Thursday, March 31, 2005

Final (for now) Thoughts on STM...

Each time a new plan is written, both a new deductible and new pre-ex exclusion begins. Let’s take an example:
Jane bought a 6 month STM plan, which became effective on January 1st, and which had a $1,000 deductible. In March, she injured her knee. She sought and received treatment, and submitted the claim. The total amount of the claim, $875, was applied to her deductible. So far, so good.
Then, in May, she developed a kidney stone. Again, she sought and received treatment, this time to the tune of $3,500. Of course, the first $125 went to satisfy the deductible. That left a balance of $3,375, which was covered at 80%: the policy paid $2,700, and she paid the rest. Again, no problem.
In June, her policy expired, but she still needed coverage. By that time, both her knee and her kidneys seemed fine. She bought another 6 month STM, and hoped that she’d soon find a job with group benefits. But here’s the thing: she may have believed that she was simply renewing the (previous) STM plan but she was, in fact, buying a new plan.
In September, she reinjured her knee, again to the tune of $875. Pop Quiz:
The plan paid:
a) At 80%, since she’d already satisfied the deductible back in May
b) The $875 went toward her new deductible
c) Nothing
If you guessed "c)" you win; since she’d already been treated for the knee injury under the first plan, it was considered a pre-existing condition, and so it was excluded.
That’s why I really urge clients to avoid using STM plans for extended periods of time. A better way would be to buy a 3 month STM, and shop for an individual major medical plan to start when the STM expires.
Oh, one more thing: if you’re planning to travel while you’re covered under an STM, read your policy CAREFULLY. Most plans exclude foreign travel, so if you’re out of the country, you’re out of luck. Your agent should be able to help you find a plan that will cover international travel.

Wednesday, March 30, 2005

A Few More Thoughts on STM

Short Term Medical plans are wonderful tools, if used correctly and judiciously. For example, if you’re between jobs, and need coverage for a short and definable period of time, they’re an inexpensive alternative to COBRA.
Or, you’ve started that new job, but there’s a 90 day waiting period until your new group coverage starts. Well, and STM plan will nicely fill that gap, offering protection until the group plan kicks in.
Maybe you’ve recently graduated from college or tech school, and need temporary coverage during your job search. Again, if you’re pretty confident that this will be a short time, say 3 or 4 months, then STM may be just what the doctor ordered [ed: couldn’t resist the pun, could you?].
But there are some pretty significant downsides to these plans, as well. Recently, I had occasion to exchange emails with a nice lady in a nearby town. Her daughter is taking some time off from school (college), and is unsure about how to go about getting coverage. Her daughter’s too old to be on her folks’ plan, but doesn’t have access to a group plan.
Which seems to mean that a STM plan would be the way to go.
But not so fast!
Since we really don’t know how long she’ll need coverage, we don’t how many months to buy (STM is typically sold in monthly increments). And as I noted above, I am leery of using STM’s for more than a few months at a time.
Why, you ask?
Simple: STM plans do not cover pre-existing conditions, and there is virtually no way to continue benefits once the plan runs out, even in the middle of a claim. Most plans limit “extension of benefits.” That is, once the plan ends, so does your coverage. A typical plan might extend those benefits for a period of time if you’re currently hospitalized. Okay, but what if it’s chemo, or some other condition that requires lengthy outpatient follow-up?
More tomorrow…

