Friday, October 31, 2008

From the Mailbag: Liz E Weighs In

Got an email today from a gentleman at American Progress, touting Elizabeth Edwards' most recent "insight" into health insurance. According to the email, Liz thinks it's a scandal that women often pay more than men for health insurance. Of course, there's a very good reason for this: biologically, there's at least one kind of major claim that many women will make that no man ever will.
And senior citizens generally have more health issues than 20-somethings, which is one of the primary reasons why Medicare is going broke.
But of course, when the playing field is leveled, that won't be a problem:
"I have often argued that buying health insurance is not the same as purchasing a refrigerator or a microwave. Health insurance is not another consumer good for which everyone pays the same price. Sick people are more expensive to insure than healthy people, the old accrue more cost than the young. For this reason, Senator John McCain’s belief in the dysfunctional and discriminatory individual market is fundamentally at odds with the point of health insurance, which requires that we share risks and pool costs."
As I replied to our correspondent, this dramatically illustrates the problem with the idea that health insurance should be community rated; i.e everyone should pay the same premium. Risk is all about probability, and insurance is about asessing and pricing for those probabilities. It is most assuredly not about "sharing" risks, which would imply that we all pay the same.
As Bob has pointed out, this way of thinking leads to the conclusion that folks with poor credit should pay the same interest rate as those with good credit (credit worthiness is, after all, simply another expression of risk).
Come to think of it, that's exactly what the Democratic congress just did.
Fancy that.

Safety Nets with Holes?

Not good news.
And yet, when one takes a more focused look at the facts, it's not clear that this is a "bad thing." The program most "at risk" is Medicaid, a cooperative venture between the states and the Feds. Medicaid provides funds for health insurance for some 50 million of our fellow citizens (not to mention a few non-citizens). For many of those states, it also represents almost half of their annual budgets. Cutting these expenses is one way for these states to more easily bring their own numbers into line.
So what Medicaid programs are being tossed?
■ Well, as we reported a few weeks ago, Hawaii's well-meaning but poorly executed plan to cover its uninsured children. As Bob noted at the time, "they must rely on taxes to support the system...Medicaid is available for a family earning $73k? I guess Hawaii has a different definition of poor."
■ In South Carolina, they're considering major cuts in funding for mental health coverage. My question would be, if the gummint thinks it shouldn't have to pay for this, why does it mandate such coverage for commercial insurance policies?
■ This past July, California slashed hospital reimbursements by 10%. As a result, Jan Emerson of the California Hospital Association believes that more hospitals will choose to opt out of the program. So what happens when we have nationalized health care, and the Feds slash reimbursement by 10% (or more)? How do providers drop out of that?
■ The Bay State, subject of quite a few posts here, cut almost $300 million from its Medicaid budget; that included some $40 million that was earmarked for the Cambridge Health Alliance, which provides care low-income residents. How much money were they already throwing at these programs, if they can cut $300 million?
Inquiring minds want to know.

A Dentist Looks at Halloween

OK, that was a stretch.

Actually, I am sure many dentists look at Halloween with mixed feelings. They are probably reminded of the fun times they had as children, dressing up and going door to door, shaking down willing neighbors for goodies.

But for some at least, they may also remember the trip to the dentist a few months later. Who knows? Perhaps that was their inspiration for entering the field of dentistry.

I am blessed to have clients from all walks of life. One of them is Dr. Kim Henry in Morrow, GA.

Kim has graciously agreed to allow me to link to his site for those who are seeking information on dental care.

This article on preventing cavities seemed most appropriate.

No tricks.

Docs Stuck in the Middle

Big pharma encourages docs to prescribe the latest and greatest, high priced meds with incentives.

Carriers are also getting into the act by providing incentives to docs that promote generics.

Caught in the middle of this financial tug of war are the docs.

Most of the tactics used by drug manufacturer's (to encourage scripting higher priced meds) has been exposed for years. Now we find that carriers are using similar tactics to encourage docs to script lower priced drugs.

But is this such a bad thing?

Health insurance premiums are driven (like any other product or service) by the underlying costs associated with producing the plan. In other words, when the cost of health CARE increases, premiums rise by a corresponding percentage.

For example, when doctors pay more for office rent, salaries, benefits, equipment, med mal insurance, etc. they must bill higher rates to cover these increasing costs. In turn, the carriers who pay the docs for services rendered must raise their rates in a similar manner.

So what is wrong with a doc who is trying to "help the cause" by scripting lower priced meds?

Apparently a lot.

In Massachusetts, a pending bill would regulate incentive plans between insurance carriers and providers. A Michigan proposal would ban financial incentives in exchange for prescribing a generic medication

So politicians want to make it illegal for your doc to be compensated for scripting generics but say nothing about incentives from pharma for scripting higher priced meds.

Something is wrong with this picture.

In New York, state Sen. Jeffrey Klein introduced legislation that would prevent insurance companies from offering physicians incentives. A grandfather clause would require HMOs to continue providing brand-name drugs to patients already benefiting from it.

Many carriers and HMO's are waging their own battle on this front by moving higher priced drugs to upper tier copay's.

And the AMA is weighing in on this as well.

Last year, the American Medical Association warned that it considered the bonuses kickbacks and said doctors who accept payment from an insurer for switching a patient from a brand name to a generic drug could potentially face criminal and civil liability under federal statutes.

Criminal charges for trying to help their patients save money?

You have got to be kidding.

But never fear. Seems the AMA is playing both sides.

After 10 years of taking the cholesterol medicine Lipitor, which has no low-cost generic equivalent, Curran's new insurer under Medicare refused to cover it. They insisted he take the generic equivalent of a completely different drug and he was scared.

His physician, Dr. Mario Motta, gave him free samples of Lipitor provided by drug salesmen. He also wrote to the insurance company to explain Curran had tried generic drugs, but in this case the brand-name drug was essential.

Still the company refused to cover it. Curran started spacing out his medication out of fear he would run out. He wound up in the hospital and had a fifth stent put in to help keep his blood vessels open. The insurance company didn't relent until Motta got the American Medical Association to make a call.

That's even scarier than Halloween.

