Tuesday, May 30, 2006

Another One Bites the Dust

It looked good on paper, but organizers of a health insurance cooperative for Moore County are puzzled that not enough people signed up for it.

The prospects seemed great because the area had a modern hospital, an extensive physician network and a largely wealthy population. Health insurance is out of reach for about five-thousand small-business workers in the county.

Only about half the minimum number of 400 participants signed up for CoverMoore in the three-month enrollment period last fall.

Kinda makes you wonder how well the AHP (association health plans) will work . . .

CMS + D = Ooopsie

When folks sign up for the new Medicare D benefit, many (most?) choose to have the premiums deducted from their Social Security checks. CMS then (in theory) forwards this money directly to the insurer, which relieves the beneficiary (insured) with a bit less stress.
Or so they thought.
Turns out though, that the process was only half thought-out (surprise!). CMS has the ability to deduct these premiums, but apparently no mechanism to actually disburse the funds to the appropriate insurance companies. Think of a hose connected to a running faucet, but the nozzle is closed. Eventually, things back up.
The CMS solution: send all that money back to the insured's. Ooops.
Not to say "I told you so," but...
Long-time IB readers know what I think of the Medicare D "plan," and know that (although I am certified) I have chosen not to sell it.
See why?
According to CMS, they have been inundated with these requests, and are currently backlogged. In fact, they are so far behind that they won’t accept any new requests until…..November. Which is, if you’ll recall, the next open enrollment season. Ooops, redux.
In the meantime, co-blogger Bob Vineyard sent me this, which tends to bolster the diagnosis.
And, of course, these are the folks who would (theoretically) be in charge of a nationalized health system. Great.

(Not So Great) Grand Rounds

Hosting blog-carnivals is no easy task. And when the submissions get up into the 30’s and 40’s, it can be quite daunting. Yet it’s not impossible, as we saw with this week’s financial carnivals.
So I am disappointed that KidneyNotes, the host of this week’s Grand Rounds, did such a lackluster job. Yes, it’s very clever that he (she?) used the “delicious” (or whatever) program to tag the links. But GR is not about how clever one can be in manipulating the technology: it’s about presenting posts in an interesting way. IMO, the host’s job is to review and summarize the submissions, perhaps sorting them into categories (although this last is by no means critical).
In scrolling down the list (in alphabetical order? By order of submission? By zodiac sign? It’s never stated), there’s no way to know what the subject or purpose of any particular post is. Yes, they’re “categorized,” but so what? The categories have no reference.
For example: would you know that this entry was written by a certified office manager (to my knowledge, the first such submission ever to GR):
Of course not. And all of the entries are presented this way. All this shows is that the host can click on a link, and do simple cut-and-paste. It doesn’t show that he’s actually read the post (or even the summary that accompanied the submission).
I certainly have higher aspirations for the Cavalcade of Risk.

Monday, May 29, 2006

Memorial Day Money

I'm impressed! Even though it's a holiday (and a long weekend, to boot), the folks at My Open Wallet and Working Solo took the time and effort to put together two great carnivals. Kudos, folks!
I also found it interesting that both of our hosts this week are actually hostesses: one from Sydney (Australia), and the other from Brooklyn.
MOW presents this week's Carnival of Personal Finance. Madame X received 46 entries, all of which she posted, in order of when they were received. I like that: it's an incentive for folks to get their entries in early (which I can tell you from my own experience with the Health Wonk Review surely helps).
As one who is rather particular in the use of words, I found this post, by Pete at My Financial Awareness, to be spot on.
Leah at Working Solo, hosting the Carnival of the Capitalists, clocked in with 42 submissions, which she sorted into relevant categories (although, in a bit of reverse chauvinism, she highlighted female bloggers' posts first).
Will Crawford at Integrative Streams has a cautionary (and frustrating) tale of a lost cell phone, a lost customer service opportunity, and (ultimately) a lost customer.
And don't forget the new Cavalcade of Risk, premiering next week. It's dedicated to the world of, well, risk, and provides a forum for exploring how each of us defines and manages risk: in business, in our finances, and in our lives.
Submissions are due by June 5th, and the C of R will debut on the 7th.

Dirigo on Life Support

When state officials proposed the creation of the Dirigo Health program, they predicted that it would enroll 31,000 people by the end of the first year.

Now, more than 16 months after the program was rolled out, fewer than 10,000 people are enrolled. And the program has a long way to go toward its stated goal of providing health coverage to the 130,000 Mainers who lack insurance; it is now providing coverage to about 5,000 people who previously weren't insured.

Why the shortfall?

DirigoChoice is most appealing to individuals who receive rebates on their coverage based on income, and to those who otherwise can't get insurance because of pre-existing conditions or a lapse in coverage.

In other words, the only ones it attracts are those who can get the health insurance at a discount or are uninsurable.

Why does this not surprise me?

Four out of five enrollees receive subsidies from the program.

Here is part of the problem.

DirigoChoice is appealing to low-income people who receive subsidies -- up to 100 percent -- and people who are sick and can't otherwise get insurance, many business owners and insurance agents say DirigoChoice doesn't offer the cost savings to justify switching.

Dirigo is mostly attracting the poor risks and does not have enough sizzle to attract good risks to offset the losses.

"We aren't backing down from our commitment to get to universal coverage," said Trish Riley, director of the Gov.'s Office of Health Policy and Finance. "It's just a little unclear on how long it's going to take."

Translation: they have no clue why the program isn’t working and have no idea how much more taxpayer money will be required to fix the problem.

NOTE: We called this 'way back in February.

Saturday, May 27, 2006

Merry *Olde* England...

As the Sceptre'd Isle’s much vaunted NHS (National Health Service) continues to implode, that country’s seasoned citizens have become the latest victims:
Hundreds of thousands of elderly Britons could face the very real possibility that their (potentially treatable) condition will become even worse, even as the medication that could alleviate their suffering is cut off:
The drugs, which campaigners estimate cost £2.50 [about $5] per day per patient, improve memory and can make daily living tasks easier.
What is that, a mocha latte a day?
On the other hand, last summer the “NICE [National Institute for Health and Clinical Excellence] said access should be restricted because they were not good value for money.
The NHS also says that this restriction will apply only to those who are diagnosed after the cut-off date; folks already being treated won’t be cut off.
On the one hand, such treatment is criticized as a bad deal, while on the other hand, folks taking it will keep on doing so.
Curious, no?

Friday, May 26, 2006

Big Doin’s in the Green Mountain State...

Yesterday (that would be Thursday the 25th), Vermont Governor Jim Douglas signed new legislation to (ostensibly) make health insurance more readily accessible and affordable.
Since this just popped up on my radar, I haven’t had time to really dig into it (as we did for Massachusetts’ efforts). On its face, it doesn’t look all that promising (new bureaucracy, taxes on smokes, employer penalties, yawn). But we’ll have an in-depth analysis shortly.
The point of this post, however [ed: was wondering when you’d get to that], is this observation:
While I’m not enamored of the mechanisms these states have chosen, I heartily approve of the method by which they are moving forward.
I am opposed to government take-over, whether by fiat or legislation, of healthcare. But this is a states’ issue; that is, there is nothing in the US Constitution granting the gummint the right to decide our healthcare, let alone the 15% of our economy it represents. The 10th Amendment, though, preserves for each state the right to address such matters as each sees fit. After all, folks (and employers) will vote with their feet: if the burden is too onerous, then jobs (and those that do them) will exit. If it’s not, well, good luck.
Each state is free to decide if and how to address the issue. I would much rather see it play out this way (as messy as it may well turn out to be) than to have the entrenched bureaucracy in DC enact its version.
Just my $.02
More later.