Monday, March 28, 2005

The Uninsured: An Interesting (Partial) Solution…

“Beating government to the punch in thinning the ranks of the uninsured, a coalition of 60 large companies plans to offer voluntary health benefits to workers ineligible for employer-based coverage.”
One of our industry journals, in a recent article (click here to read the whole thing), explores how a group of large employers is addressing one of the key demographics of the uninsured: workers who are ineligible for “regular group” coverage because they’re part-time, or seasonal, or even temporary (think Christmas in retail). This group also includes 1099 (contract) workers, as well. It’s estimated that there are some 3 million folks who would fall into this category, representing a pretty decent chunk of the uninsured.
What’s most interesting about this plan is that the product has actually been designed to appeal to folks in this group. Instead of the typical insurance company method of just throwing in benefit after benefit, driving up the cost, and then heavily underwriting the final product, thus effectively rendering it either unaffordable or unattainable by those for whom it was designed, this group actually thought it through.
For example, there would be six different plan configurations available, including a catastrophic, “safety net” design with a high deductible. The first four levels of benefit would be guaranteed issue, which would make it attractive to those who want the least hassle in buying coverage, as well as those with current medical problems. The article doesn’t mention how, or even if, pre-existing conditions would be covered, but one presumes that this has been considered, and resolved.
Another factor is that the plan will (at least initially) be available only through companies with at least 5,000 employees. But, if the idea takes root, I don’t see why this couldn’t be expanded.
And there’s also this: synergy. If (when) this idea takes off, then why couldn’t smaller groups -- Chambers of Commerce, for example -- offer similar plans? Employer purchasing alliances are being talked up; what’s hardly ever mentioned is what product they would offer. This idea seems to answer that question.

Friday, March 25, 2005

Mangled Care

What started out as a good idea to hold down costs quickly became a nightmare for almost everyone. About 15 years ago the health care industry was introduced to a concept called Managed Care. What began as Managed Care quickly deteriorated into Mangled Care.

In the “good old days” life was simple. You had basic coverage that paid $30 per day for room & board and a $400 surgical schedule. Maternity was included in almost every policy, mom was allowed to sleep through the process, she stayed in the hospital 4 days and the entire stay was less than $200.

Not long after that carriers started introducing something new called “major medical”. If your basic benefits expired (after about 120 days of benefit) you could pay a $100 deductible (an enormous sum in those days) and have the rest of your medical bills paid up to the unheard of maximum of $50,000. Since no one had bills that high the $50,000 limit was considered frivolous and many opted for the more reasonable $10,000 limit.

Well “Leave it to Beaver” is no longer on TV, except in reruns. Moms no longer do housework in high heels and pearls, and Dad doesn’t come to the dinner table in a coat and tie. The days of choosing any doctor or hospital and having no more than $100 or so out of pocket no matter how extensive your care don’t exist any more.

Now you have to deal with networks, copays, deductibles, pre-certification, second opinions, continued stay review and discharge planning. You may THINK you are covered in full by your plan only to discover a secret of Mangled Care called hidden providers.

Hidden providers are the care givers that don’t belong to any networks, are free to charge whatever they want for their services, and don’t have to accept what your carrier offers as payment in full. A few examples of hidden providers include:

Emergency transport (ambulance)
Lab & pathology
Radiation & chemotherapy
Private duty nursing

This list is not all inclusive but it does hit the most common ones.

Injured in an accident and have to go to the hospital in an ambulance? Your plan may pay $500 or less for emergency transport. If you travel by ground that may cover a third of the bill. If you travel by air you will be lucky if $500 covers even 10% of the bill.
Need surgery? You probably want anesthesia.

Guess what? The gas passer is out of network. He can charge whatever he or she wants. If you are lucky your carrier will cover 50% of the bill, maybe even a bit more.

And you might need some lab work done, particularly pathology. Yep, that’s another hidden provider.

Your plan document may read in such a way that you THINK your out of pocket on a major claim is limited to $1000 or less, but guess again. Hidden providers can easily boost your out of pocket to $5,000 or more.

Mangled Care just means you can no longer get by with just a major medical plan. You probably need to look at some way to plug the holes unless you plan on taking a second mortgage to pay your hospital bill.

