Category Archives: Health insurance industry

Supreme Court Decision in Loper Bright Enterprises v. Raimondo:  A Blow to Americans’ Health & Our Democracy as We Know It.

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Dave Kingsley

Free Rein for the Increasingly Powerful Insurance Industry in the Increasingly Privatized Medicare & Medicaid Programs

    Make no mistake about it, the Supreme Court this week in Loper Bright Enterprises v. Raimondo and Relentless v. Department of Commerce [1] handed over supreme power to the corporations of America.  These decisions didn’t just weaken federal agencies, they gutted them. OSHA, CMS, EPA, NLRB and other major regulatory agencies have been incrementally weakened for decades through legislation and raw political power. These cases are the coup de grace for our mortally wounded regulatory agencies.

    In the massive healthcare sector of our economy – funded mostly by taxpayers – major corporations will now be able to ride roughshod over the rights and needs of beneficiaries who have paid for and earned qualification for benefits.  For instance, UnitedHealth, which has exploded to the top of the Fortune 500 in a mere two decades and other insurance behemoths can continue their takeover of Medicare and Medicaid, reduce care, increase cash flow, and ignore attempts by HHS to rein them in.

    Any attempt at regulation by CMS will be challenged in court.  It is likely that regulators will lose.  No matter how rational, technical and scientific the agencies’ arguments are, the Supreme Court will have the final say.  Although nine justices on the court do not have the expertise, the resources, or the time to make appropriate decisions that congress and the courts have historically left to qualified experts in agencies, this Supreme Court will hand down decisions based on the majority’s perverse right-wing, religious ideology.   As Justice Kagan wrote in her dissent:

    “Its justification comes down, in the end, to this: Courts must have more say over regula­tion—over the provision of health care, the protection of the environment, the safety of consumer products, the efficacy of transportation systems, and so on. A longstanding prec­edent at the crux of administrative governance thus falls victim to a bald assertion of judicial authority. The major­ity disdains restraint, and grasps for power.”

    Make no mistake about it, that power will be exercised on behalf of UnitedHealth, CVS, Cigna, Molina, the Ensign Group and any other corporation wanting relief from government oversight.  We are already seeing this in the American Healthcare Association’s judge shopping suit against CMS for regulations requiring adequate staffing in nursing homes (through their Texas affiliate).

The Philosophy and Structure of the U.S. Constitution Provides Ultimate Power to the People – not to the Biggest Corporations & Six Ideologues on the Supreme Court.

    The people pay the taxes to fund government healthcare and elect representatives to enact and implement programs such as Medicaid and Medicare.  And I believe we the people still have the power – if we are willing to exercise it. Last week I was speaking to the National Association of Attorney’s General/Medicaid Fraud Control Units Association in San Diego.  My evaluation of the nursing home industry is not complimentary to say the least. At the end of my talk, I was asked what could be done about the scurrilousness of this industry.  My answer to that is first things first: expose them. Expose them to the media, expose them to legislators, expose them to colleagues, friends, and neighbors.  The American Healthcare Association (AHCA) and LeadingAge perpetually lie and propagandize about finance.  In my view, the pushback on their claims about low nets and thin margins needs to be stepped up. 

    Anyone can see the income statement, cash flow statement, and balance sheet of the Ensign Group – it is public.  Attorney General Jame’s suit in New York exposes a cabal of investors who are not required to disclose their consolidated financial statements.  The Ensign Group has over $500 million setting on their balance sheet – that is double what they had a couple of years ago.[2] The New York AG’s suit against Comprehensive at Orleans indicates cash extraction of 22% on $86.4 million in revenue over approximately three years.[3]

    Does anyone seriously doubt that these examples are exceptions in the whole scheme of things?  They are not.  We have plenty of other evidence to undermine the lies of AHCA and LA.  We need to put that in the face of legislators.  Organize, organize, organize, and relentlessly shove information at Senators and Congresspersons.  No doubt, the majority on the Supreme Court will do what we know they will do.  It will be ugly.  But they need public support to remain legitimate and survive as a credible juristic institution.  If the court continues down its current path, the citizens will eventually change the court.

[1] 22-451_7m58.pdf (supremecourt.gov)

[2] See their 2024 10K filing with the S.E.C. here: https://investor.ensigngroup.net/financials/sec-filings/default.aspx

[3] https://ag.ny.gov/press-release/2022/attorney-general-james-sues-orleans-county-nursing-home-years-fraud-and-resident

How the Health Insurance Industry is Using Disinformation to Take Over and Defraud Medicare

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By:

Dave Kingsley

Corporate Greed in the Post-Truth Age

    Most Americans have never heard of the Better Medicare Alliance[1] – a Washington, D.C. think tank and front group for big health insurers such as UnitedHealth, Aetna, and Humana.  Also, the 2023 Super Bowl TV audience didn’t know who paid for a commercial at halftime claiming that President Biden had plans to “cut Medicare.” The ad included a message urging viewers to call the White House and “tell President Biden not to cut Medicare,”[2] but they – the TV viewers – didn’t know who was asking them to do it. Football fans had to be perplexed.  Medicare beneficiaries were most likely upset and worried by what they saw and heard.

