1 November 2012

California Edition
Calendar
November 1-2
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Job-Based Plans Continue To Shrink

Level of Coverage Falls Below 50% in California
The 2008 nancial crisis and the Great noted that despite the economic recovery, the Recession that succeeded it has steadily statewide unemployment rate remains eroded the number of Californians with jobstubbornly above 10%. In 2007, prior to the based healthcare insurance coverage, with start of the Great Recession, about 15% of the their numbers dropping states residents had coverage Types of coverage among nonbelow half of the states through public insurance elderly Californians, 2011 residents for the rst time last programs. That has since Source: UCLA year. grown to 19%. According to new It's clear that the jobdata from the UCLA based model just doesn't Center for Health Policy work for everyone in an 5.6% 4.5% Research, just 49.7% of age of high unemployment 19.1% Californians obtained and rapidly changing job their healthcare coverage markets, Lavarreda said. from their jobs or from a Despite adding family members Californians to the rolls of employment last year. public insurance That compares to 56% in programs, more than 21% 21.1% 2001. of the states residents lack 49.7% We're seeing the toll health insurance about 7 of two years of high million people in all. unemployment with the UCLA ofcials noted loss of job-based that the expansion of the insurance for more than 1 Medi-Cal program that has million Californians, said begun under the Bridge to Medi-Cal/Health Families Shana Alex Lavarreda, the Reform program and will Uninsured UCLA researcher who heads continue under the Affordable Job-Based Coverage the center's Health Insurance Care Act in 2014 should bring Other Individual Coverage Studies Program. signicant relief to the state. The Medi-Cal and the Healthy Families programs have grown to Continued on Next Page replace job-based coverage for many Californians, according to Lavarreda, who

November 13-14
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December 3-4
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NEWS
Coverage (Continued from Page One)
About 400,000 people are expected to receive coverage under Bridge to Reform, while up to 3 million Californians are expected to enroll in Medi-Cal under relaxed income guidelines by the end of the decade. The California Health Insurance Exchange will also enroll individuals into commercial plans who earn too much to qualify for Medi-Cal, with the premiums partially offset by tax subsidies. Earlier this

Page 2

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In Brief
Former Blue Cross CEO Endows USC Center With $25 Million
Former Blue Cross of California/ WellPoint Chief Executive Officer Leonard D. Schaeffer has pledged $25 million toward the endowment of the Center for Health Policy and Economics at the University of Southern California. Schaeffer, who helmed Blue Cross of California and its forprofit spinoff WellPoint Inc. between 1986 and 2004, originally endowed the center in 2009. It operates in conjunction with USCs schools of public policy and pharmacy. It has received more than $45 million in external research funding grants from such institutions as the National Institutes of Health and the Centers for Medicare and Medicaid Services. Our nation faces grave health and fiscal challenges. I support this center because its rigorous, independent and interdisciplinary research provides the foundation for designing effective policies to address these issues in both the public and private sectors," Schaeffer said. Schaeffer currently acts as an advisor to TPG Capital, a private equity firm, and teaches at USC.!

week, the exchanges board of directors voted to name itself Covered California. Exchange ofcials said the name was picked because it was considered most likely to persuade Californians to obtain coverage. "When the major insurance expansions occur in 2014, the ACA should nally provide relief to the millions of Californians who for years have struggled to survive without health insurance," Lavarreda said.!

Blue Shield To Credit $50 Million

Policyholders Will Receive Less Than in Prior Years
As it continues to operate more in line with the expectations of a not-for-prot company, Blue Shield of California will credit back millions of dollars to its policyholders by the end of the year, although the total is far smaller than what it has given back in the prior two years. Altogether, the San Franciscobased Blue Shield will credit back about $50 million to its 3.3 million enrollees next month. The credit will be in the form of a one-time reduction in monthly premiums. Altogether, Blue Shield will have credited $470 million back to its enrollees since 2010. As a not-for-prot, we are committed to expanding access to high-quality health care at an affordable price. This pledge continues to demonstrate that we put affordability before prot, said Chief Executive Ofcer Bruce Bodaken. Bodaken announced Blue Shields intention to keep its annual income to 2% of revenues in 2010. The decision was made after the insurer came under scrutiny from media and consumer groups for attempting to levy premium increases of 80% or more on some of its enrollees, as well as impose multiple increases on some policyholders within a calendar year. Since 2010, Blue Shield has come closer to its 2% net income goal, which is why it is reducing the credit this year, according to spokesman Steve Shivinsky. Moreover, Shivinsky said the insurer has also tried to hold the line on premium increases moving forward. We tried to adjust the (rate increases) so they were close to the 2% margin, we would hit the margin and not have to get so much back to customers, he said. Shivinsky added that ideally, Blue Shield will eventually offer no more credits. Enrollees in the same plan between Aug. 1 and Dec. 31 of this year are eligible for the
Continued on Next Page