(Authored by Bob Vineyard, CLU - filling in for the talented and beautiful Professor)

Conversions, Continued…

Yesterday, I promised to elucidate [ed-Oooh! A $10 word!] how group conversion plans work. As you may have guessed, there’s not a lot of “there, there” so this will be a brief post.
In Ohio, carriers in the group market must make available a conversion plan for those who lose their jobs and are not eligible to continue their coverage under either COBRA or state continuation rules. The idea is that someone with a serious pre-existing condition may find it difficult or impossible to obtain (adequate) coverage in the individual market.
As you may recall, HIPAA is rather a one-way street; that is, group plans must (generally) recognize coverage from individual plans, but the reverse is not true. Individual plans can limit or exclude coverage for pre-ex, or even decline to insure one who is seriously ill. The conversion rule requires that the carrier offer some plan, one that doesn’t exclude pre-ex. But these plans are notoriously bad deals for those who can qualify for a regular policy. It’s true that the conversion plan can’t exclude a pre-exiting condition, but the benefits in such policies are quite stingy. There is usually a high deductible, no office visit co-pays or drug cards, and other limitations. And they are VERY expensive.
But not all carriers choose to do these conversions in-house. Many out-source this product to other carriers. Recently, I had occasion to do two conversions for folks who didn’t qualify under COBRA or state continuation. Interestingly, the carrier sent me to another insurer, which uses HIPAA plans (perfectly legit). This has the effect of moderating the premiums, offers a choice of two plans (instead of just one), and has a few “bells and whistles” built in (network discounts and an rx card). They’re still pricey (my sister calls this “spendey”), but they don’t seem to be as bad as the traditional conversion plans.
Have a great weekend, and a Happy Easter!

Thursday, March 24, 2005

When Good Groups Go Bad…

Okay, the group really didn’t go bad, but I liked the catchy headline. You may recall that I previously posted about a group that had particularly poor “participation” (“An interesting challenge”, posted 2/9/05). Because there were 13 employees, but only 5 elected coverage, it was difficult to find another carrier for the group.
In the event, the employer has decided to do away with the group altogether, and to have each employee apply for individual coverage. We found a carrier that would put all these policies onto one, convenient list bill, and the employer will take care of the appropriate payroll deductions.
Sounds simple, right?
Would that it were so. As you’ve no doubt already guessed, we’ve had a few setbacks. Specifically, two employees (as well as a spouse) have been declined due to health issues. I’m awaiting word on the other three.
Okay, so now what? How will the two employees who have been declined obtain coverage? Since there’s no COBRA issue here, then it falls to state laws. In Ohio, the test for continuing group coverage requires that the insured be eligible for unemployment compensation. Well, fortunately, neither of these two have actually lost their jobs. So what options are left?
Two, actually: First, by state law, group plans that are not subject to COBRA must offer a conversion plan to anyone leaving the group (or, in this case, the group leaving them). Such plans must have no exclusion for pre-existing conditions. Now, this does NOT mean that such conditions MUST be covered.
Well, let’s take a back problem, for example. Jane has some back problems, and has been successfully treated by her local chiropractor. The group covers this (up to an annual limit), and the doc is in network. Hoorah! But now the group goes away, and we’re offered a conversion plan that has no chiropractic coverage. There’s nothing in the law that says the conversion plan must offer chiro, so Jane will be footing the bill herself henceforth.
I’ll cover the types of conversion plans, and the other option(s), tomorrow.

Tuesday, March 22, 2005

A COBRA Primer – Addendum…

One last thing: In Part 2, I mentioned that there is no provision for claims to be covered after the last day of the 18th month. Here’s why that’s important:
Several years ago, I had a (life) client who was on COBRA. Now, this was the proverbial guy who had never been sick a day in his life. I had spoken with him several times about coming off COBRA early, and going onto an individual plan. His stock response was “okay, okay, I’ll get to it pretty soon.”
One day, about a week before the end of the 18th month, he suffered a MAJOR heart attack. His wife called, and told me the doc’s wouldn’t even operate because, and I quote, “his heart is mush.” He was in ICU, in pretty bad shape. His COBRA was thru Humana, so I called them to see how they would handle the claim after the end of the month. They replied (correctly, as I soon learned) that they wouldn’t; coverage would end at midnight on that last day.
But he’d still be in ICU, racking up a hefty-sized claim.
Fortunately, I knew that he would be a Federally Eligible Individual, and that we could get one of the HIPAA plans in place. I still recall walking into the ICU, briefcase in hand, and asking to see him. When I explained who I was, the nurses looked at me as if I’d escaped from the Psych ward upstairs [ed – insert punch line here]. Walking into his room, and seeing him with tubes and monitors arrayed before him, it was a truly moving sight. We finished the paperwork (well, all he really had to do was sign, which he could, and did), and we had coverage in place once Humana bowed out. But it is not an episode I’d care to repeat.
‘Nuff said.

