A Brief Commercial Break

Despite numerous offers and enticements, we don't do advertising here at IB. Yes, you do see a link to Hometown Quotes in the sidebar, but this is really a referral service; none of us actually get any leads from it. But I'd like to take the opportunity to plug two of my co-bloggers (Mike doesn't currently sell insurance):

If you live in the Golden State, and you're not availing yourself of the services of Bill Halper, you're missing a bet: Bill's an extremely knowledgeable and ethical insurance professional, and you should be seeking him out to help with your life and health insurance needs.

You may have noticed that I've updated the top post of our blogroll: instead of Insurance411, you see Bare Bones Health. This is Bob Vineyard's newest venture, and it evolved from his "Phantom Insurance" post here. Frankly, I think this is going to be big: in a sense, it's a quantum leap backward, but that's actually a good thing. The premise is that folks tend to buy too much insurance, and Bob's set out to correct that. Give it a whirl.

Mr DeMille, Your Policy's Ready!

Interesting article in the McPaper last week about insuring Hollywood blockbusters (and, of course, lacklusters):

"Most independent producers and even some big studios won't touch a film unless it's insured against potential problems including production delays from injured or incapacitated actors, bad weather, equipment breakdown or damage to essential elements of a film."

Special Risk policies are generally the province of our P&C brethren, and run the gamut from hole-in-one cover to NASCAR events. But the discipline really encompasses a lot more, and it's pretty interesting. For example:

"Independent films need to have these policies to land a different kind of protection, called a completion bond, that compensates backers if the movie doesn't come in on time and on budget. These bonds can account for an additional 2% of a film's costs" Who knew?

So now I can't wait for the new action-packed epic, Indiana Jones and the Underwriters of Doom.

PERSONAL UPDATE: Thank You to all our readers for your kind words and well wishes in the aftermath of my unfortunate accident. I had my surgery yesterday afternoon, and seem to be on the road to recovery (Percoset is good!).

Cavalcade of Risk #46 is up!

Wenchy the Wise hosts this edition of the Cavalcade of Risk. Please check it out!

We could use some hosts for April and May: please drop us a line to volunteer!

Grand Rounds is up...

Hungarian med student Bertalan Meskó, proprietor of Science Roll, presents a truly grand 'Rounds, with 4 dozen interesting entries, all with helpful context.

At Diabetes Mine, Amy Tenderich has some helpful, albeit little known, info on our immune system.

Norway: No Way!

Advocates of state-run health care take great pleasure in pointing to "success" stories in, for example, Japan and Great Britain. One of their favorites, though, has been Norway.

Until now, one supposes:

"State health officials are sounding the sirens themselves over a state of emergency in Norwegian hospitals' emergency rooms, where patients face lengthy delays, inexperienced doctors and often chaotic organization."

Ooopse!

The problems stem from inexperienced docs to long waits for staff and equipment. Perhaps more problemmatic is the dearth of monitoring of critically-ill patients and lack of clearcut procedures on how to deal with them.

"I'm from the government, und I'm here to help you!"

Indeed.

Great White North – Part XLIV

Significant goings-on up north. The Castonguay Report is released - see the Toronto Star.

Signficant because, at least in Quebec, the provincial health system is characterized as “overburdened,” “wheezing” and “near a crisis point” - because it can “no longer sustain the annual growth in health-care costs.”

Cheese, really? In Canada?

Significant also because the Castonguay Report recommends that Quebec adopt strategies that the evil American insurance companies use - - increase premiums (i.e., taxes) and reduce benefits (i.e., copays and deductibles). Predictably, unions fiercely oppose these strategies and meanwhile there is a shortage of doctors.

Sounds familiar. But in Canada??

The article notes that “The province currently spends about $24 billion annually on health care, or about 40 per cent of its budget.”

Well, now. The 2007 population of Quebec was about 7,720,000. Its $24 billion annual expenditure on health care is equivalent to $3,100 annually per capita. If U.S. federal health care spending were 40% of our budget, the U.S. would raise about $1.6 trillion anually to finance health care spending - - or around $5,400 per capita.

So the Canadian per capita number seems 43% less than the U.S. number. Is so large a difference the result of superior Canadian health care management? Maybe it is. But what if not?

What if, just maybe, this difference really measures how easily health care demand rises to meet the supply of money? What if, just maybe, it demonstrates that the American economy is able to supply substantially more health care per capita than Canada’s? And what if the difference mainly means Americans demand substantially more health care than Canadians? Might that explain, for example, the more immediate availability of hospital and specialty care in the U.S.? If the higher level of health care supply in the U.S. is bad, does that mean the higher level of health care demand is also bad? If so, who shall be punished for this?

