Oy Canada? Private vs Public Options

By definition, the Canadian health care system is a "Public Option;" private plans are outlawed (something to which we may look forward). But all is not well for the Canadian system:

As we've reported numerous times, the Canadian system is wonderful, until you actually need care. Then it's still free, but inaccessible. The LA Times tells the story of a 72 year old Canadian woman with chronic hip pain, who would have had to wait for a year and a half for surgery (after waiting a year for the diagnosis in the first place). Rather than live with the pain, she popped over to Montana (yes, Montana!) for the surgery, which set her back some $50,000 (the story doesn't indicate if this was real or Canadian money). Of course she wasn't thrilled with that, but it sure beat living with the pain.

But some Canadian doc's, loathe to seeing those health care dollars and cents fleeing south of the border, are trying something to discourage such excursions:

"Hoping to capitalize on patients who might otherwise go to the U.S. for speedier care, a network of technically illegal private clinics and surgical centers has sprung up in British Columbia, echoing a trend in Quebec. In October, the courts will be asked to decide whether the budding system should be sanctioned."

"Technically illegal." Interesting word choice; doesn't that just mean "illegal?" So the doc's are breaking the law in order to treat their patients in an appropriate time-frame, and they're willing to risk potential jail time (or at least substantial fines) to do so. Sounds like market forces at work.

Unfortunately, these physicians are somewhat naive:

"You cannot force a citizen in a free and democratic society to simply wait for healthcare, and outlaw their ability to extricate themselves from a wait list."

So opines Dr Brian Day, who runs one such clinic. He obviously hasn't heard of our Senator Max Baucus, who thinks it's perfectly peachy to arrest folks who choose to go uninsured. I'm sure the Honorable Senator would have no problem throwing offending physicians into the hoosegow, as well.

Still, as we see a shrinking Canadian system (shortfalls are causing even more delays and fewer tests), perhaps our own political class will take note. As unlikely as that may seem, consider this: public support for grandiose "reform" is at a record low, and heading south fast. It's still possible that we may avoid the tragic fate of our Neighbors to the North©.

A Death Panel by any Other Name...

There are any number of ways in which ObamaCare could seek to shorten Grandma's (and Grandpa's too, we're not sexist here!) life. The first, an unelected and unaccountable group of people with the power to end Granny's care, was (apparently) shot down in committee. But that's just an explicit method.

A far more insidious method - insidious because of its more subtle nature - would be to significantly reduce the funds available for her care. And that seems to be the "plan du jeur:"

"Three-quarters of ObamaCare is to be financed by slashing $500 billion from Medicare over the next 10 years. That comes to an 8 percent cut."

That bears repeating: an 8% cut over and above other already planned reductions. In fact, even without ObamaCare's draconian cuts, there's a 21% reduction in Medicare reimbursement rates on the books for next year. That's a lot of office time that's not going to be reimbursed, and therefore never happen. How many elderly will be turned away, or made to wait for months (or longer) to be seen?

"Last year the Medicare Payment Advisory Commission said that 29 percent of beneficiaries had trouble finding a doctor - up from 24 percent the year before."

And that's before that 21% cut. Add the additional $50 billion (at least) that would be slashed by ObamaCare, and that's a lot of seasoned citizens left without health care options.

Exit question for our political class: what percentage of those over age 65 vote?

Grand Rounds is up...

I somehow missed this yestareday, but Jacqueline at Laika's Medblog hosts this week's edition of Grand Rounds. Lots of interesting posts and commentary.

Why You Need an Umbrella (Liability) Policy

Because this could have been you:


[Hat Tip: Hugh Hewitt]

Yom Kippur 2009/5770: Health Reform Observations

At first glance, one might wonder what the Day of Atonement and health care "reform" have in common. It's important to note that Judaism has no word for the idea of "sin" (at least as we use the term today). Rather, we talk about "al cheyt" ("to miss the mark"). The idea is that we set out to do the right thing, but somehow fall short of doing so.

Another way of looking at this is that we aim for the bulls-eye, but our shot ends up off-center. And I think that's really what's happened with so-called "reform" efforts. First, we (and by "we," I mean the public and the pols) talked about health care reform, but that quickly veered off into discussions of guaranteed issue and pre-existing conditions coverage, which are in the realm of health insurance, a very different thing.

So we "missed the mark."

Then talk turned to how reforming how we pay for health care was much more important than actually dealing with the underlying cost of that care.

And again, we "missed the mark."

Soon, talk turned to a Public Option that would somehow "compete" with existing insurers, as if the government's mighty hand wouldn't be steering that ship. As we know, there is no competing with government.

And so we "missed the mark" again.

Quickly, the discussion turned to the cost of these "reforms," with various folks claiming that it would be "deficit neutral" when, in fact, it would be anything but.

Yet again, we "missed the mark."

Now, it appears that the folks in the Senate are planning to pass a bill with no actual substance: a "shell of a bill," if you will. Of course, it's difficult to discuss and debate specifics if there aren't any. And so we face the very real prospect of changing for change's sake, with no real idea of just how expensive and far-reaching these changes will be.

Sense a theme yet?

Crime AND Punishment

Only in the twisted, bizarro world of Obamington does it makes sense to jail someone for choosing not to buy insurance, and to penalize physicians for doing their job.

Under the so-called Baucus Plan, it will be a crime to be uninsured, and could result in actual jail time for choosing to be so:

"Violators could be charged with a misdemeanor and could face up to a year in jail" if they refuse to spend their own, hard-won (and still after-tax) money to purchase health insurance. So much for freedom of choice.

Providers don't skate, either: the plan also contains a little time-bomb that will punish physicians who choose to uphold their Hippocratic Oath regarding elder-care:

"The offending provision is on Pages 80-81 ... it means that in any year in which a particular doctor's average per-patient Medicare costs are in the top 10 percent in the nation, the feds will cut the doctor's payments by 5 percent."

Yeah, that's sure going to motivate Grandma's doc.

But she can still keep that doc, right? After all, we were promised that we wouldn't have to change doctors under these terrific new "reforms."

Turns out, not so much:

[Chart Hat Tip: RedState]

Disability News [UPDATED]

"Have you wondered how the recession has impacted disability claims? Or what illnesses cause most disability claims? Do you know how sharply Social Security Disability Insurance claims are increasing?"