O What A Tangled Web...

Insurance companies cheating?! Say it ain’t so, Joe.
Apparently, United HealthCare (no stranger to this blog) added a little “vig”to the comp it paid some of its (no doubt favored) brokers. This in addition to the fee said brokers were already being paid by the public agencies doing the shopping.
Having no personal experience in this particular market (well, not really: I recently quoted a small local parks district, but a) they were already with UHC, and b) they weren't paying me anything), I'm somewhat surprised that these brokers were pocketing fees in the first place; generally, we're paid a commission when we actually sell a case. By the carrier.
To make matters worse (not sure how that’s possible), UHC Home Office Critters (HOC’s) also lied to the Department of Insurance investigators. Memo to UHC staff: “Um fellas, that’s a no-no.”
Gee, I wonder what they lied about.
The state’s other major player also seems to have had its hands in the cookie jar.
Anthem Blue Cross Blue Shield, based in Mason, Ohio, signed a similar agreement April 3, paying $30,000. Anthem was not accused of lying to the department.
On the plus side, they apparently ‘fessed up, thereby mitigating the disaster. Seems that, unlike in the UHC kerfluffle, Anthem HOC’s didn’t know that their brokers were double-dipping.
I also found this tidbit interesting: “Also unclear was why the Department of Insurance was enforcing compliance with Ohio ethics laws, which typically are enforced by the Ohio Ethics Commission.
On the one hand, I teach a course on Insurance Ethics (and no, that’s not an oxymoron)(or any other kind), which class is approved by the DOI. So, technically, I suppose that they do have a horse in this race.
But on the other hand, the Department is not known for aggressively rooting out alleged carrier corruption. So it’s intriguing to see them actually digging into this matter [ed: metaphor alert].
Kevin Grady, the broker at the center of this storm, appears to be an agent in Columbus. His web page is unremarkable; he doesn’t appear to be a particularly flashy kinda guy.
In any case, Mr Grady apparently made out pretty well in this deal (well, until now, anyway): $137,000 from the school district he was ostensibly representing, plus a cool half mil from UHC.
What, he couldn’t settle for a nice calculator or some golf balls, like the rest of us peons?
I particularly liked this characterization from an email sent by one United HOC: “My guess is that the broker doesn’t want to have to deal with the account directly on a fee basis because of the amount of ‘extortion,’ I mean commission being demanded.
Mr G now will likely lose his license, face substantial fines, and will probably have to return his (allegedly) ill-gotten gains.
But hey, it sure was fun while it lasted.
But wait, there's more!

Arrested Development

Can’t afford health insurance? Rob a liquor store.

Local sheriffs find it particularly galling that inmates sometimes get better care in jail than they do on the outside -- and better care than many people who have done nothing wrong.

Better care than those who have done nothing wrong . . .

"Granted, our inmates are still not guilty, but we have people in jail who actually have full coverage, but we have disadvantaged adults and children out there who have done nothing wrong, who have no coverage. There is something wrong in the system," Madison County Sheriff Robert Hertz said

Not guilty means they have not (yet) gone to trial.

"These people may have neglected their own health on the outside, but once they get in here they develop all kinds of ailments," Hertz said. "The ailments may just be outlandish, but we can’t afford to tell them they’re crazy. We have to err on the side of caution because if they really are sick, and we don’t provide care, we’re opening ourselves to a lawsuit. It’s just a difficult situation."

If you don’t treat me I will sue.

Who says crime doesn't pay?

Thursday, May 25, 2006

Paging Miss Cleo!

Tax seer Joe Kristan, fresh from waxing his Ouija Board, has a (fortune-)telling post about a tax-dodging clairvoyant.

Guess the guy needs a new Magic 8ball.

Wednesday, May 24, 2006

Under the Microscope (Part 2)

In Part 1, we looked at some of the goals and assumptions underlying the Bay State’s new health care law, MassHealth.
Today, we’ll take a look “under the hood.”
Some time ago, Bob told us that, under the then-proposed regs, there’d be an annual fine of almost $300 per person for companies (with 11 or more employees) that fail to provide health coverage. As he pointed out, this is hardly more than a slap on the wrist ($300 a year fine for $4,000 a year or more premium). That, of course, is back in. Those of us familiar with the Law of Unintended Consequences are now wondering: what about cases where both spouses work outside the home? There are good and valid reasons to have one (family) policy. So, if a spouse waives off, is the $295 fine waived?
What do you think?
But wait, there’s more!
Introducing the "Commonwealth Health Care Connector" another new bureaucracy tasked with providing access to “affordable health insurance products” to individuals and small businesses. Folks with jobs will be able to buy their insurance through this Connector. The good news is that this would allow for portability of insurance as individuals move from one job to another. The bad news is, it’s set up as an authority under the Executive Office of Administration and Finance, and overseen by a separate, appointed board of private and public representatives.
As in: “I’m from the government, and I’m here to help you.”
So that’s what’s in store for the group market. But what about the individual market? Well, we’ve got that covered, too:
The individual part of MassHealth requires that, as of July 1, 2007, all residents must obtain health insurance coverage, provided that there are affordable options available to them at that time. Every person who files an individual return for the tax year 2007 will be required to indicate whether or not they have had health insurance coverage, claimed an exemption or had a certificate issued by the "Connector." If the Department of Revenue determines that this requirement is not met, a tax will be assessed to the individual. A sliding “affordability scale” will be set annually to determine affordability. Sweet.
I’m reminded of a favorite old saw: “Be careful what you wish for. You might just get it.”

Another Ethical Dilemna...

Some months ago, I posed an ethical question about what to do with funds raised to help save a little girl’s life (she unfortunately passed away before using them). Today, I’d like to pose another:
Suppose you are a physician whose uninsured patient requires an expensive, but life-saving, medication. The patient’s family wants you to write the scrip on another family member who is insured.
(Thank you to Rabbi Dr. Asher Meir)

Tuesday, May 23, 2006

A New Kind of Carnival

Having participated in the Carnival of the Capitalists and of Personal Finance, Grand Rounds and the Health Wonk Review, I noticed something missing.

There doesn't seem to be a comparable compendium [ed: cut it out] for those of us involved in the business of risk management.

That's about to change.

The Cavalcade of Risk is dedicated to the world of risk management; generally, this means insurance, but that’s not a requirement, nor should it be.

The purpose of the C of R is NOT to provide a forum for folks to simply advertise their services, or bash their competitors, or tout any one concept as a panacea. Rather, it is to provide a forum for exploring how each of us defines and manages risk: in business, in our finances, and in our lives.

Please pop on over, read the intro, and submit your own (or even someone else's) post.


Cancer Plans

For most of my career I have considered the “dread disease” policies to be mostly a waste. There was no good reason to purchase a policy that covers cancer, or a heart attack if you had a good major medical policy.

Times have changed and so have I.

