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New reports by the California HealthCareFoundation have shown a significantdemographic shift among the states insuredthis decade, driven in part by the recent

steep recession.Although the percentage of the states

uninsured increased only slightly between2000 and 2008, the proportion ofCalifornias insured enrolled in Medi-Cal,the states Medicaidprogram, increased from13.8% in 2000 to17.4% a morethan 25% increase.Meanwhile, theproportion of thosewith private sectorcoverage dropped

from 60.8% in2000 to 55.6% inlast year a dropof more than 8%.Those enrolled inMedicare andindividual plans saw slightincreases, but overall they still representless than 10% of all those with coverage.

Some 20.6% of Californias populationis uninsured, according to the CHCFsSnapshot of the Uninsured. Thatscompared to 20% in 2000. However, the6.6 million people lacking coverage is far

more than any other state. Texas, which hasthe largest proportion of uninsured 28%

still has nearly 1 million fewer uninsuredthan California. Paul Frontsin, director of the healthresearch and education program for the

Employee Benefits Research Institute,which compiled and analyzed the datafor CHCF, believes much of the shifttoward public health plans has comesince the prolonged recession that began

in late 2007.There are fewerpeople working,and (theworkplace) iswhere most peoplestill accesshealthcarebenefits, Frontsin

says, adding thatthe trend has

acceleratedgreatly inthe pastyear.

Demographically, this isreflected by the breakdown in insuranceby age group. Among those likely to lackcoverage in 2008, 28% were between theages of 21 to 54, considered the primeworking ages. That compares to anuninsured rate of 24% in 2000 anoverall increase of nearly 17%.

A Shift For Californias UninsuredGovernment Rolls Grow; Private Sectors Shrinks

California Edition

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January 24-27

January 28

Calendar

17 December 2009

February 10

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E-Mailinfo@payersandproviders.comwith

the details of your event, or call(877) 248-2360, ext. 3. It will be

published in the Calendar section,space permitting.

Continued on Next Page

www.lakesidecommunityhealthcare.com

0

7.5

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CaliforniaU.S.

Total Self-Employed Public Sector 500+ Employees

Likelihhod of Workers Being Uninsured,

By Percentage And Employer Types

Source: CHCF

http://www.hasc.org/popup.cfm?task=description&module=1&template=19&title=%2520&imagefile=%2520&imagewidth=0&imageheight=0&imagealt=%2520&launchpage=events.cfm&ID=254072http://www.hasc.org/popup.cfm?task=description&module=1&template=19&title=%2520&imagefile=%2520&imagewidth=0&imageheight=0&imagealt=%2520&launchpage=events.cfm&ID=254072http://www.hfmaregion11symposium.org/http://www.hfmaregion11symposium.org/http://www.hfmaregion11symposium.org/http://www.hfmaregion11symposium.org/http://itupconference.eventbrite.com/http://itupconference.eventbrite.com/http://www.hfmaregion11symposium.org/http://www.hasc.org/popup.cfm?task=description&module=1&template=19&title=%2520&imagefile=%2520&imagewidth=0&imageheight=0&imagealt=%2520&launchpage=events.cfm&ID=254072

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Payers & Providers

Premiums have also skyrocketed.According to the CHCFs EmployerHealth Benefit s Survey, premiumsincreased more than 117% between 2002and 2009 more than five times theoverall rate of inflation. Thats putenormous cost pressure on purchasers,prompting some to drop coverage.

Anthony Wright, executive directorofHealth Access, a Sacramento-basedconsumer advocate, is alarmed by thetrend.

As more and more employersdropping coverage, in some cases, thepublic programs have been succeeding inpicking up the slack, but its at a rate thatis not sustainable, Wright says.

Meanwhile, those between the agesof 55-64 actually made coverage gains.Nearly 20% of this age group was likelyto be uninsured in 2000, versus 16.6% in2008.

Frontsin believes this is a reflectionof a segment of the workforce less likelyto relinquish their jobs than in the past.

This is a group that does not havethe means to afford retirement as theyonce did, and are particularly vulnerableto high premiums if they leave their jobs,he says. So they are doing whatever theycan to hold onto their coverage.

There have also been shifts amongminority groups. Among Asians inCalifornia, more than 20% are likely tobe uninsured, versus 16.6% in 2000.

Page 2

Latinos, traditionally the group most likelyto lack coverage, made some gains, from a33% likelihood of being uninsured in 2000to just under 30% last year. African-Americans also made slight gains ininsurance, and there was a slight dip amonCaucasians. Although Frontsin believes thechanges are not large enough to bestatistically significant, he attributes theshifts in part to acculturation by immigranpopulations.

A lot of immigrants are not use to theculture of health insurance. They eithercome from a place with a single-payersystem, or pay for it out of their ownpocket, he says. That changes whenpeople have lived here for a period of time

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Allergan Leads Fight Against BotaxActivists Scoff At Claims Middle Class Would Be Hit

In Brief

Childrens HealthImproves, Poverty a

Pressing Issue

A new study of the health ofCalifornias children suggests they

have made strides in the pastdecade, but the current recessioncould impede future progress.

