The Center for Public Integrity

In 2007, a few months before I left the health insurance industry, I was tasked to write a “white paper” designed to help convince media folks and politicians that the problem of the uninsured wasn’t much of a problem after all. If demographic data was sliced just so, I was expected to write, it was easy to conclude that many of the uninsured — some 46 million at the time — were that way by choice.

I was told to point out, for example, that a significant percentage of people without coverage were in families with annual incomes of $75,000 or more. The implication: That those folks were simply shirking their responsibilities. A crucial fact that I was not to disclose, of course, was that many Americans, including wealthy ones, couldn’t buy coverage at any price because of pre-existing conditions. These are the “untouchables” as far as insurance companies were concerned. (That’s my term, not the industry’s. The underwriters prefer the term “uninsurable.”)

I also was expected to stress that most young adults — who comprise the largest segment of the uninsured — had chosen to “go naked” because they felt invincible. They simply didn’t want to pay good money for insurance because that cash could better be spent keeping the fridge stocked with Bud Light. To perpetuate that myth, we even came up with a catchy name for those twenty-somethings — the “young invincibles.”

Our message to America: Don’t feel sorry for those irresponsible bums, and by all means don’t let Congress pass any new laws that would require insurers to cover them.

Having to write that paper was one of the reasons I resigned. As the father of a couple young adults, I knew that their crowd did not consider themselves invincible. They simply did not have money left over after paying student loans and the rent to buy health insurance.

If you think the idea of privatizing Medicare has gone away, that the health insurance industry has thrown in the towel on one of its biggest goals, there was fresh evidence last week that you would be wrong.

As I wrote more than a year ago — when Rep. Paul Ryan (R.-Wis.) unveiled his plan to replace the Medicare system with one that would essentially be run by private insurers — Democrats would be foolish to think that Ryan couldn’t get the public to support the concept.  I noted then that insurers would be investing heavily in efforts to convince people that Ryan’s plan represented the only way to save the Medicare program from insolvency.

One of the tried-and-true tactics insurers have used many times to influence public opinion is the enlistment of “third-party advocates” to disseminate industry talking points. Last week an industry friend in high places — Thomas Scully, who headed the Medicare program during much of the George W. Bush administration — weighed in on the matter. It is only a matter of time, Scully told Kaiser Health News, before politicians on both sides of the aisle endorse Ryan’s proposal of providing Medicare beneficiaries with a set amount of money every year to buy coverage from private insurers.

Scully, now senior counsel at Alston & Bird, the big law and lobbying firm that has represented some of the country’s biggest health insurers, including WellPoint and Cigna, is advocating a gradual phase-in of the Ryan plan, similar to how the recent changes in Social Security came about. 

When members of Congress who led the effort to overhaul the U.S. health care system saw the public option slipping away, some of them suggested that a viable alternative would be the fostering of nonprofit health insurance CO-OPs (Consumer Oriented and Operated Plans) throughout the country.

I was among the many who belittled the idea. Having spent two decades in the health insurance industry, I knew how difficult it is for even the biggest insurers to establish a presence in markets where one or two other insurance firms dominate. And there are hardly any markets left where that is not the case.

The barriers to entry in any given market are so high that the only way insurers have been able to establish much of a foothold where the don’t already have a presence is to acquire one or more existing companies. Aetna became a big player in Philadelphia, for example, only after it bought U.S. Healthcare several years ago.

If you don’t have a sizable membership base, it is difficult to negotiate rates with doctors and hospitals that are as favorable as those that bigger insurers can get. If you have to pay providers more than your competitors, you will have to charge your customers higher premiums. It is almost impossible to grow your membership if you have to price your premiums higher than your competitors. It’s a chicken-and-egg thing and why we have seen such rapid consolidation in the insurance industry. And it’s why I was skeptical that start-up non-profit CO-OPs would have a snowball’s chance.

I’m happy to report that I might have been wrong. In fact, CO-OPs could be one of the sleepers in the health care reform law that truly transforms how care is financed and delivered in this country. And they could even hasten the day when the big investor-owned corporations cede the marketplace to nonprofits and move on to other ways of earning a profit.

An influential federal task force has finalized its view that men should avoid a controversial test for prostate cancer that was the subject of a Center for Public Integrity investigation last fall.  

The U.S. Preventive Services Task Force advised men against routine prostate cancer screening using the prostate-specific antigen (PSA) blood test because the test often leads to more harm than good. The group found that, under the best of circumstances, one man of every 1,000 given the test would avoid death as a result, while one in every 3,000 would die prematurely from complications related to prostate cancer treatment. Prostate cancer is common, particularly in older men, and often cancers discovered through screening grow so slowly that they would likely not cause harm.

The task force findings, published Monday online in The Annals of Internal Medicine, follow similar draft guidelines that were issued by the group last fall. The Preventive Services Task Force is a group of 16 primary care providers who review preventive health services and make recommendations — recommendations that are closely watched by the medical profession.   

Not everyone agrees with the findings. The American Urological Association issued a statement saying it is “outraged and believes that the Task Force is doing men a great disservice by disparaging what is now the only widely available test for prostate cancer, a potentially devastating disease.”

I learned that Mitt Romney had won the Nebraska Republican presidential primary last week via a “Breaking News” e-mail alert from POLITICO.  It wasn’t the news from the Cornhusker state, however, that caught my eye. It was instead the health insurance industry’s decision to spend our premium dollars on an Internet ad — an ad warning of dire consequences if the Supreme Court doesn’t rule the way insurers want on the constitutionality of Obamacare.

The worst-case scenario for insurers is if the high court strikes down the provision of the law requiring us to buy coverage (the so-called individual mandate), but allows the law’s important consumer protections to go forward.