Thus begins an email I received this week from the Council for Disability Awareness (CDA). They've recently concluded their latest annual survey of carriers, as well as the Social Security Disability Insurance (SSDI) program. The report is chock full of interesting data, I'll mention just a few items that I found particularly intriguing:

■ Disability insurers who are members of the CDA paid out almost $8 billion in long term disability claims last year alone.

■ Turns out, recent economic woes don't seem to have had much effect on reported claims (that surprised me) [see update below].

■ The number of folks filing SSDI claims grew by over 2 million last year - that's up almost 6% from the previous year.

At first, I think those last two items seem contradictory, but it does make sense: many more people are covered by SSDI than by private insurance (and, of course, most folks with their own plans are also covered by Social Security).

If you don't have your own disability policy, I'd strongly recommend at least looking into purchasing this valuable coverage. It's one of the very few plans that pays you, not someone else.

UPDATE: Barry Lundquist, CDA's Interim President, sends along an interesting explication of why some folks may not be filing DI claims:

"One theory I’ve heard is that people who are experiencing health problems are NOT going out on claim for fear their jobs will not be there when they come back."

That's very credible, and (perhaps) a bit scary.

More iTech Meets Med

iTriage isn't the only iPhone app that can help with medical issues. Thanks to a tip from reader Jimmy Atkinson, here are 10 such apps, including one that tracks swine flu and another with a newsfeed from the Centers for Disease Control.

So, you don't have to stay home to be scared (but it helps!).

Seriously, these are pretty interesting to read about, even if you don't install them. As for me, I'm still waiting for the new iVaccine app.

Dick Morris Demolishes ObamaCare

In this all-too-short 5 minute video, political maven Dick Morris makes some compelling points about what ObamaCare would really do. In it, he debunks many of the arguments made by the plans' proponents, including draconian Medicare cuts and substantial tax increases on those who choose to keep their insurance plans:



[Hat Tip: RWN]

Arrogant Government Tricks

Are you stupid? Illiterate? Uneducated?

Sen John Kerry thinks you are:

"Let’s be honest about it, most people don’t read the legislative language”

To be fair, he's not alone; the Party in Power© doesn't want you to see the final version of ObamaCare before it's voted on. Apparently, the PiP© thinks it will be too confusing for us rubes in flyover country to comprehend (despite the fact that we managed to muddle through the House version).

Republicans on the committee attempted to add a simple amendment: to require a 72 hour opportunity for us lowly citizens to attempt, in our feeble-minded way, to comprehend the legalistic and legislative brilliance they've been toiling over.

The PiP© was having none of that:

"Democrats said it was a delay tactic that could have postponed a vote for weeks."

Really?

The most important and far-reaching legislation in generations, and a delay of a few weeks would mean, what, exactly? If it was so darned urgent, why didn't they tackle this first, instead of the other boondoggles? They certainly had the votes, so why wasn't it urgent then, but it is urgent now? What's changed?

Maybe the fact that an overwhelming majority of Americans want no part of this?

"Shut up," they explained.

[Hat Tip: Michelle Malkin]

Cavalcade of Risk #88: Personal Responsibility Edition

Wenchy serves up a few life lessons, as well as some great risk-related posts, at this week's Cavalcade of Risk.

Please consider hosting your own edition, just drop us a line to sign up.

CMS in Hot Water?

Earlier today, we reported on the (misguided) decision by CMS to shut down Humana's efforts to educate its policyholders about the dangers of ObamaCare. In the update to that post, we further reported on Representative Camp's condemnation of said efforts.

Well, it appears that Rep Camp's protestation may be the least of CMS's problems.

According to conventional wisdom (i.e. certain blogs):

"Medicare providers are only allowed to communicate with plan members about the benefits they have now, not about possible changes to benefits. They are also not allowed to use plan-related communications to lobby for policies or legislation."

First, this is somewhat misleading: the source cited for this bit of misdirection neglects to mention that, in this context, "providers" does not mean doctors, hospitals, etc. The relevant guidelines (available here) specifically define MA plans as "providers" for the purpose of those guidelines.

The more important point is that the guidelines do no such thing. This verbiage appears nowhere in the text, nor is there anything even like it in the document (I know, because I've spent a good chunk of the evening reading through it). The seemingly relevant sections (50 and 90.7) make no mention of this kind of restriction, nor does it appear anywhere else in the text.

Which brings us to the next problem: I believe that CMS has exceeded its authority. Insurance companies are regulated by the states. Yes, the MA plans which are at the center of this discussion are based on federal guidelines, but they are approved and regulated by the state departments of insurance; CMS would seem to have no jurisdiction here.

Methinks that CMS has overreached here, and may have difficulty supporting its case. Were I running Humana, I'd announce a 180, restart the mailings, and tell CMS to pound sand. If they don't like it, I'm sure it'd make fascinating C-SPAN material.

Praiseworthy Carrier Trick [UPDATED AND BUMPED!]

[Please scroll down for update. HGS]

In light of Obamistration efforts to quell dissent, it's refreshing to see a carrier willing to go to bat for its insureds. It's particularly compelling, because the price its paid is an official investigation by CMS:

"WASHINGTON (AP) - The government is investigating a major insurance company for allegedly trying to scare seniors with a mailer warning they could lose important benefits under health care legislation in Congress."

"Scare tactics."

Apparently, that's the new way of saying "repeat what the politicos have explicitly claimed:" that Medicare Advantage plans are to be shut down. Of course, this also puts the lie to the notion that we'll be able "to keep the insurance we now have."

Major kudos to Humana.

[Hat Tip: Kalebasveggie]

UPDATE: It appears that CMS may have overreached:

"Ways and Means Ranking Member Dave Camp (R-MI) blasted actions by the Obama Administration to silence critics of the President’s proposed Medicare cuts."

Turns out, the bureauweenies at the agency tasked with Medicare oversight had no such compunctions about, for example, AARP's very vocal, very public support of cuts in Medicare funding (and, of course, ObamaCare in general). Certainly that was advocacy, yet drew no reproach. The Representative from Michigan rather decisively points out that "when health care plans try to share that information with their enrollees, the Administration slaps a gag order on them."

