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!!

Telling it Like It Is . . . Almost . . .

Key Democrats have already announced the president's plan to use the tax code to encourage more Americans to obtain health insurance is dead on arrival on Capitol Hill.

They complain this is just one more scheme to give tax breaks to people who don't need them while continuing to deny essential health care to the most vulnerable

Give tax breaks to those who don't need them.

They say that with a straight face?

About 175 million Americans receive insurance through their jobs. Under the current system, they don't pay taxes on this benefit, even on the portion of the premium paid by their employers, and they also don't get a deduction for the portion of the premiums they pay out of pocket.

Well kind of.

If they are participating in a Section 125 plan they can get a deduction (actually, a salary reduction which lowers FICA and income taxes paid) for premiums paid.

When an employer looks to hire someone, he calculates the total cost of that employee: salary, employer payroll taxes and benefits, including health insurance premiums. In terms of the true cost to the employer, a dollar paid for insurance for the employee is no different than a dollar paid in wages

Fringe benefits save employers quite a bit of money. They don't pay their share of FICA taxes, FUTA, SUTA or workers comp on monies paid for health insurance premiums.

Looked at another way, it costs the employer $100 to pay $100 toward the cost of health insurance. If that same money were paid out in wages the cost to the employer is around $112 and the net benefit to the employee in take home pay is around $85.

This is never mentioned in the press.

But the real winners would be the uninsured and those who choose insurance policies with lower premiums but higher deductibles. The uninsured would now be able to use the money they would have paid Uncle Sam to put toward purchasing health insurance. For someone in the 30 percent tax bracket, that would be $4,500 they could use to pay for health premiums. The working poor, who pay little or no income tax, would still receive a break on their payroll taxes, though not enough to pay for most current insurance policies.

Policies with lower premiums and higher deductibles.

The working poor.

My experience has been, the lower income people simply go without health insurance, especially if they have to choose a higher deductible to make the plan fit their budget. That is very short-sighted in my opinion, but who listens to me?

NJ Jumps In

New Jersey is about to jump in the "health insurance for all pool". How many is that now? I am losing track.

Massachusetts, California, Pennsylvania, New York and now New Jersey. Who am I leaving out?

Massachusetts is closer than anyone, having passed the legislation. Already they are having second thoughts about the cost of the plan to the taxpayer.

Imagine that.

So what is the Garden State planning?

Declaring that public health costs are out of control, New Jersey has joined a growing number of states - including Pennsylvania - that are hammering out plans for universal health insurance.

Public health costs are out of control. So what is their plan to reign them in?

Put more folks in to the system.

Gov. Corzine and legislative leaders say that once they finish their property-tax overhaul, the issue will take center stage in Trenton. But as with tax reform, insuring the uninsured is a concept that is widely praised - and difficult to execute.

Difficult to execute.

No kidding.

Under preliminary proposals, all New Jersey residents would be required to have health insurance - and could enroll in plans subsidized by the state

Subsidized by the state.

Translation: paid for by the taxpayers. You know, the ones who just saw their property taxes "reformed".

Instead of proposing a single bill or starting with a big public announcement, "we're putting meat on the bone," Vitale said. Last year, he convened a working group to study the issue; the group includes two members of the Corzine administration.

Depending on federal dollars, Vitale said he hoped to begin with an expansion of the state's FamilyCare program, which insures nearly 700,000 low-income children and families.


Depending on federal dollars. Where does the federal government get their money?

From you & me.

Why can't states solve their OWN problems without messing with folks in other parts of the country who also have problems within state boundaries that need addressing? Why are the uninsured in NJ more important than the uninsured in TX?

This idea of relying on the fed's to support a program is just nuts.

In Pennsylvania, state officials say a health-insurance plan proposed by Gov. Rendell would primarily be paid for by employer and worker contributions, federal grants and increased tobacco taxes.

Though many states are trying, Massachusetts, Maine and Vermont are the only three that have enacted universal coverage laws.

Maine & Vermont. Somehow I missed those.

That up's the tally to 7 states. Almost all in the Northeast. Wonder why their problems are any worse than other parts of the country?

Are they more progressive, or just the ones who want to whine more?

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!

Vanishing Coverage

USA Today offers the following for consideration.

Even after being approved, policyholders can see their coverage amended to exclude certain medical conditions or revoked entirely, sometimes long after the policies are issued.