Almost every major medical plan on the market uses a drug formulary. The net effect of the formulary is to reduce the carrier’s exposure, especially on some of the more expensive medications.

Unfortunately those are the same medications that can be the difference in surviving an illness or not.

An article by Jill Quadagno has caused me to give even deeper consideration to the usefulness of these single disease policies.

A few years ago my friend Connie’s husband, Michael, died suddenly of a heart attack at the age of fifty-six. After Michael’s death, Connie found herself struggling not only with her grief but also trying to find an affordable health insurance policy. Because she had had one abnormal pap smear, Connie’s best option was to purchase a major medical policy costing $7,000 a year. Her plan will cover any large health expenses she might incur--after she pays the $3,000 deductible. But the plan carries a clause that if her abnormal pap smear turns into cervical cancer, her health insurance will pay none of the costs.

In the last 6 months I have had two clients encounter difficulty finding health insurance because of an abnormal pap smear. Both of these clients, have now been offered the opportunity to shore up their plan with a lump sum cancer plan.

I have also extended this offer to other clients as well.

The lump sum plan is unlike most of the cancer plans on the market. When cancer is initially diagnosed a lump sum cash payment is made to the insured. The amounts can range from $10,000 to $50,000. Benefits are paid even before treatment begins. You do not have to be hospitalized to receive benefits.

Most of the older cancer plans are scheduled reimbursement types. These policies pay a pre-determined amount AFTER you have had the treatment. Like most insurance policies, you submit the bills for review then the carrier decides which bill, if any, will be reimbursed.

The lump sum cancer plans pays in advance. You decide how you want to use the money. It may be to pay regular living expenses, cover deductibles & copays or pay for the medicine and other treatment that is not covered by your major medical.

Cancer plans are no longer bottom shelf items but should be something everyone owns.

How About a Dog Scan?

We have CAT scans and PET scans, how about a DOG scan?

In a society where lung and breast cancers are leading causes of cancer death worldwide, early detection of the disease is highly desirable. In a new scientific study, researchers present astonishing new evidence that man's best friend, the dog, may have the capacity to contribute to the process of early cancer detection.

In this study which will be published in the March 2006 issue of the journal Integrative Cancer Therapies published by SAGE Publications, researchers reveal scientific evidence that a dog's extraordinary scenting ability can distinguish people with both early and late stage lung and breast cancers from healthy controls. The research, which was performed in California, was recently documented by the BBC in the United Kingdom, and is soon to be aired in the United States.

Other scientific studies have documented the abilities of dogs to identify chemicals that are diluted as low as parts per trillion. The clinical implications of canine olfaction first came to light in the case report of a dog alerting its owner to the presence of a melanoma by constantly sniffing the skin lesion.

And you thought Lassie was smart!

And Grand Rounds...

is up, hosted (for the thrid time) by Dr. Emer. With 50 posts, Dr E has done a tremendous job (trust me, I know how hard it was to organize 11!).
I'm a Sweet-N-Low man myself, but this GR entry, from Amy at Diabetes Mine, has the scoop on all the various coffee-sweetening options (and tea, too, I suppose). Be sure to ask about Stevia.

Monday, May 22, 2006

The Health Wonk Review (Lucky #7)

Well, that’ll teach me to volunteer! This week’s putative host has apparently gone AWOL, so HWR honcho Joe Paduda accepted my offer to substitute. Please forgive any mistakes, errors, runs, drips or streaks.
So, a coupla days late, but none the worse for wear (I hope!), here’s this week’s foray into the world of policy, infrastructure, insurance, technology, and managed care bloggers. Enjoy!

■ Politics, Policy, Economics

Jared Rhoads, of The Lucidicus Project, has an interesting article about Massachusetts' new healthcare legislation. Comparing commentary from various members of the free-market community, he concludes that, even as mixed as the free-market folks are, the conservatives are worse. His solution: rights-based capitalism protected by limited government.

Frequent IB foil Jill Quadango posts her presentation to the Democratic Senators Issues Conference on why 46 million Americans lack healthcare. If you haven’t read her book, One Nation Uninsured (which we reviewed last fall), this is a good summary of its contents, and conclusions. While I don’t often agree with Dr Q, she is a compelling and interesting author.

If you follow the Medblogosphere, then you’ve certainly read Marcus Newberry’s great blog about health promotion, healthy lifestyle and disease prevention. In this post, the good doctor tells us about the late Jane Jacobs, author of “The Death and Life of Great American Cities.” He compares her thesis that cities are vibrant living systems with the reality of the current situation in health care. As usual, he brings a refreshing insight.

David Williams, proprietor of the Health Business Blog, has an interesting (and provocative) take on Google Health. He tells us that, although the offering itself is weak, Google is also exploiting the goodwill of volunteers under its so-called "Co-op" program. Problem is, it’s not a co-op at all.

Behind The Wheel, brought to you by the folks who run Marketplace MD, is a fun and engaging blog (I know, because I visit it pretty often). This entry is a virtual survey of Consumer Driven Health Care, covering over two weeks' worth of nuggets from blogs, the media, and academic journals. I was particularly pleased to read that Marketplace’s founder has been published by Health Affairs, twice. Mazel Tov, Doc!

PhD-to-be Jason Shafrin, posts as the “Healthcare Economist.” This week, he tells us that the British government is shifting childbirth policy away from hospital delivery and towards births in the home, and asks if this good policy. His post also raises the point that government dictating where you have to give birth to your child is one of the costs of nationalized healthcare.

HWR founder Joe Paduda has some thoughts about the GOP's efforts to pass Association Health Plan and medical malpractice reform legislation. He wonders if it’s necessarily a bad thing that it “ran into a brick wall.” IB’s Bob Vineyard discussed this a while back, and I’d love to read a debate between them (hint, hint).

The final entry in this category is my own: in many markets, one insurer dominates. Some in the governing class object to this, and have proposed dubious solutions. We explore the situation, and possible resolutions.

■ Business of Healthcare

Tony Chen, one of a group of high-powered bloggers at Hospital Impact, has a thought-provoking post on what the mission of hospitals could be in the future. He looks at how Mayo, Johns Hopkins, the Cleveland Clinic and other A-list facilities operate now, and what their mission might look like in the future. Talk about Future Shock.

■ Technology, IT

Dmitriy Kruglyak at The Medical Blog Network offers a Consumer Health IT report from the 2006 CDHCC (Consumer Directed Health Care Conference and Expo). He says that Intuit's designs on healthcare connectivity are the most notable, and a panel of investment experts discussed how the industry is likely to evolve. It’s quite a full report, with everything from Rules Engines to Data Mining.

■ Miscellaneous

Jon Coppelman, who writes at the Workers Comp Insider, examines a recent ADA case involving Liberty Mutual Insurance. That case should raise red flags for employers: by granting FMLA leave for treatment, the employer was apparently held accountable for making "reasonable accommodations," even though it appears that none were requested. In other words, “no good deed goes unpunished.”

Well, that's it for this week's edition of HWR. Tune in on June 1rst when Dmitriy Kruglyak hosts at The Medical Blog Network.

