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778
Sandy Praeger, an independent-thinking
Republican, is insurance commissioner of
Kansas. She gave Payers & Providers a wide-
ranging interview in early June.
In last weeks issue, we published her views
on the Patient Protection and Affordable Care
Act and the challenges for state ofcials who
have to implement it.
This week, in Part 2 of a conversation with
editor Duncan Moore, Praeger talks
about the response of insurers and
consumers in Kansas to the law,
Paul Ryans Medicare reform
proposal, and why access to health-
care is a right instead of a privilege.
What is the biggest problem facing
insurers in Kansas right now?
The biggest issue is the
continuing increase in overall
healthcare costs, which have to be
passed on. Some of them are facing
some premium issues with the new
provisions. They have to get rid of
lifetime limits, rst-dollar coverage,
and kids going back on parents
coverage up to the age of 26. That last one
isnt a big deal, unless theres a reason a child
cant get coverage because of a preexisting
condition.
That is combined with high unemployment.
A lot of people without jobs let their coverage
lapse. People who need coverage buy it, so
theres some adverse selection in the
individual market right now, more than
normal.
What are the major insurers in Kansas, and
their approximate market share?
Blue Cross Blue Shield of Kansas operates
in 103 of our 105 counties. The other two
counties in the Kansas City area are served by
Blue Cross Blue Shield of Kansas
City, plus 14 counties in
Missouri.
Blue Cross of Kansas has less
than 50% market share. The next
largest by market share is
Coventry. It started in Kansas as
Preferred Health Systems, or
PHS, owned by a Catholic health
system in Wichita. They merged
with Coventry a little over a year
ago. A long time ago, Coventry
bought the old HealthNet
system, which was based around
St. Lukes Hospital in Kansas City
and its physician groups.
UnitedHealthcare is fairly
signicant. To a lesser extent, Cigna and Aetna
and Humana.
How will the health reform act change the
business model of insurers?
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E-Mail
info@payersandproviders.com with
the details of your event, or call
(877) 248-2360, ext. 3. It will be
published in the Calendar section,
space permitting.
www.lakesidecommunityhealthcare.com
Midwest Edition
Healthcares a Right, Not a Privilege
Kansas Republican Takes Iconoclastic Stance
Continued on Next Page
Sandy Praeger
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Payers & Providers Page 2
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In Brief
U.S. DoJ Files Brief
in Planned Parenthood
of Indiana Case
The U.S. Department of Justice
weighed in last week against Indianas
recent law denying Medicaid
payments to Planned Parenthood
clinics.
In a brief led on behalf of the
reproductive health services provider,
the Department of Justice argued that
U.S. District Judge Tanya Walton Pratt
should give an injunction because the
state law contravenes federal law
regarding patient preferences for
Medicaid.
Planned Parenthood, which
operates 28 clinics in Indiana, of
which four perform abortions, was
singled out in a law signed in early
May by Gov. Mitch Daniels. The
organization typically receives about
$1.3 million a year in state money.
Federal authorities have taken a
dim view of the states policy. Don
Berwick, M.D., chief of the Centers for
Medicare and Medicaid Services,
warned state ofcials that they could
face penalties for not complying with
the Social Security Act, which allows
patients covered by Medicaid to select
any qualied provider that accepts
Medicaid payments.
The judge is expected to rule in the
case by July 1.
Physicians are Reluctant
to Treat Children on
Medicaid, Study Finds
Specialist physicians are discriminating
against children insured through
Medicaid, by denying them appoint-
ments or making them wait longer to
see them, according to a new study.
Researchers posed as parents of
children needing specialty care from
allergists, dermatologists, psychiatrists,
Continued on Page 3
NEWS
Sandy Praeger (Continued from Page One)
They will have a lot more customers. The
medical loss ratio limit will force them to
become more efcient. Its going to ensure
that, of the premium money policyholders pay
in, 80% or 85% is going to go to both
healthcare expenditures and quality
improvement activities. Thats a good thing.
