Tuesday Health Tip...

Here at InsureBlog, we agree with the central tenet of Consumer Driven Health Care: that each of us is, ultimately, responsible for our health and well-being.

One way we can all accomplish at least part of this goal is with a healthy, and healthful, diet. Fortunately, this just got a whole lot easier, thanks to our friends, the Dutch:

"A study of older men in The Netherlands, known for its luscious chocolate, indicated those who ate the equivalent of one-third of a chocolate bar every day had lower blood pressure and a reduced risk of death."

As for me, I'm off to the health food store right now.

Insuring Mrs Cleaver, Part 2...

In Part 1, we outlined the financial challenges facing homemakers who may become disabled. The post was inspired by an article written by Thrivent’s Kim Anderson, who also sent me some helpful occupational class information (more on this shortly).

Since there doesn’t seem to be a non-fraternal carrier offering this cover, we got to thinking about creative solutions to the problem. What we’ve developed is imperfect, but it is at least a solution.

Let’s start with a premise: I’ve always described Long Term Care insurance as “disability insurance for retired folks.” In a sense then, disability insurance could be viewed as “LTCi for working folks.” Why, then, couldn’t a SAHS (Stay at home Spouse) purchase a Long Term Care policy to replace the economic value of his/her contributions?

There are, of course, many different LTCi plans available. Without getting too technical, we'd use an “indemnity” type plan, rather than a “reimbursement” one. Indemnity plans pay out the specified amount each month, regardless of actual expenses; reimbursement plans pay out based on how much was actually spent on LTC. In the “regular” LTCi market, there is some debate as to which is more appropriate, but in this application, it seems obvious that the indemnity plan works best.

Disability insurance benefits and premiums are based (in large part) on the occupation class of the proposed insured. These classes are determined by the carriers, and typically range from 4A (e.g. attorneys, physicians, the producer of Desperate Housewives) down to B (e.g. butcher, blacksmith, pool boy on Desperate Housewives).

Ms Anderson told me that Thrivent assigns homemakers a 2A rating. A typical policy available to this class would define disabled as “unable to perform all the important, substantial and material duties of your occupation due to illness or injury, and you require the care of a doctor.” This would be the test to determine whether one is eligible to receive benefits.

The eligibility test for a Long Term Care policy is quite different, at least superficially: in order to receive benefits, one would need substantial assistance to perform at least 2 Activities of Daily Living (ADL): bathing, continence, dressing, eating, toileting and transferring.

Almost like two different languages.

And yet…

The physical conditions described in both definitions seem pretty similar. And there's this: according to the Government Accounting Office, 40% of those receiving long term care are "Working-Age Adults."

So here's my thinking: if a 30-something owned both a DI policy and a LTCi policy, and she was eligible for benefits under one, it seems likely to me that she’d meet the test of the other, as well. Flawed, yes, but not (IMHO) fatally so.

Perfect? No. Acceptable? Let’s see.

The Medblogosphere: Grand Rounds

Over at Cut to Cure, the unlikely-named Bard Parker hosts this week's Grand Rounds. Go for the incredible artwork, and stick around for some great articles. For instance, did you know that green tea may help stave off Alzheimer's?

A Tale of Two Kidneys...

You may have read the heart-warming story of the wives who've agreed to donate kidneys to each other's husbands. What you probably didn't know is that there may be some heartbreaking tax implications. Roth & Co do an exam.

No good deed goes unpunished, indeed.

Gaming the System

Hardly a day goes by without someone suggesting ways to me to game the system in their favor. Since this is an insurance forum, you must have concluded by now the system is insurance. Specifically, health insurance. Even more specifically, individual health insurance (contrasted with group health insurance).

Last week I spoke to a lady who found a plan that was just like the one I suggested, but was 30% less in premium. Of course she did not know, nor did she care to hear that the plan also had 50% less coverage.

Before that I had a woman who complained that her $1000 per month health insurance premium was too high for the benefit she received. When I suggested a more reasonable $450 premium plus another $400 monthly into a HSA she balked saying she could not afford the $5000 deductible nor the out of pocket for her annual doctor visit. She insisted there MUST be a plan out there that is better than what she has but doesn’t charge as much in premiums.

Today, at 8:06AM I had an email from a lady who is pregnant (2 months) and wanted health insurance to cover her prenatal & delivery. This is the same woman I talked to last Thursday and explained that the only plan she could find to accomplish this feat was a small group plan through a major carrier. (She and her husband do own a small business that would qualify them under Georgia small group laws).

In today’s email she stated she had found another carrier who does not impose the same requirements for eligibility as the carrier I proposed, and the rates were lower for more coverage. She had reviewed the application for this carrier and determined this carrier does not require payroll records to substantiate qualifying for group coverage.

Due to her pre-ex condition, the rates on the proposal (mine as well as the other carrier) are not reflective of final rates which can change as much as 65% (for the other carrier) or 45% for my proposal. This may tend to level the playing field once final underwriting is concluded.

Neither carrier makes mention of supporting documents in the master application. Yet both carriers do require such documents.

