Sold Out Seniors

AARP's underhanded tactics are not news to regular readers of IB, but this takes the cake:

"Friday ... the AARP sent a memo to Senate officials threatening to yank support for the chamber's health committee's version of reform if it didn't get what it wanted on another provision in the bill related to biogeneric drugs ...

I cannot recommend a letter of support or a major grass-roots effort in support [of the health care reform bill]. Indeed, people will probably have to be critical, particularly about that provision. I hope you won't force us to do that on such an important bill that I know you all have worked so hard on."

"Gee, that's a nice store ya got there, pal, be a shame if anything happened to it."

Of course, this is merely politics as usual in DC, but it's fascinating (albeit disappointing) to see what's supposed to be the advocacy group for seniors making such (un)veiled threats. At stake, of course, is AARP's reputation as king-maker, able to wield its powerful sword (tens of millions of seniors' votes) to get its way, even at the cost of the very lives of those they ostensibly represent.

Think that's a tad dramatic?

No, it isn't:

"[O]lder people will be left vulnerable to discrimination and could miss out on life-saving treatment in favour of younger patients."

That's the view of the British health care system (known here as the MVNHS©). And it's definitely the view of The One:

"President Obama suggested at a town hall event Wednesday night that one way to shave medical costs is to stop expensive and ultimately futile procedures performed on people who are about to die and don't stand to gain from the extra care."

And in case it's not obvious to the casual observer, his very next statement concerned his grandmother. This ain't rocket surgery: he's explicitly proposing to limit care to the elderly.

One would think that might have caught AARP's attention, but it's apparently a lot more interested in scoring political points than saving the lives of its constituency.

Of course, one would be wrong.

The 150% Solution

Over 70% of health care innovation originates in the United States. Sen. Tom Coburn should know. He is a doctor and a 35 year cancer survivor and a 6 year cancer survivor.

Human Events recently interviewed Sen. Coburn about the debated changes in the health care system. Here are his words.

An early point he addresses in the interview is one we broached a few days ago. That is, accessibility to health care.

there is a crisis for cost, and there is a crisis in terms of access and half of that crises for access is in Medicaid because 40% of physicians 60% of sub-specialists won’t see a Medicaid patient because reimbursement doesn’t pay for their time to see them.

The most common question I hear from new clients is "will my doctor take this insurance"?

In most cases, the answer is yes. Most docs participate in all major PPO networks. But if you have Medicare or Medicaid, the numbers change drastically.

Why isn't the media and Congress addressing that? Is it because they don't want you to know just how BAD it would be to expand Medicare and Medicaid?

Say it ain't so!

Dr. Coburn also makes a point we have repeated ad infinitum at InsureBlog. That is, the lack of personal responsibility and the disconnect between the patient and the cost of health care.

As we have ratcheted up the sophistication in our healthcare system, and this disconnected the patient from the cost, we have this problem [of price inflation]. And the real problem is the unsustainable growth in cost. Now why is it there? Some people argue part of it is technology, and I agree part of it is. But most of it is because we don’t have real forces allocating scarce resources, and we don’t have real consumers who are making economic choices based on their pocket book because someone else is paying their bill.

That someone else is you and me.

When Joe has a big claim, he doesn't pay it. We do by virtue of our insurance premiums which support not only the cost of our care but that of others in the system as well.

They then address the cost of the Kennedy health care model. That plan will supposedly cover 16 million people (not all of whom are uninsured now) for a "mere" $1 trillion over the next 10 years.

How will they do that?

By expanding the qualification for Medicaid from 100% of the FPL to 150%.

Right now the federal Medicaid law is 100% of poverty. Changing that to 150% of poverty level puts all this cost on the states. And that hadn’t been scored at all in the bill. [Ed. note: Medicaid provides health care benefits to the poor and makes benefits available for people who have 100% or less than the federally-defined “poverty level” of income. The 2009 poverty level income for a family of four is $22,050].

If you have a family that meets the new guidelines and they have health insurance now, how many will drop it in favor of the free plan?

Quite a few.

We saw this in Massachusetts when they revised the children's Medicaid and SCHIP income requirements to 200% of the FPL.

And what about the expected mandate that businesses pay or play? Either they provide health insurance for their employees or pay a fine. What is the cost of that?

72% of all our jobs come from the small businesses. Sixty percent of them don’t cover insurance, so 60% of 72% of the jobs have a new cost, which means we’re going to fire people because we won’t be able to afford that.

Firing workers is just one alternative.

The other is to raise the price of goods or services sold by the business. In other words, an indirect tax. Indirect taxes shift the blame away from Washington in much the same was a the "green" cap & trade bill is supposed to help decrease our dependence on foreign energy sources.

But isn't M/M less costly to administer? Won't we achieve real savings by switching folks from private insurance to M/M?

Well, Medicare and Medicaid only cost 6% to administer, their cost of capital is 3%. Their fraud and abuse waste is 20%, so you add 20% plus 6% plus 3% and you get 29%. Compare that to the overhead plus profit of every insurance company out there, and it is under 21%. So they beat the federal government already in the two programs they already largely administer by a third.

(We will examine this again in another post).

I just gotta ask. How is this working for you so far? Is this the change you envisioned last fall?

The Medicare Tomato Market (and lessons for today)

[Promoted from the comments section - Thanks to Andrew Garland]

Regular commenter Andrew Garland tips us to this fantastic post from fellow med-blogger The Happy Hospitalist. It's a bit lengthy, so I'll only excerpt some key points, but please do yourself a favor and Read the WholeThing©:

"Imagine for the moment that you have been taken out of reality and into the alternate bizarro world of the Medicare Tomato. In this analogy, the Medicare Tomato represents a day in the life of a practicing physician...

Enter the massive government take over. A massive coup on the tomato market. By a midnight Congressional mandate, the destruction of the free market exchange of money for tomatoes was replaced and regulated by the Medicare National Tomato Bank (MNTB) ...

Immediately after removing free market principles from the tomato market, the MNTB instituted the principles of most resistance. If something can be regulated, it will be. The word quickly spread through out this great nation of ours that the government would now make tomatoes a right for everyone ...

[ed: that sounds familiar]

In their brilliant strike of genius, they decided to try something that had never been tried before in the world of capitalism. They would reign in the cost to the MNTB, not by cutting the demand (political suicide), but by instead instituting a policy of 80% payment of market prices ...

The first response exacerbated the problem. Since the super duper technology tomatoes were paid at a higher rate, more and more grocers stopped offering cheap tomatoes. They simply removed the variety of product. They removed their rings of service. One product fits all ...

The cheap primary tomato market was killed off."

Now, dear reader, try substituting the term "tomato" with "health care" and the picture becomes crystal clear.

And quite frightening.

DC Talk

No, not the Christian rock band. Washington speak.

According to the Washington Post, the Senate is close to rolling out their version of Health Care Reform 101.

Here is what they propose, in Washington speak, and a translation for the rest of us.

a $1 trillion health-care bill that would be fully funded by tax increases, Medicare cuts and new penalties for employers who do not offer health insurance.

This bill will save or create health insurance by creating new taxes. Medicare beneficiaries will pay more for their benefit and have more out of pocket for medical care.

Medical providers will have to save or create more income from sources other than Medicare since their fee structure for treating Medicare patients will be reduced.

Finally, this health care reform bill will save or create new penalties for employers who refuse to toe the line and recognize their patriotic duty of offering health insurance. These penalties will create new opportunities for workers to seek jobs with other employers after losing their job due to unpatriotic employers who resist the change you can believe in.

Customers of these firms who agree to save or create the money to fund the cost of health insurance that is passed on as well as those firms who resist and pay the fine, will have to save or create new dollars to pay for the goods and services of these employers.

the Finance Committee had reduced the overall cost of its bill by cutting subsidy levels for uninsured people.

Those who are uninsured will have to save or create more income on their own to pay for this new health insurance.

the financing package includes substantial reductions in future spending on Medicare and Medicaid

Medicare and Medicaid beneficiaries alike will be called upon to save or create more income just to maintain their level of care.

In addition to trimming payments to hospitals and other providers, the panel is considering empowering an existing federal agency, known as MedPAC, to monitor Medicare costs and make adjustments

MedPAC will be asked to save or create new ways to limit the amount of care provided to those on Medicare, Medicaid (including SCHIP) and those who opt for the new Public Plan Option.

The package also is expected to include just over $300 billion in new taxes on health insurance benefits that millions get from their employers.

Those who currently have a job, and have health insurance from patriotic employers, will be asked to pay additional taxes so we can, as a nation, save or create millions of new patients in this Great Society II.

A final major element of the financing package is a new penalty for employers who do not offer health insurance. One option under discussion is a "free rider" provision that would require businesses to help finance coverage for workers who receive it elsewhere, such as through Medicaid or other government programs.

Employers who refuse to do their patriotic duty will be required to save or create new ways to pay for the cost of workers (and presumably their dependents) who opt for Medicare, Medicaid, SCHIP or other government programs.

Coverage provisions under committee consideration include an expansion of Medicaid; extensive insurance reforms, including a ban on denying coverage for preexisting conditions; and a new national insurance entity, either a co-op or something run by the government. Senators also are weighing an individual mandate to buy insurance.

In an effort to save or create new Medicaid participants, Congress is exploring ways to make more people eligible for this program.

No word on how they will address the shortage of docs willing to treat Medicaid patients.

Insurance reforms will require health insurance carriers to cover all existing medical conditions. Policyholders will have to save or create new ways to pay for the much higher premiums.

Individuals who think they cannot afford to buy insurance, will have to find new ways to save or create the money to pay for their newly acquired insurance.

If you would like to refer to this guide in the future, feel free to save or create a copy for personal use.

Cavalcade of Risk #81: Call for Submissions

Jaan Sidorov hosts next week's Cavalcade of Risk. Submissions are due by Monday (June 29), and should 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.

HSA Update: Early Summer Edition

Regular readers know that we're big HSA (Health Savings Account) fans here, so it's nice to see that they continue to gain traction. According to the latest from the Association of Health Insurance Plans (AHIP), this is indeed the case:

"An annual census by ... AHIP ... shows that the number of people covered by health savings accounts/high-deductible health plans (HSA/HDHPs) totaled 8.0 million in January 2009."

That's an increase of over 200% in two years. Interestingly, the fastest growing segment seems to be the large group market, up about 35%. I don't do much in that arena; my doctor says I don't get enough stress, and recommended that I concentrate on the small group and individual markets to fix that.

Speaking of the individual market, AHIP's survey found that over half of those folks covered by an HSA plan were over age 40. Once again, we put the lie to the "only the young and healthy buy into HSA's" canard.

There's a lot more in the study, but it's clear that these plans have become "mainstreamed" in the market, and have become much more acceptable in all segments. Although I'm not holding my breath, I think that these kinds of plans, which require more individual commitment and responsibility to health care, could make a valuable contribution to health care reform efforts.

And speaking of HSA's, the new contribution limits for 2010 are in:

The max contribution limit for individual HSAs goes to $3,050 (up $50 from this year); for families, the new max is set at $6,150 (an increase of $200 from '09 levels).

Next year's minimum deductible will be $1,200 for individuals, and $2,400 for families, an increase of $50 for the former and $100 for the latter.

And, finally, the 2010 max OOP (out of pocket) for individuals increases by $150, to $5,950; for families, the max will be $11,900 (up $300).

Something about those numbers seemed "off" to me, so I broke out the ol' Excel and plugged them in. The maximum contribution amounts for 2010 increased 1.6% for individuals, and 3.25% for families. But the annual potential exposure (out of pocket maximum) increased about 2.5% for both individuals and families. This seems unfair to folks with single coverage, since they're going to be playing an impossible game of "catch up."

Just my $.02 (up 3.76% from last year!)

RIP, Angel Jill Munroe

[Welcome Industry Radar readers!]

For those of us of a certain age, Farrah's hair and swimsuit set a certain tone (maybe even expectation). To us, she'll always be Charlie's First Angel.

