Insurance Dispatch

In this week's column, we discuss wellness programs, which just got a nice boost from the Fed’s.

Available now at The Medical Blog Network.

Submissions Due...

For next week's CoR (#16!), hosted by Jason Shafrin, the Health Care Economist.

Please submit your entries (or one you like from someone else's blog) by Monday (the 1st):

■ via email

or

■ at Blog Carnival

PLEASE include:

► Your blog's url
► Your post's url
► The trackback url (if applicable)
► A (brief) summary

NB: We're still looking for hosts. If you'd like to host a future edition, just drop us an email.

Introducing Mr Mike...

Mike Feehan, that is, the newest member of Team IB. A graduate of Washington University in St Louis (both Bachelors and Masters), Mike’s worked for 3 major insurance carriers, from entry-level to Senior VP. He’s also been a benefits consultant, and manager of benefits for a plan that included some 30,000 employees, over half of whom are outside the US.

Most importantly, however, he is a lifelong Cardinals' fan, and sold beer at Busch Stadium for several years.

Mike’s resume includes stints as an Aetna VP, as Chief Underwriter for Empire Blue Cross, and as a benefits consultant for Willis of New York. It’s really too bad that he can’t seem to hold down a job.

He currently works for a prominent international organization, which must remain nameless (you read about it every day and wouldn't have any trouble guessing its identity). One thing we can tell you, though, is that Mike brings a wealth of information and insight to our blog, as well as a new perspective: Bob, Bill and I are all agents; it’ll be nice to have a knowledgeable and experienced viewpoint from someone who’s got a different outlook. And being in the Northeast, Mike helps us round out our geographic diversity, as well.

We’re looking forward to working with Mike, and wish all our readers a Happy, Healthy and Prosperous New Year!

UHC Takes a Hit...

Our friend Joe Paduda is no fan of UHC’s executive stock plans, and since he’s on vacation this week, we’ll take up the slack. The Securities and Exchange Commission (SEC) has now launched an official investigation into UHC’s stock option plans. The company says that it’s cooperating with the Fed’s, which should set everyone’s mind at ease.

You may recall that, a few months ago, United’s Dr. William McGuire resigned as Chairman of the Board following a review of his stock options. The company itself also took some financial hits as a result.

Greed, of course, is not the exclusive province of insurers, but this time of year, with so many employers facing double-digit renewals, it sure looks bad when the carrier exec’s get caught with their hands in the cookie jar.

Does She or Doesn’t She…

Well, I don’t know about her hair, but I can make a pretty good guess about her insurance: nope.

Okay, let’s go back to the beginning, and work our way forward.

I occasionally receive calls from distraught folks who are unhappy with their insurance coverage (generally, it’s because they think it’s too expensive; sometimes it’s because they got bad service). Such was the case today, when Melody called with a problem: she’s had an HSA for several years now (well, it started life as an MSA, but evolved along the way). Her agent has left the business (a not unusual occurrence), and the carrier’s home office staff has been, according to Melody, less than helpful. In the meantime, her premiums have increased to unacceptable levels, and she’d like to switch.

Hey, we’re here to help.

So I ask the normal questions (height and weight, tobacco use, some health questions). She seems fine, if a bit plump (not that I should talk, of course). Nothing that should cause a problem though, so I start asking her questions about her plan, what she likes and what she doesn’t like about it. I then suggested a certain carrier, and she quickly (and firmly) told me not to bother with them: they declined her several years ago.

Um, I thought you told me that there were no health issues?

There aren’t, Melody reassured me, just a rare genetic blood condition.

Oh, is that all? Golly, that shouldn’t be too much of a problem; after all, your current carrier took you.

You what?

You don’t think they asked if you’d ever been turned down for insurance, and why?

I see. And you didn’t bother to tell them?

Uh hunh.

Well, I happen to represent that carrier as well, and I can assure you that they did, in fact, ask if you’ve been declined. So you submitted a fraudulent application. Well, let’s see if we can get you back on the right side of the track now, with a carrier that knows your complete history. As it is, you don’t really have insurance now, so it seems a shame to pay even more for it.