EHR/EMR: Pro vs Con

Search engine behemoth Google plans to join other internet biggies in offering on-line storage of one's medical records:

"Thousands of patients at the Cleveland Clinic will be able to turn to Google to access their medical records online — everything from their prescriptions to diagnoses — in a pilot program announced Thursday..."

A few months ago, Mike wrote about similar efforts by the MVNHS©, whose providers overwhelmingly approved of (at least) the concept.

The idea is to make it easier for folks to both access their own info and make that info available to healthcare providers. The major benefit of such a service is to allow providers real-time access to pertinent (and perhaps life-saving) medical info on their patients. Another advantage is that it makes it less onerous when folks need to recall their own medical histories when faced with, for example, an ER visit.

There are some potential downsides, of course. Chief among these is the potential theft (or breach) of such data. We've all read the stories about stolen credit card info, and the risk is there for any electronically-stored records.

Another concern would be "unauthorized" access to this data; by, for example, employers (or potential employers), or even insurers. As to the latter, I really don't see a problem: we've written before about the MIB, and this seems to me an extension of that tool. As to the former, well, that is problemmatic: what does one say if/when a prospective employer requests access? That's not so cut-and-dry.

Still, rejecting new tech because of potential problems seems ill-advised. And the benefits seem genuinely, um, beneficial. And of course, one can't unring the bell: this stuff is already here (or on the way), so perhaps the discussion needs to be about the safeguards.

Cavalcade #46: Submissions Due

Wenchypoo hosts next week's edition of the Cavalcade, scheduled for Wednesday the 27th. Please make sure to get your submissions in by Monday (the 25th). She 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 April and May, so PLEASE drop us a line to reserve yours.

Accessing Healthcare, Part 1

[Welcome Industry Radar readers!]

We start today's lesson with a rebus:

Snowblower + icy driveway + gravity = broken (right) wrist

Ooops!

In my own defense, the polite and efficient ER doc informed me that there were four(!) other Y-chromosome types in the ER, at the same time, with comparable (and identically acquired) injuries.

Regular readers know that we recently switched to an Aetna HDHP/HSA; this post (and perhaps one or two others) will serve as a real-life, real-time assessment.

In the event, I was transported to the nearest hospital (a gorgeous, brand-spanking new, state-of-the-art facility). It was VERY cool:

First, I was assigned my own room (complete with sliding-glass doors, ala Dr House). The admitting person came to me: she wheeled in a cart (complete with PC, HD monitor, scanner and printer) and got my vitals: insurance card, co-pay, mother's maiden name, grandfather's trust number, you know.

She printed off the appropriate forms, stuck them in a clipboard, handed that to me, and said "sign here, please." I looked at her, then at my swollen and painfully mis-shaped wrist, and observed sagely: "you have to be kidding! "

But she wasn't; she nicely told me to use my left hand and "do my best." So I scribbled something illegible, and handed it back (but not before my youngest stood up, examined the signature and exclaimed: "really, Dad, it's no worse than your regular handwriting." She's her mother's daughter).

Then it was time for x-rays. But, they didn't wheel me to radiology, they wheeled the x-ray machine to my room! Wow.

To no one's surprise, the x-ray confirmed a broken wrist. Great.

And then came the question: do you want the on-call orthopaedic surgeon? Of course not. Dr Bob referred me to a pre-eminent hand specialist (at some point, I truly expect to be told "oh, I can't do that: you need a pinkie specialist!").

But that's another post [ed: well, we should hope so].

What I found so intriguing was the efficient (but not-impersonal) workflow: every person brought the supplies, equipment and expertise necessary for their task. I didn't feel rushed, but neither did I feel as if the wait was endless.

At some point in the next few weeks, I'll receive my EOB (Explanation of Benefits) which will list all of the medicine that was committed upon me, how much the hospital charged for said services, how much the insurance will allow them to charge, and (finally) how much I owe. When it comes, I'll share it with you, along with the strategy we'll use to pay for it.

(And yes, I typed this with my left-hand, and two vicodin's)

This Sceptered Isle Part X

Imagine this.

It's easy if you try.

You may hope someday to join them.

And the world will be as one.

Transparency Update

It's been a while since we addressed transparency in health care. Very briefly, this is the idea that folks aren't aware, up front, of the costs of various procedures or medications. Although information regarding the latter is becoming more and more available, "regular" health care costs still remain somewhat murky. To an extent, this is to be expected: after all, there are many carriers and many plans, and providers themselves often have little (if any) idea how much a given procedure or exam will cost.

Still, it's an admirable -- and attainable -- goal. We've generally seen initiatives in this area from insurers and, to an extent, Medicare. As a fan of private enterprise, I've been hoping for more entrepreneurs to jump in. FoIB Chris Parks' efforts at MedBill Advisor come to mind, and Bob recently tipped me to this start-up:

"A new Twin Cities company called Carol is trying to change that with a Web site that gives consumers a "care marketplace" to search for medical services, compare quality and price and make appointments."

