Comments on: HEALTH PLANS/POLICY: Too much fawning over Len Schaeffer?

By: Laurie

Laurie — Mon, 30 Apr 2007 05:00:50 +0000

Great article and great comments — particularly theorajones who put the whole thing into a nutshell so perfectly.
Just a couple additional comments — Schaeffer said: “By monitoring the landscape, we were able to raise or lower our prices before anyone else, which is really important in this business. You never want to sell an underpriced policy.”
I worked for Wellpoint myself and saw the company shamelessly lowball plans in their initial introduction phases. The tactic was — attract the healthy, then raise the price. Over a 16 year history with the company, I saw this a minimum of four times. If actuary was accurate (and it was) and underwriting so tight (and it was) and assuming Wellpoint saw no underwriting cycles (I question the accuracy of this) there should have been no justification for raising prices on new policies so dramatically within the first two years. It wasn’t unusual to see average increases of 20-40% within the first year.
As for Tonik and its imitators, I fully agree with the author that they are no solution to the problem of the uninsured. It’s just another tactic to draw healthy people into the net — only in this case it’s a net with some pretty big holes for the plan members.

By: theorajones

theorajones — Thu, 02 Feb 2006 00:05:03 +0000

Brilliantly put.
I think this all the time. If I’m an insurance company, I have two ways to make money.
1. The Hard way–Fix the healthcare system and then make money by healing the sick. This requires that I not only know what doctors, patients, and hospitals SHOULD be doing (which I’m not so sure I know), but also that I know how to change the behavior of many powerful entities (docs, hospitals, patients) that I have little direct control over.
2. The easy way–sell insurance to healthy people and make money by designing and pricing the policies properly and driving a hard bargain with suppliers liek docs, pharma, hospitals, etc. This involves underwriting and actuaries and data analysis and controlling the sales force and managing my supply chain and negotiations with suppliers. I have the data, I control the sales force, I write the policies–this is business school stuff. I can do this.
Why are we surprised that successful insurance companies choose the easy way to make money? Why would any rational person expect them to do anything else?
What I’m shocked at are the few loonies who are still trying to change the way we practice medicine. God bless ’em.

By: Tom Leith

Tom Leith — Tue, 31 Jan 2006 23:11:45 +0000

> Leonard Schaeffer: If you believe in an IT-enabled,
> evidence-based health care system—which I do[…]
Back in the Fall of 2004, Ruth Meyer Hollandbeck, VP at BCBS-MO came to give a talk to the Gateway Midwest HIMSS chapter on the topic of the $40M “free computer giveaway”, and mentioned e-prescribing, but was very clear that the computers went to the docs with no strings attached. She apparently had something to do with the program, but I do not quite know what. She was very proud of the fact that Wellpoint gave $40M in computer equipment to doctors.
I raised my hand, and asked an impertinent question: Did you try to find out whether the docs actually did anything like e-prescribing with the computers? The answer “No. We believe…”
Friends, this is not even religion: it is superstition, and Information Technology is the talisman. You don’t have to understand it, but if you wave it around long enough, something good will happen. Might as well wave a dead chicken.
Methinks we need an “Evidence-Based Business Practices” movement.

By: Matthew Holt

Matthew Holt — Tue, 31 Jan 2006 22:52:24 +0000

No!

By: Abby

Abby — Tue, 31 Jan 2006 13:51:39 +0000

Somewhat off topic: Do you know why Blue Cross and Blue Shield were separate companies in California whereas in most states they merged?