CIGNA & Nataline: A Broader Perspective

The Industry Radar has compiled an impressive round-up of posts and perspectives from around the blogoshere.

It's a well-balanced, comprehensive look at a no-win situation.

Recommended.

UPDATE/BREAKING: My contact at Cigna just emailed me about a new statement, just posted, from Dr. Jeffrey Kang (their CMO).

In it, Dr Kang seeks to clarify three issues about the case:

■ Cigna's role. This is crucial to the whole discussion. It appears that the group plan under which Nataline and her family were insured was a self-funded (ERISA) plan. As Bob has pointed out to me "(t)he plan sponsor cannot in any way obligate the reinsurance carrier to fund a claim. It would appear that Cigna's role in this matter was more of a consulting role than one as a front line carrier. Cigna could have authorized payment of the claim and the plan sponsor could have still refused to cover the transplant. Or, the plan sponsor could have authorized the benefit and Cigna refused to cover it under their reinsurance policy.

In other words, Cigna is pretty much removed from the decision on paying the claim as far as Nataline's family is concerned. Cigna is not their carrier, they are the reinsurer for the employer loss fund."

■ How these decisions are made. We've already touched on this issue, including the use of outside sources. What's new in this release is that it appears that Cigna consulted with three such experts (not two, as originally reported).

■ Why they offered to pay anyway. This is also key: Nataline's doctors still had the final say (which puts the lie to those that claim the carrier withheld treatment; that's always been specious), and Cigna was willing to pay if the providers decided (against overwhelming medical evidence) to go ahead.

I'm still not convinced that this was wise, but I also understand the humanity involved in the decision.

By all means, please read it yourself (available in .doc form here).

NHS progress on Electronic Medical Records

The NHS in U.K. continues on its path toward an electronic data base for medical records. In theory, this endeavor (or, endeavour?) is expected to result in improved quality of care and lower costs. This theory is also widely touted by health care observers in the U.S.

The poll reported in this article measures disagreement among British doctors whether the theory can be implemented satisfactorily. The article reports that, among doctors polled, “more than two thirds (70 per cent) agree that such records will improve patient care”. [i.e., agree with the theory] but, at the same time, doctors polled are almost evenly split “whether the benefits of electronic patient records will outweigh the risks.” [i.e., have doubts about how it will work in real life].

As with all theory, the true test is whether it works in real life. No better way to tell than to try it out. And - maybe - the best place to try it out is somewhere else not here.

Meanwhile, the NHS has lost medical data on millions of families; nine separate NHS trusts have lost patient data. In addition, the system development is reportedly years behind schedule. Understandably confidence in the security of patients’ records is mixed at best among doctors – and low with the public.

I think we should all root for the system to work and at the same time not hold high hopes until or unless positive, real-life experience emerges. Definitely worth watching.

Hey, some GOOD news for a change!

On December 26, the EEOC announced a very important final administrative rule under the Age Discrimination in Employment Act. More background here.

This final rule protects group retiree health benefits by allowing group plan sponsors that provide retiree health benefits to continue their longstanding practice of coordinating benefits with Medicare. This rule was first proposed many years ago but was delayed due to a parade of litigation. That litigation has now been resolved, clearing the way for EEOC to issue the final rule.

What this means is that plan sponsors may continue to offer two distinct levels of retiree benefits (1) Medicare “pays first” for Medicare-eligible retirees and (2) no Medicare offset for pre-Medicare retirees.

Plaintiffs in the earlier litigation had claimed that coordination of health plan benefits with Medicare violated ADEA because it resulted in lesser group benefits for Medicare-eligible retirees - and less cost for those benefits - than for pre-Medicare retirees. They also argued that EEOC did not have authority to issue the proposed rule.

The plan sponsors argued that disallowing coordination with Medicare would significantly increase their cost for retiree benefits and would result in termination of many retiree health plans not only for Medicare retirees, but for pre-Medicare retirees as well.

The U.S. Court of Appeals agreed that EEOC could proceed to implement the proposed rule, which it is now doing. In effect, the rule creates a narrow exemption within ADEA regulation for the practice of “coordinating employer-sponsored retiree health benefits with eligibility for Medicare.”

There seems to be little media attention on this development. I think that's odd, because both the new rule and the settlement of the litigation that blocked it for years, are quite significant.

A (Mandatory) Harbinger?

[Welcome Bluegrass Institute readers!]

Some time ago, The City by the Bay enacted a little provision that requires employers to provide health insurance to their employees or face fines (Sound familiar?). While that may have seemed like a good idea at the time, turns out that it faces a non-trivial challenge:

It's illegal.

Says who, you ask?

Says US District Judge Jeffrey White, "who found that the city was intruding into federal regulation of employee benefits."

Ooops.

And that may become an even bigger oops: his "ruling Wednesday invalidating part of San Francisco's landmark attempt to extend health care coverage to all uninsured adult residents cast new doubt on the viability of a statewide program for covering the uninsured that is now pending in the Legislature."

Apparently, both the local and state laws have run into the mammoth buzz-saw that is ERISA (the Employee Retirement Income Security Act). Being a federal law, ERISA preempts such attempts by local and/or state governments. If this stands (and that may be a big "if"), look for the ripple effect to impact new efforts in Delaware, as well as current ones in The Bay State (how's that for irony?).

h/t: RedState

9/11, The Mick and Nataline

On September 11, 2001 foreign terrorists struck American soil. The attack claimed 2,551 lives and injured hundreds more.

Shortly after the attack, Congress established the Victim's Compensation Fund and authorized a payout to the surviving family members of the 9/11 attack. Total payout is just shy of $16 billion.

On June 8, 1995 one of the most popular baseball players in the last 50 years received a liver transplant at Baylor University Hospital. Years of drinking had worn down the body of "The Mick" resulting in Hepatitis and cirrhosis damage to his liver.

Mickey Mantle died on August 13, 1995 taking with him his recently implanted liver.

