Conflict of Interest at the FDA?

At The California Medicine Man – which, BTW, is a terrific new blog, written by a physician, but in no way overly technical or condescending – there’s a disturbing bit of information:

“(F)or an FDA advisory committee member evaluating the COX-2 inhibitors, affiliation with Pfizer or Merck appears to constitute a clear conflict of interest. Consider these numbers I extracted from the vote breakdown in one report. If you were one of 10 committee members taking money from Pfizer or Merck,

You had a 100% probability of supporting Bextra compared with a 35% if you had no such tie.

You had a 90% probability of supporting Vioxx compared to 36% if you had no such tie.

If these 10 committee members had abstained from the vote, neither drug would have been approved for marketing.

To suggest that this breakdown occurred by mere chance and had nothing to do with drug company affiliation strains credulity to say the least!"

If verifiable, this represents an incredibly egregious abuse of regulatory discretion. As I’ve noted in previous posts, rx coverage accounts for a disproportionate share of medical coverage costs, and this just adds fuel to that fire.

Anthem and Premier Have a Food Fight…

Okay, not really, but I couldn’t resist the headline. What did happen, tho, is that the much-ballyhooed arbitration has come to an abrupt – and fruitless – halt. Apparently, after they had met for a grueling day and a half (not counting coffee- or potty-breaks), the two sides “broke off their mediated negotiations without a contract.”

Where does this leave those Anthem insureds whose providers are in the Premier system? Think creek, missing paddle. For most, non-emergency access to Premier services will come with a much higher price tag. For some, there may be no non-emergency coverage at all (this depends on which plan design a given insured has chosen).

As always, there are (at least) two sides to this story. Anthem maintains, and Premier has so far not disputed, that Premier’s costs are significantly higher than other, comparable area provider networks. In essence, Anthem insureds who choose non-Premier providers are subsidizing those who do utilize Premier. OTOH, physicians and hospitals do have costs, and Premier, in the form of Miami Valley hospital, runs the region’s CareFlight service. That can’t come cheap.

So, at least for now, this will continue to be a juggling act between offering affordable health insurance (often, Anthem’s rates are below-market) versus access to a LOT of providers.

There don’t seem to be any winners here.

I’m in perfect health, so why was I declined?

Recently, I had occasion to speak with a client who was unhappy with his coverage [ed: nooo! really?!]. This gentleman owns his own business, and has had a policy with Company F for a number of years. The plan has a high deductible, and no frills. It covers this gentleman and his family for a little over $900 per quarter.

He called me a few months ago to see if there was anything we could do to lower his premium without lowering his benefits. I looked around, and found nothing that would do accomplish his stated goal. He was not happy with this report, but there was nothing I could do about that. The quotes are the quotes.

Last week, he called me back to complain that he had been declined for health insurance. Excuse me? It seems that he had contacted (or been contacted by) another agent, not affiliated with our agency, but who also represented Company F. This agent told the client that Company F offered a plan with benefits he did not currently have, at a lower premium. The client applied for this new plan, and was declined by Company F due to his elevated blood pressure [ed: on its face, this seems an unlikely reason for declination, but inasmuch as I had nothing to do with this application, I’ll never know the true reason].

The client was outraged, so naturally he called me. Or rather, he had his wife call me. I spoke with her, and then did a little more poking around (I realized at the time that this would most likely be a waste of my time, but one does try to accommodate one’s clients). Again, I found nothing that would maintain or improve his coverage without an increase in premium,. In fact, I ran the numbers with Company F (his current carrier) -- the plan which the other agent had touted as a significant increase in benefits and decrease in premiums – and it actually cost over $2,500 per quarter, and that assumed a preferred rate classification.

As you may imagine, this did not go over well with the client. According to his doctor, his blood pressure was fine, and he was in exceedingly good health.

Now, it may be that the doctor was lying.

It may also be that the insurance company was mistaken.

But what is more likely is that they were both right: The physician sees a patient, about whom he cares, and whose health he is reasonably certain can be managed with (presumably) a minimum of hassle. He sees no major or imminent problems, and because he knows the patient on a personal level, is confident that things will “be fine.”

The insurers, OTOH, sees a potential claim. The company doesn’t know this client on a personal level – whether or not he is a current insured notwithstanding – and assesses the risks of insuring him based on the experience of insuring thousands of others like him.

It’s nothing personal.

Watch your meds…

Got an interesting flyer from Humana today. Effective May 1, they’re changing how they cover certain medications. Based on previous experience, I expect other carriers to follow suit shortly.

