WASHINGTON, Jan. 18 (UPI) -- Health insurance companies will find themselves in a more defensive mode under the new Democratic-led Congress -- with a plan to raid the coffers of Medicare Advantage plans rumored to be at the top of the Dems' hit list this year.
But budget constraints will likely spare health plans from any dramatic changes to the marketplace, policy analysts said Thursday.
At an industry-sponsored news conference on 2007 legislative and market trends, the tone was reassuring to health plans nervous that Capitol Hill's changing of the guards would mean an inevitable gutting of the private sector's role in delivering the nation's healthcare, to make way for increased government activism.
"(Private health plans) will be much more on the defensive this year," Dan Meyer, vice president of the Duberstein Group and who served as chief of staff to former House Speaker Newt Gingrich, told a conference sponsored by industry trade group America's Health Insurance Plans.
However, federal budget realities "will prevent wholesale change that could be detrimental to the industry," he said, noting that the Democrats said they would require that any increased spending be offset by savings in other areas.
What's more, many Democrats in the last election ran as moderates, Meyer added, and the new Democratic leadership will not want to repeat the mistake of the past GOP-dominated Congress by "overreaching."
Still, Medicare Advantage plans -- Medicare HMOs that are viewed by many Democrats as over-funded industry cash cows -- seem firmly in the Democrats' crosshairs in 2007, he said.
"Democrats are not thrilled with Medicare Advantage plans. They would like to scale them back (and) free up a pot of money to pay for other things they want to do," Meyer said.
In fact, recent data suggest the plans are fed a staggering 119 percent of the funding levels that fee-for-service programs like traditional Medicare are allocated, he noted.
Robert Hayes, of the Medicare Rights Center, told United Press International that the time has come to redirect some of the funds poured into the government-sponsored HMOs.
"Medicare Advantage plans are wastefully overpaid. More is paid for a program that was theoretically put in place to save money," Hayes
told UPI. Congress should force private plans to compete on a level playing field with Medicare by setting the program's funding at what it would take to cover the same beneficiaries under traditional Medicare, he said.
The squeeze on Medicare Advantage -- a favorite son of the Republicans who have seen the program as a way to lock in a private-sector role in government healthcare -- would likely come as part of a budget resolution bill, which Meyer predicted will be an elusive goal in the new Congress.
He also said he believed the Democrats' bill to open up Medicare's Part D prescription drug benefit for government price negotiations would have to be "modified a great deal" to pass and still, a presidential veto looms.
With a House bill to allow Medicare price negotiating already passed, Meyer said a senate bill on the same issue would likely have a more moderate tone, with the Part D law's "non-interference" provision struck out, and Medicare granted negotiating power only as an option.
Sen. Charles Grassley, R-Iowa, has vowed to filibuster on any bill that goes further, Meyer said.
He also predicted other Republican pet healthcare issues like association health plans and health savings accounts (HSAs) would likely stagnate in 2007. "We'll see very little movement on these issues in the Democrat-controlled Congress," he said.
Meyer added there would be ample room for bi-partisan consensus on issues like covering America's uninsured, an topic that sources say will be included in President Bush's State of the Union address Jan. 23.
Meyer said the Senate will be particularly fertile ground for consensus on healthcare issues, as minority-party lawmakers traditionally wield more influence, compared to those on the House side.
In addition, the new head of the Senate Finance Committee, Max Baucus, D-Mont., has a good rapport with former committee head and Ranking Member Charles Grassley, Meyer noted.
However, the Republicans are now facing a "tremendous vacuum" in terms of leadership and expertise on healthcare, with the loss of key GOP lawmakers like Sen. Bill Frist, R-Tenn., and Rep. Nancy Johnson, R-Conn., he said.
Diane Davies, a health plan analyst with Deloitte Consulting, who also spoke at the conference, identified a number of industry "game changers" to which plans will have to adapt to stay competitive in 2007 and beyond.
For example, the line is blurring between financial companies and health insurers, with firms like American Express offering consumers a card with which they can manage both investment accounts and an HSA, she said.
Retail medical clinics -- offering routine services at set prices and evening hours -- are springing up in pharmacies across the country, Davies said, and some health-plan giants like Wellpoint are already getting into the latest game, "concierge medicine," featuring wellness centers staffed with "life advisors" that offer consumers the ambience of a luxury health spa, with diagnostic testing thrown in.
Also, "medical tourism is becoming quite a business," she said, noting that that niche is expected to grow to $2.3 billion by 2012.
Another growth area for health plans is medical management, where insurers give consumers health information directly and offer reward-based programs to enrollees to encourage healthy living, Davies said. That market is currently valued at $4 billion and expected to double within the next five years, she noted. "Consumers are reaching beyond providers for healthcare information," Davies said.
If a health plan can be viewed as playing a coordinator role in a plan enrollee's health and it gains the trust of the consumer, "this could be a powerful role for health plans," she said. And is there any evidence that consumers trust health plans to play that role? "No," Davies said.
These trends will have a strong impact on the way health plans do business, including their reimbursement policies, she said.
The big question for the plans will be whether to confront their new business rivals in head-to-head competition, or to instead partner with companies offering the novel services, Davies added.
She also predicted a consumer backlash from the cost-shifting involved in HSAs, that could cause employers to move away from that market. Nonetheless, HSA uptake among companies with 20,000 workers or more is expected to climb to 39 percent this year and to more than 40 percent in 2008, Davies said.
While these trends coupled with a shifting political climate have made for more market uncertainty going into 2007, "uncertainly is not an excuse for inaction," Davies told the conference.
Health plans can deal with a more ambiguous marketplace through planning ahead and looking beyond traditional markets, she said.