More recently the case of Nataline Sarkisyan has made headlines because she was (some say improperly) denied a liver transplant following a failed bone marrow transplant. The insurance carrier (Cigna) originally denied payment for the liver transplant and then later reversed that decision.

How are these stories related, if at all?

In the case of 9/11, Congress authorized payout of taxpayer monies to the victim's families. There was no legal precedent for the payout, nor was there Constitutional authority to make the payout. Instead, they reacted to public sentiment.

At the time, many questioned why Mickey Mantle was moved to the head of the transplant waiting list. Sure, he was an American sports hero and a wildly popular public figure even long after his playing days. But was someone who willfully abused their body and destroyed their liver deserving of a new liver? Should they be placed ahead of someone younger, who also needed a liver, but had developed liver disease through no fault of their own?

It appears that public sentiment may have played a part in efforts to keep alive a popular sports figure.

Then we have the case of Nataline. After years of battling Leukemia she received a bone marrow transplant the day before Thanksgiving. Her body reacted negatively to the transplant and her organs started to deteriorate, including her liver.

Her insurance carrier was asked to authorize a liver transplant, which was initially denied after consulting with outside medical authorities. They later reversed that decision, perhaps in response to a public outcry.

Congress had no authority to establish the Victim's Compensation Fund but bowed to public sentiment.

Those attending to the needs of Mickey Mantle moved him to the top of the waiting list, perhaps not because his situation was more needy than others, but because of who he was.

Cigna authorized an extra-contractual medical procedure because of media publicity and public reaction.

We are a nation of laws, but we are also a nation that strives to do what is right in the wake of public sympathy. The cold facts of these situations say the victim's of 9/11 were not legally entitled to any monies, the "Mick" was not entitled to special treatment, and Nataline was not entitled to coverage for a second transplant. Yet in each case, the powers that be made decisions that went beyond the bounds of their authority.

There are no clear winners in these situations. Someone will feel short-changed while others will feel justified in their position.

All of these situations and many others will continue to be played out in the court of public opinion as long as there is human suffering and limited resources.

If You Knew Sushi (Like I Knew Sushi), II

A few months ago, we reported on a tragic episode concerning the (nationalized) Japanese health care system. Since our visitors who admire such systems fret that we seem to always pick on the MVNHS©, and that there are other systems that apparently can do no wrong, let's examine the latest from the Land of the Rising Sun:

"An 89-year-old woman died after an ambulance crew spent two hours trying 30 hospitals before finding one that would accept her for treatment, Japanese officials said Friday."

Ooops.

After several hours, during which the poor woman was bleeding and suffering from diahrea, the ambulance crew was finally able to locate a hospital that would treat her. Not could treat her, as if she had some exotic and rare condition, but would treat her, as in "gosh, what a bother."

During the trip, her heart actually stopped; the EMT's were able to temporarily revive her, but she died soon after.

But hey, at least the care was free.

Fraud vs Moron: Conclusion

A while back, we discussed the strange case of the life insurance company that didn't seem to care whether or not an applicant was blatently committing fraud. I was notified this morning that the other agent has enticed the "client" to file an Agent of Record letter, thereby letting me off the hook.

To a point.

First, an AOR is a means by which one can specify that a particular agent be assigned exclusively to you. Often, one will see this in a group situation, where it helps to both "cut out" competition and also guarantee a certain amount of continuity on one's behalf. Less often, one will see this with life insurance, usually for service-related issues. I can't recall a time where I've either asked for (or been on the receiving end of) an AOR while a life insurance application was in process.

As to "letting me off the hook," well, it's true that I'm no longer faced with the potential problem of the policy actually being issued "on my watch." This relieves me of some major ethical dilemnas, not the least of which is "what will I do if this thing is ever actually issued?"

On the other hand, I know, and the other agent knows, and the carrier knows that there was fraud committed in the application process. If and/or when a claim is actually submitted on this policy, it will be interesting to see if the carrier actually pays it. In the (entirely likely) event that it contests the claim, I may well be in the rather dubious position of being a witness for both sides. In the event, I'm certainly glad that I sent a note to the underwriter reiterating the sequence of events and my concern about them.

There is no "happy ending" here: both the underwriter and the carrier have lost my respect. I don't know the other agent well, so there was no respect to lose, but I don't envy his position: he knows that I know, and he lobbied for the AOR, thus putting any future onus completely on himself.

The client, of course, is both a moron and a fraud.

Cavalcade of Risk #42: Submissions Due

Next week's Cav ushers in 2008. Please make sure to get your submissions in to our host, Jonathan Pletzke, by Monday (the 31st). Jonathan requests that you PLEASE include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

You can submit them via Blog Carnival or email.

We have slots available for the New Year - just drop us a line to reserve yours.

Nataline: A Physician's Perspective

[Welcome Industry Radar readers!]

Once again, Dr John Ford proves his indispensibility in bringing order out of chaos. This time, he brings his experience and insight to bear on the Nataline Sarkisyan story, offering some much needed calm and perspective.

He asks what is, IMHO, the most important question: "The facts of this case are unquestionably grim but can those advocating the public hangings at least imagine the possibility that some technologies may in fact be futile or at best experimental?"

MedBlog Awards

Hot on the heels of the 2007 Weblog Awards comes this year's edition of the MedBlogger Awards. While the former was open to the entire blogosphere, the latter is specifically for those of us who blog on health care related issues.

We are very proud to have been nominated in two categories: Best Health Policies/Ethics Weblog and Best Medical Technologies/Informatics Weblog. In the first category, we're competing with bloggers like Joe Paduda and Bob Laszewski, stiff competition indeed.

We'll let you know when the actual voting is announced.

Some futures are not much fun to contemplate

This is an anecdote about the Japanese health care system. It is only an anecdote. It could never happen here.