Evidence Based Medicine

With a groundbreaking computer simulation, Eddy showed that the conventional approach to treating diabetes did little to prevent the heart attacks and strokes that are complications of the disease. In contrast, a simple regimen of aspirin and generic drugs to lower blood pressure and cholesterol sent the rate of such incidents plunging. The payoff: healthier lives and hundreds of millions in savings. "I told them: 'This is as good as it gets to improve care and lower costs, which doesn't happen often in medicine,"' Eddy recalls. "'If you don't implement this,' I said, 'you might as well close up shop."'

Currently, medicines are scripted more on promotion (advertising) than evidential findings. If efficacy were the true guiding force then why would so many be willing to use Vioxx when acetaminophen can be just as effective?

The message got through. Three years later, Kaiser is in the midst of a major initiative to change the treatment of the diabetics in its care. "We're trying to put nearly a million people on these drugs," says Dr. Paul Wallace, senior adviser to the Care Management Institute. The early results: The strategy is indeed improving care and cutting costs, just as Eddy's model predicted.

Results are all that matters. Saving money is a side benefit.

For Eddy, this is one small step toward solving the thorniest riddle in medicine -- a dark secret he has spent his career exposing. "The problem is that we don't know what we are doing," he says. Even today, with a high-tech health-care system that costs the nation $2 trillion a year, there is little or no evidence that many widely used treatments and procedures actually work better than various cheaper alternatives.

Many generics & OTC meds are just as effective, sometimes more so, than those that are heavily promoted direct to the consumer.

He traced one common practice -- preventing women from giving birth vaginally if they had previously had a cesarean -- to the recommendation of one lone doctor. Indeed, when he began taking on medicine's sacred cows, Eddy liked to cite a figure that only 15% of what doctors did was backed by hard evidence.

Only one word to describe this . . . shocking.

A great many doctors and health-care quality experts have come to endorse Eddy's critique. And while there has been progress in recent years, most of these physicians say the portion of medicine that has been proven effective is still outrageously low -- in the range of 20% to 25%.

For all the hits that HMO’s take, some deserved, Kaiser is leading the way in changing the way illness is treated. Within my own client base, there are fewer complaints about Kaiser than any other carrier. That is not scientific but is good enough for me.

Ritzy Business

Not that many years ago, prior to managed care, almost every woman over the age of 40 had a hysterectomy whether they needed it or not. Or so it seemed . . .

We do know the number of hysterectomy’s dropped dramatically in the few years following the institution of mandated second opinions so you can draw your own conclusions.

But some are now questioning just how well managed care works.

During your next routine medical checkup you have at least a 43 percent chance of undergoing an unnecessary medical test, a new study shows.

It's not like you're getting something for nothing. If you're not having symptoms, and your doctor has no reason to suspect you have a problem, U.S. guidelines advise against giving you a routine urinalysis, electrocardiogram, or X-ray.

Defensive medicine, ordering needless tests as a CYA, is becoming commonplace. All of this is an offshoot of managed care (lower fees) and medical malpractice (frivolous suits for failure to rule out every possible cause of the medical issue).

"This has more harm than benefit," says Dan Merenstein, M.D., director of research in family medicine at Georgetown University. "The problem is, there are so many false-positive results from these tests. They lead to other things, like biopsies."

Another guilty party in this mess is the low copay plan designs that are prevalent, especially in employer provided health insurance. Doctors & patients alike know that the carrier is the one who is paying the freight. Practicing medicine becomes an ala carte process when all that is risk is a copay from the patient and the doc knows the carrier will pay as long as coding justifies the test.

Of course, it really isn’t the carrier’s money . . . the money ultimately comes from those who pay the premium.

And some complain about the high cost of health insurance.

Another Money Monday...

The Carnival of the Capitalists is up. This week's edition is hosted at Integrative Stream. Each entry is posted in a specific category, which makes it easy to navigate.
I really liked this post by Joe Kristan over at Roth & Co. Somehow, I had skipped over it when I first saw it on his blog; that was a mistake, because it's a great example of something being too good to be true.
You can catch the current Carnival of Personal Finance at Frugal for Life. Instead of categories, Dawn's chosen a newspaper metaphor. Very interesting, and easy to read.
After my recent (awful) experience with my own insurance carrier, I found this post at the Dividend Guy. He asks whether a personal experience should color a business one.

Friday, May 19, 2006

Drug Formulary

Health insurance is competitive. Most consider it a commodity and compare based on price alone.

Carriers know this and are constantly manipulating the policies in such a way as to minimize benefits (and in turn claims) in order to keep the premiums affordable.

Drug formularies are just one way to accomplish this.

In the “old” days you had a deductible before drugs were reimbursed. Then came the drug copay plans and everything changed. Suddenly meds went from being a relatively small portion of claims, about 8% of total claims paid to almost triple that overnight.

The carriers countered by introducing higher copays, generics with low copays and separate drug deductibles. None of this worked until the PBM’s (pharmacy benefit managers) introduce formularies.

Simply put, certain drugs were discounted greatly and these became part of the formulary. Others, mostly the newer meds, were not on formulary and carried a higher copay. The carriers introduced 3 & 4 tier pricing where a generic might have a $5 copay (no deductible) while other meds were subject to a $100 (or higher) deductible then $20 for brand formulary & $45 for brand non-formulary.

Lately carriers have become quite creative by creating a 4th tier and other ways of paying for the most expensive meds.

The newer, more pricey drugs are now priced at a 4th tier, perhaps $60 or more. Sometimes the non-formulary drugs are a copay PLUS the difference in brand formulary and the copay. So if a non-formulary drug is $200 and a formulary brand is $50 your cost for the med might be $60 + 80% of the difference in $200 and $50.

Some plans don’t pay for non-formulary meds if there is a generic equivalent or a formulary brand equivalent.

Bottom line is, if you don’t understand your plan benefits you could get hosed when you go to fill your prescription.

There is another issue and that is off-label scripting. Some docs are prescribing meds for something other than is accepted protocol. I have a client that is taking an anti-depressant for TMJ. Another is taking a thyroid medicine to control cholesterol. Under some plans either of these meds might not be covered since they are prescribed for a condition other than their original intent.

So where does this leave the insured?

First and foremost you need to read your policy and understand what is covered, what isn’t. If you are unsure about coverage for a particular med, ask your carrier.

Some meds, particularly those used for treating certain cancer, can be quite expensive. It is not unusual to find meds running $2,000 - $5,000 per month (and even higher).

If your plan does not cover the med you will have to come out of pocket or change your med.

I have never been a proponent of dread disease policies but my attitude is changing. Supplemental plans for cancer or critical illness are becoming more important in my business and something everyone should consider. Many of the critical illness plans, and some of the cancer plans, now pay a lump sum benefit on first diagnosis. That mean, even before you are treated, you could receive a check from your carrier for $10,000 or more when you are first diagnosed.

That check may be the difference in getting the medicine you need to keep you alive or going in debt.

Something to consider . . .

Playing SOLItaire...