Fly, Jill.

The Public Health Insurance Option [UPDATED]

If PresBO get's his way, and we get a public health insurance plan similar to Medicaid, how will it work?

There are no assurances at this time that a public health insurance option will materialize. Or how it will work. Or most importantly, how it will be funded.

But we do know this much.

If and when it happens, we can probably get a good idea of how we will be affected by looking at how well (or not) current public health insurance plans work (or don't work).

For instance, consider how Medicaid works. According to at least one source, 40% of doctors will not treat Medicaid patients. In some states, like California, it is more like half of all doctors refuse to treat Medicaid patients.

In Georgia, Rep. Alan Powell tried to introduce a bill (HB 89) earlier this year.

so as to require physicians who participate in the state employees' or board of regents' health insurance plan to also participate in the Medicaid program

In other words, if you want to treat state employees you must also treat Medicaid patients.

Bills such as this, requiring doctors to treat Medicaid patients have failed in the past. HB 89 was withdrawn the end of April without coming to a vote.

How is this working for you so far?

U.S. Congressman Phil Gingrey who is also a physician, has these thoughts on a public health insurance plan as reported by U.S. News and World Report.

DNC Chairman Howard Dean, former candidate for president, is a staunch supporter of Obama's push for a public health insurance option. Governor Dean is also married to a physician, Dr. Judith Steinberg.

Dr. Steinberg does not treat Medicaid patients.

As Vermont's governor, Dean aggressively pursued expansions of government-run health insurance—and bragged that doing so "was very cheap to do." Unfortunately for beneficiaries on state-run Medicaid and children's health insurance, that "cheap" coverage often came at a very steep price. Low reimbursement rates mean that few doctors actually participate in the government-run plan, so patients can't see their personal physician—and may not be able to see any physician when they need one.

In Vermont, one of those physicians whom Medicaid beneficiaries couldn't visit was Judith Steinberg—Howard Dean's wife. In 1998, low reimbursement rates—coupled with the impact of additional regulations her husband signed into law—prompted Dr. Steinberg to end participation in the state's largest Medicaid-managed care program. As a result, the residents of Shelburne in Vermont's largest Medicaid plan lost access to the only primary care provider in town who would accept their insurance.

Oops!

Rep. Gingrey continues:

I don't fault Dr. Steinberg for her decision—it may well have been the only rational business decision for her to make. But for Governor Dean to claim that a government-run plan won't be "inferior" is to ignore his wife's experience, and that of the many beneficiaries who lost access to their physician due to Medicaid bureaucracy and poor coverage.

So health care is a business decision. As in, "for profit".

Supposedly having a government run plan would eliminate the for profit motive.

Apparently not . . .

President Obama promised during his campaign that, "If you like the plan you have, you can keep it." But most individuals don't really have their own health coverage—they get it from their employers. And if the coverage provided in the government-run plan is cheaper than what employers are paying now, logic suggests that employers will drop their current plans and place their workers in the government plan.

Estimates from independent actuaries at the Lewin Group suggest that well over half of all Americans currently with employer-sponsored health coverage—nearly 120 million individuals—would lose their current coverage due to the creation of a government-run health plan. And the change in coverage would not be a "choice"—according to Lewin studies, employers would drop their plan options, dumping employees into the government-run health plan to save money.

Well of course. Free is always better, isn't it?

ADDENDUM [HGS]: Rick Scott, head of Conservatives for Patients Rights, concurs with Bob:



Heh:

"President Obama's town hall meeting on health care delivered a sickly rating Wednesday evening ...The one-hour ABC News special "Primetime: Questions for the President: Prescription for America" ... had the fewest viewers in the 10 p.m. hour. The special tied some 8 p.m. comedy repeats as the lowest-rated program on a major broadcast network."

Health Wonk Review, Late June Edition

Master EconBlogger Jason Shafrin hosts this week's collection of wonky health care posts. If you like soccer (aka "metric football"), you'll love this HWR.

Regarding Henry . . . [UPDATED]

My co-blogger and founder of InsureBlog is having issues logging in to Blogger and his Gmail account. Even though he pays me nothing for my contributions, I agreed to help him.

After spending half an hour or more on the phone with him, trying to find a way to communicate with Blogger/Gmail (other than his Gmail account which is not accessible) he asked me to post his plea in hopes that someone could offer some help.

Until that happens readers will have to put up with me.

Here is Hank's request.

Help! I can't log into my Blogger account. I've tried literally everything they've suggested on every help page I could find. It's tied to a gmail address which has also locked me out, so I can't sign in to that, either.

The recover password info they've sent has not worked; it was sent to alternate email address, but didn't help me sign-in.

Does anyone have a way to contact Blogger directly to help me get this resolved. I'm at wit's end (not exactly a long haul, granted).

Thank you!!

UPDATE [HGS]: WooHoo! Thanks to the tech folks at Gmail and Blogger, I'm back in business. It appears (based on issues I'm having with some other email accounts) that one or more of my email accounts have been compromised, and I'm trying to whack-a-mole on those. Thanks to Bob for all his help and for posting this missive.

Let's Make a (Health Care) Deal

As Bob has pointed out, a major problem for funding all these wonderful new initiatives is that the price tag keeps getting bigger and bigger, but no one in DC really has any idea of how to pay for it. One way, of course, is to begin taxing employees' health insurance benefits. While that would appear to be a non-starter (a lot of "employees" are also "voters"), there's one large, implacable and irresistible force that could make it happen:

"(U)nion workers who helped Democrats win Congress and the White House and whose support will be key in getting a health bill signed into law would not pay the tax."

Yup, that should do it. After all, if the unions can't count on their own employees (aka the Legislative and Executive branches), then what was the point of all that campaign moola? And since they now basically own (in conjunction with those employees) major swaths of industry, it seems pretty likely that they'd get their way.

Of course, if they're exempt, what about all those poor non-union employees?

"Tough luck, bud."

On the other hand, we know that the cost of at least part of the proposals now on the table is a major reduction in the cost of medication, maybe this won't be so bad. After all, reducing the cost of drugs is sure to lower the overall cost of health care, and hence health insurance.

Right?

Well, not so much:

"The Obama White House cannot explain more than half of today's announced $80 billion in prescription drug savings."

Oh.

So the $80 billion in savings (which would do so much to alleviate the expected multi-trillion dollar government expansion into health care and insurance) just got halved? That can't be good.

The underlying problem is that no one in Washington really understands the relationship between health care costs and health insurance costs, so no plan realistically addresses either one. The overarching motto is "throw more money at it." Of course, there's no evidence that this approach has ever worked in the long run, but hey, pols aren't known for letting reality get in the way.

Take Me Out to Grand Rounds

Nurse-blogger Barbara Olson manages this week's line-up of health posts, complete with CrackerJack and beer (okay, no beer). She's sure hit a home-run fielding this outstanding team of interesting med-posts.

Unions Get a Free Pass

First the unions were given the keys to the front door of GM and Chrysler. Now it appears they will get a free pass should Congress decide to tax employer provided health insurance.

Su-weet!

According to the WSJ, Democrats are at odds over how to fund free health care for all.

Apparently free only includes those with a union card.

Let's look at what has been considered so far as ways to fund free health care.

The cost estimates for the Democrats' health-care reform have by now hit $1.5 trillion over a decade. Goodness knows the architects of this beast -- which they hope will include a new "public option" health entitlement -- have been creative in dreaming up ways to pay for it. In recent months, the administration and Congress have floated ideas to limit tax deductions, penalize soda-pop drinking, tax alcohol, tax salty foods, further raise the price of cigarettes, tax specific companies, charge for carbon, cut Medicare payments, or even implement a national sales tax.

Entitlement. That's a word I haven't heard very often in this latest expansion of government and intrusion into private lives.

Congress wants more money and yet they have not proved to be good stewards of what we have given them in the past.

OK, given is a poor choice of words. Very few, other than VP Biden and Warren Buffet willingly give money to Washington and would give even more if asked.

For most of us, taxes are demanded and taken.

But speaking of taxes, one other revenue source would be to tax employer provided benefits, especially if those benefits are deemed to be overly rich.

In each case, Democrats have confronted the bitter reality that the proposed tax is too puny (Dr. Pepper tariffs), too doomed (cap-and-trade revenue), or too politically ugly (a sales tax). Contrast this with the tantalizing reality that requiring Americans to pay taxes on some part of the company health-care benefits they now receive for free could easily raise a half-trillion dollars over a decade. In a choice between a dozen niggling tax fights that could yield uncertain revenue, or a bigger fight over benefits taxes that could yield oodles, Mr. Baucus will take the oodles.

Oodles and oodles of taxes. That's an interesting choice of words. It conjures up visions of Scrooge McDuck wallowing in his millions (except today that would be trillions).

But for two small problems. The first is that about 99% of the Democratic Party is on record trashing the idea of taxing health benefits. Trasher-in-chief is none other than President Barack Obama, who mercilessly berated Sen. John McCain for proposing such a change during the 2008 campaign. "Apparently, Senator McCain doesn't think it's enough that your health premiums have doubled. He thinks you should have to pay taxes on them, too," ran one Obama ad. Republicans are, as you read, turning these words into crisp attack ads.

Trasher-in-chief.

I like this author.

The Democrats' other problem is that the usual populist line won't fly. The party would like to be able to protect itself by saying that only those who now receive the most generous benefits will face taxes. Then again, the Americans who now have the Cadillacs (or, in these post-bailout-days, the Swedish sports car Koenigsegg CCXs) of health-care coverage are union workers. Union workers "would be stuck footing more of the bill than others," says Paul Fronstin, a senior research associate with the Employee Benefit Research Institute.

So asking the unions to pay more than their fair share apparently isn't . . . fair.

I just love watching the folks in Washington squirm. Makes me want to get in a comfy chair with a Coke and a bowl of popcorn.

But wait, that is a sugary drink and a salty snack. That would play right in to the money-grabbers in Congress.

No problem. I have an out.

The union carve-out is designed to allay the fears of many Democrats who remain outright hostile to a tax on health-care benefits, whether out of principle, political fear or union solidarity.

So here is my solution. Should this come to pass, I will join a union.

Popcorn anyone?

Smaller Cars, Bigger Health Insurance

[Welcome Industry Radar readers!]

The Oracle of Washington, who knows all, see's all, is poised to pronounce what is good for us in the way of health care.

This is the same group that thought it was a great idea to make housing available to everyone regardless of their ability to repay their mortgage.

The same group that thinks spending more than you earn is a great idea.

First they loaned money they didn't have to folks in Detroit who make our cars. Then they decided to assume control of an industry they know nothing about. Their solution is to sell one company to the Italian's so that company can now import cars that no one bought 20 years ago.

Apparently Washington thinks America is ready for the "Fix It Again Tony" (Fiat). The car that voluntarily withdrew from the U.S. market rather than meet (what was then) tough emission standards.

The other car company has either sold, or is in the process of selling off the Hummer. They will also cut back on other big cars with high profit margins in favor of smaller cars with little or no profit margin.

And let's not forget the guy (Brian Deese) in Washington who is the "brains" behind the bailout, no wait, bankruptcy of the automakers is a 31 year old law school dropout.

But wait, there's more!

The new head of GM (Ed Whitacre) by his own admission "knows nothing about cars" but why should that stop him?

So now that we will be building and buying (or so they hope) smaller cars in order to save the American auto industry, what is next on the agenda?

Bigger health insurance.

Washington want's to provide (their term, not mine) "basic, universal" health care (actually coverage, but why split hairs) for everyone.

So what is their idea of basic?

We don't really know because that is a moving target, but using politicians outside the beltway as a guide, perhaps we can get some insight into what needs to be covered by health insurance.

According to the NCPA (National Center for Policy Analysis) state mandates, benefits that MUST be covered by health insurance, increase the cost of health insurance by 20 - 50%, depending on the state.

Here is a sampling.

Nine states require coverage (no pun intended) for hair prostheses (wigs).