You can read background here, here and here. In Japan about 10,000 citizens have contracted hepatitis C from blood plasma products containing fibrinogen. Fibrinogen is a blood coagulation agent produced by the liver. At one time, blood plasma products containing added fibrinogen were used by obstetricians, gynecologists and surgeons as a means to control hemorrhaging. The U.S. government canceled its approval for such blood products in 1977 because of concern for the risk that fibrinogen obtained from donated blood could be infected by hepatitis C. Japan banned use of fibrinogen for similar reasons in 1988.

OK, back to present day. Many Japanese are infected with Hepatitis C from blood plasma containing fibrinogen. It turns out the government, specifically the ministry of health, was aware of the problem but failed to take any steps to warn those most at risk for infection:

In October [2007], the government was embarrassed when Health Ministry officials admitted to having data that would have helped identify or warn hundreds of hepatitis patients before their illnesses worsened.

Even worse,

Many patients cannot fight in court because their medical records were destroyed by their doctors.

But - - please, not to worry. As I said, this is just an anecdote about another nation’s government-run health care system and an unfortunate lapse in the health ministry. This could never happen here.

More on Nataline...

[Welcome CraigsList and California Medicine Man readers!]

If you're just tuning in, a teenager in California died recently, and there is quite a controversy surrounding the circumstances. The biggest problem so far is the lack of adequate information; while the parents are free to cast whatever accusations they want, the insurer (Cigna) is constrained by HIPAA (as well as the pending litigation).

The issue is whether Cigna "killed" Nataline.

Bloggers and commenters on both sides have weighed in, but with only one side's take on the matter, it's difficult to really understand what happened. In an effort to clarify some of the issues, I contacted Cigna. I introduced myself, explained what we were doing, and asked some questions to help get a better picture. Although I knew that I was most likely to get a "Thanks, but we can't comment on pending litigation," I figured it was worth the effort. And sure enough, my first response basically echoed that demurral. I was disappointed, but not surprised.

What did surprise me was a follow-up email sent a few hours later, which included an email that the President and CMO of Cigna had sent to employees. It explained a few facts that had not been available before. Rather than post the whole thing (it's pretty long), I'll excerpt the relevant pieces for comment. The full text is here. Here are the relevant passages:

"Transplants are an enormously complex and emotional societal issue, in particular because of the scarcity of organs and the experimental and unproven nature of some of the treatments involved. In all circumstances, a completely independent national organization controls the allocation of organs for transplant based on a number of important considerations independent of any decision involving insurance coverage.

What is often misunderstood is that most health benefit plans, whether public or private, do not cover unproven and experimental treatment related to transplants or other treatments...At CIGNA, we facilitate payment for more than 90% of all requested transplants and specifically more than 90% of the liver transplant requests made to us.“

In other words, it’s not the “greedy corporate culture” that others might have one believe, but a rigorous and medically-sound process designed to maximize the potential for a successful operation.

“In this case, rather than going through our standard method of appeal, we went directly to not one, but two, independent experts in the field who agreed that the procedure in question, given the patient’s particular circumstances, would not have been an effective or appropriate treatment.“

This tracks with what we already know from the physicians involved on Nataline’s end, and actually goes above and beyond the SOP. There was apparently no reluctance to authorize based on “bean counting” mentality.

“Based on the unique circumstances of this situation, and although it was outside the scope of the plan’s coverage and despite the lack of medical evidence regarding the effectiveness of such treatment, CIGNA decided to make an exception.“

One may argue under what rationale that exception was made (I’m personally sure that public scrutiny probably paid a part), the fact is that companies do make these kinds of exceptions when warranted. In fact, I can speak from personal experience in that regard.

The bottom line here is that, absent more facts than have thus far made it into the public discourse, folks decrying the “heinous attitude” of carriers exhibit much wind and fury, but precious little insight. All we really know for sure is that two parents are grieving, and our hearts and prayers are with them.

Merry Christmas!

Merry Christmas to all of our readers. May you be blessed with the joy of the season.

A Holly, Jolly Grand Rounds

A joyous and festive 'Rounds is up at MedGadget. With over 3 dozen posts to unwrap, all with helpful context and neatly categorized under the tree (literally), it's a real treat!

One of the best parts of blogging is the comments: who's reading, what do they think of your post, that kind of thing. At Running a Hospital, Paul Levy (who, not coincidentally, runs a hospital) takes to task a U S News and World Report article on hospital rankings. The really cool part? The editor of USNWR responds in the comments, and it's off to the races from there.

Carnival of Personal Finance: Magical Christmas Edition

Over at The Digerati Life, SVB hosts an entertaining and informative Carnival of Personal Finance. With almost 80 entertaining and informative entries, you're sure to unwrap at least one treat.

Since this can be such a stressful time, why not stop by Mad Kane's place for a little yuletide cheer?

Christmas Miracles

Miracles can happen any time of year, but they seem almost magical when they happen during the Christmas season. Miracles are, by definition, something supernatural, that cannot be explained by logic or science. Some will simply dismiss a miracle as happenstance. Others will say it is evidence of God or some other higher power at work in our lives.

No matter what your religious beliefs, miracles are something positive that happens during times of stress, emotional turmoil, financial worries or ill health. Even those who do not hold to a belief in a higher power still will marvel at positive happenings even though they may stop short of terming them as miracles.

For Christians everywhere, the true meaning of this season has nothing to do with gifts, reindeer or Santa Claus. Rather, the focus is on a baby, born to a virgin, in a stable in the town of Bethlehem.

Baby's are miracles in their own right. They grow inside their mothers womb, starting out as two small cells and in a few months enter the world as part of the process we call the miracle of birth. Anyone who has witnessed the birth of a child, particularly their own child, will confess it is a humbling, and sometimes frightening occurrence.

Most of us have been blessed with healthy children, but some have experienced the birth of a child who is forced to deal with the complexities of life early on.

Such is the case of baby Wilson (Wil) as related at InsureBlog a few weeks ago.

You will be glad to know that baby Wil is progressing and thanks to the work of the doctors in attendance, and the prayers of many, is showing improvement.

If you would like to track the progress of baby Wil, you can do so by clicking this link and registering. You may also post a message of hope if you wish.