Last fall, Joe Kristan at Roth and Co told us that "Dead Peasant" insurance was dead. But, much like George Romero’s nightmarish vision, the idea may not be.
Stranger Owned Life Insurance (SOLI) is part of the “premium financing” phenomenon. Although it seems to be “under the radar” at the moment, SOLI threatens to become a potentially bigger issue in the life insurance industry than even COLI.
Because the stakes (and the dollars) are higher, and because the rhetoric is turning nasty. And the financial press loves nothing more than it loves a brutal, knock-down fight among industry insiders.
So, what is SOLI? It’s a potentially dangerous game of financial cat and mouse: an investor (either an individual, or a syndicate, or a commercial lender) approaches a likely mark – er, uh – prospect, almost always a seasoned citizen. He then makes the prospect an offer he can’t refuse:
If you’re the prospect, this is pretty enticing; after all, what is there to lose? But what’s the incentive for the investor, the one putting up those two years’ worth of premiums?
Well, obviously, there’s the potential of a big windfall if the insured assumes room temperature (although that’s problematic, too, as we’ll see in a moment). But mostly, it’s the “glitch” in how life insurance is priced for those of advanced years. A lot of carriers price these plans with the assumption that many, if not most, will lapse. That’s probably a safe bet, since these plans can pretty expensive. Counterintuitively, though, it’s also what makes this “non-recourse premium financing” so attractive: because the carriers assume that a lot of the plans will lapse, they price them “lower than the amount that would have to be charged to maintain adequate reserves if all policies were held to maturity.” [ibid]
So, by keeping the policy “alive,” it’s pretty likely that it will pay off sooner, rather than later, and provide a nice windfall to the investor. Sweet.
So what’s the problem? Well, first, there’s the little matter of “insurable interest.” That is, the beneficiary of a policy must have some financial stake in the insured (for example, the family breadwinner, or a key employee, or the business owner himself). Heck, even with COLI, at least the employer had an ostensible such interest in the employee. But there is no such relationship in SOLI: these are perfect strangers, looking to make a (potentially) quick buck.
So what’s the harm? Yes, there’s the moral hazard: a danger that the beneficiary may get “impatient,” and hasten the payoff date. And, since there are tax implications, it potentially puts the industry under a microscope (not that there’s anything wrong with that). From the insured’s standpoint, though, I’m not sure I see a downside. The real risk, it seems to me, is to the investor whose money is at risk. And, I suppose, the carrier, but no one forced them to price their policies to make this idea attractive.
Zombies, anyone?
RELATED: It gets worse.

Thursday, May 18, 2006

Paint me a Picture...

Two weeks ago, we blogged on the topic of carrier domination; that is, where one insurer has a disproportionate share of a given market.
This just in:

Wednesday, May 17, 2006

Thoughts from a Medical Office Manager...

[Kelley A Beloff, MSW, is a Certified Medical Office Manager. For years, she has dealt with the real world issues of HIPAA, PHI and other regulations that dictate how she must run her (very busy) physicians' office.
Today, she offers her insights -- and the benefit of experience -- to InsureBlog readers. Enjoy!]
When I got into the office this morning to start another day in a busy doctor’s office, I did my usual routine. Backing up the computer program, going on line to check my emails, and there it was: another article about the costs of health care.
As a Health Care Professional, I strive to keep up to date with all information relating to the health care field. This article was from USATODAY.com and titled “Shopping for Health Care Prices can be pretty confusing.” As I read the article, it was obvious that the author did not talk with anyone who actually works in a physician’s office, so I thought I would correct some misconceptions related in the article.
There is a quote from Dianne Kiehl, Executive Director of the Business Health Care Group of Southeast Wisconsin. Ms. Kiehl states that “(i)f you walk into a (doctor’s office) and ask, ‘What does it cost?’ they can’t tell you. (The medical industry)…is trying to keep this information a secret.” This statement is not only incorrect, but shows a lack of knowledge of the operations of physicians’ offices. Firstly, physicians and their staff are not clairvoyant, we cannot predict what treatment each patient will need prior to any appointment. While there are set fees, such as the office visit (CPT Code 99213), there are other factors which can influence the cost of an appointment: A patient can come in for a visit for an illness, but during the course of the visit the patient reveals that two days ago she fell and twisted her ankle. Suddenly, the appointment has gone from an office visit for an illness to a visit for an illness and a possible bone break or fracture. The appointment has become more complex, the physician needs to order an X-ray, the staff may need to set up the patient, and the appointment becomes more costly due to the higher level of medical treatment. This happens in our office frequently and this exact scenario happened to me with my daughter. Since each appointment with a physician is unique to that patient’s care, it is impossible to predict or “quote a price for care” prior to the appointment.
The article continues and discusses how “insured patients are going to spend more of their own money, not just on premiums, but every time they go to the doctor, pick up a prescription or get admitted to the hospital”. This is true, but the article does not discuss the reasons why. One scenario that continues to happen in my office regarding patients paying more at their appointments has to do with Medicare versus Medicare HMO’s. Patients are not informed regarding the differences between the two, which causes major problems in the doctor’s office. First, patients believe that Medicare and Medicare HMO’s are the SAME. Time and again, I need to explain that these policies are not the same, in fact there are fundamental differences. Most common is the misconception that if a physician accepts Medicare, then they will accept the Medicare HMO. This is not the case: the physician’s office will only accept that HMO if the physician is contracted with the HMO’s company, e.g. Anthem, Humana, etc.
Patients do not know this fact until after they have signed with the company, seen their doctor, the doctor bills Medicare (since the patient thinks they are the same, the patient does not inform the office that they have a new insurance; it is not “new” to them), the bill is denied and the physician’s office bills the patient. At this point a month to several months have gone by, the patient has seen several doctors and suddenly has a pile of bills. Who does the patient blame: the insurance company, the insurance salesman, themselves, or the physicians office? I will give you a minute. The answer: the Physician’s Office. Why? Because we did not inform them that they were not covered under their “new” insurance (remember, they did not inform us of the change) and now we expect them to pay for their medical coverage. If they had known that the physician did not accept their “new” insurance, they would not have been seen, therefore it is our fault that they owe us money.
Secondly, the Medicare HMO may not pay for the services that Medicare was paying for and suddenly the payment for the same physicians appointment has increased. Again, who is to blame? Again, the Physician’s Office. “Why are you charging more for the same treatment I received last month under Medicare?” We are not charging more, your Insurance company is covering less of the bill. The charges are the same; there has been a change in how the bill is divided between the insurance company and the patient. This also relates back to why we cannot tell each patient what their care will cost prior to the appointment. Each insurance company pays based on it’s own internal calculations, and many time the physician’s office will not know the cost to the patient until the Explanation of Benefits (EOB) arrives in the mail.
What this article tiptoes around, but what I tell my patients, is that the patient is responsible for all the aspects of their own health care. This means understanding the insurance policy prior to signing anything, knowing if your doctor is in-network or out-of-network (i.e. takes your insurance or does not take your insurance) and finally, you the patient are ultimately responsible for all health care costs incurred by you.
I would like to thank Hank for letting me inform your audience.
Kelley A Beloff, MSW, CMOM
[ed: You’re welcome!]

Tuesday, May 16, 2006

Capitalist Underpinnings...

This week's Carnival of the Capitalists is (finally) up at Virtual Handshake. With over 80 posts, it's well worth the wait. I can only imagine wading through all of those, and annotating them as well (which our host graciously did).
I always wondered why Miss Cleo never saw her psychic network's impending demise; I mean, if she can see the future, surely she could see her future paycheck (or lack thereof). Well, Joe Kristan's CotC entry goes a step further: the tax (and domestic) problems of a Tennessee psychic.