UPDATE: I'd just add that Bob's point about generics and cost efficiency is underscored by today's McPaper:
In fact, in what may well be the first documented case of a gummint program costing less than anticipated, Part D is on track to saving 12% based on its initially projected cost. HGS

Cavalcade of Risk #64: Submissions Due

SuperSaver hosts next week's Cavalcade of Risk. Submissions are due by next Monday (the 3rd), and should 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 via Blog Carnival or email.
PLEASE submit posts on risk-related topics only (not personal finance tips and the like).
Thank You!
We're now scheduling for early 2009 (!), so please drop us a line to reserve your slot.

Thursday, October 30, 2008

Terrific Client Tricks

Yesterday, a client taught me something.
I've been working with this particular client, we'll call her Shirley, for a few weeks; she's been shopping for additional life insurance. We found an appropriate plan, and she completed the application. I explained to her that I would submit this to the carrier, and order a "paramed" exam, at the carrier's expense, as part of the underwriting process.
Almost all companies require a "paramed" when the amount at risk (the face amount, or "death benefit") exceeds a certain amount, typically $100,000. This generally consists of a few additional health questions, and the "drawing" of blood and urine. She asked me what was being tested, and I replied, "oh, for HIV, cholesterol, liver enzymes, tobacco, drug use, that kind of thing." I presumed, based on past experience, that this would be sufficient.
But it wasn't.
She wanted to know exactly what was being tested, and asked if I had a list. I must admit, I was a bit taken aback by this. In fact, I was a bit miffed, although I really had no right to be. I answered that I'd call the underwriter, to see if such a list existed.
It did, although he sounded as surprised as I had. He agreed to fax it to me.
But a funny thing happened between the time Shirley asked for the list and the time I spoke with the underwriter (a matter of a few minutes): I realized that not only was I wrong to be angry with her, she was actually the very first person who had ever asked me for such a list. As I pondered that, I realized that she was absolutely right, and that it was I who should be chagrined: why hadn't any other client ever asked for this? It seems to me that this is important; after all, how many times do we give blood and urine for testing? I daresay not very often, so it makes sense to know precisely what's being tested.
After I received the fax, I scanned and emailed it to Shirley, along with the information that, once the policy was issued, all the test results would be made available to her (this is a free service offered by that carrier). A few minutes later, I followed up with another email thanking her for making me take a second look - heck, a first look! - at this routine process.
I'd call that a good day.

I Want Care, I Want it Now, and I Want it Free

[Welcome Industry Radar readers!]

Seems there is a lot of this going around these days. Almost an epidemic you might say.

People want everything, including health care, but they don't want to pay for it.

I don't like making a mortgage payment every month but I want a place to live and moving in with my parents is no longer an option.

Gerhard McNeary of Pontiac, Michigan is 51 and doesn't have health insurance.

He hasn't had health insurance since losing his job with GM in 1998.

Why he doesn't have health care: Too costly. "I could afford health care, but I wouldn't have a place to live," he said.

I suppose living with mom & dad is not an option for him either.

Actually, he receives health care but he has chosen not to buy health insurance. Regular readers will note the distinction.

Employment: Part-time substance abuse worker in Waterford.

Is full time employment not available? Or are there other issues we don't know?

What if he gets sick? Goes to the Gary Burnstein Community Health Center, a free clinic with a growing number of patients, in Pontiac; has no primary care doctor.

As indicated before, he has health care but does not have health insurance.

How not having insurance affects him: He waited two months to have a tooth filled this week, only to have to reschedule the appointment at the clinic because its dental chair was broken. Before he started going to the Burnstein clinic a few years ago, he waited until an emergency occurred, then sought care at a hospital emergency department, including for a bad toothache.

This is what happens when health care is free. Long waits, lack of direct access, needless suffering.

What he wants: Government-provided universal health care for everyone.

Voting for: Barack Obama.

Wow. That one came out of left field.

Pardon me while I make an appointment to have my tongue removed from my cheek.

On my dime I might add.

Happy Wonkereen!

Yeah, that title's pretty lame, but David Harlow's Health Wonk Review, Samhein Edition, is certainly a treat. David, host of the HealthBlawg, is one of our premier health policy bloggers, and his HWR is packed with great posts.
Trust me, that's no mean trick.

Wednesday, October 29, 2008

Moronic Carrier Tricks

Over at Workers Comp Insider, Jon Coppelman reports on some serious shenanigans on the part of the Long Island Railroad. Turns out, over 90% of their "retirees" have done so on their disability insurers' nickel. In fact, Aflac reports that 1 in 4 of their LIRR policyholders have "cashed in" on their policies.
Why is this a "moronic carrier trick," you ask?
Well, as Jon points out, the carrier knew this, and still seemed not to care that they were apparently being gamed.
Read the whole thing.

On The Pipe

Time to nationalize health care and make it free

This came out of a survey by William Mercer that went out to 3,400 employers. Of those, 545 did not currently offer health insurance.

The reason?

43% of those employers without health coverage said they couldn't afford it. And 59% of those without coverage said they would be willing to spend no more than $50 per employee a month for it.

And while they are at it, how about serving up new BMW's for everyone at $50 per month or a home mortgage I don't have to pay back?

The data suggest, Mercer concludes, that it could be very difficult to get small-business owners to support state or federal initiatives, like Barack Obama's health-care proposal, that would mandate that many small employers buy health insurance for their workers

Employers who are forced to buy health insurance for their employees have options.

Pass the increased cost on to the consumer in the form of higher prices.

Reduced pay for their employees.

Lay off employees.

Decisions, decisions.

Many angels maintain a low profile. If you don't, then you subject yourself to all kind of people with crazy ideas. A good place for investing leads is from your local community bank. Establish a relationship with them so that you can mull over their loan rejects."

Angels = angel investors who are willing to spot money to a new venture or expansion in expectation of a high return on their investment.

Here is a wake up call.

1. Organized angel groups DID act like [venture capitalists] too much -- they were chasing unrealistic return expectations, looking for a 30% return on every investment within a couple years. Yes, that's a great model, but [it's] not going to happen most of the time.