For the parents of baby Wil, the miracle of Christmas is an ongoing event. And that is the way it should be.

God bless. Peace to all.

Bad (Risk) Santa?

FoIB Julie Ferguson of Workers Comp Insider points us to independent insurance agent Sam Friedman's risk assessment of Jolly Ol' St Nick.

I wonder if Hanukkah Harry would get better rates.

Heads Up: Comments on the Fritz

A quick note to IB readers: HaloScan (our comments hosting service) seems to be experiencing some pre-Holiday madness. If you're having trouble leaving a comment, please drop us a note, and we'll post it for you when things are back to normal.

UPDATE (12/23): At the risk of jinxing it, it appears that HaloScan is back up and running.

This is a Toughie

[Welcome Industry Radar readers!]

Perhaps you've heard this:
 

"The family of a 17-year-old girl who died hours after her health insurer reversed its previous decision and said it would pay for a liver transplant planned to sue CIGNA HealthCare, their attorney said Friday."

As the parent of both a 20 year old and a 16 year old, my heart goes out to these parents. Having known others who've lost a child, there are no adequate words of consolation.

But their insurance company didn't kill her.

The harsh reality is that the insurer can only promise to pay for (part of) a procedure. Whether or not a given procedure is actually performed is up to the patient (or, in this case, the parents of the patient) and the health care providers. The insurer has no say in whether or not a transplant (for example) takes place.

Yes, this is hard.

And yes, there will be those who fault "the system:" the health care providers who want to be paid for their efforts (and to cover their malpractice premiums), the "heartless" insurance company that had misgivings about paying for the procedure.

But the actual choice belonged solely to the parents and the provider.

Nataline (the 17 year old at the heart of this tragedy) apparently received a bone marrow transplant from her brother. Did Cigna (the insurer) pay for this? Was it considered experimental? We just don't know.

And we don't know the particulars of the liver transplant issue, either. Many policies now limit such procedures to specific "centers of excellence," for example. Was this the case here? Again, we just don't know.
 

At the last minute, Cigna rethought their decision and made an exception for Nataline. And once again, we don't know why (although we can guess). Insurers make these decisions every day. It's called risk assessment and management, and it goes to the heart of the matter. Absent real data to support a procedure's efficacy, the carrier is bound - by contract - to deny payment. Yes, this is difficult, and yes, it is painful, but it is, in the end, reality.
 

As the company pointed out, there was little to suggest that the procedure would have helped in any case; we'll obviously never know. What we do know is that, despite the rhetoric and the pain, the insurance company didn't kill Nataline. The folks who refused to treat her or to have her treated, regardless of payment, did.
 

ADDENDUM: In rereading this story, I realized that I had missed some key points. None of them change my conclusion, but they do perhaps explain a little more why Cigna may have balked at paying for the additional procedure (liver transplant).
 

For starters, Nataline suffered from leukemia, a type of blood cancer. In an attempt to treat it, she received a bone marrow transplant from her brother. Unfortunately, she subsequently developed complications from this procedure, resulting in liver failure. Things went downhill from there; in fact, she was in a "vegetative state" since shortly after Thanksgiving. After researching this for quite a while, I couldn't find anything that indicated one way or the other whether folks in this condition are considered good risks for such a procedure.
 

Bob pointed out to me that, if she had had the transplant, the doctors involved admitted that "patients in similar situations who undergo transplants have a six-month survival rate of about 65 percent." That's not particularly good odds; we also don't know whether or not she was physically "up" for such a procedure. Perhaps that information will come to light.
 

Finally, lest those who would argue that the insurer's greed contributed (or caused) Nataline's death, and that a government-run system would have saved her life, I refer you here.
 

MORE: Attorney (and CPCU) Brad Ford has some interesting insights into this tragic situation. Money quote: "I don't believe it was unreasonable to have a 2nd opinion before spending an enormous amount of money on a treatment that may not work."
 

UPDATE: We've received some additional information from Cigna.

A Christmas Salute to our Troops

One of the interesting subsets of the blogosphere is "milblogs" (military blogs), and one of the most popular of these is BlackFive. With the help of a number of other bloggers, they've put together a moving and gracious video thanking our brave men and women who serve in the armed forces:

Year End Updates

■ Folks who participate in HSA (Health Savings Account) plans will see their max contribution limits increase, up as much as 2.5% (even more for catch-ups):

[Graphic courtesy of Golden Rule Ins Co]

■ And for our seasoned citizens, news from the Medicare Part D front. The 2008 Open Enrollment season begins on January 1st, and runs through the end of March. Changes there, as well; beneficiaries (Medicare participants) can elect:

[Graphic courtesy of Anthem BC/BS]

■ Finally, from the MythBusters Dept comes this helpful test. True or false:

Eating turkey makes you sleepy

Reading in a darkened room will ruin your eyesight

You should drink at least 8 glasses of water a day

The answers may surprise you; they certainly surprised the physicians who tested them.

Snapshot of Uninsured in America

[Welcome Industry Radar readers!]

I had a brief conversation with another agent earlier. We were trading war stories about some of the frustrations we face in our business. Here is one of his.

He had been working with a family for 3 months. Husband, wife, 2 kids. Good income. Nice neighborhood.

No health insurance.

Yesterday he made another follow up phone call to see if they wanted to put in an application before rates go up in January.

No, he was told. They can't afford health insurance now. They just purchased a 2008 Suburban so it will be a while before they can fit health insurance in their budget.

The end.

Fat Boat

Al Gore will love this. Save the earth and lose weight at the same time.

The fastest eco boat on the planet will attempt to break the round the world speed record using fuel made from human fat.

Fastest boat powered by fat? Must mean there are slow boats powered by fat.

Who knew?

Bethune underwent liposuction and donated enough to produce 100ml of biofuel, while two other, larger volunteers also had the procedure, making a total of 10 litres of human fat.

For the rest of us, 10 litres (British spelling) equals a little over 2 gallons of fat.

