Cavalcade of Risk #18 is up!

Our friend Joe Paduda, host of Managed Care Matters, hosts a fiesta-filled Cavalcade. He's got some interesting categories, and plenty of context.

What's even more remarkable is that he's sombrero-blogging (confused by that? Then click on over!).

Gracias, Jose!

And if you'd like to host a future edition, even from the good ole U S of A, just drop us a line.

Hide and Seek

As we’ve pointed out many times here at IB, one of the major challenges we face in the debate about health care and how we pay for it is defining the problem. That is, so many folks conflate health care with health insurance. As we’ve discussed, they are not the same.

But there’s another problem, wrapped up inside the first one: our present system actually hides the true costs of both health care and health insurance. The former is beginning to be addressed by the transparency movement, but what of the latter? About two thirds of us get our health insurance courtesy of our employers’ plans, and there are tax advantages to this for both the employer and the employee. Those of us who buy insurance in the individual market generally don’t have that kind of tax advantage, nor is it readily available.

One proposed solution to this conundrum is to do away with the employer tax break. I’ve always maintained that it would make more sense to enlarge it, making premiums deductible for folks in who buy their own.

But President Bush has proposed a third way (and you thought that was just a Clinton thing):

Robert Samuelson, writing in Newsweek (on-line edition), points out that “by modifying [the current code] with specific deductions for insurance ($15,000 for families, $7,500 for singles), [Bush’s plan] would force most workers to see the costs.”

Intriguing, yes, but pretty darn clever, as well. Other plans, notably Senator Wyden’s, rely on complex and failure-prone mechanisms like Community Rating. The Governator’s plan would increase the tax load, but not address the underlying cost factors. And the list goes on.

As a bonus, Mr Samuelson snopefies [ed: you just made that up!] a favorite myth about the uninsured: Turns out they “don't really use emergency rooms heavily. A study in the journal Health Affairs finds that their use is similar to that of people with private insurance — and half that of people with Medicaid.”

Who knew?

Terrific Two's, Thoughtful Three's...

Today marks InsureBlog's 2nd blogiversary, and I couldn't be more proud or delighted. For one thing, we've grown to four (count 'em, four!) contributors, from all over these United States. For another, our traffic has grown substantially, as has our reputation for interesting, insightful (and often humorous) posts.

Last year, for example, saw our first major investigative series, and the creation of the bi-weekly Cavalcade of Risk.

This year, we'll continue to bring you the inside scoop on the various health care reform efforts around the country, and the steady evolution of Consumer Driven Health Care.

Please stay with us, and Thank You for another great year!

Consumer Driven Grand Rounds...

Host Fard Johnmar presents a truly grand 'Rounds: it's all about Consumer Driven Health Care, from many different perspectives. Although I'm generally not a fan of "themed" carnivals, this one really hit me between the eyes. At InsureBlog, we've been major proponents of the principle from day one.

Fard's collected well over 2 dozen relevant posts (wow!), and organized them in a way that makes sense, and easy navigation. Even better, each entry has a brief explanation, which is indeed helpful.

Bravo, Fard, Bravo!!

Coffee in Donuts

No, that's not a typo; our famous New Food Pyramid may need updating:

"Buzz Donuts(TM) and Buzzed Bagels(TM) are the brainchild of Dr. Robert Bohannon, a molecular scientist living in Durham, NC. Dr. Bohannon has developed a way to mask the normal bitterness of caffeine so that it can be used in food and pastry products such as bagels and donuts."

Yum!

Carnival of the Capitalists is up...

Johny Debacle, blogging at Long or Short Capital, hosts an intriguing Carnival of the Capitalists. He's posted "the best 15" of the 56 (non-spam) submissions he received.

I'm of mixed feeling on this: on the one hand, Bob's item on the SOTU and health care made the cut. On the other, since we're not privy to the host's criteria, how do we know that other good posts weren't left out?

I can see why this one made the cut: Sox First blog reports on an unintended (though foreseeable) consequence of Sarbanes-Oxley and other privacy initiatives (hint: it's not good news).

Insurance Dispatch...

This week, we look at Concierge Medical Plans, and how one carrier that specializes in Consumer Driven Health plans handles them.

Check it out at Trusted.MD

Why not universal health care?

WASHINGTON - Every American should have health care coverage within six years, Democratic Sen. Barack Obama said Thursday . . . "I am absolutely determined that by the end of the first term of the next president, we should have universal health care in this country," the Illinois senator said.

I wonder what Senator Obama is talking about. Is it universal insurance (”everyone should have coverage”)? Or is it “universal health care”? Who can tell from these confused statements? If Obama knows what he is talking about, why does he sound so mixed up?

Well, I say the time has come for members of Congress to understand that health care and health insurance are different, and then, unambiguously, face up to America’s true needs. And I say it’s time for Congress to take up universal health care.

Do you call an actuary when you are sick or injured? Do people call their insurance agents? Doesn’t everyone call their doctor or go to the emergency room? Yet our so-called leaders do not, or cannot, distinguish between health care and health insurance, and so haven't figured out that insurance is not what we need first - health care is what we need first.

As a result, we are being sold insurance when instead we need to be buying health care.

I say if anything is to be made universal, it should be health care. If our laws made health care universal (and much less expensive), problems of access and affordability would evaporate, as would insurance problems. And of course, once we have universal health care, our life expectancy will go UP and infant mortality will go DOWN.