Thirteen states require coverage for IVF (in vitro fertilization), a topic that is near and dear to our hearts.

Four states mandate coverage for massage therapists, three states for naturopaths. Fifteen states require coverage for "bone mass measurement" and thirty have mandates for dental anesthesia.

Now I am to be included in those who do not like pain and will go out of my way to avoid it. But since when is the cost of dental anesthesia so great that it must be an insured item? I would gladly pay for dental anesthesia even it if wasn't covered and I bet I am not alone. So why do 30 states feel it must be an insurance mandate?

Is this their idea of "basic" coverage? How do residents of the other 27 states get by without having their dental anesthesia covered by insurance?

The list goes on . . .

One reason why health insurance is expensive is because we are insuring things that don't need to be insured . . . like all of the things listed above.

I constantly remind clients that their auto insurance (mandated in all 50 states) does not cover things like tires, brakes and oil changes. But now that Washington has decided we will build smaller cars (regardless of whether anyone buys them), what if they decided it was for our own good that auto insurer's cover oil changes?

Your auto insurance premiums would rise proportionate to the number of miles you drive. If you drive 12,000 miles per year that is 4 oil changes at $40 each so your premium needs to increase by $250 to cover the cost of the anticipated oil change plus the administrative handling fee for processing your claim.

I imagine quite a few folks would balk at that but some would cheer because they no longer have to pay for oil changes.

This same mentality seems pervasive among politicians when it comes to health insurance. This is especially true when no one has to pay for health insurance any more, it will be provided for by the government.

Like their free Medicare coverage.

Taking a cue from a pizza company, I can imagine the commercials for the change that is coming from Washington.

"Smaller cars, bigger health insurance, Poppa Washington."

That Paradox

The New York Times reported on June 21 (3rd paragraph) “While 85 percent of respondents said the health care system needed to be fundamentally changed or completely rebuilt, 77 percent said they were very or somewhat satisfied with the quality of their own care.”

The Times refers to the survey result as “that paradox” (4th paragraph) but strangely, in the remainder of the 21-paragraph article, the reporters and editors at the New York Times do not probe for an explanation of the paradox, as though they have no interest in understanding it. Well, perhaps they think the paradox is unimportant? Apparently not. The Times blames the failure of the Clinton plan on “that paradox” - - 16 years ago (4th paragraph). That makes the paradox pretty important, it seems to me. And the Times' opinion on the failure of the Clinton plan is surprising because that plan failed 16 years before the present survey was conducted.

Well, perhaps the Times is merely conceding “that paradox” has existed for at least 16 years (I have evidence in my files that “that paradox” has existed for more than 30 years, but never mind). OK, but then if it is such a powerful and apparently paradoxical fact in public opinion that has existed for 16+ years, why does the Times not even attempt to explain it?

It’s my belief “that paradox” exists precisely because (1) most people are in fact generally satisfied with their medical care and (2) slanted media reporting across all those years has created the impression that most people are NOT satisfied with their medical care. So it's understandable that surveys report most people are satisfied, but believe most others are not.

In other words, “that paradox” which the Times does not explain and pointedly ignores, is the difference between what people experience for themselves, and what media such as the Times tell them is experienced by others. So I ask: who ya gonna believe? The New York Times or your own lyin eyes?

PS – Is this paradox newsworthy? I think so. Well then, why would the Times not print all the news; isn’t it fit to print? My answer: with depressing regularity, the Times deems news not fit to print when it does not fit the Times’ agenda. What is the Times’ agenda? In this area, the Times supports universal, government-controlled medical care. But if the Times were to concede that most people are generally satisfied with the quality of their own medical care, what then? Well, that would admit a powerful argument that takeover of the present system by the federales is just unnecessary. Therefore – Times won’t print that. Times won’t acknowledge that line of argument has merit – or, even, that it exists.

Carnival of Personal Finance: Iron Mike edition

Check out this week's bout of the Carnival of Personal Finance at the Suburban Dollar blog. It won't box you in, but it might knock you out (in a good way).

And For My Next Trick . . .

According to the New York Times the House has revealed a plan for sweeping health care reform in the United States.

But there are a few hitches.

They don't know how much it will cost.

They don't know how to fund it.

But other than that . . .

The draft bill would require all Americans to carry health insurance. Most employers would have to provide coverage to employees or pay a fee equivalent to 8 percent of their payroll.

Everyone must have health insurance or else what?

Then there is this goody:

The plan would also end many insurance company practices that deny coverage or charge higher premiums to sick people.

This is no problem. A handful of states already prohibit carriers from denying coverage (aka guaranteed issue) and/or charging a higher premium (known as community rating) for those with health problems.

Premiums in those states are 2x to 3x higher than comparable plans in states where carriers are free to medically underwrite coverage.

The 852-page House bill, as expected, is more expansive than the legislation taking shape in the Senate, where work on the issue bogged down this week after early cost estimates came in far higher than expected.

No one read the 1100 page stimulus bill. Wonder if anyone will read this one?

That's probably expecting too much, don't you think?

The proposal would expand Medicaid eligibility, increase Medicaid payments to primary care doctors and gradually close a gap in Medicare coverage of prescription drugs known as a doughnut hole.

If this were a car company, the design would look like a gas guzzling Hummer on steroids.

But wait! American car companies are not supposed to produce these kinds of car's any more. America wants smaller, fuel efficient "green" car's.

The bill would impose a new “tax on individuals without acceptable health care coverage.”

I can hardly wait to find out how "acceptable coverage" is defined.

The tax would be based on a person’s income and could not exceed the average cost of a basic health insurance policy.

Define "basic".

The House bill shows what Democrats mean when they speak of a “robust” public insurance plan.

Under the bill, the public plan would be run by the Department of Health and Human Services and would offer three or four policies, with different levels of benefits. The plan would initially use Medicare fee schedules, paying most doctors and hospitals at Medicare rates, plus about 5 percent. After three years, the health secretary could negotiate with doctors and hospitals.

American's turning 65 have a difficult time finding doc's willing to accept Medicare patients due to the low reimbursement. Anyone want to wager if folks under the "public plan" will encounter similar obstacles?

But the bill says, “There shall be no administrative or judicial review of a payment rate or methodology” used to pay health care providers in the public plan.

Sounds like no oversight to me. Isn't this what led to Fannie Mae & Freddie Mac crashing on the rocks?

The bill would limit what doctors could charge patients in the public insurance plan, just as Medicare limits what doctors can charge beneficiaries.

Wonder how the doc's feel about that?

The bill would require drug companies to finance improvements in the Medicare drug benefit. Drug companies would have to pay rebates to the government on drugs dispensed to low-income Medicare beneficiaries.

Gosh, this sounds an awful lot like cost shifting to the private sector.

The bill would expand Medicaid to cover millions of people with incomes below 133 percent of the poverty level ($14,400 for an individual, $29,330 for a family of four). The cost would be borne by the federal government.

The government would also offer subsidies to make insurance more affordable for people with incomes from 133 percent to 400 percent of the poverty level ($43,300 for an individual, $88,200 for a family of four).

I still have difficulty thinking of a family that earns $88,200 as poor. I guess it is something I will have to get over.

Transparency, Canadian-Style

For all the hoopla over transparency (and we've been advocating greater transparency in health care for a long, long time), the private sector seems to be ahead of the public. We see that in carrier tools like Aetna's Navigator, for example, and with a growing number of physicians' offices which share their pricing information with patients. True, Medicare has been working on this issue, and kudos to that agency for acknowleding transparency's value.

Unfortunately, our Neighbors to the North© aren't necessarily "true believers," and since the gummint-run system is the only game in town, that's a problem. For example, the Providence of Alberta seems reluctant to share data that some might consider critical to their own care and well-being:

"One Alberta hospital has an injury rate for newborns more than four times the provincial average. Patients in another Alberta hospital are five times as likely to pick up an infection following medical care, while patients at yet another hospital are more than twice as likely to experience bed sores ... But the report is unable to provide the names of specific hospitals because Alberta Health Services refused to release hospital names."

If one needs inpatient care, it might be nice to know which facility to skip to avoid bed sores. If one expects a lengthy recovery, it might be helpful to know which one to pass on to avoid an increased risk of infection. There may, in fact, be good reasons why a particular facility has more cases of a given condition, based on its focus (heart care, oncology, etc). But absent that information, no one really knows for sure.

As we rush headlong toward a similar system, it may be worth asking whether that's something we really want.

[Hat Tip: Leah Costello]

The Imperial National Insurance Czar

[Welcome Industry Radar readers!]

For 135 years insurance has been regulated at the state level. While at the federal level, laws are enacted that will filter down to the state level, all regulation is handled in each state by the DOI (Dept of Insurance).

States have been allowed not only to regulate the insurance industry, but most states rely heavily on the tax collections from premium taxes to support state services. In almost every state, premium taxes are the top 1, 2 or 3 source of revenue.

State premium taxes are usually 2% of collected premium or less yet the funds that fill state coffers usually eclipse collections from state sales or income taxes.

Now the Obamanation want's to change that.

According to Bloomberg,

Obama called for the creation of a federal Office of National Insurance within the Treasury Department to monitor the industry, represent U.S. interests in international insurance agreements, and look for gaps in state oversight.

A division of the Treasury Department.

Seems to me the head of the U.S. Treasury had some oversight problems of his own. Now he wants to be responsible for finding gaps in state oversight?

Yeah, that's the ticket.

The justification for this move is the collapse and bailout of AIG.

Of course AIG's problems were mostly the result of the collapse of the mortgage market.

The mortgage market failed because of a government insistence that poor people and those with bad credit deserve to have a home just like the rest of us. The Pied Piper of the mortgage calamity was led by Fannie Mae and Freddie Mac.

Who was watching them?

Oh yeah.

The federal government.

HRA's in Hot Water?

We've written extensively on the subject of healthy choices, and how these can positively affect insurance premiums. This can be especially helpful in the group arena, where employers often use a tool called a Health Risk Assessment (HRA) to help guage employees' health. This, in turn, is used by the insurer as one factor in the rate-setting process.

Some employers have gone so far as to require their employees to complete these forms as a pre-condition to participating in the group insurance program. In fact, the Department of Labor (which oversees ERISA, or self-funded, plans) actively endorses these tools as a way to help contain insurance and health care costs.

Alert Reader© Jeff M informs us that another gummint agency, the EEOC (Equal Employment Opportunity Commission) may be putting the kibosh on this little excercise:

"Seemingly oblivious to the ever-increasing concern shared by the rest of the country over rising health care costs, the U.S. Equal Employment Opportunity Commission recently cast doubt on the use of health risk assessments, a proven effective tool in the fight against rising group health insurance costs ... the [EEOC] issued a letter to an unidentified municipality, stating that the county’s conditioning of eligibility for its health plan on the completion of an HRA violates the Americans with Disabilities Act."

Ooops.

At present, this kerfluffle is just that, "an informal discussion on HRAs and health insurance coverage;" it's not an official "cease and desist" matter.

Yet.

We'll keep you posted.

Alzheimer's is NOT (Political) Fair Game

As we've noted more than once, although we are not apolitical, IB is not a "political blog" (poliblog). We don't, for example, endorse candidates or particular legislation. Sometimes, though, the political class oversteps its bounds and, in the popular lingo, "jumps the shark." The outrageous and utterly despicable smear against (now former) Inspector General Gerald Walpin is without honor or decency, and directly slights every Alzheimer's patient, their families, and those who care about them.

Regardless of one's political persuasion, there is simply no excuse for casually claiming that someone with whom one is in political disagreement is suffering from dementia or senility. Mr Walpin was fired from his post for reasons political, but President "57 States" Obama felt it appropriate to claim that the IG was dismissed because he was "confused, disoriented, unable to answer questions and exhibited other behavior that led the Board to question his capacity to serve;” all text-book definitions of Alzheimer's.