That converts into a little over 1.5 gallons of fuel.

Enough to travel 15km or 9 miles . . give or take.

Earthrace is fuelled on 100 per cent biodiesel and has a net zero carbon footprint.

See? I told you Al would love it.

But there is a problem.

Circumnavigating the globe represents the pinnacle of powerboat challenges, and more than 24,000 nautical miles is the world's longest speed challenge.

If they have a 24,000 mile journey and they start with enough fuel to travel 9 miles with "fat donations" from 3 volunteers, how many more fat people will it take to complete the journey?

Don't you just love these kind of math problems?

Happy eating over the holidays!

And from the parallel universe of medical malpractice insurance . . .

Last month,

[New York Insurance] Superintendent Eric Dinallo said that to fill a $500 million deficit . . . the 30,000 physicians in the state who get malpractice insurance through two large nonprofit companies could owe $50,000 each.

Well, THAT’s one way to get your doctors’ attention!

This latest insurance crisis shows once again that it does not much matter whether an insurance company is for-profit or “nonprofit”. What matters most is that both types of companies get their premiums right. This requires correctly assessing the cost of the malpractice liabilities that they insure. After all, the cost of premiums is mostly driven by the cost of the liabilities. [Sound familiar? Anyone? Anyone?]

Even a not-for-profit insurance company that underprices its liabilities will sooner or later have to charge higher premiums, reduce benefits, or go out of business. Predictably, the doctors and the trial lawyers and the insurance companies and the state regulators disagree about what the real problem is. Of course that means they disagree how to solve this crisis they can't quite define. And, predictably, our governor has ordered another “study”. [Sound familiar? Anyone? Anyone?]

Is there a call to establish a state-run, single-payer med mal insurance mechanism so this crisis could be fixed without curtailing our right to sue and without requiring anyone to pay more? I haven't seen such a call but that's probably just due to inattention on my part.

Hear, Hear! (A Doc Who *Gets* It)

When I first started blogging (almost three years ago!), one of my first "finds" was the California Medicine Man. A practicing physician, he writes about complex issues in an amazingly readable way. Recently, he asked my opinion about why insurance companies don't (generally) pay for hearing aids. I'd never really given the subject much thought, but Dr Ford certainly has.

In this thoughtful post, he offers his well-researched opinion about the "why," and offers an intriguing suggestion about changing that situation.

Recommended.

Good S-CHIP News (Finally!)

The massive expansion of this program originally touted as "for the children" was taken off life support and expired early this morning, according to sources close to the "patient:"

"After coming up short in their efforts to enact a $35 billion expansion of the State Children’s Health Insurance Program (SCHIP) — enduring two presidential vetoes along the way — congressional Democrats signed off on Republican demands to extend the program until 2009."

This is good news for poor children, whose health coverage was jeopardized by congressional efforts to cover middle class adults. With this new agreement, it looks like our Fearless Leaders on the Potomic (FLotP©) have kicked this particular can a little farther down the road.

Of course, this doesn't mean an end to congressional efforts to gut the point of the program, but it certainly buys the children, and taxpayers, some time.

Bravo!

[H/T: Michelle Malkin]

Cavalcade of Risk #41 is up!

Matthew Paulson, who runs American Consumer News blog, hosts this week's edition of risky posts. Be sure to check it out.

And don't forget, you can host a Cav, too. Just drop us a line to claim your date!

California Here I Come...I Mean, Go!

[Welcome Industry Radar readers!]

At the risk of scooping our west coast co-blogger, I bring you news of Massachusetts-West:

"The state Assembly on Monday approved a massive health care reform plan that will expand coverage to nearly 70 percent of the state's uninsured and require most Californians to buy health insurance."

The brilliant Golden State legislators, egged on by The Governator, have passed a bill that (unbelievably) surpasses even the Bay State's ginormous sinkhole [ed: okay, enough already with the hyperbole]. As passed, implementing the bill is anticipated to cost some $14 billion (yes, with a b). Of course, this is really just the floor.

My favorite line comes from Assembly Speaker (and bill author) Fabian Nunez:

"Fundamentally, health care is a right and not a privilege."

Perhaps the California constitution contains such language; that of the United States, of course, does not. And again, we see the conflation of health care and health insurance, two completely different animals.

So, who pays for this largesse?

Well, smokers for starters. I'm still convinced that the only way that that will work is simultaneous legislation requiring non-smokers to begin lighting up. But that's not all:

"The bill would require all employers to spend a minimum amount on employees' health care or contribute to a state-run insurance pool."

These contributions are set up on a sliding scale, requiring employers to fork over up to 6.5% of payroll if they don't offer coverage. Depending on the group, this may well represent a significant savings; a particularly unhealthy group may be better off jettisoning their group cover and jumping into the new state pool.

A more cynical person might presume that this is exactly the intent of the bill's sponsors.

Ya think?

[h/t: Junk Yard Blog]

DTC: Helpful PSA

[Welcome Team Pointless readers!]

As we've discussed before, DTC (Direct To Consumer) advertising is a big deal for big pharma. To some extent, it exacerbates the ever-increasing cost of health care, and thus health insurance.

On the other hand, we've also discussed how certain food group items can actually help promote good health (although preferably in moderation).

You'll no doubt be glad to learn that we've found an intriguing and helpful PSA (Public Service Announcement) which helps to resolve that dilemna:

Mailbag: Group HSA's and Medicare

One of our readers recently emailed us with an interesting problem. Seems that his group insurance at work was upgrading to a High Deductible HSA-compliant plan. The challenge is that a handful of his co-workers, including the boss, are post-65 and on Medicare.

So what, you ask?

So this:

"You are not eligible for an HSA after you have enrolled in Medicare. If you had an HSA before you enrolled in Medicare, you can keep it. However, you cannot continue to make contributions to an HSA after you enroll in Medicare."