Health care does not become less expensive when someone subsidizes it. That’s what insurance does. But I’m talking about health care, not insurance. I am suggesting that the nation take the steps necessary to reduce the cost of health care. Is it possible to provide modern health care for substantially less cost? Of course it’s possible. The experience in any number of advanced nations proves it’s possible.

Cavalcade # 18: Submissions Due

Submissions for next week's CoR, hosted by Joe Paduda at Managed Care Matters, are due this coming Monday (the 29th).

You can submit your (or someone else's!) risk-related post via:

Blog Carnival

or

Email

Please include:

► Your blog's url

► Your post's url

► The trackback url (if applicable)

► A (brief) summary

PS We're scheduling hosts for early Spring '07, so don't wait too long to sign up!

Unintended Consequences (III)

A few weeks ago, Mike reported on California’s bold new health insurance initiative. Part of the Governator’s plan requires employers with at least 10 employees to offer health cover, or face a potentially substantial fine.

One may argue about the “fairness” (or even efficacy) of such an arrangement, but some folks have decided that this is a great opportunity for some lemonade:

“The Schwarzenegger proposal requires individuals who can afford to buy their own health insurance to do so or face a state tax. Because the high-deductible health insurance plans are significantly cheaper than more comprehensive policies, Mr. McKechnie [of the Health Savings Account Council] thinks that they will become the plan of choice for many moderate-income people.”

The idea’s pretty simple (and hence, elegant): since the premium for a typical HDHP is likely to be (significantly) less than the payroll tax/fine, such plans may become very popular, very fast, at least in the Golden State. And if that’s the case, then the folks who handle the cash accounts are going to be taking a good look at this new market, as well:

“Since assets in HSAs are managed much in the manner of those in individual retirement accounts, advisers increasingly are taking an interest in HSAs.”

No kidding.

This assumes, of course, that folks fund their accounts. Whether or not they’ll do so is, of course, a mystery at this point; they’ve been gaining ground, albeit slowly, but will this potential groundswell really come about? We’ll have to wait and see.

At 4%, the payroll tax is about a third of what California employers currently spend on health care cover. So in theory, they could trade in higher priced PPO plans for HDHP’s, fund some (or most, or maybe even all) of the deductible, and still be ahead. Kind of intriguing, no?

As we’ve maintained here at IB, it’s preferable that these experiments take place at the state level. Why's that, you ask? Simple: federal experimentation could have devastating national effects on health care and its funding. By encouraging the states to “test-drive” different configurations, any potential damage is much more limited, which is desirable.

Interesting times.

Heath Wonk Review is up...

Found this week at the Health Affairs Blog. Hostess Jane Hiebert-White presents some 20 entries, with interesting and helpful commentary on each and every one (I like that!).

Something I'd never even thought about is Worker's Comp issues for our countryment deployed to Iraq. FoIB Julie Ferguson has the inside scoop.

Saving the integrity of the Ontario health care system

Here is an interesting article from Canada:

A Canadian citizen was denied reimbursement by the Ontario Health Plan for a liver transplant in 1999 after “two well-respected transplant centres in Ontario said he was not a suitable candidate for a liver transplant”. Toronto General Hospital told him “his chances of survival were slim” and “he had just six months to live.” This is the kind of review and tough decision that systems with limited resources must face, whether public or private. So, is there a problem? Well, based on the information reported in this case, I think yes.

This patient sought advice from other physicians, and that’s where the story gets interesting. A team of doctors in London, England gave him an entirely different medical opinion. However, the Ontario Health Plan refused to change its original decision, repeating that he “wasn’t a candidate”. One of the Ontario hospitals added that the “procedure had never been performed” – anyway, not “in adults” – and anyway, not “at that hospital”.

After the patient had the operation in England and survived, thank you, he sued the Ontario health plan for reimbursement – and lost, the case is under appeal.

The Ontario Health Plan’s defense is that the operation “was considered in Ontario to be experimental” and that “the state did not deprive him of anything, specifically of seeking treatment overseas.” Strangely enough, Ontario also argued that “liver transplants in Ontario are available in a timely fashion”. For everyone except poor Adolfo, I guess. Water, water everywhere and not a drop to drink - eh?

This story raises many questions that are not explored. Was the original reason for Ontario’s denial truly based on clinical factors? Was it a competent review? How much might the decision have been influenced by the Ontario hospitals’ admitted ignorance of the life-saving procedure? How much might the review authorities in Ontario have been influenced by the expected cost, in ruling that the patient was “not a good candidate” for the operation? Is Ontario truly as inflexible as the article implies in regard to its own medical guidelines? Why didn’t the patient go to a different Canadian hospital - I thought in Canada one has free choice of hospitals? Was the Ontario Health Plan responsible for the “tainted” blood transfusion in the first place? If not, who was; is there no accounting for such liability in the Canadian health care system?

Finally, in the case that is being appealed, the judges wrote that limiting the funding of out-of-country medical treatments to those that are generally accepted in Ontario ensures public funds are not spent on treatments that are "inconsistent with the ethics and values of the Ontario medical profession and the Ontario public. This safeguards the integrity of the health care system." Maybe. And maybe more information is needed before the public knows for sure whether this episode is about integrity or about money.

The Price (Waterhouse) is Right…

With the presidential election cycle already heating up, health care is again on the front burner, simmering in a handful of states that have passed “universal” care plans, and half-baked proposals popping up in DC.