This follows the "if it bleeds it leads" philosophy of news reporting.

Case in point.

Denise Wheeler, an artist in Laguna Beach, Calif., thought she and her family had health insurance.

So did Tony Seals, a self-employed businessman in nearby Riverside. Across the country in Connecticut, Maria Locker and Linda Gaskill each bought short-term insurance policies to protect themselves against catastrophic costs.

But each was left with tens of thousands in unpaid medical bills when their insurers — all major companies — retroactively canceled their policies after they faced expensive health problems. "It's the most devastating thing that's ever happened to us," says Seals, 43.

No doubt these are tragic situations. No one likes surprises.

That includes the carrier . . .

Insurers say they rarely revoke policies, and generally do so only because of misleading or omitted information on applications.

Fraud happens. When a material misrepresentation appears on a health insurance application the carrier is entitled to remedy the situation.

Failing to note a recent minor sore throat or having your tonsils removed 30 years ago is not a material fact for underwriting.

Failing to disclose recent, undiagnosed symptoms or prior treatment for a chronic or serious medical malady is a different story entirely.

I wonder what the full details are in the cases cited above.

In May 2006, Wheeler was rushed to the hospital with a perforated ulcer. Wheeler says she was unaware of the ulcer until she collapsed after her youngest son's baseball game. "You get this hole in your stomach that erupts," she says. "Your body fills up with toxins, and it kills you."

Not long after the five-hour surgery, Wheeler got a letter from her insurer asking for more information about her health history. On her application, she had not told the insurer that she went to an emergency room and her OB/GYN three months before applying for her insurance policy in October 2005, court documents say.

Every application I have seen asks about medical treatment, tests, meds & doc visits in the 6 months prior to the application. A "routine" visit to a doc for a well check up might be overlooked as incidental, particularly if there were no symptoms that prompted the visit and all testing was negative.

But an ER visit is difficult to forget and indicates something more is amiss.

That would appear to be a material misrepresentation of fact.

Like the Wheelers, the Seals family bought coverage on the individual market after Tony Seals became self-employed. They applied online for an individual policy with Health Net on March 15, 2003. At the time, they had four children.

Seals answered all the questions, including one asking when his wife, Susan, had her last menstrual period.

Asking for details about a menstrual cycle is not uncommon.

The policy was approved and became effective April 1, 2003, according to court documents.

About mid-April, Seals says, they found out his wife was pregnant.

Good timing . . . or is it?

In April 2004, when Madeline was 6 months old, the insurer told them it had reviewed their application and "felt like we had not given them a correct date for my wife's last menstrual period, so would rescind the coverage," Seals says.

The insurer had looked at Seals' wife's OB/GYN records and found that she had told the doctor a date for her last period about two weeks' different than the one Seals had included on the application, Seals says.

This would appear to be a material misrepresentation of fact. I have to ask this on a regular basis when taking applications for females who are still capable of bearing children. Not once have I had a woman tell me it was around the 15th. They know precisely.

Why would someone tell an insurer one thing and their doc something different? Missing by a day or so could be a memory lapse. Missing by 2 weeks raises eyebrows.

In Connecticut, concern has centered on short-term health insurance policies, although Blumenthal says his office has also seen problems with longer-term policies.

Gaskill, a 63-year-old retiree, says she began buying policies from Assurant Health in 2005. After a six-month policy expired, she signed up for a new one with Assurant.

Her new policy went into effect on Jan. 24, 2006,

STM medical plans have a place, but they also have severe limitations. Most notably is a 5 year look back on pre-ex conditions.

In March, she went to the doctor for a small lump under her ear. It had been there awhile, but it did not hurt or bother her so she did not make an appointment until it seemed a bit larger than before.

The doctor asked how long she had the lump.

"I said 'maybe a year,' "

This was a condition that existed prior to the policy. The carrier is well within their rights to deny any claim.

The lump turned out to be cancer. After checking her medical records, Assurant revoked her policy, leaving her with $30,000 in surgical bills.

All of the cases cited are still under review. Applicants who seek to defraud a carrier should well be aware of the consequences.

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).

Spitzer Plan

NY Governor Spitzer (they must have had an election that I missed) is planning to roll out a health plan to cover the states uninsured children.