I beg your pardon? You do have insurance now; if you break your leg the blood part doesn’t matter? Okay, well, it’s really not my job to argue with you, so I’ll check around, see if there’s any carriers that will offer you coverage, and get back with you as soon as possible.

Happy Holidays to you, too, ma’am, and PLEASE stay well.

LinkFest Tuesday

This week's Carnival of the Capitalists is hosted by Elisa Camahort at Worker Bees. She actually posted it a day early, but I missed it (for shame!!). It's a good one, too, with almost 3 dozen posts, each one with helpful context.

Grand Rounds instigator Nicholas Genes presents this week's edition. Over 30 bloggers submitted their favorite posts, and explained what made them so special.

UPDATE: The Carnival of Personal Finance is now up over at My Personal Finance Blog. The host has pulled together more than 60 entries, in a half dozen categories. Nice job!

Insurance Dispatch

While we're all celebrating the joyous Holiday Season, it's important to remember that not everyone is "naturally" so joyous.

In this week's column, we learn that cough medicine isn’t just for coughs anymore. Are your kids safe?

Available now at The Medical Blog Network.

Thursday News Briefs…

As we’ve written about more than once, so-called “health discount programs” can create more problems than they solve. And because they are NOT insurance products, the Department of Insurance (well, the Ohio DOI) has been powerless to stop them.

Until now, that is:

Ohio has joined a growing number of states which have empowered Insurance Departments to impose – and enforce – new rules on these plans. The Ohio House has passed, unanimously, their version of Senate Bill 5, which sets requirements for discount medical plans, including minimum marketing standards.

Unfortunately, SB 5 also includes enabling language for so-called “Healthcare Purchasing Alliances,” which have their own problems. We’ll have more on this soon.

While we’re on the subject of “ways to make insurance more expensive:” the Ohio House has also passed a mental health parity bill, which would require insurance companies to cover mental illnesses as they cover physical ones. Another word for this is “premium increasing mandate;” lame duck Governor Taft hasn’t announced yet whether or not he’ll sign it into law.

And finally, as long as we’re here in the Buckeye State (home of Heisman Trophy winner Troy Smith), there’s some interesting life insurance news, as well: Western-Southern Life has introduced an unemployment rider, available on many of its term plans.

The rider, which adds about 3% to the premium, is a waiver of premium benefit which is expected to help those who’ve lost their jobs keep their insurance.

UPDATE FROM BOB: Scam alert - Phony health coverage.

Cavalcade of Risk #15...

When we started the CoR a little over 6 months ago, it seemed a calculated risk that we'd last this long. We've got hosts scheduled up through mid-February now (hey, that reminds me, how would you like to host an upcoming edition?), which seems to mean that that risk paid off.

So, take a break from that last minute shopping, sit back, and enjoy the show. And a great big Thank You to everyone who submitted, and a few who didn't (but got included anyway):

■ You’ve heard of soft water, but how about Hard Money? Joshua Dorkin, blogging at Real Estate Investing For Real, explains how some lenders use an imaginative technique to help folks secure loans.

■ Joe Kristan, of Roth & Company, explains some of the “useful changes to the HSA rules." Using them can help reduce your risk of spending too much on health care.

■ The PC-Doctor prescribes a dose of common sense: reusing passwords can be dangerous to your (computer's) health!

■ Think you’re paying too much to insure your car? Chuck Russell has 15 ways to help you lower your car insurance.

■ The folks at VitaBeat warn that young men face a greater risk of high blood pressure than their female counterparts. As a former teen-age boy myself (a LOOONG time ago!), I'm tempted to say "dunh!"

■ Klik Money reports that something as simple as a health risk assessment can help lower your medical bills. Good advice!

■ The unfortunate plight of CNET editor James Kim has some lessons for the rest of us. Pro Bargain Hunter’s Yan has some helpful tips on preparing for the worst.

■ Think your identity is safe? Do you get credit card offers in the mail? Wenchypoo warns that if the answer to both of those are “yes,” you may have a problem.

■ Last week, she hosted the Health Wonk Review; this week, Rita Schwab has some pointed questions about the redundancy of the current physician credentialing system in the US. Don’t miss the comments.

■ Great news! If visions of (chocolate covered) sugarplums are dancing in your head, Mombian reports that chocolate may reduce the risk of miscarriage.