What kinds of market behaviors or responses
are you seeing in this state in the lead-up to
full implementation of the ACA?
Theyre cutting back on agent
commissions. The agent community is looking
at that. Theyre in a wait-and-see mode.
The companies are trying to build as much
reserve as they can right now. When you take
away medical underwriting, they have to take
all comers. There will be a risk management
component of the new law, rules yet to be
determined. Theyre just nervous. They also
dont know what the rules are going to be.
In the long run, if everybody has access to
private insurance, and companies are com-
peting on a level playing eld, it will be bene-
cial to them. Theyre not opposed to this.
Well, if they support it, theyve been mighty
quiet about it.
If they were opposed, we would be hearing
it. They feel they dodged a bullet. It could
have been a national exchange. That would
have beneted the large national companies.
They saw that would potentially lead us more
down the road to a single payer, where there
wouldnt be much need for them.
They recognize that getting everybody
covered is a good business model for them.
What are you hearing from consumers?
Theyre confused. They dont know what to
believe. Some are wondering if this law is in
effect. It is, sort of. There were early benets:
Kids staying on parents policies, rst-dollar
coverage. The big benets havent accrued yet.
I think consumers are still wondering what
its going to mean for them, unless they were
already beneting.
As an elected insurance commissioner, how is
your job different from that of an appointed
commissioner? How many elected
commissioners are there in the U.S.?
We have 11. The advantage is that I answer
to the voters, to the citizens that our
department is charged to protect. Its my only
focus. If youre appointed, then youre part of a
governors cabinet. Most appointed
commissioners feel they cant get too far out in
front of their governor. They have to wait until
its a priority of the governors ofce.
How does being married to a surgeon affect
your thoughts about health care, insurance,
and regulation?
It gives me a lot of insights. I frequently will
tell stories that I get from my husband. My
favorite lately is talking about why fee for
service has to change. Mark, my husband, is
the rst to acknowledge the faults in the health
system. He does not believe in physician-
owned facilities. He thinks that creates all the
wrong incentives. You should be rewarded for
patient care, not for equipment that you own,
like MRIs.
What do you think about Wisconsin Rep. Paul
Ryans proposal to restructure Medicare and
make it a more consumer-driven kind of
insurance?
I think it shifts the cost to our Medicare
beneciaries. Medicare is not a welfare
program, its a retirement program, a pension.
People contribute through Social Security to
have that benet. It really is a major
restructuring.
I dont think its a good idea to have
Medicare recipients go out in a voucher
program. Are they going to have guaranteed
issue? Medical underwriting? I think there are
a lot of questions about it.
Changes in the Medicare program need to
be on the table. It is running out of money. I
dont think privatizing it is the answer.
Do you have an opinion about the McKinsey
study showing that many employers will
possibly drop health insurance?
I have not read the report. Ive had
discussions with folks, some of whom feel it
has exaggerated, overstated the potential. We
know companies have wanted to move away
from dened benet to dened contribution,
and the exchange would facilitate that. They
would give their employees a certain amount,
and say go to the exchange.
Any last words?
Whether you like the new law or not, at
least we focus on getting everybody covered. I
think having access to healthcare services is as
important in our community as being able to
turn on the faucet and knowing its safe to
drink, as knowing that you have police and
re protection. I think healthcare is absolutely
a right. It should not be a privilege. Thats what
we do in a civilized society. We come together
to provide those services to make sure we can
all share in the American dream.
!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Page 3
Payers & Providers
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NEWS
In Brief
or orthopedists. They called each
doctors ofce twice, once saying they
had private insurance, and again
saying they had Medicaid. Specialists
declined to give appointments to 66%
of the Medicaid children and 11% of
the privately insured children. At
ofces that accepted both, the
Medicaid children had to wait an
average of 42 days, and the privately
insured children had to wait 20 days.
The study was performed in Cook
County, Ill., the countrys second most
populous county, which includes
Chicago. It was regarded as probably
reecting barriers to care for the
Medicaid population across the U.S.