[ed: We apologize for the preceding metaphor overdose. We’ll get serious now]

Of course our system isn’t perfect, but before we ditch it we should pay close attention to what other countries are experiencing. Once again, it’s critical to draw the distinction between health care and health insurance.

According to a new study released by Price Waterhouse Coopers (an international data services firm), just because a government provides (and/or pays for) health care, doesn’t mean that health care costs are any better managed. For example, even countries like France and Ireland (about which one of our regular commenters keeps asking us) are searching for solutions to their own health care crises.

By all accounts, commercial insurance carriers pay about 40% of health care costs here in the US. That’s twice what France’s carriers fork over, and almost 8 times the burden of English carriers. Yet, those same countries are stuck with a similar problem: spiraling health care costs. Even countries like Switzerland, Ireland and even Australia (all of which have much lower levels of private health care spending) face increasing costs, and increasing liabilities.

And of course, with all the press on medical tourism, the PWC study found, perhaps surprisingly, that the rest of the world turns to us for insights, experience, and ideas. According to PWC’s Paul Veronneau, “(t)here are a number of countries that are continually coming to the U.S.to understand how we do it.”

One interesting note which I found particularly relevant: the importance of wellness programs in addressing increasing costs was found to be more amenable to private, rather than public, funding. You don’t say.

Tech (Comments) Alert...

Once again, our comments are on the fritz. If you've tried to leave a comment recently, and can recall what you said, please feel free to email it to us; I'll save them, and put them up when we're back at 100%.

Thanks for your patience!

UPDATE: Comments appear to work in FireFox (just not IE).

UPDATE 2: Comments appear to be working again in IE, as well.

Toys 4 Tots 2...

Last month, Bob told us about Vimo's campaign to help kids have a brighter holiday season. Well, looks like they're still at it: they've extended their (already-in-progress) Toys For Tots Donation Program until the end of January 2007. Vimo will donate one dollar to the U.S. Marine Reserve Toys For Tots Program for every doctor rating posted by consumers at Vimo's website.

Some futures aren't much fun to contemplate - II

Medicare has an enormous financing problem that most people probably don’t think about, or even know about. The problem is Medicare's crushing future liabilities, 90% of which must be paid from future federal budgets (the other 10% will come from contributions, e.g., Part B premiums paid by Medicare beneficiaries). Taxes must be levied to cover these Medicare liabilities as they become payable.

Many people know that Social Security income benefits (the “OASDI” funds) face this kind of financing problem. However few people know that Medicare has the same kind of problem as Social Security – and it’s much bigger.

OK, so how big are the Medicare liabilities? As of 2005, “(p)roviding promised Medicare benefits is projected to require over $2.7 trillion (in nominal dollars) in new tax rev­enues over just the next 10 years . . . Medicare’s financing problems will arise sooner and ultimately surpass Social Secu­rity’s financing problems.”

$2.7 trillion is an incomprehensibly large number of dollars, but just consider that the TOTAL RECEIPTS of the U.S. government for fiscal year 2006 are expected to be less than $2.5 trillion. Given that future Medicare costs are no small problem, have you ever heard a member of Congress discuss them? Have you ever heard a member of Congress suggest a way to deal with them, on his way out of the room?

Frequently this or that politician or commentator suggests a solution to our present health care cost and access problems is “Medicare for all”. There are about 45 million Americans covered in Medicare. Before the public entrusts the government with health care for more than 200 million additional people - in any form, whether "Medicare for all" or not - shouldn't more people understand the problem the nation faces in paying for the Medicare liabilities that already exist?? Some futures aren't much fun to contemplate.

Carnival Monday!

This week's Carnival of Personal Finance is hosted by Jim at Blueprint for Financial Prosperity. With over 75 entries, in 3 categories, there's sure to be something you'll find useful (and/or fun).

Our kids are pretty much grown now (okay, one's still a teenager, but you get the idea). Still, we (they) might have benefitted from GreatFX's post on teaching kids about money.

David Maister hosts this week's Carnival of the Capitalists. There are more than 50 entries, broken down into 6 categories. Each one has helpful context, as well.

Nina, blogging at Queercents, poses an ethical question about investing in companies which engage in activities we find immoral.

Insurance Dispatch...

In this week's column, we learn about a federal agency's reports that a lot of us are scrimping on preventive care.

Check it out at Trusted.MD

The Thinker Nails It...

Bob found this insightful and important post over at The American Thinker. Steven M. Warshawsky does a terrific job of explicating something we here at InsureBlog have said for a long time: the reason health insurance is so expensive is that health care is so expensive, and he further underscores the difference between the two, writing that "not everyone who lacks health insurance is suffering from a lack of adequate medical care."

Read the whole thing.

Wal-Mart Wins...

We've blogged on the Maryland vs Wal-Mart situation before (the Old Line State had passed a law which would have requored specific employers -- namely, Wal-Mart -- to provide health coverage to its employees there). This would have placed an onerous financial burden on Wal-Mart's customers, and perhaps led to lay-offs or even stores closing.

Fortunately, the US Fourth Circuit Court of Appeals saw what a boondoggle this would have created (not to mention that it conflicted with ERISA, which supercedes state law), and told Maryland legislators to take a hike.

All's well that ends well...

Cavalcade of Risk #17 is up!

David Williams, host of the new and improved Health Business Blog, hosts an outstanding CoR this week. It's well-laid out, includes copious commentary, and almost 2 dozen entries.

Bravo, David!!

If you'd like to host a future edition, just drop us a line.