The letter starts out auspiciously enough:

“Humana is launching a new program designed to help employees who take certain high-cost drugs save money each month on their prescriptions. And when employees choose less expensive drugs, overall pharmacy costs should decrease.”

The program targets specific medications that have “lower-cost alternatives,” presumably generic equivalents. For now, Humana is focusing on meds for heartburn, pain, allergy and high cholesterol. Left unsaid, but certainly easily inferred, look for blood pressure and anti-depressant meds to follow.

The program is set up so that, at the next refill (or, for first-time use, the initial scrip), insured’s will need to talk with their doc about their new options:

- Switch to lower-cost alternative (i.e. generic),

- Stay on current med, but absorb a greater share of the cost, or

- Obtain authorization to continue with their current prescription

This is really not all that new, and I’m not convinced that it’s necessarily a bad idea. In recent years, a disproportionate percentage of health costs – and renewal increases --has been attributable to meds. And many carriers have implemented a “formulary-based” protocol; that is, if you’re med isn’t on their “preferred” list, you pay more (sometimes a LOT more) for it.

This move is also consistent with Humana’s increasing push for Consumer Driven Health Care. The idea is that patients should be taking a more pro-active role in their own care. We see this in the widespread publicity (if not actual purchase) of High Deductible Health Plans and HSA’s, and the disappearance of the lower end of the deductible scale (when was the last time you saw a $250 deductible?).

I actually applaud this move, because it encourages us to take a more active role in our care, and in how we access and use the healthcare system. The funny thing is, I don’t currently have any groups with Humana (that’s another post), but I think that this move is a positive step in the evolution of how we pay for healthcare.

And Speaking of Dead Folks…

This article caught my eye. I’m a fan of Jeff Foxworthy, and I immediately thought of his humor when I read:

No federal charges in theft of boyfriend's remains, and beer

SHEBOYGAN, Wis. - A woman accused of digging up and taking her boyfriend's cremated remains more than a decade ago - and drinking the beer that had been buried with them - won't face federal charges, a prosecutor says.

Sheboygan County District Attorney Joe De Cecco said Karen Stolzmann, 44, faces only a misdemeanor charge of possession of stolen property, punishable by up to nine months in jail and a $10,000 fine.

Stolzmann has been accused of digging up the remains of Michael Hendrickson from the Cambria Cemetery in Columbia County and drinking the beer that also had been buried, possibly out of spite for his family…

An exhumation discovered that Hendrickson's cremated remains were missing from the cemetery. Beer and cigarettes that were buried with him were also missing.

One wonders if the late Mr Hendrickson (and/or his brews and smokes) would have made it onto the database in yesterdays post.

The Dead Pool…

Recently, my friend Bob (be sure to check out his blog, Health Insurance 411) sent me an article about a new product: The Social Security Death Index Database. Briefly, the company makes available “a database of all reported deaths of reported Social Security number holders.” That is, if you’re in the Social Security system (and who isn’t?), and you die, you “make the list.”

So Bob and I had a brief email conversation about WHY someone (or some company) might need this information, and under what circumstances that need would be so great as to justify paying over $600 a year for this information.

We speculated that perhaps funeral directors would find it helpful, or even insurance agents (“Pardon me, Mrs Thompson, but I see that your husband has passed away. Did he have enough life insurance? Do you?”). But neither of us could figure out exactly who would pay for this kind of information, or to what purpose(s) it would/could be put.

So I moseyed on over to the site (which is easily navigable, and informative as well). I was surprised at the number of applications for such information:

- Bill collectors (kinda adds new meaning to “deadbeat”)
- Anyone who must be HIPAA compliant (medical providers, insurers)
- Mass marketers (who would presumably prefer that their lists remain current)

I’m still not sure how I feel about this. I guess it’s (technically) public knowledge, and I suppose that it could be a useful tool in certain businesses. But I’m also a little “creeped out” at the thought that news of my demise would be disseminated in that fashion.

Maybe I’m overreacting [ed: nooo!], but I just find this to be an unsettling development.

This is definitely a post for which I’d welcome feedback.

Brooklyn Bridge For Sale…

According to the Dayton Business Journal, “Anthem expects to save $40 million to $50 million this year as a result of dropping Premier from its network,” and “plans to funnel some of that savings back to businesses through quarterly premium credits.”

Leaving aside the plausibility of ANY insurer promising to “reduce rates,” nowhere in the article does the company representative [ed: Chris is an okay guy. This isn’t a slam on him, per se] explicate exactly how Anthem determined that it would save this amount of money by deleting Premier from its network.