Kaiser Sponsors Digital Startup Incubator

Kaiser Permanente has agreed to be a sponsor of Rock Health, a San Francisco-based accelerator for digital healthcare startups. We look forward to partnering with Rock Health to further explore how we can bring healthcare into the digital age in ways that enhance the

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Continued on Page 3

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Longer ALOS!*

NEWS
Blue Shield (Continued from Page One)
credits. Among group health plans, the average mid to large group employer will receive a credit of $35 to $40 per employee. Among groups with 50 or fewer employees, the credit will average $40, and will range up to $105 for enrollees with dependents. Among individual enrollees, the credit will average $25 and top out at $50. For a family of four, the credit will average $75 and

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In Brief
patient-clinician relationship, said Wendy Lee, a Kaiser senior vice president and chief information ofcer. The Oakland-based Kaiser has been a champion of electronic health records, and two-thirds of its enrollees use digital health tools. Terms of the partnership were not disclosed. Kaiser Permanentes broad and deep perspectives as a leading provider of health benets and health services will be invaluable to the startups in our ecosystem, said Rock Health Chief Executive Ofcer Halle Tecco. Rock Healths other partners include the Mayo Clinic, Harvard Medical School and UC San Francisco.

will range between $40 and $125. Despite the credits, Blue Shield has still been criticized for maintaining a surplus of more than $3 billion, particularly from the Santa Monica-based advocacy group Consumer Watchdog. That organization has unsuccesfully tried to qualify an initiative on the ballot to curb premium increases from health insurers.

Molina Reports Lower Net Income

But Quarterly Profit Report Followed by Stock Gain
Medicaid managed care rm Molina Healthcare reported signicantly lower net income for the third quarter ending September 30, as the company continues a brisk expansion while facing ongoing rate cuts. The Long Beach-based Molina reported net income of $3.4 million for the quarter on revenue of $1.54 billion. That compares to net income of $19 million for the third quarter of 2011, a drop of more than 82%. Revenue was up signicantly from the $1.18 billion reported during the third quarter of 2011, an increase of 32%. Molina Chief Executive Ofcer J. Mario Molina, M.D., attributed the growth in revenue primarily to an expansion of its role caring for Medicaid beneciaries in Washington State. Overall enrollment there increased from 350,000 to 411,000 in the past year, making it the state where Molina cares for the largest number of lives. Moreover, revenue from Washington grew by 30%, offsetting revenue declines from the Missouri cancellation and an enrollment decrease in Texas, which dropped to 291,000 from 301,000 at the end of the second quarter of 2012. The developments in Washington are an example of the growth that is happening in our industry even without the impetus of federal legislation, Molina said. He added that the Washington expansion could be considered a replacement for a contract in Missouri that was not renewed. The health plan covered 79,000 lives in the Show Me State. termed a replacement for a contract in Missouri that was not renewed. Total enrollment for Molina at the end of the quarter stood at 1.83 million, in nine states, up from 1.68 million a year ago, but down slightly from the second quarter of 2012. Aged, blind and disabled program enrollees reached 264,900, up from 192,800 from a year ago, while the Medicare Advantage rolls totaled 34,100, up from 31,000 a year ago. However, costs for some segments went up signicantly. The medical loss ratio in California stood at 96.1% for the quarter, up from 88.1% a year ago. California is the second largest state where Molina does business, with 346,000 enrollees. The company noted in a statement that the increases in premiums have not kept pace with the additional costs for providing medical care. Despite the lower net income and higher cost trends, Molinas stock rose about 10% in New York Stock Exchange trading in the days after it released its earnings last week.

