Monday, August 31, 2015

Cheeseburger, Cheeseburger, Cheeseburger

I am trying to write a Medigap policy on a lady. Just about to lose it.

We have met twice. Something I NEVER do.

1st time she asked a lot of questions. Took copious notes.

I took notes too. Followed up with an email reiterating and confirming everything we discussed.

Over the next few weeks she sent several emails, often asking the same question over and over again.

I responded by copying and pasting from earlier email.

Called a couple of weeks later and wanted to meet again. Almost said no, but I was going to be driving by the Starbucks where we met the first time. Agreed to give her 15 minutes more.

She brought her notes, including all the emails.

We talked some more. I thought she had it.

Plan G, Equitable.

A week later she said she had decided on G with AARP.

Of course we had discussed AARP/UHC and I told her they don't have plan G and I don't write through them. I gave her the AARP number and suggested she call them direct.

She didn't take the hint.

Emailed today, said she wanted Aetna, plan G.

Emailed back and told her what I would need, it will take 10 minutes by phone.

She wanted to know why I needed bank info. Of course we had discussed that before, but ........

Me - For the bank draft.

Her - I want to pay by credit card.

Me - No credit card, bank draft only.

Her - Can I use billpay?

Me - No billpay, bank draft only.

Her - I will need the exact address so I can use billpay.

Me - No checks, cash, money order, Western Union, credit cards, billpay .........

Automatic bank draft only.

Her - First month only, then billpay?

Me - Automatic bank draft.

1st month.

Every month.

I feel like I am in a SNL skit.

Your money or your life?

It's estimated that Medicare spends almost $170 billion each year on beneficiaries' last 6 months of life. There's no question that end-of-life care costs a lot of money. There's also no question that there's no easy "fix." Heck, Britain's Much Vaunted National Health System© had to ditch its infamous Liverpool Pathway program.

But the issue hasn't gone away, and the questions - moral, ethical, financial - still remain.

FoIB Holly R sent in this rather intriguing possibility:

"Why don’t health insurance companies offer bonuses to patients who are willing to forego standard end-of-life medical care?  When a patient receives a terminal diagnosis, I have to believe that the [insurance] companies have actuaries and data sets that would give them guidance on what the next 6-24 months of medical care would cost."

Well, we already have a pretty good idea of how much that might be (almost $80,000, by one estimate). So what if Humana or UHC or whomever offered their terminally ill clients a check for, say $50,000 in exchange for a release from additional liability for medical expenses?

Note that this would be entirely voluntary, and probably taxable. But here's a way for that person to perhaps check off just a few more bucket-list items, for example.

Interesting idea, no?

Friday, August 28, 2015

Risk-free term insurance? Not so fast...

At LifeHealthPro, Brad Cummins (a fellow insurance pro and Buckeye) has an interesting, provocative article on the risks associated with buying term life insurance.

Here's a taste:

"[S]ince every life insurance company has financial underwriting requirements, what you are eligible to get (as opposed to what you want to receive) may be exponentially different than what another applicant in another age bracket can buy."

This is key because most folks think that the only applicable underwriting criteria is one's health (which is important, of course, but only one facet of the process).

Here's another:

"There are further age-related limitations, which prevent you from purchasing coverage for as long as you may prefer."

Another salient point; it's become increasingly more difficult to find 20 (or even 15) year lock-ins for my mature clients, as carriers pull back from offering these options.

Definitely read the whole thing - it's not terribly long, but it is packed with good info.

PSA: Lo$t & Found

So, got this in email:

"My Money Monitor Asking Medical Mutual Members for Social Security Numbers and Other Identifying Information to Help Get Unclaimed Funds"

First, it should go without saying that one should never send this type of information without verifying the recipient.

Second, I was a bit curious as to how this outfit was able to ascertain the names of MMO insureds: was the carrier selling its client list?

Turns out that my fears were unfounded:

"This company ... pulls publicly available unclaimed funds reports from states"

So if you've never received or cashed that refund check (for example), it'll eventually show up on the list (both the amount and source). On the one hand, props to this outfit for its resourcefulness.
On the other, the company charges a recovery fee. One supposes that might be fair (they did, after all, have to scour 58 states' lists for this info), but, as Medical Mutual notes:

"[P]eople on the list are able to get their money for free by contacting the department in their state that handles unclaimed funds"

Methinks that might be a better (and safer) idea.

Thursday, August 27, 2015

New Mexico Singing the Blues

If you live in New Mexico and want Obamacare with a subsidy, Blue Cross will not be one of your choices in 2016.
Blue Cross and Blue Shield of New Mexico has confirmed that it will not offer on-exchange individual health insurance products on the New Mexico Health Insurance Exchange in 2016. 
According to the insurer, the premium rates BCBSNM charged for individual insurance products in 2014 and 2015 did not cover the claims costs the insurer incurred — ultimately resulting in a $19.2 million loss. - Biz Journals
Some will suggest these losses are not due to Obamacare, but when have you known a Blue plan to boycott a segment of the health insurance market?
We have been serving New Mexicans for 75 years and we hope to provide more options to individuals in the future," said Kurt Shipley, president of BCBSNM. "While we are committed to helping communities expand access to health insurance, we cannot offer products in a sustainable and predictable manner without adequate rates. We will continue to offer an HMO product off-exchange in 2016, which will be available to all consumers."
HMO is "code" for narrow network.

Losses for those served from the dollar menu must be severe to completely pull their product from the exchange.

Wednesday, August 26, 2015

No Crystal Ball Necessary

Another co-op bites the dust. This time it's Dirty Harry's home state of Nevada where operations will cease at the end of 2015. Just a short 15 months ago Bloomberg touted the "successful" start of the Nevada Co-Op in this article and referenced how they had the lowest rates in Las Vegas.

Fast forward to today's press release. Here's a few quotes from the company, one of it's board members, and the co-op CEO. Definitely not the success they envisioned.