Cost trend moderated a bit in 2005

“Healthcare spending [in 2005] grew 6.9% to about $1.99 trillion from about $1.86 trillion in 2004, a slower pace than the 7.9% increase a year earlier, the report by the National Health Statistics Group found.” (Free subscription required)

2005 was actually the third consecutive year in which health care spending declined. That may be a slender ray of good news for group benefit plan sponsors of any size - if this translates into smaller premium increases for 2007.

The $1.99 trillion consisted of $342 bn for Medicare; $300.9 bn for Medicaid consisting of $179 bn for medical services plus another $121.9 bn for nursing home and related services; and $1,347.1 bn for private, non-elderly care. Using estimated populations of 257 million under age 65 and 43 million age 65 & over, gives approximate annual per-person costs of $6,400 for the under-65 population (includes Medicaid) and $7,950 for the over-65’s.

Of course, for insurance to cover these populations, the premiums must cover these medical costs plus adminstrative costs – regardless whether the insurance is arranged by the government or by a private insurance company. For example, the average monthly premium for persons over age 65 must be at least $7,950 per year ($663 per month per person), plus something for admin. Clearly, regardless of who arranges the insurance – government or private company – the premiums have to be high because the medical costs are high. There can be no relief unless medical costs come down.

BTW, just how big a number is two trillion? Well, it’s $228 million an hour, for 12 months. Or, look at it this way. If you earned $100,000 an HOUR, 24 hours a day, 365 days a year, and went on payroll the day Julius Caesar was assassinated, you would have earned about 1.8 trillion dollars as of today. You won’t make it to 2 trillion for another 220 years. Nice work- if you can get it.

Ashley: A Moral Conundrum

This is not an insurance issue, but we have talked before about ethics. Recently, there have been news stories about a severely disabled girl whose parents decided on a radical treatment: through the use of surgery and chemicals, they have arrested her physical growth at about age nine.

As the parent of two healthy, active (sometime too active) daughters, I am at a loss as to how to view this: on the one hand, they are her parents, who have chosen a course of treatment for their handicapped daughter. On the other, this seems to be such a draconian regimen that I am finding it difficult not to be appalled.

Some time ago, I discovered a blog called Dream Mom, written by the mother of a similarly handicapped child (although her son is now a teenager). She has written a series of profound and insightful posts, and was recently interviewed by CNN.

Hers (and her son's) is not a pretty story, but it is moving and hopeful. I highly recommend reading her work. To get you started, here are a few posts which address this particular issue:

■ One

■ Two

■ Three

That last one is long (it clocks in at almost 5,000 words). Trust me, it's worth it.

For the Children...

Recently, both Bob and Mike have blogged on states' efforts to get more children insured. Both pointed out that, ultimately, this really means you and I will pay for that coverage (we can argue as to its cost effectiveness another time). Sometimes, though, the private sector gives the gummint an even bigger kick in the pants:

WellPoint (aka Blue Cross) has decided that even more government money needs to be spent on insuring children (and, to a lesser extent, adults). It's pretty easy for a big insurance company to endorse such a plan: you and I will pay for it, and they'll run it (and, presumably, make a buck or three in the process). Their brave new plan calls for increased spending by the states, expanding access to health coverage for children by subsidizing coverage for families that earn up to 3 times the federal level, or about $60,000 a year for a family of 4. How generous.

But that's not all:

■ The WP plan would offer access to a subsidized state health care program for parents who earn up to 200% of the federal poverty level, and

■ Cover all childless adults (those that apparently have no say in foreign policy, anyway) who may earn as much as the federal poverty level (about $10k for a single adult), and

■Help with premiums for families that have trouble paying for their their private insurance (hey, at least they're insured), and

■ TaDa! Set up (and/or expand) state “high-risk pools;” insurance programs for individuals who have trouble buying conventional coverage because they suffer from health problems (e.g. insulin dependent diabetics, folks with MS, etc)

[ed: Actually, I'm pretty much okay with that last...there needs to be a mechanism for folks who want insurance coverage, and are willing to pay for it, but not go broke in the process. But I believe that this is a separate issue]

How much will this wonderful plan cost?

Ask Senator Berglin.

Carnival Monday!

Young & Broke (what a GREAT name for a blog!) hosts this week's Carnival of Personal Finance. I like how each post has enough contect to be useful, but not overwhelming. The categories are helpful, too, which is a very good thing: there are almost 70 posts!

I was going to put off doing this, but I thought better of it: be sure to check out Roth & Co 's tips on tax strategies for this year. And while you're there, be sure to read his take on the AMT (Alternative Minimum Tax). Who know tax blogs could be so edgy?

And the Carnival of the Capitalists is now up, hosted at Endless Gibberish. This 19 year old entrepreneur has 3 dozen entries, each with a quick recap.

MedBlog Award Voting

If you haven't already, please consider voting for InsureBlog in this year's Medical Blog Awards (just click here and select InsureBlog). Thank you!

UPDATE: Voting's over...results on the 19th.

Insurance Dispatch...

In this week's column, we learn that Medical Identity Theft is on the rise. What is it, and why should you care?

Check it out at Trusted.MD (formerly The Medical Blog Network).

Going, Going, Gone...

There's a classic story of a man who bought, and subsequently insured, a box of expensive cigars. After smoking them, he filed a claim, asserting that they had been destroyed "in a series of small fires." The company denied the claim, of course, and the man sued. He won, and the insurer was obligated to pay him $15,000 for his "loss."

