Friday, November 21, 2014

MVP Struggling - Part 2

A few days ago, we broached the subject of Minimum Value Plans, and their potential role in mitigating group health insurance costs. In that post, co-blogger Nate shared with us a TPA's view of how this might play out.

At the time this whole concept hit my radar, I was invited to interview a benefits attorney with expertise in this area for another perspective. Kurt Anderson has specialized in employee benefit, and especially ERISA, plans for the past quarter century, and is co-author of a book on health care reform.

Kurt, like myself, believes that insurance should really focus more on risk-based, catastrophic events (such as illnesses or injuries) and less on predictable, routine items (such as preventive care, vaccines, etc). In fact, he offered this absolutely terrific take on the problem with mandated benefits and the ACA:

"If you can budget for it, you shouldn't have to purchase insurance for it."

This comports precisely with our own comparison of auto insurance paying for oil changes.

This led us to a discussion of how the employer mandate/tax will be enforced. To understand the current controversy, it's necessary to understand the stakes:

An employer (of specified size) that offers no group health plan is subject to a $2,080/employee fine tax penalty, period. This is called the "strong" penalty because it counts all employees.

If that same employer offers a group health plan, but that plan is either "unaffordable" or lacks "minimum value" the penalty is $3,120 per employee, but applies only to the number of full-time employees that opt out of the group plan and buy subsidized plans on the Exchange instead (and rotsa ruck with that). This is known as the "weak" penalty. What's interesting is that an employer that offers a "minimum value" plan that costs less than 9.5% of take-home pay ducks this penalty.

And that's the crux of the proposed IRS ruling: as Kurt explains it, employers want to save money while (legally) avoiding taxes, but still provide basic coverage. The problem is that, if the employer's affordable plan offers "minimum value" but that plan is so skinny that it doesn't provide coverage for hospitalization and other costs that folks need "real" insurance for, then the employee is screwed – he isn't eligible for a subsidy if he chooses to reject the skinny plan and get "real" insurance from the Exchange. By regulating that a "free oil changes only" plan can't satisfy minimum value, the IRS "fix" means that more employees would be subsidy-eligible. And from the employer perspective, it's still (likely) cheaper to pay the penalty for those employees who get subsidies than to provide and pay for more comprehensive coverage.   Win-win.

A big IB Thank You to Kurt Anderson for his time and expertise, and Joan Heider for putting us together.

Cavalcade of Risk #222: Call for submissions

Van Mayhall hosts next week's edition. Entries are due by Monday (the 24th).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

Thursday, November 20, 2014

Close enough for gummint work

So it seems that, as we'd already surmised, the reports of how many people actually bought ObamaPlans were, well, less than truthy:

"A report by Bloomberg’s Alex Wayne revealed that the administration quietly lumped as many as 400,000 dental plans into the total enrollment number without telling anyone."

So almost a half million "false positives." Par for the course, no?

Unintentional Medical Tourism

Before we begin, it's important to note that there's a LOT of information missing here. Of course, that hasn't stopped folks from piling on. As best we can tell, these are the bare facts:

A 6-months pregnant Canadian woman took a personal trip to Hawaii. While there, she gave birth to a daughter, who ended up in the Neonatal ICU for several months, racking up $1 million in medical bills. Her national health insurance plan paid $20,000, and (for some undisclosed reason) the US paid an additional $12,000.

The controversy arises due to the fact that, prior to departure, she had apparently purchased a travel plan from a Canadian Blue Cross affiliate, and they have denied the claim. According to Ms Huculak, they are citing pre-existing conditions as the basis for their denial.

[ed: In case you're wondering, one of the worst kept secrets about the Canadian national health care scheme is that folks "in the know" purchase private coverage to supplement it]

And here's where it gets, well, interesting. For example, Ms (Mrs?) H claims that her doctor had given her a "green light" to take the trip, despite the fact that, only two months previously, she'd had a bladder infection and hemorrhaged. She says that her "doctor saw no reason for me not to go." Which is nice, but entirely irrelevant. Perhaps she could turn the delinquent bills over to him for payment.

She also says that "her doctor sent a letter to Blue Cross confirming that Huculak’s pregnancy was stable when she went on vacation, but the claim was still denied." Again, without more detail as to why the claim was denied, we can only speculate. Regardless, an insurance company has no obligation to give any weight or credence to anything a doctor not in their employ has to say.