The company, founded in 2006, enables patients to access a variety of information about cost and availability, as well as quality of care. The site looks a lot like a shopping portal (complete with a graphic of a woman with a shopping basket). The metaphor is clear, if unsubtle: shop for health care as you would for milk and eggs, pants and shirts, a new car or DVD player.

This idea of health care as a commodity has, of course, upset a number of apple carts [ed: ugh!]:

"But Dr. Sidney Wolfe, director of Public Citizen's Health Research Group, said the site is nothing more than advertising, and he hoped it wouldn't catch on.

"Among physicians, there's a belief that health care is too critical ... to be left to the usual marketplace," he said."

Methinks thou dost protest too much, Doc.

Like it or not, you (and your colleagues) are in the business of delivering health care. While that may not seem particularly glamorous, and perhaps shows less deference than that to which you're accustomed, it is the truth. There are all kinds of health information resources available (from WebMD on out); don't you think your patients have already figured that out?

The article Bob sent also mentions something that regular readers of IB already know:

"If the site becomes more comprehensive, Carol.com would be most useful to people with high-deductible plans, health savings accounts or those without health insurance, said Elizabeth Boehm, an analyst with Forrester Research who studies the health care customer's experience."

As proponents of such plans, we've made this case many times over the years: it's your money, after all, shouldn't you spend it wisely?

Still, it's nice to be validated.

I think psychiatrist Ronald Groat summed it up best: "Carol is important because it makes health care "more visible and transparent to someone who's looking for help."

Interesting Post at Joe's Place

One of our very favorite bloggers is Joe Kristan. Despite the obvious handicap of being an accountant, Joe has insightful and often cutting-edge posts on tax-related issues.

And sometimes about gummint meddling.

In brief, Hawkeye State governor Chet Culver is taking aim at the health insurance market with a variety of problemmatic ideas. One of them seeks to address the challenge of folks coming off group plans and finding little or no joy in the individual marketplace. The Gov's idea is to require carriers to offer cover to folks with pre-existing conditions. Joe correctly adduces that this will serve to increase costs to everyone, especially if carriers are forbidden to rate up such applicants.

I tend to agree, but I'm intrigued by the concept. After all, one of the goals is to get (and keep) more folks "in the system." It's always bothered me that HIPAA does a reasonable job of this when moving from group to group, or even individual to group. But it's silent as to folks going from group to individual cover, and I think that's a problem.

As I mentioned at Joe's, as long as the carrier is able to "rate for the risk," I think this idea has some legs. Some of the Governor's other "solutions" are less attractive, but make for interesting reading.

Grand Rounds is up...

You'll find the best of the medblogs over at Daily Interview. There are over 2 dozen posts presented in 10 categories, all with helpful context.

We haven't talked much about alternative medicine here, but How to Cope with Pain has an interesting post on the efficacy of herbal pain meds.

Jumble o'Numbers

[Welcome Industry Radar readers!]

At a meeting I recently attended, one of the speakers threw out a couple of "buzz alphanumerics" (these are like "buzz words," but different): 412i and 409a.

Neither one of these are brand new, and both of them relate to the use of life insurance in defined benefit deferred compensation plans.

Whether qualified or not, deferred compensation plans are a valid, and valuable, way to accumulate additional dollars towards retirement. By "putting off" (deferring) taxable income today, one hopes to enjoy greater purchasing power with those dollars in future years.

Qualified Defined Contribution plans, such as IRA's and 401(k)'s, offer immediate tax relief, but come at a price: limited access, special rules, an uncertain tax future, to name some baggage. One is also limited in how much one can stuff away in such plans: the gummint determines how much can getted socked away, and has special rules for highly compensated folks. Such plans are essentially defined by the amount one may contribute, thus the term "defined contribution."

Non-qualified plans, on the other hand, don't have such handcuffs. About the only real limit is the amount one is willing to sock away into them. There are variations on these plans, of course, but they remain relatively burden-free (for the most part). The biggest obstacle has usually been the pocketbook. Since one is limited by practicality, these plans are essentially defined by the amount one can contribute, and so it becomes a "de facto" defined contribution-type plan (although I'll quickly point out that's a characterization, and not a definition). These typically use life insurance policies as the accumulation vehicle, for a variety of reasons.

But what happens when you "marry" the two ideas: a qualified plan with immediate tax benefits, and the guaranteed growth (and leveraged death benefit) of permanent life insurance? And what if one could set up such a plan defined not by how much one may contribute, but rather by how much one expects to receive come retirement time? Well, we'd call that a "defined benefit" plan, and that's where these two "buzz alphanumerics" come in:

412i plans fall under the rubric of "Defined Benefit Pension Plans," which lay out how much a given person will receive down the road. Based on that person's age (and other demographics), he may be able to put in much more cash, much more quickly. The downside, of course, is that it works best in small companies, and requires some big cash commitments. And because it's based solely on permanent life insuance plans, there's not much flexibility.