But it gets better: these “premium credits” would only be available to groups of greater than 50 employees. The major problem here is that most employers fall into that “small group” (under 50 lives) category, and so will never see a penny in “savings.”

Notice the other “gotcha,” as well: those employers which ARE eligible will see that any savings will be offset (reduced) “based on how often their employees had used Premier services in the past.”

So why am I pooh-poohing such a generous offer from a carrier? Exactly what motivates me to “look a gift horse in the mouth?” Because I don’t think that this is coming from the gift horse’s mouth at all…rather, I think it’s coming from the other end.

What motive could a carrier have to publicly announce presumably proprietary figures (i.e. information regarding the amount of claims projected to be paid to a specific provider, or set of providers)? Politics, plain and simple.

As noted in the article (and by this blog a while back), Anthem and Premier have hired Lisa Kloppenberg, dean of the University of Dayton Law School, to mediate their discussions. And by announcing these alleged rate reductions in advance, it certainly helps Anthem in the court of public opinion.

I’ll be advising my clients not to spend those savings, just yet.

Some interesting HSA info…

Health Savings Accounts (HSA’s) are not really new; they’re an evolution of the MSA’s that (sort of) took off in the 1990’s. Briefly, the premise behind HSA’s is that most people, in most years, pay far more in health insurance premiums than they get back in benefits. The other major complaint I get (aside from premiums) is that people resent “bean counter medicine,” where whether or not a given procedure will be covered by insurance is determined by an anonymous voice on the phone, not the physician (or hospital, etc).

With HSA’s, one purchases a high deductible health plan (HDHP), which is generally less expensive than the typical, generic co-pay plan, and then puts the savings into a tax-deductible account. Money in the account is available to pay for medical expenses not covered by the insurance (e.g. expenses below the deductible, braces for the kids, bifocals for Dad, etc). Whatever money is left in the account at the end of the year is credited to my personal checking account.

No, sorry, scratch that last. Whatever money is left in the account at the end of the year simply rolls over to the next year, as the pool of available funds continues to grow. Nice.

One type of coverage which is generally and typically available on co-pay plans, but which I usually omit from HSA plans, is a prescription drug card. My philosophy on this is that it’s more cost-effective to pay for meds from the savings account. But according to online insurance source eHealthInsurance, in 2004 “(p)lans purchased included coverage for prescription drugs 99.4 percent of the time and coverage for doctor visits and other important benefits 85.4 percent of the time.”

According to this report, of the folks who purchased HSA plans:

· Nearly half are at least 40 years old;

· More than one-third are families with children;

· 40 percent have incomes under $50,000 a year;

· One-third were previously uninsured

I find that list item to be very interesting, and very important. As a dedicated proponent of the free market, I’ve always felt that the private sector would, could and should do a better job of making medical insurance available to the uninsured. So I was heartened by this validation.

An interesting challenge - Part II...

Well, I have my answer [see Update below].

Okay, actually, the client has indicated his preference, and I agree with his conclusion.

We have decided to go with individual medical plans. We can write them on a list-bill basis, which means that the employer will receive one bill which includes all 5 policies. The way this works is that he will deduct the appropriate amount from each employee's paycheck, and forward this as a lump sum to the insurer each month.

The benefits here are:

1) Simplicity: We won't have to worry that a carrier will either enforce or change their participation requirements, triggering the kind of frustration we've just experienced.

2) Each employee will have some choices regarding their coverage; that is, if Employee A wants a $500 deductible, he can have it, and if Employee B wants the $1,000 deductible, he can choose that, and save some shekels.

3) Individual plans are portable, which means that, if an employee leaves, he doesn't automatically lose his insurance coverage.

4) The employer will enjoy an immediate cost savings of approximately 40% (but there are trade-offs to this savings, as noted below)

We also discussed the disadvantages of going this route:

1) There is no maternity coverage, which means that young couples will need to plan accordingly.

2) The plans are medically underwritten, which means that unhealthy employees and/or their dependents may not qualify, or their benefits may be limited.

3) There are potential tax implications if the employer continues to subsidize the premium: with a group plan, such subsidies (e.g. the employer pays 1/2 the premium) are not taxable to the employee, and are deductible to the employer. In this arrangement, such subsidies are still deductible to the employer, but the employee will need to claim that subsidy as compensation. (I'm not an accountant, and I don't play one on TV. Please see your tax advisor for details)

BTW, I have STILL not heard from Company S whether or not they would have written this case. Guess they're not hurting for business.