The study, by the LucilePackard Foundation for ChildrensHealth, estimated that the physicaland emotional well-being ofCalifornias children increased 16%between 1995 and 2006. TheFoundation tracked 16 specificcategories, including educationalattainment, emotional well-being,health and safety/behavioralconcerns.

The research for the study wasperformed by Kenneth Land, asociologist on the faculty ofDuke

University.One category where children

lost ground was the economic well-being of families, which dropped21%. Land estimates that as manyas 27% of the states children willbe living below the poverty line in2010, or about $22,000 for a familyof four. That compares to a 2007poverty rate of 17%.

Given that the familyeconomics domain already wasfalling in 2006, we have to askwhat the long-term effects of themore recent Great Recession willbe on Californias kids, Land says.Although its impossible to

determine just how much povertywill affect the overall Californiaindexrates are likely to weighdown what, at least until 2006,were general improvements in childwell-being.

Land expects the poverty rateto moderate only slightly after nextyear, projecting an overall rate of24% by 2012, still far higher thanthe levels experienced before therecession struck.

Coverage (Continued from Page One)

Irvine-based biotech giant Allergan, Inc. hascome under re for a highly visible campaign

to stamp out a proposed 5% tax on cosmeticprocedures to help fund federal initiatives toexpand healthcare insurance coverage.

The tax, part of the proposed federalhealthcare reform legislation, would raiseabout $600 million a year. It would beimposed on patients seeking cosmeticprocedures, virtually all of which are electiveand paid for out-of-pocket. Reconstructiveprocedures would be exempt.

Allergan has a vested interest against anysuch tax: it manufactures and distributesBotox, the famous derivative of the botulismbacterium used to temporarily erase wrinkles

in the forehead and eyebrow. It also sellsimplantable devices for breast augmentation.

About 30% of the companys $4.4 billion inannual revenues is derived from botox sales,and about 5% from breast implants.

Aside from Allergan and its competitors,the tax has drawn opposition from virtuallyevery organization that represents physicianswho perform cosmetic procedures, as well asthe American Academy of Ophthalmology,the American Academy of Dermatology, andthe American College of Surgeons.

Continued on Page 3

NEWS

Continued on Next Page

Correction

It was reported in last weeks edition of

Payers & Providers that a $125,000-per-

physician loan forgiveness program to

recruit pediatric specialists to Orange

County offered six times the amount of other

state-run programs. That was mistakenly in

reference to programs aimed at allied

health professionals. The Steven M.

Thompson Physician Corps Loan Repayment

Program, operated by the CaliforniaMedical Board, offers up to $105,000 in

forgiveness.

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Palo Alto Medical Foundation and Mills-

Peninsula Medical Group agreed to mergeearlier this month after months of negotiations.

The merger was approved by 88% ofMPMG shareholders as part of a vote takenlast week. It will become nal on April 1. Themerged entity will be called the PeninsulaClinic and have more than 1,300 afliatedphysicians and 700,000 lives.

Our current business model is notsustainable. Our primary care physicians areaging just as the population is aging and it hasbeen difcult to recruit new primary carephysicians to the community, says MPMGChief Executive Ofcer, Brian Roach, M.D.Roach will become president of PAMFs Mills-

Peninsula division after the merger is

complete.Although ofcials say the Peninsula

Clinic will eventually become a fullyintegrated medical group, only 40 of MPMGapproximately 350 physicians will join anintegrated model. The rest will remain part ofan IPA model.

This provides a transitional model, saysCecilia Montalvo, a regional vice presidentfor business and strategy for Sutter Health.Both groups were afliated with Sutter priorto the merger, and that status will not changeaccording to Montalvo.

About 200 MPMG employees will havetheir positions shifted to PAMF, ofcials say.

Page 3

PAMF, Mills-Peninsula Okay MergerGroups Are Edging Toward Integrated Model

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NEWS

In Brief

Anthem Wins Medi-CalManaged Care

Contract

The California Department ofHealth Care Services has renewed

a contract for Anthem Blue Crossto provide managed care coverageto Medi-Cal recipients in Fresno,Kings and Madera Counties. Thecontract covers 163,000 lives.

Anthem did not disclose thevalue of the contract renewal, butdid say it was the third largestrenewal of a Medicaid managedcare contract in the U.S. during2009.

Anthem says it will launch anew pharmacy managementprogram for the enrollees.

Health Net Provides

2010 Guidance

Health Net projects that revenuefor 2010 will be between $13 and$13.5 billion, about 15% lowerthan its guidance for 2009, theresult in part of the pending salesof its plans in the eastern U.S.However, it does expect earningsto rebound.

The Woodland Hills-basedinsurer also projected that healthplan enrollment by year-end 2010will be flat compared to the end ofthis year. The company reportedtotal enrollment of 6.6 million at

the end of the third quarter,including 3 million enrolleesthrough its TRICARE contracts tocare for the dependents of currentand retired members of themilitary.