Or, to put it a bit less elegantly, "shut up, they explained."

[More here]

Social Security vs Health "Reform"

Hot Air blog has an exclusive on something at once interesting and disturbing:

"[T]he CBO has determined that Social Security will run cash deficits next year and in 2011, and by 2016 will be more or less in permanent deficit mode."

HA has scored a copy of the most recent Congressional Budget Office's report to Congress; the agency reports that Social Security will be officially in the red beginning next year. This is in stark contrast to Senate Majority Leader Harry Reid's prediction that the program would be solvent for the next 50 years, a claim he made as recently as 2005.

Two things about this strike me as important:

First, the blogosphere has (once again) scooped Old Media; it won't be the last time, of course.

Second, and more important, it puts the lie to the notion that government-run health care will be anything but cost in-effective. If CongressCritters can be so far off with a program that's decades old, how can we trust them to have a clue about such a massive new undertaking?

I think we all know the answer to that.

What more could we ask?

[Welcome Industry Radar readers!]

I think there are 5 major deficiencies in all the reform proposals now in the House and Senate:

(1) none addresses the underlying problem. The underlying problem is not the cost of insurance. It’s the cost of medical care. These proposals contain zilch to reduce the cost of medical care. Why is that? The public should be asking.

(2) all bite off more than they can chew. About 15% of the population is uninsured. Why does it follow that 100% of the present system must be radically changed to effect reform for the 15%? That's what this administration seeks to do. Why is that? The public should be asking.

(3) the cost of the proposals is unreasonable. After the enormous commitment of TARP funds and after another enormous commitment of funds to the so-called economic “stimulus” and considering the enormous looming expenditures in cap & trade bills, the the federal deficits have ballooned by 2X’s to 3X’s with no end in sight. The public rightly fears that these trillions of federal spending will be followed by high taxation and inflation. But the government pretends there’s no problem. Why is that? The public should be asking.

(4) the financing doesn’t add up. The administration has repeatedly stated its proposed reforms are necessary to save our economy. The president stated that “our health care problem IS our deficit problem; nothing else comes close.” Yet the administration is proposing insurance reforms that would cost the government a trillion dollars. That’s running through Hell in gasoline pants. Even after assuming massive tax increases and Medicare cuts, CBO projects that the proposals will increase the federal deficits – and the farther out it projects results, the worse the deficits become. The administration ignores the CBO scoring. The administration is also asking us to believe that its proposals will pay for themselves; will not increase the deficit by an additional dime; and will be funded largely thru elimination of the same Medicare "waste and fraud" that every president since Johnson has pledged to eliminate. Why should anyone believe that? The public should be asking.

(5) a "public option" won’t help. There is no evidence or other reason to believe that a public option will not end up like Medicare: skimpy benefits, massive bureaucracy, rampant fraud, special new taxes - and broke. And it will drive out private plans by “competing” thru legislative fiat rather than by innovation that creates pressure for all the players to become better. That's no solution. Yet powerful factions within the administration insist the public option is essential. Why is that? The public should be asking.

It has become quite obvious that if the Congress had passed any of the current proposals “by the first of August” - as they were told to do - it would have been a serious mistake. And the Baucus proposal is even worse than anything that preceded it. Are the only birds that fly out of this administration turkeys? The public should be asking that question, too.

So what to do instead? I think physicians should be taking the lead in regard to reform of the medical delivery system, but I’m not hopeful they will - based on their passivity over the past 40 years. And it must be recognized that without a solution to the high, and increasing, cost of medical care, there can be no solution to the high and increasing cost of insurance.

As to insurance access, I think that the problems (apart from the underlying cost of medical care) are largely caused by too much government in the first place. Unfortunately, the current proposals attempt to solve these problems with still more government. Another strategy for running thru Hell in gasoline pants.

It’s my belief that the two most helpful actions government could take to make medical insurance more accessible and less expensive are: (1) allow individuals to buy insurance across state lines and (2) equalize the taxes on insurance by reducing the taxes on individual medical policies. These actions would increase competition among insurers and reduce costs for individuals. The result would be many more people able to buy insurance.

And specifically for the uninsured, the remaining unspent economic stimulus funds - about $500 billion – could be used to finance insurance for the uninsured over the next 10 years.

This administration that claims to be open to possibilities is clearly ignoring these possibilities. Why is that? The public should be asking.

Happy Birthday, Grand Rounds!

Today marks Grand Rounds' 6th Birthday, and Residency Notes celebrates with a thoughtfully designed and executed Birthday Edition. No cake or ice cream, but plenty of great food for thought.

Random Thoughts on Medicare - Part II

Here's a radical idea that will never fly -

Instead of cutting Medicare provider payments, suppose they were increased enough to allow the providers to make a bit of money...or at least enough to cover the cost of treatment.

To pay for the increase, the Medicare premiums would be indexed to a person's income. Below a certain income, the premiums would vanish, while above some level, they would increase up to some cap.

Why would you want this? Simple. One of the cost drivers in the private insurance sector is a transfer of unreimbursed expenses from the public sector to the private one. If it costs $500million to keep a medical facility open, somebody has to pay the bills. If the government isn't paying it's share, there's no option other than to raise the rates charged to private sector patients. Those increases are reflected back into everybody's insurance premiums. Conversely, if Medicare starts to pay more, the insurance premiums won't go down, but their rate of increase should slow.

Too bad there are so many seniors that vote...

Puzzling Carrier Tricks

[Welcome Industry Radar readers!]

This one has me perplexed:

"An insurance company's "reprehensible" decision to rescind a South Carolina man's coverage after he tested positive for HIV warrants a $10 million punitive damage award ... Fortis investigated Mitchell's medical history and rescinded his policy, stating that Mitchell had misrepresented his HIV-positive status."

[ed: Fortis is now Assurant Health]

The court obviously found Fortis at fault here, and I'm not defending them (Lord knows we've documented a few Stupid Carrier Tricks over the years). It's just that I can see someone being HIV positive and not knowing it, and then having a claim, and so on (actually, that's how Magic Johnson found out he had AIDS: it showed up in the blood test when he applied for a new life insurance policy). So the carrier gets the claim, gets the medical records, and sees one of two things:

■ No history of blood issues, let alone HIV, so obviously not pre-ex (since that requires prior knowledge), so pay the claim. Rescission is so over the top that it's just hard to imagine even home office critters being that stupid.

