It’s a Weird, Weird, Weird, Weird World…

A few weeks ago, I wrote about international travel and medical insurance. And that was an interesting situation. But this one’s better. In some ways, this case encapsulates the future of the global economic model.

Imagine, if you will:

A nice, normal, middle class suburban family. Dad works in IT, Mom’s a homemaker raising their three young children in Midwest Suburbia. Dad’s a contract employee at a local firm, which contract is up at the end of the month, and he’s off to the next one.

And so, you may ask?

So, this family moved here from Ireland several years ago, and Dad’s new job is in Germany, so naturally he’s leaving for France in a few weeks to look for a house. About a month after Dad leaves, Mom and the kids “will cross the pond" to join him.

Keep in mind, none of these nice folks is an American citizen. But Dad’s employer provided health coverage while they were here, and will pick it up again after they’ve settled down in their new home in France. Meantime, though, he’ll be without coverage for a while after he leaves the US, and the family will lose theirs once he’s gone.

Following this? Me either.

Thankfully, it really is much simpler than it appears: we need one type of policy for Dad, and a similar – but different -- one for Mom and the kids. Both plans will provide coverage for a month.

The total tab for this little adventure? A little over $400 for the works. Not too bad, after all.

And people complain that insurance isn’t any fun!

It’s All in the Genes…

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Recently, the debate about using genetic testing in underwriting has heated up. Newswise is an online news aggregator, a sort of Lexis-Nexis wannabe. In their most recent release, they found that “40 percent of people already undergoing genetic testing are worried that participation might affect their future insurance coverage.”

Now, at first glance, this would seem to be a pretty significant problem, and an issue which the insurance industry should address.

But things aren’t always what they seem. The poll asked participants whether or not they agreed that: “(g)enetic testing is not a good idea because you might have trouble getting or keeping your insurance.”

The problem is, the question is useless. First, there is a difference in how life insurance is underwritten and renewed, and how health insurance is underwritten and renewed. So to ask about the generic “insurance” is to miss a key point.

Second, “getting” insurance and “keeping” insurance are two different animals. The “getting” part is called underwriting, and in Ohio, companies are forbidden – by law – from using genetic testing in underwriting health insurance. The “keeping” part is irrelevant, since a carrier can’t cancel your health insurance except for very limited reasons (including fraudulent claims, misrepresentation on the application, and non-payment of premiums). There is no provision for changing or canceling a plan based on the results of any genetic tests.

Life insurance underwriters may take genetic factors into consideration. Obviously, a family history of cancer, for example, is going to play a part in that process. But it is merely one tool, and – unlike health insurance – there is so much competition in the life insurance field that even if one carrier says no, there’ll be more than a few others waiting to say yes. That’s the “getting” part. The “keeping part” is irrelevant: life insurance is also a unilateral contract, and cannot be cancelled by the carrier except for those limited circumstances previously described.

But that’s Ohio. What’s happening on the national scene? Well, the Changes in Health Care Financing and Organization program, part of The Robert Wood Johnson Foundation, discusses this in their April issue. They point out that “earlier this year, Congress weighed in with proposed legislation in the Senate and the House prohibiting discrimination on the basis of genetic information with respect to health insurance.”

Senate bill S 306, introduced by Olympia Snowe, prohibits discrimination on the basis of genetic information with respect to health insurance and employment. It would apply to small group plans, individual medical, and medicare supplements. Currently, the bill is “held at the desk,” which means that it’s waiting be matched up with its House counterpart.

And speaking of the House, H.R. 1227 is the Genetic Information Nondiscrimination Act of 2005. Sponsored by Rep Judy Biggert of Illinois, it pretty much matches up with its Senate cousin: health insurers would be barred from using genetic testing results in setting premiums, and couldn’t require applicants to undergo such testing. This bill has been referred to sub-committee, and will eventually be paired up with S 306.

So far, I’ve outlined the technical and legislative aspects of this issue. But there’s more here, on a personal level. As an agent, I represent the carrier, but I work for my clients. This is a fine line, and one which is often obscured in the flurry of paperwork that is the application and underwriting process. I understand that carriers want and/or need as much information as possible to correctly price a given risk. But I also think that there is something Orwellian in the use of genetic testing to decide whether or not someone should pay more for their insurance, or even be covered at all.