The insurance company had the last laugh though: after the man cashed the check, he was arrested on 24 counts of arson! With his own insurance claim and testimony from the previous case being used against him, the man was convicted of intentionally burning his insured property and sentenced to 24 months in jail and a $24,000.00 fine.

That story is no doubt apocryphal (literally, full of a pox), but sometimes life imitates art:

"The casino magnate who accidentally poked a hole in a Picasso painting said insurer Lloyd's of London has offered to settle his $54 million claim of lost value, but the talks aren't going the way he'd like."

Turns out that erstwhile tycoon Steve Wynn, who purchased the painting in 2001, was in the process of selling it when he accidentally poked his own elbow through it, tearing a thumb-sized hole in it. He's made no bones about the fact that it was his own clumsiness which led to the damage, which has since been repaired (but which has also diminished the painting's value).

Apparently, the Lloyd's syndicate which underwrote the policy has a difference of opinion about the value of the claim, and so Mr Wynn is suing them in an effort to "expedite" the claim (i.e. cough up more moola).

I wonder how much coverage I should get for all the mini Picasso's adorning our fridge?

Some futures aren’t much fun to contemplate

Reuters recently reported an interesting dust-up taking place in the U.K.

http://www.medscape.com/viewarticle/550297?src=mp
(free registration required)

“The National Health Service in England faces a shortage of nurses and family doctors over the next four years, according to a leaked government planning document seen by the Health Service Journal” and NHS “also predicts an oversupply of 3,200 hospital consultants [i.e., specialists], the medical weekly reported on Thursday.”

In response the Director of The Royal College of Nursing said "Just a few weeks ago, the secretary of state for health told MPs that the NHS had employed too many nurses but now her department has evidence predicting a shortage of 14,000 nurses within the next four years."

Meanwhile, the British Medical Association said it was "absurd" to suggest the NHS needed fewer hospital consultants.

Sounds like an ugly fight over money and control – and central planning of health care. The Reuters article is interesting because American media tend not to report much about other nations’ actual experience with their universal health care plans. That's a shame because it's so relevant to the public debate that this country is trying to have.

It’s wrong to argue that there is nothing good in universal, government-controlled systems. At the same time it’s also wrong to pretend that such systems have no serious problems.

This little glimpse inside the British National Health Service is telling us something about a possible future for America. Some futures aren’t much fun to contemplate.

CDHP Update

We've talked about some of the new, positive changes in store for HSA enrollees. And it's true that Consumer Driven Plans (CDHP) continue to grow in popularity (albeit not as quickly as some might have hoped). Still, the numbers could be better:

Segal-Sibson, an independent HR consulting firm, recently surveyed some 1200 employers, of which about 120 responded. On the one hand, such a statistically insignificant sample renders the numbers pretty meaningless. On the other, it's interesting to see even a small, unrepresentative slice of what's going on with CDH. One might presume that the folks who did respond had pretty strong feelings about the subject, which may be why they bothered to respond at all.

One interesting trend jumped out at me: of the employers which offered some form of CDHP at all, more went the HSA (Health Savings Account) route than the HRA (Health Reimbursement Arrangement) path. This seems to me to be just right: after all, the HSA emphasizes more personal responsibility and thoughtful health care consumption, while the HRA rewards those who spend more. Thus, if one of the stated goals is to rein in costs (both for health care and for health insurance), then the former method is desireable.

Tellingly, few of the respondents even knew whether or not their employees made use of their accounts, or the various health imporovement programs that were made available. Thus, they had no clue as to whether or not such plans were of benefit. In other words, they really had no idea what their true cost savings were, nor whether or not their employees benefitted from their HSA's. Since health insurance premiums supposedly represent such a tremendous portion of a company's expenses, one would think that there would be some interest in ascertaining whether or not there was, indeed, a real value.

What was it Bob said a while back?

Cavalcade # 17: Submissions Due

Submissions for next week's CoR, hosted by David Williams at Health Business Blog, are due this coming Monday (the 15th).

You can submit your (or someone else's!) risk-related post via:

Blog Carnival

or

Email

Please include:

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

PS We're scheduling hosts for early Spring '07, so don't wait too long to sign up!

First Health Wonk Review of '07

Roy Poses, one of the voices at Health Care Renewal, hosts an outstanding edition of Health Wonk Review. With 22 high quality entries, it may be the biggest HWR yet - it's certainly one of the most interesting and well laid out.

I was particularly intrigued by a post at Medical Progress Today, where Jurgen Reinhoudt argues against letting the Fed's negotiate on drug prices. Wow.

Our newest team member, Mike Feehan, makes his HWR debut this week.

Tech Alert (Comments)

UPDATE: Okay, comments seem to be working again.

I still hate tech.

An Unlikely View of Transparency...

Transparency in health care is a favorite topic here at IB. Recently, I came across this (perhaps over the top) example on the web:

What Doctor's Say And What They Are Thinking

■ "Welllllll, what have we here...?" (He has no idea and is hoping you’ll give him a clue.)

■ "Let me check your medical history." (I want to see if you’ve paid your last bill before spending any more time with you.)

■ "Why don’t we make another appointment later in the week." (I’m playing golf this afternoon, and this a waste of time or I need the bucks, so I’m charging you for another office visit.)

■ "We have some good news and some bad news." (The good news is, I’m going to buy that new BMW. The bad news is, you’re going to pay for it.)

■ "Let’s see how it develops." (Maybe in a few days it will grow into something that can be cured.)

