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):

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.”

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.

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.

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:

Alzheimer's meds "Donepezil, rivastigmine and galantamine would be provided on the NHS, but only when patients have reached a moderate stage of the condition."

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?

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.

Surprised?

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...

“United Healthcare of Ohio and Anthem Blue Cross and Blue Shield have signed consent orders with the Ohio Department of Insurance to resolve allegations of improper compensation to agents, Insurance Director Ann Womer Benjamin announced.”

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!

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.

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.

Well?

(Thank you to Rabbi Dr. Asher Meir)

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.

Thanks!

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.

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.

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.

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.

Why?

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:

"You purchase $10 million of insurance on your life. We'll advance the premiums for two years at an interest rate of 12% to 15% and take a collateral assignment on the policy. You pay nothing. You don't even have to pay any interest--it accrues with the loan. At the end of two years, if you want to continue the coverage, you pay us the interest you owe and repay the principal. It's a non-recourse loan. That means you risk nothing. If you don't want the coverage at the end of two years, no problem. We'll take over the policy and you have no liability. You owe nothing. Best of all, we'll pay you $250,000 in cash up-front to sweeten the deal."

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.

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.

Well, they say a picture is worth a thousand words.

This just in:

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!]

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.

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.

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.

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]:

Researchers found that “previously uninsured consumers who bought health coverage in 2005 were much more likely than in 2004 to be over age 60 and to have annual incomes in the $50,001 to $75,000 category.”

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.

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.

The primary goals of the plan are:

■ 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.

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.

Round(s) and Round(s)

Grand Rounds, hosted this week by aetiology, has something for everyone. And I mean, everyone. I quit counting at 50 submissions, including several about sex (really!).

With so many to choose from, it's hard to go wrong. I found this post by Kevin, MD fascinating: physicians who require their patients to sign a "no frivolous lawsuits" contract. Hmmm...

What's a PAP?

Bob Vineyard does more than just post interesting, and often provocative, items here at InsureBlog; he looks for, and finds, ways to help others.

Case in point: how many folks know about Patient Assistant Programs? Thanks to Bob, we now know that they "provide assistance to low income individuals & families when it comes to medical care."

Want to know more, including how to contact various programs for information? No problem, just click here.

Thanks, Bob!

And it's Carnival Time!

It's Monday, so it must be time for the Carnival of the Capitalists. This week, you'll find an action-packed edition over at Harshly Mellow [ed: is that like jumbo shrimp?], where our host has sifted through 70 entries....Whew! He's even included some that were missed in previous editions; now that's a good sport.

With so many great choices, it's hard to pick a favorite, but I'm still impressed with Joe Kristan's fisking of HSA critics. There are some good, valid reasons to be skeptical of CDHC, but (as Joe points out) the critics seems to miss these.

This week's Carnival of Personal Finance is a treat! Jim at Blueprint for Financial Prosperity has put together a clickable Treasure Map encompassing all 37 entries. What a hoot!

I was particularly drawn to this post at Inchoate Random Abstractions. A recent study quantified a stay-at-home-mom's salary. Why did this pique my interest? Click here.

Early May Health Wonk Review

This week's host, Joe Paduda at Managed Care Matters, has put together a really well-designed Review. In true capitalist fashion, he let his "real job" come first [ed: we approve!], but came back roaring.

With almost 20 entries, the HWR continues to grow. And these are some serious, and seriously interesting, posts. My fav was frequent IB commenter Marcus Newberry's bittersweet perspective on good health.

NewsBits…

■ As we’ve blogged before, Association Health Plans may look good on paper, but they’re hardly without blemish. While we hate to “pile on,” the latest group to join the Bash-An-AHP-Today bandwagon are the Attorneys General of 80% of the Union:

“Forty-one Attorneys General1 conveyed their opposition to S.1955, the Health Insurance Marketplace Modernization and Affordability Act of 2006, which would erode state oversight of health insurance plans, eliminate consumer protections in the areas of mandated benefits and internal grievance procedures, and substitute weak federal oversight for strong state protections.”