That is, if you're on Medicare, then you can't set up a Health Savings Account (HSA), nor can you continue putting money into an existing one. This poses a problem for our reader's group: it seems that the employer was going to "seed" the account to help pre-fund some expenses.

The problem was actually even more specific: the Medicare-covered employees were enrolled only in Part A, not B (physician's expenses) or D (debacle, er...drugs). Would this make a difference?

Now that is a great question. As an aside: I am continually pleased and amazed at the level of discussion that we're able to generate here. Our readers are generally informed and ask intelligent, insightful questions (even those readers with whom we occasionally disagree). Very cool.

After consulting with Bob and Bill, it was determined that whether or not one had enrolled in Parts B and/or D made no difference: those employees just weren't eligible to participate in the HSA plan. The employees could, of course, enroll in the HDHP (high deductible plan), which may or may not be appropriate. Bill also mentioned that at least one CA insurer offers a multi-plan option, where employees in a group plan can choose different types of benefits (ala "cafeteria plans"). Unfortunately, that wasn't an option in this particular case.

In the event, it looks like our reader's employer is going to use a direct reimbursement plan. Although this route lacks some of the advantages of an HSA, it's simple and effective.

We're always glad to help out, and appreciate the opportunity to do so, even when the answer isn't what we'd prefer.

I was disappointed that the Medicare-enrolled employees weren't able to fully participate in the HDHP/HSA arrangement. That seems a shame, and a waste. Some years ago, Medicare proposed adding an HSA-type option. Unfortunately, that never got off the ground. But if you're interested in that sort of thing, the folks at Kaiser did an interesting "white paper" on the idea. It's available here.

I'm ambivalent about whether or not this would really work. Obviously, I'm a big proponent of HSA's, but I have to wonder about the Medicare market for them right now. Down the road, as they (hopefully/presumably) gain market share, and more folks "age into" Medicare, they'll become attractive.

Poppin' News

Waaay back in August of last year, Bob reported on an employee in a popcorn manufacturing facility who had won a large judgment against one of his employer's suppliers. He claimed that the additive which provided that "buttery flavor," diacetyl, had ruined his lungs.

Earlier this fall, a Denver physician warned various federal agencies about the dangers of this product, urging them to investigate possible links between the chemical and increased risk of pulmonary disease.

Which brings us to today's news that "ConAgra has removed a controversial chemical from its microwave popcorn that gives the snack a buttery, creamy taste, citing concern for its workers' health." Although the DOL's "Occupational Safety and Health Administration does not have specific regulations regarding" the chemical, it did issue a special bulletin discussing the potential problem.

As for me, I'm still sticking with Alton Brown's method.

Carnival of the Capitalists is up

Rob Sama, one of the originators of the Carnival, hosts this week's edition. Rob took a major scalpel to his version, and we're treated to a simple 15 posts. Rob says (and I agree) "the Carnival has become dominated by sole practitioners offering silly how-to type entries in blogs that have extraordinarily few entries to begin with...and submissions that seemingly have been made to every...carnival under the sun." Hear, hear! Thank you, Rob, for injecting some sanity and common sense back into the CotC.

As a big fan of common sense, I really appreciated Super Saver's post on some simple ways to fix (or at least adjust) our tax code. He takes a look at both major parties' ideas and finds them wanting.

Hoosier HSA

In an attempt to raise awareness for HSA's (Health Savings Accounts) while addressing health care coverage for the poor, the White House has proposed a new HSA test program for the Hoosier state.

Under the Indiana program, eligible residents can pay up to 5 percent of their incomes into state-subsidized "Personal Wellness and Responsibility Accounts" that cover their initial medical expenses up to $1,100. Once that deductible is reached, private insurance purchased by the state kicks in.

Personal Wellness and RESPONSIBILITY Accounts.

Personal responsibility. I like that concept.

How could anyone object to requiring adults to act like adults?

Well, apparently some can . . .

Judith Solomon, senior fellow at the Center on Budget and Policy Priorities, said she doubts that many people making $10,000 a year can afford to pay $500 for health insurance. She said that about 50,000 people lost Medicaid coverage in Oregon after that state got permission to raise insurance premiums to $20 a month.

The state increases the premium from $0 to $20 per month and 50,000 LOST their coverage?

Lost their coverage?

They chose not to pay $20 for something that was previously free.

They didn't lose anything.

Just the next station on the line . . .

Remember please, the rules are there to help everyone.

UPDATE (from HGS): Mike beat me to the punch on this one, but I'd like to add a couple of my own thoughts:

■ This is but another in a (very) long string of "gotcha's" perpetrated by the MVNHS©.

■ It's been said that our system has inequalities, and that it is therefore "broken." Indeed, one of our "regulars" is on record as stating that such things happen "only in America." And yet we see the British "system" failing its patients time, after time, after time. And because it is nationalized, there are few alternatives left when such egregious failures (such as the plight of Ms Mills) come about.

First do no harm

Recently I came across the following comment on a physician’s health blog. I saved the link, but am not posting it because the specific source is not really important. But the point of view it expresses is important because it is common among physicians. Here is the comment:

"unless the physicians are vigilant in correcting [policy wonks’] fantasies, the absurdities will press on unabated."

This is the beginning of an important insight. But it’s left unfinished.

Meanwhile, and in reality, such absurdities have grown for 40 years and IMO are likely to become even worse.

Let's keep in mind that health care policy wonks do not fall out of the sky. It's trite, but true: nature abhors a vacuum. The policy vacuum in health care sucks in people who become health policy wonks, when otherwise most of them would pursue more useful vocations.

And how have these wonkish folk gained significant control within our "system?" IMO, because physicians have increasingly failed to assert control.

The resulting vacuum of physician leadership has become especially harmful during the past 40 years.

Moses found a way out of the wilderness in 40 years. OK, health care is a more difficult problem. But still . . .

Regrettably physicians by their inaction cede leadership on far too many fundamentals of health care management. If physicians want health care to be managed differently, they must find ways to exert more significant and direct leadership.

