17 December 2009
California Edition
Calendar
January 28
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A Shift For California’s Uninsured
Government Rolls Grow; Private Sector’s Shrinks
New reports by the California HealthCare still has nearly 1 million fewer uninsured
Foundation have shown a significant than California.
demographic shift among the state’s insured Paul Frontsin, director of the health
this decade, driven in part by the recent research and education program for the
steep recession. Employee Benefits Research Institute,
Although the percentage of the state’s which compiled and analyzed the data
uninsured increased only slightly between for CHCF, believes much of the shift
2000 and 2008, the proportion of toward public health plans has come
California’s insured enrolled in Medi-Cal, since the prolonged recession that began
the state’s Medicaid Likelihhod of Workers Being Uninsured, in late 2007.
program, increased from “There are fewer
By Percentage And Employer Types
13.8% in 2000 to people working,
17.4% – a more 29.5 and (the
30 27.3
than 25% increase.
22.8
workplace) is
Meanwhile, the where most people
22.5 18.8 still access
proportion of those
with private sector 14.8 13.5 healthcare
15
coverage dropped 8.3 benefits,” Frontsin
from 60.8% in 6.3 says, adding that
7.5
2000 to 55.6% in the trend has
last year – a drop 0 accelerated
of more than 8%. Total Self-Employed Public Sector 500+ Employees greatly in
Those enrolled in the past
California
Medicare and Source: CHCF
U.S. year.
individual plans saw slight Demographically, this is
increases, but overall they still represent reflected by the breakdown in insurance
less than 10% of all those with coverage. by age group. Among those likely to lack
Some 20.6% of California’s population coverage in 2008, 28% were between the
is uninsured, according to the CHCF’s ages of 21 to 54, considered the prime
“Snapshot of the Uninsured.” That’s working ages. That compares to an
compared to 20% in 2000. However, the uninsured rate of 24% in 2000 – an
6.6 million people lacking coverage is far overall increase of nearly 17%.
more than any other state. Texas, which has
the largest proportion of uninsured – 28% – Continued on Next Page
www.lakesidecommunityhealthcare.com
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In Brief
Childrens’ Health
Improves, Poverty a
Pressing Issue
A new study of the health of
California’s children suggests they
have made strides in the past
decade, but the current recession
could impede future progress.
The study, by the Lucile
Packard Foundation for Children’s
Health, estimated that the physical
and emotional well-being of
California’s children increased 16%
between 1995 and 2006. The
Foundation tracked 16 specific
categories, including educational
attainment, emotional well-being,
health and safety/behavioral
concerns.
The research for the study was
performed by Kenneth Land, a
sociologist on the faculty of Duke
University.
One category where children
lost ground was the economic well-
being of families, which dropped
21%. Land estimates that as many
as 27% of the state’s children will
be living below the poverty line in
2010, or about $22,000 for a family
of four. That compares to a 2007
poverty rate of 17%.
“Given that the family
economics domain already was
falling in 2006, we have to ask
what the long-term effects of the
more recent ‘Great Recession’ will
be on California’s kids,” Land says.
“Although it’s impossible to
determine just how much poverty
will affect the overall California
index…rates are likely to weigh
down what, at least until 2006,
were general improvements in child
well-being.”
Land expects the poverty rate
to moderate only slightly after next
year, projecting an overall rate of
24% by 2012, still far higher than
the levels experienced before the
recession struck.
Continued on Page 3
NEWS
Coverage (Continued from Page One)
Premiums have also skyrocketed.
According to the CHCF’s “Employer
Health Benefits Survey,” premiums
increased more than 117% between 2002
and 2009 – more than five times the
overall rate of inflation. That’s put
enormous cost pressure on purchasers,
prompting some to drop coverage.
Anthony Wright, executive director
of Health Access, a Sacramento-based
consumer advocate, is alarmed by the
trend.
“As more and more employers
dropping coverage, in some cases, the
public programs have been succeeding in
picking up the slack, but it’s at a rate that
is not sustainable,” Wright says.
Meanwhile, those between the ages
of 55-64 actually made coverage gains.
Nearly 20% of this age group was likely
to be uninsured in 2000, versus 16.6% in
2008.
Frontsin believes this is a reflection
of a segment of the workforce less likely
to relinquish their jobs than in the past.
“This is a group that does not have
the means to afford retirement as they
once did, and are particularly vulnerable
to high premiums if they leave their jobs,”
he says. “So they are doing whatever they
can to hold onto their coverage.”
There have also been shifts among
minority groups. Among Asians in
California, more than 20% are likely to
be uninsured, versus 16.6% in 2000.
Allergan Leads Fight Against “Botax”
Activists Scoff At Claims Middle Class Would Be Hit
Irvine-based biotech giant Allergan, Inc. has
come under re for a highly visible campaign
to stamp out a proposed 5% tax on cosmetic
procedures to help fund federal initiatives to
expand healthcare insurance coverage.
