COSA's Hollow Health Insurance Promises

Memo dated October 27, 2011 to Mayor Alvin New and San Angelo City Council members:

"At the December 7, 2010 Council meeting where the premium adjustments were approved for calendar year 2011, there was discussion regarding a concerted effort to involve employees and retirees in the process for 2012 rates."  -  City Human Resources/Risk Management Director Lisa Marley

Four days before Council meets on November 1, the public and employees received notice health insurance for 2012 was on the agenda.  The public had to go to the City's web site and pull up the agenda, which lists health insurance as item #11, after an Executive/Closed Session.  Employees received an e-mail, informing them health insurance would be the first item on the agenda.

Having offered public comment numerous times on health insurance, I would not have shown up at 9:15 am,the time given to employees.  In my mind the City released documents within hours of one another, guiding people to appear at what could be viewed as vastly different times.  Will one group be shortchanged?  Will it be the citizens of San Angelo, supposedly at the top of COSA's organizational chart or employees, required to take vacation to appear and comment?

Here's the heading of the e-mail.  Note the date and time:

Friday, October 28, 2011 2:14 PM
Subject: Fwd: For City-Wide Distribution: New Insurance

Authorized for distribution by the City Manager's Office.

TO: All Employees
(Supervisors: Please print for those employees without email.)

How many employees got the e-mail before leaving work Friday, especially those without e-mail?  How long does it take to process a vacation request?  Are there limits on how many employees can be on vacation at one time?

Council promised to do better on this contentious issue.  More than once leaders said they would involve retirees in the process, an apparent lick and a promise.   

“A lick and a promise” means “a superficial effort made without care or enthusiasm.” To perform a task with “a lick and a promise” is to do the absolute minimum required, and often far less than that. 

Retirees were involved only at the last moment, much like the City's distributing the agenda, agenda packet and employee e-mail.

Major changes are afoot, given the city's plans to spend no new money on health insurance.  One provider will be chosen, Shannon or Community.  Benefits may fall.  Retirees and employees may have to find new primary care doctors and specialists in short order.  While the city surveyed employees on possible changes, it did not include early retirees, once again casting doubt on Council's "concerted effort."

There will be no time to conduct research on options, mobilize city retirees or the general public.  November 1 is decision day, given benefit enrollment is planned the week before Thanksgiving, November 14.  Council won't meet again until November 15.  The COSA health insurance train is gaining steam, ready to achieve ramming speed.  How many employees and retirees will be tossed about this Tuesday?

It's different than casting out 192 covered employees, retirees and dependents, Council's 2010 achievement.  Early retirees have to wonder when the City's promise of "lower premiums or better benefit" will come true.  San Angelo delivers retiree licks better than promises.

Those wishing to read the e-mail can do so below:

COSA HI Emp Letter

City Health Insurance: Month Late & Dollar Short?

San Angelo Human Resources and Risk Management Director Lisa Marley will present health insurance bids to City Council this Tuesday.  The City's health insurance Request for Proposal HR-02-11, originally specified a council presentation on October 4.  Besides being a month late, the city plans to spend no new money on health insurance in 2012.  Agenda item #11 states:

a. Discussion of proposals submitted for Request for Proposal HR-02-11 for benefits regarding health, dental, vision, basic life/AD&D, voluntary life/AD&D, post-65 retiree health and flexible spending accounts.

b. Consideration of selecting Benefit Providers related to Request for Proposal HR-02-11 and authorizing staff to negotiate a contract, and authorizing the City Manager to execute said contract and any related documents

As the City budgeted no new money for health insurance, bidders had to be creative.  How much did they slash coverage levels?  How much will the City shift in annual medical costs to employees (out-of-pocket)?

Given the city's obtuseness on the Early Retiree Reinsurance Program (ERRP), I don't expect leaders to come clean on such matters.  With Retired Police Chief Russell Smith busy writing a book, someone will have to delve into the details to get the complete picture.  I helped Russell with research in the past, but am severely time constrained for the next month.

Here's my wish:  Lisa Marley would answer questions Russell or I would normally offer.  Russell might ask for the third year in a row, "What's the real agenda here?  C'mon, fess up."  One might expect the city to offer a clear motivation to San Angelo citizens, especially given COSA's organizational chart.

Is Mayor New encouraging more retirees to return to the workforce to garner affordable health insurance for dependents?  Is he using health insurance to get Shannon to provide payments in lieu of taxes, known as PILOT money?