2. They want something unique, patentable, leverageable, and with skyrocketing revenue."

About these folks looking for a free ride for health care (or health insurance) . . . any idea what they are smoking?

For more on this topic, see "Shifting the Blame".

Tuesday, October 28, 2008

Black and White

[Welcome Kaiser Network readers!]

It is an election year and once again, candidates are promising anything to get elected. Odd thing is, they never tell you how they plan to implement the sweeping changes or tell you how much it will cost.

This is especially true when it comes to health care. Both candidates are promising sweeping reform to lower costs (though they have no clue how to accomplish this) and cover everyone (clueless here as well).

But sometimes the difference in how they say they will effect change is as different as black and white.

Take the race in Washington for example.

Incumbent governor Chris Gregoire and challenger Dino Rossi have two very distinct approaches. Each has their own merit.

Gregoire wants more government intrusion while Rossi wants to encourage free market competition.

And despite a looming budget crunch, she has not backed down from her goal of providing health care access to everyone in the state by 2012.

Deficits be damned, this is an election year.

Sound familiar?

Rossi has promised to try to reduce the state's mandates for coverage

No doubt, mandates add to the cost of coverage which drives up the premium.

Here are a few of the Washington mandates that are added to premiums for their citizens.

Mandated coverage for denturist's and marriage counseling. Only 2 states cover denturist's and Washington is one of them.

Somehow folks in other 48 states manage to get along just fine without that coverage.

Here are some oldies but goodies that are only shared by a handful of states outside of Washington.

Accupuncturist's and chiropodist's. Lay midwives, naturopaths and the ever popular massage therapists.

No decent insurance plan would be caught dead without those covered.

Newborn hearing testing. Now that is an expensive item. Washington is one of only 2 states that require coverage to remove port wine stains.

Mandates cost money. Everyone pays even though only a few will benefit. Many of the mandates add 1 - 3% to the premium but add them up and you are suddenly paying an extra 20 - 30%.

It doesn't take long.

A VERY Fast 'Rounds

Kim at Emergiblog hosts this week's Grand Rounds, with a race-inspired theme that keeps thing moving right along.
Speed on over!

Monday, October 27, 2008

If Wishes Were Money...

I routinely look through our logs to get an idea of where traffic's coming from, which stories seem to be getting the most "play," and because, well, it's interesting to see what kinds of folks stop by here (don't worry, I can't tell who you are, just what kinds of things folks in general seem to find most interesting).
Kind of like a fantasy football league, but with fake "stock" based on industry. The insurance category boasts an even dozen "players," including our friends Joe Paduda and Julie Ferguson, even the RiskProf himself.
I was quite surprised to see our stock valued north of $80,000 a share (by comparison, the next highest was just over $54,000; the bulk hovered around a thousand or so). I have no idea why our stock is so high - not that I'm complaining! - and of course it's one thing to see this at "B$," and quite another to try to buy a cup of coffee with it. Regular readers know that we accept no advertising here, so it's truly a labor of love.
But if I could cash out at $80 grand a pop...

Poor Choices Yield Poor Outcomes

New car prices average $28,000 though somehow people manage to buy a new car every few years. Used car prices are about half that on average.

New car's start around $11,000 and perfectly serviceable used cars can be purchased for around $5,000 and still provide years of trouble free transportation.

Some leaner cuts of meat sell for less than $4 per pound while prime cuts can easily approach $20. Same for fish. You can get decent filet's for under $6 while some of the more exotic types can approach $30.

If you make poor choices, you can run out of cash in short order.

The same is true for health care and health insurance. (Regular readers will know the distinction. Others might have to think about it).

But when it comes to health care, some folks are not paying their bills.

Aurora Health Care's bad debts were up 28% through September of this year.

Wheaton Franciscan Healthcare's bad debts were up 30% for the fiscal year ended June 30

Columbia St. Mary's bad debts were up 36% for the fiscal year ended June 30.

Guess who pays?

The rest of us.

more than one in seven families insured through an employer, and one in five who bought insurance on their own, reported problems paying medical bills.

Some friends of ours earn very good money (in xs of $100k) and even double down on health insurance (despite my suggestion that is a waste of money). Yet they are constantly dunned by collectors about old medical bills. The Mrs. once said that we would be behind in our bills too if we had the out of pocket they do each month for docs & Rx copays.

On top of their double premiums (for very good coverage I might add) they incur over $300 per month on average in copays.

This has been going on for years and have damaged their credit.

Even so, they have managed to refi their home with cash out twice in the last 3 years. Purchased a new HDTV and two new cars. Both children go to private school.

But yet they can't pay their medical bills.

An estimated 18% of workers who get health insurance through an employer had deductibles of at least $1,000 this year, according to a survey by the Kaiser Family Foundation,


Why is this news?

Paul Miota of Menomonee Falls found that out when he had to pay roughly $8,000 last year to cover his share of the cost of outpatient surgery.

That was on top of the $425 a month, or $5,100 a year, that he was paying as his share of the premium.

"I bought the best insurance I could," Miota said. "I got this bill and I asked, 'What did I do wrong?' "

Define "best insurance".

Most folks would say it is loaded with copays and probably a low deductible. But those plans typically have a lot of holes where your dollars can eek out. The carrier stiffs you on the front end by overcharging for routine things like doc visits and hammers you on the back end when you have a large claim.

Kind of like buying an auto policy with copays for oil changes and brakes but only pays half the bill when you total your car.

Gestner never planned to be without coverage.

She decided to retire in January 2007 at 62 after having both knees replaced the previous year. She loved her employer, Hufcor Inc. in Janesville, but the factory's cement floors were hard on her knees.

Gestner, who has an income of $25,000 a year, initially planned to buy the health insurance offered by Hufcor. But when the cost increased to $850 a month, or $10,200 year, she decided to buy insurance on her own - only to find out that no one would insure her because she had high blood pressure.

Certainly $10k in premiums against an income of $25k is too much. These stories make good press but it begs the question.

First, I don't buy the statement she was turned down for high blood pressure. I have never had anyone rejected when their ONLY ISSUE was hypertension. It doesn't wash.