Having watched and cared for a real Alzheimer's victim, and having seen how Mr Walpin comports himself on television (indeed, passing a standard state-approved "mini-test" for dementia), it is obvious that this is a man in complete control and awareness of his faculties. It is an insult to my mother, and to the thousands of others who truly suffer from this horrid affliction.

It is simply inexcusable.

Healthcare "Debate:" Shut up, They Explained [UPDATED & BUMPED]

[Welcome Industry Radar readers!]

[Please scroll down for update]

The dictionary defines a debate as "a discussion in which reasons are advanced for and against some proposition or proposal;" implicit in that definition is the opportunity for each side to present its argument.

So why do we continue to call the juggernaut that is government-run health care a "debate?"

"Top aides to Senate Finance Chairman Max Baucus (D-Mont.) called a last-minute, pre-emptive strike on Wednesday with a group of prominent Democratic lobbyists, warning them to advise their clients not to attend a meeting with Senate Republicans set for Thursday."

It seems that Mr B doesn't like the idea that "the other side" may have some valid points to make; after all, "we won." Still, one can at least understand, if not condone, this kind of political grandstanding: after all, politics is very much a contact sport, and the Republicans have the opportunity to fight back in the court of public opinion.

Or do they?

"On the night of June 24, the media and government become one, when ABC turns its programming over to President Obama and White House officials to push government run health care ... exclude opposing voices on the debate."

This is unprecedented. A primetime news conference, sure, but even there, the press at least has the opportunity to question. But this is simply Pravda-in-English. Advocates of government-run health care should be embarassed - indeed, appalled - that their arguments are so weak that they can't stand to be questioned. And anyone who still believes that our media is an independent institution needs a reality check. Apparently, ABC now stands for "All Barack's Cheerleaders."

I certainly hope that folks will change the channel.

[Thanks to reader Tom T for the Drudge tip]

PILING ON DEPT [6-17-09]: It never occurred to me that the term "free press" meant that media folks would actually work for free:

"ABC is refusing paid ads for its health care program at the White House."

How much would a 30- or 60-second primetime spot normally bring in? Hundreds of thousands of dollars? More? And that's being purposely turned away in favor of scoring political points? Where are the ABC shareholders on this? Heck, where are the Disney shareholders on this?

The pro-government-healthcare folks are so afraid of the light of day, and an open, honest debate on the merits, that they're actually putting their investor's money where their own mouths are.

Words fail.

Agent/Broker Alert: Scamster Warning

Just got this from the PIA (this is a professional organization primarily for P&C agents; our agency is a member):

"Insurance agents and brokers in Nevada and California have found themselves the target of a scam recently ... individuals posing as Department of Insurance (DOI) employees are contacting agents and brokers by telephone and are informing them that their license may be canceled as the result of outstanding fees/penalties. They are then told that by providing their credit card and social security numbers, the matter can be resolved over the telephone."

Question: How many agents have actually fallen for this?

[ed: probably a lot more than you'd like to think]

As the release points out, Insurance Departments don't contact agents by phone on matters such as these; they're almost always by mail (ie, paper trail). So if you get such a call, keep your Visa number to yourself, and contact your own DOI as soon as possible.

Be careful out there...

Show Me the Money, Show me the Doc's

In a rare show of insight, physician's attending the recent AMA gathering in Obamaman's old stomping ground actually let loose a chorus of boo's. Admittedly, this was for a rather self-serving issue: "limits on jury damages in medical malpractice cases." Still, it shows a developing wedge between health care delivery folks and the gummint's efforts to nationalize their industry.

And it gets better (or worse, depending on whose ox is being gored): the Congressional Budget Office (itself not known for underestimating the cost of government-run programs) projects that the administration's health "reform" plans will cost a cool $1 trillion over the next ten years. Of course, it will ostensibly cut the ranks of the uninsured; the problem is that, as usual, that number is grossly inflated. Based on our own and other's research, we estimate the actual number of those eligible Americans who are chronically uninsured at about 25 million. That comes to some $40,000 per person (or $160,000 for a family of four). Of course, that also presumes that the $1 trillion is truly the ceiling, instead of the (more likely) floor.

But even if we take the Obamaman at his word [ed: quick, call Ripley's!], the $1+ trillion price tag does nothing to decrease the number of uninsureds.

How's that, you may ask?

Well, let's go back to the CBO, whose head honcho had this to say about "The Plan:"

"According to our preliminary assessment, enacting the proposal would result in a net increase in federal budget deficits ... When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges. At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million."

No matter how you spin this, it means that more people will lose employer coverage than gain gummint-sponsored health insurance. It's essentially rearranging deck chairs, shuffling folks from one type of plan to another, dropping many altogether, with the net result being a net loss. Somehow, I don't think this is the change folks were hoping for.

We've also heard how the adminsitration is going to cut Medicare and Medicaid expenses (i.e. reimbursements) to help offset the cost of this new initiative. Again, it'll be interesting to see how (or, perhaps, if ) that actually plays out.

Unfortunately, none of these proposals tackle the underlying problem: increasing health care costs. These are driven by a number of factors, the most critical of which is "skin in the game." As long as someone else is paying the lions' share of health care costs (be that the government or your insurance carrier), there's little incentive to not consume care. That, in turn, leaves us free to indulge our whims, often to our own detriment. As Bob has pointed out numerous times, many (most?) health care expenses could be reduced, or even eliminated, if we made healthy lifestyle choices.

Perhaps we could take a page from our P&C colleagues: auto insurance, for example, is based almost exclusively on behavior: get a lot of tickets, or wreck a lot of cars, or drink and drive, and you'll pay more. I've never heard of anyone seriously protesting this (well, except those who get dinged for their own misbehavior), and it seems to work out just fine. So why can't health insurance be more like that?

Well, it can:

Safeway, the grocery behemoth, put in place a health insurance plan that's priced directly relative to risk. That is, it's based on the actual behaviors of its participants. They observed several facts:

"The first is that 70% of all health-care costs are the direct result of behavior. The second insight, which is well understood by the providers of health care, is that 74% of all costs are confined to four chronic conditions (cardiovascular disease, cancer, diabetes and obesity). Furthermore, 80% of cardiovascular disease and diabetes is preventable, 60% of cancers are preventable, and more than 90% of obesity is preventable."

Participating employees agree to be screened for such things as tobacco, weight, blood pressure and cholesterol levels, and their premiums are then adjusted to reflect the increase or decrease in risk. Seems simple enough, and fair, too. After all, shouldn't folks be rewarded for keeping health costs (and hence, insurance premiums) down? Why couldn't these principles be applied in the broader marketplace? If the goal is to reduce costs, and thus premiums, wouldn't that ultimately lead to a reduction in the number of folks who find health insurance unaffordable? And of course, there's the added bonus of quality of life, as well.

Now that seems like a win-win to me.

Cavalcade of Risk #80 is up!

Rita Schwab hosts this week's risky collection of posts. Do stop by.

About that "Public Plan" Option: Notes from the Warpath

One of the problems with the idea that our government should be running health care is that, to some extent, it already does, and does so poorly (cf: VA, Medicare/Medicaid). But there's one gummint-run health care system that's not getting any press, and that should leave its proponents red-faced:

"Ta'Shon Rain Little Light, a happy little girl who loved to dance and dress up in traditional American Indian clothes, had stopped eating and walking ... she was diagnosed with terminal cancer, confirming the suspicions of family members ... A few weeks later, a charity sent the whole family to Disney World ... She never got to see the castle, though. She died in her hotel bed soon after the family arrived in Florida."

That's because the US Government-run Indian Health Service has become a (funny like David Letterman) joke:

"On some reservations, the oft-quoted refrain is "don't get sick after June," when the federal dollars run out."

It's essentially gallows humor, because the funds do run out about half-way through the year, leaving sickly American Indians with few options, and little hope. In fact, the Fed's are required, based on a treaty dating abck to 1787 (over two hundred years) to provide adequate and appropriate health care to American Indians. We can't (or won't) honor that commitment to a veritable handful of people, yet we're expected to believe that the gummint can handle the health care needs of hundreds of millions of other citizens?

Where's that bridge you were going to sell me?

[Hat Tip: Reader Brad F]

Grand Rounds Online

Another Early Bird, Ryan DuBosar presents this week's Grand Rounds a day ahead of schedule. As usual, there's a lot to digest here, and it helps that Ryan's 'Rounds are thoughtfully laid out and easy to navigate.

COBRA/ARRA Update: Gay Pride Edition

As previously noted, we have no problem discussing alternative lifestyle issues and insurance. This latest comes from Alert Reader© Jeff M, who asks (and then answers) "did the new COBRA rules change taxation of domestic partners?"

This is especially relevant as we see more and more carriers offering "family plan" type coverage to unmarried couples (and those same-sex marriages in relevant locales). In general, domestic partners (DP's) aren't eligible for dependent status on 1040's, so the question of how (and/or if) they should be taxed on employer provided health insurance is a poser.

Add in all the confusion about COBRA/ARRA, and you've got the makings of a real mess.

Fortunately, Benefits Attorney Frank Palmieri has the answer: a resounding "No!"

The issue is one of imputed value; that is, the monetary benefit of insurance, um, benefits. To the extent that these are (currently) not taxable for "regular" dependent coverage, the question of how they're treated for "non-traditional" arrangements becomes problematic. There was some concern that the new COBRA/ARRA rules in some way affected the taxation of these benefits with regard to DP's, but this appears to be a non-starter.

Well, so far, anyway.

[Thanks to reader Jeff M!]

There's an Annuity in my IRA!

[Welcome Wall Street Journal readers!]

One of our commenters raised an issue about which we've never written: the use of annuities in IRA's. As I replied to said commenter, there are some very good reasons to own an annuity inside an IRA wrapper (and, of course, some very good reasons not to).

First, let's review some basics. An IRA (Individual Retirement Account) is a financial tool which allows one to accrue retirement funds on a tax-advantaged basis. There are two forms of IRA: "Traditional" and "Roth." The first allows one to deduct contributions from one's income tax, but the interest earned will eventually become taxable at retirement. Contributions to the Roth version aren't deductible, but the interest isn't taxable come retirement time.

Annuities are risk management tools, used to minimize market risk. Because they're insurance products, they also offer some unique benefits (such as annuitization, which can provide a guaranteed lifetime income stream) and guaranteed interest (growth).

Annuities also have their own tax advantages which closely mirror those found in IRA's, which begs the question: isn't an annuity inside an IRA something direct from the Department of Redundancy Department?

Well, yes and no:

IRA's can comprise mutual funds, stocks, bonds, and the like. They can even include annuities. If the only investment vehicles are those with built-in market risk (e.g. mutual finds, stocks, bonds, etc), it's possible to actually lose money inside the IRA (just ask pretty much anyone who's had one over the past year or so). Annuities have built-in guarantees, which can mitigate some of the market risk of the investments.

Some might argue that putting an annuity inside an IRA is simply a way to line a lucky insurance agent's pockets. Of course, that presupposes (wrongly) that no one makes money selling the investments (which also often have "trails"). I'm not a big fan of "one size fits all," so I never recommend that folks use only annuities for retirement savings, but as we've seen, they're terrific risk mitigation tools, and certainly have a place at the IRA table.

The Economics of Health Care

Opinions on how to solve the "health care crisis" are like belly buttons. Everyone has one and no one really cares about yours.

Some want to blame insurance carriers. Others the government. Seems like quite a few blame the "profit motive" in the health care system.

All contribute but like most complex issues, there is no simple solution and there is no single way to fix.

The challenge of how to pay for health care is not just a U.S. problem, it is world wide. Socialistic health care systems to our north and across the pond have the same challenges we have. Their tax coffers are running dry and the response is to cut services.

I studied economics in college and never thought I would ever visit supply and demand curves after graduation. I won't bore you with college level economics, but if you really want to learn more, consult with Professor Google and enter phrases like "health care economics".

The economics of goods and services can be reduced to simple demand and supply. Health care is no different. It follows economic theory just like every other consumer good.

Economists look at "price curves" to determine how much a good or service should cost. In other words, how much the market will bear.