Here are some highlights.

cover all 400,000 children now without health insurance in New York,

while cutting hundreds of millions of dollars in payments to hospitals, nursing homes and drug companies

Details of Spitzer's health plan were sketchy

he did not, for instance, say whether he would cut back any specific services to Medicaid patients, nor did he say how the state would cut prescription drug costs.

his eventual goal is universal health coverage for all 2.6 million New Yorkers without insurance.

While that is unaffordable now, the governor said he will focus this year on providing coverage for 400,000 uninsured children

Spitzer's plans to cut payments to hospitals and nursing homes

Spitzer held out drug companies and insurers as among those who will have to help pay to right the state's health system

Besides freezing rates to hospitals for Medicaid patients, Spitzer also wants to end the days of paying some hospitals for physician-training programs

Medicaid costs the state about $45 billion this year - nearly half of the total state budget.

Oh, yeah. This has legs . . .

24 Page Health Insurance Application

Want health insurance? Just fill out this application, and wait 6 months . . .

The first time Ama Tullah tried to get into Minnesota's health care program for the poor, she gave up. The second time, she made it through the 24-page application, then waited six months before learning she was approved.

Makes qualifying for regular health insurance a piece of cake.

As lawmakers in Minnesota and elsewhere search for ways to get health insurance for everyone, little is said about the millions of people who currently qualify for public health care - but aren't enrolled.

Little is said. Wonder why?

Many don't know they qualify. Others are daunted by complex forms that can rival IRS documents. Some, like Tullah, have their applications delayed by red tape. In Minnesota alone, as many as 60 percent of the state's 383,000 uninsured could be eligible; nationally, the figure is estimated at about a quarter of the 46 million uninsured.

25% can qualify for existing plans. Why isn't anyone talking about this?

Perhaps because it is not newsworthy.

She plans to apply for MinnesotaCare, which has higher income limits, but has to wait for Medical Assistance to deny her coverage. Meanwhile, her 1-year-old daughter Tasneem's Medical Assistance coverage is in limbo because they submitted some paperwork late.

Tullah and her family live in a modest apartment complex in this northern Twin Cities suburb. But perhaps not for long; Tullah says they're thinking of moving to Massachusetts, which is aiming for universal health coverage.

Leaving taxpayer funded health insurance in MN to go on taxpayer funded health insurance in MA.

I'm sure the folks in MA are happy about that.

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.

A Revolution

AOL founder Steve Case has rolled out Revolution Health. I am just now flipping through and my initial impression is positive. Among other cool things you can do or learn . . .

Look up information on medical conditions from Acne to Women's Health. You can check symptoms against a Mayo Clinic database. Review treatment alternatives and effectiveness ratings.

Learn about healthy living including weight loss, family relationships, parenting, pregnancy and more.

Look up information on doctors or hospitals in your area including ratings.

Use the toolkit and calculate your BMI. Need to lose weight? Find out how much activity you have to do to lose one pound. Leisurely riding of a bicycle will take a 180# person 648 minutes to lose 1 pound. Or you could opt for 1767 minutes of foreplay to lose 1 pound.

Your choice.

Want to find your risk of a stroke or heart attack? They have a calculator for that.

The site is interesting if nothing else. User friendly. I found some pages a bit slow to load on DSL but that will not keep me from coming back and taking more tours.

Yes . . . But at What Price?

Businesses are wary of a crop of new state health care proposals to reduce the number of uninsured, fearing the programs will drive up their expenses without solving the problem.

I believe this point has been raised more than once here at InsureBlog.

"Once a statute is on the books it becomes easy to bring up the tax," Shaw said

He added the policy could have unintended consequences such as stalling growth, noting that a company might not want to add a 10th employee if it has to start paying the tax. Moreover, Shaw said companies offering health insurance may drop it because paying the 4 percent payroll tax is cheaper than providing coverage, which would only add to problem of the uninsured.

Fewer employed.

More uninsured.

Is this the plan?

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.

Health Care State of the Union

Parsing and commenting on the State of the Union, 2007 . . .

When it comes to health care, government has an obligation to care for the elderly, the disabled and poor children. And we will meet those responsibilities.

For all other Americans, private health insurance is the best way to meet their needs.

Poor children.

Nothing about poor adults.

Or illegals.

Private health insurance is the answer for most, but not all.

But many Americans cannot afford a health insurance policy.