Point, Counterpoint

Former U.S. president Bill Clinton warned Canada last night not to go down an American-style, privatized health-care road. In the U.S., 34 per cent of the health-care budget goes to administrative costs, he said, compared with Canada's 19 per cent.

And closely supporting the numbers . . .

After exclusions, administration accounted for 31.0 percent of health care expenditures in the United States and 16.7 percent of health care expenditures in Canada.

I would like to see a breakdown of those figures. From the carrier side, admin is more in the 8 - 12% range. Where does the other 19 - 23% come from?

But if costs were the only factor, we wouldn't have this to factor in.

A Canadian company that arranges cardiac, orthopedic and cosmetic surgery in India, France and other countries says wait lists at home are driving Canadians' demand for its services. "Waiting lists are so out of control in this country, many patients are willing to pay anything to obtain swift access to the services they need,"

And this comment . . .

There is little doubt that per capita health care administrative costs are lower in Canada than in the United States, as Woolhandler et al. report (Aug. 21 issue),1 even though the precise magnitude of the gap is open to debate, a point that Aaron makes in his accompanying editorial.2 However, the Canadian single-payer system results in chronic shortages of medical services because of underfunding. The underfunding problem is usually considered to be a separate issue from the single-payer system itself,2 but the very structure of the single-payer system may cause the problem.

In the United States, persons who wish to spend more on health care than the norm have a simple way of doing so: they can purchase premium private medical insurance. Notwithstanding the Medicare prescription-drug plans currently being discussed, it is generally not an option in the United States to increase medical expenditures through the taxation system, given contemporary political and fiscal constraints. In Canada, however, increases in medical expenditures are possible largely only through the taxation system. And even if, as some surveys suggest, most Canadians are willing to spend more on health care,3 taxpayers cannot be sure that any given tax increase will actually go to health care expenditures. Therefore, Canadian taxpayers generally resist tax increases, and underfunding and chronic shortages result.

Grand Rounds Time!

Dr Ibear, "a married physician in a medium volume Emergency Department somewhere in the Midwest," hosts this week's edition. There are over 50 entries this time, complete with (cute) illustrations.
This post, by David Williams (proprietor of the Health Business Blog) shines the light of truth on Google's new health care "co-op." Not a pretty sight.

Part D Deadline

The May 15th deadline has passed and an estimated 5M seniors have not signed up for the much ballyhooed Medicare Part D prescription drug plan. That is about 12% of eligibles.

Seniors who sign up after the midnight Monday deadline face a 1 percent penalty per month unless they are deemed eligible for a low-income benefit program.

Here’s a heads up. Most of the low income folks can still qualify for free or almost free medications and don’t have to pay a dime for Part D coverage. Where is the incentive to sign up if you can still get meds for free without the Part D program?

Leavitt said imposing a penalty for those who miss the signup deadline is necessary. People cannot be allowed to wait to buy insurance only when they are about to use the benefit, he said.

Wow! Is this a sudden revelation? Washington has figured out if you don’t place penalties in place people will put off buying coverage until they really need it.

If Washington can figure this out, why can’t legislators in places like VT, NH, CT & NY figure it out. What do those states have in common? A carrier is required to take you for (under 65) health insurance without regard to your prior medical history. You don’t suppose there are folks living in those states that actually wait until an illness is diagnosed before buying coverage?

A Government Accountability Office report last week found Medicare's customer service representatives gave wrong or incomplete answers to callers about a third of the time, but Medicare Director Mark McClellan told a congressional hearing last week that those problems have been addressed.

This can’t be good. But of course you have to consider the same folks that gave us the tax code have now offered seniors a federal drug benefit. In Georgia there are over 60 plans to sort through. Agents who offer these plans must first be certified by the carrier which means several hours of classroom training before you can even talk to seniors about the plan. Because of the training involved, most agents only represent 2 or 3 carriers covering about a dozen plans. That means a senior who wants to talk to an agent would have to see 10 – 15 agents to review all plans available.

Could Washington make it any more difficult?

I believe Davy Crockett is supposed to have said lawyers should not be allowed to be politicians. If he didn’t say it, he should have.

Monday, May 15, 2006


First there was identity theft (I.T.), now we have M.I.T. (medical identity theft).

This is when thieves use your name or insurance information to get medical treatment. Or, they might use it to buy prescription drugs or get reimbursed by insurance companies for services you never received.

I have to admit, this is intriguing.

False entries on health care records mean you could end up being treated based on someone else's medical history

This could also impact your ability to be approved for life or health insurance.

Often it's a call from a bill collector that alerts victims. That happened to a Colorado man who was dogged by a collection agency to pay $44,000 for surgery someone else received under his name, the report says.

I just hate it when I get a collection agency call for a surgery I didn’t even know I had.

Mixed feelings...

On the one hand, I represent the carriers whose products I sell. On the other hand, I work for my clients. As agents, we walk a thin line, balancing the interests of each of our “masters,” as well as our own.
Most of the time, this is relatively easy. The reason that lawsuits and claims disputes and the rest are news is because, for the most part, they are the exception. That is, most of the time the system works; maybe not perfectly, and perhaps not as smoothly as we’d prefer, but people are issued policies, claims do get paid, and life does go on.
And sometimes carriers do stupid things. I believe (naively, perhaps) that most agents don’t “push” particular carriers or plans just to win a trip or earn a bonus. Yes, those are nice, but they’re really just icing on the cake. Sometimes, carriers are pretty crass about these; for example, I’m getting fed up with annuity vendors offering 8, 9 or 10% commissions on their products, while paying the annuitant 3 or 4%. On the other hand, I don’t much care for the low, flat-fee commission structure that more and more health carriers are putting in place.
But my number one pet peeve is carriers that just can’t get enough PR. These companies spend tens (sometimes hundreds) of thousands of dollars to sponsor sporting (and other) events, inviting their top producers to participate. That’s money that could be spent on claims, and product development and, yes, commissions for us peons.
So what’s got my knickers in a bunch?
An organization called ProCare has been sued by Blue Cross Blue Shield of North Carolina. ProCare is an independent organization that seems to have been a thorn in BX’s side for quite a while. I’ve actually blogged on them before, because I recognized a kindred spirit, especially as regards tilting at windmills.
According to ProCare, BX has sued them after they published “truthful but embarrassing information about the company's profligate spending at the U.S. Open golf tournament.” I’ll reserve judgment on the term “profligate,” but I have little doubt that much of what is spent on such activities is not necessarily in the interests of policyholders (or agents). As an ostensible non-profit, it seems to me that they are not easily defended.
The trial is set for, believe it or not, September 11 of this year. It’s possible, although unlikely, that it will be settled out of court. I characterize this possibility as “unlikely” because one of ProCare’s stated goals is to compel BX executive leadership (such as it is) to testify under oath regarding these expenditures. If nothing else, that would make interesting reading for those of us in the industry and, indeed, anyone who has insurance.
Since I can’t reproduce the email here (I’m apparently not the geek I thought I was), I’ve linked their site. I can’t in good conscience vouch for them; I have no connection with ProCare other than being on their distro list. But they seem to be on the level, if a bit zealous.
The truly sad part is that I know that BX is not necessarily the worst of the bunch. I wonder if this lawsuit will embolden others take on its competitors.

