Wednesday, September 24, 2014

When leaders don't lead

I made note last week of the strange silence from our state's largest insurance company, Blue Cross Blue Shield, with regard to the pending antitrust settlement between the Attorney General and Partners Healthcare System.  The impetus for my column was a strong statement by the state's other insurers that the proposed deal would be bad for the state's health care system and consumers.

But I didn't make it personal.  The Boston Globe's Thomas Farragher has now done so in a column in which he asks the CEO of BCBS why the company has been silent on the issue:

Apparently cured of laryngitis, he got on the phone to explain.

“I’m not trying to be cute, but we’ve been neutral,’’ said Dreyfus, whose company accounts for about half of Partners’ commercial business. “It was our judgment that [Coakley’s office] got the best deal they could. We weren’t going to substitute our judgment for theirs.’’

What Farragher makes clear is that silence is not neutrality.  Silence is assent.  This CEO is sophisticated and thoughtful and understands that point as well as anybody in the state.

Dreyfus is better than the sum of that quote. A group of antitrust experts called flatly for rejection of the settlement. The state’s Health Policy Commission estimates the expansion could smother competition and hike health care spending by $49 million a year. Dreyfus’s competitors, a group of other insurers, have raised red flags, and a coalition of Partners hospital competitors have said the deal will drive up costs.

Andrew Dreyfus is a smart national voice in America’s raging healthcare debate. He’s a sought-after speaker across the country, for good reason. He has held down costs. He’s been a proven leader. But not this time.

We cannot always know what incents people to act in certain ways.  We can, however, judge the import of their decisions. Last week, I put it this way:

[BCBS'] actions over the years and its silence now join it irrevocably with Partners as an advocate for higher health care costs in Massachusetts.


M. E. said...

Well, if insurance companies are allowed to retain 15% of insurance premium dollars for salaries and other administrative costs and profit, can we expect that they have any incentive whatsoever to keep premium costs down? The dominant insurer benefits, just as much as Partners, from higher costs and therefore higher premiums and profits.

Barry Carol said...

I’m disappointed every time I read a comment like the one from M.E. above. Insurers know perfectly well that health insurance is becoming increasingly unaffordable as healthcare costs rise faster than other goods and services and faster than average wages. If rising healthcare costs were so wonderful for insurer profits, BCBS should be encouraging Partners and other medical providers to demand double digit price increases year in and year out. It’s also worth noting that BCBS and the other major insurers in MA are non-profit entities. Their profit after medical claims and administrative expenses probably amounts to no more than 1%-2% of premium revenue at most. It is not in the long term interest of these companies for healthcare and health insurance to become completely unaffordable.

As for BCBS’ silence on the tentative agreement between Partners and AG Coakley, I can’t speak to the CEO’s motives. However, I know from my experience in the corporate world that senior leaders have only a limited supply of political capital and they have to choose their battles carefully. From BCBS’ perspective, they may view the opposition expressed by the rest of the industry as sufficient to communicate insurers’ perspective on the matter without BCBS also having to weigh in.

Anonymous said...

What Blue Cross did with Partners, CONSPIRING to drive up health care prices violates a number of anti-trust laws including the Sherman Anti-trust act.

[This was validated by a report from the attorney general, and multiple reports by Massachusetts state government agencies on what caused Partners prices to be so much higher than other similar providers.]

I would think Blue Cross would be bending over backwards to ensure that future prosecutors see them as a reformed actor.

Might Blue Cross current inaction be seen as a continuing attempt to keep health care prices high, in other words a continuing violation of the anti-trust law? [Could nullify the statute of limitations?]

If high health care prices end up bankrupting future local and state governments deep pocketed groups like Blue Cross will probably also be a target for law suite if they are seen as a bad actor.

Don't worry blue cross just teasing...

nonlocal MD said...

Barry, I have to disagree with you this time on your theory of BCBS' silence in this matter. I see it, rather, as a illuminating confession of BCBS' utter impotence in this situation partly of their own making - they know if they ever were to enter into one of those p**sing contests with Partners that insurers and hospitals sometimes get into, they would lose. Because of Partners' expert manipulation of people's emotions (their CEO is, after all, a psychiatrist), patients demand they be on everyone's network list.
Hence, there is no one, read no one, in an official or business position in MA who is willing to challenge them. It's mind boggling.

Barry Carol said...

There was a time when Partners refused to sign tiered network contracts with insurers if they placed Partners hospitals and doctors in anything other than the most preferred tier. Either regulators or legislators (not sure) declared that stance illegal. All or none contracting is also out the window as insurers can now contract with some of Partners community hospitals but not others. They still must accept both MGH and B&W into their network or neither, however. Hopefully, that can be changed in the near future. I think it’s also hard to defend confidentiality agreements that preclude disclosure of actual contract reimbursement rates. That could change too especially if Charlie Baker becomes governor.

I remember back in the 1980’s, the United States League of Savings, the S&L lobby, had tremendous political power as there were S&L’s in virtually every congressional district. After one-third of them went broke in the late 1980’s and taxpayers paid out over $100 billion to clean up the mess, the U.S. League of Savings’ name became mud and all sorts of banking reforms were suddenly not only politically possible but imperative.

In the case of Partners, I think there is a lot that employers and insurers can do to educate consumers about the high reimbursement rates paid to Partners hospitals and doctors because of their market power and not the quality of their care. These excess prices drive up insurance premiums and restrain wage growth. No state legislation or regulatory approval is needed to spread that information. Maybe I just don’t get it but I don’t view PHS as invincible at all.

Anonymous said...

BCBS has had complaints about wasteful spending and done nothing about it. They're part of the problem. If they stop it, less $$$ rolling in and less profit.

Anonymous said...

Another fact to consider is that BCBS still has a ton of covered lives enrolled as employees of a Massachusetts town or city. Dolores Mitchell and the Mass GIC have brought in a few under their umbrella (where BCBS does not even offer a product) but BCBS still has a boatload of members in this very lucrative market. This business is all VERY political and it doesn't surprise me a bit that BCBS chooses not to get involved in such a political drama. I guess you don't rock the boat if it doesn't directly benefit you.

Anonymous said...

Hi Anon Sept 25, 12:31PM

Actually Blue Cross of Mass is taking a very CONTRARIAN stance, as least as far as the Mass health insurance industry is concern.

The Mass Association of Health Plans (MAHP) is opposing Partners/Attorney General deal. The MAHP includes virtually every health insurance firm in the top 10 in Massachusetts EXCEPT Blue cross.

Is this part of a continuing effort by Blue Cross to secretly support Partners to keep Massachusetts health care rates high?

Why would it not take the same action - OPPOSE THE PARTNERS DEAL- that virtually all other health insurance companies in Mass have taken?

Anonymous said...

Maybe BCBS is just staying true to that first backroom deal they cut with Partners years ago... that BCBS and Partners would stick together and dominate healthcare in Massachusetts. I was simply saying that the political debate about the Attorney General's deal with Partners has a lot of angles... especially during an election cycle like we have going on now. Why take sides if it will anger certain politicians who could ultimately make changes in their own city or town health insurance offerings? What if Coakley gets elected Governor and you were perceived to have gone against her deal? It just doesn't make sense for them to get involved in this even if it is the chicken thing to do by being quiet.

Anonymous said...

What I want to know is how Partners contrived to make this decision point occur at the same time as the AG is running for governor of MA. Coincidence? I fear not.