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?

"Economic troubles are driving states to scale back safety-net health-coverage programs -- even as they brace for more residents who will need help paying for care."

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.

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.

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.

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.

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.

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!

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).

So I see a link from a place called Blog$hares (that's not a typo), which is "a fantasy stock market where weblogs are the companies. Players invest fictional dollars in a wide spectrum of blogs. Blogs are valued by both incoming and outgoing links, and can add value to other blogs by linking to them."

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...

Stupid (Government) Agency Tricks

[Welcome Google Finance readers!]

"The Treasury Department is looking at ways to aid insurance companies as part of the rescue package announced earlier this month."

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.

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?

"A smelly rotten-egg gas in farts controls blood pressure in mice, a new study finds."

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.

Doing vs Talking

There's an old saying about the weather, and it appears that the same holds true with regard to health care:

"The Institute for Healthcare Improvement (IHI) announced...the progress of the...5 Million Lives Campaign, a national effort to help U.S. hospitals dramatically reduce incidents of avoidable medical harm."

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'.

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:

"The troubled insurance giant American International Group already has consumed three-quarters of a federal $123 billion rescue loan, a little more than a month after the government stepped in to save the company from bankruptcy."

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.

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:

"Denials that produce the most disputes are those where insurers judge the care to be unnecessary or unproven, pitting a proverbial sick David against a multibillion-dollar Goliath. What few Davids know is that insurance contracts by law grant companies the legal right to manage a patient's care, including denying it, sight unseen, and give them the final say, if challenged. Unless the state steps in."

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.

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:

"Taking the employee wellness program to another level, a local company is refusing to hire smokers unless they enter a program to help them quit..."We decided not to hire smokers because they add additional expense to our health plan and our ongoing operation," said Dennis Curran, chief human resources officer for USI's Midwestern region."

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]

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:

"A report issued today...provides evaluation data from six California counties demonstrating that programs that provide services to "frequent users" of emergency rooms decrease costly emergency room visits and hospitalizations for many patients."

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.

Do check it out.

And we're now scheduling for early 2009 (!), so please drop us a line to reserve your slot.

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:

"We believe individuals from the general public have a vital role to play in making personal genomes useful. We are recruiting volunteers who are willing to share their genome sequence and many types of personal information with the research community and the general public, so that together we will be better able to advance our understanding of genetic and environmental contributions to human traits and to improve our ability to diagnose, treat, and prevent illness."

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:

"The more genetic information can be made open and publicly available, nearly everyone agrees, the faster research will progress."

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.

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.

Health/Insurance News Round-Up

■ One supposes that this is "Good News," if only for a segment of the business sector:

"Baby boomer deaths could fuel funeral industry.

(T)he death rate of about 8.1 per 1,000 people is expected to inch significantly upward sometime in the next decade and eventually go as high as 10.9."

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:

"Disco tune "Stayin' Alive" could save your life

U.S. doctors have found the Bee Gees 1977 disco anthem "Stayin' Alive" provides an ideal beat to follow while performing chest compressions as part of CPR on a heart attack victim."

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:

"Hawaii Ending Universal Child Health Care After 7 Mos.

Hawaii is dropping the only state universal child health care program in the country just seven months after it launched."

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]

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.

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.

Don't miss this.

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.

The HMS MVNHS©

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:

"NHS trust to buy £400,000 yacht.

A health trust is planning to spend £400,000 on a 72ft yacht to help jobless teenagers make better "lifestyle choices."

Oy.

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?

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.

Grand Rounds is up...

Notes of an Anesthesioboist hosts this week's medblog roundup, with a movie-themed Grand Rounds. Lots of interesting posts, from "professional patients" to "Breathing 101."

In Vino: Pale Rider

Last month, we reported that "a molecule found in red wine ... has been shown to slow aging in worms, flies and mice." This was hailed as good news for Pinot noir drinkers, but what about folks with a passion for Chablis?

Well, fear no more: "New research suggests that white varieties may offer similar heart benefits to red wines."

Yippee!

Although white wines contain no resveratrol (the wonder molecule that gives the Reds their healthy oomph), new information seems to indicate that "(t)he flesh of the grape can do the same job as the skin," which would seem to be why whites share some health characteristics with their more full-bodied cousins.

Of course, much more research will be required; when do we get a PayPal button here?

Discovering the Carnival of Personal Finance

With over 70 entries, Lisa Spinelli presents a USA-sized Carnival of Personal Finance. Commemorating Columbus Day, there are all sorts of interesting financial tips awaiting your discovery.

Sail on!

Now THAT'S Customer Service!

Regular readers know that I sometimes make use of the blog to vent on non-insurance related customer service issues. I've railed on airlines and cordless phone manufacturers, and I pull no punches.

But a recent experience has restored my faith in the private sector, and I'd like to share it with you.