Just my $.02

Anthem & Premier…A Lost Hope

A while back, I wondered what would happen when United’s contract with Premier came up for renewal. Would the two sides reach an acceptable deal, or would Premier find itself cut off from BOTH of this area’s largest carriers?

Well, now we know: United and Premier have inked a deal seven months ahead of schedule. And this one’s a doozy – a 5 year contract, instead of the typical 3 year deal. This means that United customers who use Premier providers can breathe a little easier, knowing that they won’t find themselves in the same boat as Anthem insureds. And having such a long-term agreement in place means that the stress on everyone involved is put to bed for quite a while.

Well, not for everyone. Now that this deal is in place, it would appear that United is in position to take a good chunk of business away from Anthem. Why, you ask? Well, because United’s contract was due to expire this year, there was apprehension that they’d be in the same boat as Anthem, vis-a-vis Premier. Why jump out of the frying pan into the fire? But now that those fears are put to rest, employers can feel comfortable looking to United for coverage.

And there’s this: in the months since Anthem and Premier parted ways, more and more insureds are finding that they are affected by the split. The latest brouhaha involves emergency care. In theory, under Ohio law an emergency (defined by the “prudent layperson" test) must be covered as in-network, even if services were rendered by an out of network provider. But that’s not what’s happening:

"When chest pains scared Sharon Smith into Miami Valley Hospital's emergency room, it was less than a month after her cardiac stress test had found an abnormality in her heart.
It was also four days after Miami Valley's contract with her insurance company, Anthem Blue Cross and Blue Shield, had expired after failed negotiations.
But this was an emergency. Anthem had assured customers that emergency care would be covered at network rates. In Smith's case, Anthem also approved using Miami Valley for more expensive treatment.
The bill: nearly $15,000. Anthem sent her a check for $4,520.82.
About 100 Anthem customers a month are getting similar surprises after ER trips to Miami Valley or Good Samaritan Hospital, according to officials with Premier Health Partners. Premier is the parent organization over Miami Valley, Good Samaritan and Middletown Regional hospitals."

Anthem says that Ohio law doesn’t apply in this case; they maintain that they’re regulated under federal law, not state. Premier disagrees, and has filed a complaint with the Ohio Department of Insurance.

It’ll be interesting to see how that plays out.

Empowering Ourselves...

For many of us, health insurance is provided by our employer, so we have little opportunity to access typical Consumer Driven Health Care (CDHC) products. High Deductible, catastrophic plans and HSA’s are not often available, and not every company has a knowledgeable HR person (or even any HR person) to answer questions or address concerns we might have.

But there are ways to empower ourselves and take advantage of at least some of the benefits of CDHC. Most cafeteria plans now include a high-deductible option, or one with higher co-pays for office visits. Some even offer plans with no office co-pays, where one pays a percentage (typically 20% to 30%) of these smaller claims, in return for a lower premium. By choosing one of these plans, we realize savings that can go toward paying the smaller, routine claims, but maintain the safety net portion of the plan for those unexpected “big ticket” items.

Years ago, before HIPAA, I sold quite a few MSA (Medical Savings Account) plans. Of course, these were what we’d now call “non-qualified,” which means that there were no tax benefits. But that also meant no government intervention or “gotcha’s;” one could spend the money however one chose. Folks without access to an HSA can accomplish much the same thing by diverting the premium savings into a passbook account. Or even a mutual fund, although I’d recommend choosing one that concentrates on growth, and has a conservative risk profile: this is “rainy day” money, and is likely to be needed right away if needed at all.

Another area where folks can save premium dollars is in dependent coverage. For convenience’ sake, a lot of people choose to cover their spouse and children under the company plan, even though they may have to pay most (or all) of the premium. While this may make sense for some (especially young families who think they need maternity coverage, or those who have severe medical problems), there may be substantial premium savings in opting out of the employer-based coverage for dependents, choosing instead an individual major medical plan.

It's worth exploring some of these options -- after all, it's your money!

A Penny for Your Thoughts, Doc?

My last post looked at a new reimbursement model – well, maybe a “tweak” of the current model would be more accurate. In a recent New York Times item, Dr Thomas Gross suggests still another:

“The current medical reimbursement system pays by the job performed, not by the time spent…Your family doctor receives the same reimbursement for diagnosing a sinus infection in 6 minutes as he does if he takes 30 minutes…In our current system, there is no way to buy an hour of your doctor's time just to talk.”