Actually, most CAN afford health insurance.

They just need to be reasonable in the way they approach managing their money and risk.

First, I propose a standard tax deduction for health insurance that will be like the standard tax deduction for dependents

Tax deductions are fine . . . for those who pay taxes.

Records show the top 50% of wage earners pay 94% of the income taxes.

For Americans who now purchase health insurance on their own, this proposal would mean a substantial tax savings: $4,500 for a family of four making $60,000 a year.

I will be curious to find out how this was derived.

States that make basic private health insurance available to all their citizens should receive federal funds to help them provide this coverage to the poor and the sick.

And where does federal money come from?

The top 50% of wage earners who are paying 94% of the taxes . . .

Who is a top 50 wage earner?

Drum roll please . . .

Those earning in excess of $32,000 per year (AGI).

We need to help small businesses through association health plans.

Wrong!

Been there, done that, didn't work then either.

We will encourage price transparency.

The Professor will love that one.

And to protect good doctors from junk lawsuits, we need to pass medical liability reform.

Tort reform.

As in the case of "loser pays"?

This too has its' faults.

In all we do, we must remember that the best health care decisions are made not by government and insurance companies, but by patients and their doctors.

Do I hear an "Amen"?

Mass Miscalculation

Under the law, all state residents must obtain health insurance by July 1 or face tax penalties.

The panel, a subcommittee of the Commonwealth Health Insurance Connector board, on Friday outlined the proposed minimum coverage requirements, and the full board will vote on the requirements Monday

This could be interesting.

According to a summary of initial bids by insurance companies, monthly premiums would average an estimated $380, compared with the $200 per month that former Gov. Mitt Romney (R) projected when he first proposed universal coverage.

The panel had expected monthly premiums averaging about $260 based on actuarial information the board reviewed last year.

And now the other shoe drops.

According to Connector board staff, "most of the insurers' bids, the details of which have not been made public, came in much higher," the Globe reports.

Much higher.

How much higher?


Actual plan premiums will not be set for months, according to the Globe

Stay tuned . . .

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

Future Shock

Peering into the future the NYT is reporting the following:

President Bush intends to use his State of the Union address Tuesday to tackle the rising cost of health care with a one-two punch: tax breaks to help low-income people buy health insurance and tax increases for some workers whose health plans cost significantly more than the national average.

My initial reaction is positive. However, I see a couple of problems.

First, low income people pay almost no taxes. What good are tax breaks for those who get most or all of the taxes withheld from their paycheck back in the form of a refund?

Second, how will this "national average" be determined?

The basic concept is that employer-provided health insurance, now treated as a fringe benefit exempt from taxation, would no longer be entirely tax-free. Workers could be taxed if their coverage exceeded limits set by the government. But the government would also offer a new tax deduction for people buying health insurance on their own.

This is almost like a luxury tax on rich benefits. Interesting concept. Not sure if this will have legs or not.

critics say it would, in effect, tax people with insurance to provide coverage to those without it.

This already happens via cost shifting. Those without insurance and the ability to pay for care have their bills shifted to those with the ability to pay and have insurance.

This is nothing new.

The administration would cap the amount of benefits that can remain tax free at $15,000 for a family and $7,500 for an individual. Anyone whose health insurance cost more than that would pay taxes on the difference. For example, a family with coverage costing $16,000 a year would pay taxes on $1,000.

This is something with appeal. I wonder if the figures would be adjusted for higher or lower cost areas of the country.

The cap would also be used to establish the amount of the new deduction for people who lack coverage. In this example, a family buying insurance on its own could take a $12,000 deduction — even if the insurance cost less.

Nice idea as long as it does not create a subsidy program such as the earned income credit.

This will be interesting to watch & see how it pans out.

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...

Mass Insurance

Thanks to state budget cuts, uninsured Cape Codders may not know they need to pick a health plan by July 1 or face tax penalties.

The health reform legislation signed by former Gov. Mitt Romney in April makes Massachusetts the first state to require all adults over 18 to have health insurance.

Cape Cod. Isn't that where the Kennedy compound is?

On the Cape, an estimated 30,000 people, or as much as 14 percent of the population, do not have health insurance, according to a 2005 Barnstable County report, ''Monitoring the Human Condition.''

I wonder if this is like ritzy tourist areas where there are 2 social classes? The wealthy who live or vacation there . . . and the low wage workers who provide services.