The study by lead author Karin
Rhodes, M.D., an emergency
physician at the University of
Pennsylvania, was published in the
New England Journal of Medicine.
The study was paid for by the
Illinois Department of Healthcare
and Family Services under a consent
decree from a lawsuit alleging that
poor children in Cook County were
not receiving equal access to basic
medical care.

Catholic Health System
Restructures in Plan
for Future Acquisitions
Catholic Health Partners of Cincinnati
is restructuring itself into two
divisions: a North Division and a
Central/Senior Health and Housing
Service Division. The system recently
slimmed down from four divisions by
selling off its Northeast Region in
Scranton, Penn., and it expects to sell
its Tennessee-based division by the
end of the year.
The new structure should help the
system to develop integrated delivery
networks through physician
partnerships, and focus on growth
opportunities that will extend our
ministry, according to CEO Michael
Connelly. We see the potential for
numerous acquisitions and mergers
now and in the future, and we are
actively pursuing new growth that will
enhance our mission in both the short-
term and long-term.
SSM Health Care will no longer hire people
who smoke or chew tobacco at its seven St.
Louis area hospitals, the health system
announced last week. Applicants for work will
be asked whether they use tobacco, and those
who answer yes will be dropped from the
hiring pool.
The hospital system will also require
employees to get u vaccinations. The two
policies go into effect July 1.
We need to take a leadership role on
these major public health issues, said Sister
Mary Jean Ryan, FSM, Chair/CEO of SSM
Health Care, in a statement. Not hiring
tobacco users is a rst step toward creating a
healthier work force, and mandatory u
vaccinations will help protect our patients, our
colleagues, and their families.
State law in Missouri permits SSM to take
these actions. In the other states where SSM
operates hospitals and clinics, Illinois,
Oklahoma, and Wisconsin, the health system
will press for enabling legislation.
People in St. Louis deluged the comment
board at the St. Louis Post Dispatch with com-
plaints about the edict, arguing that it
interfered with personal freedoms and would
lead to the creep of employer control over
private life.
Asked about enforcement, system spokes-
man Chris Sutton said: We will take
applicants at their word. However, not being
truthful on an application is grounds for
dismissal.
As for the vaccine policy, he said, if they
refuse to get vaccinated and they have not
submitted a medical or religious waiver as
required by the policy, they will have 45
calendar days from the compliance date to get
vaccinated or they will be dismissed.!
A cloud of skepticism began to surround a
widely publicized study by McKinsey &
Company last week after the consulting rm
refused to give more details on how it
conducted a survey of employers and their
response to the federal health reform law.
An article in the McKinsey Quarterly,
published online on June 7, described a
radical restructuring of employer-sponsored
health benets that will ensue in the wake of
the health reform law last year. The shift away
from employer-provided health insurance will
be vastly greater than expected and will make
sense for many companies and lower-income
workers alike, the article said.
McKinsey claimed that 30% of the 1,300
employers it contacted in a survey would
denitely or probably stop offering employer
sponsored insurance in the years after 2014,
when the law goes into full effect. Among
employers with a high awareness of what the
law includes, the proportion will be closer to
50%.
McKinseys ndings contradicted those of
several others studies analyzing the same
problem, and researchers and congressional
Democrats, as well as the White House, asked
to see the rms raw data.
But McKinsey, following its custom,
declined to release the survey methodology or
to explain how it arrived at its surprising
conclusions.
McKinsey Study Draws Fire in D.C.
Firm Rebuffs Questions about Survey Methodology
HEALTHCARES BEST ADVERTISING VALUE
]
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SSM Wont Hire Tobacco Users
Missouri Hospitals Will Ask Applicants if They Smoke
!!!"#$$!%&!'(&)*+!,!'*-./0)*+!'1%2/+3/456!778
Payers & Providers Page 4
Two weeks ago, McKinsey & Company
produced a report suggesting that 30% of
employers are likely to drop employee health
insurance once the federal health reform law
goes into effect in 2014. (See article on p. 3)
The number of employers projected to drop
coverage in the McKinsey study is consistent
with what the Midwest Business Group on
Health (MBGH) and others are predicting.