While that’s not necessarily the same as an indictment, it does give one pause.

■ Not everyone’s impressed with Massachusetts’ efforts to insure everyone: California health care experts, for instance, say the Massachusetts plan just won't work in the Golden State. According to the California HealthCare Foundation, "(w)ith health coverage, it always comes back to money," says group President and CEO Mark D. Smith. "Where will the funds come from? And will it be affordable for those people it intends to serve?"

On Integrity

While InsureBlog is not a political blog (or at least partisan), the nature of the topics we address necessarily reflect a political viewpoint. Hopefully, this is a by-product, and not an intentional theme.

There are, however, a lot of poliblogs out there, and sometimes things "get out of hand." So a bipartisan group of bloggers has started Online Integrity, a blog dedicated to promulgating these principles:

■ Private persons are entitled to respect for their privacy regardless of their activities online.

■ Public figures are entitled to respect for the non-public nature of their personal, non-professional contact information, and their privacy with regard to their homes and families.

■ Persons seeking anonymity or pseudonymity online should have their wishes in this regard respected as much as is reasonable.

■Violations of these principles should be met with a lack of positive publicity and traffic.

InsureBlog is proud to be among the earliest signatories of this endeavor, and we urge other bloggers to consider endorsing it, as well.

Happy blogging!

Getting Transparent...

According to the Council for Affordable Health Insurance, “Americans are ready to become health care consumers, if given the tools to do so.”

Well dunh, I could’ve told you that!

Actually, this has been brewing for a long, long time.

According to CAHI, more than 80% of those surveyed agreed that providers should publish the prices of their services. Of course, price isn’t (or at least it shouldn’t be) everything, but almost as many folks said that they’d “be likely to shop for the best price.”

That’s troublesome.

There are probably very good reasons why Dr Smith’s charges are so much lower than Dr Jones. After all, what do you call the guy who graduates at the bottom of his med school class?

Doctor.

So it’s not necessarily heartening to see that folks are so price-sensitive, when there are other factors, as well. Of course, it’s not really surprising: I get a lot of folks looking for insurance “deals,” too; it’s my role to help folks see that there’s a difference between low price and value.

But there’s another side, as well.

I recently received a letter from the Chairman of the Board of one of my carriers (and no, I’m not special: it appears to be a form letter. Darn) whose company refuses to pay what they consider “outlandishly high prices” for services rendered. At claims time, if the carrier is convinced that the charges are out of line, they simply refuse to pay the billed rate, and offer to settle for a lower amount [NB: this carrier doesn’t use generally use networks, so there are no contractual issues].

So what happens if the provider says “no?”

They sue the insured for the balance.

Now, they are obviously within their rights to do so. After all, the patient/insured signed a consent form, agreeing to pay for services rendered. If their insurance company balks at the price, the patient/insured is left “holding the bag.” Now that’s a problem.

But:

"If the hospital sues our customer, we provide defense with a lawyer chosen by the customer…Our customer will not be out of pocket one nickel."

Now that’s putting your money where your mouth is.

On the other hand, I’d be concerned about credit issues. While it’s all well and good that the insured doesn’t get stuck paying the higher price for services rendered, it may well be a black (or red?) mark on one’s credit rating. And since that measure is becoming more and more important (for loans, credit cards, even auto and home insurance rates), there’s a real danger that saving a few dollars on a procedure could result in a severely damaged credit rating. And then what?

When I walk into Wendy’s, I know how much that salad’s going to cost [ed: salad. Right]. But when I walk into Dr Smith’s office, I really don’t know how much that strep test is going to cost. And since each carrier has its own pricing, the model seems much more analogous to airline fares than restaurant fares.

