When Medicaid is big business, people suffer

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Hawaii’s governor, the first Democrat elected in eight years, has publicly defended his decision to segregate the state’s Medicaid population as second class citizens.

Like Obama, Neil Abercrombie rode to victory last November on a great tide of hope for the future. And like Obama, he has apparently decided to side with Big Business against the civil rights of his voters.

There is something called “Federal Supremacy.” Federal law is the “supreme law of the land”, and states cannot limit legal rights defined by federal law.

One practical result is that children as well as adults with disabilities have the ability to appeal life-threatening denials of medically necessary services by their Medicaid plan. The majority of cases that reach this level involve children of all ages with disabilities, fighting for the right to live at home rather than in institutions. These home medical services are expensive, although less than what the state would pay for institutionalization.

In May, the White House unexpectedly pushed through an amicus (“friend of the court”) brief with the Supreme Court, taking the position that the protections of Federal law do not extend to Medicaid beneficiaries.

Disability law experts like Sara Rosenbaum and Simon Lazarus immediately warned of the potential “spill-over effect” if beneficiaries of the country’s “safety net programs” like Medicaid were suddenly denied the protections of the court.

Governor Abercrombie’s comments were made during an August 22 meeting called to explain why he signed a piece of legislation eerily similar to that amicus brief.

Hawaii’s S.B. 1274, signed by the Governor in July, accomplishes exactly what Lazarus warned of: it carves out the state’s entire Medicaid population (270,000) and denies them access to the protections of federal law.

The Governor openly admitted the purpose of SB 1274 was saving the state’s Medicaid contractors money on legal fees. Patterns of Medicaid providers violating federal regulations (and civil rights) he dismissed as mere “glitches”. (More information about SB 1274 as well as a link to a recording of the Governor's comments can be found here.)

The crux of SB 1274 was to repeal a state law enabling patients to challenge health insurers’ denials of care, and to be represented by an attorney in the process. The law required health insurers to pay the legal costs of the patient’s appeal when the company refused to approve medical treatments ordered by a doctor.

Seventy percent of Hawaii’s Medicaid budget is paid out to two publicly traded contractors, Unitedhealth and Wellcare. The two share a lucrative $1.2 billion a year contract to provide services to 40,000 children and adults with disabilities. Premiums are calculated individually, and because these contracts are specifically to cover home services for people with disabilities, monthly premiums can range as high as $27,000 for, say, a medically fragile child.

Publicly traded Medicaid (and Medicare) HMOs make shareholder profits by not spending premium money on medical expenses. Since the size of the Medicaid pie is the same it was before they bought the contract, services have to be cut twenty to fifty percent to support corporate profits.

State contracts with Medicaid providers like Unitedhealth and Wellcare must be approved federally (through CMS, the Centers for Medicare & Medicaid Services, part of DHHS). They mandate compliance with all state laws. Unitedhealth and Wellcare knew about Hawaii’s healthcare laws when they signed the contract, but apparently did not realize what they would cost them.

Only one thing is accomplished by deleting a state law requiring insurance companies to reimburse patients’ legal bills in disputes over medical care. It allows the company to slash services in order to increase profits, without worrying that patients have the ability to challenge them effectively.

In Hawaii, it got the publicly traded companies out from under the mounting legal bills incurred defending against life-threatening cuts in services, most of them victimizing children and seniors.

In April, Unitedhealth’s Hawaii attorney openly told a TV reporter that SB 1274 needed to be passed because the state’s "existing process is expensive, time-consuming and burdensome... just adds to the cost of healthcare when we [Unitedhealth] can ill-afford it."

What she failed to add was that her client, Unitedhealth had over a dozen cases pending against it at the time. As of this writing, she and Unitedhealth have lost every case ever filed against it under the same patient rights law she said needed to be repealed.

What is happening here in Hawaii is only the tip of the iceburg.

By the end of this year, publicly traded companies will own about 30% of Medicaid, up from 19.6% two years earlier.

Remember when Congress had to approve TARP giving the banks $700 billion back in 2008? In the end the price tag was $245 billion, almost all of which has been paid back by now.

The privatization of Medicaid and Medicare has gone from $105.3 billion in 2009, to $113.7 billion in 2010, and already stands at $65 billion for the first half of 2011. Not a penny of that $284 billion needs to be repaid.

