HEALTH PLANS/POLICY: John Igleheart is a pussy

In a Conversation With Larry C. Glasscock, the CEO of Wellpoint, John  Igleheart has either been massively restricted by Glasscock’s PR handlers or has revealed himself to be a complete pussy.

A little history: having been a senior exec at CareFirst (Blues of DC), Glasscock took over the fast growing regional Blues plans based around Anthem BCBS in Indiana, took them for-profit and made himself a fortune. A great American success story.

He then merged Anthem with the big other for-profit Blues agglomeration, Wellpoint which was run by Len Schaeffer, in 2005. I’ve had a fair bit to say about the variance between Len Schaeffer’s high-fallooting rhetoric and the actual on the ground performance of his company. Glasscock appears no better. And in many ways, he’s been much worse.

I’m not saying that Igleheart should necessarily have gone after him for the fact alone that he made $25m last year (not to mention the millions more in stock)—after all Wellpoint stock has done very well. But given that certain other health plan CEOs are in some hot water for their outright greed and fraudulent behavior, it might just have come up.

But the reason that the stock has done so well is because Wellpoint (and other insurers) have stuck it to their clients. They’ve got away with that because of the appalling display of incompetence by employers (their clients) over the last decade. How appalling? Glasscock thinks that employers will get more involved in the future i.e. they have just sat back and taken it so far. Here’s Glasscock’s explanation as to why they’ve taken so long:

Iglehart: Why has it taken so long for the employer community to do so when rising health expenditures have been a serious concern of companies for many years?

Glasscock: It has been difficult oftentimes for employers to directly address the cost issues that have resulted from increased pressure on managed care contracts. The reasons for this are varied. Hospital reimbursement is complex. Payment methodologies are difficult to understand for those not familiar with them. Risk-adjusted comparative cost data on hospitals are not readily accessible, and many plans aren't able to make these comparisons. The ones that do face challenges communicating such information to employers. During managed care contract rate negotiations, hospitals sometimes challenge such cost comparison data. And hospitals, which often count respected local business leaders on their boards of directors, have a lot of credibility with regard to the challenges they raise. So employers feel caught in the middle between their local hospital and their managed care company.

Transparency is another major barrier for employers. Hospitals and physicians are often understandably uncomfortable allowing specific information to be shared. For transparency to work, all stakeholders--hospitals, physicians, employers, and insurers--must find ways to collaborate and work together to create a system that benefits all parties.

So in other words, “we the health plan—who get paid to do this— have completely failed to be the agent of the employer, taxpayer or individual in controlling health care costs. And we’ve been laughing at them all the way to the bank as our share of total health dollars has rapidly increased (e.g Medical loss ratios have gone down).” But we don’t hear anything from Igleheart about that!

And then Igleheart lets Glasscock, whose major recent achievement has been to expand nationwide a bunch of cream-skimming products with stupid names which Schaeffer introduced, pontificate on about the great tools he’s bringing consumers. But Igleheart even lets him get away with a blatantly wrong answer about why insurance rates in Mass, NY et al are so high.

John, while the Massachusetts plan represents a step forward in trying to find solutions for the uninsured, I have several concerns about its individual mandate. Under the new law, individuals are only required to obtain coverage if it is "affordable" for them. But the Massachusetts law, as I understand it, preserved all of the commonwealth's existing benefit mandates, so it is difficult to see how health insurance coverage under the new program will be any more affordable once the mandate to purchase coverage becomes effective than it is today.

Hint—it’s not mandated benefits that makes insurance unaffordable, it’s mandated community rating and lack of underwriting. If there’s underwriting as happens in every other state, then Wellpoint (and everyone else) makes way more money because they don’t have to sell insurance to sick people. And of course those people can’t get insurance.

And if by some accident they do sell insurance to people who actually need it—funnily enough, they have a solution for that. Wellpoint’s biggest single unit, Blue Cross of California, has been caught red-handed systematically retroactively cancelling insurance policies. This news even got into the local newspaper in Glasscock’s home town.

Facing the threat of punishment from regulators, Blue Cross of California, a subsidiary of Indianapolis-based WellPoint, has quietly agreed to settle more than 70 lawsuits and claims from patients who accused the state's largest health insurer of illegally canceling their coverage after they got sick. The settlements include undisclosed monetary awards and will allow former policyholders to pay off hefty medical bills they were stuck with after losing their insurance. In exchange, the former policyholders agreed to drop allegations that Blue Cross was canceling individual policies to avoid paying medical bills.

The settlements follow a series of newspaper stories examining the controversial cancellations and resultant hardships on patients, their families, hospitals and physicians. Among those reaching settlements is a Riverside, Calif., family that was forced to sell its home after being hit with a mountain of medical bills. Another settlement involves the family of a 6-year-old girl who was dropped by the insurer after she was diagnosed with a life-threatening tumor in her jaw. WellPoint confirmed it was in mediation regarding the suits but declined further comment. William Shernoff, a lawyer representing many plaintiffs, said his clients won't have to worry about medical bills ever again.

Is it even slightly possible that Igleheart might have raised the question of what the hell Glasscock’s company was up to? Glasscock gets $25m big ones last year, while his company ditches on its obligations and his clients lose their house. Any hint of an opening there for a question John?

Perhaps Igleheart should be wondering whether someone with those kind of ethics should be running a health plan, let alone being given a forum in the nation’s leading health policy journal to pontificate on the advice he should give the President. Or did Glasscock just not know that this was happening on his watch?

Meanwhile Anthem/Wellpoint is being sued for anti-trust by a local broker which it’s trying to prevent from destroying the risk pool it controls in its monopoly states with some cream-skimming tactics that exceed those even Schaeffer dreamt up. I think that’s pretty funny in a tragic sort of way…