Monday, March 21, 2005

A COBRA Primer Part 2…

There’s a lot of confusion about how long COBRA Continuation lasts. Generally, you can stay on COBRA until:
- 18 months from date previous coverage ends, OR
- 29 months if you become disabled during the first 60 days of your COBRA Continuation, OR
- 36 months of you were covered under a spouse’s or parent’s plan, and the spouse or parent becomes eligible for Medicare, dies, or becomes divorced or legally separated, OR
- If/when your previous employer goes out of business or drops the group plan altogether.
Remember, though, that COBRA is very complicated, and that these are general guidelines only.
When one elects COBRA one pays the full premium for the coverage. Since most employees only pay part of the premium while employed, it can come as quite a “sticker shock” to see the true cost of the coverage. And the employer can (and will) add a 2% “handling” or administrative fee on top of that. And the employer can charge 150% during the 11 month disability extension. Ouch!
There’s one more issue that needs to be addressed. While COBRA Continuation may seem like the easiest way to go if you quit or lose your job, it’s usually not the cheapest, and that 18 months goes by pretty quickly. For those with major health problems, or if you’re pregnant, it may well be the best route. But if you’re healthy, it’s generally better to get off of COBRA as quickly as possible. Individual major medical plans are usually cheaper, and you don’t have to worry that the coverage will run out in a year and a half. This is important:
Even if you’re in the hospital, in the middle of a claim, when the clock hits 18 months (or 29 or 36, see above), you’re done. There is no extension of coverage, it just ends. Needless to say, this can be a problem.
OTOH, I get calls from folks who’ve been told that they should skip COBRA and purchase a Short Term Medical plan instead. STM plans have some attractions: they are usually quite inexpensive compared to “regular” individual medical plans, they require little (if any) underwriting, and they can be issued almost immediately. But, there are drawbacks as well: they don’t cover pre-existing conditions, they’re also limited in how long they’ll last, and they are not always considered “prior coverage” for HIPAA eligibility. So be careful in considering them.
Have a great week!

Friday, March 18, 2005

A Dilemna Resolved…

For some time, I’ve been trying to determine whether or not to post on the Terri Schiavo case. For those who may not be aware, Terri is a woman who has been in a (for lack of a better term) vegetative state for many years, on a feeding tube but not life support. Her husband, citing her wish not to be kept alive by articial means, has sought to have the feeding tube removed. Her parents have sought to prevent this.
There is a great deal of controversy in this case. At first blush, this appears to be a “right-to-die” versus “pro-life” debate, and I have endeavored to keep overtly political issues from this blog. Due to various lawsuits, the cost of the care is apparently not an issue, and there don’t seem to be any obvious connections to insurance.
So why am I posting about it?
If you’ll recall, I mentioned previously that I keep a little sticker close at hand. It says: May the action that I am about to undertake be worthy of You.” Generally, this has to do with how I treat my prospects and my clients. Terri Schiavo is neither, but I feel compelled to write about this.
I have concluded that this is not a conservative vs liberal issue. It isn’t even about the right to die. We can debate all day long about whether or not someone has the right to take his own life. And it’s not about “drastic measures;” she is not on a “vent,” she will not die immediately once the tube is removed.
She will starve to death, slowly, over the next week to 10 days.
As a human being, not a conservative or liberal, I find that unconscionable. It is decidedly NOT worthy.
Here are two blogs, one right-leaning, one left-leaning, that are following this case, and have constructive suggestions for how one can become involved, or at least learn about what’s happening. I urge you to click on (at least) one:
COBRA Primer returns Monday.
Have a great weekend!

Wednesday, March 16, 2005

A COBRA Primer (Part 1)…

The Consolidated Omnibus Budget Reconciliation Act of 1986, aka COBRA, was a landmark piece of legislation. One of the primary benefits of this law is that it provides for a continuation of group health coverage that otherwise might be terminated.
In English, this means that, if you lose your job, you don’t necessarily lose your insurance. This is important because, if there’s an ongoing medical condition, the coverage stays in force (at least for a while).
Since COBRA is law, and not insurance, I tend not to answer a lot of questions about it.
Simple, really: I am not a lawyer, and I don’t play one on TV.
That means that if I advise a client – especially one of my groups – on a COBRA issue, and I’m wrong (which, believe it or not, does happen)(rarely), then I could be in big trouble.
OTOH, there are times when it’s appropriate to help folks who call me determine what to do in a given circumstance.
Please keep in mind that I’ll be dealing in generalities here, but hopefully in a way that will be helpful to folks who just want some general, simple information about this complex legislation (which changes all the time).
In general, if a company has 20 or more full time employees in a given year (note: not necessarily ALL year; if there are usually 18 employees, and the boss hires 2 more full time to help during the Christmas rush, then COBRA comes into play), then it will need to be compliant with COBRA. This means that each employee, and each of their covered dependents, has certain rights. The most important one, IMHO, is that each “beneficiary” (government lingo for “person with COBRA rights”) can keep their coverage in force, with no exclusions or restrictions due to pre-existing conditions, for at least 18 months.
Why the “at least?” Well, in general (there’s that qualifier again!), each person can keep the coverage for 18 months. But some folks (for example: disabled ones) can actually keep it longer.
The biggest drawback to COBRA, in my experience, is that nowhere in that acronym are the letters AAAP (“at an affordable price”). The beneficiary has to pay the full price for the coverage, plus an additional 2% to cover the previous employer’s administrative costs. If you’re used to seeing $25 deducted from each paycheck to cover the insurance, there’s a bit of sticker shock when you see that the real amount is $400. As happens.
Okay, I’m running long here, so I’ll pick this up in the next post. Meantime, please feel free to leave a comment (or send an email) if there’s a specific topic you’d like to see me cover.

Monday, March 14, 2005

Employer-based Long Term Care coverage…

My better half, our brother-in-law, and a dear family friend all work at a local Fortune 100 company (which shall remain nameless, unless you happen to catch “Law and Order”). Like many large employers, this one offers the option of purchasing a Long Term Care insurance plan thru the magic and convenience of payroll deduction. All three have asked me to take a look at the plan(s), and render my professional, independent, expert opinion.
Such as it is.
These types of plans fall into two general categories. The first requires that, in order to keep the coverage, one must remain with the employer that offered the plan in the first place. The second type lacks this requirement; the plan is “portable,” meaning that you own it regardless of where you may work. If you leave the original employer, you’ll give up the payroll deduction benefit, and have to pay the premiums directly to the carrier. But the coverage stays the same, no benefits are lost, and the premium doesn’t increase due to this change.
Another area where such plans will differ is in the level and types of benefits offered. Because many such plans (including this one) are offered on a “guaranteed issue” basis, there is no medical underwriting. This is handy if one has on-going or substantial health problems. On the other hand, these products are priced to reflect this exposure. These plans cover nursing home stays, of course, but typically also offer additional benefits, such as increasing benefits to offset inflation, return of premium, and waiver of premium while “on claim.”
One last thing to consider: the rates for such plans (as for almost all LTCi) are NOT guaranteed. The carrier can’t raise YOUR premium based on claims or age, but can raise them for the group as a whole, usually based on their claims experience.
On a final note – and this is pure opinion – I am not sanguine about younger folks purchasing such coverage. How do I define “younger?” Good question! Really, I think those under 45 or 50 should be loading up on disability insurance coverage first. “Paycheck insurance” pays the bills, puts food on the table, and generally replaces lost wages. If one has a comprehensive disability plan (or plans) in place, THEN it may make sense to purchase LTCi.

Thursday, March 10, 2005

Putting the middleman back in?

No kidding.
But this article focuses on an area that, until recently, hasn’t had a lot of media play: personal health care advocates. These folks will help you make sense of the bill you just got from the hospital, or help you determine whether you need a referral for that knee surgery. And the service costs just $400 a year for a family.
I looked through their website, and they seem to offer a great array of these types of benefits. Basically, they become your personal HR department.
I have mixed feeling about this. On the one hand, as a professional agent, I expect that my clients will call me when they have questions on their bills, or an issue about coverage. So on that level, I resent that they’re paying someone else to do my job.
On the other hand, clients who use this service cease being my service problem, and I can devote more time to sales (which is how I earn a living). It’s not that I mind doing the service work – I don’t – but hey, this takes some pressure off of me, and they’re not really my competition.
But there’s a part of me that is concerned that, if and/or when there comes a major claim dispute, or a substantial coverage issue, I’m going to have to become involved anyway, but I’ll have no knowledge or records of what has transpired thus far, thereby severely hampering my ability to help resolve the problem.
I’m going to noodle on this one a while…

Tuesday, March 08, 2005

Late Breaking: The Sun Rises In The East…

As I mentioned the other day to 'she who must be obeyed,’ I understand that Dayton just isn’t a large enough market to support two daily newspapers.
Nonetheless, surely the Dayton Daily News could afford to hire a reporter (or three) who would at least make an effort to explore more than one side of a given issue. Today’s rant is in response to this (literally) incredible headline:
The article, about a recent study done by the Service Employees International Union, begins by noting that a “patient without insurance coverage typically is charged more than twice as much for hospital expenses as an insured patient…”
No kidding!
In a related development, it was revealed that people with coupons paid less for a Taco Salad than those without.
Please don’t assume that I am heartless or uncompassionate about the plight of (many of) the uninsured. But nowhere in the article will you find the terms “insurance network” or “negotiated rate.” Because of such agreements, providers are PROHIBITED from charging more than a specific amount. If you’re not a party to the contract (i.e. an insured with access to network providers), then you don’t get the discount. And that is the WHOLE point of the exercise: all the rest – Medicare, medical bankruptcies, garnisheed wages – are simply red herrings. They have nothing to do with the situation. They’re there simply to make insurers and providers seem like heartless, greedy sharks. No doubt some of them are, but this does not advance the cause.
So, absent a pre-negotiated and agreed-upon set of discounts, the provider can – and should – charge what they will. It’s called the free market. Providers that charge too much, or who are unscrupulous or engage in discriminatory practices, will eventually be run out of business, or be subject to fines, or worse. Those that find ways to attract paying customers will see their business grow.
I love this conclusion: "The solution is to make sure everyone has adequate health coverage."
Yeah, like that’s worked out so well for auto insurance.

How much is Too much?

Over at California Medicine Man, several of us folks are having a mini-debate about how helpful it is for patients to research their medical conditions and treatment.
I’ve long been a proponent of consumer-driven health care, which has come to mean different things to different people. In my neck of the woods, CDHC means coupling high deductible health plans with tax-advantaged savings accounts, thereby empowering the insured/patient with the financial ability to make informed health care decisions. Implicit in this concept is the idea that, once empowered, the insured/patient will want to make the most cost-efficient decision, and will seek out as much information as possible in order to do so.
From where will this information come? Well, a variety of sources. First and foremost, the patient should be willing and able to ask the provider whether or not a given course of treatment is necessary, or whether there are more cost-effective measures that can be taken. Another resource would be, of course, the internet. Still another would be the myriad of “self-help” books about medicine in general, and a given condition in particular.
This in turn leads to other questions: How will the provider respond? How will a patient/insured know what questions to even ask? Given the ofttimes overwhelming amount of information available on the web, how does one determine what’s true and what’s not? In short, how much information is too much?
It seems to me that an educated consumer is a happier and healthier consumer. But there must be some line that, once crossed, leads to a diminishing understanding of the condition or treatment at hand. Certainly, it’s helpful – and important – to ask the provider about alternative protocols. And I think that places like WebMD can be helpful for superficial information. But I’m less certain about how much deeper one should go in such research. At some point, I think this will lead to information overload, and the insured/patient may ultimately be so confused that he chooses to do nothing.
And that is NOT “a good thing.”

Monday, March 07, 2005

“Survey says…”

Years ago, I used to love to watch “Family Feud.” Mostly, I wondered how many of the female contestants Richard Dawson would kiss. I suspect that, in today’s PC word, he wouldn’t even take the chance.
Which brings me to a phone call I received last week. One of our carriers, with whom I’ve done business for almost 20 years, called to see why I wasn’t writing very much with them lately, and if there were things they could either do, or stop doing, which might entice me to place more of my business with them.
I’m always happy to talk with carriers about these issues. For one thing, it gives me an opportunity to vent to someone at the home office. For another, I’ve become concerned lately because I’ve been putting so much business with one carrier (not the one which called), and I really value my independence. So, if I can spread a little more of the business around, I’d be happier.
In any case, we discussed some of the issues which cause an agent to use Carrier A over Carrier B. Price is important, of course, but it’s only part of the mix. I have no problem suggesting to a client that they pick Carrier B, even though their rates are a bit higher, if they offer superior service, or easier underwriting, or better plans. But the rates do need to be competitive; as it stands, Carrier B is usually 15% to 20% higher than Carrier A for similar plans, and they are much more difficult in their underwriting. Their after-sale service is superb, but you have to get the case sold - and issued - first.
Another reason I’ve been using Carrier A so much is that, unlike Carrier B (the one which called), they offer 6 different underwriting classes, versus only 3 for Carrier B. And also unlike Carrier B, they don’t “rider” (exclude) conditions or benefits. That is, if Joe Shmo has had a knee replaced, Carrier A will charge him more, but won’t exclude the knee or medications. Carrier B, tho, will often do both: exclude the condition (at least for a year or two) AND charge a higher premium. I just don’t think that’s right.
You may have noticed one aspect of the sales situation which I haven’t mentioned: commissions. Truth be told, I often don’t even know what commissions are paid on which cases. Generally, the carriers all pay more or less the same amount. So that really hasn’t been a factor in my choices of where to place business.
All in all, it was an interesting conversation (at least from my end!). I’m looking forward to seeing what, if any, changes Carrier B makes in order to increase their market share.
It’ll be interesting to watch.

Friday, March 04, 2005

The Dog That Didn’t Bark...

In the classic Sherlock Holmes case, the great detective was able to solve the mystery by the absence of a certain behavior. In essence, he could deduce the solution because something didn’t happen.
In real life, we don’t always have that luxury.
Case in point is this story from the Dayton Daily News:
“More than one-third of Montgomery County's employees in the Anthem health-insurance network switched their coverage to UnitedHealthcare last month…
Another employer with significant migration from Anthem to United was Children's Medical Center. About 200 employees there shifted during last year's normal open enrollment.”
While these may seem to be pretty substantial defections, the numbers themselves are pretty meaningless.
Well, two reasons. First, it’s a pretty poorly-kept secret that between them, Anthem and United pretty much “own” the Dayton market. There’s a joke among most of the agent/broker community that there exists a secret tunnel between the two 800# gorillas, and that each year they just swap files with each other. My point is that the story does not tell us how far – if at all – these changes deviate from the normal back-and-forth between the two carriers. It also doesn’t look to see what other factors may be involved. It’s deceptively poor logic, because it implies a correlation from facts not in evidence. For example, the implication is that Anthem has “lost” so many members solely or primarily because of the Premier kerfuffle. But would it have been helpful to know that this year, UHC’s rates were 20% less than Anthem’s? I’m not saying they were, just that rates are also important, and there is no attempt in the article to take them into account, nor to at least examine if there were other significant differences which could account for this apparently dramatic shift.
The other dog whose yelps were absent is how many UHC members have gone over to Anthem in the same time period. I have no idea, but neither does the article even bring this up. I do know that I’ve personally written Anthem business (both group and individual) even during this time, including moving cases from United to Anthem.
What does that prove? Well, frankly, nothing. Which is exactly the same as the article.