“It is with deep sadness that based on challenging market conditions, the Board made a painful decision to wind down operations of the Nevada co-op at the end of this year.”

“Rather than spending resources on next year’s uncertain market, we would rather make sure we protect our current members. This is all about providing the most affordable, effective health insurance and service possible.”

“With a second year of high claims costs and limited opportunities for new investment, it has become clear that the amount of growth required to provide quality care at reasonable rates will be unlikely in the next plan year.”

The odds makers really missed the mark on this one. With enrollment of only 14,000 the company still lost $15,000,000 since it began enrollment in 2014. Not to mention the $66,000,000 they received from the federal government to get started.

Mid-Week Linkfest

From SoIB Gail S, we learn that a "common heart drug called a beta blocker was associated with a striking increase in survival for women with ovarian cancer in a study that suggests a possible new strategy for treating a variety of tumors."

Although the test subjects were taking the med to treat their hypertension, not specifically for cancer, the effect was such that they ended up living up to four years longer.

There were a few wrinkles such that the results aren’t necessarily dispositive, but they're certainly powerful enough to warrant additional research, and perhaps lead to even better cancer treatment options.

Your tax $$'s at work. We've mentioned the myriad problems related to the ObamaTax risk adjustment program before, but this news lends additional fodder:

"Before an insurer in a market can collect the risk-adjustment program cash transfers it's expecting to receive for the 2014 benefit year, the insurers in the market that owe the payables have to pay their risk-adjustment program bills."

That is, Company B must wait to collect its share until Company A ponies up what it was dinged. And what happens when a carrier goes south? Well then, all bets may well be off.

Talk about a chilling effect on the market.

Continuing our IRS-bashing theme (and a more deserving group of folks it would be hard to imagine):

"How slow are the project trackers helping the Internal Revenue Service (IRS) keep tabs on Patient Protection and Affordable Care Act (PPACA) administration system projects?"

They're so slow that the folks tasked to gather, collate and analyze the info have been left twirling their thumbs. In some cases, info that was supposed to be available in two weeks or less ended up dragging out for almost 3 months. One wonders how helpful that information, now quite stale, turned out to be.

Finally, some good news. Back in March, we reported that The Old Line State was toying with the idea of bringing actual licensed agents onto the state's HIX (as opposed to unlicensed, unvetted amateurs). Now, it seems, they're actually pulling that trigger:

"Maryland’s state-run exchange ... will start a pilot program during this year’s upcoming open enrollment that will transfer consumers calls from a call center directly to a broker, who will then enroll the consumer."

Will be interesting to see how this works out, and whether other states will follow suit.

Unwise Traveler Tricks

First, our thoughts and prayers to Ms Jimenez and Mr Fox.

It doesn't get much worse than this:

"A Tampa-area college student lies in a Cuban hospital bed, having been injured in a collision outside Havana, and her friends and family are desperately trying to scrape together the $50,000 they need to get her airlifted to Florida."

The collision, it turns out, was not her fault (she was a passenger in a taxi that was hit by a truck).

But that's about all that's not her fault.

Let's begin here:

"Not having any health insurance..."

Now, go back to that first paragraph: "Tampa-area college student." A few minutes on the USF site seems to confirm that undergraduates aren't required to have health insurance (although they're obviously in violation of the Mandate). One also wonders why she's not on her parents' plan (assuming they have coverage).

Which then raises another question [ed: gee, wouldn't it be nice if the MSM actually did its job, and asked them?]: if she was uninsured, how did she get into Cuba in the first place?

After all:

"All overseas visitors to Cuba must have a travel insurance policy in place with sufficient cover for medical evacuation by air, the Cuban government has said"

So how, exactly, did she gain entry in the first place?

But Henry, travel medical insurance is expensive!

No, no it's not:

A plan that would pay up to $100,000 (more than enough to cover her expenses, according to the article) with a very modest $500 deductible would have set her back all of $28 for a month of coverage (and that would include air evac and hospital-related charges).

And by the way, this took less than 3 minutes to quote; one supposes that's still too much time for the "reporter" to invest.

Penny wise....

Tuesday, August 25, 2015

The Skinny on Obamacare Access to Healthcare

Coverage for all sounds great. Maybe a politician will use that line some day. In the meantime, back to
Georgia had the highest percentage of “narrow’’ insurance networks in the 2014 health exchanges, a new report says.
Five of six Georgia “Silver” exchange plans last year had medical provider networks with a limited choice of doctors, the report said.
The 83 percent of Georgia plans having narrow networks surpassed that of all other states, according to University of Pennsylvania researchers. - Georgia Health News

Gosh, wonder why the carriers would do such a thing?
The report, released Monday, said health insurers are using narrow networks to keep premiums down as consumers shop for coverage on the exchanges, created under the Affordable Care Act. 
Got to make Obamacare affordable, even for those ordering off the dollar menu.

#Obamacare #NarrowNetworks

PSA: On Waiving Provider Fees

Not sure when this became "news:"

"Recent changes to policy and plan language and increased litigation by third-party payers suggests that out-of-network providers who waive co-pays and deductibles may be in for some rough sailing"

One supposes it's a symptom of ObamaPlan "skinny networks," but the concept is quite established.

I reached out to co-blogger Kelley Beloff (herself a medical office manager), who confirmed that "you cannot routinely waive any portion of a patient's responsibility. This is stupid, you are leaving money on the table and trains patients that they do not have to pay. Come to think of it, I have not heard in a while, "My other doctors don't collect a copay." Old news."

So there ya go.

BIDT (Back in the Day)

In early 1991, the venerated Mutual Benefit Life Insurance Company (Mutual Ben) closed its doors, signalling the end of an era. Mutual Ben was well-regarded in the industry, with a great reputation, good products fairly priced, and field reps second-to-none. Unfortunately, it succumbed to an unkind real estate market (insurance companies generally love real estate for its long term stability and growth).