I reached out to the folks at Saskatchewan Blue Cross to see if they could shed some light on some of these issues, and will have an update when (if?) I hear from them. The Canadian Blue Cross is not affiliated with the one here in the states, and has a different product line, including travel medical plans.

So, since traditional media continues to do such a shoddy job of basic research, I went to the SBC site and took a look at the policy details, and specifically the exclusions. And lo and behold, we find this at the #3 spot:

Any expenses related to a medical condition (whether or not the condition has been diagnosed or the diagnosis has changed) for which any symptoms occurred during the six (6) months prior to the Effective Date for Covered Persons:

• consulted a physician
• was hospitalized
Well, she'd obviously consulted a physician, and it's entirely likely that she'd been hospitalized for the hemorrhaging. The fact that she had failed to read the policy (and note its exclusions) is on her.

Oh, the most profound lesson here: turns out nationalized health care doesn't work. Who'da thunk it?

Health Wonk Review: Gobble, gobble edition

David Harlow presents a veritable brain-feast, replete with interesting, thought-provoking posts and mouth-watering illustrations.


Wednesday, November 19, 2014

Movember: Men's Health Alert

A few weeks ago, we highlighted October as Breast Cancer Awareness Month, and raised $800 towards research to fight this terrible illness. This month, we turn our attention to the Y-chromosome side:

(And watch through to the end for more info on how to help)

PresBo lied, Healthcare Died

The right-wingers at CNN have released a video showing - conclusively - that the goal of the ACA ObamaTax was always to destroy the previous system and increase taxes:

[Hat Tip: Ace of Spades]

Tuesday, November 18, 2014

Web (in)Security

Yesterday,  I received the following from CoveredCA: 

New!  iPad Online Application:  Replace "HTTPS" with "HTTP" in URL Address
If you are using your iPad for enrollment and already have an URL saved to get to the open enrollment online application, you will need to update the URL Hyper Text Transfer Protocol Secure (HTTPS) address by removing the “S” from the “HTTPS” in the URL address so you can access the open enrollment online application. 
Seriously?   HTTPS is the secure protocol for transmitting information over the internet. HTTP is open text that's readable by anybody who intercepts the transmission.  Nobody should EVER use HTTP for any kind of sensitive work...even Facebook uses HTTPS:

GruberGate in 2 1/2 Minutes

[Hat Tip: Ace of Spades]

Killing Time

Obamacare 2015 open enrollment is here. 

Good news is, the site seems to be working, kind of .........

Bad news?
Consumers there were having a hard time logging into their accounts, retrieving old passwords and proving they were who they said they were — a process known as identity proofing, which also vexed many people last fall. Some people did complete their applications at the Manassas clinic on Saturday, but it often took them 90 minutes.
NY Times

Babies are birthed faster than that.

Who has 90 minutes, or longer, to wait to get into their account? And that's on top of queuing up at your local Obamacare office.
Similar problems frustrated Lorena Ortiz, 40, of Woodbridge, Va., who tried to switch plans in a conference room at the clinic that Ms. Burwell visited on Saturday. Ms. Ortiz had signed up for coverage in the first enrollment period, but could not remember the password for her account on
She and a certified application counselor, Kathleen May, spent an hour trying to retrieve Ms. Ortiz’s old password — even making a call to the call center — to no avail. They waited for a new password to come to Ms. Ortiz’s email address, but it never did.
Then they tried creating a new account. At first that did not work, either, so they tried using a different email address for Ms. Ortiz. When Ms. Burwell walked into the conference room to greet clients, Ms. May and Ms. Ortiz did not even look up.
They finally succeeded in creating a new account for Ms. Ortiz with a different email address. But then they could not link her old health plan to her new account.

Smooth ..............

Rube Goldberg would be jealous.

Stupid Carrier Tricks: Timing is Everything edition

A few weeks ago, I mentioned that Anthem had sent out a batch of December 1 individual medical plan renewals for these "grandmothered" plans. Yesterday, I received a similar batch of January 1 renewals for some Medical Mutual clients.

Keep in mind that I received these on November 17th:

And when were they actually mailed?

[ed: date highlighting added]

Great timing there, MMO.