One issue is whether the insurance plans will offer Cape residents access to local specialists, or whether they'll have to go off-Cape or up to Boston to get specialized care.

Paula Schnepp, director of the Cape Cod Free Clinic and Community Health Center in Mashpee, said only one of the four plans, BMC Health Net, has an extensive list of specialists available here on the Cape. Its premium would be $18 a month for an individual earning up to 150 percent of the poverty level.

At 150% of the FPL, that equates to an income of approximately $14,500 per year.

Their cost for a full coverage health insurance plan?

$18 per month.

I should also mention that MA is a GUARANTEED ISSUE state where insurance carriers are required to issue a policy, regardless of your health.

Some Cape health providers worry that the cost of premiums and co-payments might be too pricey for some patients

$18 per month = about $0.50 per day.

What are these people smoking?

Claire Goyer of the Duffy Health Center in Hyannis worries that patients with chronic physical or mental illnesses won't go to the doctor as often as they should if they have to make co-payments under the Commonwealth Care plans

How often do they go now?

Isn't this an IMPROVEMENT over the current situation?

Assuming of course . . . it actually works . . .

Squashing Generics

Drug companies increasingly are reaching legal settlements that delay the introduction of cheaper generic medicines. Federal regulators told lawmakers seeking to ban the agreements yesterday that the pacts cheat Americans of billions of dollars a year in savings.

Reactionary press or fact?

The Federal Trade Commission and others allege that the settlements allow brand-name pharmaceutical companies to pay off would-be generic competitors, which then agree to delay introduction of their less costly but otherwise identical versions of the original medicines.

These are serious charges.

In a typical settlement, the payment is less than the potential loss in sales once a generic competitor enters the market, said Michael Wroblewski of Consumers Union. And the generic manufacturer makes more from the payment that it would from selling its version of a drug, he said.

This is true of most legal battles. It is less expensive to pay the fine than to do what is morally right.

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.

The Berglin Solution

A leading DFL senator outlined a plan Wednesday to limit increases in health insurance premiums, saying her idea would put hundreds of dollars back into the wallets of average Minnesotans.

Sen. Linda Berglin’s premium cap is part of a package that would move the state toward universal health coverage by 2010. Her bill, Senate File No. 2, is a top priority of the DFL-led Senate. Berglin said her plan would help as many as 40,000 uninsured people get covered.

The bill would cap yearly premium increases for all health insurance at a few percentage points above inflation.

What a novel idea. Limit what carriers can charge. I can't imagine why this has not been pursued before.

Is it because it is completely irrational and has no chance of working?

Possibly . . .


Berglin wouldn’t give a price tag for her plan,

Really? Is this because she does not know how much such a plan will cost?

She also wants voters to amend the state constitution to guarantee health care for all

Sounds like the making of a new reality TV show. Politicians without a clue.

All that is needed is to sign Peter Falk to re-create his "Columbo" role.

"Pardon me, ma'm. Just one more question. I really hate to bother you as you have been so kind to appear on this show. This is really important to me."

"Were you dropped on your head as a child?"

Medicare Price Increases

Renowned author and political commentator P.J. O'Rourke once wrote: "If you think health care is expensive now, wait and see how expensive it'll be when it's free."

I've always wondered who said that.

The incoming 110th Congress will make health insurance more expensive if it lets Medicare "negotiate" prescription drugs, according to research.

The liberal plan to reform Medicare is designed in a way that givse drug companies greater incentive to raise drug prices. Higher drug prices means higher prices for health insurance. And that means more people will be unable to afford health insurance.

Pelosi's posse probably doesn't want you to know this . . .

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.

Medicaid Declines

For several years, there has been a steady increase in the number of children enrolling in Virginia's health insurance program for the poor. Beginning July 1, state officials say, an unprecedented slide began.

Over the following five months, about 12,000 children dropped off the state's Medicaid rolls.

The drop-off, Jones points out, began once a new federal law took effect. The law states that U.S. citizens applying for Medicaid or renewing their participation must present proof of their citizenship and identity.

And this is a problem?

But some officials say that's not who is losing coverage.

Oh?

Then who is losing coverage?

In GA almost 30% dropped off the rolls last year after the state started requiring proof that your income was below the poverty guideline levels. It seems that some folks were simply CLAIMING they were poor, but when their SS# were cross-referenced against tax rolls they suddenly had more income than was previously reported under the "honor" system.