Who will be impacted by decreased coverage levels, by how much?  How many employees will need to change primary care doctors and specialists, once the city picks a side, Shannon or Community, in our divided healthcare town?  How fast will they need to find that new doctor given open enrollment is slated for the week before Thanksgiving?

Will early retirees ever see Marley's 2010 promise of "lower premiums or better benefits"?  Since the city qualified for ERRP, early retirees paid through the nose for dependent coverage in 2011 and face benefit cuts in 2012.

Despite the city's "concerted effort to involve employees and retirees in the process for 2012," retirees weren't involved until bids were ready to be reviewed, i.e. far too late in the game to influence budget policy or benefit design.  The four retirees include Stephen Brown, David Hermes, Curtis Milbourne and Teresa Special.  Maybe they can advocate for the use of ERRP funds to ease last year's severe pain.

Final thought:  Why does the city dangle a new time off benefit around health insurance changes?  Last year, it was a Veterans' Day holiday, a seemingly incongruous offering by Councilwoman Charlotte Farmer given the City's strapped finances.  This year it's time off in return for United Way participation at a “care share”, “double care share”, or greater level.  Why is the city prepared to spend over $57,000 on increased time off but nothing for health insurance?

I find the reference to double "care share" symbolic, as it could apply to 2012 out-of-pocket medical care costs for employees.  Should anyone wish to delve into the agenda packet, it is below.  As usual, it's light on the details.

City Council November 1, 2011 Agenda Packet

View more documents from City of San Angelo Texas

City Health Insurance: Late Addendums

The City of San Angelo planned to present its 2012 health insurance recommendation on October 4.  The topic didn't make any October Council agenda.

With no information I cruised the City's web site for requests for medical coverage proposals.  I found the original, plus a number of addendums.  One started with:

The City is very interested in a single provider option. If you are quoting medical, please make sure to include this option if available.

Of course the City is looking for the best deal, but there are other considerations.  Mayor Alvin New wants Shannon Medical Center to kick in Payments in Lieu of Taxes (PILOT).  Might the city use health insurance to arm twist Shannon?

Last year the city passed on small costs to employees but draconian increases to employee and retiree dependents.  The jury is out on changes for 2012, so says the City:

Q.  Is the City still planning to pay all of the employee's premium except for $16.00, or will there be another scenario?

A.  The City contribution for next fiscal year is unknown. This will be determined based on the bid results. 

The City told health insurance companies not to submit bids with higher premium costs.  That means bids should hold the line on costs, causing coverage levels to deteriorate significantly.

On retiree health insurance (Over 65) the city takes one stand:

Post 65 cost is $301.90 PEPM. That amount is broken down below:

$194.90 Hartford
$107.00 Rx (BCBS)
$301.90 Total

The $301.90 is the amount the spouse is billed if they are Hartford participants – the City makes no contribution to the spouse amount.

$16.50 is what the post 65 retiree pays, so the City’s contribution is $285.40.

Later the city stated:

There is no Post 65 RX plan

Clear? Only the bidders can say for sure.

Employees and retirees know the city wouldn't institute new taxes for 2011, effectively throwing 192 people off city sponsored health coverage.  For 2012 Council budgeted new money, which should cause employees/retirees to face greater out of pocket costs due to deteriorating coverage.  It will be a different kind of hit, but a hit just the same.

Update 10-21-11:  Walmart, where many COSA employees have a second job, announced cuts in health benefits for workers.  

Walk Today in Memory of Amy Pettit

Today's CROP Walk begins at 2:00 pm at the Pavilion next to Kids' Kingdom Playground.  The walk raises money to alleviate hunger, locally and beyond.  For years Amy Pettit walked, but she did so with special purpose for CROP.

As a young mother in the Depression, Amy and her infant daughter Lois knew hunger.  Times were brutal.  Daily, Amy's husband Al looked in vain for work.  The generosity of a neighbor, a bootlegger, kept the family barely fed.

Work eventually came, but Amy and Al never forgot their trials.  They looked for people to help and organizations that did likewise.  CROP fit the bill.

CROP walking became a family affair with daughter Lois and granddaughter Kristin.  The three would frequently raise over $1,000 each in a friendly competition.

Lois will walk today, in memory of Amy, who passed on August 4, 2011 at the age of 96.  Lois raised over $6,000, with $5,000 of that coming from heaven.  Amy, the longtime walker and alleviator of hunger, will walk in spirit with her daughter.  There's no place Amy would rather be.