■ The kid knew he had HIV, files the claim, and the rest is history. This would (should) result in a denial and rescission, but then one would think that would have been upheld by the courts. So which is it?

'Tis a poser.

[Hat Tip: Holly Robinson]

UPDATE: Thanks to co-blogger Bill Halper, we learn that Fortis really was that stupid; as Bill notes, "Fortis based the recission on an incorrectly dated note in the doctor's file and declined to correct the error after repeated attempts were made to point it out."

Random thoughts on Medicare - Part I

One of the common threads running through the various health care reform proposals is the elimination of "fraud and waste" in the Medicare system. This raises an interesting question: How come the "fraud and waste" hasn't been identified and eliminated before?

There's no question that there's fraud and waste in the system...you can't run a system that large without some creeping in. But either the people currently charged with that task are: A.) incompetent or B.) they're going their job, but there's not enough of them. In either case, it's a management issue. Tell me how things are going to change...

Comments Moderation Bleg

I'm becoming more and more frustrated with the HaloScan folks: it's been almost two weeks since I plucked down my $12 (okay, so I'm not exactly the Donald Trump of the blogosphere), and aside from an initial flurry of "we're working on it" emails, nada.

At this point, I'd like to chuck the whole thing and move to a different (better) platform, but we've been with them for so long (4+ years) that I really don't know where to go.

I would love suggestions from readers about alternate systems, preferably with a modest price-point (since we take no paid ads, this is a labor of love). Feel free to leave a, um, comment, or drop me an email.

Thanks!

L’Shannah Tova 5770!

This evening marks the beginning of Judaism's Days of Awe, as we welcome the New Year, called Rosh HaShannah. It is a time of celebration and introspection.

We adhere to a principle called "t'shuva," which is generally translated as "repentance." The literal translation, though, is "to return;" I like that better because it implies that we start the new year with a clean slate (and forgive those who've slighted us, granting them a clean slate, as well).

We wish all of our readers a happy, healthy and blessed New Year.

Cavalcade of Risk #88: Call for submissions

Wenchy hosts next week's edition of the Cavalcade of Risk. Submissions are due Monday (the 21st). She asks that you please include:

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

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

You can submit your post via Blog Carnival or email.

BLEG: We're scheduling fall Cav's now, please let me know if you'd like to host one.

Section 213(d) Clarification

Folks taking advantage of various tax-advantaged medical options (e.g. HSA, HRA, FSA) are (or should be) familiar with Section 213(d) of the Tax Code. This is the part of the code which identifies which medical expenses are eligible for reimbursement under the plan.

For example: eyeglasses are eligible, pool goggles are not. There is still some controversy regarding the eligibility of Lasic eye surgery, as well.

What there is no longer a controversy regarding is fees relating to, um, sex therapy:

"(A) New York tax attorney ... claimed that the amounts he spent on, let's call them personal-gratification-related books and materials, and also numerous professional intimate-therapy service providers, were "medical expenses" that he could deduct under Section 213 of the Internal Revenue Code."

Unfortunately for Mr Halby [ed: note that's Halby, not Halper], the Tax Court found his argument flaccid, and ruled against him.

No word on whether he appealed the decision after four hours.

Intriguing Carrier Trick

Did you know that carriers have their own R&D departments? It seems obvious that they would, but I hadn't ever given that much thought. I attended a product roll-out meeting recently where some folks from United HealthCare's (UHC) R&D department presented a new product they're test-marketing in our area. It's a pilot program now, whether it will see national distribution remains to be seen.

The product itself is interesting, but the mechanics behind it really intrigued me. The key to the design is information provided by UHC's Ingenix folks:

■ 65% of insureds have less than $1500 of eligible expenses each year (and thus get very little, if anything, "out of their plan")

■ 25% have between $1500 and $8000 of expenses (and much of these can be eliminated with simple lifestyle choices)

■ 10% have in excess of $8000 (most likely "maxing out" their out of pocket exposure)

The new product, called All Savers, "targets" that middle 25%. The goal was to design a product that specifically discourages these folks from certain choices by dramatically increasing their own out of pocket. That's accomplished via the plan's design: it includes what I'll call a carrier-sponsored HRA benefit (and which UHC calls "First Dollar Medical Credit" or FDC). The underlying plan includes office visit and prescription drug co-pays, a deductible and co-insurance (yes, very vanilla so far), but then adds a cash benefit to reimburse folks for minor or routine claims (including preventative care). This way, folks with a few small claims "get something" from the plan.

The "catch" is that if one chooses, for example, a brand name med instead of the generic, that benefit's going to be used up much more quickly, and one is going to be going "out of pocket" much sooner. So there's a real, identifiable incentive to make less expensive choices. It's another manifestation of the "skin in the game" precept in consumer driven plans.

Another unique facet of the program is that one can choose from a menu of benefits choices. An employer picks a "price point" (or premium level), and then each employee can choose what benefits he or she wants from within that rate. Joe, for example, could choose a higher deductible, with a correspondingly higher FDC amount. There's a lot of flexibility built in.

Perhaps the most intriguing piece is how the plan is underwritten. Typically, underwriters look at health issues within a group and assign values to them. There are guides and standards, of course, but it's essentially a "human-based" process. What UHC is doing with All Savers is different and, as far as I can tell (and I've looked), unique: instead of a traditional model, UHC is using something called "algorithmic underwriting."

[ed: I was told there'd be no math]

So what's algorithmic underwriting (AU)? Good question. In a nutshell, they've removed that "human element" from the process, and developed complex mathematical models which serve to predict how the group, and the individuals in that group, are likely to behave. I was very intrigued by this, and asked the gentleman who designed this approach if I could interview him specifically about it. He agreed, and we should have a post on this soon. In the meantime, I did find one (and only one) resource online that would serve as a reasonable introduction to the concept (available here).

I'm still not completely sold on the product: there are some areas that I think are unnecessarily complicated, and I'm still a fan of HSA's (and their inherent value and simplicity). But I like the idea of a carrier thinking outside the box, and particularly approve of the idea that one can use health insurance to rein in the costs of health care.