Long before HIPAA and EOB's, carriers like Mutual Ben had a more personal touch. FoIB Jeff M has kindly agreed to share with us correspondence he came across in his grandmother's effects. It's a fascinating glimpse into a simpler, arguably kinder time.

Here's a sample:

 [click picture to embiggen]

The whole set is available here. Thanks for sharing, Jeff!

Monday, August 24, 2015

Dumb Carrier Trick: Redeemed

So, 20+ years ago, I had the privilege of writing my first single-pay Long Term Care policy. What was so special about it was that the client, the prototypical little old lady with the most beautiful smile, called me a few months later to buy another one.

Fast forward a couple of decades, and she passes away. A sad time for her family, to be sure, but the best time of all for any life insurance carrier to shine.

Or screw up mightily.

Unfortunately, "Ajax Life" chose the latter.

[ed: I've redacted the carrier's real name because they've demonstrated a willingness to resolve the issues.]

When Emily (not her real name) passed away, her son originally called the home office instead of me; his brother, with whom I had met alongside Emily in those early days, had since died. Eventually, the surviving son (we'll call him Les) called me for help. He had never received the forms that Home Office had promised to send him.

To further complicate things, there were multiple beneficiaries on multiple plans, so I had to coordinate them. So, I called Home Office and requested the proper forms and instructions on how to put this together. To their credit, Ajax promptly emailed me the forms and instructions.

I eventually received all the completed forms and appropriate documentation, packaged everything up (sans pink ribbon, natch) and sent them to Ajax.

And waited.

And waited.

Finally, I called to ask where the checks were, and was told any number of different stories: first, they'd never received the package. Then, they'd received it, but it was still being processed.

No one could (or would?) tell me exactly what needed "processing;" these were 20 year old policies, the insured had died of natural causes, this was not rocket surgery. I was finally able to get them to commit to having their claims "processor" call me.

Which he did. And then told me that the reason it took so long was that they had to get an exception because I'd sent in the wrong forms.

Excuse me?!

I got those forms from you!

Well, you see, he'd also (allegedly) sent the correct ones to Les in May and again in July, but never heard back. Which was news to Les when I told him about it: he'd never received any such forms. But even supposing he had, how is it relevant? Ajax sent me the claim form, which I in good faith passed along to the beneficiaries. The only clock that counts here is the one that started when I sent in the completed forms and documentation.

The "good" news is that (supposedly) the claim has been approved and the checks will go out shortly.


This was my very first death claim with this company, and there are very few things they could have screwed up worse. Topping the list is the complete stupidity of sending me the wrong form in the first place: how does that happen, exactly?

And no one thought it’d be appropriate to reach out to me to indicate that there'd be a delay, and why?

Until now, I'd had no reason to doubt the capabilities of this carrier, and felt good about recommending them to my clients.

What to do?

So, I reached out to the Vice President of Claims & Operations, expressing my frustration, explaining its source, and offering a path to redemption. Several days later, I received a very satisfactory reply, including an unqualified apology and a detailed explanation of the steps being undertaken to ensure that this kind of thing doesn't happen again (or at least, will minimize the chances).

I was particularly impressed that this executive admitted that he "was embarrassed to see the timeline and claim form confusion associated with this claim. The claims management team will be discussing the coaching and additional processes we need to implement to prevent future experiences such as this." That was just one of several steps he mentioned towards remediation.

Although I was quite disappointed that this whole situation occurred, I am quite satisfied with the outcome. People do make mistakes, and this company's willingness to unequivocally acknowledge (and correct) theirs is a very positive sign.

Friday, August 21, 2015

Patrick @ The Federalist

Co-blogger Patrick makes The Federalist (again!):

"Obamacare’s Transitional Reinsurance Program screwed you and helped pad insurance company pockets"

Details at The Fed(eralist).

Media Misses

From FoIB Jeff M:

"Local hospitals see increase in Medicare fines ... Combined, the nation's hospitals are losing $420 million, government records show."


Question for the MSM:

Who do you think actually pays those fines?

(Hint: It ain't the hospitals)


DPC Insurance, "The Wrap"

As promised in the Update to our previous Direct Primary Care (DPC) post, we have details about Pan-American Life's "wrap" plan.

Pan-American VP Carlo Mulvenna was kind enough to walk me through the basic idea behind the plan's design, as well as share product details. In a nutshell, the carrier has staked out a niche in what Carlo calls the "limited benefit space," and focuses its efforts there. They were approached by the folks at MedLion (the DPC bundler) because there was a perceived need for at least some non-primary care coverage.

The folks at Pan-American basically took their off-the-shelf limited benefit plan and carved out the primary care pieces (which would be redundant in this application). This gives insureds access to specialists and lab work via reimbursement (there are prescription med options available, as well). Because the plan is built on a "hospital indemnity chassis," it's approved as an "excepted benefit" and thus exempted from major pieces of the ACA. The whole program is designed to meet the ACA individual mandate requirement.

Both the MedLion and Pan-American programs are offered as employer-sponsored arrangements, not (currently) available to individuals ("retail"). The wrap plan is guaranteed issue and imposes no pre-existing condition exclusions; it does require a minimum enrollment of 50 employees.

Carlo told me that he understood that MedLion's DPC fee runs about $85 a month per adult; coupled with a typical "wrap" plan the total cost comes to about $180 per member, per month.

I still have reservations about this: as Carlo conceded, there is no provision for catastrophic claims. I know that DPC proponents tend to focus on how good primary care can help prevent a lot of major claims. And that's a legitimate point, but entirely irrelevant to the discussion of insurance:

I don't think anyone disputes that primary care is important; the issue is why the heck it should be covered by insurance. As one who looks at these things through the lens of risk management, I can't help but think of the old saw about "penny wise, pound foolish." So taking it out of the insurance realm, as DPC does, is a positive step. And I grant that Pan-American's wrap program is indeed better than nothing, especially to folks at the lower end of the income spectrum. But when we're talking about nearly $200 a month per adult, then I'm just not seeing the value when a cancer or heart attack or kidney failure can quickly wipe out any possible savings.