Monday Morning Carnival

2million blog hosts this week's edition of the Carnival of Personal Finance. If you're interested in learning more about 401(k)'s, he's got a batch of relevant posts right at the top.
With awareness of (and the threat of) identity theft on the rise, I found this post at My 1st Million at 33 to be very helpful.

Sunday, May 14, 2006


Thank you, Vermont legislators, for making it impossible to find a competitively priced health plan in Vermont.

Vermont is one of at least 4 states that mandate "guaranteed issue" individual health insurance.

I am self-employed and recently went shopping for health insurance on the Internet in order to compare pricing and service. What I quickly discovered is that citizens in most states enjoy the opportunity to buy insurance from reputable national firms at rates significantly lower than what I am able to purchase in Vermont. This is because Vermont has previously passed legislation that prohibits competitive insurance pricing.

Market forces come in to play in most states where carriers are allowed to underwrite risk and price accordingly. The guaranteed issue states essentially are telling a carrier a 55 year old non-smoking jogger should pay the same rate as a smoker with advance stage lung cancer.

Vermont law requires health insurance companies who wish to do business in our state to cover anyone at any time and for any reason. The insurance industry calls this practice "guaranteed issue." On top of guaranteed issue, we also require health care premiums to be priced the same for the sick as for the healthy. The insurance industry calls this "community rating."

Our community rating law requires that we all pay a high price for this foolish practice. Yet, we wonder why many of our young, and those who are otherwise healthy, choose not to pay inflated health insurance premiums and would rather be counted as uninsured.

Health insurance costs for the few states that have established "community rating" and/or "guaranteed issue" laws have the highest health premiums in the nation without any improvement in health status, reduction in the cost of health services or decreases in the numbers of uninsured.

Quite frankly, by not getting rid of our community rating and guaranteed issue practices, our legislators are only arranging the deck chairs on a titanic health care problem.

James T. Rude

I could not have said it better myself . . .

Saturday, May 13, 2006

A Rising Tide…

They say that a rising tide lifts all ships. The idea is that when good things happen, everyone benefits.
And that may well be the case with Empowered Consumer Heath Plans (yeah, I got tired of the HDHP acronym; alternate suggestions welcome):
According to ehealthinsurance, these plans are growing in popularity with young consumers and middle-income consumers. “The percentage of HSA-compatible plan purchasers who are ages 20 to 29 increased to 28% in 2005, from 20%, while the percentage in the 30-39 and 40-49 age categories fell.” In other words, younger folks are flocking to these plans, while those who should be in their prime earning years seem to be shying away.
That seems strange to me.
We’ve blogged before about this fallacy of the uninsured: that many of these folks are well able to afford cover, but choose to go without. That seems to be borne out by the ehealth survey [ibid]:
And in fact, almost a third of those who purchased such a HDHP in 2005 were “in the $50,001-$75,000 income category were uninsured, up from 27% in 2004.
Food for thought.

Friday, May 12, 2006

Candid Docs

Doctor: You’re fat.
Patient: I want a second opinion.
Doctor: OK, you’re also ugly.

Dear Annie: I'd been suffering agonizing back pain; my family doctor took an MRI and sent me to a surgeon. I am 49 years old and a large man - think of a professional football player or a wrestler gone soft. I am not sloppy, but I am about 30 pounds overweight.

When the surgeon came in, he asked if I knew why my back was hurting. I told him that for 30 years, I'd had a job lifting heavy things and it had taken its toll. The doctor looked at me and said, "I think you have always eaten too much."

I told him most of my family was built large. He said, "Then they eat too much, too." He said everybody has the same metabolism and genes do not play that big a role in your size. People who are heavy simply eat too much and do too little.

Men usually view themselves as “a little heavy”.

Women usually view themselves as “fat”.

Someone must be selling gender specific mirrors.

If a doctor has an issue with large people, he should be upfront about it at the time the appointment is made. Anyone who is overweight knows he is overweight and doesn't need to pay $200 to have it stuffed in his face. Our society does it every day for free. People of all sizes can have back pain. Why can't we have the same medical care? If my weight puts me at risk, tell me, but don't be rude.

Somewhere along the line we became a country of overly sensitive people. Granted, the doc could have said things differently, but he was telling the truth. Most overweight people are that way because of the too’s.

Too much food.

Too little exercise.

If your back hurts and you are overweight, maybe you don’t need an MRI to tell you the problem. Try losing 5% of your body weight and see if the situation improves.

As for the doc, maybe he should have pointed out the obvious in a different fashion.

Patient: Doc, my back hurts.
Doc: It appears you have Dunlap’s disease?
Patient: Dunlap’s? Is it serious? What is that?
Doc: It is where your belly done lapped over your belt.

S. 1955 Dead

At least for now, S. 1955 which would have allowed AHP (association health plans) to form, is dead.

A divisive bill that would have allowed health insurers to preempt state-mandated benefits in order to extend coverage to small businesses was defeated by the U.S. Senate late Thursday.

The Senate voted 55-43 to stop considering the Health Insurance Marketplace Modernization and Affordability Act of 2006, or S. 1955, which was introduced last year by Sen. Mike Enzi, R-Wyo., and co-sponsored by Ben Nelson, D-Neb., and Conrad Burns, R-Mont.

The bill needed 60 votes to go on to a debate that would have led to a vote on final passage, said Zach Goldberg of the American Diabetes Association.

Thursday, May 11, 2006

Long Term Death

It occurs to me that very few consumers, and even fewer agents, truly understand the dynamics of disability. I will dispense with quoting statistics; you can get those from promotional material from any carrier. Besides, statistics never convinced anyone to buy anything. Like other insurance products, your motivation for taking action is emotional, not logical.

Of all the insurance purchases you will make, the one that is the least logical is life insurance. Why buy a product that will never be activated until you are dead and gone? Clearly the motivation for buying life insurance is emotional, not logical.

But what about long term disability, also known as LTD. Most people have some form of LTD coverage in the form of Social Security but only about 30% of the population has additional coverage to supplement the government plan.

Long term disability is actually a misnomer. It should be called long term death because those who are disabled for any length of time more often than not suffer a long term financial death.

Most LTD policies are designed to kick in after a waiting period. The most common waiting period is 90 days although some will be shorter (30 or 60 days) and others may be longer (180 days or even longer). Simply stated, this means your benefit does not begin until you have been unable to work for at the calendar days in your waiting period.

The most common benefit periods, the time when you will receive benefit is 2 years or 5 years. Some policies pay benefits to age 65 and a few, very rare, pay for life.

To keep things relatively simple, let’s say you have a policy with a 90 day waiting period and a 5 year benefit period. The timeline for certain events is as follows.

Day 1 – 90 there is no benefit payable. You may or may not have a paycheck coming in depending on your situation. Some employees accumulate sick days while others have a plan that may be offered by the employer to continue some or all of your pay for a period of time.

Once you have satisfied the waiting period you may apply for benefits. The amount payable, once you are approved is usually around 60 – 67% of your gross pay. When you file a disability claim it may take a month or more before it is approved and the money starts to flow back to you. It is not unusual for a plan with a 90 day waiting period to issue the first check 5 months after you are disabled.

This is important to keep in mind, especially if your paycheck has stopped but your normal monthly bills still come in.