(Qualified) Kudos to UHC and All Savers.

Health Wonk Review is up...

Richard Elmore, blogging at Healthcare Technology News, presents this week's Health Wonk Review. There are a *lot* of interesting posts this week, so definitely check it out.

Saving on Health Care: The Video

Humana's released another of their "In the Know" type videos, and this one's really, really good. If you've wondered why your health insurance premiums go up, even though you've had few (or even no) claims, this vid's for you. If you've wondered how you can save money on your health care expenses, this vid's for you. If you've wondered what your insurance plan can do for you beyond paying claims, then this vid's for you.

Have You Stopped Beating Your Insurance?

There's a rather inflammatory post up at another site based on the claim that a handful of states allow carriers to deny coverage to abused spouses. We'll take them at their word regarding which states have such laws on their books, and try to understand exactly why this is even relevant.

First, the post's author had to go back almost 15 years to even find carriers which engaged in this practice. He then lumps together health, life and disability carriers, as if the risk and underwriting issues were identical across these lines.

They're not.

But the post fails to answer three questions:

1) How is this the insurers' fault? If it's such a heinous idea, then legislators can close the (alleged) loophole.

2) How many carriers even engage in this practice, and how, exactly, do they even determine who's been abused? I looked at applications from all three lines, from a variety of carriers, and not one of them ask about abuse.

3) Is it even a bad thing to decline to insure folks who've been abused?

That last will no doubt get me in hot water, but let's take a look at it through our favorite lens: risk.

Of course we don't condone spousal abuse, whether physical or otherwise. But we also don't condone drunk driving or snorting coke, both of which make it difficult to purchase auto and health insurance. I haven't seen any great uproar from folks who think it's bad that habitual DUI offenders are hard pressed to buy auto insurance, for example. And that's the point: insurance is about risk, and auto insurance companies know that someone with three DUI's is likely to be a bad one.

As is someone who stays in an abusive relationship. It's not about morality or victimhood. It's about risk: if you're being beaten pretty regularly, you're going to be making a lot of trips to the (expensive) ER, and you're likely not a particularly attractive prospect to a health (or life, or disability) insurer. Is that fair? Maybe not, but "fair" has nothing to do with risk.

Seems pretty clear to me.

[Hat Tip: Holly Robinson]

Around the MedBlogs in 80 Posts (aka Grand Rounds)

Suture for a Living hosts this week's edition of Grand Rounds, based on the Jules Verne classic. Very cool concept, very well done.

Malpractice makes Malperfect? [UPDATED]

[UPDATED: Link to report added]

The most talked about issues with regard to "health care reform" (whatever that means today) have to do with access (pre-ex and underwriting) and cutting expenses (which is not the same as "costs"). We've also seen some talk about tort reform.

Flying under the radar, however, is this stunning bit of news regarding the latter:

■ 83 percent of the nation’s electorate want Congress to address reform of the medical malpractice system as part of any health care reform plan.

■ Only 43 percent of Americans have confidence that a lawsuit “without merit” that was filed against them would be resolved in their favor, and only 30 percent have confidence it would be resolved quickly and efficiently.

The study, by Dr. Ronald A. Faucheux of Clarus Research Group, consisted of live telephone interviews with over a 1,000 registered voters (a fairly highly regarded demo). It took place mid-August, and the results were just released.

Another interesting item is that there seems to be growing support for so-called "health courts:"

"67 percent of voters favor special health courts deciding medical malpractice cases rather than the regular court system."

While I understand the appeal of such fora, I'm leery of adding another bureaucracy. And it's also not clear to me how having a new, separate court system would work without a lot of other adjustments to tort law. Now, I'm not a lawyer (and I don't play one on TV), so maybe I'm all wet on that last. I'd welcome any legal eagles' opinions on that in the comments.

[Hat Tip: Jessie duPont]

In Memoriam: Jerome Robert Lohez (v2009)

[Exactly 3 years ago today, we participated in the 2006 Project 2,996, honoring Jerome Robert Lohez. We are honored, and humbled, to participate in this year's rendition of the Project. In his memory, it is our intent to leave this as the only post today:]

As regular InsureBlog readers know, my better half has long maintained that “there are no coincidences.” That is, she believes that everything happens for a reason, although we may not be aware just what that reason is.

As for me, I’ve gradually become 90% convinced that she’s right on this (in everything else, of course, she’s 100% right). But one evening, a few weeks ago, that all changed.

I have a confession: My name is Henry, and I’m a news junkie. It is my habit to stay up way too late reading news blogs. Which I was doing several weeks ago, when I came across an item about one man’s extraordinary effort to harness the power of the blogosphere, in tribute to our fellow Americans who died in The Towers, exactly five years ago today.

The concept was deceptively simple: 2996 victims, 2996 blogs, each one remembering a single person. Bloggers were invited to sign up, and each was assigned – at random – one name.

Stop for a moment, and consider this: one blogger, reading one news item, decides it’s the right thing to do, signs up, and is assigned the name of a person he’s never even heard of, let alone met. We’ll come back to this shortly.

And so I was assigned the name of Jerome Robert Lohez, given a photo of him, and told the briefest of biographical information: age 30, lived in Jersey City, New Jersey.

That was it. A name, a face, a place.

The assignment was simple: On September 11, post his name and picture.

But I’m a news junkie, and that wasn’t good enough. I had to know more about Jerome. So I Googled his name (hey, why not?) and came across a site that CNN put together in December of ’01. It had pictures and names, of course, but I also learned that Jerome, born in France, married Dening Wu some three years before The Towers fell.

One month before The Towers fell, Jerome got his Green Card, and the happy couple flew to Europe to celebrate with his family. When they got back, two days before The Towers fell, Jerome told Dening “Only in New York do we have so much sunshine."

That was Sunday, September 9, 2001.

On Tuesday morning, he left for work. And The Towers fell.

And now we've come full circle: One. Random. Name.

Jerome didn’t just work in The Towers. He worked for Empire Blue Cross and Blue Shield. He worked in the insurance industry.

90% doesn’t cut it anymore.

Thank you, Jerome, for the lives you touched, the joy you brought, your love for New York and America, and for the privilege of paying you tribute.

Au revoir, Monsieur Lohez, au revoir.

