Insurance executive warns about effects of health care reforms

Neil Waldron
Neil Waldron

Neil Waldron is no stranger to the health insurance industry. He’s worked in both the profit and nonprofit sectors over the past decade.

As chief marketing officer for Rocky Mountain Health Plans based in Grand Junction, he currently works for a nonprofit organization that’s been praised for its role in what could serve as a model for national health care reform.

But even as the local system is touted as a good start to a revamped national model, Waldron also sounds a warning about the effects of federal health care reform legislation.

As families have less disposable income moving forward, insurance companies must reduce expenses to keep premiums lower. And that means reducing labor and increasing automation, Waldron said at an event hosted by the masters of business administration degree program at Mesa State College in Grand Junction.

Insurance companies won’t be the only ones trying to reduce costs, either, Waldron said. Businesses required to offer health insurance to employees under the Patient Protection and Affordable Care Act might decide it’s better to drop coverage and pay the federal penalty rather than foot the bill for insurance.

Even employers looking out for the welfare of their workers could make that decision, he said. A business that carries a worker under the company health insurance plan for humane reasons might decide the business can eliminate the cost of insurance while also ensuring the worker remains covered. That’s because workers who purportedly can’t afford health insurance will be offered some kind of coverage by the federal government.

“Employers will drop insurance because there’s no reason and they can’t afford it,” Waldron said.

The idea of employer-provided health insurance coverage grew from efforts to retain good employees following World War II. The federal government imposed wage and price ceilings in an attempt to control inflation. Companies who couldn’t offer more pay instead offered health insurance coverage, which was relatively inexpensive at the time.

Waldron said Rocky Mountain Health Plans will likely be one of the few insurance companies that survive the financial directives under health care reform. In the end, he said consumers will have fewer choices when it comes to purchasing mandated health insurance.

“The bill is hostile to our industry,” he said, adding the new law “tells insurance companies what they can make and how they can perform.”

The legislation also represents a shift in power from the states to the federal government, he said.

The situation could improve if lawmakers were allowed to pass reform measures in piecemeal fashion. But now that the reforms are law, one answer could be to change some provisions of the law, Waldron said. “You need to be able to go in and fix it.”

In an interview with the Grand Valley Business Times in early October, Waldron said the health care reform law won’t be budget-positive despite what the Congressional Budget Office reported soon after the measure became law last spring. The potential for profits from the changes ignored the potential for further cuts in Medicare reimbursements for doctors.

As of press time, Congress was considering whether or not to allow a 23 percent reduction in reimbursements to take effect Dec. 1. Some primary care physicians in the Grand Valley say if the cuts occur,  doctors won’t be able to accept new patients who are covered only by Medicare. Meanwhile, the Medicaid program faces challenges of its own. The joint federal and state program that provides assistance for low-income patients can force doctors to swallow 70 percent of a patient’s bill for treatment. Medicare typically covers all but 40 percent of doctor fees.

Proponents of the health care law dismiss suggestions the system could result in rationing of treatments. But Waldron countered that a system that entices doctors to refuse new Medicare patients results in rationing by default. In light of that scenario, Waldron suggested that people who have older primary care doctors try to sign on with a younger doctor. If such patients don’t make the move to a younger doctor, they might find themselves without a primary care doctor when their current physician retires.

Waldron is familiar with perspectives from both the profit and nonprofit sectors of heath insurance. He has worked for RMHP for two years, but was head of sales and marketing for Aetna Insurance from 2001 through 2006. Between those two jobs, Waldron worked as senior vice president for Great West HealthCare in Denver. The organization covered 1.4 million members.  According to Waldron’s résumé, he helped grow profits in 2007 and exceeded 2008 revenue projections by 31 percent.

Rocky Mountain Health Plans has been praised by President Barack Obama — as well as in a recent story in the New England Journal of Medicine — for its role in what’s billed as a model health care system that provides quality care at reasonable costs.

The journal cited several statistics to verify the reputation of the Mesa County model: “According to the Dartmouth Atlas of Health Care, average per capita Medicare spending in Grand Junction was $6,599 in 2007 — 24 percent lower than the national average and 60 percent below high-cost Miami. … Moreover, Grand Junction scored above the national average on a number of measurements of preventive care, diabetes, asthma and other quality metrics.”

An unusual agreement between RMHP and the Mesa County Physicians Independent Practice Association ensures that RMHP is looped in with most of the local primary care physicians. In return, RMHP offers to compensate doctors at higher rates than they would normally receive from Medicare.

Mesa County also is recognized for collaborative efforts that offer health care services for patients ranging from infants to seniors in their final days of life and for those whose incomes fall below poverty levels.