    The ad, funded by Better Medicare Alliance, was a lie.  The truth is that President Biden had no intention and no plan to cut Medicare.  Contrary to what the ad claimed, he was planning to claw back $4.7 billion from UnitedHealth and other insurers for defrauding the program through false billing practices.  One illegal practice health insurers utilize to add unearned value to their Medicare Advantage (MA) reimbursement is called “upcoding.” Because sicker patients are reimbursed at a higher rate, the trick is to find ways to lie about how sick a patient is – to make them look sicker than they are.[3]

    MA beneficiaries tend to be healthier than Traditional Medicare (TM) beneficiaries.  Nevertheless, research indicates that when individuals move from TM to MA, their costs to the program increase.  The important point is that “total Medicare payments to MA plans in 2024 (including rebates that finance extra benefits) are projected to be $83 billion higher than if MA enrollees were enrolled in FFS Medicare.”  Furthermore, payments to MA plans average an estimated 122 percent of what Medicare would have expected to spend on MA enrollees if they were in FFS Medicare.”[4]

    After the Biden Administration’s proposal to recoup stolen money from MA insurers and prevent further fraud, the health insurance industry threw a conniption fit and went into overdrive.  The Super Bowl ad was only one tactic (costing eight figures, it was super expensive).  In addition, they sent their army of lobbyists crawling all over the Washington, D.C. beltway threatening and bribing legislators.  HHS backed down.  The cheating continues and costs the seniors of America – indeed all wage earners – hundreds of billions from their payroll deductions, premiums, co-pays, and nearly $200 out of every Social Security check.

Pulling Back the Curtain on the Washington D.C. Policy Planning Network:  What is the Better Medicare Alliance & Who is Behind It?

    The insidious thing about think tanks set up inside the Washington, D.C. beltway is that they enlist the aid of seemingly legitimate advocates and scholars.  It is hard to know if the advocates and scholars are merely naïve or whether they are self-serving. Perhaps unwitting would be a kinder word. For instance, the Better Medicare Alliance board consists of Dennis Borel, Executive Director of Texans with Disabilities, Caroline Coats, Humana, Inc., Daniel Dawes, Meharry Medical College, Mary Beth Dawes, Former Congresswoman (President & CEO), Joneigh Kaldhun, CVS Health, Dan Lowenstein, Visiting Nurse Service, NY, Richard Migliori, UnitedHealth, Elena Rios, National Hispanic Medical Association, and Kenneth Thorpe, Emory University.

    The organizational structure of these industry front groups is a form of disinformation itself. On the board are big players in the MA industry – Humana, CVS, and UnitedHealth.  Interspersed with the representatives of these health insurance behemoths are executives and professionals from organizations with an ostensible mission to improve society in some manner.

    By placing their imprimatur on an industry lobbying group, NGOs, nonprofits with a stated humanitarian cause, and universities  are participating in a duplicitous tactic to confuse the public about the real purpose of nefarious industry think tanks like Better Medicare Alliance. Their support for various entities with a mission to preserve and strengthen the medical-industrial complex helps divert funds needed for care into the coffers of executives and shareholders.

Privatizing Medicare was Supposed to Reduce Costs and Give Beneficiaries More Choice:  It Hasn’t Worked Out that Way.

    MA is a creature of the Medicare Modernization Act of 2003. The right-wing of American politics accomplished a coup by setting Medicare on the road to privatization.  Currently over 50% of all beneficiaries have selected it over Traditional Medicare ™.  Federal policy is unfortunately driving Seniors into MA by allowing manipulative practices such as low premiums and a few benefits not available to TA beneficiaries.  Seniors are being led like lemmings into the arms of the insurance industry by disinformation and deceit. Organizations like the AARP in partnership with health insurers like UnitedHealth are the Pied Pipers.  

    MA is one of the most serious threats to the health and well-being of American seniors.  It robs money from care and transfers it into the pockets of investors and executives.  Many beneficiaries are happy with low premiums and add-ons not available under traditional Medicare such as Silver Sneakers plus some dental and vision care.  I can understand why many people who have it are pleased with their coverage.  It works for healthier beneficiaries until it doesn’t.      

    If MA beneficiaries should incur a costly service that is not in network, their assets could be wiped out.  Some retirees have no choice in the matter.  If their company or institution includes health insurance as a retirement benefit, it is most likely MA. Furthermore, I can’t blame anyone who is trying to avoid the premiums for supplemental coverage under traditional Medicare.  Avoiding bankruptcy and depletion of assets through a catastrophic sickness makes perfect sense for TA beneficiaries. But the supplemental insurance is a heavy burden that could be avoided if the Medicare program weren’t diverting so much funding to MA (see discussion below).

Seniors and People with Disabilities Would not be Struggling as Much If Big Health Insurance were not Stealing from Them.

    For seniors and disabled Americans to lose nearly $200 per month of their Social Security and choose between a large payout for supplemental or the risk of bankruptcy, is an injustice when privatized healthcare is stealing hundreds of billions of Americans’ tax dollars, payroll deductions, and hard-earned money through out-of-pocket expenses. The Physicians for a National Health Program (PNHP) has estimated that MA overcharged taxpayers by a minimum of 22% or $88 billion and potentially up to 35% for a total of $131 billion in 2022. If the high end of the estimate were correct, all of Part B premiums ($131 billion in 2022) or Part D premiums ($126 billion in 2022) could be covered by excessive corporate extraction of funds from Medicare.[5]  

    UnitedHealth is noting $25 billion in cash and cash equivalents on its 2023 balance sheet, CVS has noted $12 billion, and Humana is noting $5 billion. They have multiples of these amounts in long-term and short-term investments; they spend hundreds of billions on stock buybacks, dividends, and board and executive compensation. By digging into their assets, the cash rich health insurance business would be able to charge fair prices and stop their criminal behavior without much of a dent in a reasonable return on their investments.

