread voter support” for choice of a public health plan as part of comprehensive, national health care reform.

For example, 62% of voters believe a public plan will spend less on profits and administration and force private insurers to compete while only 28% of voters believe the attack that a public plan would be a “big, government bureaucracy.” 60% believe that if private insurers are really more efficient than government, then they won’t have any trouble competing with a public plan. Only 23% believe a public plan would have an unfair advantage over private plans.

Other Key Findings:

• 61% think a public health insurance plan will be better able to control health care costs by using its purchasing power to drive competition. Only 25% believe a public plan will shift higher costs onto the privately insured.

• 61% agree that millions of people are already losing their coverage every year, and a choice of private or public health insurance plans will make sure that Americans always have quality, affordable care. Only 27% believe the claim that a public plan will cause millions of people to be dumped from their private coverage.

• Two thirds (66%) agree that a public plan will provide a choice with a standard, comprehensive package of benefits and a wide choice of doctors. Only 26% believe a public plan will force people into lower quality care including rationing and long waits.

Personally I find the voters’ views naïve and an exercise in wishful and uniformed thinking. Nevertheless, their current views have political power and deepen the health plans’troubles.

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