The reason Obamacare is built around the individual mandate is because of the relentless lobbying by insurers, and not just on Capitol Hill.  Representatives of the industry made frequent trips to the White House during the debate on reform to twist the arm of President Obama, who had campaigned against the mandate when he was running for president.  

The insurance reps were persuasive in arguing that the parts of the bill consumer advocates were demanding wouldn’t work unless an “enforceable personal purchase requirement” (a.k.a., the individual mandate) was also included, along with subsidies from the government to help low-income families pay their premiums. And not incidentally, insurers love the mandate because it forces millions more people to buy health insurance policies. The insurance folks made it clear that without the mandate and subsidies, the industry would spend whatever was necessary to defeat reform. So a deal was cut. The industry promised it would not try to destroy reform if it got the mandate, and it would even go along with some of what consumer advocates wanted.

We’ll be hearing a lot from politicians this summer and fall about the urgency of dealing with Medicare spending, which will begin to rise sharply in the coming years as increasing numbers of the country’s 75 million baby boomers turn 65.

If we’re fortunate, some courageous candidates will call for renewed debate on a provision of the health care reform bill that had once enjoyed bipartisan support. The one that spineless Democrats decided had to be yanked when a certain former vice presidential nominee claimed, falsely, that it would create government-run “death panels.”

Medicare expenditures now total more than half a trillion dollars annually, representing 15 percent of federal spending.  The only programs to which the government devotes more dollars are Social Security and national defense, both of which consume 20 percent of yearly federal outlays.

The Congressional Budget Office projects that the average annual growth in Medicare spending will be 5.8 percent between 2012 and 2020. It would have been one percentage point higher than that, according to the CBO, if not for the cost-constraining provisions of the Affordable Care Act,  most notably the one that will gradually eliminate the bonuses the government pays private insurers to participate in the Medicare Advantage program.

The Affordable Care Act might have been able to curtail spending further if it hadn’t been for Sarah Palin’s reckless rhetoric. It was Palin who charged that a provision of the law allowing Medicare to pay doctors for having end-of-life discussions with their patients would lead to government-run “death panels.”

Thousands of doctors across the country are billing Medicare for routine medical care at rates far above their peers, potentially costing taxpayers tens of millions of dollars in overcharges, according to a new government report.

The audit released today by the U.S. Department of Health and Human Services Office of Inspector General stopped short of accusing the high-billing doctors of ripping off the government health plan for the elderly. But it stated that Medicare’s payment scales for doctors have been “vulnerable to fraud and abuse” in recent years.

The doctor payment scales are known as “Evaluation and Management” or E/M codes. Doctors choose from five escalating payment levels for treating patients based on the “amount of skill, effort, time responsibility and medical knowledge required for the service.” In 2010, almost 370 million E/M services were provided by about 442,000 doctors nationwide.

The code the doctor chooses can make a big difference to the bottom line. For instance, the Medicare fee for treating a new patient in 2010 ranged from $36.62 to $190.56, depending on the level of service provided by the doctor, and the code chosen for billing.

Using these codes, Medicare paid doctors and other health professionals $33.5 billion in 2010 for services ranging from routine office care to hospital or nursing homes visits.

That billing total represented a 48 percent jump since 2001, though the number of services delivered over the same time period grew only 13 percent. What the data reveal is that many doctors have been gravitating toward the codes that pay them higher fees for these routine services, a practice officials have struggled to understand and curb.

Since 2010, our Manipulating Medicare series has taken a hard look at the problems plaguing one of the nation’s most expensive public programs. This year's investigative pieces from iWatch News will look at questionable billing practices and political interference that directs Medicare spending in often-inefficient ways.

The big story in Medicare fraud last week was an unprecedented bust of 107 doctors, nurses and social workers who allegedly billed $452 million of fraudulent medical expenses to the taxpayer-funded program, as reported by the Associated Press. Though the crackdown was huge, Medicare fraud is believed to cost up to $90 billion annually, the scams associated with the recent arrests only represent a fraction of the overall problem.

Brief history:

Back in March 2007, agencies within the Department of Justice teamed up with the Department of Health and Human Services to create a Medicare Fraud Strike Force. It is a collaboration that became part of a larger initiative known as the Health Care Fraud Prevention and Enforcement Action Team (H.E.A.T.) in 2009. Now with about two-dozen prosecutors in nine U.S. cities, the strike force has busted more than 1,300 people accused of billing the Medicare program for at least $4 billion (during FY2011 alone) in medical services that never happened.

You’ve heard it before. Let’s deep six ObamaCare and replace it with a trio of sure-fire free-market solutions to the problems that plague our health care system. All that’s really needed, we’re told, is to pass tort reform, allow insurance companies to sell policies across state lines and encourage people to set up health savings accounts.

Here’s the problem: there is mounting evidence that all three of these strategies not only are ineffective but may actually be making matters worse.

Let’s start with those health saving accounts (HSAs), which folks can establish if they enroll in a high-deductible health plan. With backing from the Bush administration and the insurance industry, Congress passed legislation in 2003 to encourage people to enroll in high-deductible plans by giving tax-exempt status to the money policyholders contribute to their HSAs to cover out-of-pocket expenses. 

Proponents argued that Americans would be more prudent “consumers” and take better care of themselves if they had to spend more of their own hard-earned money for health care and their insurers had to spend less. HSAs, they said, would bring down the cost of care because people with more “skin in the game” would shop around for doctors and hospitals that charged less.

It sounded good. But one of the reasons I left the insurance industry was because of irrefutable evidence that high-deductible plans were great for insurance firms but not so great for many of the people enrolled in them.