Physicians’ attempts to correct others' fantasies won’t work. Physicians' attempts to persuade policy wonks to lead, but in a manner agreeable to physicians rather than to policy wonks, won’t succeed. Physicians’ complaints about others’ poor leadership is not leadership. In fact, none of these behaviors is leadership. What to do? Well, I’m no wonk. I don't know for a fact what will work. If I knew I’d be very rich. But my opinion is that physicians must assert much more direct influence on health care policy and management in this country.

“First, do no harm” is sometimes a call to take action, rather than to refrain from taking action. If now is not one of those times to act – then when?

Cavalcade #41: Submissions Due

Next week's Cav wraps up a tremendous 2007. Please make sure to get your submissions in to our host, Matthew Paulson, by Monday (the 17th). Matthew asks that you PLEASE include:

■ Your blog's url

■ Your post's url

■ The post's trackback URL (if available)

■ A (brief) summary of the post

You can submit them via Blog Carnival or email.

We have slots available for the New Year - just drop us a line to reserve yours.

A Taxing (Health) Problem

Once again, our favorite tax-blogger, Joe Kristan, has indispensable year-end news:

"S corporation shareholders need to make sure that their premiums are included on their 2007 W-2s."

What's the point, you ask?

Simply this: if you own a business, and you want to (legally) deduct your health insurance premiums (usually a non-trivial amount), there are some new rules, and you need to know about them.

Fortunately, Joe has all the sordid details, which he generously shares with those of us who don't count (or even necessarily know) beans.

Check it out.

Health Wonk Review: Final '07 Edition

HealthBlawger David Harlow presents an outstanding EOY edition, successfully integrating his chosen theme (light) with a potpourri of policy posts. I especially like how he creates a kind narrative.

Each HWR seems even better than the last.

One post that caught my eye was Dr Adam Fein's on how Medicare Part D is playing out. Regular IB readers know that I'm no fan of the program, but Dr Fein has an interesting take on how it can actually drive down some costs.

S-CHIPping Away

The original intent of the S-CHIP program was to offer affordable health insurance coverage to poor children. Along the way, the definition of both poor and children has blossomed to include middle class adults who would rather rely on the government than take responsibility for themselves (and their families). We saw this with the S-CHIP kerfluffle this past fall, and our fearless leaders in Washington (DC) decided to trot it out again.

President Bush wisely smacked down the latest version, which again included adults. The President summed it up nicely:

"Ultimately, our nation's goal should be to move children who have no health insurance to private coverage, not to move children who already have private health insurance to government coverage."

Hear, hear!

Misdirection

Republican presidential candidates have called for a greater reliance upon the individual health insurance market. But many of these same candidates have had cancer and wouldn't have been able to get individual coverage under their own health reform plans at the time of their treatment.

Close, but no cigar.

All have called for a more robust individual health insurance market. But that market today relies upon medical underwriting--people who have had cancer will have great difficulty finding an insurance company to underwrite them. As the Times reports, "Cancer survivors -- even if they have been free of disease for several years -- are routinely denied health insurance when they try to purchase it as individuals."

True, at least to an extent. Some cancers with good remission/cure rates are given a free pass.

If coverage is offered, it often comes with restrictions on the disease the person suffered with or high premiums.

If coverage is offered.

Tempering the headline?

First they cannot get coverage. Now the author opts to qualify his contention.

But when individual coverage costs thousands of dollars a year, many can't afford to get it.

And many cannot afford COBRA either.

Or, for that matter, risk pool premiums.

So the issue is not one of AVAILABILITY as it is AFFORDABILITY.

Several dynamics come in to play here. One is a reliance and expectation that the carrier should cover items that are routine, such as primary care. Stripping out primary care as part of a health plan goes a long way toward reducing premiums, often by 30% or more.

The other issue that no one wants to address is that Americans as a whole are not savers. Most live paycheck to paycheck. When the check stops they go into a crisis mode.

If the taxpayer wants forced health care for everyone (regardless of the funding) then they should also require forced saving accounts. If you cannot support yourself and your family for 6 months without a paycheck then perhaps you should not be eligible for subsidized health insurance.

At some point the taxpayer needs to accept the responsibility of adulthood.

Easy Money

John Dillinger is reported to have said "you get much more with a gun and a smile than just a smile alone".

Dillinger was wrong.

Dillinger never heard of Medicare.

A recent report by NBC News reveals an estimated $60B in fraud committed on the taxpayers by virtue of Medicare fraud.

A recent report by the inspector general for the Department of Health and Human Services noted that 72 percent of the Medicare claims submitted nationwide for HIV/AIDS treatment in 2005 came from South Florida alone. That percentage is of great concern to authorities, since only eight percent of the country's HIV/AIDS Medicare beneficiaries actually live in South Florida,

And no one noticed?

Who's minding the store?

"For every one owner we arrest, another one pops up, maybe even two, tomorrow. It's so lucrative that we have yet to turn the tide."

Stealing from taxpayers. Lucrative.

Interesting choice of words.

One of the most common schemes is the illicit billing for DME, or durable medical equipment, such as oxygen generators, breathing machines, air mattresses, walkers, orthopedic braces and wheelchairs. This scheme involves billions of dollars a year in illegal claims.

And let's not forget the Medicare scooters heavily advertised on TV.

federal officials in Miami pointed to a red electric wheelchair they seized from an illicit company. Normally it would cost about $5,000. But by billing Medicare over and over, nor ever delivering the wheelchair to an actual patient, criminals charged a total of $5 million for that one item alone.

That's some wheelchair.

Here's a bit of trivia. Most folks know that Lyndon Johnson instituted Medicare with a stroke of a pen. But who was the first Medicare beneficiary?

In honor of (Harry) Truman's leadership foresight, Johnson enrolled him as the program's first beneficiary and presented him with the nation's first Medicare card.

So how much does Medicare fraud cost the taxpayer?

thieves now steal an estimated $60 billion a year in taxpayer money that is supposed to finance health care for 43 million American seniors and the disabled.