409a isn't a plan, per se: it's a (relatively new) section of the code relating to how defined benefit plans (and their funding vehicles) are taxed. You didn't think Uncle Sam was going to ignore the potential bajillions [ed: a highly technical accounting and actuarial term] of dollars that could conceivably be tucked away in such plans, did you?

The new law was officially signed in October of 2004 as part of the American Jobs Creation Act. "The new law imposes restrictions on funding, distributions, and elections to participate in the plan. While recent IRS guidance (IRS Notice 2005-1, as revised on 6 January 2005) provides some transitional relief, immediate changes to many compensation arrangements are necessary."

Still, these plans remain an attractive and effective means towards growing retirement income. If you're interested, you'll need at least two resources that you know and trust: an accoutant, an independent insurance agent, and someone to handle the administrative end (I know, that's three).

Now you know.

Carnival of Personal Finance

The Financial Blogger presents this week's Carnival of Personal Finance, with over 80 entries. On the one hand, there's plenty to choose from, and posts are broken into a handful of categories. On the other, it's really just a big list of posts; relying on the titles is helpful, but somewhat hit-or-miss.

I did find one thought-provoker, though: Tina, at Money Smart Life, recently discovered (to her chagrin) that one's credit rating can affect one's insurance premiums. Thus far, this phenom has affected primarily the P&C side (although most life insurance applications also ask whether or not one has filed for bankruptcy). I've previously discussed this with a P&C pal, and I'll see if I can get him to do a guest-post on the topic.

Shameless Self-Promotion

We're usually pretty circumspect here at IB, but what the heck:

■ In the past few days, we've been linked by both Reuters and Fox News.

And:

■ We're ranked by Wikio as the Number 3 health-related blog (see new sidebar item).

Interestingly, we're also ranked by Wikio as #770 in the "General" blog category (out of almost 35,000 tracked), which puts us in the Top 2%.

Pretty cool.

Must Be an Election Year, II

[Welcome Insurance Forums readers!]

[UPDATE & BUMP: See below]

"New York Attorney General Andrew Cuomo plans on Wednesday to announce the launch of an industrywide investigation into health-care insurers, his office said."

Wow, an industrywide search. Pretty impressive (if a bit overwhelming). And what's Mr Cuomo's beef with insurers?

"Attorney General Andrew M. Cuomo today announced that he is conducting an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates. At the center of the scheme is Ingenix, Inc., the nation’s largest provider of healthcare billing information, which serves as a conduit for rigged data to the largest insurers in the country."

Oooh, "rigged data!" Nothing loaded about that phraseology, is there? The issue is how folks are covered for non-emergency out-of-network care. Traditionally, reimbursement rates for these services are paid as a percentage of "usual and customary" (UCR). And who decides what's UCR? Well, apparently Ingenix does.

Which raises an important, if impudent, question: so what?

Someone has to set these rates, else what's the benchmark? And imagine the hue and cry if the carriers themselves did so. Kind of a "darned if you do..." scenario. According to the company's website, over 1,500 insurance companies and health plans utilize these services (that number's important: it represents the vast majority of carriers). Interestingly, over 200,000 health care providers also use this service.

Wonder when Mr C's going to investigate them?

And since he apprently doesn't think that little effort's going to take some doing, the Empire State's AG plans to sue one of our favorite targets, United HealthCare, for allegedly engaging in "deceptive practices."

And what practices are these, you may wonder?

In order to rein in out-of-network costs, UHC chose to "keep their reimbursements artificially low and force patients to absorb a higher share of the costs."

A higher share of the costs for choosing to go out of network? Heaven forfend!

For its part, UHC (in an email I received this morning) says they use such tools "to set their own reimbursement schedules, establish fees for non-network care, negotiate provider service contracts and review claims for their members and consumers."

Seems inocuous enough to me. But then, I actually favor consumers being more proactive, and taking more personal responsibility for their health care and how it's financed.

(Hat tip: Industry Radar)

UPDATE: Bob sent me this link to an LA Times article which reports "City Atty. Rocky Delgadillo has assembled a team of investigators and prosecutors to probe industry practices such as canceling patients' coverage after they get sick." This is of a piece with what Bill has written about recent efforts in this area.

Food Pyramid Update: Bad News and Good News

[Welcome Reuters and FoxNews readers! Please feel free to look around the site]

Swedish scientists recently concluded a study on the effects of a "month-long diet of fast food and no exercise." [ed: sign me up!]