Monday, November 17, 2014

GruberGate: The Musical

[Hat Tip: PowerLine Blog]

MVP Struggling - Part 1

Minimum Value (aka MVP) Plans have been touted for groups over 100 (this year, and 50 next year) wishing to meet the letter of the ObamaTax law and yet minimize their costs. The Government published an online calculator where employers could enter their plan benefits and determine whether it met the minimum value test themselves, and avoid the cost of hiring an actuary. As we blogged a few months ago, the calculator included a "glitch" which allowed employers to exclude in-hospital services (and some other high cost benefits) and still pass the 60% threshold, and therefore some of the penalties taxes.

That's now changed. The IRS and HHS have now warned plans that they will fix the calculator, and the definition:

"[C]ertain group health plan benefit designs that do not provide coverage for in-patient hospitalization services are being promoted to employers. A plan that fails to provide substantial coverage for these services would fail to offer fundamental benefits ... plans that fail to provide substantial coverage for in-patient hospitalization services or for physician services ... do not provide the minimum value intended by the minimum value requirement."

Shorter: no, MVP's with no hospital coverage don't make the cut. Interestingly, so-called "skinny" plans with hospital and other Minimum Essential Coverage are still okay.

[ed: I'll refrain here from opining as to whether or not it's really the place of unelected, unaccountable bureauweenies to make these determinations]

So, what to do? A whole cottage industry has sprung up touting these plans as an affordable alternative to full-blown (and expensive) group plans, and at some point in the (presumably near) future, new rules will be put in place to cut them off. What then?

One option, of course, would be to just stop offering group coverage altogether, and just pay the tax penalty fine (which is likely to be a LOT less than any premiums). Another would be to offer a slightly "less skinny" plan that does cover in-hospital charges in a way that satisfies Our Betters in DC©.

The folks at OptiMed Health claim that their plan offers "independent actuarial certification and statement of compliance." Which is nice, and perhaps a viable alternative for employers who want to avoid both the penalty and bankruptcy.

My co-blogger Nate Ogden has another, intriguing, thought: why not offer a good plan, with around a 55% Actuarial Value, that covers the majority of people’s healthcare expenses. It would exclude hospital inpatient, therapy, and prolonged treatment. But it would cover, at a low cost, the majority of people’s needs for the year. This way most healthy people can get on a low cost plan and the employer won’t pay any penalties for them. Sick people in a group would still be subsidy eligible, so they could buy a more comprehensive plan on the Exchange, and their net cost is reduced by a subsidy. This appeases the government officials who concern with MVP minus hospital was they precluded individuals that needed coverage from getting a subsidy

The purpose is to satisfy the "80/20 Conundrum:" insure the 80% of the group that only accounts for 20% of the cost, then pay the $3,000 penalty on the 20% of the group that accounts for 80% of the costs.

Of course, you'd want to work closely with your agent and/or TPA to make sure all the i's are crossed and the t's dotted.

In part 2, we'll hear from a Benefits Attorney with another take on this development.

Winner, Winner Chicken Dinner!

So a colleague recently clued me in to a way that the free market is responding to the new reality of an Obamacare-dominated health insurance market. The good news is that the concept seems to be perfectly legit, serving the interests of both the client and the agent (and her carrier). The bad news is that the plan is only available in a dozen states so far, although it has been filed and is pending approval in almost all states (although it's available only from agents of one carrier).

Still, it's a fascinating glimpse into how one can "reverse engineer" a desired outcome. I'll let "Donna" take it from here:

"You're going to like this, it's damn brilliant. Basically we're offering a limited benefit product that's very cheap compared to Obamacare. Assuming that no major illnesses or injuries come up, it'll pay almost all of one's medical costs with no deductible. The capper, though, is that the plan has a rider that allows the insured, at their discretion (and with with no additional underwriting) to convert it to a major medical plan with a $3,000 deductible and 100% coverage after that.