Cavalcade of Risk #87: Post-Labor Day Edition

Andrew at the Oz Risk blog hosts this week's Cavalcade of Risk. Please drop by.

BLEG: We need hosts for this Fall; please drop us a line to volunteer.

Anyone presume to criticize the Great Ob?

Lo, the Great and Powerful Ob has spoken.

And he said, "PAY NO ATTENTION to that public plan behind the curtain."

Oh sure, he said more than that in his brief hour upon the stage (and said it very skillfully). But the other stuff he said mainly served to spread smoke around the room in an attempt to cover up the main issue that the curtain concealed. That main issue is single-payer for all. The main issue for the administration is not, as the Great and Powerful Ob suggests, coverage of the uninsured. If coverage of the uninsured were the issue, it could be addressed without all the other government apparatus in House Bill HR3200. Or if affordable insurance were the issue, it could be addressed by tackling the cost of medical care, instead of remaining stuck on the cost of insurance. Besides, we know for certain from statements made by Democrat leadership over the years - right up to the present time and including the Great and Powerful Ob himself - that the public plan is a deliberate and strategic step toward the ultimate goal of single payer.

So there is a clear choice before us:

To obey the Great and Powerful Ob and ignore the public plan that is behind the curtain.

Or not.

(I may have more to say on the speech, over the next few days. Or not.)

On Risk, Insurance and Intellectual Honesty

Mike will be doing yeoman's work tonight, watching and then reporting on the President's speech to a (you should pardon the expression) joint session of Congress. One of the key issues, and the one that seems to have garnered the most press and controversy, is the so-called "Public Option."

But equally burdensome is the concept of "guaranteed issue," especially when coupled with "pre-ex coverage." Very briefly, the idea is that no insurance company would be allowed to decline coverage for any individual, no matter how ill, and must immediately cover any pre-existing conditions.

To some extent, this already exists in the group marketplace. HIPAA requires insurers to take any group (with exceptions for specific industries and participation), and to cover any pre-existing conditions that group may be experiencing.

[ed: this is, of necessity, an oversimplification HIPAA]

Individuals who have "paid their dues" (that is: had previous coverage) are immediately covered for pre-ex, and those who have not gain that coverage after a year of continuous coverage.

So far, so good (maybe).

The issue at hand is that the health care "reforms" currently on the table extend those principles to the individual market. And therein lies the problem:

Insurance is a risk management tool. Yes, that seems obvious enough, but let's delve a bit deeper. Risk is about probability; that is, the likelihood that some event will (or won't) occur. Insurance takes that a bit further, applying the Law of Large Numbers, and underwriters use the result to help carriers price a given "risk." Thus, if you're a healthy 20-something male who takes no part in potentially dangerous avocations, the risk that you'll have a claim is relatively small, and your premium reflects that. If you're a 40-something woman with a history of high blood pressure, your likelihood of a heart attack is higher, and so is your premium.

If you've just come off of 3 months of chemo for an aggressive cancer, your risk of a recurrence is pretty high, and you'll be unlikely to find coverage (whether or not that's "fair" is another discussion). Insurance companies are in the business of making money - which is a good thing, since we want them to be around to pay our claim.

So what happens if the "rules" are changed, and there can be no underwriting?

In that case, it's no longer "insurance" - since there's no risk - but rather a socially endorsed redistribution scheme. While I would find that objectionable, it is at least understandable (see: "fair"). So why is it that pols who advocate for such a sea-change won't just come out and state the obvious: "we want to eliminate insurance from the health care equation."

I think we all know the reason for that.

And it will be revenue neutral...

"Come and take it from me"

Now that Senate Finance Committee chair Max Baucus (D-$$) has finally outed himself as one who wants to punish those who choose not to be insured, perhaps we'll be seeing more of this:

[Way to go, Liberty Belle!]

A Congressman "Gets It"

Rep Mike Rogers (R-MI) lays it out for us clearly and concisely:

Well done, sir, well done.

[Hat Tip: FoIB Jeff M]

Carnivals & 'Rounds

The Carnival of Personal Finance, delayed 24 hours for the holiday, is up at the Financial Highway.

And Grand Rounds, that weekly collection of medblog posts, is hosted this week at Medic999.

Both are chock full of interesting posts, and should keep you busy as try to recover from the 3 day weekend.

Wall Street Hits Bottom, Keeps Digging

We've seen some very bad insurance ideas before, but this one is the Mother of All Stupidity:

"Wall Street is developing a product that packages life-insurance policies into investable bonds, and the plan already is generating controversy"

"Already generating controversy."

No dunh!

Here's the thinking: let's take a concept that's already been outlawed (STOLI), couple it with a questionable insurance practice (viaticals), package it as an "investment," and then sell the product to investors.

What could possibly go wrong?

And why, one may reasonably ask, is this even being considered?

Simple:

"Wall Street has been searching for a product to replace the once-lucrative mortgage business."

Yeah, 'cause that worked out so well for the economy (not to mention banks, mortgagees and the tax-payer). With FHA loan defaults hitting 14%, we should definitely be looking to prostitute life insurance policies to shore up Wall Street's precarious position. Frankly, I presumed this whole idea was a very clever ruse by The Onion to tweak two industries at once.

I wish.

[Hat Tip: Lucianne.com]

Open Wide and say "Aaaah!"

I'm not a big fan of dental insurance, especially when one buys it outside of a group plan. There are a number of reasons for this: chief among them is that, generally speaking, it's trading dollars with the carrier. So I don't usually sell it (although folks have bought it from me), There are, of course, exceptions to this rule, and one of those would be group plans where the employer (and/or a flex plan) subsidises the premium.

One of the major problems with dental coverage is that the maximum annual benefit is usually severely limited (often to $1,000 a year). That is, no matter what you have done, the carrier won't pay out more than that amount in a given year. This means that, when you're reimbursed $50 for a cleaning, that's $50 less available for that root canal. As we saw in the case of the woman in Arizona who beat her breast cancer, chipping away at policy limits can be problematic.

But what if an recurring expense didn't count toward that maximum?