Color me unconvinced.

[Special IB Thanks to PALIG's Carlo Mulvenna for his time and insights]

And the 2015 Award for Excellence in Product Positioning goes to...

Aetna for their new ACO in Southern California: Aetna Whole Health - MemorialCare.

I don't know about you, but it makes me think of funeral homes and tombstones.

(Yeah, I know, it uses Long Beach Memorial Medical Center and MemorialCare Medical Group, but honestly guys, you ever think of running focus groups?)

Thursday, August 20, 2015

LTCi Partnership Refresher, 2015 edition

So, it's that time again for my bi-annual Long Term Care refresher course (actually, I'm a few months early, but figured better safe than sorry, given southwest Ohio January weather). As usual, I was fortunate to have as my instructor LTCi master Ray Copenheaver, who's likely forgotten more about LTCi than I'll ever learn.

And also as usual, there were a few interesting gems. For example:

■ A company called LifeCare Funding (?) is developing (has developed?) a program to use existing life insurance plans to buy long term care policies, essentially viaticating one to pay for the other. Interesting.

■ Section 884 of the 2010 Pension Protection Act includes a provision that allows one to "invest" into tax advantaged annuities that have tax-free withdrawals for long term care expenses.

■ There's a new, industry-wide effort to get more folks thinking about long term care insurance. Called 3in4needMore, it's a website with some great resources, including videos and calculators to help you figure out your own long term care needs.

■ I was surprised to learn that about 1.5 million Americans are currently receiving care in skilled nursing facilities, and another 900,000 in Assisted Living.

Why was I surprised? Because I really expected those numbers to be much higher. On the other hand, over 11 million folks are receiving at least some level of long term care at home.

Thanks, Ray!

DPC Insurance? Maybe, maybe not [UPDATED]

[Scroll down for Update]

One of the "hot new(ish) things" is something called Direct Primary Care (DPC); the "ish" is because we actually blogged on this a few years ago in our interview with Dr Rob Lamberts. But it's gaining increasing traction of late, primarily due to a new (and as-yet unavailable) insurance product that would seem to answer some major objections. More on that in a moment.

First, let's define what DPC is (and isn't):

DPC is often conflated with "concierge" medicine; the major difference between the two models is that concierge is essentially a pre-paid subscription service that promises enhanced access to one's provider. These fees can range from a few hundred to tens of thousands of dollars (a month!). Some concierge providers also accept insurance.

DPC providers also charge a fee (although it is usually much lower than their concierge cousins'), but don't accept insurance; in fact, one of the model's primary goals is to service the uninsured.

One of the immediate problems that one encounters with either model is that, since insurance is not a pre-condition of membership, there seems to be a problem with the ACA tax penalty fine. That is, if one can eschew insurance and still gain provider access, then one is by definition skirting the (Evil) individual mandate.

Or is one?

According to Dave Chase, writing at Forbes, the model is unequivocally empowered by the ACA itself (Section 1301 (a)(3):

(3) TREATMENT OF QUALIFIED DIRECT PRIMARY CARE MEDICALHOME PLANS.—The Secretary of Health and Human Servicesshall permit a qualified health plan to provide coveragethrough a qualified direct primary care medical home plan thatmeets criteria established by the Secretary, so long as thequalified health plan meets all requirements that are otherwiseapplicable and the services covered by the medical homeplan are coordinated with the entity offering the qualifiedhealth plan.
So, seems legit, and an interesting, perhaps even viable alternative to an expensive ObamaPlan, which satisfies the mandate. What's not to love?

Well, the problem with the DPC and concierge models is that they provide for only one provider's care. They don't have any mechanism to pay for one's oncologist or nephrologist, or the ER doc, for that matter. Neither do they pay for the surgeon or anesthesiologist, or the hospital charges themselves. Nor, of course, one's insulin or Lipitor. What to do?

Well, up until now, perhaps, not much: the ObamaTax has effectively killed off the mini-med market, and if one chooses the DPC route then no HSA for you. One could, of course, still purchase an ObamaPlan, but this defeats the purpose of DPC, no? After all, the ObamaPlan already includes first-dollar preventive care, and its own (typically hefty) price tag and additional out-of-pocket exposure. Not to mention, a DPC plan would be subsidy-ineligible. Oops.

Enter Pan-American Life, which recently announced a partnership with MedLion (a sort of DPC co-operative, which seems to have a price transparency problem of its own). Pan-Am has announced a new "wrap around" product that seems to promise an answer to the conundrum named above,  namely: what about non-preventive care?

According to the company's press release:

"Pan-American Life’s U.S. Benefits division will administer a supplemental “wrap” insurance program exclusively for MedLion Direct Primary Care clients."

And that's it. Not exactly long on details, is it?

So, we reached out to Pan-Am, but they were unwilling to share any information about the plan itself. Which is, of course, their call to make, but leaves us a bit doubtful about the product. Plus, such an arrangement means two expenses: the DPC fee plus the "wrap-around" plan (and any additional out-of-pocket exposure that such a plan may also entail).

And there's this: the kind of policy that would be needed to supplement the DPC plan is likely illegal. Which may be why Pan-American is reluctant to share details.

'Tis a bummer.

Which is not to say that the idea lacks merit: we're all for any product (or products) that offers a viable ObamaPlan alternative.

I just don't see this one accomplishing that.