At either extreme you have inelastic price curves and elastic curves. Most consumer items track a bell curve but some things are totally elastic or totally inelastic.

Sugar has price elasticity. As the price of sugar rises, demand decreases since there are substitutes for sugar. If sugar suddenly rose to $10 per pound sales would drop to almost zero.

Gasoline is inelastic. As the price moves toward $5 per gallon consumption drops but not proportionately. In parts of Europe gasoline is $10 per gallon but consumers are still buying gasoline and driving gasoline powered cars. At this time, there really is no substitute for gasoline so (at least in theory) the price could rise to $40 per gallon and there would still be demand.

Health care is also inelastic. Consumers want to be healthy and the way most of us deal with it is through medical services. We ignore the fact that 70% of health care services could be eliminated with a healthier lifestyle and instead put demands on health care providers to produce more and more.

Health care providers are limited and since there is no real substitute, the price can increase geometrically and someone will pay.

But unlike food or gasoline, where the consumer pays for the goods, health care is different.

Consumers do not pay (directly) for health care. Over 80% of health care is paid for by insurance carriers and taxpayer funded programs.

In other words, consumers don't have any skin in the game. As long as someone else is paying for their care there are no incentives to take personal responsibility and improve health, or to look for less costly ways of treating the individual.

What is so disgusting to me about the rhetoric coming from Washington about changing health care is that they either do not have a clue or simply don't care.

An op-ed piece by Robert Samuelson in the Washington Post addresses this much more eloquently than I can. My only complaint is that he misses the mark too, by blaming the providers.

The central cause of runaway health spending is clear. Hospitals and doctors are paid mostly on a fee-for-service basis and reimbursed by insurance, either private or governmental. The open-ended payment system encourages doctors and hospitals to provide more services -- and patients to expect them. It also favors new medical technologies, which are made profitable by heavy use. Unfortunately, what pleases providers and patients individually hurts the nation as a whole.

That's the crux of the health-care dilemma, and Obama hasn't confronted it.

The health care problem is demand driven and priced on an inelastic curve. The price of health care continues to rise but demand is not showing a corresponding decrease. As long as consumers, or more specifically, the carriers and government programs are willing to pay for services ad nauseum there will continue to be a crisis.

The only way to reduce demand is for us as individuals and a nation to become healthier.

That is not going to happen.

Until then, consumer demand for health care services will continue unabated and the price will continue to rise. Premium and tax increases do nothing to limit demand for health care and do nothing to solve the problem.

Washington is playing the public like a fool and, sadly, it seems like the consumer is going along. All Washington is doing is rearranging the deck chairs and running up more and more deficits we cannot afford. The unfunded liability for government programs exceeds $100 trillion dollars against a U.S. GDP of $15 trillion and a global GDP of $60 trillion.

This is completely unsustainable. We are walking an economic plank and are mere steps from the end.

Do have a nice day . . .

Carnival of Personal Finance now online

This week's collection of personal finance posts is now up at Living Almost Large. As usual, it's chock full of useful financial tidbits.

Public Health Insurance - Beam Me Up

Star Trek fans will recognize this line. "No signs of intelligent life here. Beam me up, Scotty."

The same could be said for a government run, public health insurance plan.

At least, if it is run like Medicare.

If the government is going to help subsidize coverage for the millions of uninsured, it will need to find significant savings in Medicare spending, at least some of which should come from reducing over-treatment. In the long run, if doctors can’t be induced to rein themselves in, there is little hope of lasting reform.

Isn't this what Obama-man promises? To rein in costs?

Dr. Gawande, a Harvard-affiliated surgeon and author, traveled to McAllen, Texas, to find out why Medicare spends more per beneficiary there than in any other city except Miami.

None of the usual rationalizations put forth by doctors held up. The population, though poor, is not sicker than average; the quality of care people get is not superior. Malpractice suits have practically disappeared due to a tough state malpractice law, leaving no rationale for defensive medicine.

Then what is the explanation?

The reason for McAllen’s soaring costs, some doctors finally admitted, is over-treatment. Doctors perform extra tests, surgeries and other procedures to increase their incomes.

Say it ain't so!

Once the pay czar get's finished with them, they will be singing a different tune.

After adjusting for differences in health, income, medical price and other factors, the Dartmouth researchers’ overall conclusion is that the more costly areas and institutions provide a lot more tests, services and intensive hospital-based care than the lower cost centers. Yet their patients fare no better and often fare worse because they suffer from the over-treatment.

Suffering from over-treatment.

Not to mention endless hours in the waiting room and only last summers big print Readers Digest to bide your time.

When President Obama speaks at the annual meeting of the American Medical Association on Monday he will need all of his persuasive powers to bring doctors into the campaign for health care reform. Doctors have been complicit in driving up health care costs. They need to become part of the solution.

I can hear Barry now:

"OK, guys, listen up. Either you agree to take a pay cut or we will do it for you."

"The American people are tired of those big salaries and expensive junket's. You are going to have to learn to live on $400,000 per year plus free housing and an unlimited travel budget just like I do."

"If you don't agree, we will have to nationalize health care, put you into bankruptcy, then sell you to the Italians. They were stupid enough to buy Chrysler. Seems only fitting we give them something else in return."

Canadian Pay Doc'd

We have taken several swipes at our neighbors to the north with regard to their health care system. Queue's, lack of proper facilities, limited choices . . .

But I don't think we have ever addressed the way doc's in Canada are paid.

To be honest, the Canadian health care system is not one system but 10. One for each province. Some may be better managed than others but from our perspective, if you have seen one you have seen them all.

So how are Canadian doc's paid?

They are on a salary as determined by the Health Minister (or similar title) in each province. In the case of New Brunswick, just north of Maine for those who are geographically challenged, it seems the Health Minister wants to freeze wages and return to the bargaining table.

Huh?

Yes, that is correct.

Having just negotiated a 4 year wage agreement in December, 2008, apparently the H.M. has decided they are paying too much for medical services and wants to take a Mulligan.

The wage-freeze bill, introduced by Health Minister Mike Murphy, passed second reading Wednesday afternoon. Alward likened the bill to a gun to the head of the medical community.

He said (H.M.) Murphy hasn't shown he's serious about finding a solution to the crisis over the doctors' contract dispute.

"We believe if he is truly serious about finding solutions it makes sense to take the legislation off the table."

The Tory leader said the Liberal government has to do something to regain the trust of doctors.

"Liberal" government.

That would equate to the Democratic party here I suppose.

In December 2008, the New Brunswick Medical Society and a government negotiating team reached a tentative agreement on a new four-year contract.

The doctors ratified it in February.

But by March, the ruling Liberals were privately telling the doctors they couldn't afford the deal because of the collapsing world economy and falling government revenues.

Murphy introduced legislation last week to freeze doctors' wages for two years.

So the wage agreement has been in place less than 5 months and already the government wants a do-over due to the falling economy. Why don't they just do what Washington does? Increase taxes on the wealthy?

Maybe they are already on the wrong side of the Laffer curve and have realized more taxes will be counter-productive.

Murphy said he knows the wage freeze will leave a stain on the government's relationship with doctors and he doesn't want to proceed with it.

"But it is there for the protection of the fiscal realities of the province and all of the people of the province," he said.

While we don't (yet) have a government run health care program, and we don't (yet) have our doctors working on a salary that is "negotiated" with the government, perhaps we can peer into the future a bit and see what is in store.

Keep in mind that doc's who treat Medicare and Medicaid patients have their income on these patients capped. Most doc's who do accept M/M patients limit the number of M/M patients in order to maximize revenue. Most would like to keep their M/M patient load to less than 10% and few will allow their patient load to exceed 20% of total patients.

Some, due to the nature of their practice don't have that luxury and may have 50% or more of their patient on M/M.

So what happens if we have "Medicare for all" as some in Congress envision? Or we find ourselves with Medicare, Medicaid, SCHIP and a "Public Plan".

Doc's may not be on salary but as the government role in providing and managing health care increases doc's will find their income squeezed more and more.

I don't know what doc's in Canada do to compensate for a wage freeze. They have bills to pay just like the rest of us.

Maybe they take a second or third job to stay current on bills or perhaps even get ahead. Imagine walking into McDonald's and seeing your pediatrician there, asking if you want fries with that.

Yeah, that's comforting.

A Blogging Nightmare?

Although I really have no idea why, we've had occasional hits from a blog called April's Mom . No big deal: we get hits from a lot of different, perhaps unexpected places. The April's Mom blog is (was) written by a young woman who was pregnant with a terminally-ill baby girl; the heart-wrenching, yet inspiring posts chronicled the journey.

Or not.

Turns out, April's Mom was not, in fact pregnant with a terminally ill child. Or any other kind:

"A blogger who wrote of deciding to give birth to a terminally ill baby, attracting a following of thousands of supporters online, admits now that the entire story was made up."

Oy.

The blogger behind the blog is a 20-something Chicagoland social worker, who became unable (or unwilling) to stop building on lie after lie. She even received gifts from loyal readers, and prayers from well-wishers (and pro-life advocates). It appears that she really did lose a son, shortly after his birth, in 2005. Why she waited this long to start the April's Mom blog is, at this point anyone's guess.

Actually, it's not all that clear why she started it at all (although it does appear that she hoped to use it as a pro-life advocacy effort).

So, why are we blogging on this?

At its peak, her blog was getting over 14,000 hits a day (hard to believe, but that's even more than we get!). That kind of traffic implies, and in fact generates, a certain amount of credibility. So when a blog that big implodes, it calls into question others, as well.

Regular readers here know that we don't blog anonymously, and there are a number of reasons for that. But the over-arching one is credibility: it's quite easy to post controversial items when one has the shield of anonymity. It's quite another when folks know who (and where) one really is.

Frankly, I wouldn't have it any other way.

Health Care Reform - Washington Style

Washington is promising a coming change in health care.

Coverage for everyone. More affordable premiums. What's not to love?

How about funding? How will we (the taxpayer) pay for this?

Nothing is final yet, but . . .

Higher prices (taxes) for beer, wine, tobacco products and soft drinks.

But what if these higher prices mean less consumption which translates into lower tax collections? Oh well . . .

Taxes on employer provided health insurance. In other words, if you have health insurance you need to pay a tax so those who don't have health insurance can have health insurance.

Got it?

Seems to me like it is better for you (or your employer) to drop coverage so you can get it for free.

And let's not forget Washington's favorite target. The rich.

They want to tax the rich to pay for health insurance for the poor.

Sounds good until you notice they have also appointed a pay czar to limit how much business executives receive in compensation. So if they limit pay on those greedy CEO's, where will the find the wealthy?

Only Washington would want to tax the rich and then turn around and limit the number of rich people.

But they have more silly ideas on how to fund health care for all.

In addition to raising taxes, they want to put restrictions on health care costs. Part of the Spendulus Bill (all $819 billion of it) allocates includes $147 billion for health care related issues.

So how does that $147 billion make health care, and health insurance, more affordable?

Roughly $86 billion will go to help states cover Medicaid costs; tax cuts for COBRA subsidy will consume $25 billion. My calculator says that is $121 billion and they have done nothing to make health CARE affordable.

So how much is Washington dedicating to do something to actually LOWER the cost of health care . . . which will actually lower health insurance premiums.

We have $26 billion left so let's see how they plan to make an investment in lowering health care costs.

They will invest $20 billion to develop EMR (electronic medical records). You should note there is no proof EMR will significantly lower the cost of care. Some estimates put it at less than 2%.

Community health centers will receive $2 billion, the VA $1 billion and American Indian reservations will get $500 million.

Let's recap.

$819 billion with $147 billion allocated for health care, and of that, only $26 billion to really have an impact on the cost of health care.

And how much does health care cost us?

About $2 trillion per year.

$26 billion to save, maybe in a good year, 2% or $40 billion.

Washington just doesn't get it. If they want to really save money they need to focus on the folks who are using the system the most.

Like the 5% of the population that consume 50% of all health care expenditures.