■ "Let me schedule you for some tests." (I have a forty-percent interest in the lab.)

■ "I’d like to have my associate look at you." (He’s going through a messy divorce and owes me a bundle.)

■ "I’d like to prescribe a new drug." (I’m writing a paper and would like to use you for a guinea pig.)

■ "If it doesn’t clear up in a week, give me a call." (I don’t know what it is. Maybe it will go away by itself.)

■ "That’s quite a nasty looking wound." (I think I’m going to throw up.)

■ "This may smart a little." (Last week two patients bit off their tongues.)

■ "Well, we’re not feeling so well today, are we?" (I’m stalling for time. Who are you and why are you here?)

■ "This should fix you up." (The drug company slipped me some big bucks to prescribe this stuff.)

■ "Everything seems to be normal." (Rats! I guess I can’t buy that new beach condo after all.)

■ "I’d like to run some more tests." (I can’t figure out what’s wrong. Maybe the kid in the lab can solve this one.)

■ "Do you suppose all this stress could be affecting your nerves?" (You’re crazier’n an outhouse rat. Now, if I can only find a shrink who’ll split fees with me.)

■ "There is a lot of that going around." (My God, that’s the third one this week. I’d better learn something about this.)

■ "If those symptoms persist, call for an appointment." (I’ve never heard of anything so disgusting. Thank God I’m off next week.)

Rate Reviews…

[This post is a joint effort of Bob Vineyard, CLU & Henry Stern, LUTCF]

As mentioned a few weeks ago, one of the key elements of Senator Wyden’s Healthy Americans Act is the implementation of community rating (CR) on a national basis.

There has been a lot of buzz in the medblogosphere about our, shall we say, less than enthusiastic support for this idea. A lot of folks whom we respect and admire have had favorable things to say about CR, but it’s clear that even the brightest among us don’t completely understand the dynamics of health insurance, and especially community rating (CR). Several debates, including some on this site, have focused on the merits of CR, which just goes to show how critical it is to the success (or lack of such) of the HAA.

Proponents of CR claim that it is a way to make health insurance affordable. To an extent this is true, but for whom is it more affordable? A true community-rated product is delivered without regard to the individual’s sex, age or health (or behaviors, for that matter). This means quite simply that everyone in the pool is charged the same rate.

Such an approach is favorable towards those who are older than the average age of the pool, or less healthy. Keep in mind that CR (as it exists now) does not mean that EVERYONE is offered a policy and admitted to the pool. Some with severe pre-ex conditions can still be excluded from coverage, which allows for some selection by the carrier to exist.

So even with community rating, some are able to obtain insurance, others are not. It’s one of the pieces of HAA which is most puzzling: if there is to be true community-based rating, and the coverage is to be mandatory and universal, then how could there be any kind of limitation on coverage, or exclusion of conditions? And if there are no such controls, why would its proponents believe that it will lead to lower costs?

As with almost anything having to do with health care and health insurance, there are exceptions (which often prove the rule). In this case, it’s that CR sometimes works in the small group market. It’s really not hard to see why: it’s the middle ground between the individual and the large group (generally self-insured) markets.

Let’s look at how well CR works in our current system. Currently, 4 states (NY, NH, VT and ME) mandate community rating; in those states, a carrier is prohibited from offering a policy based on age or health condition. If one looks at the insurance market in those states, one finds something else they have in common: few companies (less market choice) and higher than average rates.

There’s a very sound reason for this:

Community rated insurance premiums makes as much sense as community rated loans. That is, in a world of community rated lenders, everyone would pay the same rate when borrowing money. Those who are most credit worthy are lumped in with deadbeats who never pay their bills, and everyone is charged the same interest rate for the same kind of loan. One can easily imagine what those interest rates would be. Why anyone would envision this as fair is beyond our ken, but for some odd reason some believe charging everyone the same rate for health insurance, regardless of health or age, is a more equitable system than the one used in the other 46 states.

As we’ve discussed here at IB many times, risk (it’s assessment and management) is the underlying principle, the raison d’etre (literally: Deter’s raisin) of insurance. Take away that key component, and what we’re talking about is no longer insurance, but a shuffling of dollars from here to there and back again. We won’t argue the merits of such a scheme, but will argue that it is most emphatically not insurance, but rather (and at the risk of invoking Godwin’s Law) simply socialism.

(Pause for raspberries)

Okay, now that everyone’s thrown up their hands in disgust and/or pity, let’s examine why this is not merely name-calling, but sound economic and political reasoning:

Community rating is a method for pricing insurance. It simply says that everyone in a specific demographic cohort (i.e. geographic area, socio-economic class, race or sex) must be charged the same rate for insurance, regardless of health, habits or age. The term “community” simply acknowledges the commonality of that cohort. In the case of the HAA, that “community” becomes the population of the United States (or subsets of it). Fair enough; if that’s what the people really want, then that’s fine. But by prohibiting insurers from taking into account the fact that different people have different physical characteristics, health histories, and behaviors, the plan drastically devalues the element of risk. It is simply transferring money around, which is not insurance. By definition, socialism (whether as an economic or political system) is the forced redistribution of resources (in this case, money) without regard to merit.

In short, community rating encourages adverse selection more than the current system. The result is, the carrier gets more of the unhealthy risks and fewer of the healthy risks. (For a more detailed explication, see here and here)

Why does this matter?