Look, I like the DPC model. It's just very obvious that this is an experiment that should have been tried pre- (or, wishcastingly, post-) ACA. And let's be frank, it was never going to have the kind of impact that its proponents claim: at most, 20% (and more likely less than 10%) of total health care expenditures are PC-related. So reducing PC costs by even substantial amounts (quite uncertain) wasn't going to impact overall expenditures all that much.

UPDATE/CORRECTION: Just spent a very fruitful half hour with Pan-American VP Carlo Mulvenna, who brought me up to speed on how the wrap plan works, and why.

I'll put up a full separate, complete post on the program shortly; suffice it to say, it does what the press release says it will do.

I'd add that it also doesn't do what I mentioned that it wouldn't. Stay tuned.

[Special IB Thanks! to Jason S, David W and co-blogger Patrick]

Wednesday, August 19, 2015

Louise has questions

As we've seen time and again, the MSM does a poor job of actually reporting insurance-related stories (here for example, or here). Our good friend Louise Norris, a fellow blogger and insurance agent, recently had her own experience with this kind of malfeasance:

"Many patient advocates have been pushing to make maternity a qualifying event [for Special Open Enrollment] ... But Colorado tackled that problem five years ago [pre-ACA] ... The law required all health insurance plans in Colorado - including the individual market - to include maternity coverage."

Louise wants to know why the Jenks' family didn't already have maternity coverage, as it's been required on all individual health insurance plans in Colorado since before ObamaCare. And of course, the media can't be bothered to either investigate this, or offer an explanation.

Read the whole post: it's interesting, provocative and very well-written.

Health Wonk Review, the early edition, now online

As usual, Peggy Salvatore does a fantastic job of weaving very disparate posts into a coherent framework.


Tuesday, August 18, 2015

CO-OPs keep circling

Last week, we noted that Iowa's Consumer Operated and Oriented Plan (CO-OP) was on-track to become the first such to go down the tubes, and predicted it wouldn't be the last.

Granted, this is akin to predicting the sun will rise tomorrow in the East, but it's gratifying (in an ironic way) to be proven correct so quickly:

"Most federal insurance cooperatives created under the Affordable Care Act are losing money and could have difficulty repaying millions of dollars in federal loans"

Of course, "federal loans" is government-speak for your (and my) tax dollars.

Proving once again that the MSM lacks anything approaching self-awareness, we also get this little gem:

"Even as overall enrollments for insurance have increased, many of the co-ops are still losing money"

But hey, they'll make it up on volume.

Top. Men.

Monday, August 17, 2015

Love, Marriage & Health Insurance: Pick Two

Way back in Aught Eight, Bob blogged on an interesting (new?) trend:

"[A] poll conducted by the Kaiser Family Foundation, a leading health policy research group, found that in the past year 7 percent of U.S. adults married so one or the other could get on a partner's health insurance plan."

Five years later, in the age of The ObamaTax, that boat began taking on water:

"By denying coverage to spouses, employers not only save the annual premiums, but also the new fees ... This year, companies have to pay $1 or $2 “per life” covered on their plans, a sum that jumps to $65 in 2014"

And now, the ship is sinking fast:

"[N]early half of large employers say if they don’t take additional measures to control costs, at least one of their health plans will reach the threshold that triggers the “Cadillac” excise tax"

And what measures might those be, you may be wondering?


"More than one in three employers (34%) will implement surcharges for spouses who can obtain coverage through their own employer, an increase from 29% this year. A handful of employers will exclude spouses altogether when other coverage is available through an employer"

Thus opening up a whole 'nuther can of worms: for one thing, who covers the kids? For another, one of the benefits of a "family" plan is that a family's maximum out-of-pocket exposure is limited to (usually) 2 or 3 times the individual. This can be a tremendous benefit for a medium-to-large family, and which would be severely impacted by splitting it up.

But hey, if you like your plan....

[Hat Tip: Moe Lane @ RedState]


I am so fortunate to have such outstanding co-bloggers; through the wonders of the internet, they've become friends, as well (actually, several were friends before I started blogging). The downside, of course, is that one rarely gets to meet such folks "in real life." Over the years, I've had the good fortune to meet co-blogger Bob and FoIB Joe Kristan. Co-blogger Kelley and I live in the same town (basically), and our families have been friends for a long time.

Recently, my eldest began her Physics PhD studies in a town not far from co-blogger Mike (and his extraordinary wife), and we arranged to meet up a few weeks ago:


Mike's been a valued co-blogger for going on 10 years - what a pleasure to finally meet him.

Friday, August 14, 2015

It's Not a Risk When Using Other People's Money

Obamacare's Transitional Reinsurance Program screwed you and helped pad insurance company pockets. I know it's hard to believe that a government program that promised to hammer insurance companies would actually do the exact opposite. But. It. Does.

First, a little background. The Transitional Reinsurance Program is one of three mechanisms in Obamacare created to protect insurance companies from the risks associated with entering into the new marketplaces. This temporary program was designed to help insurers recoup large claims. The goal was for these funds to pay 80% of a high claimant in excess of $45,000 up to $250,000. In other words, the government had you pay to fund insurance claims that insurance companies normally would have paid - but only for those who purchased individual insurance plans through qualified health plans.

In order to receive reinsurance funds insurance companies had to offer Obamacare compliant plans. The funds they receive can only be used to fund claims for the people who enrolled in these plans. According to, they estimated that in 2014 there were approximately 16,347,250 people (on and off exchange) that had purchased individual qualified health plans.

Even though only 16 million people were in the eligible risk pool, funding for this program came from every single person who has private insurance. In 2014 the fee for each person was $63. CMS reported that they received a total of $8.7 billion into this program. Based on these figures there were 138,095,238 people who paid the fee.

In the June 30th CMS summary report we learned that the government has paid out $7.9 billion to insurance companies. Since reinsurance contributions exceeded the requests for reinsurance payments CMS decided to increase the coinsurance rate to 100 percent.