Second, even if she WERE turned down for HTN, I would think she could qualify for some kind of taxpayer funded plan or charity. A quick check at Cover For All indicates she could qualify for:

The state subsidized risk pool.

A chronic disease program at little or no cost.

Dave Bolen, vice president of finance for Beloit Memorial Hospital, said Gestner may qualify for charity care or a sliding-scale discount given the size of her bill.

There are choices.

Sometimes folks make sound decisions, sometimes not.

Stupid (Government) Agency Tricks

[Welcome Google Finance readers!]
You have got to be kidding!
Oh, you're not?
The Feds are now talking about diverting between $50 and a $100 billion of our tax dollars to carriers owning "distressed assets." Hey, I'm distressed by this foolhardy scheme; where's my bailout?
As we pointed out last month, insurers buying up mortgages, and then watching their value plummet, is a time-honored tradition. If they're not going to face consequences for ill-advised investment decisions, why would they ever stop? Rewarding bad behavior is a sure-fire way to encourage its repetition. You don't give your puppy a treat for peeing on the carpet, so why would the Feds be giving away so much of our money to these carriers?
We've already seen how "responsibly" at least one such beneficiary has behaved, why would we assume that its erstwhile competitors would be any more careful with "free money?"
On the other hand, at least some carriers are taking their fiduciary responsibility seriously:
"In recent weeks, insurance companies including Hartford Financial Services and MetLife [have] raised capital."
Hartford glommed on to about $2 and a half million from Germany's Allianz, while MetLife sold off about $2 billion in stock. Good on them for addressing the issue from the corporate boardroom, not the U S Treasury.

Sunday, October 26, 2008

High Blood Pressure? That Stinks!

[Welcome FoxNews readers!]
Sometimes, we at IB face a dilemna: as a "family-friendly" blog, where do we draw the line between licentious and useful? For example, did you know that that which makes flatulence odoriferous (and the delight of 5th grade boys the world over) also serves a more noble bodily function?
Sorry, but science is science.
Turns out, the gas is created by bacteria making its home in our digestive system, and that (according to new research) it helps regulate blood pressure by acting as a sort of "steam valve," much like the little gizmo on top of a pressure cooker. That gas, hydrogen sulfide, is responsible for the offending aroma.
The scary part, one supposes, comes from its potential application in medical tech. According to Dr Solomon Snyder, a neuroscientist at Johns Hopkins, "(n)ow that we know hydrogen sulfide’s role in regulating blood pressure, it may be possible to design drug therapies that enhance its formation as an alternative to the current methods of treatment for hypertension.”
Well, it was only a matter of time that we'd get from medical marijuana to medicinal methane.

Saturday, October 25, 2008

Doing vs Talking

There's an old saying about the weather, and it appears that the same holds true with regard to health care:
Right out of the chute, that seems like a good idea.
But it gets better:
"The Campaign [asked] hospitals to introduce up to 11 evidence-based health care interventions and to engage their trustees in the effort, in order to protect patients across the nation from five million incidents of medical harm over a 24-month period..."
That's a lot of "incidents," although we don't know how many are simply prescribing the wrong aspirin versus removing the wrong kidney. The goal as stated is certainly admirable, but a perhaps unintended side effect caught my attention:
Over 4,000 hospitals (representing almost 80% of the available beds nationally) participated in the program, and "(e)ight other countries have launched initiatives inspired by the Campaign." These included some whose systems we've, um, discussed here at IB, including the MVNHS© and Our Neighbors to the North© . Which begs the question: if socialized medicine is so great, and our system so bad, how come these two stalwarts (not to mention Sweden and Japan) feel it necessary to address the issue of "avoidable medical harm?"
Just wonderin'.

Friday, October 24, 2008

Easy Come, Easy Go

In case you were worried that erstwhile insurance behemoth AIG wouldn't be able to spend our money fast enough, have no fear:
By my calculations, that means they're burning through almost $3 million a day, every day (hey, at least they're not slacking on the weekends!). Of course, dropping a few million here and there on "entertainment" helps.
As of yesterday, they'd used up about $100,000,000 to (and ya gotta love this phrasing) "pay off bad bets the company made in guaranteeing other firms' risky mortgage investments." Wouldn't it have been cheaper to just bet it all at the craps table?
"Wall Street analysts said this is a vulnerable juncture for the insurance giant."
No kidding.

Now For Some Good News

Not totally good.

A mixed bag actually, but not something you will see on the 6 o'clock news either.

Carriers are continuously raked over the coals for things they do wrong, or at least are perceived to be wrong. We have certainly waded in on some of those situations as well.

Comes now a story from a fellow agent about one of his clients. And no, I cannot provide links to validate because as indicated, this is not (in some eyes at least) newsworthy.

Paul lives in Tampa and recently picked up a client who had no prior coverage. She had gone "naked" for a year but bought a policy with him.

In most case, carriers impose pre-ex limitations when you purchase individual major medical and have not had coverage in the prior 63 days.

That was part of their offer here as well.

Shortly after the policy was issued she had a GYN exam where early stage cervical cancer was discovered.

The bad news is, she has cancer.

The good news is, the carrier will pay the claim.

The contractual thing for the carrier to do would be to deny the claim. Perhaps some carriers would even go so far as to rescind coverage.

Instead, this carrier has informed the agent and his client they will honor the claim.

That is a stand up thing for a carrier to do.

Hat's off to United Healthcare for stepping up to the plate.

So where are all the news camera's?

Thanks to Paul Manchester in Tampa for this bit of news.

Foreign Threat

Most of us stay home, or at least limit our travel to the 50 states.

Some like to travel to far and exotic parts of the world.

Probably one of the last things we think of when planning a trip is health insurance. In some cases, particularly traveling out of country, it should be one of the first.

Britt Leis and Leah Koehn were attacked Thursday on a beach in the South American country. Leis, 35, was stabbed 18 times, according to his father, Ronald Leis. Koehn, 24, was assaulted but able to seek help.

For certain, this is an unusual medical situation. But according to a report on NBC, 1 in 4 American's have reported assaults while traveling abroad. Some involve robbery while others are simple battery. But there are also a handful of stories like this that make you think.