UPDATE: Well, this is an interesting twist. I just spoke with Carrier S, and they ARE willing to write this case, after all. Their participation requirements are actually kind of interesting: A minimum of 75% of all eligible employees, not counting those employees who waive coverage because they are covered under another insurance plan [ed: like spouses or Medicare], needs to participate. If the 75% participation is met and if the participating employees are below the 50% of all eligible employees [ed: as it does in this case], then (the carrier) will write the group if everyone fills out the medical questionnaires.

Cutting to the chase, though, the employer has decided to go ahead with individual plans, primarily because of Advantage #1 above.

Whew.

Knockin’ down the Straw Man…

In the study of logic, one learns of the “Straw Man Fallacy.” Briefly, this method consists of arguing that since a=b, then of course f=g. Allow me to illustrate:

In a recent Letter to the Editor of The Free Lance-Star (link), Dr Peter Kamilakis writes:

"Anthem made $295 million profit in the first quarter of 2004. This is $100 million more than the year before. Compare Anthem CEO Larry Glasscock's "performance bonus" of $42.5 million in 2002 (working no nights or weekends) to what your family doctor earns working 90 hours per week under Anthem's miserable payment schedule, and you can see why doctors arrive and then depart the Fredericksburg area constantly.”

He goes on to ask:

“In this age of concern about health care and health insurance costs, who on earth would side with a monster like Anthem, which demonstrates such colossal greed?”

He concludes that:

"Only when Anthem loses their monopoly on health insurance in Virginia will the playing field be leveled.”

Allow me to state at the outset that I am no shill for Anthem. I do represent them (as well as many other carriers), but I have my own issues with the way they do business, as well. For example, they are among the lowest paying (if not THE lowest) carriers in the group market. And I am also troubled by the seemingly egregious amount that the CEO takes home each year (I am by nature a fan of the free market and entrepreneurial spirit, but this is not Mr Glasscock’s capital at work, it is the shareholders’).

But fair is fair.

The straw man in this argument is that the CEO’s compensation is the cause of the current state of health care in Fredericksburg (and, I would suppose, elsewhere, since the Good Doctor is apparently writing from Wisconsin). But it has no bearing on this subject. I also find these kinds of profits and bonuses objectionable, but they just aren't relevant. It is not a finite pie, with only so many slices to go around. It is based on contracts and market share, the latter of which is fluid and dynamic.

In his letter, Dr Kamilakis bemoans the idea that “where Anthem's payment did not match what the physician charged, the doctors wanted the option of billing the patient for the difference.”

Well, absent a network contract, doc's are always free to balance bill. OTOH, if there's a contract in place, they can wail all they want, but no one forced them to sign that contract.

Individuals (almost) always have the option to switch carriers. And employers often (usually?) shop their coverage annually, in order to stay ahead of the rate increases. But the sad fact is, Anthem (well, any BX, really) is almost always the 800# gorilla in a given market. Until employers and unions (and, of course, brokers) push other carriers, it will ever be so. Unfortunately, that's not likely to happen, because the bottom line will generally dictate where the market goes.

It's true that price is not the only factor when deciding on a health insurance plan or carrier. And it may not even be the most important factor. But it sure as heck is a MAJOR factor, and that's unlikely to change any time soon. Yet, I've (occasionally) found a comparable quote with a lower price than Anthem, and still ended up writing the case with Anthem. Why? 'Cuz that's what the client wanted.

The bottom line [ed: I really hate that term!] is that Anthem is a business, and its shareholders demand a profit. And the providers want their customer base (patients), and to be paid fairly and promptly. And agents want to get the case written, and issued.

It’s called a free market.

As a service...

To my clients, I've added a few product links to the sidebar.

The most interesting of these, in my opinion, is the Special Risk Medical plan. It's not for everyone, but it seems to offer the best (or maybe just least bad) alternative for those folks who are uninsurable.

Most folks, even with various medical conditions, are NOT uninsurable. Generally, once I spend some time digging out the medical info, and checking with the carriers, some offer will be made.

But for those folks who truly can't get past underwriting, there are precious few options:

1) HMO Open Enrollment. By law, HMO's are required to periodically "open the doors" to anyone who wishes to obtain coverage. Generally, these are folks who can't obtain coverage elsewhere, so these enrollment periods are somewhat like Russian Roulette for the carriers. As a result, the premiums for these plans can be pretty hefty.

2) Medical Service Discount Programs (e.g. Care Entree, et al). It's important to note that these programs are NOT insurance. They allow one to access Preferred Provider Organization (PPO) networks, and to then enjoy the discounted rates for various medical services and procedures. The primary drawback to these plans is that the discounts (which may be substantial) are predicated on prompt payment of the entire balance due, usually within a relatively limited timeframe (e.g. 10 to 30 days).