One of their conclusions, which should surprise exactly no one, was that such a diet leads to a higher risk of liver damage.

What was surprising, however, was that the subjects' "healthy HDL cholesterol actually increased" during the month-long experiment.

Decisions, decisions.

Not So Good Neighbors (A Hot Tip)

Lawblogger Eric Turkewitz has a major scoop:

"State Farm has been sued for racketeering in New York with a claim that it conspired with "Independent Medical Exam" companies and medical practitioners to produce fraudulent and sham medical reports."

Ooops!

The idea was to generate false medical reports in order to justify cutting off (legitimate) claims.

If true, I would judge this to be far worse than AG Cuomo's silly vendetta against UHC. As they say, read the whole thing.

California Dreamin'

Fresh on the heels of a recent legislative defeat, Golden State residents who live in the Los Angeles area face another blow:

"Los Angeles County healthcare officials unveiled a draft cost-cutting plan Wednesday that calls for closing all but one of the county's dozen clinics and reduces services at its six comprehensive outpatient health centers."

We've seen this kind of thing happen in other metro areas, as well. The problem seems to be high demand and little remuneration:

"On paper, it looks like they're trying to achieve savings without cuts in services, but the numbers leave more questions unanswered," opines community activist Yolanda Vera. Last year, you may recall, the dreadful Martin Luther King Jr.-Harbor Hospital was shuttered, after at least one person bled to death waiting on help that never arrived. Unfortunately, this left a void in the system, which other gummint-run providers haven't been able to fill.

So what happens now?

Sheer magic, that's what:

"Officials said they plan for private, nonprofit clinics to step into the gap and provide care to most of the displaced patients for a lower cost than the public system."

Watch out for that little phrase, "nonprofit:" contrary to popular belief, this doesn't mean "at a loss." Someone has to pay for these services (of course, physicians could just do it for free, though, right?), and guess who these "Officials" have in mind?

"Under the plan, the county would then spend..."

As we know, "counties" don't actually have any money to spend; they collect taxes from their citizens and redistribute those funds.

What a plan!

The GPS Dilemma: Tales from the P&C side

[Welcome Industry Radar readers! Please take a look around the site]

Last year, my better half bought me a GPS for my birthday. It's very cool, very helpful, very convenient. I have the voice set to "Female, British," which may be somewhat masochistic, but it's also kinda fun (I call her "Monique"). It's not a high-end unit, but it certainly gets the job done.

That job, of course, is to help me get from Point A to Point B in a reasonable amount of time.

But could it do more?

"A variety of navigational, wireless and sensory devices now allow insurers and authorities to track where you drive, how far, how fast and how well. In return, drivers, parents and employers are saving money on their insurance premiums."

Now this is something I hadn't considered. I consider the little widget a convenience tool, but perhaps it's got a dark side, as well:

"These devices have the potential to track you wherever you go, and the question is, who is going to have access to this data?"

So asks Guilherme Roschke, Skadden Fellow with the Electronic Privacy Information Center. His concern (which is shared by others) is that the technology that can give us quick directions, insurance discounts and enable worried parents to track their teenaged divers can also give us mileage taxes, and potential loss of 5th amendment rights.

But the potential trade-offs have an up side, as well:

Safeco, for example, offers discounts to parents who install such devices in their teens' vehicles. And Ivox (an Atlanta-based company that works with commercial insurers) "has been using GPS units equipped with sensing technology for commercial fleets to monitor driver behavior." This can help lower fleet insurance costs.

As is so often the case when looking at new tech, there are no clear-cut answers. For now, I'll probably just keep my low-end, portable GPS unit in the glove-box when not in use.

Hope that's okay with Monique.

Cavalcade of Risk #45 is up!

Jaimie at Paid Twice hosts the Valentine's Day Eve edition of the Cavalcade of Risk. With over 2 dozen interesting posts, you're sure to find something sweet.

We could sure use some hosts for March and April: just drop us a line to volunteer!

Grand Rounds: (Almost) Valentine's Day edition

In a nod to history, health care lawyer and consultant David Harlow presents this week's Grand Rounds as a sort of "Valentine's Day through the ages." It's a great effort, with almost 3 dozen roses, er, entries.

We've blogged before on the case of the anonymous Texas blogger(s) taking on the mean ol' hospital. Well, health care lawyer (and fellow medblogger) Bob Coffield has the newest developments, along with some in-depth analysis.

Stupid Client Tricks (#1?)

[Welcome Industry Radar readers! Please feel free to look around, as well]

This is just too good not to mention:

One of my groups recently switched from a moderate-deductible co-pay plan to a High Deductible Health Savings Account plan (HSA). For many years, they've had a Flexible Spending Account (FSA), which the employer seeded with $250 per employee. That was essentially a $250 gift certificate for health care.