Natalie Holloway took a senior trip to Aruba and has not been seen since. Other stories have made headlines as well.

Leis had 3 surgeries in Ecuador and was recently stable enough to be evacuated by medical ambulance stateside at a reported cost of $55,000.

U.S. based health insurance offers limited coverage outside the states and no coverage for medical evacuation or translation of medical records which can easily run in the thousands.

International medical coverage is available for literally a few dollars. I recently placed a plan on a fellow taking a two week ski trip to Antarctica. The premium was $46.

To help pay for the flight and Leis' medical bills, the couple are accepting donations under the Britt Leis Medical Assistance Fund at any Bank of America branch or the Britt Leis Donation Fund at any Bank of the Cascades.

Friends of the couple have also set up Web sites, including and to solicit donations.

Anything you can do to help will, I am certain, be appreciated by the families.

From the Mailbag: Is that a fact?

As we've mentioned, we get some interesting email here at IB. Recently, aspiring author Doug Perednia, M.D. wrote to us, questioning the veracity of a recent article in US News and World Report. It seems that a Dr Bernadine Healy, whose imagination is surpassed only by her paranoia, penned a rather misinformed screed against health insurance, and the carriers that underwrite it.
Specifically, Dr Doug cited this passage from the diatribe:
Although there's a lot of other misinformation in the linked article, we'll concentrate on the issues raised by Dr Doug. As per SOP, I forwarded the good doctor's email to my (more than) capable co-bloggers, and then proceeded to respond directly.
I replied:
insurance contracts by law grant companies the legal right to manage a patient's care
No, that is just silly. Insurers no more manage one's care than your car dealer tells you what kind of air freshener you can hang on the mirror. Insurers cannot, and do not, tell you what procedures or medicines you can utilize, only whether (and/or how much) they'll pay for them. And even these issues are subject to a claims review process, which is included in policies.
the most disputes are those where insurers judge the care to be unnecessary or unproven
I would also question her assertion that most claims disputes have to do with medical necessity (which would be the correct terminology). I haven't seen any figures which would support this (although, to be fair, I haven't seen any to refute it, either). I'd like to see some citation(s) to back this up. Perhaps Dr Healy will oblige you on that score; please let me know if she does, because that would make an interesting post, as well.
Bob was even more specific:
There are certainly a lot of goofy statements in that link.
Just to name a few . . .
the 17-year-old girl who died before her liver transplant was approved
Not sure if we are talking about the same case or not, but the liver transplant was covered extensively at InsureBlog.
the people in California whose insurers canceled their policies retroactively after they got sick
As for the folks in CA with retroactive cancellation, we've also covered that as well.
Quite a few misstatements in the article. But I had to chuckle at this one:
"Andrew Cuomo of New York has launched a nationwide investigation into schemes that low-ball reimbursement and stick patients with bills insurance companies should have paid. "All too often," Cuomo says, "insurers play a game of deny, delay, and deceive." His pursuit is in full throttle and has the advantages of his bully pulpit and his power of subpoena to pierce the opaque veil that patients never can."
This is the same Andrew Cuomo appointed by President Clinton to head up the FHA and authorized the expansion of mortgage lending to low income, and otherwise unqualified loan applicants.
Of course we all know how well that worked . . .
And Mike took issue with this one:
insurers judge the care to be unnecessary or unproven
I would only add that "unnecessary" and "unproven" are two very different reasons. Lumping the two of them together does not yield a meaningful statistic. Sort of like saying that more than 90% of deaths in the U.S. last year were the result of the common cold or some other cause.
Since I'd hate to run up the score, we'll leave it at that.

Thursday, October 23, 2008

And Along Those Same Lines . . .

Hank posted "Health Insurance Trends, Fall Edition"

Probably just a coincidence that I found this, completely independent of Hank's post. But then he would say, there are no coincidences.

and . . .

Health/Insurance Trends: Fall Edition

[Welcome Industry Radar readers!]

First up, Health Savings Accounts (HSA's) take a bounce:
UnitedHealthcare, which has certainly earned our disdain over the years, redeems itself with some timely and useful information about HSA market penetration. They studied the claims activities of over 200,000 of their HSA clients for a full year, and then drew some conclusions based on that information.
Since they used 2006 as their benchmark year, all the numbers in the study reflect experience with employer-based (i.e. group) plans; their purchase of Golden Rule, and thus its book of individual clients, wasn't part of this.
And remember, the typical HSA plan comprises two separate components: a high deductible health plan (insurance) and a health savings account (money). Just because one buys the insurance plan doesn't mean that one also opens up the savings account. But according to the study, employees whose employers seeded the accounts were 6 times more likely to open one than those whose employers simply made it available.
This makes sense: employees saw value in something which their employers were willing to at least partially fund; and of course, no one wants to leave their employer's cash on the table.
Something else interesting, and this mirrors my own experience, is that small employers seem to have adopted these plans in much bigger proportions than larger ones.
One other terrific piece of news: it apears that we can finally put to rest the canard that such plans appeal more to higher income folks than to "Joe the Plumber." Turns out, a higher percentage of folks making under $25,000 a year signed up for an HSA plan than folks pulling down $100,000 or more.
UPDATE: Bob has more on this, including two terrific videos with extraordinary insights from non-insurance folks.
One of the benefits of High Deductible plans, especially HSA compliant ones, is lower rates. But plan design is only one factor in that equation; reducing utilization and claims can really help, as well. And one way to reduce health care costs is by making healthier lifestyle choices.
Or having them made for you:
Frankly, I think that this is a good thing: although I'm not a proponent of government initiatives that require private enterprises to be smoke-free, I certainly agree that it's in their best interest to do so. And helping the bottom line is one more benefit of going that route.
[Hat Tip: Holly Robinson]

Not For Men Only

This morning I had a nice email from Kelly Sonora informing us we are included in the list of top 100 Men's Health Blogs.

Coming in at number 6 is quite an honor and we do appreciate being included in their list.

However, I would like to say (and hope) we are not for men only. I believe we do have our share of female readers.