The states experiencing declines are adamant that U.S. citizens and certain legal immigrants are dropping off the Medicaid rolls, not illegal immigrants.

“There is no evidence that the decline is due to undocumented aliens leaving the program,” said Anita Smith of the Iowa Department of Human Services. “Rather, we believe that these new requirements are keeping otherwise eligible citizens from receiving Medicaid because they cannot provide the documents required to prove their citizenship or identity.”

No evidence to SUPPORT their belief that legal immigrants are dropping off, but rather these officials THINK there are folks who SHOULD be getting services. There is no proof of visitors from other planets but some folks believe this happens.

That must make it so . . .

Medicaid is a health insurance program serving about 55 million people that is financed by the federal government and the states.

No, Medicaid is financed by the TAXPAYER, not the government.

Who writes this stuff?

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.

Occ, Med Exclusions

The news item says:

Some Californians are refused individual health insurance policies even if they are in good health and can afford coverage because of their jobs and the use of certain medications, according to a report in Monday's Los Angeles Times that cited consumer advocates who said the policies -- while legal -- are too restrictive.

And the issue is????

It is quite common for carriers to refuse to cover those in high risk occupations, even if they are covered by workers comp. Some of the occs include:

Armed Forces Personnel
Asbestos Workers
Divers
Munitions & Explosives Workers
Professional Athletes

And how about those meds?

AZT - AIDS & HIV patients
Clozapine - used for treating schizophrenic patients
Humira - cancer patients currently undergoing chemotherapy
Thalidomide - treats multiple myeloma & can cause serious birth defects

There are also some avocations that can get you excluded.

Skydiving
Deep see diving below 30M
Motocross racing
Aerobatic aviation

And, there are other factors that can cause your coverage to be denied

Felony conviction
History of illegal drug use, including anabolic steroids
DUI or reckless driving citations

Why would anyone have a problem with any of these?

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!

Fat Chance

Weighing 386 pounds, Jeff Haaga believes he will be dead soon without gastric bypass surgery.
"My doctor said, 'You're going to die if you don't lose weight,' " the 52-year-old West Jordan man said.
His insurance company, SelectHealth, an Inter- mountain Health Care company, has denied his appeals for the company to pay for the operation. And he fears going ahead alone.
"If I paid for it myself, they don't cover any complications from the surgery," he said. "It could bankrupt someone like me if I got pneumonia or something else related to the surgery."

There is a reason why carriers will not pay for the surgery, except where required by law. Not only are there risks associated with the surgery, but complications following the surgery can be significant.

In addition to internal bleeding & gastric blockage, your bodies ability to absorb foods & medicines changes. This can result in many long term effects that are just as bad, if not worse, than carrying the extra weight.

Of course some folks who are heavy have discovered an easier way to lose weight. It is called diet & exercise.

To help people like Haaga, Rep. Steve Mascaro, R-West Jordan, has drafted a bill mandating that insurance companies cover gastric bypass surgery for morbidly obese Utahns.

Approximately 3M Americans (about 1% of the population) are classified as morbidly obese. If 99% of the population are able to control their weight, at least to the point of NOT thinking they need drastic measures, then why must the rest of us share the cost of this treatment?

People are having a devil of a time getting surgery that their doctors say will cure morbid obesity.


This is hogwash.

GB does not CURE morbid obesity. What GB does is FORCE a change in eating habits that lead to weight loss.

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.

Kennedy Kare

The federal government should join the state of Massachusetts in enacting universal health coverage, said Sen. Edward Kennedy, the new chairman of the Senate committee with jurisdiction over numerous health issues.

Gee, I don't know. Don't you think the federal govt should get Medicare working first?

Kennedy has his own version of what universal health coverage would look like. He wants to extend Medicare to all.

Let's see. Medicare. That thing that you pay on all your working life, then when you turn 65 you have to pay again, and if you want (almost) full coverage you have to buy a supplemental plan because Medicare doesn't cover everything.

Uh-huh.

Some of the committee's Republicans would like the committee to renew its attention to help for small businesses. They support a plan that would let businesses buy insurance through regional or national trade associations.

Another plan that has virtually a 100% failure rate.

Doesn't anyone pay attention?

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?