Blumner: The smart business of health

Geraghty is right on health care reform, but what of his own $6.8 million package?

Star Tribune.com

Geraghty is right on health care reform, but what of his own $6.8 million package?

It isn't often you hear a buttoned-down, well-compensated health insurance executive sound like some combination of TED talk and the Burning Man festival. But Patrick Geraghty's ideas for reforming the health care system evoke elbow patches and tie-dye as much as a starched collar.

The chairman and CEO of Florida Blue, the state's largest health insurer and a not-for-profit company, told the Tampa Bay Times editorial board last week that "wellness and prevention" are key to containing health care costs. He wants to create financial incentives for patient-centered care, even if that means paying primary care physicians more. And he is flat-out opposed to Florida's decision to reject Medicaid expansion for nearly a million poor, uninsured adults.

This is where he's picked a fight with Florida Republicans. Specifically with House Speaker Will Weatherford, who on principle rejects the idea that government should extend a helping hand to able-bodied adults in need.

Republican leaders in Michigan just voted to expand Medicaid, joining their fellow Republicans in Arizona and North Dakota in putting people's health care above politics. Not in Florida.

Geraghty points out there are strong economic incentives to expanding Medicaid regardless of ideology. Florida would receive $51 billion in federal dollars over 10 years. Money that the state's hospitals were counting on.

"Underfunded health care systems always find a payer," Geraghty says, meaning the cost for the state's uninsured will now shift to people with private insurance (his customers) and taxpayers.

Call it the Weatherford Tax.

In other ways, too, Geraghty is at odds with the Florida Republican leadership's handling of health care reform. "The state should have had a state exchange," he says. Instead, Florida is leaving it to the federal government to build its online health insurance marketplace that opens Oct. 1.

"The state should be regulating the insurance rates in the exchange," Geraghty declares. A law that passed the Republican-controlled Legislature last session suspends the power of Florida's insurance commissioner to reject unreasonable rate hikes on health insurance for the next two years — letting insurers set their own rates.

Call it the Legislature's Anti-Obamacare Tax.

Geraghty talks a lot about containing costs while bettering care. He sees the business model of fee-for-service medicine as broken. Florida Blue has established "Patient-Centered Medical Homes," where efficiency and quality are rewarded.

For instance, physicians are paid more for evening-hour staffing so patients can see a doctor rather than take an expensive trip to the emergency room. So far, the 2,200 physician participants have seen emergency room visits decline 12 percent.

Geraghty envisions a future where doctor visits are conducted through an iPhone.

But all is not rosy for Florida Blue customers. The company is raising average premiums more than 31 percent for mid-level coverage on the coming state online exchange, even as health care inflation is in the low single digits. Geraghty explains that this is due to more generous coverage and a compression of rates between old and young policyholders required under health care reform and because he believes not as many young people will buy insurance as predicted, which would cause the insured pool to be older and less healthy. But without Florida's insurance regulator policing rates, opportunism could also play a part.

Florida Blue is also adding to the burdensome cost of health insurance for its 4.2 million customers through Geraghty's outsized salary and benefits. Last year he received $6.8 million in compensation. His directors were paid an average of more than $180,000 according to the Palm Beach Post.

Compare Geraghty's compensation to Kathleen Sebelius, the secretary of Health and Human Services, who along with other Cabinet secretaries earns about $200,000 — and she's charged with implementing Obamacare nationwide.

Geraghty is on the right side when it comes to health care reform, but reform should include re-examining compensation for health care executives.

Correction: This column has been revised to reflect Florida Blue's correct tax designation. It is a not-for-profit entity.

Blumner: The smart business of health 09/05/13 [Last modified: Friday, September 6, 2013 7:29pm]

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