When it’s routed through the government because their spending is done with mythically different dollars than private spending. Or at least it is in the bizzaro world of free-marketeer policy analysts. Let me explain…
A couple of weeks back a small consulting firm working for McCain sent me an article written by University of Minnesota economist Roger Feldman about the cost of Obama’s health plan. They were complaining that I hadn’t featured their analysis. So I read the report which suggested that the Obama plan would cause $450 billion in health spending. Bear in mind, Obama suggests that it’ll cost $65 billion, so this is quite some stretch.
I was going to write a long, learned article about this, but instead I’ll just show you the email back & forth.
The problem with astroturf
….is that sometimes real weeds might sneak in and mess up the nice green carpeting you’re laying down.
To wit, here’s an exchange between an SEIU member and AHIP President Karen Ignagni at the AHIP astroturf meeting in Ohio. When asked why Wellpoint’s CEO is still talking about profitability (and going off message to the political world when going on message to Wall Street), Ignagni starts off about “No Margin, No Mission”.
Err … Karen, that’s the line used by non-profits that (theoretically) have a mission to do some social good. The mission of investor-owned companies like Wellpoint, Healthnet, Aetna, United, et al is to make a profit. Your opponents can show you lots of “insurance companies” that do a pretty good job (or at least as good as your members and usually better) and don’t make a profit. Hint: one’s called Medicare, another is the VA.
And at another astroturf forum a different AHIP spokesman also showed a lack of comprehension of basic economics when he apparently said that it is necessary for the insurance industry to make profits to cover costs. Err no, you have to cover your costs to cover your costs — profit is on top of that!
Has Steve Poizner gone soft?
California’s de facto health insurance commissioner Lisa Girion reports on California’s actual Insurance Commissioner Steve Poizner’s agreement with Healthnet. After all that fuss, the deal is that Healthnet pays $14m in canceled medical bills, reinstates around 1,000 canceled policy-holders and pays a $3.6m fine. Poizner agreed to this despite all his tough words of not too long ago.
How is it that the punishment fine is less than the cost of the offense? So let me see. Don’t pay $14m in medical bills you’d agreed to insure, and either get away with it, or run the slight risk of not getting away with it and pay $18m several years later. That’s a deal any self-respecting egregious booty capitalist would take. And let’s face it being one of those is a requirement of the job to run a health plan these days.
Of course, the separate $9m fine Healthnet has already seen in one case alone—handed down by an arbitrator whose decisions cannot be overturned later—gives a clue to what the real damages will be in the courts should these cases get there.
So no wonder Shernoff and the trail lawyers are pissed that this settlement may undercut their case. And why has Poizner rolled over?
UPDATE: Darrel Ng, Press Secretary at the CA Department of Insurance is working late on Friday and responded to this post "One of the highlights of the settlement is that by accepting the payments and health insurance, patients do not have to forgo future litigation. So while I know critics have made the assertion that their case may be undercut, I’m not sure why they would believe that’s the case." Darrel didn’t explain why the fine for one case in arbitration was three times the fine for 1,000 cases from the DOI.
McGuire not in prison. Reyes is. Anyone understand?
So Bill McGuire has settled with CALPers in the scandal where he backdated the value of his United HealthGroup stock options. He’ll pay a $30m fine which sounds a lot but is a rounding error on his net worth. So it appears that his troubles are over.
Meanwhile Gregory Reyes the CEO of Brocade did exactly the same thing and he’s doing 21 months in the big house as well as paying a similarly big fine.
For that matter Steve Jobs apparently did the same thing too, and just today Apple settled with the SEC for a mere $14 million (or about 8 minutes of iPhone sales) and Jobs himself doesn’t seem to be paying anything.
Isn’t there something about equal treatment under the law in one of those fuddy-duddy 18th century documents we Americans are so keen on? Can anyone explain the rationale behind these differences in treatment?
No such thing as Free Lunch
I’m over at Spot-On today writing about a great new book I’ve read, "Free Lunch." Check
out and it, and, as always, come back here to comment. Here’s a taste of what you’ll find.
Few of the books I’ve read lately have been quite as staggering as Free Lunch, from former New York Times investigative reporter David Cay Johnston who, heroically, made his career writing about – brace yourselves – the U.S. tax code. Free Lunch is a fabulous book by a veteran investigative reporter giving you his life’s work–a look at how corporations and wealthy Americans have profited, again and again, at the expense of you and me.
Johnston’s best known for his exhaustive investigations at the Times into how corporations and very very rich individuals subvert U.S. tax law so that they pay less to the government, while the rest of us pay more. But in this book – written after he’s free of the "responsibility" of being a Times reporter – he gets almost biblical in calling out the cheats, crooks and murderers.
23andMe punk rock partying, price cuts and on vid on D
23andme is having a gobbing party in NYC tonight—presumably at the Roxie. You didn’t know punk was back, did ya?