Quite simply, because everywhere CR has been implemented, it has led almost immediately to increased insurance rates and decreased insurance availability. Why would this result not obtain if it is implemented on a (far) larger scale? The principle and the goal is the same, regardless of whether we’re talking one state or 50. It’s fashionable to discuss health insurance in terms of “fairness,” but it is silly to do so. A prevalent (though erroneous) school of thought conflates health insurance with health care; such folks have decided that it makes sense to look at health insurance not as a risk management vehicle, but some fundamental right, akin to voting and peaceful assembly.

It is not.

It is a mechanism for spreading risk. But if we remove (or substantially decrease) the risk, then it’s no longer insurance. Fine, let’s recast the debate, but let's at least be intellectually honest about it: it’s a national health plan, coupled with a nationalized health care system (can’t have one without the other). How about an honest discussion about that?

Got Milk?

Are you sure you want it? Well, maybe you do:

According to researchers at Stockholm's Karolinska Institute, "(f)ull fat dairy products are more likely to keep you slim than comparable low fat foods." That's because, well, apparently no one really knows why.

On the other hand, maybe you don't want that cool, refreshing glass after all:

According to German researchers, "the relaxing effect of a few cups of ordinary black tea on the arteries is completely wiped out by milk." At least they have (or think they have) a handle on why: apparently, "casein proteins from milk blocked the effect of tea all by themselves."

Now go wipe off that mustache.

Carnival Monday!

Up, up and away! It's the latest edition of the Carnival of Personal Finance, on newstands now (okay, not really: it's at Get Rich Slowly). Host J.D. has chosen a heroic theme, and presents a stunning 78 posts, all with interesting and helpful commentary.

The Carnival of the Capitalists is also up, courtesy of Andrew at Diary of a Startup. With 3 dozen entries, all with useful context, it's a great resource. as well.

Insurance Dispatch...

This week, we look at a recent Kaiser Foundation study which shows that the share of GDP going to health care has been growing faster in many European and Asian countries than it has here.

Available now at The Medical Blog Network.

Governator seeks insurance for all Cal children

From the L.A. Times today, 4 January 2007:

“SACRAMENTO — Gov. Arnold Schwarzenegger will propose that all Californian children, including those in the state illegally, be guaranteed medical insurance as part of the health-care overhaul he intends to unveil next week”

The pro and con for including children of illegal aliens seems to sort out as follows:

Pro - From a public health standpoint, it's smarter to cover all children regardless of immigration. You just don't want unimmunized kids surfing around in the population.

Con - Californians do not want to reward illegal behavior

I lean toward the public health view because I think the additional cost of covering children of illegal aliens will be a relatively small part of the overall package – a likely public health bargain. Besides, I think it would be an error to hold children responsible for the illegal behavior of their parents, certainly insofar as entitlement to a public health care program that affects mainly the poor. Finally I think the possibility that this thing will actually be enacted and presented to the Governator for signature are less than 50%.

The governor vetoed a similar plan in 2005 citing lack of a plan to pay for it. It's not clear why the financing might be different now and in fact the article reports that “the administration has not revealed details of how it would pay for such a program”. The article also states that “Sixty-nine percent of Californian children without health insurance in 2005 were eligible for existing programs but were not enrolled, according to the UCLA Center for Health Policy Research...That was due to a variety of factors, including inadequate funds in some county programs to cover all those who qualified”. One must wonder about the logic of pushing a new program when the state cannot pay for the program it has already.

'07 HSA Changes: A Recap

As we reported last month, a number of (mostly positive) changes are on tap for Health Savings Accounts (HSA’s). Here’s a brief summary:

· Folks can make a one time transfer from their IRA to their HSA.

· They can also make a one time rollover from their FSA and/or HRA.

· In general, the FSA grace period no longer impacts HSA eligibility.

· Maximum annual contribution limitations are more generous, and aren’t based on HDHP (High Deductible Health Plan) deductibles or IRS limits.

· Perhaps the most significant change is that, in most cases, contributions don’t have to be pro-rated when you start an HDHP mid year. This is really helpful for folks who want to make the switch in, say, September, but are intimidated at the major deductible (and paltry HSA contributions allowance) facing them so late in the year.

· Employers can contribute to more to non-highly compensated employees without running afoul of HSA comparability rules.
There are one or two other changes, as well.

On the downside, Vimo (a comparison-shopping portal for healthcare products and services) reports a significant gap between the number of people enrolled in HDHP’s and those who’ve set up Health Savings Accounts. They’re also concerned that the amount of money actually on deposit in these accounts represent half of the potential out-of-pocket exposure. For some reason, Vimo is concerned that these “findings hint at disturbing trends that may jeopardize the Consumer-Driven Health movement."

Me, I don’t see it. First, just because the money isn’t in the HSA doesn’t mean it’s not available. And a lot of folks also use their accounts on a fairly fluid basis, moving funds in and out as claims occur. Finally, it ignores the fact that there were significant limits on the amount of money that could be put into those accounts, which limits are now greatly reduced.

Looks like clear skies to me.

MedBlog Awards

This year's Medical Blogs Award is now open for voting, and we've been nominated in the "Best Health Policies/Ethics Weblog 2006" category. Folks can vote once (per category), and we have some mighty stiff (and deserving) competition.

Please consider voting for IB, and ask your friends, relatives, business acquaintences and the fine folks at the Nigerian Ministry of Finance to vote for us, as well.

Just click here and then on InsureBlog.

Thanks again for your support.