Well, that's fine if that balance is $200 or $300. But what if it's $20,000? Start off in the ER, get moved up to ICU for a coupla days, and this is not so far-fetched.

3) Special Risk plans offer a viable alternative to both HMO's and PPO's, but they are NOT a panacea. The primary benefit of such a plan is that they are often "guaranteed to issue," which means that the underwriting is limited to non-medical issues (e.g. actively at work, not hospitalized in the past "x" number of days, etc). They are reasonably priced, and offer access to both PPO networks (and thus discounted services) and discounted prescriptions.

But they are NOT comprehensive in coverage, and offer limited dollar benefits on claims. And, for out-patient services -- especially doctors' office visits -- benefits are meager, if available at all.

Happy Valentine's Day!

So here’s the thing….

The point is to blog every day. Or, more precisely, to post something of interest every day.

But what if there’s really nothing that fits the bill?

Posting for the sake of posting isn’t blogging: it’s cyber-babbling.

I still have no definitive answer from Carrier S regarding my “problem group.” (“An interesting challenge”)

I have had no luck in re-connecting with the young lady who may or may not be able to obtain health insurance. (“Right answer”)

There is a bit of bright news regarding the ongoing battle between Premier and Anthem: they’ve both agreed to arbitration, and chosen an arbitrator. She is a nationally-recognized authority in these types of cases, so perhaps we’ll see a satisfactory resolution soon.

So, I’ll wish y’all a great weekend, and attempt to have something worthwhile come Monday.

An interesting challenge….

One of my clients is a small business (13 employees) who we’ve had insured with Carrier P for several years. Their situation is unusual, because only 5 of the 13 employees are actually on the plan. The rest have coverage either through their spouse or MediCare (this business attracts a lot of senior citizens looking to supplement their retirement income).

The problem is that carriers have rules requiring that a certain percentage of employees must be covered on the plan. Typically, this ranges from 50%-75%. There are all sorts of games that get played with this, but the bottom line is that, when we wrote the case, Carrier P was the only one who would take it.

Now, the rates have become unbearable. Yet I have been unable to find a carrier to which to move. The two major players in this area – Anthem and United – both declined to even quote the case, let alone write it. Two other carriers also have declined.

One local carrier has essentially told me “maybe;” I’m awaiting clarification. ;-))

And one other carrier has yet to respond to my request.

So, what to do?

Well, there are a number of alternatives, some more attractive than others. One would be to dissolve the group plan, and (attempt to) write each of the covered employees their own individual plans. This method has certain benefits: each person could choose the exact level and types of coverage that they want. Each person would then own that coverage, so portability would not be an issue. And, typically (and paradoxically) individual coverage is less expensive than group.

The downsides are not, however, insignificant: for one thing, unlike group plans, with individual plans there is the possibility that a given employee would be unable to secure coverage, or could have one or more existing medical conditions excluded. Another drawback – particularly for younger folks – is that individual plans don’t cover maternity. Finally, it is more difficult (although not impossible) for the employer to subsidize the premiums on individual plans (i.e. pay for a portion of the premium).

There’s more, of course, but that’ll have to wait for tomorrow.

UPDATE (2/10/05): Well, I've heard now from that last carrier, and they, too, have said "no thanks." The challenge, from my perspective, is that I understand WHY they're telling me "no." What's frustrating is that I just know that there's a carrier out there that wants to say "yes."

More later.

Posting Comments -- Update

Okay, finally figured out how they work.
You can post "anonymously" (i.e. without registering):
Scroll down to a post's "comments" button, and click it. You'll see a screen with a large button that says "Sign In."
BUT, just below that button is one that says: "Or Post Anonymously"
Click on that, and you're good to go!

Sometimes, it’s hard to know the right answer…

I’ll share something personal: For several years now, I’ve had a little sticker in a place where I can’t miss seeing it.

Glued to the phone.

It’s a pretty simple little prayer: “May the action that I am about to undertake be worthy of You”

So as I said, it’s pretty simple, but sometimes it makes my job rather difficult.

Case in point: This afternoon, I received a call from a young single lady who recently had a child. She is experiencing several post-partum symptoms, most especially of the anxiety variety. Her medication currently runs about $120 per month.

And of course, she is uninsured.

And of further course, she wants to buy insurance so that the medication (and concomitant office visits) will be paid for by a 3rd party. The insurer.

