This will get you, briefly up to date on the deregulation snafu.
Our power grids are protected by interlocking computer systems. The quality of the protection is based on a compromise between cost and engineering. Anytime you allow a private\unregulated entity the opportunity to voluntarily choose between quality and profit - we, the public will lose. I quickly found a comment on what happened to New Jersey when they deregulated electricity... Please do not consider that I'm being condescending - You asked and I am more than happy to attempt to prove my point.
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THE PRICE OF DEREGULATION
Hold your wallet
New Jersey's elected officials brought the joys of energy deregulation to the state in 1999. The idea was to create an "open market" in things like electrical power. Consumers would love it, officials said. Competition would drive down rates. As a matter of fact, lawmakers and then-Gov. Christie Whitman trumpeted, electricity rates will drop by more than 11 percent as soon as the deregulation bill is signed.

But that was then.

This is now: Rates for electricity around the state have increased, dramatically in some cases, as of Aug. 1. And about all the current administration can offer is a renewed push for energy conservation.

Got a problem with how this whole deregulation thing worked out? Shut up and turn up the thermostat on the AC, officials say.

The 1999 deregulation bill cut electrical rates all right - but not because of any deregulatory magic. The bill simply created mandatory rate caps that expired on - you guessed it - Aug. 1, 2003. All the state did was force utility companies to provide power at artificially low rates and then allow the companies to recoup those losses come August 2003. Statewide, consumers will now have to ante up some $1 billion in deferred costs.

The whole thing "raises the question of why rate decreases were implemented in the first place if consumers were just going to be required to pay for the rate cuts later," according to a state report prepared under the McGreevey administration.

Indeed.

So what do we do now?

Turn off lights, keep a close eye on the thermostat, buy more efficient appliances. Or prepare to pay a lot more for electricity.

Conservation is always a good idea - but this is not exactly what consumers were promised when the deregulation bill was pushed.

This isn't McGreevey's fault. The deregulation bill was flawed in the first place. And the whole thing spawned a wave of "new economy" nonsense. The word "synergy" got tossed around a lot. Stable companies that had done one thing well for decades suddenly had the equivalent of mid-life crises. Conectiv, for example, went into the telephone business - briefly.

The bottom line: Anytime you hear an elected official say the word "deregulation" - hold onto to your wallet.

FOR IMMEDIATE RELEASE
Tuesday, March 11, 2003


CONTACT:
Mark Cooper, CFA 301-384-2204
David Butler, Consumers Union 202-462-6262

CONSUMER GROUPS QUESTION FCC'S POWELL
ON MEDIA DIVERSITY INDEX

INDEX WILL LEAD TO CONCENTRATED OWNERSHIP
THREATENING MEDIA DEMOCRACY


WASHINGTON -Two of the nation's largest consumer organizations, Consumer Federation of America (CFA) and Consumers Union (CU) contend that the media diversity index recently proposed by Federal Communications Commission (FCC) Chairman Powell in its upcoming media ownership rulemaking is not supported by the empirical evidence and will lead to excessive media concentration.

Last week, the Commission signaled that it favors replacing the current broadcast-newspaper cross-ownership rule and the TV-radio cross-ownership rule with a new "diversity index" which would rely on a mathematical formula to measure the number of media voices in a local market.

In comments delivered today at a forum entitled "Media Concentration and Local Markets" hosted by the Information Policy Institute, Dr. Mark Cooper, Director of Research for Consumer Federation of America and Gene Kimmelman, Senior Director of Public Policy and Advocacy for Consumers Union, argue against the diversity index.

"A shift in the analysis of media products and markets toward the FCC's diversity index model will lead the Commission to mistakenly concluded that local media markets are less concentrated than is actually the case," concludes Cooper. "The result is more concentrated media with less diversity, localism and regard for the public interest."

"Public debate in the media is not primarily about entertainment and not primarily about variety or the number of media outlets," says Kimmelman. "Public debate is about information from diverse sources that are independently owned. Multiple outlets with single owners are only one voice. The FCC cannot reduce its obligation to promote diversity and the public interest to a count of entertainment programs available."

"Media ownership rules are essential to a healthy democracy," says Cooper. "These rules were adopted to ensure that the public would receive a wide range of contrasting perspectives from the media, not simply the opinions of a handful of conglomerates. The stakes for consumers, citizens and the nation are enormous."

"Because of the importance of media to our democracy, we cannot afford to experiment with disaster," Kimmelman warns. "The cost of market failure in media markets is the price we pay when stories are not told and when sleazy accounting practices do not surface. Journalism must continue to act as corporate watchdog not industry lapdog."