The political hot potato neither Republicans nor Democrats are talking about is who determines how much of that money actually needs to be spent. Or even if any of this nice federal and state funding has actually been spent on real medical care for people who need it.

The amicus brief and state laws like SB 1274 clear the way for these publicly traded companies to increase profits without worrying about federal regulatory interference. Unitedhealth and Wellcare are only two of about ten publicly traded health companies together splitting about $11 billion every month in federal and state revenues for Medicaid and Medicare.

The morning after last November’s elections, Public Citizen published a study of the link between “party-shifting contests” and “unregulated third-party spending.” Twenty-two of fifty-eight new Republicans were in seven of the eight states that just settled with Wellcare for criminal Medicaid fraud claims. Unregulated third party spending in those seven states came to $11 million, of the $54 million tracked.

Eighty-five percent of the total was spent in states where six publicly traded corporations (Unitedhealth, Wellcare, Wellpoint, Centene, Amerigroup and Molina) own Medicaid contracts. Unitedhealth alone operated either Medicaid or Medicare HMOs in 28 of the 33 states where Republicans beat Democrats, and was bidding on new contracts with a 29th state at the time.

On August 5, the White House took another swipe at federal protections for people on Medicaid, and particularly those with disabilities. CMS sent a letter out telling states how to auction off their Medicaid contracts without worrying about inconvenient federal safeguards. The legal work-arounds that CMS proposes specifically target what is called “maintenance of effort.” New Medicaid contracts/programs cannot restrict existing access to program benefits.

Now they can.

The politics of Medicaid/Medicare corruption override party membership. Greed trumps ideology, apparently.

You see it as far back as 2002. That’s the year a group of Wall Street financiers bought Florida’s biggest Medicaid HMO, a little known company named Wellcare. George Soros, head of the group, was known for donating to Democrats. The financiers’ hand-picked CEO was a Bush fundraiser.
Between taking the company public in 2004 and selling out before the very public FBI raid in October 2007 (the last shares were sold only weeks earlier), the original investors turned $70 million into almost $900 million.

The whistleblower complaint that led to a dawn raid by 200 FBI agents was not unsealed until last summer, almost three years later. Reading it, however, makes it very clear that the criminally fraudulent practices that generated such excessive profits traced back to the change of ownership in 2002.

Wellcare almost appears to have been structured from the get-go as a financial experiment in how to get rich from Medicaid and Medicare.

One of the last Board Members whose involvement could be traced back to 2002 only stepped down in early 2010. It took until the fall for the company to finish getting around to suing former executives whom, it claimed, had hid their criminal actions from the Board.

In October, it was learned the company had become one of Florida’s largest political contributors between 2004 and 2007, reporting a total of $2.6 million to the state Republican Party as well as individual Republican candidates. According to a report in Health News Florida, “Tampa attorney Barry Cohen …said today the contributions were pennies on the dollar compared to the money the HMO saved in Medicaid fines -- and the profits it made.”

In November, industry analysts were predicting that “WellCare’s strong Medicaid HMO position in multiple states will enable it to grow the upcoming Medicaid expansion that is part of the new health law.”

In late April, the White House apparently backed a federal settlement with Wellcare letting the company off the hook forever. The final settlement was for about $137 million, of up to $600 million estimated embezzled from federal and state funds.

Since January, Wellcare has been outperforming the S&P 500 by up to 35%. Quarterly net earnings reported in June are 7.64% of gross premium revenue, up from 1.62% in June 2008. Quarterly gross premiums are down $160 million (from $1.64 billion to $1.49 billion) while net earnings have grown from $26.6 to $113.5 million.

There’s an old saying that you can’t know where you’re going unless you know where you’ve been. Wellcare’s first financial success was defeated because they got caught stealing. The emerging federal “hands-off” policy towards Medicaid means they, and all the other publicly traded companies feeding off the backs of our most vulnerable citizens, will no longer have to worry about getting caught. Nobody will be looking.

Medicare already 45% privatized, Medicaid could reach 30% by year's end

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The privatization of Medicaid could hit 30% by the end of 2011. Medicare's privatization has already reached 45%.

The so-called Republican war on Medicare and Medicaid was already won a couple of years ago, and the battles waged so publicly now are, in large part, a public relations diversion.

What the Republicans, and apparently the President, don't want us to see is is the amount of government health care funds - between $2 billion and $5 billion every month - that this privatization has diverted to shareholder profits.