Health Insurance Absent from COSA Council Agenda

The San Angelo City Council agenda is out.  Employee and retiree health insurance is absent from the October 18 agenda.  City Manager Harold Dominguez and Councilman Kendall Hirschfeld highlighted promising bids in early September.  The "good news" remains untold.  I remain curious how far benefits will be cut to achieve the city's no new money criteria.

Tom Green County Indigent Health Expenditures

The Tom Green County Indigent Health Program finished the 2010-2011 fiscal year. While no year end report has been filed and shared at a County Commissioners' meeting, a mid-year report was available. Of nearly $2.1 million the county is required to set aside, it spent $128,000 over seven months.  Add in the $1 million used to leverage Upper Payment Limit funds and the total grows to $1.13 million. 

If the first seven month experience held, the County spent $220,000.  That would leave $780,000 to transfer into the general fund.  I'll update the numbers when the County releases actual year end figures.  (Click in the image above to make it larger).

TGC Indigent Health: History Rewrite

Texas County Progress has a teaser on Tom Green County's Indigent Care Program, specifically collaborative efforts that helped the county spend money more effectively.  It reported:

In the spring of 2002, Tom Green County staff helped organize a Health Access Subcommittee. The subcommittee met approximately once every six weeks to discuss local health care problems and find resolutions for those problems within the committee. The subcommittee consisted of the local chief executive officers and chief financial officers of the two local hospitals, the administrator to the federally qualified health center, the social services director, pharmacists, physicians, the Health Foundation chief executive officer, county commissioners, the county judge, and the director of indigent health care. Together, the subcommittee was able to remove barriers in communications between organizations and better coordinate benefits for indigent health care clients, in addition to understanding the educational and financial crises of the impoverished of our community. 

Unfortunately, time may have clouded the author's memory of events. San Angelo's Health Access Coalition was formed in 1999.  It had three subgroups, Access & Financing, Health Promotion and Data/Information.  The Access/Financing subgroup offered to help the county, which consistently overspent its budget the prior three years.

Community leaders, especially Shannon Medical Center's Vice President for Legacy Insurance, provided specific recommendations for stretching dollars further.  This included covering nurse practitioners (in addition to physician assistants), paying for outpatient surgery vs. one night surgical hospital stays, and paying FQHC services vs. expensive ER visits.  Leaders also recommended searching for other payor sources for patients who might be retired military or have access to other benefits.

The vision and goal for Tom Green County Indigent Health Care was to provide all eligible clients more primary care and specialist services, as well as additional optional health care services, while lowering Tom Green County expenditures.

My recollection of the vision and goal was to spend money more effectively so more people could be covered with the same resources.  The HAC hoped income eligibility would increase from "the poorest of the dirt poor."  Instead the program has become Tom Green County's cash cow, replenishing reserves on an annual basis.  As the facilitator and minute taker for all HAC subcommittees, I want to be on record with a more accurate version of history.

City Misses Health Insurance Milestone

The City of San Angelo planned to present health insurance bids to elected leaders in today's council meeting:

They missed their milestone.  Thus, the public remains unaware of the magic used to keep health insurance rates steady or lower when other employers face 25% premium increases.

How much will benefits fall to hold the premium line? It remains to be seen.

Cozy Oil Spew Commission Keeps Alaska Open

Two members of President Obama's Oil Spill Commission had ties to BP and ConocoPhillips.  William Reilly had a vested interest in Alaskan offshore drilling via his $2 million in ConocoPhillips stock and board of directors position, which resumed when his commission submitted its report.  Fran Ulmer's University of Alaska received $30 million in donations from BP and ConocoPhillips. 

BP and ConocoPhillips stand to profit from increased Alaska oil production.  Conoco benefits if their leases strike black gold, but both firms profit if Shell's efforts produce, given Shell plans to use the Trans Alaska Pipeline, an 800-mile (1,287-kilometer) pipeline ending at Valdez.  Line owners include BP, Exxon and ConocoPhillips.

While Alaska's Chukchi Sea is covered in ice from early December to mid May, Valdez remains an open water port.  William Reilly, Bush I's EPA Chief, oversaw the Exxon Valdez disaster in Prince William Sound.  What role might he play in an Arctic oil spew?  For one, Reilly reset the drilling deck.