Recently, Assurant's Jacquie Hill wrote to tell me that her carrier has developed a new product which does just that:

"With Preventive Max Waiver, dental plan members continue to receive the same coverage for preventive dental services, such as exams, cleanings and x-rays, that they're accustomed to, but the benefit paid does not count toward their annual benefit maximum, giving them more benefit dollars for other costlier dental procedures they may need, such as root canals and crowns."

Hmm.

This benefit, available on the company's group-based dental policies, may be just what the dentist ordered. Why is that? Well, it means that one doesn't have to juggle that bite-wing x-ray against a crown. And these "little" expenses can add up:

"Our internal data has shown that the average cost for two exams, two cleanings and a set of bitewing x-rays is $281. Without Preventive Max Waiver, that amount would be subtracted from an insured's annual benefit maximum, leaving a plan member who has a $1,000 annual maximum with just $719 in benefits for the remainder. However, with Preventive Max Waiver, the same plan member would have a full $1,000 in benefit dollars remaining to use during the year."

So there's almost $300 a year that suddenly becomes available for more expensive dental work (if necessary). There is, of course, a charge for the waiver; it's based on "internal data and the characteristics of an individual group." One imagines, however, that this would be relatively modest.

It will be interesting to see if other non-medical carriers pick up on this. And, of course, if our readers are aware of any such, please let us know.

In the meantime, a big Thank You to Jacquie Hill at Assurant.

Feeling sick? Feel lucky?

Oy Canada, indeed. In the town of Norwood (Ontario, Canada), they've got a pretty interesting little health care deal going on. Seems the town's health care providers, chafing at limits set in stone by the Canadian Health Service, have devised a little end-run to get around the problem that there's a five year wait to see a doc:



But remember, Canadian health care is free!

[Hat Tip: Hot Air]

First, We Nationalize All the Lawyers...

If "Hell hath no fury like a woman scorned," then certainly this comes in a close second:

"Since we are moving toward socialism with ObamaCare, the time has come to do the same with other professions—especially lawyers. Physician committees can decide whether lawyers are necessary in any given situation."

At issue is the reluctance of our Lawyer-in-Chief and his colleagues on The Hill to even consider looking at tort reform as one means towards reining in health care costs. Absent such change, it's unlikely that physicians will voluntarily ease up on ordering batteries of perhaps extraneous tests and procedures, for fear of being called out for malpractice. Can't say I blame them.

I'm not aware of anyone arguing that tort reform, in and of itself, will solve all the problems of increasing health care costs. Rather, it's touted as one important factor, and a relatively easy and inexpensive way to help reduce them.

Dr. Rafal, a New York City radiologist, graciously volunteers to lead the charge, and offers some pretty useful ideas:

■ "Legal "DRGs." Each potential legal situation will be assigned a relative value, and charges limited to this amount." Just as medical procedures are assigned special codes which dictate reimbursement levels, Dr Rafal envisions each legal maneuver as having a particular value, and sees them reimbursed accordingly.

■ "Ration legal care." One of the features/bugs (depending on one's perspective) of ObamaCare is the idea of rationing health services. Why not extend that concept to legal services, as well?

(and my favorite:)

■ The "Lawyer Reduction Act (HR -3200)" This legislation would immediately - and arbitrarily - remove 3200 lawyers from practicing law. Oh, that's 3200 lawyers per year [ed: insert favorite lawyer joke here].

Not a bad start.

[Hat Tip: Lucianne.com]

Medical Costs, ObamaCare and Reality

One of the claims made by supporters of (the various incarnations of) Obamacare is that nationalizing health care and health insurance will reduce overall costs of both. In short, "we're from the government, and we're here to help you" is cited as a valid reason to trust that the folks in DC have a clue about economic principles, and a proven track record on them.

Well, to be precise, a "proven track record of being correct on them."

The reality? Not so much:

The dark blue lines represent what Obamington claimed unemployment numbers would be under the Spendulus, and the light blue what the pols claimed would be the unemployment numbers sans the Spendulus.

Those red ones?

Reality.

And yet, we're supposed to trust them to get the health care numbers right?

Sure.

[Hat Tip: Innocent Bystanders]

Health Care Town Hall - West Hartford CT, Sept 2. Part II

My impressions and conclusions:

Larson offered more platitudes than specifics about HR3200. He several times broke into full campaign mode, a la Ted Kennedy on a roll. These interludes were passionate, articulate, entertaining - but mostly empty political rhetoric.

Larson provided no structure to the meeting. He just showed up to say some familiar vague generalities about the need to "act" and "come together" and "support change" to build a "unique health care system for America". And then he answered questions peppered at him. But he did not venture to explain why 100% of the system must be reformed because 15% have no insurance. He did not point out that Medicaid is failing to meet its mission to insure the poor. He agreed with one of the panelists that Medicare is doing a sterling job – but did not cite its ponderous bureaucracy, skimpy benefits, and high cost including its staggering unfunded liabilities. And he avoided talking about the cost of medical care - he stuck carefully to insurance.

So basically, I give him poor marks for failing to set HR3200 into its context, to rationalize its necessity, and to outline its scope - never mind his sometimes inane answers to the questions that were asked of him. In other words, he did almost nothing to help the audience understand the legislation in a way that would have been meaningful for us.

One reason I think that public resistance to comprehensive “health care reform” is growing, is that people don't understand it in concrete terms. All we hear is generalities. And when we ask questions we are too often given incomplete, incomprehensible, or jargon-laced answers - and sometimes we have been patronized & even vilified - by our own elected representatives. Along the way, we have learned to have precious little trust in Congress to do the right thing.

But this growing disconnect between the Congress and the people over health care is more than a simple failure to communicate. My own reading of HR3200 revealed some reasons to worry about its actual substance. I worry that the Bill creates a legal framework on which to build a massively bureaucratic mechanism to control the delivery of medical care - not just the financing of it thru insurance. That is an especially acute worry for Medicare participants. The big example - no one has persuasively dealt with the specter of explicit rationing. I think this issue refuses to go away because people are beginning to realize that rationing is viewed by government planners as necessary.

HR3200 may still be an imaginary garden - but it seems to have at least this one real toad in it.

I also think the questions asked at this Town Hall revealed many in the audience lack important basic knowledge - not just of the bill, but of legislative process, how bills become law, the roles of the legislative and executive branches, who is responsible for regulations, and more.