First, in fairness, one most likely COULD purchase an hour of the doc’s time; it would just be VERY expensive, and not a covered expense under one’s medical plan. But I see Dr Gross’ real point, which is that medicine has become outcome-based, as opposed to health-based. And that this is at least partly a result of the current medical insurance system.

In previous posts, I discussed Consumer Driven Health Care (CDHC). The primary goal of CDHC is to empower patients/insureds in taking a more active role in their own health care. We talked about coupling catastrophic medical plans with tax-advantaged savings accounts.

But HDHP’s and HSA’s are not the only way to engage in CDHC (there, is THAT wonkish enough for you?). We’ll look at some alternatives next week.

So, How Much Do You Tip Your Doctor?

We routinely tip our waitress at the local diner, and our barber…er, uh Hair Stylist, even the pizza delivery guy. But how much do we tip our physician when we’ve recovered from the surgery, or just stayed healthy?

Of course, I ask this with tongue firmly in cheek, but I was prompted to bring this up because of an article over at Fox News. Apparently, physicians who participate in the “Bridges To Excellence” program are eligible for cash bonuses based on the health of their patients.

The idea is that, if docs can keep their patients healthy, they’ll lower overall health care costs. Which makes sense. Of course, it hearkens back to capitation plans (e.g. staff model HMO) which actually penalize physicians who have negative outcomes. This approach has had mixed success; apparently sticks don’t work as well as carrots.

As one can imagine, not everyone who learns about this arrangement is a fan:

"It's disturbing that the only way we can get physicians to do the right thing for their patients is by paying them money."

So says Arthur Levin from the Center for Medical Consumers, a non-profit advocacy organization active in both statewide and national efforts to improve the quality of health care.

I find this kind of naiveté refreshing, if misplaced. Last I looked, physicians are human (well, excepting EMH, for all you Voyager fans), and respond well to financial incentives. What difference does it make “why” a given doctor is motivated to keep his patients well? What’s important is that his are.

There is one valid concern mentioned in the article, but it seemed as if it was an afterthought, and wasn’t fully explicated: “Critics fear an incentive program may encourage doctors to treat only the healthiest patients in order to get the financial reward.” Isn’t that the same argument, though, that critics have lobbed at Consumer Driven Health Care? I’m not saying it isn’t true, but I would love to see some facts to support the thesis.

Interestingly, Medicare is testing this out, as well. That’s promising: anything that would potentially help lower the costs of Medicare can’t be all bad.

Interesting idea, and I’ll be keeping an eye out for more information on it.

UPDATE: Welcome Grand Rounds visitors! Please take a look around, and feel free to leave a comment (or three).

Anthem vs Premier: I Told Ya So…

Way back in February, I wrote a series of posts about the Anthem Insurance versus Premier Health issue. Briefly, Anthem is this area’s largest health insurer, while Premier encompasses the most actual healthcare providers. Their contract expired, and as a result, folks covered by Anthem who see Premier docs and use Premier facilities must pay a much higher rate for services provided.

At the time, I predicted that “more and more folks (will) have to switch docs, leaving Premier’s physicians with a shrinking customer base.”

Well, lo and behold, this week’s issue of the Dayton Business Journal brings us this news: “Five months after Anthem coverage ended, Premier-owned physician practices are feeling the squeeze. Doctors are expected to lose 10 percent of their salaries this year as patients go to other doctors who take Anthem or delay appointments, which can complicate patient care. Doctors across the group are opening to new patients, some for the first time in years.”

Business is apparently so bad that at least one Premier provider, Premier HealthNet (a group of primary care docs) is offering a discount of up to 30% for their Anthem patients, to help cushion the blow.

I had observed at the time that, while the two Premier hospitals could probably weather the storm, I had my doubts that the physicians, with much shallower pockets, could bear the long-term brunt of this painful situation.

On the bright side, I must applaud Premier for taking the unusual step of contacting their Anthem patients, encouraging them to urge their employers to switch to a carrier that included Premier. I can report, though, that I have yet to be called by any Anthem clients who wish to change carriers due to this circumstance. And I haven’t heard from any colleagues that they’d been asked, either.

But as always, the big loser is the patient. As one Premier doctor observes, “Healthy patients can transfer to another doctor with little problem. But the chronically ill, elderly or mentally impaired suffer most.”