In this Dark Age of Plutocracy, the Superrich & Corporations are Lying and Blaming Government & Ordinary Americans for Poor Healthcare and Excess Expenditures

     Americans earning wages and salaries are being subjected to a corporate network of disinformation and gaslighting.  President Biden is blamed for cutting Medicare when he is in fact attempting to protect the program.  The growing elderly population is blamed for federal debt and deficits when Medicare and Social Security have little impact on the federal budget (SS has none and over half of MC is paid through payroll deductions, premiums, and co-pays).  The nursing home industry blames taxpayers for failing to provide them with enough money to adequately care for the elderly and disabled patients in their beds while they spin a false hardship narrative.

    The Medical-Industrial Complex has established a network of front groups with a duplicitous message of doing good for Americans and has enlisted the aid of do-gooder nonprofits, universities, and individuals. This system and its apparatchiks aren’t all that clever.  Their organizational tactics are rather easy to discern.  The problem is that it is happening stealthily behind the scenes in Washington, D.C. and the 50 state capitals. The media is ignoring it. We intend to expose it and encourage everyone we can to join us in that endeavor.

[1] https://bettermedicarealliance.org/

[2] You can see the ad here: https://www.ispot.tv/ad/2UHG/better-medicare-alliance-cutting-medicare-thats-nuts.

[3] Reed Abelson & Margot Sanger-Katz (2023), “Biden Plan to Cut Billions in Medicaid Fraud Ignites Lobbying Frenzy,” https://w.w.w.nytimes.com/2023/03/22/health/medicare-insurance-fraud.html?searchResultPosition=1.

[4] Medicare Payment Advisory Commission (MDPAC), 2024, p. March 2024 Report to the Congress: Medicare Payment Policy – MedPAC

[5] Physicians for a National Health Program, (2023), Our Payments their Profits: Quantifying Overpayments in the Medicare Advantage Program. MA Overpayment Report (pnhp.org)

WHY DO THE  AMERICAN PEOPLE TOLERATE A POOR PUBLIC HEALTH SYSTEM ALONG WITH BAD HEALTHCARE THAT COSTS SO MUCH?

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By:

Dave Kingsley

Unchecked Bigness is One Factor Threatening our Democracy & Our Health

    Big corporations and big unions can be and indeed are in many cases bad for our health.  For instance, UnitedHealth, Centene, Cigna, CVS, and other healthcare-related corporations in the top 30 of the Fortune 500 have interjected themselves into our publicly funded medical care system as financial intermediaries and major influencers of government policy.[1]  Their motivation is protecting and enhancing shareholder value in the uniquely privatized, taxpayer funded U.S medical delivery structure.  They make money from sickness not wellness.  Prevention does not add to their bottom line, but treatment is quite lucrative – never mind the public interest.

    Big unions, which initially have laudable missions and continue to do much good, sometimes tend to degenerate into self-serving actors without concern for the health and well-being of the public.  This is particularly the case when our federal, state, and local governments attempt to protect our health from the dangers of fossil fuel.  Public efforts to stop irrational projects such as the Keystone pipeline often fail due to the power of the building trade unions in concert with industrial interests.[2]  The United Auto Workers and the big three auto manufacturers have successfully tapped the brakes on the Biden Administration’s planned transition to electric vehicles. Air quality and the threat to humanity from climate system meltdown are secondary to the short-term interests of big unions and gas engine manufacturers.

Indoctrination, Manipulation & Conditioning of the American People

   Why are we, the American people, passive and compliant in the face of an assault by special interests on our dignity and well-being?  The deterioration of service and quality at excessive prices is not only happening in healthcare.  We see it in airline travel, brick and mortar and online retail, technology (computers, software, and apps) – you name it.  Predatory economics have become the name of the game, which is simply this: “How can we lower quality and squeeze more out of customers/patients through lying and deceitful propaganda?”

    Customers and patients are not at fault. The dystopian part of the U.S. economy did not come about as the result of a revolution.  The wealth and political power of investors, owners of vast amount of assets, and corporations have been able to move economic behaviors incrementally and deceitfully from the unthinkable to the normal.  Propaganda and duplicity by forces with the resources to falsely convince the public that they are living in the best there is in the best of all possible worlds have been effective.  People tend to trust officious and authoritative, i.e. powerful organizations and individuals.  So, they hunker down and take it as they get fleeced through small incremental price increases and lower quality of goods and services.

    The primary healthcare industry business model can be compared to the air travel industry.  They incrementally lower quality and add value to revenue for investors at the expense of patients and consumers of medical goods.

    Through dissemination of false advertising and stories promoted by industry PR, the mainstream media – perhaps unwittingly – is helpful to corporate predators. As airlines herd passengers around like cattle and stuff them into increasingly uncomfortable flying tubes at ungodly prices, the media takes up the airlines’ cause by spreading the image of travelers as “unruly.”  The poor airlines are forced to put up with all those bad people.  Should I believe that or my lying eyes? I have traveled on the airlines extensively over the past 60 years.  I used to love it.  Now I hate it.  Furthermore, mostly what I see are cooperative, well-behaved people trying to adapt and endure the indignities, discomfort, and stresses heaped on them by extremely profitable, oligopolistic, and deregulated airlines.   

     Industries have leveraged highly sophisticated techniques of mass psychology for the purpose of pacifying the traveler, nursing home patients and their families, customers of health insurance corporations, users of computer applications, and so forth.  You probably don’t know that A Place for Mom is owned by private equity, that they don’t choose the best place, rather they choose the place that will pay them.  Did you know that the ostensibly pro-retiree-AARP’s deal with UnitedHealth is designed to lead the elderly down a primrose path into the waiting arms of the health insurance industry while the pro-beneficiary-Medicare program is destroyed?