CFA and CU released three documents that detail the evidence supporting their concerns. These documents are available upon request.

God! I must look like a cynic to you, Swede. This is a breakdown on
how our HMOs operate. Do we need national health care or what?
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Gatekeeper

* Your physician is a gatekeeper. Isn’t a gate designed to keep something out? Whud up?
* Managed care changes the way physicians can care for you and limits the circumstances and level of care as well as the types of surgery and medicine you may receive. In fact, managed care pays gatekeeper/providers more for giving less care and penalizes gatekeeper/providers for giving the care you expect. Managed care mangles the doctor-patient relationship, which matters only when you need it most. Precisely because most managed care patients are healthy, you won’t miss your doctor-patient relationship until you need it, and when you are sick you may be too preoccupied to do anything about what has become a provider-client relationship.

Z score

* Managed care companies track prescriptions written, referrals made, procedures performed by each contracted provider/gatekeeper and create a report documenting provider/gatekeeper behavior and how it aligns with other provider/gatekeepers' behavior, the Z score. A copy is sent to each provider/gatekeeper. United Health Group plans to publish these reports. Provider/gatekeepers with statistics outside an established range are reprimanded and/or money is withheld until behavior is corrected, that is until patients are given fewer prescriptions, fewer referrals, fewer procedures. If you assume the prescriptions, referrals, procedures are unnecessary the result saves money. What if the prescriptions, referrals or procedures are necessary, and what if the patient is you? Ask your provvider/gatekeeper if your insurance company effectively restricts your care because other patients have needed prescriptions, referrals or procedures this month or this quarter and if your provider/gatekeeper must alter his behavior and your care. Managed care companies and your provider/gatekeeper promote alternative therapies, ostensibly responding to patient demand, but the truth is clear: non-medical therapies cost less than medical and surgical therapy, but effectiveness is not established.

Capitation (this is not even in the dictionary)

* This Conspiracy is a dirty little secret between your managed care company and your provider/gatekeeper. Your provider/gatekeeper is given a predetermined amount of money to spend on you for one year. If you need more care than the capitation payment covers, the money comes from the provider/gatekeeper 's pocket; if you need less care than the capitation payment covers, the excess money goes into the provider/gatekeeper's pocket. If your provider/gatekeeper is a saint, human nature may not affect the care you receive. Ask your provider/gatekeeper if you are capitated and if he/she is a saint.



Hospitalist

* Provider/gatekeepers no longer care for their hospitalized patients. Your care is turned over to a hospitalist (this isn’t in the dictionary either), another provider/gatekeeper, hired by your managed care company or the hospital, who works full time in the hospital. If you are hospitalized, this insurance company or hospital employee will direct your care and determine your length of stay. Ask your hospitalist what evaluations or treatments are excluded from your treatment plan. Ask your provider/gatekeeper if he/she will see you in the hospital and precisely what role he/she has in your care.



Decredential

* Provider/gatekeepers who resist managed care regulations and guidelines are expelled and their patients are sent to another provider/gatekeeper . This is called decredentialling. Your provider/gatekeeper is caught in a terrible, ethical bind between the medical imperative to care for you and the financial constraint imposed by your insurance company. Provider/gatekeeper autonomy in clinical decision-making has been commandeered by non-professionals. There are only two responses: cooperate or not. Ask your provider/gatekeeper about this.



Formulary

* Managed care companies block use of many new drugs and switch patients from trusted, reliable medications to cheaper drugs through their formulary. Formulary is a list of drugs approved by your insurance company; your provider/gatekeeper must select from that list. The list is different for every HMO. Some drugs are "preferred, " some are prohibited, and some will cost you a premium. Most are generics. The difference between a generic and name brand is greater than you might think. The FDA permits marketing of generic medications that work in the same way as a brand name. This does not mean the generic drug is the same as the brand name. It certainly does not mean a generic drug contains the same materials as the brand name. Ask to see your formulary, and then compare that list to the PDR (PHYSICIAN'S DESK REFERENCE)
* If you shift jobs or insurance coverage, you will shift your formulary. This alters your medications, and that can have dire consequences.
* Diabetic patients dependent and controlled by specific types of insulin are switched to cheaper, less-effective insulin, sometimes with devastating consequences.
* Heart patients are put on old-time remedies rather than new medications.
* Migraine sufferers can’t use new medications and suffer old-time treatments.
* Patients cannot benefit from recently released medications unless your HMO adds the newest drugs to your formulary.
* Patients have to pay full price for effective, but new medications that do not make it on the formulary.
* Provider/gatekeepers have to seek prior approval before prescribing some medications, and the hassle factor steers the medical decision-making about your health toward the hassle-free drugs on the formulary. Is that how you want your care determined? Just as a brand name drug is not biologically-equivalent to a generic brand, one generic brand is not biologically-equivalent to another generic brand of the same drug. Examine your medication each time you refill a prescription. If your drugs are switched and you experience an untoward reaction, report it to your provider/gatekeeper and MedWatch (1.800.FDA.1088)



