'ALL-PRODUCTS' DROPPED. Aetna will drop its all-products clause nationwide and pay California physicians what the California Medical Association describes as actuarially sound capitation rates.
The Dec. 19 announcement expands earlier policy decisions Aetna has made around the country, beginning in Connecticut and Georgia. The agreement in California follows six months of negotiations between the nation's largest insurer and the CMA, the nation's most vocal opponent of managed care.
Aetna CEO Jack Rowe, M.D., says there is a lack of respect in the relationships between physicians and payers. He says that's among the reasons Aetna and the CMA will develop an independent committee to review policies and resolve disputes.
CMA President Marie Kuffner, M.D., says that while physicians didn't get all that they wanted, they didn't give up anything. "These are very significant gains for physicians," she says. "But the CMA wants to be clear. This is just the first step. There is still much to be done. If we do not achieve a fair arbitration process here, we must--and we will--achieve it elsewhere."
AETNA TO CUT 5,000 JOBS. Days after completing the sale of its nonhealthcare business to a Dutch firm, Aetna announced plans to cut 5,000 jobs over the year.
The majority of the cuts will come through attrition, although some will come as a result of job elimination.
The company had lower-than-expected earnings in the second quarter and posted third-quarter earnings that were lower than the previous year. Officials blame the rising cost of healthcare and increased utilization for the financial difficulties.
Over the summer, Aetna said it planned to exit most of its Medicare+Choice markets. In the Dec. 18 announcement, officials said they also will exit an undisclosed number of unprofitable commercial markets.
MORE UNINSURED SEEN. Despite the historic decline in the number of Americans without health insurance, and even with continued economic prosperity, the ranks of the uninsured are likely to rise, according to two researchers from Georgia State University in Atlanta.
The Census Bureau says there were 42 million Americans without health insurance in 1999, down 1.7 million from the year before, the first drop since the agency started keeping track in 1987. But the drop was the result of an unusual short-term confluence of two factors, a strong economy and a decline in healthcare inflation, the researchers conclude.
William Custer, assistant professor at the GSU Center for Risk Management and Insurance Research, and Patricia Ketsche, assistant professor at the GSU Institute of Health Administration, worked under funding from the Health Insurance Association of America. They projected there will be 48 million uninsured Americans by 2009 with continued growth in the economy and 61 million if the economy falters.
"There are strong indications healthcare inflation is returning with a vengeance," Ketsche says.
DRUG COSTS DRIVE INFLATION. Healthcare costs rose by 6.6% in 1999, largely due to increased spending on prescription drugs, according to data compiled by the Washington-based Center for Studying Health System Change.
Higher drug costs accounted for 44% of all healthcare price increases in 1999, while physician fees were responsible for 32% of new expenses, the center says.
About 21% of the increase was due to hospital outpatient spending, though costs of hospital inpatient services remained essentially flat in 1999. The 6.6% increase is about 2 1/2 times the annual average of 2.4% between 1993 and 1997.
The study also says health insurance premiums grew 8.3% in 2000, compared with an average annual growth of 2% between 1994 and 1998.
"Judging from past cycles, the phase in which premium increases exceed increases in underlying costs will probably continue for at least another two years," says HSC President Paul Ginsburg.
AMA'S RED INK. The AMA will post an operating loss of at least $6.6 million for 2000, marking its fourth straight year of deficits. The nation's largest physician organization also will lose about 3,700 members for the year, according to an economic forecast released last month at the group's interim meeting in Orlando, Fla.
The drop in membership, one of the largest in recent years, resulted in about $4.1 million in lost revenue and contributed heavily to the Chicago-based organization's bleak overall picture. Executives say membership is a top priority for 2001.
E. Ratcliffe Anderson, M.D., who has vowed to boost membership since his hiring in May 1998 as executive vice president, says the AMA now has about 290,000 dues-paying members, the lowest number since the mid-1990s. At the end of 1999, the AMA's membership list totaled 293,695, the highest in five years.
The AMA recently began a lifetime membership plan with annual dues based on age. The AMA represents about 37% of America's doctors.