For those keeping score allow me to recap:
  1. 138,095,238 people paid a total of $8,700,000,000 to a reinsurance fund.
  2. Only 16,347,250 people were in the risk pool that this money was set aside to fund claims.
  3. The money in this fund was supposed to reimburse insurance companies 80% of the large claims.
  4. Instead the government paid the insurance companies 100% of the large claims.
  5. The total paid out was $7,900,000,000.
So the government collected more money from you than they needed, gave more money to insurance companies than the original agreement, and kept $800 million of your money for insurance companies in the future. Yet for 91% of those who paid in, it didn't help whatsoever.

Once again we have another Obamacare success!

Thursday, August 13, 2015

Taking Carly to School

I must admit, I am very impressed with Carly Fiorina as a presidential candidate. She handles herself well and has a good grasp of most of the issues.

But she whiffs it when it comes to Obamacare.

Case in point.
(Jake Tapper) “Didn’t your experience [with cancer] show you that the pre-existing condition part of Obamacare is crucial.
(Carly Fiorina) “I absolutely endorse that goal–I did at the time. But guess what? None of that has worked. Demonstrably, if you look at the results of Obamacare…health insurance premiums are up almost 40% now.
That isn’t helping anyone with cancer, I can assure you that–” IJ Review

I give her a split on this.

Premiums did go up. In most cases a lot more than 40%. It was inevitable.

When you go from insuring mostly healthy people (some carriers made offers on 90%+ of the applications) to insuring anyone, no questions asked, premiums HAD to go up.

But I give her this much. The current offerings don't help much. Even if you have a subsidy, unless you are receiving the max and getting the deductible "buy down" you have premiums you can't afford, deductibles so high you (think) you can't afford to use the plan, or both.

I quoted a husband and wife, age 58, almost $1000 per month for a plan with no copay's and a $12,600 deductible.

Two years ago they could have had a lower deductible for less than $400 per month.
Tapper: “But the expansion of the pool allows the insurance companies to pay for the people with pre-existing conditions.”
Fiorina: “…Who helped write Obamacare? The health insurance companies, and the drug companies. And guess what’s happening? Those companies are consolidating. That’s called crony capitalism.”

Yes, carriers and drug companies were asked to provide input, which they did. But the plan that Obama signed was not the one pitched to the carriers, drug manufacturers or the voting public.

Even Pelosi admitted she had no idea what was in the law she promoted and voted for.

But that's OK. She wasn't alone. Most of those who voted had no idea what was in the law.

Isn't that special?

But the consolidation of carriers was inevitable. Carriers were led to believe they would all write more business and the government (taxpayers actually) would cover their losses.

Come to the Obamacare Casino and you are guaranteed to win. No one loses.

So Carly, the consolidation was not crony capitalism. It is merely the heavy handed micro-management of the law by the administration. Changing the rules on the fly after the law was written. Moving open enrollment. Waiving penalties. Granting exemptions.

I know crony capitalism is a nice buzzword to throw around at election time. But this time it doesn't fit.

#CarlyFiorina #Obamacare #cronycapitalism

Insuring the Mrs

Just shy of 9 years ago, we blogged on the concept of disability income insurance for stay-at-hone moms (and, by extension, dads). Fast forward nearly a decade, and the (e-)Mail Bag brings this goodie:

"Moms are awesome. They do everything from caring for their children to keeping the house in order and, in some families, they're even the primary breadwinner. So what would her family do if she was gone?"

Intriguing, no?

Turns out that only about 40% of American female-types own life insurance, yet the (what I would call imputed) value of Stay-at-Homes (SAHM) is close to $120,000 a year. Couple that with the fact that over 80% of single parents are of the fairer sex, and this life insurance shortage could spell disaster.

Now, the other side to this coin is that this actually tracks closely with the percentage of Americans of both sexes that own life policies.

Still, it's undeniable that "wife insurance" is an important and often underserved market. The folks at ConsumerAffair have put together an interesting and informative infographic neatly detailing the problem.

Food for thought, no?

[Hat Tip: Kay E.]

Those who cannot remember the past...

Wednesday, August 12, 2015

An Embarrasment of Linkage

Three important items, all deserving their own posts, but life (and work) intervene:

■ Remember that promise that "if you like your plan, you can keep your plan?" Yeah, well, if you don't like your new ObamaPlan, you're not alone:

"[O]nly 30% of ObamaCare enrollees are satisfied with their current plan, compared with 42% of those with employer plans, and 46% overall."

The good news (such as it is), is that Open Enrollment v3.0 is coming up, so no worries there. Right?

Perhaps more importantly, as uber-wonk Bob Laszewski notes:

"[E]nrollment as a share of the eligible market is dismally low in every income group except those at the bottom — who get coverage almost for free."

No kidding.

As we've long noted, the whole CO-OP program was doomed from the start (something about "sustainability"). Now comes more evidence of its unraveling. From the Hawkeye State:
"A court filing this week shows that the first ObamaCare-created insurance co-op to fail will likely cost $147 million ... CoOpportunity was one of the first ObamaCare co-ops to get off the ground.
It was also the first to fail."
But it won't be the last. Bet on it.

We're not a political blog, but of course health care looms large in the upcoming Presidential races. FoIB Avik Roy cautions the current GOP frontrunner that:

"No, Donald Trump, Single-Payer Health Care Doesn't 'Work Incredibly Well' In Canada & Scotland"

As we've long chronicled at IB (here for example), these kinds of schemes result in loss of access and choice, and increased costs (in the form of taxes and fees). Avik lays out the case forcefully and in detail.

Has better hair, too.

HIX Woes, Redux

In what will surely be no surprise to regular readers, FoIB Gail S tips us to this news:

Gee, ya think?!