When we switched to the HSA, the employer kept the FSA (as well as the $250) in place, and also "seeded" the HSA with another $260 per year. That's over $500 of "free" health care, courtesy of a very generous employer.

Of course, this just isn't good enough for some folks.

Turns out that one of the employees is unhappy with the new plan. He's been co-habitating with a woman for some 15 years, and has fathered several (perhaps all) of her children. He has also had them on his group plan, because the employer also helps out with the dependent premiums. When we installed the new plan, he was quite unhappy ("I'm not spending an extra $3,000 on these kids"), so he did the logical thing:

He married the gal.

That way, you see, he could put himself and the kids on her plan (why he couldn't just add the kids to hers is a mystery), and teach that mean ol' employer a lesson.

'Course, it cost him the $500+ in FSA and HSA contributions, not to mention the premium subsidy, but he certainly made his point.

And it only cost him $40 (cash only!) for the license.

Carnival of Personal Finance: Valentine's Day edition

Madison, blogging at My Dollar Plan, hosts a spectacular Carnival of Personal Finance this morning. It's a bit overwhelming: over 90(!) posts, in 16 categories. Wow.

I always like a good bargain, and free is usually a great one. Fire Finance tells us that Bill Gates & Co are offering "free hosting, a free domain name along with free access to MS Office Live Basics for small businesses." Good deal!

Revitalizing primary care

A primary-care physician in New Hampshire recently had this to say:

“[Political candidates] talk about universal health insurance. But two of the greater issues would be cutting health-care costs and revitalizing primary care.”

It's encouraging - though not all that surprising - that other commentators, especially health care professionals, share one of InsureBlog’s key insights – that health care cost is the primary driver of health insurance cost - and therefore the more fundamental issue demanding attention is the cost of health care.

I also agree 100% with the physician's second point - the need to revitalize primary care belongs at the center of any strategy to better manage the care Americans receive.

And beyond that, I believe improvements in managing care will result in better management of cost.

However, I'm doubtful that these changes will occur anywhere near as rapidly as even the present technology makes possible. My doubts spring from a belief that widespread and determined physician leadership is necessary to realize positive change - but we have not seen such leadership for at least the past 40 or so years. As I occasionally say, Moses found the way out of his Wilderness in 40 years. Yeah, health care may be tougher. But, still . . .

Cavalcade #45: Submissions Due

Paid Twice plays host for next week's Valentine's Day edition of the Cavalcade, scheduled for Wednesday the 13th. Please make sure to get your submissions in by Monday (the 11th). Jaimie 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 March, so PLEASE drop us a line to reserve yours.

Health Wonk Review

This week's edition, hosted by Health Business Blog, is packed with insightful posts from fellow health wonks. As usual, host David Williams does a great job of organizing and highlighting (although he refers to our own Bob Vineyard as "nuanced").

We've been skeptical of so-called "individual mandates" (which would require folks to buy insurance) for some time. The folks at GoozNews share that concern in this detailed and thoughtful analysis.

Nice joint. Thanks, I'm hip.

And now for something completely different:

Today we present another in our occasional series of guest-posters. Please welcome Dr Robert Roman, who practices orthopedic surgery in Middletown, Ohio. Dr Roman's an alum of the University of Cincinnati College of Medicine, and has been in private practice for over 13 years. Full disclosure: he is also my brother-in-law, but please don't hold that against him.

Dr Roman is here to tell us about a unique, potentially revolutionary, medical procedure. While it may seem, well, odd to find a post written primarily by an orthopedic surgeon on a blog about insurance, consider this: a core principle here at IB is that the cost of health care drives the cost of health insurance. So who better to discuss cutting edge, and potentially cost-reducing, medical news than someone in the medical field?

You may also be wondering "hey, these are such hot-shot ideas, why isn't this in the NEJM?" Indeed, I posed that myself. Bob told me, quite succinctly, "because the right people don't read that." His point is that he’d like for news of this new method to be available to a broader audience. And what, exactly, is this radical new idea? I'll let him explain:

Total Hip Replacement: The Anterior Approach

Traditional approaches, posterior and lateral, sacrifice or cut muscle, leaving weakness and causing more discomfort [ed: both of these approaches require the patient to lie on his or her side]. In addition, there is an increased risk of dislocation and misjudgment on achieving accurate leg length due to the patient’s position during the procedure.

The anterior approach (the patient is on his her back, not side) navigates between muscle groups, leaving less weakness and pain, and resulting in shorter hospital stays [ed: which also means lowered risk of post-op infections and other complications, which also helps mitigate costs]. Using this procedure also lowers dislocation risk, and (because the patient is positioned on their back instead of their side) leg length can be accurately measured off the opposite leg.

The OSI/Hana table [ed: see graphic below] in conjunction with new instruments have been the technological breakthrough which allows direct, in line with leg shaft approach to the femur.