Panels

* Managed care companies admit certain provider/gatekeepers to the panel, a list of contracted or owned provider/gatekeepers, and then direct patients to those provider/gatekeepers and to non-physician/provider/gatekeepers for cheaper service. Some HMOs publicize willingness to send you to “alternative” and “complementary” practitioners. Think about this, people.



Out of network

* Managed care companies or their provider/gatekeepers threaten patients with exclusion or imply consequences if you seek care from a primary care provider/gatekeeper or specialist not owned or contracted by your plan. Imagine if a provider/gatekeeper you have seen for years is not contracted with your HMO or if you develop a disorder and you learn of an expert who is not in your HMO network; if you seek care out of network, what repercussions will occur? Will your provider/gatekeeper view you as uncooperative, disrespectful? Will your managed care company limit your care? Your decision-making is colored by your natural inclination to cooperate with your managed care company and the provider/gatekeeper who oversees your health needs, so in a sense your choice is restricted without overt statements from your managed care company or provider/gatekeeper . This prompts some states to legislate freedom to seek out of network care.



Incentive payments

* Managed care companies pay “incentive payments” to provider/gatekeepers whose patients are not sent for specialist care or laboratory services. This translates into lower costs to the managed care company but delayed diagnosis and treatment of cancer and other disease. Ask your provider/gatekeeper if he/she accepts incentive payments from your managed care company.



National Practitioner Data Bank

* Contracted provider/gatekeepers who withdraw from managed care risk submission of their names to the National Practitioner Data Bank. (www.NPDB-HIPDB.com) The National Practitioner Data Bank was created to record names of physicians disciplined for hospital or medical infractions and malpractice. Presence of a physician’s name in the data bank complicates his or her ability to obtain malpractice insurance, hospital privileges and health insurance accreditation. Managed care companies report names of physicians who extract themselves from contracts as a clinical privilege report in retribution. As of December 31, 1998 Division of Quality Assurance operated by the Bureau of Health Professions of the Health Resources and Services Administration reports there were more than 200,000 reports in the data bank:

Reason Number
Malpractice payments

154,372
State licensing actions

29,372
Medicare exclusions

10,231
Professional society actions

358
Clinical privilege reports

7,680



PBM

* Pharmacy Benefit Managers (PBM) are the organizations that orchestrate your formulary, reducing competition for prices and alternatives for patients and driving neighborhood pharmacies out of business. PBMs are the managed care companies of the pharmacy world. They contract with pharmacies for specific drugs at specific prices and determine which drugs are sold and which pharmacies sell them. While some decisions are made through straightforward negotiations, rebates paid by drug companies to pharmacy benefits managers for preferred positions on formularies are common. Furthermore, the largest pharmacy benefit managers are owned by managed care companies or drug store chains, reducing competition and alternatives for you the patient and your doctor. Almost 70% of all prescriptions written in the US last year were handled by PBMs and HMOs.



Cherry-picking

* Medicare HMOs recruit patients at malls and restaurants, places frequented by healthy clients (you’re a client, expressed as “covered lives’” not a patient any more.) This avoids solicitations to seniors who are sick, disabled and not active. Since Medicare pays a fixed amount for each Medicare beneficiary enrolled in an HMO, the business people running the HMO want only the healthy. Selective enrollment by HMOs is called cherry-picking, and the practice is confirmed by many studies of Medicare HMOs yet tersely denied by the HMOs spokespeople. Despite this, Medicare HMOs will curtailed service and raised premiums in 2000, forced another 327,000 beneficiaries out of coverage, brought to 734,000 when added to the 407,000 dropped in 1999. One in ten Medicare HMO-enrolled beneficiaries have been dropped from managed care plans according to Karen Ignagni, president of American Association of Health Plans. The pattern was repeated in 2001, but the number of seniors dropped from HMOs as they pulled out of unprofitable markets exceeded 933,000. 65 HMOs did not renew contracts and 53 HMOs withdrew from coverage in specific counties with profits. Medicare pays an HMO $6,876 per year to cover one beneficiary in the top markets. Medicare payment is $6,492 per year in less-profitable markets.



