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?

Ego Trip

Is health care reform about satisfying politician's ego's or making health care affordable as they claim? The Washington Post's op-ed columnist Robert Samuelson has his own perspective on Obamacare.

"My colleagues, this is our opportunity to make history," Chairman Max Baucus implored last week as the Senate Finance Committee opened consideration of his bill. Politicians, in their most self-important moments, see themselves as instruments of national destiny. They yearn to be remembered as the architects and agents of great social and economic transformations. They want to be at the signing ceremony; they want a pen.

One can almost envision Sen. Baucus in a powdered wig, white stockings and buckle shoes signing on in large fashion as John Hancock did with the Declaration of Independence.

One study "found that every year in America, lack of health coverage leads to 45,000 deaths," he told the committee. "No one should die because they cannot afford health care. This bill would fix that."

Oh really?

But wait, there's more!

"These reforms would give Americans real savings," Baucus said. The Congressional Budget Office "tells us that the [insurance] rating reforms and exchanges in our proposal would significantly lower premiums in the individual market." As well, the bill wouldn't increase the budget deficit and "starts reducing the deficit within 10 years."

How could anyone be against that?

Unfortunately, just having insurance doesn't automatically improve people's health. Sometimes more medical care doesn't really help. Sometimes people don't go to doctors when they should or follow instructions (take medicine, alter lifestyles).

Say it ain't so!

Indeed, many people don't even sign up for insurance to which they're entitled. An Urban Institute study estimated that 10.9 million people eligible for Medicaid or the Children's Health Insurance Program in 2007 didn't enroll.

Why would someone refuse FREE health insurance? Inquiring minds want to know.

And how about those 45,000 who died because they didn't have health insurance?

The 45,000 figure cited by Baucus is itself an unreliable statistical construct built on many assumptions. It's based on a study of 9,004 people ages 17 to 64 who were examined between 1988 and 1994. By 2000, 351 had died; of these, 60 were uninsured. The crude death rates among the insured (3 percent of whom died) and uninsured (3.3 percent) were within the statistical margin of error. After adjustments for age, income and other factors, the authors concluded that being uninsured raises the risk of death by 40 percent. They then extrapolated this to the entire population by two techniques, one producing an estimate of 35,327 premature deaths and another of 44,789.

Oops!

OK, but we will still have lower health insurance premiums, right?

Here is what the CBO had to say about that.

"Premiums in the new insurance exchanges would tend to be higher than the average premiums in the current-law individual market -- again with other factors held equal -- because the new policies would have to cover pre-existing medical conditions and could not deny coverage to people with high expected costs for health care."

"Higher than average premiums" because the NEW policies will have to cover pre-existing conditions and cannot deny coverage. Somehow this information has never passed the lips of the politicians who are promising lower, more affordable health care and health insurance.

Wonder why?

So how many want to pay higher taxes to cover people who won't take advantage of "free" health insurance, higher health insurance premiums to cover pre-existing conditions and "no refusal" policies, and questionable improvement in health outcomes . . . just to satisfy the ego of their favorite politician?

Health care reform is a sham.

Smaller cars, bigger (more expensive) health insurance, Poppa Washington.

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.

No More Wrinkles

Consumer Reports gives us 7 ways to have fewer wrinkles. Here is their list.

Use a facial moisturizer with an SPF of at least 30 to limit the sun’s damage every day, not just when you’re at the beach.

Shield your face with a hat and sunglasses when you’re outdoors, particularly on sunny days.

Avoid tanning beds. Those ultraviolet rays can be even more intense than the sun’s and can increase your risk of skin cancer.

Don’t smoke. Tobacco ranks second only to sunlight in its dire effects on skin.

Try not to rub your eyes. Treat hay fever so you’re less itchy and not tempted to rub.

Sleep on your back. Mashing your face into a pillow can cause lines to form over time.

Get an annual eye exam. If you can’t see clearly, you’re likely to squint, which can create wrinkles.

That's a good list, but we think they missed a few.

Facial moisturizers are good, but we prefer a chocolate facial mask. It's kind of like having your cake and eating it too.

CR suggest using a hat and sunglasses while outside on a sunny day. That is a good idea, but not a great one. We are partial to the middle Eastern approach to protecting your face.

While it is true that smoking can cause wrinkles, not everyone is affected in the same way.

Yes, a pillow over your face can cause wrinkles, sometimes it can lead to something worse.

So there you have it.

Enjoy a wrinkle free day!

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]

2.4M Had Health Insurance but Died Anyway

CNN reported that 45,000 die each year because they don't have health insurance and there were 2,426,264 total deaths in the U.S. last year according to the CDC.

Since 45,000 didn't have health insurance it is logical to assume that 2,381,264 had health insurance but died anyway.

So if you have health insurance be prepared to die.

We now return you to normal programming.

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.