(Perhaps tellingly, she made no mention of needing – or even wanting – coverage for her newborn).

OK, so here’s the dilemna. On the one hand, I have a fiduciary duty to my carriers not to send them “junk” (This is NOT a value judgment of the young lady, but of the case per se). On the other hand, here is someone who understands – perhaps – the value of insurance, and is seeking to purchase it.

On the gripping hand, this is akin to shopping for auto insurance from the cab of the tow truck.

So, what to do?

There was no question that I would at least look to see if she qualified for SOME kind of coverage. Interestingly (surprisingly?), one of my carriers indicated that this would not be an automatic decline, but that there may be some way to write this. Hmmm.

So what’s “the rest of the story?” Don’t know. I did tell the young lady that she MAY be eligible for coverage, and made a guesstimate of what that coverage might cost.

She’ll get back to me.

😃

LTCi (what the heck is that?!)

An alternative to cruising?

Long Term Care insurance (LTCi) is one of those coverages, like disability, that everyone says folks need, that all the financial guru’s says folks need, that all us insurance folk say folks need [ed: getting a little “folksy,” aren’t we?].

But so few people actually DO buy it (or buy into it).

Now we learn that one reason that so few folks own LTCi is because they can’t get it:

“More than half (57.2%) of individuals who apply for long-term care insurance after their 80th birthday are declined coverage according to Long-Term Care Insurance Sales Strategies magazine. At older ages, the percentage of applications declined was significantly higher...only one in 10 (10.7%) applicants who were between ages 50 and 59 were declined coverage.”

Now, granted, anyone who waits until their 80 to start even looking for such coverage is most likely going to be disappointed. But my take on this is that maybe I haven’t really been pushing it that hard with my clients. First, this type of insurance is a bit more complicated than, oh say, term life insurance [you need more!], but it doesn’t have to be rocket science (or as my techie wife would say, “it’s not computer science!”).

Really, when you get right down to it, LTCi is nothing more than disability insurance for retired people. That is, it’s a way to protect your assets from being eaten up by a need for care, whether in a nursing facility or the comfort of your own home. Now, statistics seem to show that only about 1/3 of folks over age 65 actually end up needing such care.

But think about this: there's only about a 1 in 1200 chance that we'll have a house fire, but we all have homeowner’s insurance, right? Granted, the bank makes us buy that, but you get the point: it’s much more likely that we’ll need long term care than that our house will burn down.

It’s all about managing risk.

BTW, a group of governmental agencies have launched the Long-Term care Consumer Awareness Project, with the goal of increasing consumers' awareness of the need to plan for potential long-term care needs. For more information, and even printed materials, check out http://www.ltcaware.info.

LTC = Long Term Cruise?!

From John McCaslin (click on the title above for link, 5th item down):

Our "Dramamine" column item from earlier this week — that it costs just about the same for an 80-year-old American to live out his or her days on a luxury cruise ship ($230,497) as in an assisted-living facility ($228,075) — generated considerable response.

"On our October cruise on Royal Caribbean lines, there was an elderly lady who actually resided on the ship 'Voyager of the Sea,'" writes Becky Jackson-Turner of Acworth, Ga.

"Medicare took care of her medical needs, which were few, and whenever the ship would pull in to its main port, she would disembark for a few hours. ...

"She told us that it was just more financially feasible to do this than living in an assisted-living home and was much more fun," Mrs. Jackson-Turner recalls. "She got to meet new people all the time, always had great food and always had her bed turned down for her when it was time to sleep — with a mint to boot.

"We were blown away, but even more so when she told us of at least 20 other people she knew who did the same, except a lot of them change ships every once in a while to add a little variety."

Now, I had intended to blog about LTCi soon (I'm still massaging that post), but this was too good to pass up.

UPDATE: I’ve been thinking about those numbers. I think that they’re high. At $228,000, that’s over $620/day for assisted living, which (around here, anyway) is on the high side.

And $230,000 for the cruisin’, well, that’s better than $4,400/week, for a single. Based on all the commercials I keep seeing on Food Network and HGTV, that seems rather high. Plus, if Granny’s cruising THAT much, wouldn’t she qualify for some kind of Frequent Sailor miles?

Still, it sounds like a pretty fun way to spend one’s Golden Years.

This always makes me crazy...

And I know that it shouldn’t, but: why do we (and I guess by “we” I mean health care consumers in general) assume that birth control should be a covered expense? And not just BC pills, but IUD’s, vasectomies, etc? (Warning: I’m about to go off on a rant about individual medical coverage; these issues are dealt with differently in group contracts)

Because it’s “preventive care?” On the same level as cholesterol screenings, mammograms, and PSA tests? I don’t think so.