Soon, the gummint will be sharing what Medicare pays for some common procedures. While that’s a step in the right direction, I’m not sure how useful that will be. Providers typically charge different amounts for Medicare patients than commercially insured ones, let alone those without coverage. At least for our seasoned citizens, more information may be close at hand.

And providers themselves are getting into the act; over at MedBill Advisors, host Chris Parks tells us about how HCA (Hospital Corporation of America) plans to inform its patients about their costs, in advance.

The bottom line is, transparency in pricing is an important, and potentially useful, tool. No one tool, however, is useful in all situations, and most jobs require several, as well as the skills to use them.

Health Q & A

(Presented with tongue firmly in cheek)

Q: I've heard that cardiovascular exercise can prolong life; is this true?

A: Your heart is only good for so many beats, and that's it... don't waste them on exercise. Everything wears out eventually. Speeding up your heart will not make you live longer; that's like saying you can extend the life of your car by driving it faster. Want to live longer? Take a nap.

Q: Should I cut down on meat and eat more fruits and vegetables?

A: You must grasp logistical efficiencies. What does a cow eat? Hay and corn. And what are these? Vegetables. So a steak is nothing more than an efficient mechanism of delivering vegetables to your system. Need grain? Eat chicken. Beef is also a good source of field grass (green leafy vegetable). And a pork chop can give you 100% of your recommended daily allowance of vegetable products.

Q: Should I reduce my alcohol intake?

A: No, not at all. Wine is made from fruit. Brandy ! is distilled wine, that means they take the water out of the fruity bit so you get even more of the goodness that way. Beer is also made out of grain. Bottoms up!

Q: How can I calculate my body/fat ratio?

A: Well, if you have a body and you have fat, your ratio is one to one. If you have two bodies, your ratio is two to one, etc.

Q: What are some of the advantages of participating in a regular exercise program?

A: Can't think of a single one, sorry. My philosophy is: No Pain...Good!

Q: Aren't fried foods bad for you?

A: YOU'RE NOT LISTENING!!! .. Foods are fried these days in vegetable oil. In fact, they're permeated in it. How could getting more vegetables be bad for you?

Q: Will sit-ups help prevent me from getting a little soft around the middle?

A: Definitely not! When you exercise a muscle, it gets bigger. You should only be doing sit-ups if you want a bigger stomach.

Q: Is chocolate bad for me?

A: Are you crazy? HELLO Cocoa beans! Another vegetable!!! It's the best feel-good food around!

Q: Is swimming good for your figure?

A: If swimming is good for your figure, explain whales to me.

Q: Is getting in-shape important for my lifestyle?

A: Hey! 'Round' is a shape!

Well, I hope this has cleared up any misconceptions you may have had about food and diets.

Time for Grand Rounds...

After some major tech problems, Scott at Polite Dissent presents this week's Grand Rounds. With over 50 posts, broken into helpful and logical categories, it's a tremendous job.

My favorite was a wonderful post by Dr Charles, about an old woman, an old pharmacist, and some old-fashioned values. Read it: you'll feel better.

Masters of the Obvious

Perhaps it’s just Monday Madness, but there seem to be an awful lot of seriously moronic articles coming out of the insurance industry today. And as if we didn’t already know this, the New York Times (no less) clues us in on the latest:

“Federal investigators have found that a handful of companies account for a growing share of the health insurance policies sold to small businesses in most states, leaving consumers with fewer options and higher costs.”

In three quarters of a dozen states, for example, Blue Cross has more than half the business, according to The Gray Lady. This has apparently shocked legislators (who have, of course, their own deluxe health care coverage), who believe that the answer is, wait for it, Association Health Plans.

Now, Bob and I have blogged on these before, so I won’t rehash why AHP’s are no panacea, either. But the point here is that such plans are, ultimately, insured by a carrier. Now, if one particular carrier has already darn near cornered the market without the help of the gummint, why would a sensible person believe that it won’t continue to so so, and gobble up the AHP market (such as it is) to boot?