So the answer is simple. Locate the 5% that are eating us alive and tell them we can't afford to pay for their care.

That is a change you can believe in.

Solving the health care problem is easy.

Paint Me a Birmingham

Thanks, Tracy, but today we're talking about hip resurfacing, not oil painting. A while back, we had a guest post from Dr Robert Roman discussing a new hip surgery technique. Recently, I had the opportunity to speak with Bob about another hip procedure, this one aimed primarily at "young actives."

By the way, "young actives" are those folks aged 55 or so who enjoy an active lifestyle, and don't want to be sidelined because of a bum joint.

Typically, a hip replacement involves cutting a piece of bone, and then attaching a new piece (or three). There's usually a pretty significant waiting period before one's able to get back to one's accustomed lifestyle, whether that's mall-walking or a round of golf. Another downside is that the replacement parts have a finite (and known) lifespan. This is a problem, because no one really wants to have such an operation at age 57, and then again at 72.

And that's where this (relatively) new technique comes in. Called the Birmingham Hip Resurfacing System, this process, developed by Smith & Nephew, holds a lot of promise for those "young actives." As Dr Roman explains, it involves much less bone resection, and patients can expect to get back to their pre-surgical activity level much faster than with a traditional hip replacement. In fact, according to Dr Roman, some 87% of folks who undergo the resurfacing process are back to their pre-surgical levels of participation in sports activities, and in past series some 22% of these athletes participate in contact sports.

[ed: Actually, Dr Roman may be understating the benefits of the Birmingham approach; according to this study, almost half again as many folks who had the surgery were able to participate in sports post-op, and "a significant proportion of patients who did not do any sports before surgery are able to take part in sports after surgery." ]

This procedure also lends itself nicely to the anterior approach (where the patient is prone and the surgeon proceeds from the front, rather than the traditional posterior - or lateral - approach). It's less invasive than traditional replacement surgery, which means a faster recovery time, but Dr Roman also warned that's it's more labor intensive for the surgeon. Another benefit is that the "Birmingham method" is a self-lubricating, metal-on-metal bearing surface, so there is much slower wear and tear.

Hunh?

This simply means that there's greater longevity in comparison to a traditional metal-on-plastic bearing, and so less likelihood of additional replacement procedures down the road.

Let's step back and look at how "a Birmingham" works: the surgeon make an incision, and then trims the "knob" at the top of the leg bone where it joins with the "cup" of the hip, and adds a little ball (much like the ones we used to put on car antennas). He then adds a metal "liner" inside that cup; there's a very small channel where the new ball and the newly-lined cup meet. The body's own, natural lubricants fill in that space, creating a self-lubricating system.

Very cool.

[ed: Click here for a short video showing the difference]

Of course, we also need to consider both the cost and the insurance aspects of this procedure, especially in contrast with the traditional replacement method. As Dr Roman explained it, the Birmingham is a bit more expensive (at least initially), but that cost differential is minimal. The surgeon's fee is generally set by either Medicare (if applicable) or one's insurer, so it tends to be the same as a full replacement. So at least from the outset, there's no tangible cost-savings. Of course, if there are fewer complications, then longer-term costs are likely to be lower. It's really a lifestyle, rather than a financial, calculus.

From the insurer's perspective, this has become just another procedure, not considered experimental. Again, fees are dependent on procedure codes, but carriers seem to be okay with it. In fact, it's generally the same code as a full replacement, and reimbursed the same way. And providers like it because it gives them an additional marketing tool: "hey, we've got the latest tech and processes, and can get you back on the courts and courses faster."

So what are the downsides? Well, as Dr Roman points out, the anterior method we discussed previously, while continuing to gain steam, faces some obstacles. For one thing, many hospitals are a bit skittish about the $80,000 capital investment for the new, specialized equipment. For another, surgeon's who have had reasonable success with traditional replacement techniques often take the "if it ain't broke, don't fix it" route. Still, these are not insurmountable obstacles, and Dr Roman is confident that this technique will become relatively commonplace in the near future.

Thanks again to Dr Robert Roman for helping us to enlighten our readers. If you have any questions, please feel free to pose them in the comments, or drop us a line.

Cavalcade of Risk #80: Call for Submissions

Rita Schwab hosts next week's Cavalcade of Risk, and she's looking for some strong, risk-related posts. Deadline for submissions is Monday, June 15. Please remember to submit yours with:

■ 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.

American Health Choices Act, v. 1.01 [UPDATED & BUMPED]

[Welcome Insurance Forums readers!]

[Please scroll down for update]

And so it comes to pass that we learn Senator Kennedy's staff are busy bees, having ground out a 167-page interim draft of a Bill they are pleased to call the American Health Choices Act. A copy was leaked over the weekend. The text of the draft Bill and the article where I saw it are here - both are at Keith Hennessey.com, the economics blog. I recommend you read Hennessey's entire linked post on this draft Bill.

My reading of the draft Bill so far: Congressional staffers are far along in defining what will be theirs to choose, ours to obey.

If you decide also to scan thru the draft Bill, you will almost immediately come upon this:

6 SEC. 2. DECLARATION OF RIGHTS.

7 (a) RIGHTS OF PATIENTS TO CHOOSE THEIR DOC
8 TOR.-It is the right of patients to select the doctor of
9 their choice.

10 (b) DOCTOR-PATIENT RELATIONSHIP.-A strong
11 doctor-patient relationship is essential to the practice of
12 medicine, and patients have a right to an effective doctor-
13 patient relationship.

14 (c) HEALTH PROFESSIONALS SHOULD JUDGE WHAT
15 Is BEST FOR THEIR PATIENTS.-Doctors, nurses, and
16 other health professionals have the right to judge what
17 is best for their patients.

18 (d) No INTERFERENCE WITH THESE RIGHTS.-
19 Nothing in the this Act or the amendments made by this
20 Act interferes with the rights described in this section.

Paragraphs (a) and (b) sound innocuous but are not. Still, it's paragraphs (c) and (d) that really creep me out.

Paragraph (c) grants no legal right to patients, to influence the judgement of what is best for them. Perhaps more importantly, paragraph (c) grants patients no legal right to refuse treatment that a doctor may prescribe. Only "health professionals" are given these rights. And then paragraph (d) says "we really mean it."

Does this strike you as a little creepy? It sure does me.

Ah well, as the man once said at his finest moment in the movie, So let it be written, so let it be done.

Maybe this is only a movie.

UPDATE [HGS]: Mike's done an outstanding job of delineating some of the problems with this legislation. From an agent's (and free market advocate) perspective, this is certainly frightening:

"Specifically, §2704(a) is the “Requirement to provide value for premium payments.” A health plan must report how much of their premium revenues are used for clinical services, how much for “activities that improve health care quality,” and how much for “all other non-claims costs.”

§2704(b)(1) then tells the Secretary to look at how much other health plans spent on “all other non-claims costs,” and based on that survey, set an allowable percentage for this category. Plans are then required to rebate premiums if they go above this amount. This is direct (but confusing) regulation of premiums and profit margins."

What this means is that an insurer which is able to operate more efficiently (that is, save money on claims) will actually be penalized for doing so.

Brilliant.

Will Doc's Prove They're Not Stupid? [UPDATED & BUMPED]

[Please scroll down for update]

Several months ago, we raised the question (and a lot of hackles) of whether doctors - as a group - are dim bulbs. Our justification for concluding that they were was fairly damning: the AMA website, which continued to tout a government takeover of the health care industry [ed: see UPDATE below for news].

But the AMA doesn't necessarily speak for all physicians, and a grassroots effort to stop the gummint juggernaut has been launched:

"We are an organization of concerned physicians committed to the establishment of a health care system that preserves the sanctity of the doctor-patient relationship, promotes quality of care, supports affordable access to all Americans, and protects patients’ freedom of choice."

Let's examine those principles one by one:

"sanctity of the doctor-patient relationship" Under a nationally-run system, the government decides who you see, when and how often you see them, and (under some proposals now under consideration) what courses of treatment the physician may undertake.

"promotes quality of care" This should be self-evident, but under current gummint-run systems (e.g. Medicare, VA), quality of care is not the primary metric (that would be cost).

"affordable access to all Americans" That one's somewhat of a puzzler: there are already a myriad of programs, both public and private, that give every American access to health care.

"protects patients’ freedom of choice" Freedom to choose which doctor (or doctors) one may see, what kinds of care one may receive, and the opportunity to make (informed) choices.

That last is especially relevant: while the politicians and pundits try to cast this battle in terms of economics and heart-strings, it's really about choices, and the freedom to make them. To choose whether or not one wishes to buy insurance, and what kind; the freedom to choose a provider, or not; the freedom to choose personal accountability and responsibility.

Or not.

Choice versus mandate.

Consider carefully.

UPDATE: Well looky here! The AMA has finally seen the light, and has now gone on record as opposing the so-called "Public Plan."

Of course, they continue to conflate health care and health insurance:

"While committed to the goal of affordable health insurance for all, the association had said in a general statement of principles that health services should be “provided through private markets, as they are currently.”

Still, if they can be made to see the light on one major issue, perhaps there's yet hope for the doc's.

Health Wonk Review: Major Reform Edition

HWR founder Joe Paduda hosts this week's edition of health care wonkitry, with a special focus on current health care and financing reform issues.

The HWR is always a great read; this week, it's a must read.

More Bang for Your Buck

As Mr. Fixit and his band of merry men and women in Congress debate how to put the fix on health care, it is interesting (in a lurid sort of way) to watch them work.

The Washington Post has this to say.

"Sure, some people here have the best health care in the world, but the average American is paying too much and not getting enough in return,"

By whose standards are we "not getting enough" if we have the "best health care in the world". Seems these statements are diametrically opposed.

Mercedes-Benz is arguably one of the best cars in the world, and it comes with a price to reflect the quality. You can pay less and still get a decent car, but it just isn't the same as a Mercedes, is it?

They envision a health-care system that guarantees a basic level of care for everyone, shifts the emphasis to wellness and prevention, minimizes errors, and reduces unnecessary and unproved treatment.

Seems to me everyone already has access to a "basic level of care", so what's the beef? As we have said repeatedly, one does not need health insurance to access health care, and certainly not at the basic level.

You may design a plan that promotes wellness but unless you are willing to punish those who do not obey the ideology is flawed.

For years we have been told to follow a healthy diet, get regular exercise and limit alcohol consumption. Yet we are a nation that is getting fatter year by year.

Minimizes error and reduces unnecessary and unproved treatment. As long as humans are involved, there will be error. And for what it's worth, carriers as well as Medicare/Medicaid do not pay for unnecessary or unproven treatment modalities.

So what is the problem?

"People tend to demand the new thing even if there's not much evidence it will make a difference in the length or quality of life," she said.

We want the latest and greatest but want someone else (the insurance carrier) to pay for it. Sometimes older, more established medications will accomplish the same thing at a lower cost and fewer side effects.

But who is willing to settle for something "old" when there are plenty of new medications?

Not those who have health insurance. Especially if it has copay's.

In 2006, using inflation-adjusted figures, Medicare spent $5,812 on the average beneficiary in La Crosse, compared with $16,351 in Miami. Yet an examination of health status in both places, adjusted for age, finds no evidence that the extra spending resulted in better care,

The answer seems simple enough.

Send those who need care to La Crosse . . . or pay the docs in Miami the same as those in La Crosse.

Or send them to Turkey for treatment.

No problem.

Solving the health care crisis is a piece of cake.

Long-Term Care . . . the other elephant in the room

[Welcome Wall Street Journal readers!]

The U.K is studying the problem of long term care (nursing homes) and one proposal is for mandatory, private long-term care insurance. I think this is a creative idea that is worthy of discussion and debate – not only in the U.K but here, too.

One very constructive concept in the linked article is that mandatory, private long term care insurance would be “primary” to NHS. This means that the cost of nursing home care for insured persons would first be paid by each person's insurance company, up to the policy limit, thus reducing the expenses of nursing home care to NHS, i.e., the public treasury.