And this has nothing to do with sexuality or morality, per se. It has to do with risk management, and the underlying premise of insurance. I don’t think that anyone believes that their auto insurance covers oil changes or tune-ups (or should), but aren’t these “preventive” measures? Our homeowners insurance doesn’t pay for the chimneysweep, but wouldn’t that be a preventive measure?

Why do we expect our health insurance to cover so much that is not risk-based? I suppose it could be that we perceive it to be so expensive, and we want to get our money’s worth. Or it could be that we’ve become so conditioned to plans covering so much that it’s tough to adjust to a lower level of coverage (I’m thinking here of folks who come off a group plan and pick up individual coverage).

But I just don’t understand WHY insurance SHOULD cover these things. Don’t we have any sense of personal responsibility? Should medical insurance cover weight loss plans? How about stop-smoking programs? Shouldn’t my insurance pay for me to join a gym club, or Jenny Craig? Where would it end?

I wonder if people consider how much MORE their insurance would cost if it DID cover these items.

Okay…I feel better now.

Sometimes I just don’t get it…

Case in point: One of my clients is a small (3 person) high-end carpentry business, made up of three brothers. One is the owner, the other two work for him. The owner asked me to put together a disability income program for them. After reviewing their needs and goals, I proposed that we write 3 individual plans (primarily because each had such different cash flow issues). They agreed, and we completed and submitted applications.

So far, so good.

Okay, 6 weeks later, the underwriter decided that only one of the three was insurable (medical issues). Great.

Back to square one*.

Okay, I thought, let’s go with Plan B: a group DI plan. Requested quotes for Short and Long Term Disability from a handful of carriers. Prepared to wait patiently for said quotes.

Surprise! Got answers right away. That’s the good news.

The bad news is that all but one declined to quote, and that one would only quote STD. Oooookay, what gives?

Well, about half the declines were due to the industry: carpentry. Note that I could write a garage; that somehow mechanics are a better risk than carpenters. Un hunh.

The other half said no because, and you’ll love this, the three employees are brothers. But hold on a sec….it’s not like they’re 23 years old living at home with mom. They’re all grown men, with wives and kids and mortgages.

Doesn’t matter, rules are rules.

So, now on to Plan C ½: We’ll take the STD (with a 6 month benefit), and write a special risk DI policy with a 6 month waiting period. The cool thing about being an independent agent is that I at least have a plan C ½. But IMHO, the carriers are being pretty shortsighted in not even looking at the case because they can’t see past two rules which make no sense (to me).

Just my $.02 for today.

*Why we passed on the insurable one will be the subject of another post

Okay, Smart Guy, Riddle Me This…

Another agent -- a close friend (and mentor) -- called me recently to pose this question:

“Hank,” he asked, ”how do you explain to your clients why health insurance keeps getting more and more expensive?”

Now, my wife insists that there are no coincidences, which is why I find it interesting that I received a call today from a (soon to be former, I guess) client, who complained that his rates had gone up AGAIN, for no good reason, and that he wasn’t going to pay any more.

Both calls really involved the same principles, and answers.

My initial response to Tony (the aforementioned friend) was tongue-in-cheek: I simply tell my clients that the rates go up so that I can make a bigger commission. The truly ironic part, of course, is that, for the most part, commissions keep going down. I went on to enumerate some of what I see as the primary contributors to recent rate increases:

First, the cost of prescription medications has become a bigger and bigger portion of the health insurance dollar. Of course, this is good in the sense that new medications (with the obvious exceptions of Vioxx, etc) mean improved health and quicker recovery. On the other hand, the cost of advertising the next “purple pill” drives the cost of the meds even higher. And, of course, we see the commercials and all flock to our physicians for a scrip for “that new pill.”

Second, “managed care” itself shares some of the blame. Let me explain that:

Years ago, managed care (HMO’s, PPO’s, etc) was touted as the answer to sky-rocketing premiums. And, for a while, bean-counting medicine seemed to work. But, as with so many such phenomena, it ran into the brick wall of diminishing returns. That is, there is a point where, no matter what you do, there is a minimum cost – a floor – below which prices cannot go. And when we hit that floor, a few years back, prices had nowhere to go but up.

Third on the list would be hidden costs, primarily in the form of government mandates. Insurance is primarily regulated at the state level, and each state requires (“mandates”) that certain coverages be included, regardless of whether a given insured actually wants or needs that coverage. Mandated benefits are estimated to account for as much as 17% of health insurance costs. Interestingly, Ohio is looking at ways to change this, by allowing carriers to offer “mandate light” plan designs.