A few years ago, when we redid our back porch, I cajoled my better half into letting me buy a new grill. I'd always coveted a Ducane (sort of the BMW of the gas grill world), and I got a really good deal on a "last year's model" that was, in fact, brand new; it was left over from the previous season. I use it pretty much year-round, and so it's taken a lot of wear and tear. Over the years, I've replaced a few parts, but it recently reached a point where I needed two particular ones, and wanted another.

In the event, I came across Ed Young's Ace Hardware, which not only had the warming rack and control knobs I needed, but the extra side table I wanted. What's unique about Ed's place is that, when you place your order, they specifically refuse to accept the expiration date on your credit card: once the order's placed, they email you to confirm that what you want and what they offer are a match.

Wow.

Once I'd confirmed the details, my order arrived in less than 4 days (!), and contained exactly what I'd ordered - and expected.

Bravo, Ed's, Bravo!

Dr Val's New Home

We were recently blessed with two posts from guest blogger Dr Val Jones (here and here). We're pleased to let our readers know that her new blog, Get Better Health, is now "live," and encourage y'all to drop by her new place. You'll be glad you did.

From the Mailbag: Oy, Canada!

Got an email the other day from Physicians for a National Health Program (not affiliated with Democrats for Nixon). The opening line, "Canada's publicly funded health insurance program known as medicare is one of the best health care systems in the world" did make me chortle a bit, especially since it was delivered (presumably straight-faced) by a Dr. Marcia Angell, who's currently serving as a senior lecturer at Harvard University's Medical School.

The point of the email was that "Health care is a human right," and the sender wished us to use our bully pulpit to spread that message.

Ahem.

Apparently, the gentleman is not a regular reader, nor particularly well-informed. So I responded thusly:

Thanks for the heads up.

However, Canada's government-run health care system is NOT "one of the best health care systems in the world;" based on actual outcomes and timeliness of care, it's WAY down the list.

In addition, I'm not sure where you get the idea that "Health care is a human right;" at whose expense?

The fact is, Canada's system is falling apart, as witnessed by the increased number of folks who must travel outside that country for *actual* care, and those who opt to buy private health insurance.

As one might imagine, I've received no reply (whether or not I've been taken off his distro list remains to be seen). But I thought it would be worth sharing with our readers why I answered as I did.

First, the Canadian health care system is, by any rational measure, a mess. They have been unable to effectively control the cost of health care, even through rationing and, well, more extreme measures. The noble-sounding idea that "health care is a right" doesn't even pass the smell test: health care must be delivered by a provider, so if it's a "right" then that person is being forced to provide that care whether or not he or she is remunerated for doing so.

Gee, almost makes one want to spend all that time in medical school, doesn't it?

If by "health care" the folks at PNHP actually mean "health insurance," then they're already behind the eight ball there, as well:

"Since the first private MRI clinics opened their doors in Canada 10 years ago, there has been a national explosion of private health facilities with little policing by the federal or provincial governments."

Ooops.

The fact is, Canadians want decent health care, it's just that their current system makes that difficult to obtain. So, the market has responded:

"Across Canada, there are 42 for-profit magnetic resonance imaging (MRI) and computed tomography (CT) clinics, 72 private surgical hospitals (excluding cosmetic surgery facilities) and 16 "boutique" physician clinics."

Sounds like a good start.

Cavalcade of Risk #62: Wall Street Wipeout Edition

I couldn't improve on that title if I tried. Wenchy does an outstanding job with this week's Cavalcade of Risk; she gives us a chuckle or two for relief, and then plunges (oops, bad choice of words there) right in.

Do check it out.

And we need a bailout, too: there are still slots available for Mid- and Late-Fall Cavalcades (and it doesn't cost $Billions to host, either!). Just drop us a line to participate.

Parkland Memorial Hospital: 45 Years Later

Almost 45 years ago, then-President John F Kennedy, fatally wounded by an assassin's bullet, was taken to Parkland Memorial Hospital, where he died of his wounds.

One evening last month, former restaurateur Mike Herrera, experiencing severe abdominal pains, walked into Parkland and availed himself of a state-of-the-art, computerized admissions kiosk. Although such a system would appear to be "just what the doctor ordered," Mr Herrera died some 19 hours later, still waiting to be seen.

This is unconscionable. Here at IB, we often point to such shenanigans in the MVNHS©, and in Canada. Parkland spokescritter (and president) Ron Anderson offers this stunning appraisal: "There's nothing you can say except just apologize for this happening."

Are you kidding?!

We expect to see this kind of impersonal, unfeeling health care from a system run by faceless gummint bureaucrats, but not by hospitals in modern American metropoli. What went wrong here?

As it turns out, there's actually an obvious (to IB readers) explanation:

"Mr. Herrera's death follows years of warnings about excessive wait times in the emergency department of Dallas County's charity hospital, which serves the indigent and others without health insurance."

In addition, since there are so few available beds in the hospital proper, patients are kept in the ER for extended periods of time; "boarding," as we've discussed before, is a perennial problem in such facilities.