The tax, part of the proposed federal
healthcare reform legislation, would raise
about $600 million a year. It would be
imposed on patients seeking cosmetic
procedures, virtually all of which are elective
and paid for out-of-pocket. Reconstructive
procedures would be exempt.
Allergan has a vested interest against any
such tax: it manufactures and distributes
Botox, the famous derivative of the botulism
bacterium used to temporarily erase wrinkles
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Page 2
Latinos, traditionally the group most likely
to lack coverage, made some gains, from a
33% likelihood of being uninsured in 2000
to just under 30% last year. African-
Americans also made slight gains in
insurance, and there was a slight dip among
Caucasians. Although Frontsin believes the
changes are not large enough to be
statistically significant, he attributes the
shifts in part to acculturation by immigrant
populations.
“A lot of immigrants are not use to the
culture of health insurance. They either
come from a place with a single-payer
system, or pay for it out of their own
pocket,” he says. “That changes when
people have lived here for a period of time.”
Correction
It was reported in last week’s edition of
Payers & Providers that a $125,000-per-
physician loan forgiveness program to
recruit pediatric specialists to Orange
County offered six times the amount of other
state-run programs. That was mistakenly in
reference to programs aimed at allied
health professionals. The Steven M.
Thompson Physician Corps Loan Repayment
Program, operated by the California
Medical Board, offers up to $105,000 in
forgiveness.
in the forehead and eyebrow. It also sells
implantable devices for breast augmentation.
About 30% of the company’s $4.4 billion in
annual revenues is derived from botox sales,
and about 5% from breast implants.
Aside from Allergan and its competitors,
the tax has drawn opposition from virtually
every organization that represents physicians
who perform cosmetic procedures, as well as
the American Academy of Ophthalmology,
the American Academy of Dermatology, and
the American College of Surgeons.
Continued on Next Page
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In Brief
Anthem Wins Medi-Cal
Managed Care
Contract
The California Department of
Health Care Services has renewed
a contract for Anthem Blue Cross
to provide managed care coverage
to Medi-Cal recipients in Fresno,
Kings and Madera Counties. The
contract covers 163,000 lives.
Anthem did not disclose the
value of the contract renewal, but
did say it was the third largest
renewal of a Medicaid managed
care contract in the U.S. during
2009.
Anthem says it will launch a
new pharmacy management
program for the enrollees.
Health Net Provides
2010 Guidance
Health Net projects that revenue
for 2010 will be between $13 and
$13.5 billion, about 15% lower
than its guidance for 2009, the
result in part of the pending sales
of its plans in the eastern U.S.
However, it does expect earnings
to rebound.
The Woodland Hills-based
insurer also projected that health
plan enrollment by year-end 2010
will be flat compared to the end of
this year. The company reported
total enrollment of 6.6 million at
the end of the third quarter,
including 3 million enrollees
through its TRICARE contracts to
care for the dependents of current
and retired members of the
military.
Health Net also projects
diluted earnings of $1.90 to $2.00
per share, including the impact of
$69 million in pretax charges. The
company has r eported 12-month
trailing diluted earnings of 31 cents
per share.
NEWS
Botax (Continued from Page Two)
However, no organization has taken the
battle as far as Allergan: the company has
launched a Website,
www.stopcosmetictax.org, and
commissioned Princeton, N.J.-based
marketing rm Opinion Research Corp. to
perform a public opinion poll earlier this
month. Allergan claims the tax discriminates
against women and the middle-class.
“The tax would impact middle class
Americans,” Allergan Chief Executive Ofcer
David Pyott said in a statement issued earlier
this month. “President Obama promised not
to raise taxes on the middle class. Yet that is
exactly what the cosmetic tax would do.”
Allergan has also claimed the tax would
encourage manufacturers to skirt regulation
by the U.S. Food and Drug Administration,
although it recently sued the FDA to be
permitted to provide guidance to physicians
about how to use Botox outside of currently
approved uses.
Allergan’s position was blasted by Judy
PAMF, Mills-Peninsula Okay Merger
Groups Are Edging Toward Integrated Model
Palo Alto Medical Foundation and Mills-
Peninsula Medical Group agreed to merge
earlier this month after months of negotiations.
The merger was approved by 88% of
MPMG shareholders as part of a vote taken
last week. It will become nal on April 1. The
merged entity will be called the Peninsula
Clinic and have more than 1,300 afliated
physicians and 700,000 lives.
“Our current business model is not
sustainable. Our primary care physicians are
aging just as the population is aging and it has
been difcult to recruit new primary care
physicians to the community,” says MPMG
Chief Executive Ofcer, Brian Roach, M.D.