Biden Speaks

Joe (I'm always good for a quote) Biden was allowed out of his cage to speak before the NAIC (National Association of Insurance Commissioners). Here are some tidbits.

tighter regulation of the industry is needed to protect consumers and slow the spiraling cost of medical coverage.

OK, so how does more regulation lead to lower insurance premiums? Every time the government get's involved things get worse and premiums increase, not decrease.

It never fails.

Far from destroying the profitability of health insurance companies, the new regulations envisioned by President Obama would enhance competition and choice for consumers while creating a bounty of new customers, Biden said.

Enhance competition and choice. Everything in HR 3200, and even the Baucus bill, will lead to fewer health insurance companies and fewer plans.

If premiums increase with health care reform, and they will, where will this "bounty" of new customers come from?

Health insurance premiums in states rose between 88 percent and 145 percent in the past decade, far outpacing wages and overall inflation, which increased 38 percent and 28 percent, respectively, over the same period, according to a new Kaiser Family Foundation study cited by the White House.

There is a problem with this kind of study. It fails to explain why health insurance premiums increased.

The answer is simple. Premiums are driven by claims.

More people are submitting more claims at least in part because health care doesn't cost them very much. A $20 doc copay and a $25 Rx copay is all it takes to cover a $200 or more bill.

Medical care inflation is 5 - 7% but premiums rise by a multiple of that because claims are increasing at double digit rates.

Biden said new rules should prevent insurance companies from declining coverage to people with preexisting conditions, should limit out-of-pocket expenses and should not allow companies to drop coverage for patients who are seriously ill.

Coverage is usually not dropped except for failure to pay the premium or fraud.

The other provisions, declining coverage for pre-ex conditions and limiting out of pocket will make health insurance LESS affordable, not more affordable.

On the other side, even the spokesman for AHIP shows his ignorance.

"Premiums track directly with the underlying cost of medical care," said Robert Zirkelbach, a spokesman for America's Health Insurance Plans, a lobbying group that represents nearly 1,300 plans.

Premiums track claims, not the cost of medical care.

This may seem like semantics, but the cost of a doc visit or drug is not the issue. It is the total expenditure on claims that impacts premiums.

What kind of idiots are working there?

Swine Flu Cops

Didn't get your shots? You can be quarantined by the state. No knock warrants anyone?

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...

Stupid Government Tricks - Tax Increase?

Is Obamacare a tax increase? It depends on what your definition of a tax increase is, is . . .



Why does this remind me of Clinton saying "it depends on what your definition of is, is . . .

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.

Rocket Surgery

"I'm Chevy Chase and you're not", the SNL Weekend Update on line seemed appropriate for this bit of gallows humor from the New Yorker.

Getting sick is no fun, but think about the impact your illness will have on stimulating the economy.

Human illness adds two trillion dollars annually to America’s gross domestic product. Are you contributing your fair share?

Sentences set in small type make a handy eye test. If you can read this without difficulty, your eyes may be too strong and you will need the prescription drug Corneac R (dollarmycin-B) to return your vision to normal. Consult your pastor about the choice between sightlessness and personal bankruptcy.

Personally, I have weak eyes.

According to my mother it has to do with a common teenage practice.

Policy Updates

—All of you “Far Horizons” Fifteenth Tier Plan subscribers may now choose any doctor you like, who will then refer you to the list of approved cheap doctors, ex-doctors, doctors-in-training, and veterinarians.

—“Near Horizons” Sharing & Caring Plan members: Some misunderstandings about this plan have arisen lately. Sharing your hospital bed does not reduce the per-day costs of your hospital stay, and you will be legally liable if your bedmate contracts a communicable disease.

—Be sure to ask about the new “Invisible Horizons” Plan, providing discounts and a free ballpoint pen on hospital bills of more than a million dollars per week for any fifty-two-week period when you cannot get out of bed.

—The new “Artificial Horizons” Plan for prosthetics will no longer provide separate prosthetic toes. See Pamphlet 567-A-2099 for a limited-time-only “Five-Pak” prosthetic-toe kit. (One foot per subscriber.)

—Feeling poorly? Ask about our new “Eternal Horizons” Plan option, which includes an afterlife provision covering basic medical care for eternity. Have your executor call 1-800-RIV-STYX for details. Cryogenic “Eternal Horizons” subscribers, or their survivors, must provide a matching body and head.

Explanation of Benefits

Skip this section. No benefits are currently available.

Q. & A. of the Month

Q: My current statement lists two hundred and thirty-one charges for “brain surgery,” even though I have had no brain surgery. How can I rectify this?

A: Invalid question. Brain surgery is not covered under your plan.

And there you have it.

Aren't you glad you asked?

Thanks to Jeff Silver for this tip . . .

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.

Medicare Secrets

Medicare will pay for a kidney transplant then expects you to die in 3 years. Bet you didn't know that.

According to the WSJ Health Blog, Medicare could save lives and money by making beneficial changes to the way they approve treatment but they choose not to.