The reality is that subsidies are based, in large part, in one's estimating a future year's family income. Here at IB, our Ouija board lacks a dollar sign ($). Adding insult to (financial) injury, the site itself (keyed to a handful of government agencies, each with their own protocols and tech) must collate all manner of disparate data in order to "vet" a prospective enrollee:

"Not all the internal controls were effective in determining if applicants were properly eligible for health insurance or subsidies .. It also found problems resolving inconsistencies between some applicants’ information and federal data."

No kidding.

Thank goodness all those problems are cleared up now.

Wait, what?

Wait, you mean people lied about their status?

Not necessarily: as complicated and arcane as this process is, it's entirely possible (likely?) that folks just didn't understand the criteria. And sure, some most likely did understand that they were pulling a Pelosi, but figured "what are the odds of getting caught?"

Given the ineptitude of the folks running this train wreck, probably a good bet.

Tuesday, August 11, 2015

Sarah K (finally) nails one

This is one of the most difficult posts I've ever written.

No, not because it actually lauds frequent foil Sarah Kliff; for once, she gets it right.

No, here's the hard part:

A few months ago, we lost our beloved 13-and-a-half year old puppy to canine lupus. She fought valiantly, but in the end, the disease was just too much for her. Fortunately, we were in a position financially where we could afford top-notch treatment, and there was never any real question that we would do whatever we could to try to save her life.

Some (many?) folks aren't that fortunate, and can't afford to throw many hundreds or even thousands of dollars into care for their pets. Some of them buy pet insurance, about which we've written a few times [Full disclosure: there's a pet insurance ad in the sidebar]. But I've never really considered it a "must buy" like life or long term care insurance.

And neither did Sarah, until "Spencer ... a goofy, adorable 25-pound rescue beagle from West Virginia" adopted her. And in the past year, his medical bills have surpassed hers (almost $1700 since last August). Like me, Sarah was skeptical about the value of pet insurance, and so she set about researching it. What she found is quite interesting and in fact helpful if you're considering such a purchase.

But where she really shines is this insight:

"How much would I be willing to spend to save my dog's life?"

She notes that she initially treated this as a math problem (which it is), but that this is only partially relevant (again, very true). Comparing it to, for example, homeowner's or renter's insurance (as she does) yields only so much useful information. She ultimately grasps the most important insurance-related concept that it's not about the frequency of claims, but about insuring against the risk of a catastrophic loss.

Something she's never done, by the way, with health insurance.

I especially liked this quote, from Harvard economist David Cutler:
"My goal is to always put in more than I take out from insurance. I’d be blissfully happy if I never used my homeowners insurance." Filing no claims means that life is proceeding apace, with no unexpected disasters.
Sarah ultimately formulates the most important - and difficult - question one needs to ask when considering a pet insurance purchase:

"How much am I willing to spend to save my pet's life?' [emphasis in original]

That's a very different question, of course, than "how much can I afford to spend," and it's wise (and important) that Sarah brings it up. The answer will vary from person to person, pet to pet, of course, but the question bears consideration.

Sarah's article has some other interesting and useful thoughts on the subject and I heartily recommend that pet owners (and would-be owners) read the whole thing.

[Hat Tip: FoIB Jon B]

Monday, August 10, 2015

The Policy That Fell to Earth: 9 Years On

Hard to believe, but it's been almost a decade since we first wrote about the tricks and travails of Universal Life:

"The problem is, for the past 10 or 15 years, this has not been the case, and the policies are beginning to “blow up.” That’s insurespeak for lose value, and threaten to lapse."

Yesterday's Wall Street Journal had a pretty decent article pointing out how these plans have begun biting retirees in the tush, offering a fairly balanced take:

"The buyer deposits money into the policy. The insurer deducts for expenses, including the cost of the death benefit, and the rest of the money stays in the policy earning interest to help pay some, or all, of the future costs"

So far, so good.

The article then goes on to point out some of the flaws in how the plans were both constructed and sold, and why they've begun blowing up. The problem is that  it completely absolves the policyholder from any responsibility. That is, it seems to lay the blame for this self-destruction primarily at the feet of agents (and, to some extent carriers).

Now, it's undeniable that agents also bought into the idea that interest rates would always go up (as had been historically true for many years). And I have no doubt that unscrupulous colleagues may have been less than forthright in their presentations (which is not to let the carriers off the hook).

But missing from the article is any real sense that the clients themselves, with actual skin (ie money) in the game had any responsibility for their plans' success (or lack thereof). All UL's come with annual reports, which show how well (or poorly) the plan is faring.

But Henry, you may object, I don't understand those reports.

Fair enough (for maybe the first few), but then why wouldn't you call your agent to ask for an explanation?

And along those lines, the article castigates carriers for failing to notify insureds when policies  go "upside down." Why is it this the insurer's obligation? For all they know, the insured wants the policy to run out. And exactly how would the insurer, who has zero ability to force policy owners to make premium payments (let a,lone increase them) determine the appropriate time for such notification?

What ever happened to personal responsibility?

Which is not to say that it's not crossed my own mind: in fact, I've had this discussion more than once with the rep for my primary life carrier, and one of the problems we've yet to resolve is how does an insurer determine the "right" time to make this notification? And what resources would be necessary to even begin to red flag individual policies over many years?

Best advice? Read your annual reports, and don't be afraid to ask questions about them.

[Hat Tip: FoIB Joe B]

Friday, August 07, 2015

Carolina Blues

The largest insurer in North Carolina (BCBS) is asking for a 34.6% average rate increase on their business sold in the individual ACA compliant marketplace. Consumers who have Grandmothered plans will not be affected (Gee, I wonder why?)

This final request for increase comes after an initial request of 25.7% they submitted in June. Why did they change their request and why did it come so late? The answer is, initial requests were due in June but reinsurance payments weren't made available until late July. BCBS expected to receive a large chuck of financial assistance from the reinsurance funds. What they received was less than expected. The result was total losses of $466 million offset by reinsurance payments of $343 million for a net loss of $123 million. 