    When you don’t see that the fine print included autorenewal, too bad. That’s your problem.  You have a serious glitch and need help.  That’s been outsourced to the Philippines.  Good luck with that. You didn’t know that the 5-minute life flight from Taos to Albuquerque cost $70,000 and was out of network? Now you’re stuck with the bill and will never find out what a reasonable price would be and why it’s not covered by your Medicare Advantage plan. You hear that those unfortunate, underpaid nursing home corporations are not making enough money to treat us and family members humanely. You could check their finances and verify what they are saying but the government allows them to operate behind a veil of secrecy. 

Big Government is Not Always Bad

    As the bottom ninety percent of Americans in income and wealth make their slow descent into economic serfdom, government agencies that are supposed to protect us have been neutered and checked by the politics of self interest and pseudoscientific economic theory.  Nonsense from major university economic departments, indeed from the overwhelming majority of economists, has been adopted as gospel by politicians and the media. Despite of the obvious failure and detriment from this proto-religious canon, it continues unabated and is as strong as ever.  The EPA, FTC, and other major government regulators have been reduced to going along to get along. This all while the ecosystem is collapsing, public health is deteriorating, and wealth and power is increasingly concentrated in fewer entities and individuals.

    The free-market, trickle down, government-busting theories of faux libertarians such as Hayek and Friedman have proven to be a chimera.  But that has become the underpinnings of U.S. government and economics.  Political power resides in the so-called center right to center left.    The Democratic Party and the Republican Party are both responsible for deregulation of corporations and privatization of government services.  It was President Carter that deregulated air travel, trucking, and banking industries. He kicked off a deregulation craze that has left the American people in an extremely vulnerable position.  President Reagan was a fanatical government hater and adopted the right-wing worship of corporations along with a cynical view of people that our-constitutional government is designed to serve.  The Democrats have made a little noise about the dismantling of government but have for the most part gone along with it and have even participated in it.

What Can the American People Do About Their Economic Plight?

    The first step in changing a corrupt system is exposing it.  The first step in exposure is to stop believing propaganda.  The AARP is not a friend of retirees – they are selling us out with their UnitedHealth partner.  A Place for Mom is not interested in your mom – they are looking to turn a quick buck.  Prevagen is snake oil.  Balance of Nature is a worthless capsule.  The FEC is allowing false advertising and consequently you can be robbed of your hard earned money at CVS and Walgreens. All the available evidence we can amass tells us that the nursing home industry is quite lucrative for investors. But the investors’ narrative of financial hardship is dominating the conversation.  Let’s put a stop to that.

    The second step in systems change is changing the narrative. Government is not bad – it is good.  Regulation is important.  Not long ago, I confronted some state legislators at a hearing about weak oversight of nursing homes and their finances.  That hadn’t been done before in that particular legislative committee.  Advocates need to take a strong stand in exposing fraud. 

The status quo is not OK.  Believe it. Demand change. Pick up the phone. Send emails and get your friends, neighbors and relatives to call and write.  Politicians respond to volume.  So, learn about an issue and organize people to confront  senators, congresspersons, and state legislators.  Get people to pressure the media to stop selling lies.  Learned helplessness is our enemy.  If you think that Medicare Advantage is a good deal, it may be for you, but down the road all Medicare will be controlled by a few insurance conglomerates. They will continue to create financial intermediaries such as pharmacy benefit managers for the purpose of adding value to their revenue at the expense of our care.

    Support those think tanks in Washington that you know are on our side.  The Committee to Preserve Social Security & Medicare is fighting for us.  The Committee for a Responsible Federal Budget and the Concord Coalition are working to reduce Social Security and Medicare benefits. I know these organizations well and have dealt with all of them.  The Committee for a Responsible Federal Budget and the Concord Coalition were organized with the backing of the late multi-billionaire Peter G. Petersen who was on a crusade to privatize Social Security & Medicare.[3]  If you think that his legacy is not a major negative influence in your life, you would be wrong.  Furthermore, politicians and the media are treating the Washington network he left behind with deference and respect it doesn’t deserve.  Believe it! Fight it!

[1] In 2000, none of these companies were in the Fortune 500 top 30.  Now UnitedHealth is the 5th largest corporation in the U.S. and 10th largest in the world.  CVS is the 6th largest U.S. corporation and healthcare related corporations make up one-third of the top 30 U.S. companies in the Fortune 500. 

[2] I spent a career in labor relations on management’s side of the table.  Most of the unions with which I negotiated were building trades unions such as sheet metal workers, operating engineers, laborers, pipe fitters, boiler makers, and electricians in mining, construction, and heavy manufacturing.  I believe that unions are good thing until they aren’t.  The companies I worked for believed in good faith bargaining, but we took strikes and work stoppages that were counterproductive for the union members, companies, and the public. At this stage of our economic system, I don’t think that we can leave the plight of workers to the unlikely event that they will organize and improve their standard of living.  Politicians need to step up. I do not want to overlook the good that labor unions have contributed to the working classes.  They have fought for health & safety, an end to child labor, better pay and benefits so richly deserved by the people without whose labor corporations would not exist.  I think that they still fight hard for social justice.  We have much more good from the labor movement than bad.

[3] Working with the Committee to Preserves Social Security, the Gray Panthers, and other groups I have spent countless hours over the decades in Washington, D.C. fighting the duplicitous cabal of Peter G. Petersen funded think tanks and other Wall Street back entities trying to grab off the $trillions in tax-funded programs for investors.  It’s a tough fight and one that is undermined by organizations that appear to be do-gooders but are really representing the other side.