Point Hope doubts the oil industry's ability to operate without spills.  The tiny village depends on the sea.  While their doubts are well founded, another narrative shows few David's in today's world of financial and energy Goliaths.  Goliath William Reilly represents both kinds.

Roots of Pay for Performance in Healthcare

Pay for performance is sold as the panacea, the balm for America's health care ills.  One root of the movement came in an "Open Letter in Health Affairs 2003":

We call on the administration and congressional leaders of both parties to act in a bipartisan spirit on health care quality and to join the campaign to rally our underperforming health care system by empowering Medicare to take the further necessary and decisive steps to make pay-for-performance a national strategy for better quality. We should settle for nothing less.

The first two signers were:

Donald M. Berwick
Institute for Healthcare Improvement, Boston, MA

Nancy-Ann DeParle (MedPAc)
J.P. Morgan Partners LLC, Washington, DC 

Dr. Berwick is the Interim Chief of the Centers for Medicare/Medicaid, while Ms. DeParle, a former CMS chief and private equity underwriter (PEU), served as President Obama's health czar, before her promotion to White House Deputy Chief of Staff.

Dr. Berwick called incentive pay a toxic daisy chain while at the Institute for Health Improvement.  Pay for performance kills intrinsic motivation, the internal desire to perform good work.  People focus on what it takes to get the prize.  That behavior is frequently unethical.  This leads us to another signee of the P4P letter:

Gail R. Wilensky (MedPAC)
Project HOPE, Bethesda,

Wilensky's 2003 ManorCare bio showed her on the board of Advanced Tissue Sciences, Inc.; Gentiva Health Services, Inc.; Quest Diagnostics Incorporated; Syncor International Corporation; and UnitedHealth Group.

UnitedHealth Group employed the most pure form of incentive compensation, executive stock options.  Wilensky sat on the Compliance and Government Affairs Committee of UnitedHealth's board.  SEC filings described the committee's responsibilities.

The Compliance and Government Affairs Committee is responsible for the development of guidelines and procedures for ethical and legal compliance; ensuring adequate guidance, reporting and investigation processes; monitoring compliance with Company guidelines and ethics policies; and monitoring and evaluating corporate governance.

Corporate governance set and implemented executive compensation, thus Wilensky's committee bore responsibility for ensuring stock option pay remain ethical and legal.  Wilensky, on the board since 1993, missed nearly a decade of stock option cheating by CEO William McGuire, MD.  Bloomberg reported:

McGuire is the most visible CEO to leave his job in the continuing probe into options-granting practices at U.S. companies.

At least 144 companies are conducting internal investigations or are subject to government probes on the matter. Executives at two companies, Brocade Communications Systems Inc. and Comverse Technology Inc., have been charged by federal authorities with securities fraud. At least 30 executives and directors have left their jobs, and hundreds of lawsuits have been filed.

A repricing of McGuire's options from 1994 through 2002 to the high closing price of each year, assuming he hasn't yet exercised any of the options, would deny him a profit of $155 million, according to a Bloomberg analysis. From 1994 through 2005, McGuire realized $333 million in option gains.

Wilensky may not have known about pay for performance's toxic effects in 2003, but she clearly knew in 2006. 

Other letter signers were the beneficiaries of clean executive stock option pay:

John W. Rowe

Aetna, Hartford, CT

Leonard D. Schaeffer

WellPoint Health Networks, Thousand Oaks, CA

Corporate influence permeates the letter:

William L. Roper
University of North Carolina, Chapel Hill, NC

Roper was on the board of Davita, Medco Health Solutions, Luminex Corporation and Quintiles Transnational Corp at the time.  Nancy-Ann DeParle, signer #2, served alongside Roper on the Davita board.  She also had board slots for  Guidant, Accredo Health, Cerner, Triad Hospitals, Medco, Boston Scientific and Specialty Labs.

Toxic corporate pay practices will not solve the ills of America's healthcare system. While it's interesting to know who set the stage for today's non-solutions and how they may profit, it's not the least bit comforting.

Update 11-14-11: Nancy Ann DeParle's board track record reveals a number of investigative settlements, with more potential fraud investigations on the way.  The quest for quality will be undermined by extrinsic motivation schemes.

Update 5-30-23:  HuffPo's "The Golden Age of White Collar Crime" stated:

32 percent of American managers said they were comfortable behaving unethically to meet financial targets.