Roach will become president of PAMF’s Mills-
Expert Healthcare Communications
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Page 3
Dugan, research director for Consumer
Watchdog, a Santa Monica-based activist
group that has been highly critical of the way
for-prot healthcare rms operate.
“It’s completely ridiculous for the plastic
surgery industry to call a 5% tax a
disproportionate burden on the middle class,”
she says. “It not only really pushes the
envelope, but it’s just a joke, considering how
many burdens the middle-class already bears.”
According to a poll commissioned by
Allergan of 1,014 individuals earlier this
month, 49% of respondents say they opposed
the tax after they were told it would
disproportionately affect people whose
household incomes were between $30,000
and $90,000. However, Allergan says that
52% of respondents opposed the tax
altogether, and that older respondents opposed
the proposed tax in higher numbers.
Allergan did not respond to requests for
comment, or to release the poll questions.
Peninsula division after the merger is
complete.
Although ofcials say the Peninsula
Clinic will eventually become a fully
integrated medical group, only 40 of MPMG’s
approximately 350 physicians will join an
integrated model. The rest will remain part of
an IPA model.
“This provides a transitional model,” says
Cecilia Montalvo, a regional vice president
for business and strategy for Sutter Health.
Both groups were afliated with Sutter prior
to the merger, and that status will not change,
according to Montalvo.
About 200 MPMG employees will have
their positions shifted to PAMF, ofcials say.
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Payers & Providers
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OPINION
Reform From A Preventative Perch
Approaches to Care Must Change Along With Policy
Whether or not you agree with the
provisions of the healthcare reform bill
currently simmering in the Senate, there
can be little debate that our nation’s
healthcare system is broken. The U.S.
spends more on health care – $2.4 trillion
in 2008 alone – than any other nation.
Medical spending accounts for more than
20% of all goods and services produced in
the U.S. and exceeds the national defense
budget by more than four times.
Much of this spending could be
prevented or reduced by reforming our
system from a disease treatment to a
disease prevention modality. For too long
the healthcare system has ignored the
important role that prevention
can play in resolving the
national healthcare crisis.
Doctors shrugged off patient
discussions about weight
management. Hospitals fed
diabetic patients the same menu
as non-diabetic patients. And
insurers just paid the bills,
making it easy for consumers to
avoid thinking about the real
costs of medical care. The
consequences of this "laissez-faire"
attitude include a national obesity rate George
that is the highest in the industrialized DeVries expand insurance and preventive care to
world; an epidemic increase in chronic
conditions like diabetes; a less healthy and
productive workforce; and generations of
Americans who feel entitled to only the
best (and most expensive) medical
treatments.
Employers, economists and the federal
government understand what is at stake if
Americans continue spiraling toward bad
health. At the current pace of increase,
medical expenditures could nearly double
to $4.4 trillion by 2018. That doesn’t
include the impact of absenteeism and
presenteeism. It costs the U.S. $260 billion
per year in lost economic output.
The role of healthcare leaders should be
to influence, encourage and enable
Americans to make better lifestyle choices
that will keep them healthy. Healthy
Americans are more productive, and they
cost employers and health plans less
money. And healthy Americans raise
healthier, happier families.
As healthcare leaders we must work
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Page 4
together to:
• Increase the use of employer-based
prevention and wellness programs. Studies
show that comprehensive wellness
programs, including screenings, health
education, health coaches, tobacco
cessation, weight and stress management
programs, and incentives for healthy
choices, can reduce employer health costs
and enhance productivity. Employers with
effective health and productivity
management programs achieve 20 percent
more revenue per employee.
• Expand the focus on preventive care by
pediatricians and primary care physicians,
increasing early screenings for obesity,
diabetes and other chronic
diseases, and interventions for
lifestyle changes.
•Make local health improvement
a priority. Foster community- and
state-wide policies and programs
that encourage and support
healthy life choices. School lunch
programs, bike-to-work days, or
free obesity screenings can all
make an impact on the health of
residents.
By •Make healthcare accessible to and
affordable for all. Support initiatives that
the 46 million uninsured Americans.
Lack of insurance prevents early detection
and diagnosis of diseases, allowing them to
become critical and more costly to treat.
Healthcare reform is a fiscal and moral
imperative. We have the knowledge and tools
to implement preventive care and wellness
reforms that can improve the health of our
nation. The time to implement these reforms
is now, so we can begin to ratchet down
America's unhealthy habits and their impact
on our nation’s fiscal, cultural and moral
well-being.
George DeVries is chairman and chief executive
officer of American Specialty Health, a San
Diego-based company that creates preventative
care programs.
Op-ed submissions of up to 575 words are
welcomed. Please e-mail proposals to
editor@payersandproviders.com, or call
(877) 248-2360, ext. 3.
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