Health Net also projectsdiluted earnings of $1.90 to $2.00per share, including the impact of$69 million in pretax charges. The

company has reported 12-monthtrailing diluted earnings of 31 centsper share.

However, no organization has taken thebattle as far as Allergan: the company haslaunched a Website,www.stopcosmetictax.org, andcommissioned Princeton, N.J.-basedmarketing rm Opinion Research Corp. toperform a public opinion poll earlier thismonth. Allergan claims the tax discriminatesagainst women and the middle-class.

The tax would impact middle classAmericans, Allergan Chief Executive OfcerDavid Pyott said in a statement issued earlierthis month. President Obama promised notto raise taxes on the middle class. Yet that isexactly what the cosmetic tax would do.

Allergan has also claimed the tax wouldencourage manufacturers to skirt regulationby the U.S. Food and Drug Administration,although it recently sued the FDA to bepermitted to provide guidance to physiciansabout how to use Botox outside of currentlyapproved uses.

Allergans position was blasted by Judy

Dugan, research director for ConsumerWatchdog, a Santa Monica-based activistgroup that has been highly critical of the wayfor-prot healthcare rms operate.

Its completely ridiculous for the plasticsurgery industry to call a 5% tax adisproportionate burden on the middle class,she says. It not only really pushes theenvelope, but its just a joke, considering howmany burdens the middle-class already bears.

According to a poll commissioned byAllergan of 1,014 individuals earlier thismonth, 49% of respondents say they opposedthe tax after they were told it woulddisproportionately affect people whosehousehold incomes were between $30,000and $90,000. However, Allergan says that52% of respondents opposed the taxaltogether, and that older respondents opposethe proposed tax in higher numbers.

Allergan did not respond to requests forcomment, or to release the poll questions.

Botax (Continued from Page Two)

Expert Healthcare Communications

!White Papers !Media Campaigns !Newsletters

(818) 848-8510 www.rfsconsult.com

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Payers & Providers Page

Whether or not you agree with theprovisions of the healthcare reform billcurrently simmering in the Senate, therecan be little debate that our nationshealthcare system is broken. The U.S.spends more on health care $2.4 trillionin 2008 alone than any other nation.Medical spending accounts for more than20% of all goods and services produced inthe U.S. and exceeds the national defensebudget by more than four times.

Much of this spending could beprevented or reduced by reforming oursystem from a disease treatment to a

disease prevention modality. For too longthe healthcare system has ignored theimportant role that preventioncan play in resolving thenational healthcare crisis.Doctors shrugged off patientdiscussions about weightmanagement. Hospitals feddiabetic patients the same menuas non-diabetic patients. Andinsurers just paid the bills,making it easy for consumers toavoid thinking about the realcosts of medical care. The

consequences of this "laissez-faire"attitude include a national obesity ratethat is the highest in the industrializedworld; an epidemic increase in chronicconditions like diabetes; a less healthy andproductive workforce; and generations ofAmericans who feel entitled to only thebest (and most expensive) medicaltreatments.

Employers, economists and the federalgovernment understand what is at stake ifAmericans continue spiraling toward badhealth. At the current pace of increase,medical expenditures could nearly double

to $4.4 tr illion by 2018. That doesntinclude the impact of absenteeism andpresenteeism. It costs the U.S. $260 billionper year in lost economic output.

The role of healthcare leaders should beto influence, encourage and enableAmericans to make better lifestyle choicesthat will keep them healthy. HealthyAmericans are more productive, and theycost employers and health plans lessmoney. And healthy Americans raisehealthier, happier families.

As healthcare leaders we must work

together to: Increase the use of employer-based

prevention and wellness programs. Studshow that comprehensive wellnessprograms, including screenings, healtheducation, health coaches, tobaccocessation, weight and stress managemeprograms, and incentives for healthychoices, can reduce employer health coand enhance productivity. Employers weffective health and productivitymanagement programs achieve 20 percmore revenue per employee.

Expand the focus on preventive car

pediatricians and primary care physiciaincreasing early screenings for obesity,

diabetes and other chronicdiseases, and interventions folifestyle changes.

Make local health improvema priority. Foster community-state-wide policies and progrthat encourage and supporthealthy life choices. School lprograms, bike-to-work days,free obesity screenings can amake an impact on the healthresidents.

Make healthcare accessible to andaffordable for all. Support initiativesexpand insurance and preventive cathe 46 million uninsured Americans

Lack of insurance prevents early detectand diagnosis of diseases, allowing thebecome critical and more costly to trea

Healthcare reform is a fiscal and morimperative. We have the knowledge and tto implement preventive care and wellnesreforms that can improve the health of ounation. The time to implement these reforis now, so we can begin to ratchet downAmerica's unhealthy habits and their imp

on our nations fiscal, cultural and moralwell-being.

OPINION

Reform From A Preventative PerchApproaches to Care Must Change Along With Polic

ByGeorge

DeVries

George DeVries is chairman and chief execut

officer of American Specialty Health, a San

Diego-based company that creates preventat

care programs.

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Op-ed submissions of up to 575 words a

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*New England Journal of Medicine, 2004.