$60B out of a total $408B spent on Medicare.

That's 15% of the budget lost to fraud.

So who wants "Medicare for all"?

If John Dillinger were alive, he probably would be in the thick of it. He might even be willing to make a go of it with just a smile . . .

Fertility Chair

An inexpensive alternative to IVF?

Stupid Carrier Tricks #143

Of all the types of claims we see in the life and health business, a natural death claim on a 20 year old policy would seem to be the least likely to be a problem.

After all, such a policy is well past the contestable period, and there's no foul play (my client died of cancer). It's tailor-made for prompt settlement.

Unless, apparently, the carrier's Time Insurance (aka Hartford Life).

The facts are pretty straightforward: we wrote a universal life insurance policy on a gentleman in 1988, and he died of cancer on October 28, 2007. I contacted the carrier immediately, and they responded to the request for paperwork quickly.

And that was the last thing they did "quickly."

I met with the widow a week or so later, and we submitted the completed paperwork on November 9th. Then we waited.

And waited.

Eventually, I called Kelly Wanovich, the "claim analyst" who had initially responded to our request on October 31st. He told me that it can take up to 10 business days for a claim to be processed and paid. It's now over a month since we filed the claim (for those keeping track at home, that's 20 business days, if we presume that the obviously overworked staff at Time Insurance took off Thanksgiving and "Black Friday"), and still no check. I did receive a call late last week indicating that it was being "processed" and would soon be on its way, but "the check is in the mail" doesn't put food on the widow's table, or make the mortgage payment for a roof over her head.

I even emailed Mr Wanovich last Friday:

"Got your voice mail, and was pleased to hear that the check is (finally) on its way.

I still don't understand why it's taken almost a month (including some 20 business days) for this to happen. I'd like to be able to explain this to [redacted], his widow, as well. Can you help with that?"

Of course, I have yet to receive a response.

There is simply no excuse for such an egregious abuse of the claims process. Trust me, if my client had been a day late with his premium payment, he would have quickly received a "reminder" notice from the carrier. But when it's time to pay, where is that state-of-the-art system to be found? Certainly not in the Claims Department.

It's one thing when there's a legitimate question about a claim; after all, we all suffer when carriers are defrauded. But it is quite another to deliberately withhold money on a straightforward, no-brainer claim such as this.

Unless, of course, you're a carrier, and the term "no brain" fits a little too well.

UPDATE 12/12/07: O Frabjous Day! The death claim check arrived this afternoon, a month after the claim was submitted. On the one hand, this is terrific news for the widow. On the other, it does not mitigate or negate the agregiously long time it took for this to happen.

An Enigmatic Conundrum

Group term life insurance is the ugly stepchild of "real" life insurance. Typically sold as part of a group medical plan, it pays a minimal amount (often multiplied in the case of accidental death) and is owned not but the insured, but the employer (who has the right to cancel or change the plan).

Which is not to say that GTL is a bad or unnecessary thing; simply that it is a poor substitute for personally owned life insurance.

So what brought that on?

Well, even though GTL is not my favorite product, it does serve a very important purpose: for many, it is the only life insurance they own. For these folks, it may actually mean bread on the table for the family they leave behind.

There's one other interesting difference between "regular" (underwritten) life insurance and GTL, as well: terrorism coverage. Almost all* individual life policies have clauses about war and (especially) "acts of war" which could be a problem in the event of a terrorist attack.

Most GTL plans lack this distinction.

Which brings us to the conundrum:

"The industry, in the event of a severe act of terrorism, is vulnerable to insolvency because high concentrations of covered employees work in the same locations, because primary group life insurers do not exclude terrorism risks while most catastrophic reinsurance does exclude such risks, and because a large-scale loss of life would fall outside of actuarial expectations of death.”

At least according to the text of a new terrorism bill being debated in the House. The challenge is that carriers face huge losses, many of which are apparently not reinsured, in the event of another 9/11. By placing the treasury of the United States as a "backstop" against this kind of loss, it lessens the likelihood of any one (or several) carrier from going down the tubes. And that would be important to the beneficiaries, those left behind.

On the other hand, this is the nature of business, and particularly the insurance business: risk management. If the risk of terrorism is of concern (as it obviously should be), then it seems to me that the industry is obligated to come up with solutions on its own. It shouldn't count on the gummint (which is to say, the taxpayer) to bail out carriers who made poor choices.

No easy answers.

*I'm not aware of any that don't, but there may well be.

An Aesthetic Grand Rounds

First time GR host Dr G C George presents a gorgeous collection of interesting posts from around the medblogosphere. He presents the 20-plus entries as a sort of Caribbean cruise, somplete with marine flora and fauna. It's both visually and intellectually appealing.

Prudence, MD has an interesting post on the relationship of religion and health. Her backdrop is a rather disturbing recent episode in the Philippines which saw a fundamental clash between providers concerned about the spread of AIDS, and a religious hierarchy vehemently opposed to safe sex education.

HSA News: Breaking

CPA Extraordinaire Joe Kristan has some interesting news for those who either itemize their medical expenses or (more likely) participate in Qualified Alternative Benefits (FSA/HRA/HSA).

While some of the changes affect a broad spectrum of participants, those who are pregnant (or think they might be) definitely need to "read the whole thing."

Carnival Monday!

The folks at Money $mart Life present a tremendous Carnival of Personal Finance, complete with an introductory YouTube preview. Very unique, very cool. And there are almost 70 interesting submissions, all neatly categorized and annotated.

Kudos!

Paid Twice has an interesting post on how our priorities and measures change as we mature. It's a very timely reminder.

UPDATE: A tad late, but welcome nonetheless, Jay at Blogblivion hosts this week's edition of the Carnival of the Capitalists. With some 28 posts, all celebrating the capitalist system, you're sure to find something helpful.

Ever eaten a square watermelon? With a post that's truly "outside of the box," take a taste of Financial Hack's report on a great solution to a vexing problem.