Glide-paths

* Just as a pilot establishes an approach to the runway before landing, managed care companies authorize and limit levels of care for people of certain age with specific diagnoses, assuming that death will occur before severe complications from the diagnosis. These are called glide-paths. A pilot can be sure that the runway will not move and that nothing will happen to the runway before the plane lands, therefore the pilot can confidently commit to the landing. On the other hand, the managed care company has only statistical information on which to base life expectancy to determine the number of years you might endure your diagnosis. Limiting care because of life expectancy is a shameful abrogation of responsibility.

What if you outlive your life expectancy?

What if you get well?

What if you change insurance?

What if medical advances provided cures or more effective treatments?

Ask your provider/gatekeeper if you are on a glide-path.



Provider

* Provider is the managed care name for doctors, and everyone else who is supposed to care for your health. This is a not so subtle dig at your medical doctor. Think of your doctor who has dedicated four years of college, four years of medical school to earn the title doctor, four to six years or more of residency training before starting the practice of medicine finding himself in the same practitioner category as a physician’s assistant who has spent two years of training or a massage therapist who might have spent one year. Once you realize that medical decision-making actually is performed by the bureaucrats and clerks at your managed care company, you understand that your physician really is just a provider.



Gainsharing

* If you have Medicare, this term means you lose. Your provider/gatekeeper gets paid by your hospital when money-saving choices are made by your provider/gatekeeper. This is the deal. When you go to your hospital, Medicare pays the hospital a predetermined, set fee depending on your diagnosis, regardless of actual costs. If your provider/gatekeeper gets you out of the hospital fast, omits expensive tests, declines in-hospital treatment, the hospital gets paid the set amount, pocketing the difference between anticipated and actual costs. Part of the pocketed money is gainshared, slipped to your provider/gatekeeper. Ask about it.
* The story gets worse: While stating that gainsharing is illegal, the Inspector General wrote that "hospitals have a legitimate interest in enlisting physicians in their efforts to eliminate unnecessary costs," and therefore "hospitals and physicians may enter into arrangements based on a 'fixed fee' that is fair market value for services rendered, rather than a percentage of cost savings." If your gatekeeper/provider is paid off by the hospital as well as the managed care company, who looks out for the patient?



Pre-existing condition

* Insurance clerks use this term to "decline" coverage which ultimately costs you because the billing clerk in your gatekeeper/provider's office will bill you. Insurance companies get a claim for your visit. If the diagnosis permits, the insurance clerk might get your previous medical records and find that you have been previously diagnosed and treated for the disorder. If the diagnosis or treatment occurred prior to the effective date of current coverage or while you were covered by another carrier, pre-existing condition clauses take your insurance carrier off the hook. This is a real problem when your employer's Benefits Manager shops for your health insurance each year and gets a better price from a new carrier. A new carrier can give a better price because it will not be responsible for pre-existing conditions, you will. Sometimes your insurance company uses the pretense of pre-existing conditions to delay payment to your gatekeeper/provider while you prove that the disorder was not pre-existing, sort of a guilty until proved innocent ploy. This riles the billing clerk in your gatekeeper/provider's office, your gatekeeper/provider and you. It is all about money.



Co-Management

* This is when you surgeon turns you over to the provider that sent you for surgery sometimes sooner than you think you should be released. Sound like a kickback? The deal is this: Medicare pays a certain fee for each procedure and for follow-up care for a specified period of time, usually ninety days. As an incentive for the referral, the surgeon can orchestrate a kickback to the referral source by co-management; part of the surgery fee is paid to the referral source, ostensibly to cover follow-up care. This is outlawed by New York Medicare carriers unless the operating surgeon is unavailable and unless the provider is licensed to manage "all aspects of the postoperative care, including potential complications that would require a return to surgery."

The Failing Airline Industry – Suffering from Self Inflicted Wounds?

Do the airlines have a lemming-like death wish? It sure seems so at present. Here’s three examples.

Hey, Buddy, Say it Ain’t So

On Wednesday United Airlines’ Chairman James Goodwin took the unusual step of sending a letter to his 100,000 or so remaining employees (UA keep announcing staff cuts, I’ve lost count) warning that the airline – the nation’s second largest – ‘will perish sometime next year’ unless something (apparently not specified and perhaps not even known) changes to counter its current massive losses.

What’s wrong with this picture? Apart from the sorry situation that UA most assuredly finds itself in.

I’ve owned and managed businesses myself, through good times and bad. But one thing I have never ever done is communicate, in a public manner to my entire staff and to my entire customer base as well, that I think my business is going to go broke sometime within the next twelve months! What sort of a message is that? It is a self-fulfilling prophecy message, that’s what it is.