Government Oversight of Medicaid: The Shift of Power from Federal Agencies to State Agencies has Been a Disaster for Poor Americans’ Health

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By:

Dave Kingsley

Dismantling of the Federal Administrative State

    President Ronald Reagan said this at a press conference in 1986: “The nine most terrifying words in the English language are ‘I’m from the government and I’m here to help.’” This might have seemed funny at the time but by 2008 when lax federal governmental oversight of the financial services industry led to economic collapse or when in 2020 a deteriorated public health system led to a raging COVID epidemic, the people of America were screaming back to the government these five desperate words: “For God’s sake help us!”

    President Reagan’s quip was a continuation and acceleration of devolution of power from the federal government to the states that began during the Nixon administration. Consequently, the far-right dream of dismantling the federal administrative state has led to funneling federal grants to states as block grants rather than grants-in-aid, which meant less federal control over how states regulated federal-state funded programs such as Medicaid and welfare in general.   

    Some states are more enlightened than other states in how they administer welfare programs.  But during the Clinton Administration, the mistaken notion that people needing assistance for their daily needs – including medical care – would benefit from some tough love like denial of any services after a few years of receiving it.  Aid to Families with Dependent Children (AFDC a grant-in-aid program) became Temporary Aid for Needy Families (TANF – a block granted program with a much more stigmatizing moniker).  By the late 1990s, President Clinton was declaring that “the era of big government is over” – seven very unfortunate words.

    The idea that poor people down on their luck needed some federal assistance for survival was warped into a philosophy that help from the government would induce dependency and that administrative barriers to assistance and forcing people off of aid would somehow be character building.  As has happened since the era of industrialization began, poor people were more intently looked at as irresponsible and the cause of their own plight.  By the turn of the Century, this philosophy had become de rigueur – even in states given to a more empathetic and compassionate approach to the less fortunate (which could be any of us).

How Have States Handled their Increasing Power?

    So, how have states done with the power devolved to them?  Not well.  As an example, consider the prior authorization of Medicaid that I wrote about in my last blog post.  The HHS, OIG had this to say in their recently released report:  “most State Medicaid agencies reported that they did not routinely review the appropriateness of a sample of MCO denials of prior authorization requests, and many did not collect and monitor data on these decisions.”  This seems like very familiar state regulatory behavior to me.  Having reviewed thousands of nursing home cost reports, I have yet to see one properly filled out (in accordance with GAAP/FSAB accounting principles and federal regulations).  Indeed, they are loaded with deceit, misinformation, and what is either profound ignorance or fraud.  And yet auditing at the state level appears to be practically nonexistent.

    There is no point in using nursing home cost reports for research except to raise issues of state incompetence, lack of oversight capacity, and corporate ability to game the system. The same can be said about the giant insurance corporations contracting with states as MCOs.  Indeed, Anthem’s highest MCO denial rate was 34%.  Molina, one of the largest providers had denial rates that ranged from 17% to 41%.  Aetna, Centene, and UnitedHealth denial rates were 5% to 29%, 3% to 23%,  and 7% to 27% respectively.

    The States with the highest rates of denial are Georgia (34%), Michigan (32%), California (29%), Mississippi (27%), New Jersey (27%), Virginia (26%), and Wisconsin (25%).  One can only imagine how difficult and frustrating it is for physicians and Medicaid patients in these states to obtain needed medical care.  None of these states used denial data for oversight.

There is Nothing Funny about Government Help:  We Need it Badly!

    My colleagues and I spend our working hours attempting to ferret out information from states regarding Medicaid outcomes data.  To quote Warren Buffet, “It’s like getting red meat out of a tiger cage.”  But we have been communicating with staff – including auditors – in the OIG’s office and will continue that communication.  Our mission is to fight the state/federal barriers to public information.

    The Medicaid program is nominally a $900 billion federal/state expenditure.  But with tax expenditures (i.e., tax subsidies) for corporations in the business, it is a much larger expenditure in federal and state budgets combined than that. Furthermore, nursing home corporations and the giant insurance corporations contracting as MCOs are extracting immense amount of tax dollars without a correlative investment in a loyal, career-oriented work force, and a medical services infrastructure that welcomes and benefits the people eligible to receive it. 

    Centene, UnitedHealth, and the other large providers are lavishing obscene compensation packages on executives and board members (CEOs are usually receiving about $20 to $24 million per year); they have billions of dollars sitting on their balance sheets, they are paying robust dividends to their shareholders (most of which are asset managers such as Vanguard, BlackRock, and State Street, handling pension, insurance, and sovereign wealth funds); and they have devoted billions to capturing government through lax lobbying and election financing.

    No matter how objective and scientific researchers like to be, this is all about politics.  It’s about what goes on inside the D.C. beltway and in state capitols.  Anyone who thinks they can be politically neutral, purely professional, and outside of politics is sadly mistaken.  Making CMS do its job is a political task and will take political organizing.  The same can be said about making state agencies do their job.  You cannot work within the system and change it that way. 

Managed Care & Privatization was Supposed to Save Taxpayers Money & Work Better than Government Administered Medical Care, but That’s Not What is Happening.

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By:  Dave Kingsley

Managed Care for Poor Peoples’ Medicine is a Chimera

    According to a report released by the HHS OIG’s Office last week[1], the massive Medicaid program intended for poor Americans is beset with denial of authorization for care and weak state oversight.  What that means is this:  poor people who are hard scrabble poor enough to qualify for Medicaid and have the moxie and luck in navigating the bureaucracy to the point of approval for the program, are far too often denied the treatment physicians think they need.  The gigantic insurance companies contracting with states to run their Medicaid programs are denying care at double the rate of Medicare denials under managed care (i.e., Medicare Advantage).