But I could be wrong . . .

Wednesday, October 22, 2008

Dog Bites Man, Film/Study at 11:00

We get some interesting email here at IB. Partly, it's that we've been around for almost 4 years, so we've built some "cred," and partly it's because we occupy a kind of unique niche: mostly insurance, but also part health news, and often the intersection of the two.
Here's an example of that "fusion:"
I received an email from Sharon Rapport of the Corporation for Supportive Housing. This is a non-profit based in California, whose mission is to help "communities create permanent housing with services to prevent and end homelessness." Now ordinarily, this would seem to have nothing to do with either insurance or health news, but they've released the results of a recent study that shows an interesting, and relevant, trend:
I rather flippantly replied to Ms Rapport: "In a way, this is kind of a "d'uh!" but it's also interesting." [ed: I've apologized to her for my flippant tone] I think the reason I responded that way was because its sad that something which seems so obvious -- on-going, supervised and routine health care means fewer ER visits -- requires a (presumably costly) study. But the results are interesting, and ultimately helpful. If it takes a homeless advocacy group to get folks to understand the importance of preventive care, then so be it.
It also shows something else. If we assume that a non-trivial segment of the uninsured population are also homeless (I offer no proof of this, only supposition), then it seems to me that tax dollars may be well-spent on programs which encourage that cohort to seek more routine care, and enables them to afford it.
As part of the study, the CSH and other advocacy groups set up an intriguing pilot program. Starting some 6 years ago, the "Initiative...provided or connected frequent [ER and hospital] users to medical and mental health care, substance abuse treatment, transportation, housing and benefits." And the results were surprisingly positive:
"(A) 61% decrease in emergency department visits and a 62% decrease in inpatient days" for folks who participated in the study's various programs. That's some serious numbers. And since we know that helath care costs directly impact health insurance costs, there are some valuable lessons to be learned from this.
Kudos to CHS, and Thank You to Sharon Rapport.

Cavalcade of Risk #63: Now online!

John Cogan has an outstanding edition of the Cavalcade of Risk, including a treat for those of us "of a certain age." John's refocused the Cav on risk, and presents some outstanding posts.
And we're now scheduling for early 2009 (!), so please drop us a line to reserve your slot.

Tuesday, October 21, 2008

Nice Genes!

Over the years, we've addressed the issue of genetics many times. For example, we've looked at how genetic testing can impact the underwriting process, and we've also discussed how one particular piece of our code could determine our risk for Alzheimer's. But the topic is going to get a bit murkier, if wider, because there's a new player in town, and it's one of a new breed of specialty providers that may help us learn more than we really want to know:
That's the mission statement of a new program called the Personal Genome Project. What they're trying to build is nothing less than a massive genetic database, which they hope will be a resource for researchers looking for cures for everything from baldness to MS:
At least, that's the hype, and the hope. Certainly, the more information we have available, the more scientists can cross-check information to determine a given population's risk for a particular illness, and perhaps to find better treatment options, even cures. There doesn't seem to be any charge to participate, but the "cost" is that one agrees the genetic info is shared (pooled) in the database. Of course, there'd be no personal identifying information there, just data.
Now, what does this have to do with insurance? Well, if nothing else, it'll be one more data set for underwriters and actuaries to determine risk for folks with certain illnesses and conditions. And I rather like the idea that the private sector is undertaking this effort; it holds a great deal of promise.
[Hat Tip: Holly Robinson]

Grand Rounds is up...

Pallimed's Christian Sinclair hosts this week's roundup of the top medblogs. In an interesting twist, he's got a kind of "Top 10" on the front page, and "all the rest" as a comment to the post.
Do stop by.

Monday, October 20, 2008

175th Carnival of Personal Finance

Quick: How many personal finance bloggers does it take to change a lightbulb?
Answer: No one knows, because they're all too busy offering great tips and ideas on how to get the best deal on bulbs.
Okay, that was lame, but J Money at the Budgets Are Sexy blog has some great jokes interspersed among over 7 dozen (!) entries. Go ahead and laugh, but don't miss this one.

Friday, October 17, 2008

Health/Insurance News Round-Up

■ One supposes that this is "Good News," if only for a segment of the business sector:
This is a very telling statistic: at just shy of 11 deaths per thousand people, that "high" is still fairly low, perhaps as a result of (expensive) new medical treatments and (inexpensive) personal responsibility on the part of our senior citizens.
Since I'm about to knock on the door of that cohort (come this Monday), I suppose I should be grateful.
■ I've maintained for a long time that "disco is dead," but that's apparently not entirely true:
I'm not entirely sure that I'd really want to survive an onslaught of Saturday Night Fever showtunes.
[Hat Tip for above two items: James Taranto]
■ And for fans of S-CHIP, some not-so-good news:
And why is that, you ask?
Regular readers no doubt already know:
"Gov. Linda Lingle's administration cited budget shortfalls and other available health care options for eliminating funding for the program."
Not exactly a surprise, given the nature of the beast. When care is available for free, why would folks bother to pay for it? And that's exactly how these types of plans work: by shifting taxpayer dollars almost directly to providers, consumers have no incentive to pay out of their own pockets.
And there's a more insidious (or, perhaps, deliberate) side-effect:
"A state official said families were dropping private coverage so their children would be eligible for the subsidized plan."
Again, why would someone pay for their childrens' insurance when the taxpayer has already ponied up for them?
And for a more in-depth look at this news, check out Bob's post.
[H/T: Jeff M]

Paradise Lost

Hawaii has been described by some as paradise. I have to admit, in my limited travels, Hawaii is tops on my list.

But all is not well in the Aloha state.

In 2007 Hawaiin lawmakers voted to provide "universal health care" to ensure every child in Hawaii would be served.

The Keiki (child) Care program aimed to cover every child from birth to 18 years old who didn't already have health insurance — mostly immigrants and members of lower-income families.


As in non-citizens?

It costs the state about $50,000 per month, or $25.50 per child

Somehow $50k doesn't seem like it should be that much of a stretch. But then, unlike the federal government, Hawaii can't print more money. Sadly, they must rely on taxes to support the system.

What a novel idea.