I do not claim to have complete understanding of all aspects of health insurance and readily admit that I still learn things every week despite a long tenure in the industry. But one thing I do know is this. If you think you can beat the carriers at their own game you are wrong. They have been doing this a lot longer than any of us, and have probably seen it all. They also have high paid attorneys, actuaries and underwriters who know how to protect the carrier.

I know for certain there are no ways to beat the carriers at their own game. But I also know that when you understand the rules, and I feel I know them as well as any, you can work the system to your favor. If you think you have found a way to beat the carrier, most likely the only thing you have accomplished is finding a way for the carrier to deny coverage at some future date, once all the facts come to light.

Once you are in claim, that is not the time to find out your policy isn’t what you thought it was.

It's Money Monday!

The Carnival of Personal Finance, hosted this week by Money Blog Network, offers links to a variety of helpful posts. My favorite this week is this one from Joe Kristan, which illustrates tax-protestor follies.

IdeaLogic hosts this week's Carnival of the Capitalists, with links to useful and interesting info. For example, Searchlight Crusades has a helpful primer on mortgages, deconstructing the partial-truth that "all mortgage money comes from the same place."

Insuring Mrs Cleaver...

And no, I’m not trying to be sexist, but rather to make a point:

“ (W)hat is the Human Life Value of a stay-at-home mother (or a stay-at-home father)? No income, so nothing, right?

Wrong. ”

Disability income insurance (DI) is often called “Paycheck Insurance.” The idea is that, if one is injured or ill, and is unable to work for an extended period of time, the insurance would kick in to help pay the bills and put food on the table.

Nowadays, many folks have such coverage through a group plan at work. Others have purchased it directly, which usually means a more appropriate coverage, but often a higher price, as well.

The amount of DI coverage that one can buy is generally based on two criteria: the nature of one’s job, and the size of one’s paycheck. In the case of a homemaker, it may be relatively easy to ascertain the first, but how does one determine the second? After all, there are no paystubs, W-2’s or 1099’s, no actual cash changes hands.

Yet there is obviously value in what the homemaker does. Determining that is essential. Harder still, however, is finding a way to insure it.

Years ago, I recall that Golden Rule used to sell a disability policy for Stay at Home Mom’s (SAHM’s). They haven’t had that available for many years, though, and the market itself has evolved. For one thing, there seem to be a lot more SAHD’s, which also alters the picture.

SAHS’s (Stay at home Spouse’s) can generally buy life insurance with no real problem. So why is it so difficult to find disability cover?

“Think about the daily tasks typically performed by the stay-at-home spouse, such as child care, laundry, grocery shopping, bill paying, cooking, cleaning, etc. These services not only have an intrinsic value but also a real economic value to a family.” (Ibid)

Exactly so. All of those issues make it relatively easy to find life insurance. Don’t these same factors justify DI coverage, as well?

Kim Anderson, the author of the article, notes that “(t)raditionally, the DI industry has not recognized the economic value of the stay-at-home spouse for purposes of providing coverage. The reason for this is simple: Companies calculate eligible benefits based directly on a person’s income.” She adds that “(a) few companies now offer stay-at-home spouses disability income protection without a need for the insured to validate a source of income.”

That last intrigued me, so I dropped her a note, asking about who is now writing this cover. To my delight, I received a prompt reply: After doing quite a bit of research, she and her associate determined that only Thrivent Financial is currently marketing this type of product. The challenge is that the plans are available only from a (relatively) small group of agents to a (relatively) small group of folks (Lutherans). However, she promised to keep me apprised if her further research turned up another carrier.

Somewhat disheartened, I conducted a little research of my own, confirming the lack of availability.

And yet…

A recent conversation with a friend gave me new hope. We look at a potentially useful way to solve the problem in Part 2.

Wal-Mart Caves?

Wal-Mart stores, facing a raft of state legislation that would require it to increase spending on employee health insurance, will lift several of its long-standing — and most-criticized — restrictions on eligibility over the next year, the giant retailer said this morning.
Wal-Mart insures less than half of its 1.3 million employees in the United States and has come under growing criticism for skimping on benefits and shifting the cost of health care to state governments.

More affordable coverage is on the way.

At the same time, Wal-Mart said it would make a new health-care plan introduced in several regions this year, with premiums as low as $11 a month, available to half of its employees by next year.

But it won’t be without its’ detractors . . .

That plan allows for several prescriptions and doctors visits before a $1,000 deductible kicks in. But it is unlikely to cover a complicated illness or expensive hospital stay during the first year, when there is a $25,000 insurance cap. In addition, out-of-pocket payments range from $300 for prescriptions to $1,000 for hospital stays.

Seems generous to me, but the $25k cap is dangerously low. It will be interesting to watch this (I am certain) continuing saga.

A Step in the Wrong Direction

New clients come to me in several ways. Some as a result of advertising, some from referrals. Others find me quite by accident.

One of my newest clients came to me by way of taking a step in the wrong direction. Like many, they were looking for a way to save money on health insurance. They applied with a low price carrier and were almost immediately denied coverage within a few days of making application. Seems the health issue they considered more of a nuisance than anything was preventing them from being approved.

Once you have been denied by a carrier it becomes more difficult to obtain a fair review by later carriers. Every application has a gatekeeper question that goes something like this.

