Tuesday, April 03, 2007

"Responsible" Bush Cuts Payments to County Hospitals while Upping Medicare Funding for Private Insurers

The Center for Medicare and Medicaid Services recently announced two regulatory decisions. One increases payments to private insurance companies for their Medicare Advantage plan recipients, while the other cuts funding for government owned hospitals serving the uninsured. Health insurance stocks rose broadly on the announcement. In contrast local and state owned hospitals have no stock to fall.

The move to increase payments to health insurers for Medicare Advantage took the market by surprise. Recent reports indicated a payment cut to be on tap, rather than a payment increase.

Should Susan Bayh, the wife of Senator Evan Bayh of Indiana, waited before flipping her WellPoint stock options? She turned them in January for a net gain of $112,000. Had she made the same move today, Susan could have netted an additional $14,000.

Hospitals under the Bush plan stand to do much worse than Mrs. Bayh. With the regulation change, the feds expect to save nearly $4 billion over 5 years. How much will private insurers get under their fee increase? I’m still searching for that number, but if I find it you’ll be the first to know.

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