How will you, as a frequent flier, respond to this news? Do you still feel good about your MileagePlus Premier Executive status? Or is it time to urgently switch to another airline’s program? And what about those hundreds of thousands of frequent flier miles you’ve been sitting on – probably time to quickly cash them in, isn’t it!

And what will United’s best and brightest staff be thinking? They’ll be thinking it’s time to jump ship, urgently quickly! Linda Farrow, President of United’s Flight Attendant Union claims that Goodwin ‘made a number of mind-numbingly irresponsible financial decisions over the past year’ and calls on him to now step down.

The net result is that Chairman Goodwin’s letter, rather than having any positive effect, will encourage both its best staff and its most profitable customers to abandon United and thereby hasten the demise of a once rock-solid seeming leading carrier.

Failing a First Year Marketing Course

Now let’s switch gears and pretend we’re in a first year Marketing or Economics lecture and learning about the ‘Elasticity of Demand’. This is really simple, which is why it is covered in a first year course - if you have too much of a product that isn’t selling, you reduce its price, which means (for most products with an ‘elastic demand curve’) demand will increase.

You’ll see this on seasonal pricing for produce – peak season fruit is cheaper than early season. It applies to airlines, too - if flights are going out full, you increase the price of tickets. If they’re going out empty, you drop the price. It can’t get simpler than that. Maybe this is too simple for the high powered MBAs that staff the airline’s marketing and pricing departments because they’ve only mastered the first part – you know, the bit about increasing prices. The second bit – lowering prices when demand is weak – eludes them.

A recent article by a transportation economist, no less, takes the airlines to task for their continued exploitive pricing on non-competitive routes. Professor Burton writes that, like many others, he decided he’d rather not travel when faced with $1000 for a roundtrip fare between Charleston, WV and Atlanta (a one hour 46 minute flight). This decision however penalizes a lot more people than just the airline. It means that the rental car company, the hotel in Atlanta, local restaurants and services, all such companies also lose business.

The airline for sure lost out – it got no revenue at all from this potential passenger. It could have made a fair profit selling the ticket at $250 and a massive profit selling it at $500, but instead it greedily tried for an ‘all or nothing’ jackpot at the $1000 price point, and ended up with – you guessed it, nothing.

This pricing situation isn’t new, but now the airlines are flying on taxpayer’s money. Seems to me that they have a moral obligation to sensibly price their tickets and to do all they fairly can to help people to travel and jump-start the American economy – a huge part of which relies on people flying as often as possible.

Making Travel as Unpleasant as Possible

Lastly, I’m reminded of a 30+ year veteran of the airline industry who often starts a speech by saying ‘We know that very few of our customers choose to take a flight just for the sheer pleasure of flying’ – a statement that usually draws polite laughter. Rather than joke about it, surely the airlines should do all they can to minimize the appalling unpleasantness to which we’re now being asked to meekly submit, rather than to exploit the situation for all they can, under the guise of increased security.

There is no reason why any security procedures need to have people checking in for a flight two or three or even four hours prior to departure. The airlines and the security screening people they contract with have a simple choice – employ more staff so as to process their passengers more efficiently, or lay off staff and cause their passengers to spend more time waiting to checkin than they actually spend on the flight itself.

As we now know, the airlines are choosing the less honorable course, and are trying to make us believe that taking two hours rather than twenty minutes to check us in for a flight somehow means they are doing a better job and we are safer! Get this – it is now quicker to check in for a long haul international flight (operated by a high quality and security conscious carrier such as BA) than for many short domestic flights. Something’s really wrong here, and it has nothing to do with security. It’s all about unacceptable service, not increases in security.

These ‘savings’ in service levels must be costing the airlines plenty of lost passengers. With an unknown but probably 2-4 hour checkin time, it makes quick one day business trips - such as we have all often done in the past - an impossibility. And for sure, if you’re like me, you’ll do a whole lot fewer overnight trips – more expensive in time and money and less convenient every which way - than you have done single day trips in the past.

As a quick rule of thumb, the profit on each short day trip ticket is sufficient to pay for one extra security person at both airports. Do the math yourself - if each airline is losing only two passengers per flight per day due to these new so-called ‘security’ delays, the industry as a whole could afford to hire as many as 50,000 extra security staff with the money they’d get if just these two passengers per flight returned to the skies! No need for extra ticket surcharges or fees - just a simple ‘think positive’ marketing approach.

I’m cutting back on my travel. Not because it is dangerous. Not because I’m scared. But because it is now so incredibly unpleasant, inefficient and overpriced. So perhaps United Chairman Goodwin is smarter than I give him credit for. Because, for sure, if United keeps acting the way it is at present, it definitely will go broke.