That major medical plan runs until the insured's next open enrollment period. So, cheap insurance for as long as you need it, the option to switch to a major medical plan even AFTER you get ill (but not requiring you to pay for it until you need it), and a guaranteed transition to O'Care (which, being guaranteed issue, is the appropriate place for high risk individuals). I'm going to sell a boatload of this product, and best of all, nobody loses

Indeed. The only real drawback I see would be the potential for the individual mandate tax penalty fine. On the other hand, I'm told that it's priced to have a lower premium than a "metal plan," even with the tax penalty

Now here's where it gets, well, weird: almost six years ago, the (now defunct) American Community insurance company rolled out a very similar plan:

"Called "Community Flex," it starts out as an accident policy (major claims are only paid for injury, not illness), with some coverage for doc visits, preventive care, and a drug discount card ... if you want more coverage, such is available through a "Gold Plan" buy-up. This gets you coverage for more doctor's visits, more preventive care, and better prescription drug coverage."

So, not exactly the same, but similar concept. Currently, my colleague's company is the only one (of which I'm aware) that has developed this new-fangled ObamaPlan alternative.

Be nice if there were others (hint, hint).

Friday, November 14, 2014

The Gruber Hits The Fan

HIX Predix

I have a few predictions about tomorrow morning:

■ The sun will rise in the east

■ Water will be wet

■ The site will be broken

Why does the last one seem no less obvious than the first two?

From the horse's, er, mouth:

"Health Secretary Sylvia Burwell warns, “we will have things that won’t go right. We will have outages, we will have downtime.”

And it's no ray of sunshine for small businesses, either.

Up-Lyfting Update

Last week, we noted car-sharing service Lyft's first passenger fatality, and pondered the insurance implications thereof. Since this situation is a bit outside our wheelhouse, we turned to P&C expert (and long-time FoIB) Kevin Sullivan.

I really didn't know what questions to even be asking, what issues (beyond the obvious) were relevant, and what part the location (California vs, say, Ohio) would play in this whole scenario. He kindly supplied not only the necessary questions, but the answers, as well Take it away, Kevin:

The insurance test here:  Will Lyft's Commercial General Liability, or Business Auto coverage defend the Lyft driver?

IMHO, it doesn't matter if it's the driver's fault.  Everybody's getting sued.  Lawyers cost money [ed: this is a point our friend Bill M made, as well].

If the driver has a commercial auto policy, and he's not found criminally negligent (drunk, on drugs, etc), they defend/settle.  My guess:  The driver has no such insurance.  Personal Auto expressly EXCLUDES using your vehicle to make money.  However, the coverage exists, otherwise, you wouldn't be able to get a pizza delivered to your house.  The Pizzeria (Lyft) purchases that cover.

Back to Lyft: 

1.  Is the driver named on Lyft's policy?  Or is he listed on just an "Additional Insured" endorsement? 

2.  $1,000,000 Combined Single Limit?  Liability only?

3.  What carrier wrote the Lyft policy?  That would tell me a TON...

Looks like Lyft's insurance is prepared to pay or defend.

Here's how this is all going to go down:  Settlement will occur, nobody will know how much.  Lyft will either need to find another carrier, or pay a TON more in premium.  A non-renewal (cancellation) is also possible.  Again, I'd need to know the carrier before I'd guess.

Lyft could go out of business for not being able to find a new insurance carrier.  That won't matter: another service will come along, and replace them.  Ride-sharing ain't dying.

In the big picture, the carriers are playing "wait and see" with this new auto niche.  Trust me, they are crunching numbers right now, and will develop a product for the "part time TNC (Transportation Networking Company) driver" for Uber, Lyft, Sidecar, etc.

If they had HALF A CLUE, the TNC's would create a "driver's association" for ALL ride share drivers.  As a member of the association, you'd get access to the association’s insurance plan at $X,XXX per year [ed: similar to how many professional organizations sponsor life or disability insurance].

Thanks, Kevin!

This is still a relatively immature market, with plenty of room for expansion, and missteps. But as Kevin notes, there's just too much pent-up demand, primarily tech-driven (all those iOS and Android apps aren’t going to drive themselves, after all). And the centuries old taxi-cab model with its expensive (and increasingly outmoded) barrier to entry just doesn't seem sustainable. On the other hand, folks want to know that they're protected from the risk of someone else's driving.

Something's gonna give, it's now a question of how and when.

Thursday, November 13, 2014

Peanut Butter and Chocolate

You got feckless, clueless punditry in my O'Care deceit lectures.

No! You got O'Care deceit lectures in my feckless, clueless punditry.

Kiddies, kiddies, please calm down. You're both right:

Now Playing: HIX (Health Insurance Exchange)

Interesting video primer on how the Exchanges (are supposed to) work: