The CBO Director's Blog

Did you know the the Director of the Congressional Budget Office has a blog? It's always interesting to read first-hand what's been said...and then see how it appears in the media. Here's a link to the section dealing with Healthcare issues.

Off-Topic, But Incredibly Cool

[Welcome Industry Radar readers!]

In case you haven't seen this, a Beluga whale turned Lassie, saving a struggling diver from drowning in sub-zero temperatures:

"Terrified Yang Yun thought she was going to die when her legs were paralyzed by crippling cramps in arctic temperatures ... I thought that was it for me - I was dead. Until I felt this incredible force under me driving me to the surface."

Just for that, I'm giving up cavier this week.

Ennie Time is a Good Time [BUMPED & UPDATED]

For the third straight year, our good FoIB Fat Dragon Games has been nominated for its industry's most prestigious award, The Ennie. This is all but unprecedented, especially when one considers that FDG is run by one (rather talented) person. Tom's up against some major industry Titans (including Hasbro!), and he's once again asking for our readers' help.

Please take a moment and click here, then scroll down to Best Miniature Product (the 12th category) and select '#1' next to "E-Z Terrain: Cliffs and Mountains." Then, scroll to the bottom and click on "Submit my votes."

Thank You, and we'll let you know how the vote turns out.

UPDATE: Voting ends this Friday (7/31/09), so if you haven't already voted, please do so. Thanks!

Cavalcade of Risk #83 now online

Nancy Germond has this week's Cavalcade of Risk. Do stop by for thought-provoking posts on all things risk-related.

Deficit Neutral Healthcare? In a word, No.

[Welcome LGF readers!]

Much discussion has ensued regarding the impact that ObamaCare will have on the deficit. Unfortunately, the truth is much darker than the Party in Power© would have us believe.

This graph, prepared by the nonpartisan Congressional Budget Office, charts the path that we'll be running down if the PiP© gets its way:

[Hat Tip: Hugh Hewitt]

Isn't That "Special"

No comment:

"The proposed health-insurance bill from the House of Representatives refers to mentally disabled people as "retarded"

Okay, maybe one: how dare these people presume to lecture us about how much more they care about those less privileged?

Stupid Carrier Rant: Pre-Screens

[Welcome Industry Radar readers!]

Sometimes, carriers seem like they're begging for ObamaCare. Case in point: pre-screening small group plans. When I'm asked to quote a small group, I ask for a "census:" a list of employees' names (usually only first or last), sex, age or date of birth, family status (single, married, etc) and any known medical conditions. I'm always careful not to link an given employee to any condition; generally, it's really only important that we know what the condition (and any treatment or med's) is.

The point of that last bit is that, without knowing what problems may exist in the group, the carrier's going to just provide me with "street rates," which are rather like MPG on cars: useful for comparative purposes, but not particularly realistic. If I provide medical info, the carrier has an opportunity to provide a rate that's likely to be pretty close to the actual premium if/when we write the case.

This levels the playing field somewhat: you can get a feel for how certain carriers treat, for example, asthmatics vs diabetics. Comparing a screened rate to a street rate gives the latter carrier an unfair (and unrealistic) advantage. So it's really in all carriers' interests to make that process as easy and useful as possible.

But of course, we can't let common sense stand in the way of insurers' stupidity.

For small group, I use the services of a General Agency (think: wholesaler) which means that I can send in one Request for Quote (RFQ) and get multiple proposals. Typically, these include Anthem, UHC, Aetna, Humana and Medical Mutual (although others are also available). For a little while now, Humana and Aetna wouldn't provide pre-screened rates for any case, and now UHC has gone a step further: unless I provide the employees' and dependents' full names, heights and weights, no pre-screen.

This is stupid.

It's unlikely that an employer would know all of his employees' - let alone any of their dependents' - heights and weights. To get that, you really need an application from everyone. But that's already at the enrollment stage, which you can't get to without first getting quotes and choosing a carrier. Talk about the cart drawing the horse!

Which means that, for all intents and purposes, these carriers have determined that they don't need to provide more accurate quotes. This means that I really can't show any pre-screened quotes, because there's no way to know what the other carriers will ultimately do. Yes, I can (and will) explain to prospects that these numbers are for comparative purposes only, and will likely bear no resemblance to final, actual rates. But if you're an employer, especially one who's seen another premium increase on the current plan, wouldn't you want to know if it's even worth the bother of having all your employees' complete an application for a plan that's potentially even more expensive?

Sheesh.

Ch-Ch-Changes (and Your Health Coverage)

Until ObamaCare (or some variation thereof) actually passes, we live in a HIPAA-oriented health insurance world. As part of an ongoing series of informative vidclips, Humana explains how changing insurance plans (at least on the group level) works:

By necessity, of course, the information in the vid's pretty limited. So, a friendly challenge to our readers: how many items could you add to that clip to present an even broader picture of Life Under HIPAA©?

Nip/Tuck/Tax

Thinking about a tummy tuck? How about a facelift or "augmentation" surgery? Better think again:

"Face-lifts, tummy tucks and hair transplants could be hit with a new tax to help finance the trillion-dollar healthcare overhaul plan, according to sources familiar with the Senate talks."

One has to wonder, though, how an effort lauded as "deficit neutral" could give rise to so many proposed tax increases. Oh, that's right, by raising taxes, we can keep the deficit low. I'm no economist, but something about that equation strikes me as, um...unlikely.

Now, regular readers know that I'm very much taken with the concept of "medical necessity;"still, it never occurred to me that penalizing folks for those choices was a grand idea. But that's just what Congress is mulling:

"It would target procedures prohibited under Section 213 of the tax code, which deals with itemized deductions for medical expenses not covered by health insurance."

So, it's a hat-trick: not covered by insurance, hence not eligible for in-network pricing (discounts) and a hefty tax penalty to boot(y)? Is that part of that whole "soak the rich" mentality that's going to lower medical costs for the rest of us?

I didn't think so: a similar tax scheme in the Garden State yielded only about "25 percent of anticipated revenue since it was enacted in 2004 and imposes "another bureaucratic layer," including questions of how to determine what procedures are eligible."

Yep, just what we need: another "bureaucratic layer" is just the ticket to reining in health costs.

Sounds like a classic case of cranial-rectal inversion to me.

On Your Mark, Get Set, Grand Rounds!

Captain Atopic hosts this week's Tour de France-themed Grand Rounds. Accompanied by beautiful photographs, there's plenty of great info to be found.

From the Mailbag: Life Insurance Times 2

A reader asks:

Can I have more than 1 life insurance policy? What "gotcha's" should I be aware of?

Yes, you can certainly have more than one life insurance policy. For example, lots of folks have one through work (usually as part of their group medical plan), and another they bought on their own. The advantage to the former is that the rates are usually low (since the face amount is usually only $10 or $15 thousand). The advantage to the latter is that it isn't tied to your job, so you don't give it up if you change employers.

Also, many people have more than one kind of policy: for example, a term plan to cover the mortgage, and a permanent one for longer term needs (income replacement, final expenses, etc). Some folks also find variable policies (which have sub-accounts that mimic mutual finds) to be useful in retirement planning.

If there's any "gotcha" (and I'm not saying there is), it's that carriers generally try to avoid over-insuring folks. That is, having so much insurance - in total - that one is "worth more dead than alive." So they'll ask about other plans already in place, and whether the new policy replaces or supplements those.

It's also a good idea to review your policies on a regular basis. One's needs, goals and desires change over time, and one's insurance policies should reflect these. And that's also a good time to make sure that beneficiary designations are appropriate and up-to-date.

ObamaCare: Clueless or Brilliant?

From the Why Didn't WE Think of This Department:

"(R)ather than relying only on the Medicare actuaries for such verification, along with other suggestions, such as including an across-the-board reduction in payments as a fallback mechanism if the council did not produce proposals that generated adequate savings." [ed: emphasis added]

This, from the administration's Budget Director, Peter Orszag, commenting on the latest CBO projections showing that ObamaCare proposals will "actually save almost no money over 10 years."

Well, reducing payments for services is certainly one way to cut costs; one wonders, though, how the actual health care providers might feel about that. As Bob has repeatedly pointed out, less than "half of all doctors do not accept Medicare assignment."

Another pay cut for doc's? At what point do they start "Going Galt?"

Sheesh.

Once Again: The "Hidden Chart"

It seems that the current Party in Power© doesn't much like the light of day shining on their misguided attempt to "transform" American health care. A group of Republican lawmakers attempted to mail copies of the chart to their constituents, which effort has been thwarted by the PiP©:

"Rep. John Carter (R-Texas), the secretary of the House Republican Conference and a former District Court Judge, is having his messages to constituents censored by Democrats on the Franking Commission. Republicans are no longer allowed to use the words “government run health care” in the communications to their constituents."

We don't need no stinkin' Frankings:

Congress & Econ 101: Fail

[Welcome Industry Radar readers!]

What is it about Congresscritters that completely blinds them to simple economics? Take the current "health care debate:" one of the arguments against the Public Option is that it will encourage employers to drop their current group plans, leaving their employees to fend for themselves via the PO. The counterargument is that, by doing so, these employers will face a large fine - an additional 8% payroll tax.

The counter-counter-argument is that employers will gladly pay this fine, if it means they can successfully rein in their total expenses by dropping their current coverage.

Both of these schools of thought flunk:

No employer will ever pay the fine.

That's so important that it bears repeating:

No employer will ever pay that fine.

But Henry, you may argue, of course they'll pay it if they drop their group policy. It'll be the law!

To which I'd reply: So what?

Employers won't pay that fine any more than they pay for the group coverage in the first place. It is a cost of doing business that comes out of the employee's gross wages. Employers don't pay any of those costs, either. They are simply deducted from the employees' wages when calculating the total cost of employment.

Likewise, these "fines" will be passed along to employees (in the form of lower wages) and consumers (in the form of higher costs).

Why is that so difficult to understand?

Cavalcade of Risk #83: Call for Submissions

Nancy Germond hosts the next Cavalcade of Risk, online next Wednesday. Submissions are due by Monday (the 27th).

Nancy reminds you to include:

■ Your blog's url

■ Your post's url

■ The post's trackback URL (if available)

■ A (brief) summary of the post

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

You can submit your post via Blog Carnival or email.

Obamacare

From my father's blog...

In an effort to revive public approval of his Health Care Plan, and to reassure the American people that they would continue to receive prompt, quality health care, President Obama announced that he was recruiting senior executives from inside government departments. Their experience, he announced, should silence all criticism of the way Obamacare would be managed and should reassure the American people that he had their best interests at heart.

He announced a nine (9) person Management Committee with complete oversight of America’s entire health programs including medical personnel (doctors, nurses and technicians), medical and nursing schools, medications (legal and illegal), hospitals, nursing homes and cemeteries, medical devices and medical manuals and books.

The nine (9) person Committee would be appointed by him - three (3) from the Board of Directors of Amtrack, three (3) from the Management of the Postal Service, and three (3) from FEMA, all of whom will have had experience with the Katrina rescue mission. "I hope to have a racially diverse group and a gender neutral group (although, unless we use a transgender cross-dresser, it may be difficult to divide two sexes into a nine member Board.) If I have trouble on selecting these members, ACORN has promised to help and their reputation is unblemished, almost."

"The outstanding way these departments have performed over the years should give rest to any rumors that I will not appoint experienced executives to run 1/6th of the American economy. Their background cannot be matched by any Board of Directors of any corporation or labor union in the country, no matter what the industry."

Yes, he made that up. I hope.

Dr Price Goes to Washington

This video, of Rep Tom Price (R-GA), takes "Dr" Nancy and Co to the woodshed. Rep Price, a real physician, diagnoses the problem, and explains why the Democrats' "cure" is worse than the disease:



[Hat Tip: Reader Fred W]

Health Wonk Review is up

Paul Testa hosts this week's collection of wonky posts. Paul's 'Review pays tribute to State Fairs and Carnivals, so bring your appetite for fun and knowledge.

So, Doc's Aren't Stupid After All... [UPDATED]

[Updated - please scroll down]

They're just greedy and short-sighted.

Say you didn't want to take a pay cut, and you could convince someone else to help you hike your fees, all the while passing on those increased costs to an unsuspecting - and captive - clientele. How, exactly, would that work?

Well, here's one way:

"Democrats and the Obama administration argue that the $245 billion included for doctors -- the approximate 10-year cost of adjusting Medicare reimbursement rates so physicians don't face big annual pay cuts -- does not have to be counted in the overall cost of the health care bill."

It's beautiful in its simplicity, really: you just pass on the increases, but you don't call them increases. And why would you put the interests of one small group over a much larger one? That's easy: you'd get the coveted endorsement of the AMA. It reminds me of the punchline to an old joke: "we already know what you are, we're just haggling over the price."

In return for salvaging some semblance of decent reimbursement rates, the medical establishment has cast its lot with those whose first goal is to rid itself of those pesky (and expensive!) seasoned citizens. But hey, I'm young, this won't hurt me.

Right?

Right?!

Well, that depends on how you define "hurt:" since they're taking these increased costs "off line," they can tout their solution as "revenue neutral," or (even better!) "cost saving." Of course, these savings come with a price tag themselves: reduced quality of health care for everyone.

And of course, we're all "everyone."

UPDATE: Apparently, some doc's still have a little common sense (not to mention, decency); there seems to be a bit of a revolt in the ranks of the AMA:

"Some doctors charge the bill will lead to inferior patient care as physician offices around the country triple their patient lists and become forced to ration care.

"This is war," Dr. George Watson, a Kansas physician and president-elect of the American Association of Physicians and Surgeons, told FOXNews.com Thursday. "This is a bureaucratic boondoggle to grab control of health care. Everything that has been proposed in the 1,018 page bill will contribute to the ruination of medicine." [ed: emphasis added]

Couldn't have said it better myself.

(Despite) Good Insurance News: Women, Minorities Hit Hardest

The left-leaning Robert J Woods Foundation can't seem to help itself. Here are the facts (as reported by the RWJF itself):

"(T)he Robert Wood Johnson Foundation Health Care Consumer Confidence Index (RWJF Index) found that Americans’ confidence in their health insurance coverage and access to health care rose slightly in June. The RWJF Index rose 3.6 points last month to 102.3, up from the May confidence level of 98.7."

That's a pretty decent bounce, especially coming after months and months of "it's a crisis!" The index is based on monthly surveys of some 500 households (it's not clear how the demographics break down - useful information to have). But this is how that surprisingly good news is portrayed at the top of the email I received from Bob J and company:

"Minorities and individuals with lower incomes report significantly lower confidence in health care."

But of course.

The spin gets even more interesting when one drills down a bit further. According to The Index, over 80% of those surveyed "believe health reform is an important part of addressing the nation’s economic crisis." Of course, the only "economic crisis" lately is the one that's been self-inflicted by our Betters in Washington©. The next item reports that:

"Less than half of all Americans are still worried that they will not be able to pay for their future health care needs in the event of a serious illness."

Okay, you caught me: it doesn't say that.

Instead, the spin goes:

"More than four in 10 of all Americans (43.3%) are worried that they will not be able to pay for their future health care needs in the event of a serious illness."

Nice little sleight of hand there, Bob!

Here's an attention grabber:

"Americans are afraid of losing their insurance in the coming year."

Now, that sure sounds like a lot of folks are losing sleep over this one. But the study actually says that less than one in four of our fellow citizens is worried about such an eventuality.

So why, if there truly is a crisis, must these "advocates" deliberately mislead us about it?

Well, here's one good reason:

"Key House Panel Cancels Health Care Session as Moderate Democrats Voice Concerns"

Despite a filibuster-proof Senate and an overwhelming House majority, these folks can't even sell themselves on "the cure."

Throwing Grandma Under the Train

At some point, the "debate" about health care ceased to be political, and instead grew into something diabolical:

Subject to paragraphs (3) and (4), the term ‘advance care planning consultation’ means a consultation between the individual and a practitioner described in paragraph (2) [ed: one's physician] regarding advance care planning, if, subject to paragraph (3), the individual involved has not had such a consultation within the last 5 years. Such consultation shall include the following:

(A) An explanation by the practitioner of advance care planning, including key questions and considerations, important steps, and suggested people to talk to.

(B) An explanation by the practitioner of advance directives, including living wills and durable 9 powers of attorney, and their uses.

(C) An explanation by the practitioner of the role and responsibilities of a health care proxy.

[snip]

(E) An explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice, and benefits for such services and supports that are available under this title.

[ed: from Section 1233 of the bill]

Let's cut through the Congress-speak, and translate two key elements:

Section (A) means that discussions regarding important legal issues involving end-of-life decisions are to be held with a doctor, not a lawyer. Whatever one may think of the legal profession as a whole, certainly one's attorney is is a far better position to advise one on such potentially critical documents.

But it certainly paves the way for Section (E), which seems to clear the way for folks like Dr Kevorkian to practice their craft. Really, does our political class think so little of our intellect that they don't believe we'd see through this? Class warfare is, of course, nothing new, but pitting one generation of Americans against another is beyond the pale.

Or should be.

[Hat Tip: Red State]

A Mysterious Grand Rounds

Detective Doc Gurley solves the puzzle of an enigmatic Grand Rounds, but it's no mystery that the good doctor's deduced how to present a myriad of clues to enlighten us all.

Counterpoint: Revenue-Neutral Health care "Reform"

In the comments, longtime reader and frequent commenter Rick takes me to task for my use of Congressional Budget Office estimates of the estimated costs of the administration's pet health care proposal. Rick has demonstrated his credibility on this issue before, so in the interests of fairness, here's what he has to say:

The least we could do at IB is get the stenography right.

The CBO said the total SPENDING of the health plan would be $1 trillion over 10 years. The actual DEFICIT over 10 years would be $239 billion, or $23.9 billion a year, give or take. There have already been almost $800 billion found in various offsets and revenue sources to pay for the legislation -- which, we will all note, does nothing about cost containment.

Now, $239 billion is not nothing over 10 years. But at least it's accurate.

And it's a helluva lot less than we spent off-the-books on the War on Terror (until this year, when the President insisted that all the war costs actually be budgeted).

Here's the CBO quote from California Healthline:

"The estimate -- released late last week -- puts the gross cost of the bill at $1.04 trillion between 2010 and 2019.

Spending provisions in Medicare and Medicaid would reduce spending by $219 billion over that period, while a surtax on individuals and families with high incomes would increase federal revenues by about $583 billion, totaling $802 billion of the cost of the $1.04 trillion package, leaving the plan $239 billion short.

CBO said the biggest savings would come from a proposal to make permanent reductions to the annual updates to Medicare's payment rates for nearly all services in the fee-for-service program besides physicians' services.

That would reduce spending by $196 billion over 10 years, the CBO estimated."

See for yourself here.

So, all that being said, $239 billion over 10 years is highly "find-able" savings, if the Congress-critters can actually strap on a pair and call for some real cost containment.

Sounds like we're on the path to a revenue-neutral bill. Can the promised land of declining medical cost trends be far beyond?

P.S. I don't know if the $219 billion in cost savings from Medicare and Medicaid includes the $155 billion hospitals pledged to cut in the name of healthcare reform, or the $80 billion the pharmaceutical manufacturers promised to the effort. If the CBO scoring does NOT include these, then we may already have a revenue-neutral bill. How cool is that?"

Carnival of Personal Finance: Presidential Edition

Stephanie at Poorer Than You hosts this week's Carnival of Personal Finance, and presents an absolutely fascinating edition. Each post relates to a U S President, and she really does a great job of tying the post to the Prez.

To Dream the Impossible Dream...

Thus spake Obamaman:

“I want to be very clear ... I will not sign on to any health plan that adds to our deficits over the next decade."

And thus spake the Congressional Budget Office:

"According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits..." specifically, "$1 trillion over 10 years."

And thus concluded Captain, Road Prison 36:

"What we have here is a failure to communicate."

Back to the Future, Part 2: Introducing the Health Administration Bureau

From the folks who brought you the fantastic and enlightening video on health care rationing, here's a site dedicated to upholding all of the important, patriotic sacrifices we're about to be told to make.

Agents vs Carriers

[Welcome Industry Radar readers!]

As an insurance agent, one of the most frustrating parts of the whole health care reform "debate" is that no one is asking for our opinion. Yet ours is a unique and valuable perspective: we represent consumers and insurers, and access providers. We help clients (consumers) navigate the various pathways toward deciding on a plan, and are there as an advocate come claims time.

But no one invites us to the table.

Some will claim - incorrectly - that we already have a seat there because (some) carriers and their advocacy group (AHIP) are represented. They will be wrong.

Let's take the latest from Anthem (a Blue Cross/Blue Shield company). In an email I received today, they reported on the latest in the debate, and claimed to be "deeply disappointed with the legislation progressing in Congress. Both the bill proposed by House Democrats and the bill passed by the Senate HELP Committee miss the opportunity to address the underlying cost drivers in our health care system."

And they're correct, as far as it goes. Moving health care financing decisions from carriers to the gummint does nothing to address the fundamental disconnect between consumers and providers.

They also objected to the employer mandate and revisions to Medicare reimbursement schedules. There followed a laundry list of other issues, but there was not a single mention of how the agents who represent Anthem will be outlawed under the new plan. This makes sense, of course, since the carriers aren't prohibited from offering plans through the as-yet-to-be-defined Exchange system. But consumers will lose counselors and advocates: have a claims problem? Call the gummint hotline. As anyone who's stood in line at the DMV or called the IRS can attest, this is a recipe for disaster and disappointment.

But there's no reason for the carriers to care what happens to agents. After all, the government will become the agent, and there's no pesky commissions to be paid or questions to be answered. The problem is that, once you've sold your (corporate) soul to the government, you may not like the results.

Back to the Future: What's in Store

[Hat Tip: Ace of Spades]

Health Care Reform in 1,000 Words...

[ed: Click to enlarge]

[Hat Tip: Lyndsi Thomas]

Seasoned Citizens in the Crosshairs

As we continue to rush headlong toward a system modeled after the MVNHS© [Much Vaunted National Health System], it's becoming increasingly apparent that seniors will bear the brunt of the reductions in both access to, and availability of, health care. As Mike pointed out last month, "mandatory, private long term care insurance would be “primary” to NHS." The point of that exercise is to wean folks from the public trough, at least as regards funding of long term care needs.

But that's only the most benign of proposals. In what can only be ascribed to that British penchant for dry humor, "elderly people could pay up to £25,000 [ed: about $40,000 at today's exchange rate] to guarantee basic social care under proposals aimed at ending the "cruel lottery" of old age care."

The problem, you see, is that British seniors are perceived to have been getting a "free ride" for far too long, and the time has come to pay the piper. Of course, those who have been paying their own way are among those to be penalized; Health Secretary Andy Burnham "admitted the present care system was "flawed", with inconsistencies across the country and people penalised for prudence."

Ooops.

And yet that's precisely the kind of flawed system being touted here. As former Clinton advisor (and pedicure enthusiast) Dick Morris notes, "Obama’s health care proposal is, in effect, the repeal of the Medicare program as we know it." He bases this on the fact that, under the President's plan, Medicare beneficiaries will enjoy the least access to medical care, and cherished end of life decisions will be taken out of their hands.

Of course, AARP, the 800 pound gorilla of senior care lobbying organizations, is hard at work fighting for its members' very lives.

Right?

Well, not so much.

It's probably a good thing that my mother's not still around to see this. Of course, if she were, it apparently wouldn't be for long.

Cavalcade of Risk #82 now up!

Louise and Jay Norris host this week's edition of the Cavalcade of Risk. Be sure to stop by for a great edition!

And something new to the Cav: you can twitter it, facebook it, digg it, reddit, stumbleupon it, or del.icio.us it; just look for the handy buttons at the bottom of the post.

Finding Meaning in Cancer

While we generally focus on insurance issues, we're also classified as a health blog (at #11 in those Wikio standings, for those keeping score at home). While we've talked about cancer-related insurability and claims issues, we haven't spent much time on the non-financial side.

My better half, who is generally more in tune with this area than I am, just sent me a link to a WSJ story on a new kind of therapy for those with cancer:

"The unusual program ... aims to help cancer patients find a sense of meaning, peace and purpose in their lives, even as the end approaches. “For many cancer patients, the biggest challenge is, ‘How do I live in the space between my diagnosis and my eventual death?’” says William Breitbart, a Memorial Sloan-Kettering psychiatrist who developed the program, known as meaning-centered psychotherapy, and has tested it with more than 300 patients since 2000."

The part that really hit home, however, is how Dr Breitbart first conceived of the idea. He based the treatment on the writings of Dr Victor Frankl (who pased away about 12 years ago), an Austrian-born psychiatrist and Holocaust survivor. We are both very familiar with Dr Frankl's writings. In describing how he survivied the horrors of Auschwitz, he observed that the Nazis could imprison, torture and starve him, but he always maintained control over how he would react to, and deal with, his suffering.

This form of therapy seems a natural outgrowth of that ideal; perhaps it will be adopted by other institutions, as well.

[Hat Tip: Gail S.]

Electronic Health Records...How to really blow it...

The German electronic health records system has had a minor setback.

The master internal security key was accidentally erased. Unfortunately that very large random number is needed to authenticate the ID cards. It wouldn't be much of a problem if they had a backup copy, but they don't.

Every first generation card has to be replaced. It's a good thing that the system was still in the testing phase.

Needless to say, everybody's pointing fingers at everybody else.

EMR: Panacea or Pandora?

According to The Washington Monthly (a DC-based magazine which purports to be non-partisan, but which lists as its contributors former Enron advisor Paul Krugman, outspoken media personality Rachel Maddow, and former president Bill Clinton), the answer to all the waste and inefficiency in our health care system can be traced to one source: medical records that aren't computerized. On the one hand, I admire this bold assertion, and the fact that it could be made with a straight face.

On the other, one presumes that the WM is read by at least a few folks, some of whom may well be in positions of authority. Which is a shame, since the premise is so far off base, and the lack of actual, you know, data to support the assertion is so glaring.

Let's start by granting that digitizing records could help in a number of ways: fewer dead trees, of course, but also more easily accessible patient info, the ability to quickly cross-reference treatment modes, and potentially speed up billing and payment. All of these are worthy goals, none of them will dramatically lower health care costs. In fact, given that there's a demonstrable front-end captial expenditure to actually digitize the information, the actual payback time may be years out.

This is not to say that we shouldn't pursue this; there are obviously good and sufficient reasons to do so. But to claim that this will directly and substantively reduce health care costs is a pipe dream.

UPDATE: Be sure to check out Bill's report on what happens when EMR meets Westworld.

ADDENDUM: I'm more than a little annoyed with myself for having succumbed to suggestion; the email I received touting the linked article read, in part, "digitized health care could help save the nation from insolvency while improving and extending millions of lives at the same time," and I read the article with a pre-conceived idea of what it was saying. I still maintain that EMR is not a magic potion, but in fairness, the article doesn't specifically claim that it is.

Medicine, Technology, and Grand Rounds

Dr Joseph Kim hosts this week's Grand Rounds. Focusing on technology and healthcare, Dr Kim has a terrific roundup of posts.

Do check it out.

Oy Canada: Reality (TV) Bites

From a possible broken wrist to a simple blood test, count on long lines and more than a few unhelpful health care "providers."

And better eat your veggies, because you definitely don't want any circulatory problems (unless you have no further use for your legs).

But hey, it's "free," right?

Wyden-ing Options

A while back, we were privileged to participate in a "blogger call" with Sen Ron Wyden. While I have some issues with many of Sen Wyden's proposals, I certainly appreciated his willingness to reach out to "new media" to help get his message out. As a result of that teleconference, we're treated to regular email updates from the Senator's office. One such recently hit our in-box, and it's quite intriguing. Basically, the Senator proposes to do away with the current employer exclusion for health insurance premiums, and replace it with a tax deduction for everyone who pays for health insurance (and, of course, pays taxes).

The plan would delete the exclusion employers currently enjoy, which makes health insurance more affordable for a lot of folks. And, of course, it helps businesses attract and retain employees. On the other hand, most folks who buy their own health insurance enjoy no such benefit, and must pay for that coverage with after-tax dollars, adding to the net cost. Sen Wyden would grant these individuals (as well as employees covered by insurance at work), a tax deduction for premiums paid, up to about $17,000 per family (or about $7,000 for individuals). This number is partially arbitrary; it's based on the "value" of the Federal Employees' Health Plan, plus an additional 10%. This method is very different from Sen Baucus' proposal, which simply caps the employer exclusion at that magical $17k, with no regard to individuals who buy their own coverage.

Needless to say, I have some issues with the totality of Sen Wyden's idea, but the basic premise is sound: why shouldn't individuals get the same tax benefits as employers? This seems fundamentally unfair and unsustainable. By extending those tax benefits to individuals, their net cost for health insurance decreases, making it more likely that they'll actually buy coverage. And I have no problem in principle with the idea of a cap: this may encouage folks to look for more effective coverage (e.g. HSA's) and to stop wasting money. I do have some problems with the actual numbers: while a $1400 ($17k divided by 12) a month premium certainly seems excessive, there are factors that go into the mix over which an individual (or family) have no control: where one lives, significant health problems, family size - all of these can affect one's premium. I'm not sure how to control for these, but they do need to be addressed.

The biggest problem I have with this proposal is the call for a so-called "individual mandate;" that is, requiring everyone to buy insurance. Yes, I think it's reckless to go "naked," but whatever happened to liberals' much vaunted "freedom of choice?" Aren't we supposed to be free to make (potentially stupid) decisions on our own? And, of course, that mandate implies other mechanisms: if one is required to buy insurance, it certainly follows that the market will be forced to offer it to them. And that, of course, sets up a whole 'nother set of issues.

There are those who will claim - perhaps correctly - that this will be the death knell for employer based (aka "group") insurance. To which I reply: "you say that like it's a bad thing." Employers don't make your mortgage or car payments, or pay your grocery bill. Why should the purchase of health insurance be any different? Of course, there are other advantages to group cover (e.g. guaranteed issue), but these are also what make that coverage so expensive. By extending the tax benefits to those without group options, we make the whole system less expensive, which seems to me a pretty good deal.

Sauce for the Geese

One of the little-known caveats in every piece of "health care reform" legislation exempts one small but particularly powerful group of individuals. These are folks who push for special legislation without regard to the impact it might have on others who don't have a job in that particular sector.

No, I'm not talking about the UAW, but an even more insidious collection of power brokers: our congress.

Well-known for passing onerous and expensive bills that they're unlikely to have to pay, these scions of honesty haven't mentioned that they, and theirs, won't have to actually live with the inferior health care they're attempting to foist on us.

The good news is, that may change:

Physician and US Representative John Fleming [R-LA] has introduced a bill that would require those who vote in favor of a nationalized system to "forgo their right to participate in the Federal Employees Health Benefits Program (FEHBP) and agree to enroll under that public option."

I like that: it's succinct, sensible and fair.

After all, if we're going to suffer, it seems only fitting that those whom we've elected to represent our interests suffer, too.

[Hat Tip: RedState]

Critically Speaking

When it comes to major illness, even the most benefit-laden medical plans don't pay for everything (which is not necessarily bad); for example, there are often travel and lodging expenses, even home upgrades that can get expensive, but aren't covered. There is, however, an insurance product to manage this risk.

Called Critical Illness plans, they've been around quite a while. Basically, these plans pay a lump sum upon the diagnosis of one (or more) of a list of conditions (such as cancer or a stroke). This can be used to help pay for expenses not covered by one's major medical plan.

I recently had the opportunity to interview Ken Smith, Director of Health Insurance for Assurity Life Insurance Company (one of the primary players in this market):

> Thanks, Ken, for your time today. Can you tell our readers a little about the history of Critical Illness (CI) policies?

Well, they were actually introduced in the 1980's, in South Africa. Dr. Marius Barnard (whose brother, Christian, pioneered heart transplants) noticed that, although these surgeries were successful from a physical standpoint, they took a financial toll. In 1983 , to help alleviate this financial burden , he got together with a South African carrier called Crusader Life, and they developed and began marketing the first CI plan.

> Okay, that makes sense, but why should someone buy one of these instead of a good disability income plan?

It's not an "either/or" situation, people really need both, because they solve different problems. People need the disability insurance (DI) to replace lost income, and they need CI to preserve current assets.

The purpose of a CI plan is to remove financial stress. Let's say that you're diagnosed with cancer, and choose M D Anderson as your best bet for survival. Odds are, your medical plan will pay for the treatment and follow-up, but not for you to fly from Dayton to Texas several times a month, or for the hotel room for your spouse. There are really two concerns in these cases: the stress of dealing with the health issue itself, and the added financial stress that comes from the treatment. Medicine has made some great advances, we're living longer and surviving conditions that would have been a death sentence not too many years ago. But there's a price for that.

The other problem with comparing the two (Disability and CI) is that the disability policy may not kick in fast enough. Again, let's say you're missing a few days of work each month for chemo. The problem is that there aren't enough of them, all in a row, to satisfy the waiting period for the the DI plan (even those which allow for cumulative days will take a longer time to start paying out). But of course, it's costing money, because you're not at full function. So the CI plan fills that gap.

> Why a lump sum instead of, say, an income stream?

Well, primarily for the KISS (Keep It Simple) factor. It's a good thing this was designed by a doctor; can you imagine how complicated this would be if the insurance people had put it together? As for the concern that people will squander it, our experience is that claimants do't "blow through it," they're pretty savvy. A lot of them put the money they didn't need right away in the bank, where it can earn some interest, and still be available on a moment's notice.

> What are some key things that readers should look for in a CI policy?

About 80% of the claims we see are for cancer, heart attacks and strokes. The definitions become really important; for example, someone with Stage I Hodgekins, we'd pay 100% of the benefit for that, but some other carriers might only pay at 25%. Or a stroke: many plans say you have to survive 30 days after it to be eligible for payment; we only require 96 hours. The reason for that 96 hour definition, by the way, is to differentiate it from a TIA [ed: an event which often looks like a stroke but is not, and seems to leave no permament damage].

> How does one determine how much coverage is needed?

Think in terms of covering a couple of years of mortgage payments, and of course short term debt (credit cards, car payments, and the like). The CI plan can take off a lot of the stress of dealing with these, and help provide for a smoother transition time.

Thanks, Ken, for your time and expertise!

Cavalcade of Risk #82: Call for Submissions

Jay Norris hosts next week's Cavalcade of Risk. Submissions are due Monday (the 13th), and the Cav goes live on Wednesday. Jay asks that you include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).
You can submit your post via Blog Carnival or email.

MVNHS© vs Private Insurance: An Englishman's Blog

Not many people on this side of The Pond know that our British cousins can purchase "private" health insurance to complement (or supplement) their government-sponsored health care. This despite the fact that health care in Britain is "free," "readily available," and of "high quality."

Recently, a relatively new British blogger has come on the scene. with some interesting (and enlightening) insights into what works, and what doesn't, in Merry Olde England. His name is Andrew McDonald, and he runs the Private Health Insurance Guide Blog. Andy describes himself as just "an ordinary person, who, like millions of others, is concerned by the quality of the UK healthcare system."

I've read some of his recent posts, and been favorably impressed. If you'd like to see what someone who actually lives and works under a system after which (some) folks would like to model ours, I heartily recommend that you drop by Andy's place.

Health Wonk Review: Two-fer Edition

Ken Terry and Joe Paduda team up to bring us two HWR's in one: Terry presents several great links with helpful summaries, and Joe has reaction to Bob L's Affordability Model.

Do stop by.

Told ya so...

"The Congressional Budget Office Tuesday told the Senate health committee that the latest version of the panel's Democratic health care reform bill would push millions of people out of their work-sponsored health insurance plans because it would give employers a cheaper option."

The so-called "pay or play" option has always been a non-starter for just this reason, but it's at the heart of key "health care" legislation.

We've called this more than once; nice to see the CBO finally catching up with us.

Government and Terror Insurance

From time to time, we offer other folks an opportunity to “guest-blog” here at IB. We recently received an interesting email from a company called Guy Carpenter, “the world’s leading risk and reinsurance specialist and a part of the Marsh & McLennan Companies.” Since we’re all about risk, this seemed a natural.

The challenge was that the article, while interesting, was perhaps a bit too “inside baseball” for our readers (it certainly was for us). On the other hand, this seemed to us to be an important and interesting risk management tool, and we asked if GC would be kind enough to blog about it for us. Fortunately, Chris Klein, GC’s Global Head of Business Intelligence, was kind enough to do so, and we’re pleased to present his post on how governments can act as a sort of “reinsurer” for terrorism cover:

It’s still far from the norm, but governments around the world are becoming increasingly involved in providing terrorism reinsurance. In addition to catastrophe cover, some are addressing business interruption, motor, life and other lines. While many countries still haven’t stepped into the marketplace, larger, developed nations are now quite active.

Government involvement has become necessary, in many cases, as private insurers and reinsurers would otherwise step back from these risks – either by reducing their exposure or eliminating it completely.

The United States, one of the early entrants following the terror attacks of September 11, 2001, has addressed cover at both the federal and state level – the former with an extension of the Terrorism Risk Insurance Act of 2002 and the latter through the addition of terrorism exclusions to the “1943 New York Standard Fire Policy.”

In Europe, Austria, Belgium, France, Germany, the Netherlands and the United Kingdom have implemented terror insurance schemes as a way to ease the burden on private carriers and ensure that a robust market can be supported. But, Denmark, Italy, Norway, Portugal and Sweden have not been similarly engaged.

And, the market is continually changing.

Specific threats and impacts do not stand still, resulting in a dynamic environment that can be difficult for carriers to manage. Fortunately, the tools of the trade are progressing alongside the risks. Last year, AIR Worldwide Corporation updated its damage functions to include the impact of reflected pressure waves in the wake of a conventional bomb blast. Risk Management Solutions has updated the number of targets in its U.S. model to 98 – including chemical plants, government buildings and convention and entertainment centers.

While it may seem a bit dry, this is critical information. How many folks know whether or not their homeowners policy covers acts of terrorism (not the same as “acts of war”)? What about your life and health policies? Hopefully, we’ll never have such a claim, but it’s helpful to know that both the private and the public sectors are working on this.

Thank you, Chris!

[Hat Tip: Matt Conroy]

Don't Forget the Java

It's been a while since we've had either a Food Pyramid or Alzheimer's update, and now we have a two-fer:

"Three large cups of coffee a day could help to slow the progress of Alzheimer’s disease and even reverse the condition, researchers say."

Past studies have linked caffeine with lowering the risk of developing Alzheimer's; this one actually concludes that it can "directly target the disease itself." The mice involved in the study actually demonstrated increased mental skills. How this will translate to humans, of course, is yet to be seen.

(In fairness, the scientists were really studying the effects of caffeine, not coffee per se: the mice were given caffeinated water. But they didn't say coffee wouldn't work just as well)

Best of All Worlds? The Healthcare Affordability Model [Updated & Bumped]

[Welcome Industry Radar readers!]

Bob Laszewski is one of the brightest health wonks I know, and a frequent read for me. Joe Paduda, another bright health care policy guy, sent us (and several other health care policy bloggers) a link to Bob's newest effort, called the Health Care Affordability Model.

Bob's proposal is, if nothing else, exceedingly long, and unnecessarily repetitive. It pains me to be so critical, because he's generally a very profound guy, but I fear that a lot of potential readers will be turned off simply by the length of the post (which clocks in at just under 7,000 words). Very frankly, I was disappointed in the effort, and have chosen to address a few of its problems. Readers wishing for an extended analysis may drop me an email, and I'll happily comply.

Bob starts out by positing that, under his plan, providers and insurers who fail to toe the line would lose tax advantages. He specifically states that premiums "for a non-qualified health plan would no longer be tax deductible for individuals or plan sponsors who used these unqualified plans."

Is he so out of touch with the current system that he doesn't know that premiums for individual plans are not generally deductible now?

He then posits that providers "who were not in a tax qualified health care network would lose patients to networks that did control costs." I'm not convinced that this follows: quality of care may be more important than cost.

He next claims that "insurers and providers would be required to first begin to stabilize and then control their costs." A noble goal, to be sure, but he never really lays out specific ways for that to be accomplished.

Bob then moves on to a Nine Point strategy to implement his recommended policy; as noted, I'll address only a key few:

■1. "(L)ive healthier lifestyles and more often practice good prevention." Well, that's certainly preaching to the choir as far as IB and its readers are concerned. But how do we encourage and/or enforce this? Maybe no tax deductions for fatties or smokers? Rotsa ruck with that.

■2. "We Have to Work Together." No kidding. But, and I realize that I'm beginning to sound like a broken record, what policy needs to be changed/implemented for this to occur?

■4. "Payers and providers generally know...where waste is." Really? How does he know this? And what's "waste" versus "defensive medicine?" If that's what he means, then let's see tort reform on the table.

■5. "During the last decade quality has slipped and health care costs have doubled." I reject that. First, care has improved and second, I suspect cost has more than doubled.

■7. "Patient-centered solutions cannot occur in a system driven by central planning." No argument, but no real progress, either. Lots of pretty words, and yes we're very bright people. But there needs to be incentives and/or "consequences."

■8. He calls for stakeholders to meet "face to face." And that's why there are so many insurance AGENTS being asked to the table? We have a unique and valuable perspective to offer: we know what works, and doesn't work, from all three sides (consumer, provider and insurer). Why isn't our input being actively solicited?

Keep in mind that saying "health insurers have been consulted" is meaningless in this context: their interests and perspective do not often coincide with agents'.

Once he's outlined his starting assumptions, Bob makes a rather startling new one: that we can "begin to slow, and then moderate, and even reduce the climb in America’s health care costs."

Okay, but HOW? I don't see concrete suggestions here. There's reference to tax consequences, but I don't see them delineated. Did I miss something?

He says his plan "would not impose government controls over insurance or provider prices." But, as we'll see in a moment, that's (at best) disingenuous.

He goes on:

In fact, insurers and providers have had compelling reasons not to make the health care system cost effective—providers and insurers get paid more not to."

Bull----. First, there's the substantial cost-shifting as a result of government programs (I'm looking at YOU, Medicare). Second, technology ain't free. I think he really misses the mark on this one.

"Simply lopping off the fees either providers or insurers receive (as the Public Plan Option would do) would do little to create a sustainable system over the long-term."

Agreed; in fact, this is the first - maybe the only - thing he's said that makes sense in terms of "the big picture."

He completely misses the mark, though, with his diatribe against profitability of insurers and providers. For one thing, he seems not to understand the difference between "profit" and "profit margin" (the latter is significantly smaller than he seems to believe).

And he seems not to have been reading the WSJ for the past, oh, nine years or so:

"Between 2001 and 2008, private health insurance costs increased between 6% and 14% each year—multiples of inflation and growth in the overall economy—while health insurers, drug companies, and device companies booked record profits, and most hospitals and doctors did well."

Correlation is not causation. He's overlooking a major (likely THE major) contributor to those profits: Wall Street. Look at where the "story" ends: 2008. Ring any bells?

"Under the Affordability Model there would be less money available than what would have been in the relatively unfettered system with costs exploding as they are today."

Really? Why is that? I see the conclusion, but I don't see the facts to back it up.

Unfortunately, he takes a seriously wrong turn here, advocating that "a new system of insurance exchanges would be created for the individual and small group health insurance market."

Right, because it's worked so well in Massachusetts (for example).

And he continues down the wrong path:

"Health insurers would be required to offer at least the standard option benefit plan in each state in which they operate through the insurance exchange. Through competitive bidding each plan would establish its baseline costs in the first year."

So he knocks Medicare, but then basically buys into the MC Supplement model. I'm not claiming that that model's "fatally flawed," but look at where we are today (MC Advantage Plans or Part D, anyone?).

Bob then proposes that "(s)elf-insured plans would be required to provide an actuarial certification attesting to the relationship its overall plan costs had compared to what they would have been had the plan offered the standard plan option to all employees (including age and severity adjustments). In the first year, that cost would become the baseline for future year costs."

Uh-hunh. And guess what those first year numbers are going to look like. Color me cynical, but methinks there will be some major benefits and cost-shifting juggling going on. And I'm still waiting to hear how we cap medical inflation.

Here's a doozy:

"An employer who chose to terminate their health plans in favor of their employees purchasing benefits through the insurance exchange would be required to “cash-out” their benefits"

DING DING DING! This is one of the most insidious parts of the Public Plan, and he wants to adopt it? Sheesh.

"Legislation would set national health care affordability goals expressed as a percentage of growth in the nation’s GDP—as defined and measured by the Department of Commerce."

Oh great: because they've been so accurate on all the other metrics? Tell me about the Spendulus and unemployment rates.

He believes that his model would "reduce national health care expenditures as a percentage of GDP."

There's an assumption here that I'm not sure I buy into. What's the "appropriate" ratio of health care costs to GDP? Isn't that pretty much an arbitrary number? Yes, 17% (or whatever) SOUNDS like a lot. But is it? I'm not saying it's not, but I'm not sold that it is.

"A Health Care Actuarial Certification Board would administer the goals."

DING DING DING again! Yes, the gummint will be in charge of setting health care costs, reimbursement and inflation. Lovely.

So we get a Health Czar, too.

Frankly, I'm done. That killed any cred this plan MAY have had. Once you've ceded the cost and valuation functions to the gummint, you can call it anything you like, but it is de facto government-run health care. Period.

Mike is more succinct (no surprise there):

"The biggest obstacle for me, in deciding whether to try to read a 7,000 word paper from one of the policy wonks, is that Bob seems to be deep into solution mode at a time when you can barely find 10 people at once who agree what the problem is.

It would be easy to determine if we're going at this the wrong way, in two easy steps:

1. Ask Bob if he can succinctly (less than 7,000 words) define the problem(s) that he thinks must be solved, and then

2. Ask a broad sample of people if they agree with his definition.

My bet - this proposal will stir up conversation and argument, but not much more."

And I suspect that this post will generate some interesting comments; we ask that the level of discourse be polite and respectful.

Have at it.

UPDATE: Joe sent along this link to an abridged version of Bob's Affordability post. I'm pleased to see a tightened-up version, but there's not enough substantive difference to justify a major revision to this post.

There are, however, two items in this abbreviated version which I'll address:

1) Reference to the newer Wyden bill (about which I intend to blog shortly), which seems to be a winner, and

2) Continued reference to the mystical (likely mythical) "30% waste" figure. First, the only place I've ever seen this number applied is to Medicare, and I don't see Bob discussing major changes to that soon-to-be-bankrupt system. Second, I'm skeptical that this alleged 30% can be cut, for the simple reason that no one has ever budgeted 30% waste in the first place.