    It is not difficult to understand why an undue administrative burden is placed on poor people for both qualifying for government health care in the first instance and then for receiving needed care once they are admitted to the program.  Powerful insurance companies have a financial incentive to deny a large proportion of care medical professionals think Medicaid recipients need. Furthermore, a lobby for poor people is nonexistent; they are powerless; and they can be pushed around and/or ignored by state bureaucrats.  Nevertheless, a puzzling and mistaken conventional wisdom proclaims that a corporatized and privatized system is a far more efficient and effective way to deliver taxpayer funded medical services.  It is past time that the conventional wisdom undergoes strong pushback from medical professionals, academics, and the media.

Background

    During the 2000 aughts (starting about 2010), states relying on the concept of “managed care” in which insurance companies (known as MCOs) are paid a “capitation rate,” i.e., a specific amount per enrollee, turned over their Medicaid programs to insurance corporations.  If the insurers keep their costs below the total dollars committed for enrollees, they make money.  Patients are, however, required to utilize medical services within “network.”  They must use a medical practice or hospital that is part of the contracting MCOs network of physicians and other medical providers.  Furthermore, care must be authorized by the MCO.

    The size of federal expenditures for Medicaid has resulted in mushrooming revenue for major healthcare insurers such as UnitedHealth, Elevance, Cigna, Centene, and Aetna.  In the early 2000s, no health insurers were in the top 30 corporations listed on the Fortune 500.  By 2022, nearly one-third of the top 30 Fortune 500 companies were related to healthcare insurance and managed care contracting.

    The idea of managed care began with the concept of health maintenance organizations (HMO) such as Kaiser Permanente and Ross Loos.  Individuals can join an HMO, pay the premium and expect low deductibles and co-pays.  However, the HMO or MCO in the case of Medicaid managed care have a network of physicians and other providers.  Enrollees must “stay within network” and receive authorization from an insurer (MCO) for a host of medical services their primary physician thinks they need.  This opens the door to tremendous power of insurance behemoths over Americans’ healthcare needs.

Has Privatization & Corporatization Through the Managed Care Concept Been Beneficial to the Health of Americans?

    As I mentioned, it is conventional wisdom that private, for-profit corporations can do a better job of administering taxpayer funded healthcare than government agencies.  But managed care is not working out in accordance with the widespread belief the government will pay less for healthcare if the profit motive incentivizes better care at a lower price.  Medicare Advantage costs fifteen percent more per enrollee than traditional Medicare.  Medicaid MCOs are paying robust dividends, buying back billions of dollars worth of their stock, and rewarding executives with exorbitant compensation packages while well baby care, infant mortality, heart disease, diabetes, and access to addiction treatment are not significantly improving across the Medicaid eligible population.

    Aetna, UnitedHealth, Centene, and other major insurance companies are reaping huge financial rewards by keeping per capita costs low. That would not in itself be a bad thing if outcomes were improving.  Perhaps having some healthcare is better than nothing.  No doubt, people receiving Medicaid benefits have better health outcomes than people with nothing.  But that is not the point.  Comparing poor people with no health insurance to poor people with Medicaid is illogical.

    Medicaid is lower tier medicine.  So those individuals lucky enough to qualify for it and actually receive it are treated as second class citizens.  So, by virtue of carving out a form of medical care for poor people – which is seen as welfare or a “handout” – the system can exploit them for financial gain while denying them the quality of care every other citizen deserves even though every form of healthcare received by Americans is heavily subsidized in some way or other by government.

Follow Us at the Center for Health Care Information & Policy (a newly formed nonprofit at https://chipcenterus.org/) and on this Blog as We Expose the Illogic and Folly of Privatizing U.S. Healthcare

[1] HHS OIG Report: “High Rates of Prior Authorization Denials by Some Plans and Limited State Oversight Raise Concern About Access to Care in Medicaid Managed Care.” https://www.oig.hhs.gov/oei/reports/OEI-09-19-00350.asp#:~:text=Overall%2C%20the%20MCOs%20included%20in%20our%20review%20denied,rates%20greater%20than%2025%20percent-twice%20the%20overall%20rate.

THE HEALTH CARE INDUSTRY:  CONCENTRATED WEALTH INEVITABLY TRANSFORMS INTO CONCENTRATED POWER

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It is estimated that healthcare expenditures in the United States have grown to twenty percent of GDP.  In 2022, the Bureau of Economic Analysis indicated that U.S. GDP had grown to $25.46 trillion (https://www.bea.gov/news/2023/gross-domestic-product-fourth-quarter-and-year-2022).  Hence, we can assume that in 2022, approximately $5 trillion was expended for U.S. healthcare.

In the taxpayer funded, privatized, medical care system in the United States, the growth of corporations with revenues from Medicare, Medicaid, Obamacare, and other tax subsidized healthcare (e.g., employer provided health insurance) has been astounding. The size and number of healthcare related corporations listed on the Fortune 500 top 30 in 2020 compared to 2000 is a reflection of the dominance and power of companies such as UnitedHealth, CVS, McKesson, Cardinal Health, and others appearing in the 2022 Fortune 500 top 30.

As the table below indicates, absolutely no healthcare related corporation was ranked among the top 30 corporations in revenue in 2000. In a mere two decades, nine of the 30 largest U.S. companies were in some facet of the medical/healthcare sector. Note the following corporations in the table and their Fortune 500 2022 ranking: CVS Health (4), UnitedHealth Group (5), McKesson (9), Amerisource Bergen (10), Cigna (12), Cardinal Health (15), Walgreen/Boots Alliance (18), Elevance Health (20), Centene Corporation (26).