Thanks, Bob, for your time and expertise.

The major economic advantage is that, after taking into account the initial capital expenditure for the necessary equipment, such procedures could help significantly lower the cost of both the operation and post-operative issues (physical therapy, etc). This in turn can help rein in at least some health care costs, which are primary drivers of health insurance costs.

A win-win scenario.

Way to go, Joe!

FoIB and Tax Guru Joe Kristan's Tax Update blog has made the "Smart Stops on the Web" list in the February (2008) Journal of Accountancy.

Mazel Tov, Joe, and kudos to the Journal for finding out something that IB readers have known for a long while: "Since 2001, author Joe Kristan, CPA, the firm’s tax technical director, has been posting on dozens of tax topics, including backdated options, reform, the AMT and tax shelter news [ed: and he's pretty sharp with the insurance stuff, too! ]."

Whoa There, Big Boy!

This morning, Bob posted a thoughtful (and provocative) piece on The Magnolia State's latest effort to curb its citizens' appetites. Whether or not this (presumably) well-intentioned legislative fat-cutting is successful, it appears to be based on a flawed premise:

"Preventing obesity and smoking can save lives, but it doesn't save money, researchers reported yesterday. It costs more to care for healthy people who live years longer, according to a Dutch study that counters the common perception that preventing obesity would save governments millions of dollars."

Oh.

So that premise, which claimed a "61 percent increase in the number of Americans classified as obese between 1991 and 2000...(and) singled out Mississippi as having the highest rate" seems disconnected from the, ahem, solution: "proposing to make it illegal for a Mississippi restaurant to serve anyone with a body mass index of 30 or more."

Now, that's not to say that the effort is ill-advised (who am I to advise the residents of the Bayou State?). But it seems to me that, before we start passing more restrictive laws -- let alone those without, you know, actual "penalties (for) an eatery would face for violating" them -- we ought to have some kind of handle on what we're really hoping to accomplish.

Super Tuesday Grand Rounds

Amy at DiabetesMine has my vote for a terrific Grand Rounds. She's focused on Health 2.0, but there are plenty of other interesting posts, as well (27 of them, in fact!). Go pull that lever.

We've blogged on medical tourism, and we've blogged on ethics, but JC Jones, host of Healthline Connects, blogs on the intersection of the two. He writes of a recent movie that "depicts the plight of illegal immigrants in the UK, who sell their organs in exchange for passports," and asks if it's fact or fiction. The answer may surprise you.

Carnival of Personal Finance: Super Bowl Edition

I've Paid for this Twice Already hosts this week's bigger-than-life edition of the Carnival of Personal Finance. In a clever twist, the categories range from Offensive MVP (none of which were offensive themselves, of course) to Special Teams. A true winner!

My better half's the money manager in our home (and for good reason!). I think she'd appreciate these great suggestions on what to do with the upcoming Economic Stimulus Package's windfall from the Rather Be Shopping blog. I bet you will, too!

Lexis-Nexis (Blog) Law Center Update

As we mentioned earlier, IB was selected for inclusion in the Lexis-Nexis on-line Law Center. We joined pretty exclusive company, with some major league bloggers and authors.

The center also includes a kind of revolving-content link-fest; this week they're featuring Philadelphia coverage attorney Randy Maniloff’s 7th annual look at the top 10 insurance coverage cases of 2007. Pretty interesting stuff.

SOLItaire Revisited

It's been a while since we've discussed "Stranger Owned Life Insurance." This is where one sells one's life insurance policy to someone who will pay cash now in exchange for the death benefit later. It's a close relative of "viaticals," which are typically used by folks who are terminally ill in order to receive an immediate infusion of cash.

In the case of SOLI, no such morbid motivation exists; rather, it's a straight business proposition, not unlike selling a piece of real estate. The challenges lie in a couple of key areas:

First, when one buys a life insurance policy, one names a beneficiary. At least initially, that person (or entity) has to have an "insurable interest" in the life of the insured. For example, a wife would have an insurable interest in her husband's life; if he dies, his income needs to be replaced, perhaps the mortgage paid off, that kind of thing. A business which purchases a key-person policy on a valued executive has an insurable interest in his life; if he dies, it may take years and lots of cash to rebuild the business.

Further out, charitable organizations may have an insurable interest: folks often buy insurance policies naming their church as the beneficiary, and this is well established and "kosher" (if I may mix a metaphor).

Years ago, I even saw a policy which an ex-wife could buy on her former spouse without his knowledge, to replace alimony and child support.

But SOLI is a different animal: there is no insurable interest because there is no relatinship. The parties are, by definition, strangers to one another. Which begs the question: at what point does insurable interest cease to be relevant? We know that it must be there when the policy is first purchased, but what about after it's in force?