Problems with the idea? oh yeah, sure, the same problems as with mandatory insurance of any kind. But it's my hope that won’t be used as an excuse to ignore the need for policy debate here, on LTC.

In the U.S., long-term care is not covered at all by Medicare or private medical insurance. Only a few fortunate people have the resources to pay for nursing home care themselves – which can easily cost $75,000 per year, or more depending on where you live. So in the U.S., most people who need nursing home care also need significant financial aid and the most common source of aid is Medicaid.

To qualify for nursing home benefits under Medicaid, one must “spend-down” one’s assets to essentially zero – in other words, one must be, or become, impoverished to qualify.

While private LTC policies have been available for many years, relatively few people buy them. Going without LTC insurance can mean assuming a very substantial risk because in the event one needs nursing home care, the only practical option may be to spend down your life’s savings, apply to Medicaid – and live in poverty.

Statistics suggest the odds of needing nursing home care at some point in one’s life are over 50%. This means that, for the average person over age 65, the question of confinement in a nursing home is more a matter of “when” not “if”. Note in the linked article a health minister states these chances are one in ten; that may be the case in the U.K., but in the U.S. the risk seems to be much higher. That's why you should care about LTC.

Medicaid now pays for more than 50% of all nursing home expenses with the result that almost 33% of Medicaid spending goes to nursing home care. The oldest baby-boomers are now beyond age 60 and many more are coming behind them like a wave. If a more effective means cannot be devised to cover long-term care expenses, I think we will witness:

(1) much higher Medicaid expenses which will devastate federal and state budgets, and result in higher taxes or reduced benefits or both.

(2) increasing numbers of people who impoverish themselves to obtain nursing home care.

There needs to be public policy debate about long term care and the debate should start right here and right now.

The U.K appears to be engaging this problem. The U.S. should, too.

ObamaCare: A Thousand Words' Worth... [UPDATED!]

'Nuff said.

[PhotoShop courtesy Michelle Malkin]

UPDATE: Leave it to Peach State physicians to "get it:" Check out Docs 4 Patient Care to see how front-line providers (not ivory tower AMA types) see this looming battle. [More here]

Universal Health Care - Been There, Done That

[Welcome American Issues Project readers!]

We are pleased to offer this first hand account of universal health care courtesy of one of our readers.

As an Italian citizen, I have experienced the “Utopia” of universal health care. It is a noble and ethically good idea, the problem is that it simply does not work. I will explain briefly what I am talking about:

First, it is not free; every month a variable sum (proportional to salary) of money is automatically taken by the government out of your paycheck, thus you have no control on that money, you have no freedom to choose whether to have health care coverage or not, plus, the more money you make, the more you pay, which in terms of health care is not fair nor directly linked to your personal health status or habits.

Second, but no less significant, is that even when you go to a hospital for treatment, it is overcrowded, understaffed, mostly old buildings and infrastructure, with not enough physicians nor resources. For example, you might have to wait several months to get a sonogram or an MRI. If a surgical procedure is needed, you are put on a waiting list in which you could be called months later at any time, any day to have the procedure.

Third, if you cannot afford private care, after going through the painful process of public infrastructure, you still pay a co-pay according to the treatment you receive.

In addition, I feel obliged to throw in a few more considerations:

Private health care guarantees competition between doctors and medical institutions which contributes to a higher level of care and professionalism stimulated, obviously, by the monetary gain. This does not apply to public structures that often cannot afford to pay doctor’s adequate wages, lowering the quality of medical service and almost eliminating research projects.

The psychological “comfort” of having “paid-by-the-government” health care, lowers the awareness and responsibilities that people have towards their own health, making it easier for them to rely on future care instead of making the best lifestyle choices to stay healthy and in shape.

Having lived under both systems, I appreciate the freedom of choice that is given to me by the private health care system.

Thanks to Cristina Folchitto for penning this blogpost, and to Nick Perry for passing it along.

Carnival of Personal Finance is up!

David Weliver, blogging at Money Under 30, presents the 208th edition of this venerable roundup of finance posts from around the 'sphere. It's done well: there's an Editor's Picks section, and then the other submissions.

Early Grand Rounds...

Oh those Brits! This week's Grand Rounds, the weekly compendium of great medposts, is hosted by The Jobbing Doctor. TJD is a bit early out of the gate: GR generally "goes live" on Tuesdays. Still, better early than never...

Seriously, don't miss this intriguing take by a distinguished member of the MVNHS©.

The Pay Czar

Mr. Fixit is set to announce a pay czar for firms receiving TARP money.

According to the article,

"The Obama administration plans to appoint a "Special Master for Compensation" to ensure that companies receiving federal bailout funds are abiding by executive-pay guidelines, according to people familiar with the matter."

No big deal, right?

After all, if they are using taxpayer money (which the taxpayer's did not authorize) there should be some sort of oversight, right?

But why stop with firms receiving TARP money?

How about government contractors that supply goods & services?

Of course when you limit the pay of HCE's (highly compensated employees) you also limit the income tax collections. Guess the brainiac's in Congress never thought about that.

Health care has a bulls eye right now and the folks in Washington are looking to cut health care costs. Since they already cover roughly 40% of the population via taxpayer funded health insurance plans like Medicare (bankrupt), Medicaid (bankrupt) and SCHIP, controlling the salaries of health care providers seems a logical step.

They already dictate what they are willing to pay for medical services. If a medical provider serves M/M/SCHIP patients they must be willing to accept the dictated reimbursement schedule and are prohibited from balance billing the patient for any difference in what they actually NEED to cover the cost of services vs. what M/M/S are willing to pay.

So why not take it a step further and limit how much docs and hospital administrators can earn overall?

Of course in doing so that means income tax collections will dwindle. I don't suppose any of those eggheads in Congress considered that.

Public Plan or Public Enemy? Our Conclusion

In Poe's The Purloined Letter, the thief hides the stolen item in plain sight. He knows that most folks tend to overlook the obvious, and takes advantage of that fact. In much the same way, members of our political class are using the innocuous sounding title "Public Plan" to (not so) surreptitiously implement a gummint-run health system.

How's that, you ask?

Well first, let's review the premise behind the so-called "Public Plan" (PP): the government will institute an "alternative system to private insurers, much like some states already use for their employees;" the PP would offer certain plan designs at set rates, presumably subsidized for those who can't (or won't) pay the higher premiums. Of course, the gummint has a poor track record in predicting how its policies will actually work in real-time. Case in point: current unemployment numbers. You may ask, "what's that got to do with gummint and health care?" The reality is that the Spendulus was supposed to create (and/or save) scads of jobs, and yet the latest unemployment figures show that we're worse off than if there'd been no Spendulus. Why would anyone think the Feds would be any more successful in anticipating the effects (and costs) of a nationalized health care system?

Meanwhile, we still have the unanswered question of how the PP will supplant the private sector.

First, the PP must recognize that health care costs drive health insurance costs, and that absent some downward pressure on the former, the latter's just going to continue to climb. There are only a few ways to control costs, and comparable systems we've explored (cf: the MVNHS© , Canada, et al) have done so through rationing, generally at the expense of those in their Golden Years.

Second, while the PP is advertised as being an alternative to insurers, it is in reality a substitute for them. How can we state this so unequivocally? Because we saw in the recent mortgage debacle that when the government meddles in private sector financial issues, we get mandated loans to folks who have no way of repaying them. And how does that apply to insurance? Well, when the government is buying and selling health care, it can use the power of the state to get its way, and thus the whole "level playing field" theory becomes a myth. How can private insurers hope to compete against the government, especially when the state can reduce fees at will, rather than through negotiation?

As mentioned in Part 1, I was particularly intrigued with Stuart Butler's term: "the down the road." First, the so-called "wall of separation" between the government and the market becomes blurred (Hello! GM, anyone?), and as costs continue to mount, there's every reason to believe that the government will continue its tradition of tinkering with systems about which it has no real experience or understanding. It becomes, in essence, the team manager and the umpire. What could possibly go wrong?

Mr Butler also observed that what people "heard" during the election is not at all what we're seeing proposed: that if one is currently insured, that wouldn't change. But of course, it must: as we've seen with Medicare [ed: did we mention that that's going bust in less than 10 years?], the gummint has, and uses, the power to shift costs to the private sector (insurance). Of course, when it's expanded to the population writ large, the problem is then magnified.

There are those who would argue that the PP is simply an extension of already-existing state employee programs. This would be disingenuous: no individual state has anything like the power of the Federal Government. Indeed, a national PP would control costs simply by controlling how much is paid, a sure-fire way to force health care rationing.

They say that a picture's worth a thousand words (and we're already up to 600+), so we'll conclude with this video, which neatly summarizes the inherent problems of a Public Plan. Or is that Public Enemy?

[Thanks to Lyndsi Thomas for the video link]

Patient Charity Update

We have updated two resource pages for those looking for information on health and dental insurance in Georgia.

Patient Charity has been a top ranked site for information on charitable programs for low income and uninsured in Georgia. For years it was a stand alone site but was incorporated into my primary site a few months ago. Since the first of the year we have added many more resources for the uninsured and uninsurable in Georgia.

We recently paired with COBRA Insurance to provide the number one resource for COBRA on the web. Their FAQ section has answers to more than 1800 COBRA related question and is indexed and fully searchable. This inspired us to add our on FAQ section to Georgia Insurance Shop. (More on that later).

At Patient Charity you can find information on taxpayer funded government programs for the poor and uninsured including links to Georgia Peachcare for Kids.

Other points of interest on Patient Charity include:

Healthfinder, a site that points you to clinics that are either free or charge on a sliding scale.

Benefit Checkup where you can learn about government entitlement programs for the poor and aged.

Out of Pocket is one of our favorite sites to look up the cost of common medical procedures.

We just introduced a new Georgia Health Insurance Resource section with links and information specifically for Georgia residents. You can link to the GA DOI (Dept of Insurance) website and find answers to frequently asked questions as well as looking up information on licensed insurance agents. Is the person you are dealing with LICENSED to offer insurance in Georgia or are they just a shyster looking to peddle a sham product?

Many people have COBRA benefits that are expiring and their health prevents them from qualifying for major medical. In the Georgia Health Insurance Resource section you will find a link to the Georgia assignment application including details on plan options and rates. (More information is in our revised FAQ section).

Check out links to Atlanta Community Access Coalition, BRAVE Kids, Babies Can't Wait, Candlelighters Childrens Cancer Foundation, Georgia Cares, Parent to Parent and more.

We also have information on INSURED plans for those who cannot afford or qualify for traditional major medical insurance. Georgia Core Health is a guaranteed acceptance basic health insurance plan. There are NO HEALTH QUESTIONS, no physical exam. Pair Core Health with Smart Accident Medical, Benicard or Careington Total Care for enhanced coverage as well as discounts on medical, dental, vision and Rx services.

Inspired by COBRA Insurance, we decided to ehance our own FAQ page which will be updated several times a week. As questions are fielded they will be added to the page along with answers to those questions. If you have a question that is not on that page, email us and we will provide a personal answer along with adding it to the page.

The FAQ page will grow daily as new questions arise so check back often.

iTriage Update

Just got an email from Healthagen announcing that their iTriage app (reviewed here) is now free.

Exit question: Should I ask for my $1.05 back?

ROP Term Increases

If you are a fan of ROP term life insurance (return of premium) here is a heads up. I have been notified by a general agent friend that prices for ROP term plans will increase 40 - 50% within the next 6 months.

Buy now and save.

Cavalcade of Risk: 3rd Anniversary Edition

Hard as it is to believe, this edition of the Cavalcade marks our 3rd Anniversary. As has become our tradition, we're including posts only from those who submitted (hosts know that I spend the weekend before a Cav "hunting" for interesting risk-related posts). To see how far we've come, one has only to look at our premier issue.

