The unspoken link between the Republican war on Medicare and the privatization of Medicaid

Share |

There is a strong link between the Republican war on Medicare, and the progressive privatization of Medicaid, and that is the primary beneficiaries of each: the Wall Street darlings of the health insurance industry.

Paul Krugman's piece yesterday in The New York Times describes the Republican vision of Medicare as Vouchercare, where private health insurers are paid a set fee every month per person. It would function similarly to the capitation contracts for Medicaid that these same private health insurers are gobbling up quietly across the country.

About $30 billion in Medicare and Medicaid funding was paid to nine corporate insurance companies in the first quarter of 2011, already well on the way to topping the 2010 total of $113 billion. According to published Medical Loss Ratios, more than $5 billion of that was skimmed off the top as operating profit: the difference between what the company is paid per person per month and what they actually spend on that person. With seven of the nine reporting lowered MLRs for 2010, that quarterly figure is also on the way to besting the 2010 published total of about $19.5 billion.

Unitedhealth is the leader of the pack financially. A five percent increase in Medicaid membership generated a twenty-three percent increase in Medicaid revenues just in the past six months.

Meanwhile, criminal fraud investigations have found several of these companies - Amerigroup, Humana, Wellcare and Unitedhealth in particular - artificially inflating MLRs. Florida is asking for millions of dollars to be returned, just from investigations that are already four or five years old. Wellcare, whose Medicaid/Medicare income grew nine percent in 1Q 2011 over the previous year, submitted a settlement agreement with nine states over Medicaid fraud in late April. A few days later they scooped up a new contract with one of the nine, Georgia.

The selling of Medicaid and Medicare to the private sector becomes particularly frightening in light of a recent amicus brief the Administration has submitted to the Supreme Court. Barring Medicaid beneficiaries access to the protections of federal civil rights laws can only produce an exponential growth in criminal Medicaid and Medicare fraud.

Why Medicaid is creating demonic glee on Wall Street

Share |

The Obama Administration has told the Supreme Court that Medicaid turns beneficiaries into second-class citizens. The amicus brief filed by Acting Solicitor General Neal K. Katyal on May 26 effectively exempts everyone receiving Medicaid - including children, the elderly and people with disabilities - from the protection of federal law.

The Affordable Care Act has already been driving a double-digit boost to the privatization of Medicaid and Medicare, by spawning new contracts going out to bid across the country. Katyal's brief will allow corporate insurers, many already with reputations for criminal Medicaid fraud, to continue receiving federal and state funding with no federal controls over how, or even if, it is spent.

As official Administration policy, the brief also seems to grant these health insurers immunity from anyone appealing their decisions successfully ever again. It may also raise interesting questions about the content of meetings between the President and some of these same health insurance companies that took place prior to passage of the ACA.

Corporations are already reporting to the SEC with demonic glee the profits to be reaped by refusing to spend the money they get paid every month for state Medicaid and federal Medicare contracts. First quarter 2011 Medicaid/Medicare income to Wall Street-driven private insurers was about $30 billion, already well on the way to surpassing the 2010 total of $114 billion. Companies like UnitedHealth have reported federal revenue increases of over twenty percent just in the past six months.

Many of the companies gobbling up these new state and federal contracts are already developing unsavory reputations for criminal Medicaid fraud. Private insurers like Amerigroup, Unitedhealth, Wellcare and Humana have all either been charged with criminal fraud, or are fighting/have already reached repayment agreements to avoid criminal prosecution for stealing state Medicaid funds.

If this amicus brief is allowed to stand, civil rights earned over the past sixty years will be decimated. These companies are already creating a corporate criminal culture out of Medicaid and Medicare, which can only expand if they are allowed to violate federal laws with impunity.

This is what is already happening in states like Hawaii, where at least six different federal civil rights investigations have been initiated in the past fifteen months. The investigations have all been on behalf of medically fragile children and target one of two for-profit health insurance companies, Unitedhealth or Wellcare. Together, the two collect about seventy percent of the state's annual $1.75 billion Medicaid budget, in exchange for providing Medicaid services to the elderly, blind and children as well as adults with disabilities.

Florida's legislature recently voted to force its entire Medicaid population into managed care programs operated by for-profit insurers. Hawaii's former Republican governor Linda Lingle started that process locally, and recent announcements by state officials open the door for greater for-profit corporate intrusion into Medicaid and further violations of federal civil and legal rights.

Legislation is currently sitting on the desk of Hawaii Governor Neil Abercrombie that would exempt the state's entire Medicaid population from equal access to state appeals procedures. S.B. 1274 has been heavily lobbied for by the state's Medicaid insurers, who claim they are spending too much money defending their medical decisions in current state insurance division appeals.

These medical decisions they are defending are some of the same ones targeted by the federal civil rights investigations, two of which have been opened just in the past month. Two cases that were closed last summer both found in favor of the medically fragile children who filed the appeals.


More on the amicus brief itself

The New York Times reported on May 28 that Representative Henry A. Waxman of California called the brief “wrong on the law and bad policy.”

I am bitterly disappointed that President Obama would accept the position of the acting solicitor general to file a brief that is contrary to the decades-long practice of giving Medicaid beneficiaries and providers the ability to turn to the courts to enforce their rights under federal law,” Mr. Waxman said. He said that he and other Democratic lawmakers planned to file a brief opposing the administration’s view.

The amicus brief was apparently the opposite of that requested in a letter by twelve national organizations on March 21. The letter stated that "the federal government has an interest in assuring that ... federal laws are not undermined by conflicting state laws." The letter went on to say that the right of Medicaid beneficiaries and providers "to vindicate federal Medicaid requirements further[s] the federal government's interest in ensuring that the Medicaid program provides meaningful benefits to Medicaid recipients."

On June 3 by the National Senior Citizens Law Center released an evaluation of the brief, saying it "will eliminate what is often the only practical corrective mechanism for ensuring that federal Medicaid funds actually provide the treatments and services prescribed by Congress."

The Acting Solicitor General’s argument arbitrarily carves safety net laws out from the protections of the Constitution’s supremacy clause. The brief charts a path for the Supreme Court to permit federal courts to continue routinely apply federal supremacy to strike down state laws protecting consumers, workers, retirees, bank depositors and others, alleged by business litigants to conflict with federal laws. This result hardly fits the administration’s often-proclaimed goal of promoting courts responsive to the needs of ordinary people rather than powerful interests.

If you think this amicus brief is a bad idea, you can let President Obama know by going to the White House website and emailing a comment. Your message can be as simple as:

Dear President Obama:

Please do not allow Medicaid beneficiaries to be made into second-class US citizens. The amicus brief filed on May 26 by the office of the Solicitor General needs to be withdrawn.

How to let Governor Abercrombie know you want him to veto SB 1274 if you can't attend today's rally

Share

 If you are on another island, or can't make today's rally, you can still let Governor Abercrombie know directly that you want him to veto SB 1274.

You can call him at (808) 586-0034. Or you can go to his online contact form here.

Your message subject and content can simply be:

Please veto SB 1274.

Veto demonstration today for SB 1274

Share

Please show your support for the Governor's veto of SB 1274, by attending a rally today at 3:30 at the Capitol.

Parking is under the Capitol Building.  The entry is off of Punchbowl, mauka of South Beretania ½ block, across the street from The Queen’s Medical Center, past the DOE parking entry to a street you can see takes you down underneath South Beretania.  Parking takes quarters. There is a change machine at the building entrance.  Take the elevators to your right up to the 1st floor.

The update from Rafael del Castillo on June 1:

Meanwhile, we are getting some strong support from some dedicated folks working behind the scenes.  I hand carried a letter to the Governor’s office yesterday which uses the technical guidance issued by the CCIIO (Center for Consumer Information and Insurance Oversight which has responsibility for reviewing state laws) that gives assurances they will “work with” states before issuing any compliance lists prior to July 1 in the case of any state where they have concerns about the state external review law.  As you know, CCIIO has never made any move to “work with” Hawaii.  Quite the contrary.

I also drafted a suggested letter for the Governor to send to Asst. Secretary Phyllis Borzi, who is in charge of the Employment Benefits Security Administration at the Dept. of Labor, requesting a determination whether most of Hawaii’s now-excluded ERISA plans will no longer be excluded from our external review after the Affordable Care Act. The reason the Governor needs to ask that question is no one knows the answer for sure.  Even so, the legislators who voted for SB1274 ASSUMED (and everyone knows what the letters stand for) ERISA would continue to be excluded.  With all due respect to our legislators, I question whether their aggregate knowledge of ERISA adds up to 1% of what Phyllis Borzi knows, but none of them consulted her or anyone else at DOL (nor had our Insurance Commissioner before them).  I at least hope that our Governor will go to the trouble of doing so instead of accepting an assumption about a highly technical legal issue.

For more information, email countmein@we-are1.com

Evercare already counting on Abercrombie signing SB 1274

Share

Evercare is apparently assuming Governor Abercrombie will be signing SB 1274 into law, as the company has already started announcing slashes in services to begin July 1.

If SB 1274 is signed by Governor Abercrombie, July 1 is the date that everyone on Medicaid loses the right to any sort of independent review of their insurance provider's medical decisions.

Evercare is also involved in two federal civil rights violation investigations opened in Hawaii in the past few weeks. Both investigations are into allegations Medicaid cuts in home nursing services are violating the civil rights of medically fragile children.

It is not an issue of the money not being available.  Unitedhealth typically spends only eighty cents out of every dollar they receive, regardless of whether the bill is paid by an individual, an employer, or the federal government.  The company is paid with federal funds to provide the extraordinary level of care that medically fragile children need in order to stay home with their families. It is the company's decision then, not to spend the money, even if it means ignoring all the children's doctors.

How much of this child abuse is due to the irony that Evercare and Ohana are paid more by the feds every month if two little girls are institutionalized than if they stay home, I do not know.  It is certainly a nice inducement for the company to cut home hours to the point the child's safety is endangered.

Both Unitedhealth and Wellcare seem to lead all Medicaid managed carecontractors in violations, over billing, and billing irregularities adding up to unsavory reputations.  Wellcare filed with the SEC in April their Medicaid fraud settlement with nine states, and both companies have been accused of stealing from
children's Medicaid funding in Florida.  New indictments of Wellcare's founding board and executives have been handed down recently and that does not appear to be the end of it.