“Have you had coverage denied, postponed, modified or rated?”

That pretty much says it all. Answer yes and you are subject to intense scrutiny. Answer no and you have committed fraud and run the risk of having claims or coverage denied at a later date.

After much discussion and a review of the medical condition, I started polling my top 3 carriers. I work closely with these carriers and have a good feel for the way they underwrite.

I also have field underwriting manuals for all of these carriers as well as a dozen more.

The results from my inquiry were a “no”, a “maybe” and a “probably”.

The “maybe” was a strong carrier not known for aggressive underwriting but is almost always in the hunt on price. The "probably" is a lesser known carrier but strong in many ways and has recently become more reasonable in underwriting.

The “maybe” indicated a rate of $180 per month with a rider for the medical condition. The “probably” told me they would most likely cover the condition but with an extra premium bringing the total monthly to $300.

The condition is a “slight arrhythmia” that is asymptomatic and has remained unchanged in 15 years. The condition is controlled by two inexpensive medicines that cost less than $40 per month.

My new client did the obvious and wanted to apply for the lower priced plan. I counseled them by saying this might not be a wise choice. They stood fast so I countered with a form where they would attest that I showed them a plan with full coverage which they rejected.

Then they were the ones who balked.

In their mind, the $120 monthly premium savings more than offset the $40 monthly med cost. No argument there. What I did next was to explain why each carrier took their respective positions.

The one with the exclusion rider was not dodging the $40 monthly meds or even the annual EKG. They were more concerned about potential stroke or M.I. down the road.

The carrier with the higher premium was willing to absorb not only the meds and the annual EKG but the potential heart attack or stroke that could occur at any time.

Or never . . .

In the end the client agreed to make application to the carrier with the higher premium. I had not only stated my case in a logical and comprehensive manner, but they also agreed I had been more helpful than anyone else who had reviewed their case . . . including the initial agent who simply ran away once he had a rejection from his carrier.

This is not about me or my skills. Rather it is all about making an informed decision and not just taking the lower priced plan for the sake of saving money now. The $120 monthly savings could have gone for other things besides health insurance premiums. But all of that would have been worthless if the annoying medical condition were to take a turn for the worse.

Comments Glitch... [UPDATED]

UPDATE: Comments back online.

HaloScan (which hosts our comments) appears to be having technical difficulties this morning. While that's being resolved, feel free to drop me an email (addy in profile) and I'll make sure it gets added once the glitch is resolved.

Thanx for stoppping by InsureBlog!

Alphabet Soup: S or LLC?

Joe Kristan at Roth & Co has an intriguing take on why folks choose one type of corporation over the other. Pretty interesting reading.

Singin’ the Blues...

Did you know that the Internal Revenue Code gives certain Blue Cross plans a special tax deduction? I certainly didn’t.

I learned about this by way of an email I received from an insurance activist group (nothing wrong with that). Generally, I treat these much like I treat the numerous other warnings that appear in my “in box:” a healthy skepticism, followed by a click over to snopes, which generally debunks them as urban legends.

This time, though, the information seems to be on the up and up. Apparently, the Blues get a special tax break, which is ostensibly based on the “public good” that they are perceived to do. In reading through the statute, it appeared that other carriers could qualify for the deduction, so long as they met a rather interesting set of criteria:

(i) substantially all the activities of such organization involve the providing of health insurance,

(ii) at least 10 percent of the health insurance provided by such organization is provided to individuals and small groups (not taking into account any medicare supplemental coverage),

(iii) such organization provides continuous full-year open enrollment (including conversions) for individuals and small groups,

(iv) such organization’s policies covering individuals provide full coverage of pre-existing conditions of high-risk individuals without a price differential (with a reasonable waiting period), and coverage is provided without regard to age, income, or employment status of individuals under age 65,

(v) at least 35 percent of its premiums are determined on a community rated basis, and

(vi) no part of its net earnings inures to the benefit of any private shareholder or individual.

Looks to me like there’s only one carrier that meets this particular test. Could be wrong, of course, and I’d love to hear from IB readers who know of another qualifying insurer.

As in “the dog that didn’t bark,” I noticed that there is nothing which lets us know exactly why the Blues rate this special treatment, nor is there any test set forth to determine whether or not they continue to deserve it.

Now, I’m not saying that Blue Cross is evil incarnate, or that they shouldn’t take all the largesse that they can find (it is capitalism, after all). But I’d really like to know the justification for this special tax break, and its continued existence.

Any takers?

Grand Rounds...

is up, hosted this week by Dr Andy. The good doctor tries out a new format this week: putting his "Top 10" at the head of the line, followed by numerous (and terrific) other submissions.

InsureBlog's own Bob Vineyard, by the way, made the Top 10. WooHoo!

And Dr Eric has his own take on the malpractice issue.

Money Monday

First up, the Carnival of Personal Finance, hosted this week at FreeMoney Finance. For those of you gearing up for March Madness, Joe Kristan (of Roth & Co) has a unique post on the profits and perils of gambling.

Perry Mason vs Dr Kildare

We don't only talk about health insurance and life insurance here at InsureBlog. Although Medical Malpractice insurance falls in the P&C (Property and Casualty) camp, it impacts the costs of both health care and health insurance.

So it's fair game.

Last year, for example, over 400 legislative bills were introduced to deal with the crisis in one way or another, and 31 states actually passed bills relevant to MedMal.

The American Medical Association considers this very much a "hot button" issue, and has been backing a number of initiatives to reign in what it perceives as a major problem.

According to a Stanford University study, "(s)tates that adopted malpractice law reforms such as caps on non-economic damages experienced an increase in physician supply."

It's also likely that such reform would help to lower health care costs (and, potentially, insurance premiums).

Texas provides an example of this: as recently as two years ago, so many lawsuits were being filed against doctors there that many simply closed up shop, or began to limit their practices, just to reduce the risk of being sued.

Texas passed a law capping non-economic damages at $250,000 (but put no limit on economic damages), and saw significant changes. Lone Star State hospitals saw their MedMal costs frop 17%, and doc's saw a 12% decrease. Not too shabby.

When the cost of health care declines, the cost of insuring it may also go down.

You'll notice, of course, the qualifiers. I'm not convinced that there is necessarily a one-to-one relationship between the cost of health care and the cost of health insurance. There are other factors that go into the insurance ratings process beyond the raw cost of care.

But there will certainly be a downward pressure exerted on premiums as a result of these kinds of savings. Whether that will translate into real dollars saved remains to be seen. If nothing else, it gives carriers an incentive to discount rates in those states which have enacted such reforms.

Limit, One Per Person

A state insurance program that initially denied coverage for an Iowa County woman's lung transplant says it reversed itself after reviewing her policy history, not because of media coverage.

OK, so why did they deny coverage?

When 44-year-old Joan McCarville was told she'd need a third transplant, the Health Insurance Risk Sharing Plan said a 2000 stipulation prevented it from covering a person for more than one transplant of an organ.

Interesting . . .

Guess that is what one can expect with a government run program.

Here We Go Again . . .

A grass-roots group of Madison-area residents wants the city to require employers to provide health insurance through a mandated fee, but the city attorney says the city can't impose such a payroll tax on businesses.

The group, Wisconsin Health Care for All, has proposed a universal health insurance plan called "Provide or Pay." It would force employers to make insurance available to all workers or contribute roughly 5 percent to 10 percent of payroll into a community health plan.

Will someone please tell me why it is the responsibility of government, or business, to provide health insurance for everyone???

Nattering Naysayers...

Since consumer driven health care, and especially HSA’s, tend to be a focus here at InsureBlog, such plans also tend to draw a lot of fire. We get a lot of comments deriding them, claiming that they benefit only the rich and/or healthy, and do little (or nothing) to solve the “problem” of the uninsured.

When such commenters (or other bloggers) deign to suggest a solution, it is almost invariably in the form of some kind of government-based plan. The implication is that only the gummint can reign in costs and/or decrease the number of those who remain uninsured.

Rarely (if ever), do these folks point to great success stories of nationalized (or socialized, or, well, you pick the adjective) medicine. Perhaps that’s because of real life examples like this:

“Maine is the home of Democratic Gov. John Baldacci's Dirigo Health, which regulates the state's health-care system and includes a subsidized health-insurance program...When the law creating Dirigo Health was signed, proponents said it would reduce cost-shifting and health-system costs and ultimately cover all 130,000 uninsured Mainers within five years, including 31,000 uninsured in year one."

Sounds good so far, no?

Well, not so fast:

“Through the first nine months only 1,600 previously uninsured individuals enrolled in Dirigo Health's insurance product, called DirigoChoice. The other 6,000 who enrolled simply traded their private health insurance for taxpayer-subsidized DirigoChoice. The program continues to spend millions subsidizing insurance for those already insured.”

Ooops.

The premise underlying DirigoChoice was that the plan would save money AND cover the uninsured. But it has done neither. And who’s stuck with the bill? Yup, you guessed it: Maine’s taxpayers.

Now, Maine is, of course, a part of New England. They could solve a big part of the DirigoChoice Dilemna by emulating a new trend in (Merry Olde) England:

"Despite health officials' contention that decisions about treatment are based solely on clinical effectiveness, critics contend that with drugs growing ever more expensive, cost has become an increasingly important factor...But Herceptin is an expensive drug, costing $36,000 to $47,000 a year for each patient, and the health service has finite resources..."

You can already see where this is going:

"But the Swindon health service has a policy of allowing its use for early-stage breast cancer only in "exceptional circumstances," and her doctor said that her case was no different from those of "the 20 or so other residents in the Swindon area in the same position." He urged that all the patients be given the drug. The health service rejected the recommendation."

So, there you have it, the perfect solution.

Right?

Hearts & Kidneys...

If you gave your beloved a candy heart yesterday, you've been one-upped:

And you thought your Valentine's Day gift was generous

The Cost of Care

Health care, and insurance to cover the cost of that care, is a popular topic for debate. It has been debated, sometimes heatedly, in this forum and others.

Many who have not used their health insurance other than for minor illness or accident fail to see the other side of the equation. It always amazes me when I ask a prospective client what kind of benefits they would like, the response almost invariably goes like this. They want a low copay for doctor visits and meds. They want to be able to have an annual physical at little or no cost to them. Beyond that (they profess) they really don’t need health insurance since they never get sick.

My contention is, they really don’t need health insurance for routine things like doctor visits for mundane afflictions or even for most meds. Instead, what they need is catastrophic coverage, such as is found in the HDHP/HSA combination.

Regardless of whether you believe your insurance cover should cover the routine or be saved for the truly catastrophic, here is an example of WHY you need a plan with a GOOD major med benefit and no cap on things like medications.

Avastin is an example of a tier 3 or non-formulary medication. You won’t find it on any carriers list of meds that can be purchased for a $20 copay. Instead it will be in the non-formulary column that could carry a $60 copay or even higher.

In an attempt to be price competitive, some carriers have eliminated coverage for meds completely. Others have simply put an artificial limit of $2000 per year for meds.

If you were taking Avastin, and you had this plan, you would blow through your annual max in about 2 weeks.

Personally, I think it is very short-sighted of agents who sell cover that has limited benefits. I also think they should be sued when their client develops a condition that requires care that is not covered by the policy they promoted just because it was cheap.

But I also think the consumer should share some blame for failing to understand the pitfalls of purchasing a plan simply on the basis of a low price, and a feeling they will never need coverage for expensive meds.

You may never need such a powerful drug, but if you do the time to make the right decision concerning your coverage is now, not later.

Consumer Driven or Managed Consumers?

“Bottom line it for me.”

“Put it on the backburner.”

“Think outside the box.”

Every industry has its own jargon, its own clichés. And of course, insurance is no different. The health insurance biz is especially fond of acronyms (ERISA, COBRA, HSA, etc) and buzzwords like “empowerment.” Most recently, Consumer Driven Health Care (CDHC) has been the term du jour (literally: “repeated endlessly”). The idea is that, by increasing the patient’s share of health care costs, one can also increase their “ownership” of their overall health. The primary way this is done is through higher deductibles and fewer “frills.”

But does it work?

Well, it seems to: a recent study by Cigna found that folks in these type of plans “generated an eight percent reduction in medical costs and made positive changes in health behavior, such as increasing their use of medications to treat chronic health care conditions.” Not too hateful.

Interestingly, CDHC-users showed that, while there was a significant increase in their use of medications to control diabetes, asthma and high cholesterol, the cost per day for these meds decreased. This suggests that CDHC-users made more cost-effective decisions, but did not skip medications.

So what’s my point, you ask?

Well, just as the VCR gave way to the DVD, and the ubiquitous LP to the CD (and now MP3), it looks like CDHC is ceding ground to MC. [ed: okay, enough already with the cutesy jargon!]

MC, or Managed Consumerism, “combines the best of CDH with the best of managed care principles,” says University of California Professor James Robinson, who coined the term. Consumers must become more cost conscious, and medical services more tightly integrated and efficiently delivered. Why is that? Well, because both "movements" (CDHC and managed care) tried to apply one strategy of cost control or quality improvement to all forms of medical care. "One size fits all" rarely leads to a happy ending.

A big part of the problem is the old 80/20 rule: in business, 20% of your customers create 80% of the problems (there are other interpretations, as well). In this case, CDHC focuses on patient-initiated, acute types of care. That covers about 80% of the (insured) population, but accounts for only 20% of total health care spending. What about the other 20%, with chronic conditions that account for 80% balance of spending?

That’s where Managed Consumerism comes in:

"The mistake of managed care - the political mistake and the cultural mistake - was that they said yes' and then no.'" The managed care plans promised universal access for a paltry co-pay. But once inside the system, prior authorization, capitation, and narrow networks all said "no."

Consumerism can fix that by saying "no" then "yes," Robinson says. "No," health care is not free; but, "yes," you can save money by making the right choices.”

Money Monday

The Carnival of Personal Finance is up and running at The Dividend Guy’s blog. Frugal for Life has some great tips on what kind of documents you should hold onto, and for how long.

Speaking of frugal, the Frugal Underground hosts this week’s Carnival of the Capitalists. With a daughter already in college, I never really stopped to ask about the “real” value of a college education: Free Money Finance has the true bottom line.

Congratulations To our good friend Joe Kristan, of Roth & Co, who makes a cameo in today’s Wall Street Journal. WooHoo!

“Survey says…”

Apropos of nothing, really, but I came across this on the web:

“Dr. Aaron Fine, the head of Israel's Tatzpit polling agency told Arutz-7 Sunday that 75% of the public refuses to take part in polls, rendering poll results nearly useless.”

So, does this mean that his poll is wrong, too?

Dr Fine goes on to castigate the media, “it is scandalous that polls reported daily in the media do not disclose how many of those polled refused to answer or said they are still undecided.”

Interesting point.

Old Post - New Update...

Almost a year ago, we discussed a new health insurance initiative from a coalition of large employers. It was supposed to help part-time workers, temporary and seasonal employees, contract and franchise workers obtain basic health cover. The coalition included Ford, General Electric, McDonald's, IBM and Sears, among others.

Our friend Kate Steadman has an update on this plan, which hasn’t exactly set any land-speed records [gratuitous Olympics reference], and offers an interesting alternative.