Which brings us to the second insurance principle at play here: moral hazard. P&C companies have strict rules about how much homes can be insured for, and what condition they must be in. They don't want to tempt insured's into a literal "fire sale." And so life insurers are loathe to make their insured's "easy targets." Both of these eventualities would be "against the public interest." Thus, when purchasing a policy, the initial beneficiary must demonstrate an insurable interest.

Which brings us back to the question I posed above: "what about after it's in force?"

Well, the Ohio Department of Insurance has decided to weigh in:

"A bill that would tighten state law governing the method of buying life insurance policies from consumers has passed in the Ohio House and is on its way to the state Senate floor...(the law) takes steps to improve protections for those looking to sell a policy to a third party and creates a legal framework for prevented what's called "stranger-oriented" life insurance."

The idea is to impose a "waiting period" between the time the agreement is reached and when it can take effect. On the one hand, it makes sense to encourage unwitting consumers to carefully consider what they're doing. On the other, though, if life insurance ownership is truly comparable to ownership of any other property (which I maintain it is), then why is it the government's business to whom I choose to sell?

A clue may be found here:

"The bill's supporters...(claim that) worries are mounting that a growing share of viatical settlements are arranged purely for financial gain."

Heaven forfend!

Selling property for profit is now considered "worrisome?" Is this because, unlike the sale of most property, no taxes are paid in this transaction? Or are they worried that this will lead to a lot of "suspicious" deaths?

If the former, I'm disappointed, but not surprised. If the latter, well, maybe there's something to it.

(H/T: Bob Vineyard)

Revoltin' Developments

[Updated & Bumped - see below]

You may have already heard that the California Department of Managed Health Care (which is a separate entity from the Department of Insurance) recently fined Pacificare a walloping $3.5 million. Adding insult to injury, the UHC-owned carrier now faces an additional potential $1.3 billion (yes, with a "b") in fines from the Golden State's DOI. This amounts to $10,000 for each of the mind-boggling 130,000 violations the troubled insurer is alleged to have committed.

If this stands (and we'll discuss the likelihood of that in a moment), it would be one of the biggest (if not THE biggest) such fines ever imposed on a carrier.

Ouch!

I mentioned earlier that I'm no carrier's shill, and especially one which I don't even represent (that would be Pacificare). And we've chronicled insurer malfeasance here for a long, long time. Still, this one seems tortured, at best:

On the one hand, I'm not terribly surprised that a carrier could have erred so many times; insurers process millions of claims every year, and we can't tell from the information thus far available the percentage that this 130,000 represents. I'm not condoning such errors mind you, simply acknowledging that they occur. It would be helpful, too, to know the nature of these violations: were they bad faith claims denials, or accounting errors, or simply computer hiccups? We just don't know.

I discussed this with a friend of mine yesterday. Fred's a carrier rep, but hasn't been in the group medical field for many years (and never worked for Pacificare or UHC). Still, he has many years of experience from "the other side of the table," and I was interested in his take on this. He had an interesting perspective, and I'd like to share that with our readers. Before I do so, let me make clear that if it does turn out that Pacificare cavalierly and negligently caused the kind of grief implied in the charges, then I applaud the efforts to punish them.

But before we run up the yardarm, let's take a more dispassionate look at what we do know, and what we can reasonable infer.

Fred and I noodled out that the $1.3 billion and the 130,000 violations share the number 13 (eat your heart out, Planck). Some quick calculation led us to the conclusion that each fine must max out at $10,000. It is Fred's opinion that this must represent the maximum fine that can be levied for each violation. It doesn't make sense, however, that every single instance would justify such a large amount. A more careful re-reading of the articles gave us a clue: "could face fines," and "could face up to." Notice the qualifying term "could." So it stands to reason that someone, either the reporter or someone in the DOI's office, is stressing the maximum fine, for maximum effect. Which is not to say that Pacificare won't be on the hook for that amount, but the odds are agin it.

Why, you ask?

Well, there are two issues here:

First, it's unlikely that every single (alleged) violation would rate the max penalty. Could it happen? Of course, but we're talking probability here.

And second, it's also likely that the Department of Insurance (in California, this is an elected office, so there's a lot of politics involved), seeking to at least share the limelight with the Department of Managed Health Care, would stress that maximum liability, no matter the likelihood that it would ever come to fruition (can you say Elliot Spitzer?).

The problem here is that we lack both facts and perspective; we've heard from but one side. One of my clients is a former commissioner of the California DOI, and I've dropped him an email seeking his opinion. I've also written to the PR folks at Pacificare, to see what (if anything) they have to say. Of course, we'll be following the press on this, to see what light they can shed.

This promises to get interesting.

UPDATE: Received an email from a kind reader which included a press release on this issue from UHC. You can download it here.