Of course it would.

Frankly, I’m none too pleased that any one carrier has that much market share, but more government intervention isn’t the answer (cf: Ma Bell). In a free market such as ours, it behooves other carriers to do what they can to make themselves more attractive.

And, of course, it’s up to agents to make a more concerted effort to “push” other carriers, even when (or maybe because) this requires a bit more work on our part.

Ultimately, though, it’s the marketplace that has the final say. If employers who buy group plans, and individuals who buy, well, individual plans want to see more competition, they have to get past the “price is everything” mentality. Granted, BX tends to have the most extensive networks in their markets, but others are not too far behind.

And, of course, the story has to include mention of the (suspect) 45 million uninsured. What, pray tell, has that to do with the subject at hand? Ah, just as I thought.

As an agent, I’m concerned that the marketplace keeps shrinking; and it’s not just health carriers: there are fewer and fewer (quality) disability and long term care insurance carriers extant, as well. I believe that competition is good: it helps drive down costs, encourages innovation, and gives the consumer more choices. So the shrinking pool of carriers is troubling.

The only thing more troubling would be the government “fixing” it.

Ironic/Clueless Headline of the Day...

Terrorist Attack Could Wreck Group Life Industry
Ya think?!
For once, words fail me.

The Policy that Fell to Earth (Part Two)

In Part 1, we learned about the history of Universal Life, and the mechanics of how it works.

Properly funded and used, UL can be a great insurance planning tool. And it’s not my intention here to “bash” it. Indeed, I own both Universal and Variable Universal Life policies, so I’m a believer.

To a point.

The challenge, and the reason I’ve become less enamored of UL, is that, despite the best intentions of agents, clients, and carriers, UL carries within it the seeds of its own destruction (pause for dramatic effect). That is, in the later years of these plans, that spigot gets turned wide open, and the cash value drains very quickly, leaving the client with no insurance (and potentially a sizeable tax bill).

The problem is that, ideally, agents would recommend – and clients would agree – that the client should put in as much money as possible in the early and middle years, to compensate for that wide-open spigot in the later years.

But one of the appeals of UL is that it can be funded at a lower (sometimes much lower) level than a comparable Whole Life plan, and the temptation is to save money. Nothing wrong with that, but it can be difficult playing ‘catch up’ in those later years.

And there’s the rub: policies bought and sold in the 1980’s are now 25 years old, and starting to show signs of wear and tear. Folks who didn’t put in the maximum dollars are finding that their plans don’t have enough cash to keep going, even if they increase their premiums. Sometimes, we have to lower the face amount AND raise the premium.

And it’s not likely that things will get much better soon.

So what’s the lesson? Well, first of all, look at your annual statements, and see how well they track with what was illustrated. They won’t match exactly, but it’ll give you a sense of what’s happening with the plan. Second, call your agent, and ask what options are available. Agents can run (or have run) “in-force” illustrations, and play “what if” with the plan.

Finally, don’t conclude that UL is a poor choice: it has its uses, and it can be a great tool. Like any financial or insurance product, though, it requires supervision, and fortitude.

It's Money Monday!

Flexo, proprietor of Consumerism Commentary, is once again hosting the Carnival of Personal Finance. And a terrific job he (she?) does, too: there are a ton of entries, and each one has a summary, making it easy to find just the right post to read.

I found these 10 Money Savers, suggested by No Credit Needed, helpful. Maybe you will, too.

And this week's Carnival of the Capitalists is now up and running at Interim Thoughts, a blog based in India. Don't tell me we're outsourcing Carnivals?!

Actually, it's a great effort: Neelakantan, our host, has posts grouped by subject, and even intersperses little blogbits about the Indian economy along the way. Great job!

Among other gems, previous CoPF host Five Cent Nickel (is there any other kind?) has a cautionary tale for those of us who fail to answer the phone.