Another reason for the change is concern for continued high claims. Now that companies have access to actual claims data they are finding that the enrolled population is sicker and older than projected. Many believed that demand for health care services would decline after 2014. This isn't the case according to Patrick Getzen, BCBS chief actuary: “We actually expected pent-up demand to level off in 2015, but that didn’t happen.”

As if huge rate increases weren't enough, Blue Cross said it’s also eliminating several plans across the state. Beginning in January they will no longer offer Blue Advantage and Blue Select plans. Of course these are the plans that offer the broadest networks of doctors and hospitals.

If you like your plan you can keep it. We will lower an average family's insurance premiums by $2500. If you like your doctors you can keep them.

Except if you live in North Carolina and have an Obamacare compliant plan. In your case chances are you're screwed.

Wednesday, August 05, 2015

Reflections on Obamacare

The folks at Money did a softball piece on the merits of Obamacare at the 18 month mark for "full blown Obamacare".

Let's take a look at what they had to say.
Before Obamacare, individual insurance policies often offered bare bones coverage with high deductibles and many exclusions. Now insurers must offer comprehensive coverage and can no longer deny applicants because of pre-existing medical conditions, both of which have raised the monthly cost. - Money CNN
Now after Obamacare many of my clients have higher deductibles and coverage they don't want and would rather not pay for (such as maternity).
As for annual premium increases for Obamacare plans, they vary widely. Some insurers imposed double-digit premium increases between 2014 and 2015, but others kept their monthly charge essentially flat or even lowered a bit. But since more insurers entered the market, consumers could generally shop around for a cheaper plan.
Completely discounts the 100% - 200% and sometimes even higher increases when the old policies were discontinued.

Averages are fun to talk about unless your situation is above the norm.
Few people pay the full sticker price of their health plans because of subsidies.Some 85% of the 10.2 million Obamacare enrollees receive federal subsidies, which keep their premiums to no more than 9.6% of their income.
For purposes of this fluff piece, Obamacare policies are only those bought on the exchange.

Acccording to AHIP some 19 million have individual health insurance. If 8.5 million get subsidies then another 11 million are paying full freight.
Urban Institute researchers estimate around 2.6 million lost their existing coverage. It's likely, however, that they gained insurance elsewhere.
No idea who Urban Institute is but if 19M had coverage before 2014 and 10M bought coverage on the exchange, there is a good chance that most of the 19M lost what they had and about half are getting a subsidy, the rest are paying a helluva lot more now for a plan they don't want.

OK, I've had enough fun with this for now. Time to say goodnight Gracie.

Coming in 2016...HillaryCar

Hillary Car is the new government mandated program in which everyone must purchase a car. Too bad if you walk to work or take public transportation. It is your responsibility to help those less fortunate and pay your fair share. Failure to comply with your individual responsibility will result in having to pay the individual responsibility payment to the IRS. Employers with 50 or more employees should also know that they will have to provide Hillary-Car to each of their employees and must pay a large portion of the cost. Failure to participate will result in employers paying an Employer Shared Responsibility payment. The law will be written to protect everyone from high costs of cars and to make sure that everyone pays their fair share of the costs associated with being a driver.

All vehicles must have these ten essential features:
1.       Anti-lock breaks
2.       Seat warmers
3.       Moonroof
4.       Halogen lights
5.       Navigation
6.       Remote keyless entry
7.       Power Windows
8.       Roadside assistance
9.       Cigarette lighters (for Obama)
10.     Rearview Cameras

In addition to these 10 features all vehicles must now fall within four narrow bands of options (called Actuarial Vehicle bands) relating to vehicle model. Those who are under the age of 30 can also purchase a stripped down model. The five levels are:  Hydrogen, Oxygen, Carbon, Lead, and Sulphur.

No matter which plan you choose oil changes, tire rotations, replacement wiper blades and other government approved preventive services are free. Also free are other preventive maintenance services for when your car hits mileage milestones. If you are fortunate enough to be female you get free gas as well. Sorry men, you have to pay for it.
Cars will be purchased through a new online Marketplace. Instead of working with or the government will be creating a whole new site that will make buying a car as easy as buying an insurance policy!
The good news for consumers is if your income is under 400% of the Federal Poverty Level (FPL) you will qualify for a government subsidy to help pay the cost of your car. Those who are fortunate enough to be below 138% of the FPL may be entitled to Medi-Car. In this case you will be given a free BMW. Never mind the fact that it might be impossible to find a certified dealer to service your vehicle.
To help pay for this new program several new taxes are being imposed on various industries. There is a 2.3% tax on oil companies, a 2.7% tax on those dealerships who sell you the car, and a new 10% tax on car washes and detail shops. Also, beginning in 2020 any car purchased that is too high in price (referred to as the Cleveland Clinic Tax) will result in your dealership paying a 40% excise tax.
HillaryCar believes in competition. Creating this new marketplace will enable existing car manufacturers with an opportunity to grow their business through competitive pricing while also limiting the amount they can keep in administrative costs and profits. Car manufacturers will now be required to retain no more than 20% of the price of their vehicle sales. HillaryCar will also introduce new Car-ops – government funded non-profit car manufacturers – to compete against existing manufacturers.
Based on existing makes and models we have determined that the following vehicles will be available under the law:

Unfortunately several models didn't meet the narrow Actuarial Vehicle band values. These included the Lexus GS, the Cadillac SRX, and the Chrysler 200. You will also note that SUV’s are no longer an option. This is because they don’t meet the required emission standards set forth in the law (sorry Jeep!). In addition, Buick and Lincoln declined to participate in the vehicle marketplace.
HillaryCar will be rolled out to congress on December 24th at 11:30pm in 2016. There will be no debate and the public will have 72 hours to read the 2000 page bill. Not to worry though as most of the language will be very vague and rule making will be left up to the Department of Transportation and Department of Energy.