This is kinda cool…

A long-term client (and friend) recently referred his brother and sister-in-law to me for their life insurance needs. Aside from the fact that this is one of the best compliments one can pay an agent (any referral is terrific, but a relative is the highest kudos), this was an interesting case on its own merits.

An aside: I try to update this blog every few days. This past week, though, I hit an intellectual dry-spell. Thank you for your patience as I get back up to speed.

My client’s brother (whom I’ll call “Tom”) is a private pilot. But he is not an amateur pilot: he flies a corporate jet for a (presumably wealth) family. They travel extensively overseas, including England and Europe. While traveling, his employers pick up the tab for all his expenses (food and lodging, entertainment, etc). I think I’m jealous.

Tom’s wife also has an unusual vocation: she’s a free-lance news reporter. I must confess that, although I’ve insured media folks before, this is a new niche for me.

Tom and his wife had decided that they need additional life insurance. Because of his job, this promised to be somewhat challenging. I’ve written a few pilots before; carriers tend to make offers that include a choice of:

1) Increased premiums or

2) Aviation exclusion

This means that he could have coverage for all risks, including a plane crash, but pay a substantial premium for the privilege. Or, he could have “standard” rates, but no coverage in the event that his plane took a dive. This would be understandable, perhaps, for a weekend pilot with limited experience. But he has over 10,000 hours logged, which seems to take him out of the “amateur” category.

I called Tony -- a good friend and colleague – who is also a private pilot, although without Tom’s extensive history. He suggested a carrier that he’s used. And indeed, the quote I received from them was okay. Pricey, but acceptable.

I called Tom to go over the numbers, and he agreed with my conclusion. But he then mentioned that he had read, in one of his industry journals, of another carrier which specialized in this type of risk. One of the benefits of being an independent agent is the ability to take on new carriers for specific cases; this carrier offered a quote, based on Tom’s info, that included neither an excessive rate nor an exclusion. WooHoo!

The case is now with the underwriter. One of the best things about this business is the opportunity to meet interesting folks, and to tackle challenging cases. This experience satisfied both.

Some Thoughts on the Uninsured…

I’m often bemused by politicians and hucksters (but I repeat myself) who try to equate “uninsured” with “unable to access health care.” To add insult to injury, there’s a perception that most – if not all –- such folks have little or no opportunity to purchase health insurance, or cannot afford it.

For the most part, of course, the poorest among us – who I believe we do have a duty to at least try to help – already have access to health coverage and health care, through the auspices of Medicaid (Medicare’s another can of worms). I was pleased to find that I’m not way out in left field in this:

According to the National Underwriter, “(m)any uninsured American adults are healthy, and many who are uninsured do appear to be getting some kind of medical care.” According to the article, over ½ of all uninsured adults (excluding those on Medicare) are free of chronic conditions. On top of that, almost ¾ of such folks who ARE chronically ill have accessed needed medical care in the previous 12 months.

The article goes on to say that such adults “are far less likely to get any care at all, or care from a 'usual source of care,' than adults with health insurance.” Tellingly, no numbers are given for THIS conclusion, which indicates to me that it’s far less of a given than the authors would have us believe.

So what does all of this mean? Well, for one thing, it’s pretty clear that there’s no health care “crisis” here in the good ole US of A. Sure, there are problems, and the cost of insurance is one of them. And the toll – in dollars and hours – attributable to illegal aliens; sorry, undocumented foreign guests -- is immense. Finally, the burden of cost-shifting from the government onto the private sector is staggering.

But those who need care generally get care, even if it’s not from their traditional family doctor. Of course, the rest of us pay for this, but that’s another post.

But wait, there’s more! According to the Employee Benefit Research Institute in Washington, “(t)he number of high-income individuals without health insurance may not be increasing as fast as government statistics suggest .” In fact, those who earn at least $50,000 a year account for almost 1/5 of the total uninsured.

Now, $50,000 a year is not “rich.” But it is not “poor,” either. Certainly there are folks in this income range who have enormous debt…but by and large this is not a sector of the economy which one would characterize as “poverty-stricken.” There are inexpensive safety-net health plans available that are tailor-made to ensure that someone in this income range doesn’t lose his house to medical bills. Whether or not that someone chooses to purchase such a plan is, of course, another matter.