I Spine

A while back, Bob blogged on the phenomenon of physicians "expanding" their practices with non-traditional "extras" in an effort to bolster revenue. For example, one physician added botox injections and hair removal to the list of services she offers, which apparently help to offset decreases in other areas of her practice.

According to the NYT's Reed Abelson, this idea is catching on in other medical specialties, as well:

"Spinal-fusion surgery is one of the most lucrative areas of medicine...But there have been serious questions about how much the surgery actually helps patients with back pain and whether surgeons’ generous fees might motivate them to overuse the procedure."

And that's not all; apparently, these same surgeons invest in the companies which make the "hardware" (screws and plates, for example) which are used in the surgery.

I'm not sure I have a real problem with the latter: is it unethical for me to invest in insurance companies? Or my mechanic to buy some shares in Pennzoil? I didn't think so.

But the "non-story" has legs: "Federal regulators have voiced concerns about the growing popularity of the investment arrangements, which would potentially violate antikickback laws if doctors receive stock or are otherwise compensated to use or recommend certain devices."

This sounds to me a bit more damaging than simply buying stock in a company with which one does business. I suppose it would be akin to me only selling policies from companies whose stock I own, or that mechanic only using Pennzoil when servicing my car. I just don't believe that any one carrier (and/or its products) is always right for every client. In the same way, it's difficult for me to believe that XYZ Corporation's spinal products are always the best choice for every patient.

According to Ms Abelson, many of the almost 100 companies in the spinal devices field are owned (to some degree) by physicians. On the one hand, I'm still not convinced that this is as a priori conflict of interest. On the other hand, though, it does look like there may be a problem.

So what does this have to do with insurance? Well, it seems to me that if this is increasing the cost of health care, then it is increasing the cost of insurance, as well. After all, at least some of the funds being so directed come from insurance (and/or Medicare) reimbursements. If the prices are inflated, or if there's no effort made to hold down costs, then this doesn't bode well.

Cavalcade of Risk #16 is up!

Jason Shafrin hosts this edition, available now at the Healthcare Economist. With 15 well-explained entries, in three categories, it's a great New Year for the CoR.

Please drop by!

And if you'd like to host an upcoming edition, just drop us a line.

Money Monday (on Tuesday!)

Free Money Finance rings in the New Year with 2007's first Carnival of the Capitalists. There are over 30 entries, each with excellent context and commentary.

Joe Kristan, of Roth & Co, has his 2006 Taxpayer of the Year Award nominees. Not to be missed.

John at Mighty Bargain Hunter hosts the year's first Carnival of Personal Finance. He's compiled a list of over 40 entries, and includes context for each.

Ever wondered why gas pumps have that third decimal? Me either, but Money, Matter and More Musings explains why you should.

UPDATE: An explosive edition of Grand Rounds, 2007's first, is up at Distractible Mind. Fellow Medical Blog Network columnist Dr Rob Lamberts hosts, with some 30 entries, all with helpful commentary and categorized. Hint: be prepared for a booming good time.

There were quite a few interesting posts, but my favorite is Dr Charles' entry on (of all things) John Bolton's mustache.

The uninsured as Medicaid failure

In October 2006, the Kaiser Family Foundation Commission on Medicaid and the Uninsured released this Issue Paper:

http://www.kff.org/uninsured/upload/7571.pdf

The Issue Paper cites Federal Census data reporting that the estimated number of uninsured grew by 1.3 million people between 2004 and 2005, and now stands at 46.2 million, or about 17.9% of the under-65 population. This Paper thus provides additional support for the expressions of concern that “one out of every 6 Americans is uninsured”.

But wait a minute. Statements like that only reflect the average. Even an accurate average says nothing about the distribution of the population. It is accurate to say that "one out of 5" persons on the face of the earth is Chinese but that does not tell you how many Chinese live on your block. Fact is, the overwhelming majority of Chinese live in China. Similarly the uninsured don't simply comprise "one out of every 6 Americans". Fact is, the odds of being uninsured are hugely driven by poverty.

The Issue Paper confirms this fact, which prior surveys have also consistently found. And it stands to reason - - the very poor tend not to have regular, full-time jobs that offer employer-based group insurance; they often don't sign up for employer-based insurance even if eligible, because of the cost; and they can't afford to purchase individual insurance.

Table 1 in the Issue Paper shows that people below 2X's the federal poverty level comprised about 65% of all uninsured, non-elderly Americans in both 2004 and 2005. For people below 2X’s the FPL, the rate of uninsurance was 32.3% in 2004 and 33.3% in 2005. This raises some questions for Medicaid. Why is Medicaid failing to meet the needs of so many of our most impoverished citizens??? Aren't these exactly the people that Medicaid was created to serve?? How can Medicaid be falling so far short of meeting the goals for which it was established??? The KFF Commission on Medicaid and the Uninsured does not comment on these questions in the Issue Paper.

If all the nonelderly below 2X’s the federal poverty level could be enrolled in Medicaid, the proportion of uninsured Americans would fall from 17.9% to about 6% of the total population under age 65. (Enrolling everyone below 4X’s the federal poverty level into Medicaid would reduce the uninsured all the way down to 2%).

Seems to me that Medicaid is failing in its purpose as a governmental safety net for the poor, and that public pressure must be brought to bear on the new Congress to fx it within e.g. 100 days of their taking office in January.

OT Bleg: We're in the running for a MedBlog Award, and would appreciate your vote (just click here, select "InsureBlog" and press "Vote"). Thank you!