Indu will be there (sadly I had to stay chained to the computer). But there’s a little more 23andme news today in that they’ve dropped their core price to $399 and have inked a deal to get access to Ancestry.com’s database of users. Not quite an impulse purchase yet, but still getting down there.
And if you want to know what 23andme is up to, you can see Linda & Ann’s interview/demo at All things D last May. Of course you can see Linda at Health 2.0 next month, but I’m not sure we’ll be quite the pushovers Mossberg & Swisher are…at least we’ll keep them to 3.5 minutes! 
I’m still trying to figure out whether the DTC genomic market is a gimmick or actually has some value (and I don’t mean value the way a VC does! I mean whether society should be spending health care dollars on genomics when we do such a shitty job treating diseases we do understand). But it’s good to see some real activity in at least postulating the concept.
Adam Bosworth speaks about Google Health, Keas and everything
After a long period of time I’ve finally wrestled Adam Bosworth to the floor and forced
the microphone to his mouth. Adam of course is the software guru (he’s one of the originators of XML) who went to Google to start Google Health, and spent much of 2007 talking about how he hoped Google Health would change health care. He then left Google Health (several months before it launched in March 2008) and at the very end of 2007 founded Keas. Adam will be at the Health 2.0 Conference and while Keas is in stealth mode at the moment, he may just be ready to show us all a bit of Keas’ technology by then.
But he also has very strong views on health technology, data, PHRs. HealthVault & Google Health, and much much more. Listen to the interview.
Google’s strategy (mostly outside of health care)
VC Fred Wilson explains where he thinks Google is going in Chrome, Android, and The Cloud. The Health 2.0 team is about 3 months into using Google Docs (especially the spreadsheet) and although Docs continues to have its teething troubles, like Fred we are hooked. I suspect we and Fred’s shop are not alone
BTW, I read the Chrome comic book today and it is a thing of beauty — taking really tough technical concepts and explaining them simply and not condescendingly. I’ll for sure be downloading Chrome when I get the chance.
Meanwhile, in health care last week David Kibbe interviewed Ronnie Zeiger at Google as part of the Great American Health 2.0 Tour. The Googleplex was a little empty as half the employees seemed to be at Burning Man. But a little way into the public release of Google Health, it does seem as they’re happy with what’s happening so far, and they remain committed to taking it seriously. (I sense a bottle of fine wine coming my way ).
On the other hand, I know for sure that Microsoft continues to take its health care business very seriously too. And yes, you’ll be able to see both of them at Health 2.0.
Obama and Krugman — almost mirror each other
By
I thought Obama was fabulous last night at the convention. He’s a great speaker, but
also able to gently laugh with his audience. His introduction showed what a tough road he had. If the Republicans manage to convince the American people that a black kid with a single white parent living in middle America is an elitist son of privilege then Karl Rove is better than I thought.
He was happy to rip McCain not on personality but on the issues. I’d like to have seen a lot more from the Democrats at this convention ripping Bush and Cheney on personality, personal corruption and the issues, and I wish Kerry had done even more in 2004, but that’s water under the bridge.
But the key point is that for most Americans things aren’t going well. Paul Krugman, who’s had his differences with Obama says it well today showing just how much key Republicans are out of touch — especially on the economy and health care.
Of course all he has to do is quote Phil Gramm, who appeared in Obama’s speech, and John Goodman who didn’t but does make it into Krugman’s column today. Goodman, of course, was pilloried in THCB yesterday. But I still think it’s a triple bluff on his part.
Two Boston Health 2.0 companies show a little more
Two MD-run Health 2.0 companies in Boston had decent interviews recently in which they told a little more about themselves.
American Well’s Roy Schoenberg was interviewed by Health Business Blog’s David
Williams. It’s a long and thorough interview although Roy doesn’t tell anything particularly new, it’s as good a summary of what he thinks their business will be as I’ve seen anywhere. And they get all those fun trips to Hawaii too!
Meanwhile, across the Charles River in Cambridge Sermo’s Daniel Palestrant is making a
little more public. It’s no longer just Pfizer, now most of the big pharma companies are dipping their toe in the Sermo pond, as he tells Xconomy. What he won’t tell anyone yet is how deep their feet are in, but Sermo which reached more than 70,000 signed up docs recently — from less than 10,000 only 18 months ago — is clearly basing most of its business plan on getting big pharma to move from experimenting with it to using Sermo as a mainstream educational and marketing channel. As I’ve said before, this makes lots of sense for Sermo and its users. Whether it helps big pharma remains to be seen!
But the good news is that Daniel is not shy with his advice to other Health 2.0 Companies. “You Will Not Pay Your Bills with ads by Google,” he says.
Why not, Daniel? It works pretty well for Google!
(Both Roy of American Well and Daniel of Sermo will be at Health 2.0 next month, of course!)