Although the article fails to explicitly state this, it isn't a stretch to infer that many (perhaps most) of the "indigents" served by Parkland are, in fact, illegal immigrants. As we've previously noted, this group makes up a disproportionate share of "the uninsured," exacerbating the problem of limited facilities.

Our condolences, of course, to Mr Herrera's family. Perhaps this will be a "teaching moment" for the rest of us.

Ratzin-Fratzin Grand Rounds

If you're a fan of a certain Sam, then you're gonna love this week's Grand Rounds. Even if you're not (although that's hard to imagine), this week's edition of the best of the medblogs is a hoot, with lots of good choices and interesting posts. The folks at MDOD have done a rootin'-tootin' good job!

Stormy Weather: From The P&C Files

Although it apparently never made national headlines, Hurricane Ike managed to spread its path of destruction as far north as Ohio. In fact, 84 of our 88 counties ended up with at least some Ike-related damage, albeit nothing as severe as Galveston's. As one can imagine, this generated a large number of claims (although very few catastrophic ones).

While it may seem a bit like closing the barn door after the cows have been blown away, now's a good time to take a look at your home and business insurance policies, to make sure that everything's up to date and all your "stuff" is adequately protected. Have you had a new roof put on in the past few years? Done some remodeling? Added a hot tub or covered porch? All these things add value to your home, but they also need to be brought to your agent's attention.

Two often overlooked items that quickly became "hot buttons" are food loss and debris removal. When the electricity's out for a few days, your food's going to spoil. Some plans just lump that in with the claim as a whole (and thus subject to the deductible); others pay up to a certain amount, and the deductible's waived.

I can tell you from first hand experience that big trees in your yard are expensive to remove (unlike some folks, I'm not allowed to own a chain saw). Again, some companies reimburse these expenses after you've spent a small fortune, while others cover the removal on a "first dollar" basis (up to the specified limits, of course). Check with your agent to make sure that you're appropriately covered.

Businesses also have to be on their toes. A friend of mine told me about a colleague of his who'd had over $100,000 of losses from the storm, but had only $40,000 of coverage. Why's that? Well, obviously we don't have all the facts, but it's a good bet that he hadn't reviewed his coverage lately. Of course, his agent may have been asleep at the switch, as well; regardless, it's important to keep your policies up to date:

Have you bought a new van for the business? How about new computers or cash registers? Added a new location or shop? Make sure to discuss these changes with your agent before another hurricane is bearing down on you.

And remember, it's important to weigh the cost of additional coverage against the increased premiums. Sometimes it's a tough call, but would you rather spend that extra $100 now, or face $10,000 in unexpected losses next time a big storm rolls through?

Give it some thought.

Carnival of Personal Finance online

The 173rd (wow!) edition of the Carnival of Personal Finance is up at Girls Just Wanna Have Funds . Stop by to catch up on great tips for your wallet.

Cavalcade of Risk #62: Submissions Due

Wenchy hosts her umpteenth Cavalcade of Risk next Wednesday (October 8). She's asked us to remind you that the deadline for her edition is this coming Monday (the 6th), and that you'll need to 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 your post via Blog Carnival or email.

We're scheduling mid-Fall Cavs, so please drop us a line to reserve yours.

Bailout Craziness

Exchanged emails today with Jason Shafrin (host of this week's Health Wonk Review) regarding the "doings" on Wall Street. Jason, I should note, is a remarkably bright and able young man, who's just about completed his Ph.D. in health economics, and will soon be available for whatever company is smart (and swift) enough to grab him up.

Jason asked me if (and how) the bailout was affecting the health insurance business or any of my work, and wondered whether or not I supported the bailout. Since this is an insurance blog, not a finance or political one, I'll stick with the insurance related issues here.

The first part is simple: for the most part, the life insurance piece really hasn't affected me. I don't use AIG for that, so no problem. Likewise the health side: they're not in the small group or individual markets. As I remarked recently regarding this situation, I was incensed that the gummint (i.e. the taxpayer) essentially bought an insurance company, and lamented the sad state of affairs vis A M Best.

From an insurance perspective, the latest iteration from the Senate includes what I would consider a "poison pill:" mental health parity. This is an expensive and unnecessary intrusion of the government, which has no place in the discussion of whether or not we should be bailing out Wall Street. As I remarked to Jason, I think its inclusion inferred a surprisingly candid connection between our congress critters and the need for mental health coverage.

It's not that I believe that mental health is trivial, nor that it shouldn't be addressed. But as we've demonstrated numerous times here at IB, mandated benefits add to the overall cost of health insurance, and this one will most assuredly increase premiums, causing more folks to choose to be uninsured. Perhaps that's the intent, but who knows?

What I do know is that the fact that it had to be covertly added to a ginormous financial bill (pun in 10 did) speaks volumes about its true value.

Health Wonk Review: Bailout Edition

No, host Jason Shafrin isn't "bailing out" of the HWR; quite the contrary. This week's edition includes several posts highlighting how the finance sector and overlaps the medical. As always, there are plenty of interesting subjects, from Wall Street to Pennsylvania Avenue.

Be sure to check it out.