Sutter Health Donates $500,000 Toward Sandy Relief Efforts

Sacramento-based hospital chain Sutter Health has donated $500,000 to the American Red Cross as part of the relief efforts on the East Coast in the aftermath of superstorm Sandy. The damage caused by superstorm Sandy is indescribable," said Patrick Fry, president and CEO of Sutter Health. Our thoughts go out to everyone affected. We hope our donation brings comfort to our fellow Americans in their time of great need. In addition to the donation for Sandy-related damage, Sutter also reported that its employees raised more than $661,000 this year that will be donated to the California chapter of the March of Dimes. Sutter Health physicians, nurses and staff inspire us with the creative ways they support March of Dimes in Californiafrom community walks to engaging in our programmatic work and much more. Because of their vibrant spirit and our longstanding clinical partnership, more and more babies are getting the healthy start at life they deserve, said Karyn DeMartini, director of the March of Dimes in California.

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OPINION

Page 4

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A Neurosurgeon Turns Film Auteur

His Analysis of U.S. Healthcare is Worth Watching
Vivekanand Palavali, M.D., has it all. A neck in a roller skating accident was able to neurosurgeon who trained at the University dismiss the Affordable Care Act as damaging to of Chicago and practices in Flint, Mich., he is the country. the embodiment of the American Dream, As a matter of fact, one of the most someone who has made more than good trenchant observations about the U.S. since he immigrated from India in the healthcare system came from a Swede Palavali mid-1980s. interviewed. Sweden, of course, has Yet Palavali isnt satised. Despite making guaranteed access to healthcare. a comfortable living, he practices in one of Money makes the choice for them, she the most economically battered cities in the said of the Americans. U.S. The automotive industry As a result, Palavali mostly pulled out of Flint in the concluded that the U.S. system 1970s, and the Great Recession is much closer to that of a has caused the number of developing country such as his uninsured patients he treats to native India, where those with about double. money have access to decent I began asking myself, isnt hospitals and everybody else is anyone ashamed? America is the on their own. Palavali makes this richest, powerful nation in the poignant point by managing to world, he said. It spends close nd two homeless cancer to $3 trillion a year on healthcare. victims one in India, and one Where is the money going to? just footsteps away from Harvard To nd out, Palavali put University. himself behind the two digital cameras Palavalis lm has its aws; it By he owns. relies too much on the long-faded Ron The end result is a documentary Occupy movement for too much Shinkman source material, and spends too much called Bitter Pill: America & Healthcare In America. time visiting the ruined streets of cities Given Palavali served as Bitter Pills such as Detroit and East St. Louis, Ill. without director, writer, cameraman and narrator and tying them closely to his thesis. is not a professional lmmaker, he But overall, Bitter Pill is a better effort nonetheless created a remarkably clear than another lm about healthcare created by indictment of the U.S. healthcare system. a resident of Flint: Michael Moores Sicko. Bitter Pill is far closer to what you would Thats primarily because Palavalis narrative is see on Frontline than YouTube. backed by facts and isnt gummed up with Palavali traveled to ve countries for his smugness and stunts such as taking a bunch of research, and interviewed everyone from Americans to Cuba for a checkup. healthcare policy experts to an exotic dancer Bitter Pill is playing primarily in theaters in Las Vegas named Malibu. She in the Flint area, but it is streaming for free acknowledged that she entertains spinal today (Nov.1) at www.bitterpilldoc.com. If you have some time and bandwidth surgeons and other physicians, compliments available, I strongly suggest you watch it. You of the nations medical supply companies. may not agree with what it has to say, but it That is among the reasons, Palavali cohesively puts together many interesting facts concluded, that spinal fusion supplies cost about the unique business of U.S. healthcare about ve times as much in the U.S. than delivery, and presents them in an engaging anywhere else in the world. and informative manner. He also discussed the disinformation dumped onto the American people by politicians who foment fears that any Ron Shinkman is the publisher of Payers & expansion of healthcare coverage is the Providers. equivalent of European-style socialism. Which is how an uninsured patient of Op-ed submissions of up to 600 words are Palavalis who is on the business end of welcomed. Please e-mail proposals to $100,000 in medical bills after breaking her
editor@payersandproviders.com

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