■ What’s a modern day Jack the Ripper got to do with risk (other than the obvious, if you’re in a certain line of work)? Renthusiast wonders why the ubiquitous London surveillance cameras weren't a show-stopper.

■ Hedge Funds are mysterious, and potentially risky, vehicles. Find out why Mister Juggles loves ‘em.

■ Since it's such a hot topic these days, here's one more on identity theft. The Identity Theft Fixes blog has a cautionary tale about a simple printing error that could have dire consequences.

■ No need to grab a shovel: Paul’s Tips has some advice about cutting your losses.

■ Jon Coppelman at Workers Comp Insider has a great post on navigating the hazards of the ADA (no, not that ADA!)

■ And finally, Yours Truly responds to a commenter’s puzzlement over the difference between luck and risk.

Our next host will be Jason Shafrin, the Healthcare Economist, on January 3rd. You can find the new Winter Schedule (and any changes) at the Cavalcade homepage.

Carnival Monday!

I'm ambivalent about this week's Carnival of Personal Finance: on the one hand, it's simply a list of posts, with no clue (other than titles) as to content. OTOH, I'm empathetic to the folks at A Penny Saved (after all, this week's Cavalcade of Risk is here at IB); still, I wonder if there isn't some happy compromise available.

In the event, you can't go wrong with Joe Kristan's tax-oriented guide to gift giving.

Happily, Jeff Cornwall has an outstanding, Christmas-themed Carnival of the Capitalists. With over 40 posts, including summaries and some (cute) comments, this makes a great gift.

Happily, Wenchypoo has a thought-provoking article on those ubiquitous year-end bonuses.

Insurance Dispatch

In this week's column, we examine how to enhance the holiday experience using your Flexible Spending Account.

Available now at The Medical Blog Network.

Happy Chanukah!

May the light of the season illuminate and warm the hearts and homes of all our readers.

UPDATE: And yes, they do taste as good as they look.

Wydening Gyre

In the pre-blog world, Senator Ron Wyden’s health care bill, the Healthy Americans Act, would be just another pie-in-the-sky version of HillaryCare, and would be consigned quickly to oblivion. It is, after all, based on flawed premises and suspect assumptions (which is not to say that it’s entirely without merit; more on that in a bit).

But a funny thing happened on the way to the backbench: Senator Wyden recognized the burgeoning influence of the blogosphere, and its ability to both shape and publicize the debate. As I remarked to the Senator, I have long envied my colleagues in the political blog world for their growing access to key political decision-makers and players.

But hold on a minute, Prof, what do you mean “as I remarked to the Senator?" Since when do members of congress discuss things with you?

Earlier this week, the Senator’s office sent out an email announcing his bold new health care initiative. Among the recipients were both myself and Bob, as well as (one supposes) several thousand of our colleagues. I responded by asking for an interview; turns out, he’d already anticipated such invitations, and had arranged for a conference call with a dozen bloggers from the “health policy wonk” side of the blogosphere. Bob was unavailable for the call, but I was able to participate. Also attending were such medblog luminaries as Joe Paduda, Matthew Holt and Ezra Klein, along with several other interesting bloggers, including econblogger Max Sawicky. Most everyone, myself excluded, were proponents of either single-payor or universal coverage systems, and were quite receptive to the Senator’s plan.

On the face of it, the bill offers a lot of bang for the buck. For one thing, it phases out employer-based health insurance. I’m all for that, with some caveats. For another, it appears to recognize the value of the “private” (i.e. non-government program) insurance channel.

There are, however, two fundamental flaws in the proposal:

First, it relies on a model called “Community Rating.” Basically, CR is the health insurance equivalent of “pay at the pump” auto insurance. It sure sounds nice: everyone pays the same rate, simple to administer, universal coverage (every car needs gas, right?). The problem is that not every car is the same, and not every driver has a flawless record. Same with health insurance: absent underwriting, folks who routinely run (and win) 26 mile marathons would pay the same as obese folks with diabetes. Thus, everyone ends up paying more.