A state official said families were dropping private coverage so their children would be eligible for the subsidized plan.

"People who were already able to afford health care began to stop paying for it so they could get it for free,"

Say it isn't so!

Dropping existing coverage for "free" coverage.

Who would have thought that?

Obviously the folks who passed these laws never considered it.

Yeah, I am surprised too.

Families with children currently enrolled in the universal system are being encouraged to seek more comprehensive Medicaid coverage, which may be available to children in a family of four earning up to $73,000 annually.

Medicaid is available for a family earning $73k? I guess Hawaii has a different definition of poor.

What Were They Thinking?

[Welcome Industry Radar Readers!]

Sometimes folks just make it too easy. They make silly comments or ludicrous decisions and then can't figure out why things go awry.

Apparently the residents of Massachusetts are not content to select someone like Barney Frank, the flip-flopping guardian of Fannie Mae, as their representative. The folks who work at the Mass Connector are also missing the boat.

Mass Connector is not a freeway interchange but rather the marketing & regulatory arm for insurance matters. In an effort to further gouge their citizens, they have come up with "minimum credible standards" for health insurance.

One such regulation limits Rx deductibles.

So why is this a bad thing?

"So one of the biggest innovations in healthcare cost control in the last decade stands to be wiped off the books for Massachusetts employers," said Edholm. "For the first time, the HSA gives the average employee a stake in the game by allowing him to get health contributions back, income-tax-free. At the same time it lets employers to save money, too."

And what is the upshot of this?

"The HSA will be gone, and employers will be left with just higher-priced plans -- which the new regulations will make even more costly. It makes ZERO sense in a difficult economy to arbitrarily load additional costs onto a healthcare system that can barely afford what's already loaded onto it."

Makes zero sense.

I concur.

Sounds like it is time to fire the folks at the Mass Connector.

Cavalcade of Risk #63: Submissions Due

John Cogan hosts next week's Cavalcade of Risk. Submissions are due by next Monday (the 20th), and should 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 via Blog Carnival or email.
PLEASE submit posts on risk-related topics only (not personal finance tips and the like).
Thank You!
BTW, we're now scheduling for early 2009 (!), so please drop us a line to reserve your slot.

Thursday, October 16, 2008

Another Idiotic Carrier Trick

[Welcome Industry Radar readers!]

Less than a month after the rocket surgeons at the top of the AIG heap thought it'd be a good idea to blow almost a half million dollars on an extravagant party, they've apparently decided that too much just isn't enough:

"(N)ow it's $86,000 for a hunting trip in England as the faltering company reaped another $37.8 billion in taxpayer funded loans."

Granted, this represents a significant belt-tightening by the super geniuses running the largest American insurance company; after all, it's a bit less than 20% of what they spent on the aforementioned gala. Did they ever stop to think that we taxpayers may cast a dim eye on such shenanigans after forking over almost $125 million of our hard-earned dollars?

Apparently not:

"Company officials said the hunting trip in the English countryside was an annual event for customers that had been planned months before the bailout."

And their point is...?

Hey guys? Lots of us have postponed trips, entertainment and other luxuries while we consider a potentially bleak economic future. I for one would love to know just who these "customers" were.

Never fear though, the company has pledged "to continue focusing on actions necessary to repay the Federal Reserve loan and emerge as a vital, ongoing business." If this is how they intend to "focus" on repaying that debt, I'll take a pass.

Pre-Election Health Wonk Review

HWR founder Joe Paduda hosts this week's round-up of health care policy and polity. It's a serious effort, with some incredibly insightful and provocative posts, starting with our own Bob Vineyard's startling news on unfunded Medicare liability.

A Difficult Decison

As a parent, my worst nightmare is that something would happen to my children. Even though they are both young adults, you never stop being a parent.

I can't imagine how these parents feel right now. After hearing their story, you will most likely feel the same.

Sully's brain surgery.

Wednesday, October 15, 2008

Stupid Carrier Tricks #148

Most of this much loved (or reviled, depending on your perspective) series has been vents about carriers doing incredibly stupid things to alienate consumers. But just so you know, they sometimes do dumb things to create distrust among the agents who send them business.

I spent most of the morning dealing with Aetna over commission issues. A recent bank change required me to complete new paper work for direct deposit. I sent them the proper form and assumed everything was fine.

What a silly thing that was.

Today I get an email from the "commission lady" informing me they have the wrong FEIN for my agency. In fact, they have two different ones on file, neither of which are correct.

I sent them copies of tax documents filed with the state, but that was not good enough. Neither was a coupon used for federal tax payments.

The next remark sent me over the top.

Unless I can provide them with proof from the Georgia Department of Insurance of my correct FEIN, they will cease paying commissions and report me to the IRS for reporting a false FEIN to a carrier.

Now isn't that special?

Open Dialog, Part 2

[Welcome Kaiser Network readers!]