That money could be used instead to fund anywhere between 400,000 and 1 million full time jobs in local communities across the country. Every time one of these publicly-traded companies cuts the benefits it pays out, it means jobs have been lost as nurses, home attendants, adult day care, and a host of other local companies that provide equipment and services to the disability community. Meanwhile states have been able to cut their accounting, social work, quality control, regulation monitoring and other positions when the HMO takes over these jobs as part of its contract.

Figures published by the Commonwealth Fund, combined with Securities & Exchange Commission (SEC) filings, show the percentage of people receiving Medicaid who are signed up through publicly traded HMOs has gone from 19.6% in 2009 to 27.1% as of June 30, 2011.

New contracts coming into play this year will add at least 1.7 million new people, bringing privatization to 29.8%. The Affordable Care Act is expected to raise Medicaid enrollment by 16 million by 2019, and the Commonwealth Fund concluded that "given recent patterns in state contract awards to managed care plans, it is reasonable to anticipate that plans operated by publicly traded companies will enroll the majority of the expanded Medicaid population."

Of the 47 million signed up for Medicare, 21 million are enrolled in publicly traded HMOs. When compared against the total population of just Medicare's managed care and stand-alone drug benefit, that 21 million becomes 71% of the total number of enrollees in those programs.

We obviously cannot count on our elected officials to stop this insidious process by themselves. They aren't even telling us about it. Please sign our petition demanding legislation to take private profits out of Medicaid and Medicare.

Stopping the privatization of Medicaid and Medicare: Create jobs not profits

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This country is in desperate need of legislation to halt the privatization of Medicaid and Medicare.

It is already costing taxpayers $11 billion a month in a subsidy or bailout or whatever you want to call it, that no one has voted on, and is the driving force behind a civil rights war going on right beneath our noses.

Throughout American history, every minority has won its equality through speaking up on is own behalf. The reason nobody knows about this particular civil rights war, is this time the minority cannot speak for itself.

They are our medically vulnerable of any age, those who because of time or disability would be living in institutions if not for Medicaid. Eighty-six percent of the national Medicaid budget is allocated for their care, to pay for the treatments and services to keep our loved ones at home with their families, or in the communities of their choice.

It may be budgeted for their care, but if it's paid to one of ten major for-profit HMOs, anywhere between twenty and fifty (or more) percent is taken out as a sort of middleman fee.

For our families, these cuts translate into reductions of sterile medical equipment, denials of anything from diapers to wheelchairs to communications devices, and reductions in those very services we need in order to keep our loved ones out of institutions. We sacrifice sleep, jobs, friends and the ability to multitask to try to compensate for cuts that were made to raise company profits.

Legislation imposing a 95% health benefits ratio (the percentage of the per person per month premium the HMO receives that is spent on actual health benefits) will do no good. The Administration effectively acknowledged the power of the criminal culture grown up around these HMOs when they gave Wellcare a "get out of jail free" card in April. No expenses they report themselves could ever be trusted.

The best legislation may be to outlaw capitation payments. Go back to a simple fee-for-service program; after all, it worked fine for forty years. All the county and state workers who lost their jobs when the HMO took over can be hired back. These are the people who are best capable of managing the care of someone who is medically vulnerable anyway, not employees of a for-profit HMO.

If the state goes back to writing the checks (more jobs), we eliminate the profit motive, while pumping $11 billion a month into local communities. That could translate into between 400,000 and 1 million jobs across the country. Every time a nurse is hired, a child or grandparent with disabilities is given forty hours a week of home nursing services, something that literally can mean the difference between life and death.

That could also be seen as a million jobs across the country that have been sacrificed in the past three years to keep profits up.

On my other website, I started a survey in January looking for information on how well states were adhering to federal Medicaid regulations. Not adhering means violating, right? While the sample remains small, every state represented so far is violating one federal regulation or another.

Yet the Supreme Court will soon be considering whether anyone signing up for Medicaid should forfeit the right to "federal Supremacy", turning about 50 million people immediately into second class citizens. The White House has also backed a series of proposed Medicaid regulations that implement this anti-regulation of the human and civil rights of our elderly, our adults and our children with disabilities.

Why isn't it child abuse to steal money intended to be spent on keeping children home with their families? Since when can the government abdicate regulatory control over the recipients of federal funds?

Millions like my daughter who have no ability to speak out in support of their own civil rights, are watching control over their life-and-death decisions being sold off to for-profit HMOs.