The second problem is that it relies heavily on prevention to hold down rising health care costs. There are, for example, tax incentives for parents to have their kids vaccinated. While prevention issues are, of course, important and helpful, they are not going to significantly hold down the rising cost of health care. As one of our commenters has previously noted, “(I)f health care were not expensive, health insurance would not be expensive. If the cost of health care were not rising the cost of health insurance would not be rising.” There is precious little in this bill that addresses this basic problem.

And there’s this: the bill is touted as having bipartisan support, as well as support from various union leaders and titans (or at least captains) of industry. But, as usual, no one who actually works in the insurance field was involved. Rather like assessing how to get the car running better, but eschewing the advice of the mechanic. That is, we’re the folks who actually see how this stuff works, and doesn’t work, in the real world. We understand that study after study has shown that 85% of insureds are satisfied with their coverage. We also understand that mandatory coverage is no panacea (why don’t auto insurance rates go down every year?). The only insurance industry “representative” involved in putting this plan together was the president of Oregon’s Blue Cross/Blue Shield. Small wonder, that: who else is going to administer the plan (and reap the financial rewards)?

I would urge IB readers to check out the reports of the other attendees; each one of us had, of course, our own agenda and biases, as well as our own conclusions.

My own take is that this bill, while interesting in itself, is unlikely to get much traction. There are just too many problems with it, not the least of which is its unfavorable propensity to look like the Medicare D debacle writ large(r). That is, while it may look good on paper, the reality is that it will lead to a rapid increase in health insurance costs, while doing very little to rein in health care costs.

What did impress me, however, is that Senator Wyden was perceptive enough to understand that, by taking his case to the blogs, he gets a built-in publicity bump, with (mostly) favorable reviews. Thus, his bill will enjoy an immediate advantage over others that come down the pike. And he wasn’t afraid to engage in a bit of friendly debate with yours truly; he asserted that community rating would hold down insurance costs, and opined that cost-shifting from the private sector to the government was a major reason for high health care costs.

I pointed out that he had both of these phenomena bassackwards; that is, community rating increases premiums, and that the gummint’s cost-shifting habits (especially Medicare’s) unnecessarily increase costs. His answer was, unsurprisingly, to try to water down my point by saying that all sectors shift costs, which (for some unknown reason) somehow increases costs to the others. I found his arguments unpersuasive, but appreciated his candor and enthusiasm.

This was a tremendous opportunity, and I thank the Senator for sharing his time and insights with us. Hopefully, other congresscritters will follow suit, and we’ll have more such opportunities. If nothing else, it shows that medblogs are quickly coming into their own.

Calling all Wonks...

For the Health Wonk Review, available now at the MSSP Nexus blog. Hostess Rita Schwab presents an all-star round-up of over 20 thought-provoking posts.

Marcus Newberry, writing at Fixin' Healthcare, has an interesting piece on risk, and the problem-oriented nature of our health care system.

Helpful HSA News...

From the fine folks at Colorado Health Insurance Insider, a helpful compendium of what's (presumably) in store for 2007 and beyond.

And FoIB Joe Kristan, who blogs at Roth & Co, has even more.

Grand Rounds

A very full 'Rounds today, with almost 30 entries, all professionally put together by the folks at TreatmentOnLine. Each post has thoughtful and incisive commentary, as well. Bravo!

FoIB David Williams, proprietor of the Health Business Blog, puts the lie to those who claim that the rich and powerful receive better health care. Thought-provoking piece.

Money Monday!

Kirk Walsh presents an excellent Carnival of Personal Finance. With almost 60 entries, all neatly categorized and most with helpful comments and context, it's a great pre-holiday treat.

Joe Kristan has an interesting post on the AMT (Alternative Minimum Tax) that helps explain that arcane little tax nugget.

This week's Carnival of the Capitalists is also pretty jam-packed, with some 40-plus entries, hosted by Sama Blog. I was a bit disappointed to see that it's basically just a list of posts, with no particular rhyme nor reason.

This one caught my eye, though, because it succinctly and accurately explains how liability insurance works and, more importantly, what it doesn't do. An excellent read from John Bambenek at the Part-Time Pundit.

Insurance Dispatch

Betting the Pharm...In this week's column, we take a look at a relatively new trend in pharmacy benefit management. PBM's are going transparent, which could mean lower health care and insurance costs.