The Sky is Falling 2.11

According to John McCarron you can say goodbye to employer provided, group health insurance if the Bush administration gets their way.

OK, I’ll bite.

According to the article," if you paid close attention--very close attention--to President Bush's State of the Union address, you may hear a distant knell for the way most Americans get their health insurance."

So what is wrong with that?

Apparently this.

“In his address, the president said government has a responsibility to "help people afford the insurance coverage they need." The way to do that, his aides later explained, is to "level the playing field" so folks who buy their own insurance get as good a deal as folks who join their company's plan.”

And that would be accomplished how?

“Bush proposes a supercharged version of the health savings accounts (that would allow a) family sock away $10,500 per year tax-free. Moreover, they could claim a tax credit equal to 15.3 percent of the amount they deposited. But it gets sweeter. If the worker buys his own high-deductible insurance policy, rather than one offered at work, the premiums he pays would be fully tax-deductible and eligible for the 15.3 percent tax credit.”

I am not really sure how one is able to deduct premiums AND get a tax credit for those premiums, but I am definitely interested.

The balance of the article is mostly a tirade against the wealthy & healthy so I won’t even go there.

The HSA is an excellent tool and one that should be used by a large percentage of the population. So far less than 3% of those covered by health insurance agree with me but I am not going to let that stop me.

As for the Bush recommendation, tax credits really only appeal to those who actually pay taxes. Coincidentally, this is about half the population . . . those with an AGI that exceeds $29,019.

So what is wrong with the Bush proposal? Not much that I can see. Bring it on.

I Just Couldn't Resist . . .

Medical Insurance Explained

Q. What does HMO stand for?
A. This is actually a variation of the phrase, "HEY MOE." Its roots go back to a concept pioneered by Moe of the Three Stooges, who discovered that a patient could be made to forget the pain in his foot if he was poked hard enough in the eye.

Q. I just joined an HMO. How difficult will it be to choose the doctor I want?
A. Just slightly more difficult than choosing your parents. Your insurer will provide you with a book listing all the doctors in the plan. The doctors basically fall into two categories: those who are no longer accepting new patients, and those who will see you but are no longer participating in the plan. But don't worry, the remaining doctor who is still in the plan and accepting new patients has an office just a half-day's drive away and a diploma from a third world country.

Q. Do all diagnostic procedures require pre-certification?
A. No. Only those you need.

Q. Can I get coverage for my preexisting conditions?
A. Certainly, as long as they don't require any treatment.

Q. What happens if I want to try alternative forms of medicine?
A. You'll need to find alternative forms of payment.

Q. My pharmacy plan only covers generic drugs, but I need the name brand. I tried the generic medication, but it gave me a stomach ache. What should I do?
A. Poke yourself in the eye.

Q. What if I'm away from home and I get sick?
A. You really shouldn't do that.

Q. I think I need to see a specialist, but my doctor insists he can handle my problem. Can a general practitioner really perform a heart transplant right in his/her office?
A. Hard to say, but considering that all you're risking is the $20 co-payment, there's no harm in giving it a shot.

Q. Will health care be different in the next century?
A. No, but if you call right now, you might get an appointment by then.

Author unkown

Look Before You Leap...

We’ve all seen them, plastered on telephone poles, flooding our email, jamming our fax machines: Save on Health Care! Alternative to Expensive Insurance! Guaranteed Acceptance!

What are they? They’re “discount cards,” which we’ve discussed before.

So why bring it up again?

Because sometimes, people get hurt.

The voicemail was succinct: “I’m shopping for health insurance. Please call me to tell me about the plans you offer.” Okay, routine, someone shopping for a new policy. Maybe her premiums got “too high,” or her doc left the network, or she had a claims problem. Could be anything, really.

Kathy (not her real name)[ed: dunh!] sounds like a bright, interested prospect who wanted a quote. I usually begin with a series of questions: is this just for you or for a family, how old are you, do you use tobacco, do you currently have insurance, what medications do you take? Turns out she’s a single, 27 year old non-smoker who cancelled her insurance a few months ago.

And, oh yeah, she’s a diabetic on 2 types of insulin.

So why did she cancel her insurance? Well, she found something “better,” and didn’t realize that it wasn’t what she had thought until she’d paid a non-refundable $189 fee and cancelled her previous insurance.

Now what?

Well, there are very few options left to this young lady, and none of these is going to be as good as the coverage she cancelled. So, Lesson One: NEVER cancel existing coverage until the new plan is approved and you’ve had a chance to look it over. It doesn’t matter WHAT the agent (or sales rep) says, ALWAYS read the actual policy.

The first option that comes to mind is to find a (new) job which offers a group health plan. Her current employer does not. Even that may not be enough: she cancelled her previous plan in October, well past the 63 days which would have provided her creditable coverage.

In Ohio, she could apply for – and be declined – health insurance, and thus become eligible for a state-mandated plan (YMMV). These are expensive and offer mediocre coverage, but they at least offer a true major medical plan.

Third, she could look into a “mini-med” plan. These are often guaranteed issue, and offer not only the provider discounts, but some medical and prescription drug coverage, as well. These benefits are EXTREMELY limited, but they are – arguably – better than nothing.