Given the money in politics and decreasing capacity of government agencies to monitor and hold corporate behemoths accountable, the growth of health/medical related enterprises should be alarming. These are not capitalist enterprises. Rather, they are government sponsored enterprises much like Fannie Mae and Freddie Mac and should be regulated as such.

Furthermore, money is power and much of the “inside the Washington, D.C. beltway” activity related to studies, commissions, and general policymaking involving academics and other professionals has been rigged through power politics to insure the perpetuation and preservation of the participants – hence, preservation of the status quo. Let’s take the nonprofit Better Medicare Alliance as an example. This front group has roped in scholars, professional associations, and other duped entities in a cooperative effort to sell Medicare Advantage to the public on behalf of the industry.

Currently, the Biden Administration is attempting to reduce Medicare Advantage billing fraud that will save the Medicare Trust Fund billions. That legitimate and laudable effort on the President’s part was attacked in an ad during the last Super Bowl. The ad was paid for by Better Medicare Alliance. Check out this outfit’s “ally list” and its list of “scholars.” Conflicts of interest involving scholarship, corporate board service, and coopting of scientific institutions by superrich foundations with Wall Street leaning board members should be exposed along with a network of think tanks presenting a charade for the purpose of enhancing revenue from government programs.

FORTUNE 500 RANKINGS:  2000 & 2022
RANK
(2000)		CORPORATIONREVENUE*RANK (2022)CORPORATIONREVENUE*
1General Motors18.91Walmart572.8
2Walmart16.72Amazon469.8
3Exxon Mobile16.43Apple366.8
4Ford Motor Co16.34CVS Health292.1
5General Electric11.25UnitedHealth Group287.6
6IBM8.86Exxon-Mobile285.6
7Citigroup Inc8.27Berkshire Hathaway276.1
8AT&T6.28Alphabet257.6
9Phillip Morris Inc6.29McKesson238.2
10The Boeing Company5.810AmerisourceBergen214.0
11Bank of America5.111Costco195.9
12SBC Communications4.912Cigna174.1
13** 13AT&T168.9
14The Kroger Co4.514Microsoft168.1
15State Farm Insurance4.415Cardinal Health162.5
16Sears, Roebuck, & Co4.116Chevron162.5
17AIG4.117Home Depot151.2
18Enron4.018Walgreens/Boots Allian.148.6
19Teachers Insurance & Annuity3.919Marathon Petroleum141.0
20Compaq Computers3.820Elevance Health138.6
21Home Depot3.821Kroger137.9
22Lucent3.822Ford Motor Co136.3
23Procter & Gamble3.723Verizon133.6
24Hewlett-Packard3.724J.P. Morgan Chase127.2
25MCI World Com3.725General Motors127.0
26Fannie Mae3.726Centene126.0
27K Mart3.627Meta118.0
28Texaco3.628ComCast116.4
29Merrill-Lynch3.529Phillips 66114.9
30Mogan Stanley Dean Witter3.430Valero Energy108.3
* In Billions of dollars. **#Number 13 not noted on Fortune 500 list.

Centene Corporation’s Annual Financial Report Indicates That Poverty is Profitable for Investors

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The Biggest Player in Poverty Medicine Had a Banner Year in 2022

    Among all U.S. corporations, Centene Corporation is ranked 20th in revenue. It is also a major player in the Medicaid Managed Care business.  The other leading corporations contracting with states in the $800 billion Medicaid program include United Health, Aetna/CVS, Anthem, and Molina. Most states have moved or will be moving to managed care and contracting with an MCO.  The big five have approximately half of that business now.  It is likely that the Medicaid MCO market will become increasingly concentrated and oligopolistic over the next few years.

    Centene can be said to be solely in the Medicaid managed care business.  According to its recently released annual 10-K report to the Securities and Exchange Commission, 97% of Centene 2022 revenues of $144 billion were derived from Medicaid and Medicare contracting – practically all of it from Medicaid.  The company’s cash flow statement notes $6.3 billion net cash from operating activities, which is a major indicator of “profitability.”  However, that is not the whole story regarding enhancement and protection of shareholder value.

Taking Care of Shareholders by Keeping Stock Price Propped Up

    Cash and cash equivalents on Centene’s balance sheet increased from $10.8 billion in 2020 – the early stages of the ongoing COVID pandemic – to $12.7 billion at the end of 2022. Taxpayers need to ask questions about how that hoard of cash is allocated.  I have tracked the company’s stock since late November of 2021 when the equities market began to tank.  It closed at $73.77 on November 29, 2021 and has been quite resilient despite the market decline since that time – trading in the high $70s and $80s.

    The strength of Centene’s stock price is most likely due to a $3 billion stock buyback. In 2022, the company’s board “authorized increases to the Company’s existing stock repurchase program, including $3.0 billion in June 2022 and an additional $2.0 billion in December 2022.” (see page, 34 of 10-K*).  With those increases, the Company was authorized to repurchase up to $6.0 billion.

    Stock repurchases, which are thinly disguised forms of stock manipulation/insider trading, were unfortunately deregulated during the Clinton Administration.  This financial maneuver benefits only shareholders and executives and does nothing for long-term investment in workers, R&D, patient quality, and other productive activities.  The benefits for executives and board members who have been awarded generous stock options involve strategies for exercising their right to sell stock based on insider knowledge (of which the public is unaware).

