By Dick Miller
WE.CONNECT.DOTS: A large number of people in Western Pennsylvania may not be able to keep their doctor of choice after the end of this year. A war between Highmark and UPMC, two Pittsburgh-based goliath “non-profits” and ownership of state politicians are reasons why.
Almost since World War II, Highmark (then Blue Cross/Blue Shield) has been the health insurer for at least two-thirds of all insured in Western PA.
Despite the fact Highmark usually offered the highest quality, lowest rates and largest network of providers, the insurance company amassed billions in cash reserves to fight any assault to their empire.
In the meantime, UPMC (that is University of Pittsburgh Medical Center) began with a small number of major hospitals in the southwest before forming its own insurance company. UPMC became the largest provider by “merging” with about 15 community hospitals over the last three decades.
Since these smaller hospitals were also non-profits, “merging” became the operative word. The only cash UPMC laid out was in the form of severance agreements to parting local CEOs and wining and dining of members of community hospital boards. More a “takeover” than a “merger” because the surviving entity was everything UPMC and nothing local hospital, UPMC was able to develop a multi-billion dollar health care provider on the cheap.
Almost two decades ago, UPMC began attempts to make its version of health insurance a player in that market. Best UPMC could do is become a perennial second in the insurance market.
It is hard to tell which non-profit first became greedier. Highmark acquired a decent-sized group of hospitals in the Pittsburgh region. These hospitals had not fared well in competing with UPMC hospitals. Highmark assumed debt to take over these hospitals, but the moved gave UPMC an opening to escalate the war.
UPMC announced it would not renew the provider contract with Highmark Insurance at the end of 2014. UPMC learned Highmark’s entry into the hospital business would require it to “move” 40,000 UPMC patients to the new provider network to have a successful business model.
Two state representatives – Jim Christiana (R-Beaver) and Dan Frankel (D-Allegheny) introduced a bill that would require all larger health systems in state to accept insurance from any in-state company. The bill is not exactly being fast-tracked and UPMC political action committees have targeted both lawmakers.
Other efforts by state politicians to end this war have not been serious and even this one seems to have few sponsors. Both UPMC and Highmark executives write scads of campaign checks.
If state lawmakers and Gov. Corbett intended to take real action, they can just look to other states.
“Romneycare” passed in 2006 in Massachusetts. “Obamacare” is modeled after “Romneycare” in part — so much so — that the GOP nominee for President in 2012 had to repudiate the program. Losing your choice of doctor has not been an issue there.
In 2011 Vermont became the first state to lay groundwork for single-payer health care. “Green Mountain Care’s” five-member board is working to streamline into a single, unified system that will also set reimbursement rates for providers.
In nearby Maryland, hospitals are paid to keep people out of their beds and the rates are uniform for all procedures. Observers believe the most extensive health care reforms will occur in Maryland.
Officials in all three states put their version of health care reform ahead of Obamacare. Losing your choice of doctors has not been a major issue in these states.
Reform there has put a dent in the insurance business. Insurance companies and agents – large and small – also write campaign checks, which is why reform is not close in Pennsylvania.
Smaller, independent hospitals represent the only segment of health care currently being shafted by our state government. Gov. Corbett has delayed the implementation of his version of Obamacare, demanding that everyone getting coverage pay some sort of premium to his or her local insurance agent.
Corbett may delay $4-5 billion in subsidies from Washington for a year.
Bottom Line: The $4-5 billion would normally pay hospitals. Smaller, independent hospitals need those payments the most. Instead, all providers will see an increase in uncompensated care.