Which will she choose? I really don’t know. She did ask me to forward the link to the guaranteed issue mini-med plan, so perhaps she’ll choose that route. OTOH, she sounded like she still had a few phone calls left to make. Perhaps surprisingly, I encouraged her to continue making those calls. At this point, she really has nothing to lose (except a little time), and she struck me as someone who won’t be truly convinced until a few more doors are slammed shut. Nothing wrong with that, I suppose.

Carnival Time!

You'll find this week's Grand Rounds at Science and Politics. Host Bora Zivkovic's mini-bio is a hoot! This week's edition is super-sized, with a LOT of interesting posts.

This week's Carnival of Personal Finance is hosted by the Financial Reference blog. Be sure to see FoIB Joe Kristan's very timely advice about choosing a tax advisor.

Over at the Any Letter blog, you'll find the current Carnival of the Capitalists. Retire at 30 takes a look at a unique, and seemingly successful, money-maker in "Pixels for Sale."

The Sky is Falling! (Part 2)

Many years ago, the then-President of Blue Cross/Blue Shield of Ohio (now Medical Mutual) published a little tome warning that MSA’s would be the ruin of the health insurance industry, and our country’s health care system in general. Frankly, I can’t even recall this fellow’s name, but obviously, his fears were – to say the least – unfounded. And so we fast forward 15 or so years, and find that “la plus ca change, la plus le meme chose” (literally: same stuff, different day).

I actually agree that, if every single healthy person chose an HSA (or other consumer driven product) , and every unhealthy person chose a more “traditional” one, the current system would be thrown into havoc.

Fortunately, that eventuality seems unlikely.

First, it’s necessary to understand the underlying premise of Consumer Driven Health Care: personal accountability and responsibility. The current system discourages both: since a 3rd party (either an insurer or the gummint) pays the bulk of the costs of health care, and few people pay the full cost of their insurance, most of us are disconnected from the actual expenses we incur. That is, we go to the doc because we have a fever and a cough, or to the local imaging center for a mammogram, or the ER to have our broken leg set. We pay a few dollars (or even a few hundred dollars), and we’re out the door. But the provider isn’t through yet: eventually we get an EOB (Explanation of Benefits) form that show how much the insurance company paid. “That’s nice,” we say to ourselves, “thank goodness I don’t have to come up with that $3,000!” But, you see, we already have: in premiums, in co-pays and deductibles, in taxes. It’s just that we don’t see these expenses in discrete, obvious “chunks;” they’re deducted from our paychecks, or the swipe of a credit or debit card. But they’re real, and they add up.

Back in 1977, Sir Freddie Laker, a British entrepreneur, came up with a low-cost, no-frills airline that offered great rates, without peanuts and pretzels and movies. Called SkyTrain, Laker’s idea was to make air travel affordable to “the masses,” by cutting out all the extra’s that added cost, but not necessarily value. Within five years, it had gone bust, but it’s successors live on: SouthWest, AirTran, and the like all owe their existence to the man who said “perhaps they were spending too much money on aeroplanes and not enough getting the aeroplanes in the air for the right number of hours.” In other words, they weren’t focusing on their real mission: to get people from Point A to Point B safely and quickly, but not necessarily luxuriously.

And that’s part of the problem with our system today: we all want the absolute best care, with no (or very little) expense to ourselves.

The other two primary arguments made by those who believe that HSA’s will be the ruin of civilization as we know it are:

■ Only the young and wealthy will buy these plans, and/or

■ It won’t solve the “problem” of the 46 million folks currently uninsured

Well, the first argument is interesting primarily because those who make it never quite define “wealthy.” And yet, over 40% of those who purchase these plans make less than $50,000 a year . I don’t think that most of those folks consider themselves “wealthy.”

And almost half, by the way, are over age 40.

As to the second argument, well, it’s kind of disingenuous, as well. There is a great deal of turnover in that “46 million;” in other words, most of those who are uninsured today will be covered tomorrow, as a new batch comes in to take their place. It’s also specious to equate “uninsured” with “unable to access health care.” This is simply smoke and mirrors.

I agree that HSA’s alone won’t solve the problem. But I am unaware of any serious proponent of them who makes any such claim. Rather, they are but one tool in the box.

We’ll wrap up with a look at President Bush’s plans in Part 3. (Part 1 is here)

Travel Advisory

Recently, some folks planning a trip to Israel applied for life insurance, and were turned down.

Now, it does happen that some people are declined for life insurance, because of poor health, or dangerous hobbies, or because they’re crack-dealers. These folks, however, were healthy, boringly employed, law-abiding citizens – who just happened to be traveling to a demonstrably dangerous part of the world.

Could have been Iraq, or Venezuela, or perhaps Chechnya. Happened to be Israel.

And so they filed a formal complaint with the Georgia Department of Insurance (because that’s where they all live); the Department, and the General Assembly, intervened on their behalf:

“Recently, legislation was introduced …to prohibit underwriting for life insurance based on an applicant’s…past or proposed future travel to the State of Israel.”

So what, you may ask.

