HHS Assistant Secretary for Planning and Evaluation (ASPE) Report of $1.2 Billion in Savings: Take the Government's Word For It? Why It's Time for Third Party Peer Review of Obamacare Claims of Cost Reductions

Public servants enjoying a good spin

According to this U.S. Department of Health and Human Services: Rate Review Annual Report September 2013 from the U.S. Department of Health and Human Services' Assistant Secretary for Planning and Evaluation (ASPE), the federal government's scrutiny of proposed health insurance rates "saved consumers approximately $1.2 billion" in 2012

In other words, U.S. citizens: 1.  Health insurers: 0.  Or rather, the score is 1.2 billion to zero.

That's a lot of money.  When the DMCB reads the report, it's a credible manuscript that resembles the peer-reviewed medical literature. 

The problem: it doesn't and it isn't.

The DMCB explains.

Disease Management Care Blog readers may recall how Wellpoint's tone deafness turbocharged the inclusion of federal "rate reviews" in the Affordable Care Act.  In addition to hundreds of millions in state grants to bribe strengthen the states' regulation of health insurers, the law also required that proposed increase of 10% or more must be submitted to HHS and "justified."
 
While the DMCB suspects that rate approvals ultimately belong to the state insurance regulators, HHS' new power is the threat of public humiliation from posting the health insurers' rate requests, their actuarial justification and a determination that the rate is "unreasonable."

It was presumably this threat that led to the initial requests being "reduced or denied" to the tune of $1.2 billion  When the requested amounts were compared to the implemented amounts, there was $311 million in savings in the individual insurance market and $866 million in savings in the small group market.

As the DMCB understands it, the data was from health insurers in 47 states that were submitted on a quarterly basis. Rate submissions had to be "cleaned" to correct "filings that were out of scope, or contained similar or duplicative entries, missing or incomplete filings, or incorrect data on requested and/or approved rate changes."  154 rates were reviewed and 43 were "modified or rejected" in the individual market, while 136 were reviewed and 38 "modified or rejected" in the small group insurance market.

The DMCB's take:

The style and layout of the online ASPE report appears to be taken from the peer reviewed medical literature, such as the New England Journal of Medicine or Health Affairs.  Unfortunately, the resemblance ends there, because everything published in the Journal or in Health Affairs is subjected to external third party review.

While peer review is certainly not perfect, it's the best we got.  As this page shows, Journal editors take the threat of conflicts of interest quite seriously while they rely on external volunteer and expert reviewers as the "lifeblood" of journalistic integrity. As anyone who has submitted a paper for refereed publication knows, medical journal reviewers can be merciless nitpicking critics. While painful and certainly not perfect, the result is greater objectivity, transparency, clarity and trustworthiness.

As far as the DMCB can tell, the ASPE report has not been reviewed by external, unbiased third-party reviewers. While claims of $1.2 billion in savings is credible, the DMCB is worried that the data analysis was consciously or unconsciously configured or manipulated for maximum "spin." Since the folks who run HHS are understandably interested in the success of the Affordable Care Act, it's possible that the unnamed authors of this study configured the numbers to present the most flattering aspect of the rate review process.

Case in point?  At the very end ASPE report at the very end of the Appendix, there's this disclaimer:

"A limitation to this method for estimating savings by state is that it assumes that each affected enrollee in these plans paid the statewide average premium, which may not be likely when small numbers of enrollees are affected.  Another limitation is that the savings are applied to a full year of premiums, even though many rate increases go into effect mid-year.

In other words, there's a possibility that there wasn't $1.2 billion in savings.  Had this report been submitted for peer review, that weakness would have certainly been caught up in peer review and it's likely that another number would have been reported.

Bottom line: Because Obamacare continues to be implemented under ever-increasing levels of scrutiny (for example), it's time for outfits like ASPE to submit reports like this to independent journals for peer reviewed publication.  Just because it's the government doesn't mean we can take its word for it.

Image from Wikipedia

Follow-Up on Wellpoint's Proposed Rate Increase: Have Some Pie

Should the Disease Management Care Blog help itself to a heapin' slice of humble pie?