In addition to regular living expenses, you may have to pay the full cost of your health insurance if you have an employer plan. For a single employee this could easily be $300 - $400 per month; families could pay $1100 to $1500 per month or more.

It gets’ worse.

If you are disabled your expenses usually increase. Medicine. Doctor visits. Child care.

So let’s say your claim is approved and benefits start to flow . . . somewhere around the 5th month of your disability. That is around the time you can make your initial claim for SSDI (Social Security Disability Income).

Most SSDI claims are denied.

They are denied once. They are denied twice. Somewhere around the third time you apply is when you might expect approval for your SSDI benefit. Most SSDI claimants are finally approved around the 18th month of your disability. The good news is when your SSDI claim is approved they pay you retroactively back to the first month of your eligibility. That means you expect about a years worth of SSDI payments in a lump sum.

The bad news is your LTD carrier is going to want that money.

Most LTD plans have a Social Security offset. That means if your benefit is $3000 per month with an offset, and your SSDI benefit is $1200 per month, by the time you get your SSDI award of around $15,000 about $14,000 of it.

The news get’s worse.

Somewhere along the line your employer changed you from active status to disabled. That means your health insurance becomes COBRA which means it is finite. Most likely you can continue your COBRA for 30 months. That is the good news.

But back to the LTD benefit.

Most LTD plans define disability as the inability to perform the duties of your regular occupation.

For two years.

After two years the definition changes to the duties of ANY occupation.

This means your LTD benefit could end after two years unless the disability is so severe as to prevent you from earning wages from any job.

Long term disability. Long term financial death.

Under the Mass Microscope (Part 1)

Eight years ago, when Kennedy-Kassebaum (aka HIPAA) was being hammered (and subsequently rolled) out, a colleague and I downloaded and read the entire legislation (which, IIRC, ran some 200+ pages in a pdf file).
While everyone else was touting guaranteed issue, and portability, and even viaticals, Ray and I noticed something other things: NPI, and PHI, and other less than savory components.
We predicted that HIPAA would, ultimately, create at least as many problems as it purported to solve. And, ultimately, that seems to be the case.
So now we turn our attention to the oft-cited, but apparently less well understood, MassHealth insurance reform plan now being implemented in the Bay State. As is our wont here at IB, we’re going to look at some of the items that are currently “under the radar,” but which could very easily become profound. And, unlike some blogs, we won’t rely on the news media’s interpretation of “what it all means,” we’re going to be working strictly from the law itself.
■ To subsidize the purchase of private insurance for low-income individuals
■ To reduce the number of uninsured
■ And to direct more federal and state dollars to individuals and less to institutions
Lofty and laudable goals, to be sure, but are they the least bit realistic?
Well, let’s see.
The very first piece is about low-income folks. But many (most?) are already covered by Medicaid. So this is just good old-fashioned cost-shifting, or perhaps that should be “shafting.” And a lot of other folks choose to go “bare.” What happens to them?
Almost a year ago, when this plan was embroyonic, I asked “where are the teeth?” Well, we got ‘em: introducing the “Health Insurance Responsibility Disclosure” form, “to be completed and signed, under oath, by every employer and employee doing business in the commonwealth,” failure to comply with which “may be subject to sanctions under chapter 111M.”
Whatever that means (but it probably isn’t fun).
Believe it or not, there’s more. Click for Part 2.

Wednesday, May 10, 2006

Restraint of Trade, and A Lesson...

For a very, very long time, most types of insurance have been sold through the General Agency system. Briefly, a carrier contracts with a General Agent, which acts as a distributor, usually for several carriers. The GA then contracts with individual agents who actually sell the product to the public. The GA provides technical and administrative support to the agents, and acts as a conduit for compensation (commissions, overrides, bonuses, etc). Very good GA’s act as advocates for the agent if there are “issues” with the carrier, and act as “backup” for the agent if a client has one (see: Cylons).
Because we enjoy a free market system, agents are free to move among GA’s, picking the one (or ones) that best suit their needs.
So far, so good.
Now one carrier has adopted a strange and provocative tactic: it has “frozen” such transfers. That is, if I represent that company, and I have a problem with my GA, well, too bad. I can’t switch to another one.
And that is “restraint of trade.”
Now, I happen to have an excellent GA, and can’t imagine a situation where I would wish to change to another one. But, I fervently enjoy my freedom to do so should the need arise. When I received the letter this afternoon, announcing this new company directive, I immediately called the Attorney General’s office.
Now, you may ask, “Henry, it’s an insurance company, why didn’t you call the Department of Insurance?” There are two answers:
First, this is a legal, not an insurance, issue and second, the DOI is useless in this matter. Their primary constituency is not the consumer, nor the agent, but the carriers. So even if they could do something, it's unlikely that they would.
So, I spent the next 40 minutes being shunted around the AG’s office, growing more and more frustrated because no one seemed to know whether or not there was anything they could do. At one point, a (nice) lady admitted that they didn’t do much legal work in her area, which led me to ask why I was paying their salaries.
Eventually, I ended up with an actual, real live attorney. So, for the fourth (fifth?) time, I repeated my story. He replied that the Department of Insurance (DOI) was his client, so he didn’t see what he could do. I am proud to say that I did not, in fact, point out to him that I was his client, since I pay his salary. Rather, sensing that this would not move the ball forward, I let it go.
He did give me the phone number for the Anti-Trust Department, and wish me luck.
I decided that I needed a bigger gun.
One of my clients also happens to be my State Representative, so I decided to bring the Legislative Branch into play. I called him, and explained the situation. At first, he offered to speak with the DOI, but I was able to redirect him toward the AG’s office. He promised to have someone from Anti-Trust call me, and (more importantly) to call him back, so that he could stay in the loop (and involved).
That’s the game so far; I’ll keep you posted on my progress.
Oh, the lesson? If you’re an insurance company, try not to tick me off.
UPDATE (5/12/06): A gentleman from my Rep's office called, and I explained the situation to him. He's promised to contact the Anti-Trust folks at the AG's office, and to stay in the loop, as well. And indeed, I've been copied an email he sent to the AG's office.
It would be nice to know if there are other agents (and/or brokers) who are affected by this unfortunate decision. If so, please email me (addy in profile).

More Number Crunching...

According to the Kaiser Family Foundation, an average person with medical expenses pays 35% of those costs out-of-pocket; the rest is paid by insurance.
More than 40% of those OOP costs, by the way, are for prescription meds. Ouch!
The balance of the OOP is office visits and dental care. Remember, though, YMMV.
And remember the old 80/20 rule? Well, it still holds: the 20% of our fellow citizens with the highest spending account for 80% of medical costs. To put a finer point on it: the 5% of Americans with the highest spending account for about 49% of total health expenditures.
The really BIG numbers come in when we step back and look at the big picture: total U.S. health expenditures will end up around $2.16 trillion this year, and are projected to reach $4 trillion in 2015. That's a lot of Tums.
But wait, there's more!
According to a recent WSJ/Harris poll, support for rewarding providers based on outcomes seems to be fading:

What's striking to me is that, while everyone talks about only wanting the best of care, there seems to be little support for paying for that: only about 20% of those surveyed believe that "it would be fair for patients to pay more to be treated [by providers that] provide better care."
Um, folks, you get what you pay for.
UPDATE: David Williams at the Health Business Blog has more.