    Since the financial deregulation allowing loose rules about stock buybacks a corporate buyback frenzy has been underway. Free money handed out by the Federal Reserve from 2008 until Fed Chair Powell reversed course to quell inflation pumped $trillions into speculative finance, much of which was borrowed for stock repurchase. Consequently, the U.S. economy has been damaged and wealth has become increasingly maldistributed by the diversion of cash to a wealthy few that could be reinvested in long-term growth benefitting employees and overall economic growth. It seems to me to be the height of governmental irresponsibility to not regulate this kind of activity on the part of corporations which are rewarded for managing poor peoples’ health care.

Politically Powerful Board Members & Executive Board Compensation

    The revolving door from government to business is starkly obvious on the Centene board, which includes two powerful former congressmen – Tommy Thompson and Richard Gephardt. Mr. Thompson is also a former Secretary of Health and Human Services.  The Centene Proxy Statement for 2022 has not been issued to the public yet (we expect to see it within a month).  However, the 2021 Proxy Statement indicates that Mr. Thompson’s compensation in cash and stock totaled $403,046.  Mr. Gephardt’s compensation totaled $426,923.  The fine print below the compensation table states that both Mr. Thompson’s and Mr. Gephardt’s compensation included use of the company aircraft and other perks.

Executive Compensation

    The late Michael Neidorff had been Chief Executive and Chairman of the Board in 2019, 2020, and 2021 with compensation for those years of $26.4 million, $24.9 million, and $20.6 million respectively.  His replacement, Sarah M. London joined the board in 2021 as vice chairman and received 2021 compensation of $15.2 million.  The seven top executives received a total of $80 million in compensation in 2021.

Conclusion

    Medicaid expenditures in the U.S. will reach $1 trillion within the next few years.  Along with expenditure on military activities, this poverty program will remain one of the two biggest programs funded by U.S. income tax payers.  With expansion of Medicaid under the Affordable Care Act, we anticipate that growth of tax-funded  poverty medical care will be rapid in the years ahead.  This raises the question of evaluation of these expenditures and public discourse about the quality of care.

    My initial foray into availability of state and federal data regarding the effectiveness and regulation of MCOs leaves me with considerable doubt about what taxpayers and legislators know about outsourcing medical care for poor people.  It is not difficult for me to uncover the inordinate executive compensation packages, stock buyback information, and financial performance metrics reported by major providers.  However, medical and ethical, questions arise regarding the justification for cash out to investors and executives given the care provided.  I will be sharing my research pertaining to Medicaid expenditures on this blog in the weeks, months, and years ahead. 

*The Centene 10-K can be accessed at https://investors.centene.com/all-filings?cat=1.

Liberals & Democrats Need to Change the Conversation: Too Much of Our Federal Medical Care Funding is Flowing to the Wealthy

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By:

Dave Kingsley

Rogue Corporations Scamming the System

You may have never heard of Centene Corporation. But we need to talk about this company which derives most of its revenue from Medicaid – medical care for the poor. With revenue of $111 billion in 2020, it is 24th on the Fortune 500 ranking of corporations (by size of revenues). CEO Michael Neidorff earned $25 million last year – among the five or six highest paid executives in corporate America. Not bad for “welfare medicine.”

Compensation for the top four Centene executives and the board of directors totaled $64 million in 2020. The board includes former congressmen Tommy Thompson (also former head of HHS) and Richard Gephardt. Two very powerful former members of congress.

So, what exactly does this company do for Medicaid? It is known as a “managed care organization” or MCO. The idea underlying the MCO concept is that private, for-profit corporations can do a better and more economical job of managing government funded medical care than government employees. Evidence overwhelmingly points in the other direction but the myth nevertheless persists.

Humana, Cigna, and other corporations have jumped into the MCO business. Let’s face it, the $600 billion+ Medicaid budget has opened opportunities for corporations to rake off untold billions for wealthy investors, executives, and board members, while poor people in states that have expanded Medicaid are humiliated through character tests such as proof they aren’t taking drugs, or too lazy to look for a job. Poor people in Arkansas for instance are facing administrative road blocks and state bureaucracies that see their role as keeping people from receiving benefits.

I’m certain that wealthy executives and investors are enjoying their concierge medicine while poor people can’t get treatment for an abscessed tooth, screening for cancer, diabetes, or medical care that most of us take for granted. This is what the Democrats and liberals need to be screaming about – not means testing and making people prove they are worthy of medicine taken for granted by every citizen in most affluent countries. No doubt, progressives in the U.S. House of Representatives are doing just that. However, silence on this issue from most senators and congresspersons on the Democratic side of aisle is deafening. Forget the now cruel Republican Party. There is no hope there.

Remembering Darryl Ringer: Charismatic Farm Activist

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This Thanksgiving, I can truly give thanks for having known and worked with farm activist Darryl Ringer from Quinter, Kansas.  Darryl died in a farm accident in 1993.  At the time he was killed, he had gained national stature as an activist on behalf of farmers who were losing their farms to banks in foreclosure actions.

I am proud to say that I offered my couch to Darryl as a place to sleep as he traveled the state in 1988 and worked with us on the Jesse Jackson campaign.  His charisma, intelligence, and organizing ability were phenomenal.  His death left a gaping hole in the progressive movement.

In memory of Darryl, I suggest that we support the actions of the National Farmers Union, which represents 250,000 farming and ranching families. The Farmers Union is pushing for a strong, viable, government-run, health insurance program.  Farm families are finding the cost of health care out of reach due to the nature of the insurance cartel.  For instance, 69% of health insurance policies in Nebraska are written by two insurance companies.

The other farm organization, the Farm Bureau, is opposing the bill passed in the House of Representatives.  Since the Farm Bureau represents large corporations and the agricorp industry as a whole, it opposes the provision of HR 3962 that requires employers to provide health insurance or pay some rather severe penalties.