However, dropping coverage, while seemingly
a simple decision for many small employers,
actually could result in higher
costs for them over time.
Numerous studies have
shown that people with health
insurance are healthier than
those without coverage. Access
to preventive, acute, and chronic
care services allows people to
maintain their health.
Alternatively, an employer that
drops insurance exposes itself to
greater absenteeism, loss of
productivity, and the subsequent
reduction in protability if
workers cant perform their jobs
because of illness.
Earlier this year, MBGH
released the results of a national
employer survey on health reform. The ndings
indicated that while employers believe the law
will increase their benet costs (through its
administrative and tax provisions), they also
believe that keeping workers healthy and
implementing strategic health management
approaches are necessary to reduce costs.
Its been suggested that in those instances
where employers drop coverage, they will raise
the salaries of workers so they can purchase
insurance benets for themselves in the newly
created Health Benet Exchanges. However, in
the MBGH survey, while 22% of all employers
said that it is likely that they would consider
dropping benets altogether, only about 20%
indicated they will raise worker salaries to help
pay for individual coverage.
The lack of an added boost in salaries, in
combination with the small penalty for
individuals who decide not to obtain coverage,
may lead many workers to hold on to their
money until they are in need of care. Then they
will obtain insurance, and later drop it when
their care is completed. This will result in more
emergency room visits, increased sick days, and
extended hospitalizations, as people let their
health deteriorate until it cant be ignored. For the
employer, this will increase lost time and
replacement worker costs.
In response to this scenario, many employers
are recognizing that to keep their work force
healthy, they still must offer health management
programs and resources, even if they decide not
to provide insurance. Among respondents in the
MBGH survey, almost 60% of all employers stated
that they will expand wellness programs in light
of the increased incentives the
new health reform law allows.
For the past 20 years, weve
been working with employers on
their health benet challenges.
Its become evident that to stay
competitive in the global
marketplace, employers need to
get a handle on the high cost of
health benets and services. But
to keep their health benet costs
low, employers dont need to
drop coverage. Instead they
should consider an extreme
makeover in their own house
of benets.
The foundation for this new
house must be built on
knowing the covered populations needs and
maintaining a healthy work force. As University
of Michigan Professor Dee Eddington says, an
employer must keep the healthy people healthy
and keep the sick ones from getting worse. We
now know that the 18% to 20% of people with
chronic disease who are responsible for 85% to
90% of health costs is not a static group, but one
that turns over each year.
Employers dont offer benets because theyre
altruistic. They do so to retain and recruit talent,
as well as to maintain a healthy and productive
work force. Health benets must be seen as an
investment in human capital, not an expense.
Dropping coverage is a limited cost-reduction
strategy, which will not be enough to keep an
employers costs down or ensure protability.
OPINION
Dropping Coverage Isnt the Answer
In the End, Employers Need a Healthy Work Force
By Larry Boress
Larry Boress is president and CEO of the
Midwest Business Group on Health in Chicago.
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>1)+0(&6!=2)(+)!A(22!DNOOG"ENH"PQ#? Op-ed submissions of up to 600 words are
welcomed. Please e-mail proposals to
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MARKETPLACE/EMPLOYMENT
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luyors & lrovdors und MCCL prosont koundtubo lntoructvo. lt dobuts Murch 20|| n tho luyors & lrovdors Nutonu odton.
Cur roudors uvuys vunt to knov vhut s on tho mnds ol houthcuro's c-suto oxocutvos. Conloroncos und trudo ovonts olton
ony uov lor crucu momonts to ntoruct vth thoso thought oudors. \th koundtubo lntoructvo, you' cut through tho
promnuros und mmodutoy knov vhut's on thor mnd.
Lvory koundtubo lntoructvo v louturo u C&A sosson conductod by luyors & lrovdors lubshor kon Shnkmun. Hs
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1opcs lor upcomng koundtubo lntoructvos ncudo:
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*New England Journal of Medicine, 2004.
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