Check it out at The Medical Blog Network.

Nipping One in the Bud...

There's been a great deal of blog-buzz recently about the new Johns Hopkins study. It purports to show that a sizeable chuck of "uninsureds' earn too much to qualify for public assistance, but nevertheless cannot afford insurance premiums.

Let me state the obvious at the outset: the study itself is fatally flawed, and its presentation so full of holes that I want a Reuben. About the only redeeming feature I could find was that it eschewed the common mistake of conflating health insurance with health care.

Okay, now to brass tacks:

According to the “study,” well over half of those folks who identify themselves as uninsured claim that they make too much money to qualify for the various public assistance programs, but not enough to afford insurance premiums. As my co-blogger, Bob Vineyard, reminded me, this seems to fly directly in the face of many previous such studies, which indicated that about 40% of the uninsured make in excess of $50,000 a year. Granted, this isn’t exactly Bill Gates territory, but it certainly enough to be able to afford some basic, catastrophic coverage.

Second, the type of plans for which these folks are supposedly shopping is never revealed. Are they looking for (expensive) first-dollars type plans, with office co-pays and drug cards? Or are they looking at, for example, high deductible plans which offer an affordable safety net? The study never says (although I’d hazard a guess). The point is, absent some critical illness, most folks will qualify for at least some basic level of coverage.

Third, it’s never made clear (if they bothered to ascertain this at all) how many of these fine folks have cable TV, internet access, or cell phones. It would be nice to know this: assuming that one has a finite income, the choices one makes as to how it’s to be spent is certainly relevant to this discussion. Absent this type of information, the study itself is meaningless.

But Professor, you may object, how can you say this when everyone knows how expensive health insurance is?

The “study” itself gives us the answer: “(W)e do not know what the benefit packages or cost sharing are for the policies for which we have premium data." That is, they have a set of values, and a set of variables, and there is absolutely no effort made to correlate the two. In other words, they just made the whole thing up.

Much ado about nothing, indeed.

Insuring the Uninsured...part n+1

Santa Clara County, (California) the valley's largest provider of health care for people without medical insurance, thinks it can get small businesses to do the right thing -- and make the county money in the bargain.

Under the "Three Share Model'' plan, the county would make its health and hospital network -- and its 300 attending physicians -- available to low-wage workers of small businesses that currently do not offer health coverage. Participating employers and employees, in return, would pay monthly premiums....

It remains at the conceptual stage until next spring, when the county will learn if it will be awarded state money, estimated at $10 million to $15 million, to launch the project. SJ Mercury News

To be eligible, a business must have less than 50 employees, 30% of whom earn $30,000 or less per year, and who live and work within Santa Clara County. The current proposal calls for businesses to pay $125 per employee per month and the employee pay $50 per month...nothing has been said about rates for dependent coverage. If the plan gets approved by the state, it is estimated that 5000 to 10,000 people will enroll.

What this will do to the bottom line is unclear. The county provides medical services for these people anyway...with this plan they'll collect $175/month per employee. That's a lot higher than the $0 that's collected today. However, nothing has hit the press about the plan benefits versus what's currently provided. And if the enrollees now think of themselves as having real insurance, utilization may markedly increase.

It will be interesting to see how this plays out.

HSA Discrepancy in the News (finally!)

Regular IB readers may recall our investigative pieces, inspired by Joe Paduda, in which Bob and I described how unsuspecting folks get burned receiving uncovered care from network providers. As far as we know, ours are the only blogs which have extensively covered this potentially catstrophic situation, and we wondered when (if?) it would appear on the radar outside the blogosphere.

Well, wonder no more; Peter Rousmanierre, himself a blogger as well as a regular feature writer, has an article on this growing problem in the November issue of Human Resource Executive magazine. In it, he cites our work as a primary source, and has some additional information, as well.

Click away! (NB: If the link isn't working, here's a pdf of the article)

Cavalcade of Risk (#14!) is up...

The Cato Institute's Michael Cannon hosts a terrific CoR, with a dozen interesting (and often provocative) posts. And he adds not just context, but a unique sense of humor to each entry, making them even more intriguing.

Hats off to Michael!