The Traditional third anniversary gift is leather, but I'm kind of afraid to go there. The Modern gift is crystal or glass, but these pose substantial risk of breakage, so they're out. It turns out that the gemstone gift for third anniversaries is pearls, and I think that's just about right: each of these posts contain at least one pearl (of wisdom, natch):

■ If you're like a lot of folks, you've already broken the first rule of password protection: don't Post-It-Note it on your monitor (bet you never saw Post-It-Note conjugated before, have you?). An even better idea is to pick a password with some heft to it. Jim at Bargaineering has some tips on how to pick a strong, but easily recalled, password.

■ Five Cent Nickel's not afraid to ask the tough questions. With all the banking and finance problems in the news, have you ever considered the role of the SIPC (Securities Investor Protector Corporation)? FCN has, and offers some insights.

■ Ever heard of the ADA? No, not Jack McCoy, but the Americans with Disabilities Act. Nancy Germond asks you to consider if you're ready to help your injured workers return to productivity, because there's some new changes to the Act that could test your risk-assessment skills.

■ It never ceases to amaze me how EconBlogger Jason Shafrin effortlessly segues from economic principles to risk management, but he sure makes it look easy. Today, he takes a look at Medicare Part D (known around these parts as "D for Debacle") , and how it's affecting pharmacy insurance benefits. Jason reviews an article and makes some disturbing discoveries.

■ Talk about the horse's, um, mouth: Colorado Health Insurance Insider's Jay Norris offers up a guest-post from the President of Anthem Blue Cross Blue Shield of Colorado. John Martie has the insurer's perspective on some important, and potentially troublesome, aspects of guaranteed issue health insurance.

■ Rita Schwab (who hosts the next Cav) highlights the risk to patients, hospitals, and practitioners involved in a negligent credentialing case, and the potential risk to reporters and bloggers who may find themselves in the midst of controversy for writing about the case. And make sure you see the email received from the defendant's attorney at the bottom of the post. Scary stuff.

■ HWR founder (and all-around good guy) Joe Paduda cautions "Medicare for all? Not so fast..." Joe's been conversing with Jacob Hatcher and Jason Rosenbaum about the merits of using Medicare as the basis for a public health plan option. Joe's not convinced Medicare is the right answer, in fact he's pretty much convinced it isn't. But he thinks that another government offering may well be.

■ Self-proclaimed rookie blogger John Leppard thinks that when "Change" (vaguely defined) is the centerpiece of the national agenda, it is quite fitting to be a little apprehensive. Promises aren't the same as policies, but they can be just as dangerous. Such promises can be risky, at best.

■ An integral part of risk is "mitigation;" that is, trying to reduce the impact of something that may be unavoidable. Mikkal Travvis offers some timely tips on how to survive a possible flu pandemic.

■ One of our major bugaboos lately has been the influx of spam submissions from the personal finance folks. This post, submitted by BankMan, almost ended up in the JunkMail folder because of that, but luckily, I stopped to actually read it. It ties in quite nicely with Five Cent Nickel's SIPC piece (above): the FDIC was created to prevent people from making runs on their banks and causing banks to collapse when they were otherwise healthy. This was a HUGE problem in the Great Depression, and caused many banks to fail and people to lose their life's savings - all because people panicked. No one wants to risk that.

■ Longtime contributor Jaan Sidorov examines the hubbub around McAllen Texas' outlier status in the New Yorker magazine, which examined health care utilization rates. He's not impressed and thinks the commentary has failed to pay attention to a very simple concept from statistics 101 (and hence the risk factor).

■ The Norks' Nukes? The Iranians Uranium? The Chinese Chits? None of those infuriate me as much as the folks who insist on Dialing While Driving. WorkersComp Insider's Jon Coppleman looks at the liability risks posed to companies by workers who use cell phones while driving and offers examples of policies that various companies are implementing to mitigate that risk (unfortunately, none of these include the Death Penalty for offenders).

■ And, finally, our own submission examines whether reducing risky behavior really does result in better health (and lower insurance premiums). Apparently so, as we learn from this post based on recent studies.

Well, that does it for our 3rd Anniversary edition. Thanks again to all of our hosts this past year, and to everyone who's contributed to the Cav.

Next week's host is Rita Schwab. We have hosting slots available starting in September, and would encourage you to grab yours "while the gettin's good."

We're also looking for alternatives to Blog Carnival, so if you have any suggestions, please send 'em in.

Another Resource Pops Up...

Quest Diagnostics, a national medical testing service, recently initiated a new, free service for folks with limited finances and those who are uninsured. There are actually four independent Patient Assistance Programs:

■ Financial Assistance Program For folks of limited means, Quest will help work out a payment plan.

■ Uninsured Patient Program For a modest fee, offers dicounts on certain services.

■ Free or Reduced Fee Laboratory Services Working with various clinics, Quest is offering reduced (or waived) testing fees.

■ Take Care Clinic(sm) Take Care Recovery Plan Working with the Take Care Recovery Plan to provide free laboratory testing services to qualified patients.

Kudos!

[Hat Tip: Holly Robinson]

Lying Eye's

You can't hide your lyin' eyes
And your smile is a thin disguise
I thought by now you'd realize
There ain't no way to hide your lyin eyes

The Eagles knew it. Seems a California judge feels the same way.

In a key victory for Blue Shield of California, a judge ruled the health insurer acted properly when it rescinded a couple's policy because they made misrepresentations about medical history on their application for coverage.

Rescission's are a difficult part of the individual health insurance market, but if you lie on an application you will get caught.

Blue Shield opened a rescission investigation after Steve Hailey was hospitalized soon after he signed the application for coverage that claimed he had no prior health problems, Blue Shield said. When medical records indicated he failed to disclose numerous serious medical conditions, Blue Shield rescinded the contract. Between the time it opened its investigation and the time the policy was rescinded, Hailey was involved in a car accident, Blue Shield said.

According to press reports, Hailey accused Blue Shield of wrongly dropping his coverage after the accident left him with bills of more than $400,000.

Tough break.

He lied about his medical history in order to obtain health insurance, then was involved in an auto accident. Some would call that justice.

After five years of litigation, the decision "proves that Blue Shield of California had every right to rescind the Haileys' coverage," Jacobs said in the statement. The Haileys admitted that they understood the Blue Shield application and that the application "was clear and unambiguous," he said.

Five years and countless lawyer fees.

Thanks to Jeff Milne for this tip.

Grand Rounds, "June's Bustin' Out" Edition

Health law blogger David Harlow hosts this week's compendium of health care posts. But David has a whimsical side, as well, so be sure to check out the embedded video.

The Winner Is?

The folks at Kaiser Foundation have put together a side by side comparison of 3 health care reform packages under consideration.

I encourage you to read it for yourself and decide, but here are some key points and contrasts between Mr. Fixit's campaign promise, the Senate Finance Committee, and Max
"What Deficit?" Baucus.

The Senate & Baucus plans issue a mandate that everyone have health insurance. Mr. Fixit does not explicitly make that mandate. The Senate & Baucus will require employers to provide health insurance for their employees.

Apparently no one in Washington watches the news. Part of the reason for the bankruptcy of Chrysler & Government Motors is the union negotiated health care benefits.

Part of the deal brokered with the UAW to save Chrysler is a reduction in pensions and health insurance for CURRENT as well as future retirees. Doesn't this fly in the face of an employer mandate or is it just me?

With regard to making coverage affordable, Mr. Fixit is rhetorical while the Senate & Baucus propose tax subsidies for those making up to roughly $88,000 per year for a family of 4.

Isn't that just about everyone? Latest figures say those households with $88k or less comprise roughly 80% of the population.

If they are going to cut taxes on most then who is left to pay for this?

Two of the proposals propose uniform benefit designs with 3 or 4 plan choices and little or no room for anything else. Rather than one-size-fits-all you can buy your health insurance in small, medium or large.

The carriers must issue coverage to anyone, regardless of any existing conditions. This works really well in states like NY, MA, ME & VT where rates are 2x to 3x higher than in neighboring states for comparable coverage and medical conditions can be underwritten.

One carrier we know is already ramping up for this change. They are currently still denying coverage based on certain medical conditions but that is only because their current rate structure does not allow them to charge enough to cover individuals with cancer, heart disease, MS, AIDS and chronic conditions like diabetes. Those who can qualify under the current rate structure will see their rates run anywhere from "standard" (no significant health history) to a 100% rate up before declining.

Once the base rates are adjusted upward, my guess would be to double the base rate as a start, then those on the upper end of the health risk scale can qualify for insurance as well at roughly triple current rates for a healthy individual.

Not a problem.

Other proposals include eliminating waste and transitioning to things like EHR (electronic health records). Mr Fixit proposes spending $600 billion or so over the next 10 years to improve efficiency. That $600 billion will go a long way towards reducing health care which is currently $2.7 trillion and expected to grow (if unabated) to double that in 10 years if not sooner.

There are not enough zero's in the Washington checking account to offset the growth in demand for health care.

As you wade further into the 17 page document you see 5 other proposals from various members of Congress that are mostly "me too" plans that are long on promise and short on reality.

I don't think anyone in Washington can balance a checkbook or has any grasp on the problem here.

The taxpayers are bailing out banks, insurance carriers, mortgage lenders, the FDIC and automakers. My question is, who will bail out the taxpayer?

Sticks and Stones and HSA's

[Welcome Industry Radar readers!]

Regular IB reader and commenter Brad Ford (himself an agent, although primarily on the P&C side) alerts us to this rather disingenuous article at the Gray Lady:

"IS your medical insurance bad for your health? If you have a high-deductible plan, the answer may be yes."

Really?

And how might that be?

According to a study done of folks covered by high deductible plans by investment firm [ed: investment firm? Gee, those guys sure have a lot of cred ] Fidelity, about half of those surveyed "said they or a family member had chosen not to seek medical care for minor ailments as many as four times in the last year to avoid paying the out-of-pocket expenses."

What would have been helpful is to have determined how many folks covered under "regular" (i.e. co-pay) plans also eschewed care. After all, even co-pays can begin to add up. As we've repeatedly pointed out (and as Brad reminds us), insurance should be there to cover our catastrophic claims, not every ache and sneeze. In fact, over-utilization is a major contributing factor when comparing rates for co-pay and high deductible plans.

And it flies in the face of what we've previously seen: that folks who have a stake in their own health care tend to make more carefully considered decisions, and don't tend to skimp on care.

Brad also points out another major fallacy in the article: lifetime caps. These are the "outer limits" health plans - virtually ALL health plans, not just HDHP's - put on policies to mitigate exposure. These can range from $100,000 (dangerously low) to $5 or even $7 million (way more than adequate). The article's author, Walecia Konrad, also seems to have no clue as to how these plans actually work:

"Some severely restrictive plans will cover only a handful of doctor visits a year after the deductible is met."

Really? Name one HDHP with such a feature. On the other hand, many carriers are now offering reduced premium (and reduced benefit) co-pay plans with just such limitations. My professional opinion is that these provide a false sense of security and a minimally reduced cost, certainly not worth the trade-off. But Mr/Ms Konrad seems not to have understood the distinction.

I also found this little tidbit disturbing:

"If you use a Web site like ehealthinsurance.com, you can find out more about each price quoted by clicking on “plan details” and reading carefully, looking for the categories listed above. If you do not find the specifics you need, call the insurer’s customer service department and ask."

First, using an online service to buy health insurance is, at best, playing Russian Roulette with your own health: there are literally thousands of carriers and plans available, and choosing the right one presents a daunting challenge. Add to the the likelihood that one will buy too much insurance. And of course, contacting the insurer, while not a terrible idea, only tells you what that carrier will offer, not how their products, service and network stacks up in the marketplace.

This is why finding - and using - a professional, independent agent is so critical. Health insurance (any insurance, really) is a poor candidate indeed for DIY.

And relying on the advice, let alone "expertise" of a journalist for tips on shopping for health insurance is no less foolhardy.

Carnival of Personal Finance is up...

Funny About Money presents this week's collection of personal finance tips and insights. I especially appreciated that our host, "vh," opted to present the "miscellaneous" posts first. Shaking things up is good.