Recall that in a previous post, the DMCB more or less defended California insurer Wellpoint's excessive '39%' premium rate increase for some of its individual policies. Well, the California Department of Insurance brought in a third party to review the actuarial math behind Wellpoint's calculations and they found some alleged mistakes. The impact of aging on trend was "double counted" and the baseline risk factor trend was too high. As a result, Wellpoint has cancelled its premium increases, which means going back to the drawing board.

The DMCB isn't about to let a bad call get buried in its past bloggy archives. Better to tackle it head on and recognize that it made a bad call. It should have known there are two sides to every story.

That being said.....

a) there was nothing actuarial behind the Administration's criticism of Wellpoint during the health reform debate.

b) there's also an old joke that you can take all the actuaries in the world and put them end to end, they still won't reach agreement. One reason why the 3rd party actuarial review of Wellpoint is correct (and if you take the time to read it you'll see how complex this is) is because the California Department of Insurance says it is so.

c) if the DMCB is reading the report correctly, the indicated rate increase for all the Wellpoint products is still a whopping 15.2%. The only good thing about kind of rate increase is that fewer people will find it unaffordable - that is until health reform kicks in. That's when the subsidies will have to kick in and the taxpayers will find it unaffordable.

Yum.

Ms. Sebelius and Wellpoint's Rate Increases: Doesn't HHS Have Enough to Worry About?

Egads, doesn't Ms. Sebelius have enough to worry about?

Our HHS Secretary faxed a letter to California-based Anthem Blue Cross, expressing how 'disturbed' she was by 'unaffordable' rate increases 'as much as 39%' in the face of 'soar'ing $2.7 billion profits. She calls for greater transparency on the ratio of medical vs. overhead costs and urges Anthem to 'cooperate fully' with California's Insurance Commissioner, because [gulp!] she will be 'closely monitoring the situation.'

While the Disease Management Care Blog appreciates this latest example of perma-campaign mode political grandstanding, it would like to remind the HHS leadership that there is no national health insurance comissioner with jurisdication over state regulated plans. Ms. Sebelius' considerable administrative and political skills would be better spent addressing the government's 10.4% trend rate, relentless growth to the point of accounting for 50% of all health care costs, a budget increase in 2011 in excess of $80 million with close to 3000 additional FTEs, not having anyone at the helm at CMS, and a looming deficit that has perilous national security implications.

The DMCB hopes that Ms. Sebelius' puffery wasn't completely orchestrated by the White House's Four Horsmen and that she actually took the took the time to personally look at Wellpoint's 2009 financials. If she did, she'd know the company lost 1.4 milion members, mostly from its small group business. Operating revenue went down compared to 2008, the cost trend was high at 8.9% thanks to rising provider costs and investment income was lower. The DMCB suspects it all adds up to a toxic brew of premium increases due to a combination of higher medical costs and unfavorable underwriting: in the current economy, healthy persons that can do without insurance drop it, leaving behind relatively more sick persons with high health care costs. The DMCB wonders why no one has pointed out that a rate increase was the responsible thing to do in the face of relentless health system cost increases - unless, of course, you're willing to trample on State's rights, fudge entitlements, print money and borrow from the Chinese.

Ms. Sebelius can fuss all she wants. The there are only so many premium dollars to cover the cost, the State of California is in charge, and the Obama Administration's time would be better spent on dealing with bigger problems that it can actually do something about.

Current and future Medicare beneficiaries deserve better.

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Addendum:

For an update on how things can snowball (no pun intended for those of us living in the Mid-Atlantic), check out the investigative spleen venting in the Health Access WeBlog. The veteran Bob Laszewski has more middle-of-the-road perspective here at the Health Care Policy and Marketplace Review Blog.

The DMCB is going to double down and predict that, once the news cycle moves on, Anthem will quietly provide all its pricing information to all the various Committee Chairs, Senators, Commissioners, Commissars and Potentates. After a requisite amount of nit-picking and face-saving adjustments, the bulk of the premium increases will stand. That's because, in this particular instance, health care inflation and the political process are the real problems, not the health insurance industry.