Well, enough for now….more on this later.

BTW, I'd really love some feedback on this one (hint, hint)

Comments...

UPDATE: Okay, that didn't work. I thought that if I changed the settings to "anyone" can comment, then folks wouldn't have to register.

Obviously, I was incorrect (who'da thunk that?!)

So, it looks like you have to register to leave a comment. But, it's a pretty painless process [ed: nice alliteration]: just click on the "Blogger" icon in the upper left corner. It'll walk you thru the process (it's a little weird, because it also asks if you want to set up a blog yourself). You can register with a throw-away email (e.g. mail.com, juno.com, hotmail.com, etc).

I really want to have people leave comments, to get a dialogue going. So....Please don't be intimidated, go ahead and sign up!

In response to some emails, I've changed the settings for comments so that anyone can post one, not just registered folks.

Don't know how long I'll let that go; I'm new to this, so I'll play it by ear.

Meantime, it costs nothing to register (just click on the "Blogger" icon in the upper left-hand corner and it'll walk you thru), and it may help avoid hassles for folks later if/when I change the comments settings back to "registered users only."

Some Thoughts on Anthem vs Premier

Here in southwest Ohio, Anthem is one of the two 800 pound gorillas in the medical insurance area, particularly in the group field (the other being United Health Care).

In the Dayton area, Premier Health Associates includes two hospitals and about 100 doctors.

Recently, the contract between these two entities expired and, failing to find a compromise position, they parted ways.

The immediate effect of this fall-out was that one of the areas two best hospitals is no longer in the Anthem network, and a slew of specialists are also now “off limits.”

Which brings me to two seemingly unrelated observations:

First, it’s always interesting to me when someone says that their insurance carrier won’t “let them” receive some particular medical treatment. Last I looked, the only thing an insurer can do to dissuade you from undergoing treatment is to threaten not to pay for it. No carrier can actually prevent someone from seeking treatment. Even for out-of-network claims, many plans will cover at least a portion of the bill. And in an emergency, non-network claims are treated as in-network.

Second, I’m really surprised that the two players involved (Anthem and Premier) are still wrangling over this. Yes, the hospitals can afford to wait it out, but the physicians are really starting to hurt. Many (most?) people have health insurance through their employer, and have little – if any –say in which carrier that employer chooses. So more and more folks have to switch docs, leaving Premier’s physicians with a shrinking customer base (and that’s really what a patient load is: a customer base).

OTOH, surely Anthem sees a potential for other carriers -- whose contracts with Premier are still valid -- to step into the void, publicizing their on-going relationship with Premier. At some point, Anthem’s new business sales will begin to fall off, squeezing them, as well.

Of course, the folks who are really getting hurt here are the insureds, who signed up with Anthem believing that they would see no changes in providers. And as noted, it’s not as if many have a choice, or a voice, in the matter.

Why I Recommend High Deductible Plans

Over the past few years, more and more of my practice has involved individual medical plans. There are myriad reasons for this, but for now I’d like to focus more on the “what” than the “why.”

For example, yesterday a young lady called about medical coverage for her family (mom, dad, son). She had called a number of places before getting to me (hard to believe!), and every one of those places gave her a quote for a generic co-pay plan. I know that it’s easy to do that, and to fall in the rut of cookie-cutter offerings, but I’ve found that this isn’t always (or even usually) the best way to go.

So I recommended a plan with a $2500 (per person) deductible, with a drug card but without office visit co-pays, and – best of all – no co-insurance.

As an aside: I’ve been in this business for over 20 years, and the single most difficult item to explain is co-insurance. “It’s 80/20 coverage!” Oh yeah, 80/20 of WHAT? Oh, today it’s 60/40 but only if you go to Doctor Kildare. Sheesh!

Anyway, as I explained to this potential new client, her family would save well over $100 a month with this plan; it seemed pretty far-fetched that they’d accrue anything close to $1,200 in doctor’s office visits over the year. And on a large claim, she’d actually SAVE money.

How’s that?! Well, today’s generic plans include a $1,000 deductible, then 80/20 (ahah, there’s that co-insurance again!) of the next $10,000, and then 100% coverage after that. So that means on a big-ticket claim (say $50,000), her out of pocket exposure would be $3,000 ($1,000 deductible + $2,000 co-insurance). But the plan I proposed limited her out of pocket maximum to only $2,500. And she saved $1,200 along the way!

Okay, that’s my soap-box for today….