The first step to stop this insidious destruction of the human rights of the weakest members of our society is to let Congress and the President know that we know what they have been doing without the voters' permission. It is not over-dramatizing to say people have already died, and will continue to do so, until legislation takes the profit out of Medicaid and Medicare.

Please sign our petition here. With the pending Supreme Court decision, and final versions of those proposed new regulations coming up this fall, we need your voice now to help speak up for our children, those who will always be our children and those to whom we were children.

Poll: Should Medicaid and Medicare be auctioned off to for-profit HMOs?

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The disability rights, civil rights, womens rights, family rights, senior rights and healthcare rights advocates need to unite to stop Medicaid and Medicare being sold off to for-profit HMOs. Please take our poll: should Medicaid and Medicare be sold to for-profit HMOs?

Unfortunately, the process has already been underway since the Bush days, reaching almost $11 billion a month in government revenues paid to for-profit HMOS. That amount is growing, for some companies as fast as twenty percent within six months.

I'm the mother of a beautiful and loving soon-to-be 12 year old who is at 24/7 risk of death from epilepsy. Hannah's life was auctioned off to one of these companies (Unitedhealth) in February 2009 so I see every day the impact of its spectacular earnings growth on her daily life. There is a huge disability community on the internet, and I see the impacts there as well. They are intensifying as more and more states are requiring Medicaid recipients with disabilities to join these for-profit HMOs.

They have taken away from us the right of choice.

The companies aren't cutting services to our children because "the budget" has been cut. In fact, if you live in Hawaii, New York, Florida, Georgia and a few other states, your for-profit Medicaid HMO got a premium raise from your state. That's an increase to the budget, not a decrease.

What's getting cut is how much of the premium your Medicaid HMO is being paid for your child that is actually being spent on medical care. The health insurance industry calls it the "Medical loss ratio," I think of it as the "Patient loss ratio", some companies are reasonably straightforward and call it the "health benefits ratio."

If you google "medical loss ratio", you will see that this little number is playing a large role in Washington politicking. I've uploaded a number of articles about it here. The point is, it represents the amount of the premium spent on actual medical costs as a percentage of the premium. If a company reports an 80% MLR to federal regulators, it means they spent only eighty percent of the money allocated for the care of our children (for example), and saved the rest by denying medically necessary services and treatments.

A twenty percent "patient loss ratio" is what these companies brazenly report to the SEC. Federal investigations have revealed companies fraudulently inflating costs by up to 299%, and so a 50% PLR estimate could be conservative.

These companies are stealing from our children, our grandparents, and our communities' most vulnerable populations.

We can't change something we don't know about, so please help us spread the word.

Obama's $1 trillion handout to big business insurers, Part 2

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Once you start following the money rather than the rhetoric, you can start seeing how the Medicaid/Medicare reality has little do to with big business insurers' PR campaign.

Myth 1:  We need to find a good way to reduce costs; rising costs of services is  the problem.

Reality:  When private insurers create HMOs for Medicaid and Medicare, the company is paid by the government a set amount per month per person. With little to no regulation let alone enforcement of minimum spending requirements, reducing costs just gives the company higher profits. 

I've been puzzling for over a month now over an article by Paul Krugman. He states, "Yes, Medicare has to get serious about cost control; it has to start saying no to expensive procedures with little or no medical benefits, it has to change the way it pays doctors and hospitals, and so on."  He compares US Medicare with Canadian health care, which is "less open-ended and more cost-conscious."

The Canadian public health system probably doesn't have a corporate middleman who slips twenty to fifty percent of premiums into his back pocket every month.

Myth 2: Health care companies are making money because people can't afford to spend their deductibles.

Reality:  Unitedhealth sold this line to the Wall Street Journal after last year's earnings figures came out.  It was apparently deemed successful enough that the PR department used it again in May with the New York Times.  This time they brought out some commercial policy holders to interview who substantiated their claim.

In the past three years, Unitedhealth's commercial premiums have increased by only $334 million a month.  Government revenues paid by Medicaid and Medicare are up almost $1.5 billion a month.  Corporate profits from not spending government-paid premiums are up 67%, while the premium revenues themselves are up only 51%.

Unitedhealth's soaring profits are more accurately represented by the family who has been denied hospitalization, or medications, or home care services for their child or grandparent with a disability.

We don't make as good a PR statement, however.