The next edition is back here at IB. In fact, we're actually scheduling hosts for next February (can you believe it?!), so don't be shy about volunteering.

Grand Rounds

Dr Emily DeVoto, hostess of The Antidote, has an outstanding collection of posts from around the medblogosphere. Her 'Rounds includes over 3 dozen entries, categorized and summarized. Nice!

From the Fellow Blogger Makes Good file: Diabetes Mine blogress Amy Tenderich has published a guide for diabetics, aimed at helping them manage their care. Mazel Tov, Amy!

NoKo Insurance (Big Time Fraud?)

Everyone's favorite whacky dictator has a problem (well, several, but this one is relevant to IB): he's strapped for cash, and running out of options (and money). Sure, he could sell weapons to terrorists, or continue to pump out counterfeit US currency.

But that's just small potatoes; the real bucks, as everyone knows, are in the insurance.

No, Kim hasn't (yet) gotten his Life & Health license (so far as we know, anyway); but he has (apparently) set up a pretty interesting reinsurance scheme:

Apparently, he's insuring much of his country's infrastructure, and then submitting major claims against those policies. If true, this is insurance fraud writ large, to the tune of potentially hundreds of millions of dollars.

Why should you care? After all, it's the reinsurers who take the hit, not us, right? Well, no: our own carriers offload much of their risk to these same reinsurers, who will now have to charge more to make up for the NK losses. A double whammy.

Ouch!

Money Monday

Marshall Lebovits hosts a jam-packed edition of Carnival of The Capitalists, available now at Show Me The Money blog. This edition boasts 30 entries, with helpful categories (including Poetry & Humor) and each entry includes a description.

As one opposed to any "minimum wage" laws, I really appreciated Brian Gongol's thoughtful explanation of why they don't really do what they purport to.

Insurance Dispatch

A new guide to disease prevention that can help employers, and employees, promote good health and save money at the same time. That's the subject of this week's column at The Medical Blog Network.

Read all about it!

Almost missed this...

David Williams, host of the Health Business Blog, has an insightful post about Walmart's new(ish) $4 rx offerings. He takes on its critics with some powerful, well-reasoned arguments, and offers his thoughts on the positive implications of such programs.

Good weekend reading.

Risk vs Luck

One of our commenters has raised an interesting question: "Isn't risk just a fancier word for bad luck?"

Well, no:

Risk is about "the potential harm that may arise from some present process or from some future event," whereas luck is "an unknown and unpredictable phenomenon." The former has to do with probability, the latter with randomness.

By way of example:

Suppose I bet that you won't make a hole in one, blindfolded, at our local course. My risk is that you may, in fact, ace the hole. But the laws of probability dictate that there is a finite chance of this happening, and I can buy insurance to cover the eventuality. You, on the other hand, must depend on luck that you'll make the shot.

In the same way, health insurers know that there is a chance (a risk) that you will become seriously ill in the next year. But they also know, based on your application and their own statistics, the likelihood of this happening, and can arrive at a price that will cover that risk (premium). You may or may not become ill, but that's your luck, not the carrier's risk (which they've already managed).

Insurance is about spreading the risk; that is, assessing the likelihood that, out of a large group of people, one particular person will have a large claim. So if a person has the bad luck (we'll leave out behavioral choices for this example) to have, say, a heart attack, the company has already planned for that contingency.

Insurance is not about "spreading the luck:" there are other industries for that.

Submissions Due...

For next week's Cavalcade of Risk (#14!), hosted by Mike Cannon of the Cato Institute. Please submit your entries (or one you like from someone else's blog) by Monday (the 4th):

■ via email
or
■ at Blog Carnival

PLEASE include:

► Your blog's url

► Your post's url

► The trackback url (if applicable)

► A (brief) summary

PS: We're still looking for hosts. If you'd like to host a future edition, just drop us an email.

In Which I'm the Interviewee (again)

Dr Alex Kavokin, host of the most recent Cavalcade of Risk, is well-known in the medblogosphere for his interesting and informative interviews (Nursing Professor Kim McAllister, for example). Recently, he asked me to participate, and I agreed.

I was impressed (and a bit surprised) by the number and scope of his questions; they really made me stop and think.

In the event, here ya go.