Larson missed EVERY opportunity presented to him to enlighten the audience. He missed NO opportunity to push the administration line that HR3200 is good enough to be passed this Fall. He said we (Congress) know what you want, we understand what you need - and he seemed to imply that the public should stop telling Congress different and fall in line to support this bill. In fact, both Larson and the panelists said the nation cannot afford to do nothing - AS IF "nothing" were the only alternative to HR3200.

All of this ultimately goes to the credibility of our legislators. And here is the effect: At another point during the meeting, a voice from the audience interrupted Larson to demand "Answer the question!"

Larson's reply was "I’ve answered the question, you just won't accept my answer."

He said that as though it were a problem for the person in the audience, not himself. I think it's just the reverse.

Part 1 is here.

Health Care Town Hall - West Hartford CT, Sept 2. Part I

Here’s a summary of my notes from the Town Hall meeting on health care, hosted by Congressman John B. Larson, First District, Connecticut. The meeting took place in West Hartford Wednesday evening September 2. For background on this Town Hall, look in the comments section here. Also, there are presently 5 bills in Congress (3 in the House and 2 in the Senate). The discussion September 2 focused on one of the House Bills, HR3200.

This is Part 1 of 2 Parts. It summarizes some of the Q and A interaction in the Town Hall meeting. Part 2 contains my overall impressions and observations.

Each numbered item below includes a question posed to the Congressman, the Congressman’s answer, and where I have a comment it's [in brackets]. I haven't included all the questions that were asked.

1. Obama says we can keep our existing insurance if we like it. Is that just for 5 years?
--Larson simply answered "you can keep your insurance". He did not refer to the 5-year grace period at all. A voice from the back of the room shouted "Sir you are lying! I'm a physician and I've read the bill!" Larson's face got red, he raised his own voice to say "I have never lied to you" and moved on to the next question.

2. Will you pledge that you & your family will join the public option?
--Larson said that there is presently no public option, and that he is not in the federal employees' plan either.

[This was a confusing answer. He apparently has insurance thru his wife's employment. His answer stimulated a lot of crosstalk from the floor, the loudest ones asking if Larson read the bill. Larson responded by stating that he "had the bill read" one day to the Democratic Caucus for "5 1/2 hours" followed by a couple more hours of discussion. I think this is a whopper. This bill is complicated legalese and it's a real tough slog to read. Reading the whole Bill - 1,017 pages - in 5 1/2 hours, works out to less than 20 seconds per page. Is THAT all the attention HR3200 gets from our Congressman? I doubt the complete bill was actually "read" in the time frame Larson claimed. But clearly Larson wanted the audience to believe it was.]

7. Will this raise my taxes? Will it raise my insurance premiums?
--Larson said the Bill will cut Medicare waste and claimed that Medicare savings will help pay for the cost of the Bill. He also cited a RAND Corporation study that there would be $77 billion annual savings from health information technology.

[He didn't explain how Medicare might reduce "waste", he just said it would happen. He also failed to explain how HIT would save anything and I think left the impression that significant savings would come from reductions to HIT spending. Well, how much HIT spending is there, now?]

11. Why can't we just buy our insurance directly from an insurance company? Why does it have to go true an employer?
--Larson said "that would be single-payer"

[Many people shouted No it's not! - including me. Larson just moved on to the next question.]

15. Will drug prices go down?
--"What will make drug prices go down is when the government negotiates them down like VA"

18. In the current system private companies sell Medicare supplement insurance. Will that disappear in the new public option?
--Larson said no, they won't disappear

[btw he gave a very different answer regarding Medicare Advantage - see #19 below]

Larson also stated that the CBO projects "only about 10 million participants in the public option".

[A question no one asked: if there are 47 million uninsured, how does a public option that covers only 10 million in total solve the uninsured problem? My guess is that he would answer that HR3200 will subsidize the uninsured so they can buy insurance either thru the public option or private insurance. My response would then be "doesn't that mean government subsidy of the insurance companies? Isn't that exactly what he objects to in Medicare Advantage?]

19. Do you support dissolving Medicare Advantage to save money?
--Larson said yes, and the reasons he gave were that Medicare Advantage plans are "subsidized by the government" yet provide the "same benefits and no better health outcomes".

[Larson - and the President - ignore (a) MA plans provide extra benefits (vision, hearing, dental, home care, wellness, and others not included in original Medicare; (b) MA also provides other modern health services not available in original Medicare (case management, disease management programs, nurse hotlines) (c) MA participants have fewer out-of-pocket expenses than original Medicare participants - documented by CMS and the Kaiser Family Foundation, (d) CMS data show that fewer MA participants, compared with original Medicare participants, have reported delayed care, and fewer reported having trouble getting care - perhaps because more MA participants report a regular relationship with a physician. An old report in JAMA (Jan 15, 2003) found that MA participants outperformed original Medicare in five of the seven HEDIS quality measures for health care.

Larson also ignored the cost-shift from Medicare and Medicaid into the private sector which has been going on for more than FORTY YEARS.

It appeared to me that Larson substantially skirted important facts on this question.]

22. The President says a public option will keep insurance companies honest. Aren't state regulators doing this? Who will keep the public option honest?
--Larson's answer - "the people - you can vote us out of office"

[This answer strikes me as inane. Federal agencies are the nearest things to immortality on earth. And besides, when has a Congressional election ever resulted in the closure of a federal agency? Ever? Anyway, Larson's seat is very safe as are most Congressional seats. The answer might be acceptable in a 9th grade civics class but in the real world I think it falls flat. It comes across as condescending to the extent that Larson expects anyone is so naive to believe it, and cynical to the extent he does not care if anyone believes it but says it anyway because it's politically correct.]

25. National debt is $12 trillion going up another $9 trillion in the next 10 years. And CBO estimates that health care will increase the deficit.
--Larson said "this bill is paid for by savings and it's revenue neutral."

[Another whopper. CBO said exactly the reverse. According to CBO, House bill HR3200 would increase the federal budget by $239 billion in the first 10 years. What's more, when the Director of the CBO was asked point-blank if HR3200 would “bend the cost curve,” he responded “no.”]

26. Will there be interstate portability?
--"Yes".

[No explanation. I wonder whether most people understood the question or the answer.]

Part 2 is here.