Thursday, March 03, 2005

Promising New Legislation – Part II

In Part I, we discussed the first three major areas of HB and SB 5. In this post, we’ll explore the other two areas under consideration. To refresh your memory, these would be:
- Health care providers would be required to provide consumers advanced notice of health care services costs
- Proposes an analysis of a high-risk pool as a health insurance option for uninsured Ohioans, and further analysis of how to increase participation in small employer purchasing alliances.
The first item is interesting. According to my friend Bob in Hotlanta, this is being proposed in Georgia, as well: SB83 would “require hospitals and medical facilities to provide estimates of charges to patients.” I’m kinda ambivalent about this. On the one hand, when I walk into McDonald’s, there’s a sign that tells me how much that Big Mac is going to cost. So how come I can’t walk into my doc’s office and get the same thing?
Well, for one thing, everyone pays the same amount for a Big Mac; i.e. there’s no “Burger Network” or HMO. But based on contracts and negotiations, there may be a significant variation in what different patients pay, depending on with whom each is insured (just ask Anthem insured’s going to their Premier doc’s).
Finally, it’s interesting – and a little frustrating – that Ohio is one of the few states that do not currently have a high-risk pool for uninsured folks. Certainly the market is profitable enough to support this (such pools are generally funded by insurers writing business in a given state). So that’s a positive development.
I’m reserving judgment on the employer purchasing alliances. There’s an awful lot of misinformation out there about these. For one thing, they look a lot like MEWA’s to me. For another, I have often been struck by how many people buy into the “low group rate” mantra, without understanding that this is a classic oxymoron. Benefit for benefit, group plans are generally MORE expensive than individually issued plans. Why? Well first, because of the state mandated benefits built into such plans (see Part I below). Chief among these is maternity coverage, which is almost always excluded under individual plans. Finally, group insurance is guaranteed issue; that is, except for certain marketing restrictions (minimum size, participation, industry type), group carriers must issue plans to even sickly groups with high claims. Individual plans can exclude conditions, and even decline coverage.
This is definitely the “must-watch” legislation of the current session.

Tuesday, March 01, 2005

Promising New Legislation – Part I

House and Senate Bills 5 may blow some much-needed fresh air into the Ohio small group market. Among the proposed changes:
- New “Flexible Health Benefit Plans” would be created for small business employers
- Availability of health savings accounts (HSA) would be increased by encouraging more HMO participation
- Would allow HSA products to be reinsured through a state operated reinsurance program
- Health care providers would be required to provide consumers advanced notice of health care services costs
- Proposes an analysis of a high-risk pool as a health insurance option for uninsured Ohioans, and further analysis of how to increase participation in small employer purchasing alliances.
This post will examine the first three items on that list. I’ll cover the other two in a separate post.
I do see the overall plan as a welcome change from “business as usual.” The first two items merge well with the drive toward more consumer driven health care. The Flex Health plans envision a major reduction in the number and scope of mandated coverages. It’s been estimated that as much as 17% of the cost of health insurance is due to government-mandated benefits, often ones that most people don’t even want.
I seriously doubt that we’d see a substantial growth in the actual purchase of HSA plans due to increased marketing by HMO’s. Let’s face it, MSA’s/HSA’s have been available for a long time now, and it’s not availability that has limited their expansion in the marketplace. It’s the fundamentally flawed pricing model.
I’ll reserve judgment on the efficacy (and, indeed, the necessity) of reinsuring HSA’s. As noted above, it’s not availability that has limited their growth in the marketplace.
To be continued…