So, this:

Regular readers of InsureBlog know that we look at these kinds of issues through the lens of risk. Just as health insurance benefits pass through the filter of “medical necessity,” life insurance underwriting encompasses risk management elements, as well. An underwriter categorizes potential insureds according to how likely it is that the company will collect $100 in premium, and then pay out $100,000 in benefits. Do that too often, and you could be talking some serious money.

So, for example, a 40 year old, 5 foot tall applicant weighing 250 pounds, taking Lipitor and who had angioplasty last spring would find it difficult to find an affordable life insurance policy, and most people would understand why.

Or, perhaps the buff 35 year old was convicted of cocaine trafficking last year, just after serving time for several armed robberies; we’d understand if such a fellow found it difficult to purchase life insurance.

There are carriers who specialize in such risks (“substandard” in industry lingo), but most carriers would quickly run away.

And if you’re planning a trip to North Korea or Syria, then it would be understandable that most carriers would decline to issue you a policy. Why? Because the risk is very great, and the premium (proportionately) is small. They don’t really care if you’re black or white, Jewish or Christian, Democrat or Republican. An underwriter never knows any of this. Nor does he care. All he knows is that, if he approves the policy and you get blown up, he’s going to have a heck of a time explaining that decision to his boss.

So why is it that these same principles don’t apply to folks traveling to Israel? Certainly, most folks who go are there are not blown up. But some are; and it’s much more likely for a visitor to Israel to become a terror victim than someone traveling to, oh, St Thomas.

And yet, the Georgia Department of Insurance and members of the legislature have determined that basic underwriting principles are irrelevant when a group of people complain about their result. It is a form of affirmative action, which actually contradicts the Department’s own statement that:

“The following acts or practices are deemed unfair methods of competition and unfair and deception acts or practices…

Making or permitting any unfair discrimination between individuals of the same class, same policy amount, and equal expectation of life…” [emphasis added]

So what will they say when a group of missionaries, planning a trip to Chenya or Iraq, are declined?

Just wondering.

The Sky is Falling 1.2

Not wanting to steal any of the Professor’s thunder, but just wanted to get something off my chest.

OK, so maybe you don’t care. That’s OK. This is short. Deal with it.

Prospective client has an old fashioned plan with a major carrier. The plan is very rich in benefits with $20 doc copays; $25 Rx copays and a (GASP) $500 deductible.

It also carries a hefty price tag.

Over $900 per month.

The plan they have now will not be renewed by their carrier in the summer. They will have the option then of moving to a higher deductible, lower benefits and a higher price; or they can leave this carrier and go somewhere else.

Yes, I did say a higher price.

Based on other renewals with this carrier, for this product, my guesstimate is about 30% more in premium.

Did I mention the higher premium is for less benefit?

For the SAME $900 per month they can have an HDHP PLUS a FULLY FUNDED HSA.

That means NO out of pocket for anything.

No out of pocket for doc visits.

No out of pocket for meds.

No out of pocket for a major claim. Unless the claim exceeds $5,000,000 . . .

So what did they say to my proposal?

If I can’t show them how they can save money over their current plan, they would rather stay where they are until August when the plan renews.

These people are not stupid. I drew them a picture . . . literally. They just think they are better off paying $20 to go to the doc, than paying nothing (after the HSA reimbursement).

OK, maybe they are stupid.

Someone just go ahead and shoot me.

Gee, We Were Only Kidding!

Remember the Peanuts cartoon where Charlie Brown would attempt to kick a football that Lucy was holding? Charlie would run hard at the ball, ready to kick it downfield. At the last minute Lucy would take the ball away, Charlie would go flying through the air and land with a thud.

Sometimes real life imitates art, or in this case, cartoon art.

Back in 1996 the drug companies reached an agreement with Washington in exchange for an extension on some valuable drug patents. In exchange for this protection, the drug companies agreed to make certain drugs free or almost free to low income patients and those with AIDS.

This was a win-win situation.

Companies such as Med Solutions and others sprung up to aid qualified beneficiaries in filling out the paper work. These companies charge a nominal fee for handling the paper work and the recipients get their meds for around $3 per month per script.

And the drug companies get to keep their patents a little longer, prohibiting other companies from making generic equivalents, which keeps prices (and profits) high.

Such a deal!

Until now . . .

It seems that the drug companies see the new Medicare drug plan as a way to change the rules. Several companies have announced plans to discontinue this free ride for the elderly and disabled.

Just like Lucy and Charlie Brown, the football (in this case the free drugs) are pulled away at the last minute. Only this time, the one hitting with a thud are the elderly and disabled.

Sigh . . .

Hey Doc, let me get back to ya on that . . .

“Attention BigMart shoppers! For the next 20 minutes we are running a special on Erythromycin in aisle six. In addition, the first 10 shoppers will receive a coupon for a free proctoscopic exam on your next visit.”

This might not be as far-fetched as you think. Some carriers are now allowing insured’s to dial up their meds and do a price check, while in the doctors office.

Think your doc isn’t spending enough time with you? Cigna has a better idea! Not only can you price check, but find out how much time a doc should be spending depending on the diagnosis and price charged.

Neat huh?

Personally, I don’t think so . . .

[David Williams over at the Health Business Blog has more on this, as well]