In Part 1, we discussed a recent post by health uber-wonk Joe Paduda. In it, Joe propounded what he described as "a solution that enables the Democrats to deliver on their commitment without breaking the bank." His solution consisted of a four-prong legislative approach, the first three of which we've discussed.
The fourth piece, a "basic benefits plan" would seem, in my opinion, to be a good thing if by "basic plan" one means the deletion of many, if not all, mandated benefits. That's the rub, really: the major problem with the "basic benefits" idea is that there's rarely agreement on the definition of "basic." For example, I was recently talking with a friend of mine about the credit crunch, and he mentioned "folks buying $300,000 houses." I reminded him that, in our world, that's a very fine home indeed, but in San Francisco, that's somebody's one car garage. Same thing holds true in defining what a "basic" level of coverage would entail. If a "basic plan" is so larded up with extraneous benefits (e.g. maternity, mental health, etc) that the resulting plan requires a budget-busting premium, then what's the point? If, on the other hand, one comes up with something that looks a lot like a High Deductible Health Plan (HDHP), covering catastrophic losses at one end, and preventive care at the other, then I think it deserves a closer look.
The main problem, though, with Joe's ideas is that none of them address the underlying issue, which is that we don't have a health insurance crisis in this country so much as we have a health care problem. To be fair, Joe disagrees with this assessment, which position I respect, if disagree with [ed: weren't you taught never to end sentences with prepositions?].
Simply insuring everyone doesn't do anything to address the underlying and increasing costs of health care (cf: Canada, England, et al). So one ends up with a system which rations care by government fiat, with little or no recourse. We think that there's a better way.
I've mentioned before that my better half believes that "there are no coincidences." Over the past few days, I've been corresponding with a regular reader (and commenter) about what kind of plan I think would help alleviate our current "situation." I felt his queries deserved a considered reply, and forwarded his email to my esteemed co-bloggers. Bob responded that "(a)ny proposal that promotes the HSA is on the right track. Everything else is rhetoric."
I think that's about right, with some caveats:
If you want to talk about an easy, relatively inexpensive partial solution (and I think Joe's correct that we're only going to get partial solutions - which isn't necessarily a bad thing), how about loosening up the HSA rules so that ANYONE can set one up, and use it, regardless of what kind of health insurance they have (or even if they're not insured, or under a government-sponsored plan). There's really no logical reason why one has to have a HDHP in order to qualify for a tax-advantaged HSA (Health Savings Account). In fact, as I replied to our correspondent, I think it'd be a fine idea to make them available to anyone who wants one, whether or not they have an HDHP, are covered by a government program, or have no insurance at all.
I tend to differ with many of my colleagues "in the biz" because I've never felt that the tax benefits of HSA's are all that big a deal: what's important is the empowerment and personal responsibility they engender. When one has "skin in the game," one is necessarily more aware of what various health care services cost. Were HSA's available to anyone who cared to own one, I believe that folks would become more aware of the underlying costs of health care (which is, in fact, the primary driving force behind the cost of health insurance); after one's had a year's (or so) contributions built up, one would become much more careful about depleting it.
Is this a "magic bullet?" Of course not; but it's important to understand that we didn't arrive where we are overnight, but incrementally. So any reasonably effective solution must be arrived at incrementally, as well.


Just when you thought it was safe to go back in the water, or at least to believe that Britain's National Health Service couldn't, um, sink any lower, we land this whopper:
And precisely why is the alleged "health" service laying out almost seven hundred thousand dollars? To "improve the long-term health prospects of teenagers," of course.
But Henry, how will spending time on a yacht help young people live healthier lives?
I'm so glad you asked, dear reader. Although the answer may not seem obvious to you (or, to be fair, to me), we must trust those righteous stewards of the MVNHS© to make wise choices for the better good.
To wit, the masterminds at the NHS think that it's a grand idea to take 150 unemployed teenagers and put them to work on The Love Boat. That works out, by the way, to almost $5,000 a teen (gratuities not included, of course).
And what will these young Horatio Algers do that will improve their health? Well, according to the MVNHS©, "people in employment are less likely to have long-term health issues.” Of course, no citation was offered bolstering this rather startling assessment, but who are we to question the medical expertise of these health experts?
Turns out, there is someone willing to call them out (Hooray!). One of Hull City's elected officials, Steve Brady, says it best: "What I am absolutely concerned about is the misuse of public money."
Yah think?

Tuesday, October 14, 2008

Open Dialog, Part 1

[Welcome Kaiser Network readers!]

One of the best things about blogging has been the exposure to so many different points of view, and one of the things I most appreciate is the opportunity for frank, honest, no-holds-barred but civil disagreement. Add to that the opportunity to make "blog buddies" with folks with whom I may often (okay, usually) disagree, and you have the makings of some fine thought-storms.
One of my favorite health wonk bloggers is Joe Paduda (who, not coincidentally, is the "father" of the Health Wonk Review). Joe wrote me recently, asking for my take on his post about potential solutions to what he characterizes as our "insurance crisis." In it, he posits that there are several changes that could be made without the expenditure of great political capital, to enhance our current system.
Please take a moment to read it.
The first thing you notice is the deliberate, intellectually honest way in which Joe frames the issues:
"Congress could pass and the President could sign legislation prohibiting medical underwriting in the individual market, requiring insurers to cover pre-existing conditions, mandating community rating, and establishing a basic benefits plan."
I have, as one might imagine, some issues with this: the first and third are VERY bad ideas, the second is potentially doable, and the last may be a very GOOD idea (presuming one means limiting or deleting mandates).
As to the first proposal, eliminating medical underwriting, the problem is risk assessment; that is, if everyone's treated the same, then healthy folks pay an undeserved penalty. To understand why, let's turn to the P&C world: a while back, it was proposed that the solution to the problem of uninsured motorists was an idea called "pay at the pump." The premise was that since everyone needs to fill up their car every once in a while, it made sense that there'd be a "small" tax assessed for each gallon, which would cover the insurance. The problem was that every car and every driver was different, so that BMW owners paid the same as those who drove a Chevy, and folks with nary a speeding ticket paid the same as those with 3 DUI's.
Needless to say, this never got any (ahem) traction.
The same holds true with health insurance: why would a perfectly healthy person pay the same as someone with high cholesterol? Joe's answer is "(t)hat’s the way health insurance should work: some subsidize others, with the understanding that when that ‘some’ (or when their kids break bones or they get hurt) someone else will help them out." Very noble, and yet very wrong: risk isn't just "spread," it's managed, and there's no way to manage risk if everyone's treated the same. This goes against the whole premise of insurance.
As to the third (I'll come back to the second in a moment), community rating, well, the less said about that abomination the better.
The second idea, covering pre-existing conditions, actually has some merit, and precedence: in group health insurance plans, as long as one has jumped through the appropriate hoops, pre-existing conditions are covered. I see no reason why the same principles shouldn't be applied to individual coverage (which, by the way, I believe should be the ultimate goal of any major reform). Just as HIPAA mitigated "job lock," I think that if an individual has appropriate prior coverage, pre-existing conditions should be covered. In fact, that already exists, to a limited extent, in the individual market; it doesn't seem to me to be an insurmountable challenge to broaden that to the industry as a whole.
In Part 2, we consider the fourth item on Joe's agenda, offer some conclusions, and explain how another rather simple solution may hold the key.