And Then Sometimes This Business is Fun…

Over the years, I’ve had the privilege of becoming the local “international medical expert.” Primarily, this is because I write a handful of these plans each year, whereas most agents don’t get much call for it, or don’t have the inclination to learn about it.

International medical is a burgeoning industry: as we become more and more a global economy, business doesn’t “stop at the shore.” Many executives travel overseas, a lot of seniors like to take those Italian cruises, and there are folks who engage in humanitarian efforts.

Once such gentleman – my client, in this case -- is headed over to Tanzania later this month. He’s part of a medical supply effort undertaken by the Rotary Club. They’re delivering over 400,000 doses of medication, donated by one of those evil, greedy, profit-driven pharmaceutical companies, obviously in direct violation of said company’s pact with Satan. My client and his daughter are accompanying the life-saving medications as distribution auditors.

He is covered by Medicare, which does generally stop “at the shore.” He’s concerned that, if he’s seriously ill or injured, or has need of urgent medical care, that such care will be more readily available if he can pay for it. Which is where the insurance comes in. Most insurance plans sold today don’t cover much, if any, expense incurred outside the US. Of course, some do, so it’s important that folks check with their carrier before checking their luggage.

In this case, the plan covers both injury and illness, and provides for emergency medical evacuation back to the states. It also covers emergency reunion, if the attending physician feels it would be helpful to have a family member present.

The plan itself is pretty simple: it’s built on a traditional major medical plan chassis: there’s a deductible, and some co-insurance, and then coverage at 100% to the stated maximum. That maximum, BTW, is perhaps the most interesting part of the plan: when you purchase such a plan, you are given a choice about what the upper limit for claims will be. In this case, the choices range from $50,000 up to a cool $1 million. Of course, the premiums reflect these amounts.

Of course, no discussion of any kind of medical insurance would be complete without considering pre-existing conditions. In this case, they’re defined as any injury or illness “which was contracted or which manifested itself, or for which treatment or medication was prescribed 3 years prior to the effective date.” Pretty standard stuff, but important to keep in mind.

I can’t wait to see the slides from the trip!

The Third Side…

A long time ago, I had a sales manager who told me “you can’t compensate for other peoples’ ignorance.”

What he meant by that was that, when other folks make stupid decisions, I shouldn’t take it personally.

In the post below, Bob Vineyard tells of two of his clients who either bought coverage or chose not to, and the consequences of those decisions. He characterized the stories as two sides of a coin. In a flippant e-mail, I asked “only two sides?”

Well, turns out there’s a third:

Recently, I wrote a policy for a family. There were some health issues, but we were able to get coverage from one of the two more lenient carriers in this market, at what I considered a reasonable cost. After a month or so, they asked me if there was a better plan available, and I suggested that we apply to the other lenient carrier. Of course, I urged them to continue the existing plan until we had the new one in place. This shouldn’t have been a problem, since we didn’t need to send a check with the new application.

So, of course, they let the existing policy lapse, and then called me to get the new one started. And, of further course, it needed to be in place immediately.

So, we sent in the app to the other carrier, which immediately asked for additional information on the husband. Weeks later, he eventually calls the 800# that I’ve given him, to speak directly with the underwriter’s assistant, in order to provide that “additional information.”

Which information, of course, resulted in his being declined for coverage. They’ll issue a plan on the wife and kids, mind you, but not on him. And since this is PHI (Protected Health Information), I have no clue what caused the underwriter to decline coverage on him, making it even more difficult to obtain coverage elsewhere.

I just called with the “good news, bad news.” He is not a happy camper. And I feel bad for him, because I am human. But I don’t feel too bad for him, because I had – a long time ago – a good manager.

I’ll keep you posted when this is finally resolved.

I hope.

"A Coin Has 2 Sides..."

My friend and colleague Bob Vineyard has a new post up on his blog, one that really touched me.

He tells the (true) stories of two young people who had the opportunity to purchase inexpensive coverage, and who subsequently had significant claims.

One purchased the insurance.

The other didn't.

Sometimes, my clients (and prospects) don't heed my advice. Most of us who take this vocation seriously are loathe to engage in the "hard sell." Bob's clients' experiences really drive home why coverage is important, but in a way that is most definitely NOT a "hard sell."

As they say in the blogosphere, read the whole thing.