Medicare’s three-year limit on payment for anti-organ-rejection drugs led to a woman needing a second kidney transplant, because she couldn’t afford to the medicine that would have allowed her to keep her first transplanted kidney in healthy, working condition.

The cost of anti-rejection drugs for the patient? $1,000 to $3,000 a month. Cost of the second transplant? $125,000. The average Medicare expenditure per kidney transplant patient care is $17,000 yearly, while it’s $71,000 a year for dialysis patients and $106,000 for a transplant, according to the Times.

According to the NY Times, Melissa Whitaker found herself in a Medicare conundrum.

Ms. Whitaker, 31, who describes herself as “kind of a nerd,” has Alport syndrome, a genetic disorder that caused kidney failure and significant hearing loss by the time she was 14. In 1997, after undergoing daily dialysis for five years, she received her first transplant. Most of the cost of the dialysis and the transplant, totaling hundreds of thousands of dollars, was absorbed by the federal Medicare program, which provides broad coverage for those with end-stage renal disease.

By late 2003, her transplanted kidney had failed, and she returned to dialysis, covered by the government at $9,300 a month, more than three times the cost of the pills. Then 15 months ago, Medicare paid for her second transplant — total charges, $125,000 — and the 36-month clock began ticking again.

“If they had just paid for the pills, I’d still have my kidney,” said Ms. Whitaker

So rather than paying $1000 - $3000 per month for anti-rejection meds beyond the arbitrary 36 month limit, Medicare in their infinite wisdom put her back on dialysis, approved a second transplant, and started her on a new 36 month plan.

The most recent report from the United States Renal Data System found that Medicare spends an average of $17,000 a year on care for kidney transplant recipients, most of it for anti-rejection drugs. That compares with $71,000 a year for dialysis patients and $106,000 for a transplant (including the first year of monitoring).

This reminds me of Jay Leno's question to Hugh Grant following Hugh's incident with a transvestite hooker.

"What were they thinking?"

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]

WMD's

No reason to get sidetracked by the truth. PresBO has declared war on health care.

According to POTUS, the insurance industry is using WMD's (weapons of mass disintegration), also known as health insurance policies, that self destruct when you need them most.

In his speech to Congress he alleged

"More and more Americans pay their premiums, only to discover that their insurance company has dropped their coverage when they get sick, or won't pay the full cost of care. It happens every day."

Those bastards!

To highlight abusive practices, Mr. Obama referred to an Illinois man who "lost his coverage in the middle of chemotherapy because his insurer found he hadn't reported gallstones that he didn't even know about." The president continued: "They delayed his treatment, and he died because of it."

Actually, the carrier is not in a position to administer, advise or delay treatment. That is clearly a patient-doctor decision.

The deceased's sister testified that the insurer reinstated her brother's coverage following intervention by the Illinois Attorney General's Office. She testified that her brother received a prescribed stem-cell transplant within the desired three- to four-week "window of opportunity" from "one of the most renowned doctors in the whole world on the specific routine," that the procedure "was extremely successful," and that "it extended his life nearly three and a half years."

Well yeah, but he still died so PresBO did get that right at least.

The president's second example was a Texas woman "about to get a double mastectomy when her insurance company canceled her policy because she forgot to declare a case of acne." He said that "By the time she had her insurance reinstated, her breast cancer more than doubled in size."

Canceled because of failure to disclose acne? Give me a break, Barry.

The woman's testimony at the June 16 hearing confirms that her surgery was delayed several months. It also suggests that the dermatologist's chart may have described her skin condition as precancerous, that the insurer also took issue with an apparent failure to disclose an earlier problem with an irregular heartbeat, and that she knowingly underreported her weight on the application.

Irregular heartbeat, depending on the nature and treatment, can be an automatic decline on the front end. Missing your weight by a few pounds is common. We don't know how much her weight was understated, but it seems to be enough to make it an issue to the carrier.

In other words, there seems to be evidence of fraud on the application. No reason to let that become an issue, right? I mean, we let mortgage fraud go on for years and that wasn't an issue.

Later in his speech, the president used Alabama to buttress his call for a government insurer to enhance competition in health insurance. He asserted that 90% of the Alabama health-insurance market is controlled by one insurer, and that high market concentration "makes it easier for insurance companies to treat their customers badly—by cherry-picking the healthiest individuals and trying to drop the sickest; by overcharging small businesses who have no leverage; and by jacking up rates."

This one is a real whopper.

In fact, the Birmingham News reported immediately following the speech that the state's largest health insurer, the nonprofit Blue Cross and Blue Shield of Alabama, has about a 75% market share. A representative of the company indicated that its "profit" averaged only 0.6% of premiums the past decade, and that its administrative expense ratio is 7% of premiums, the fourth lowest among 39 Blue Cross and Blue Shield plans nationwide.

Similarly, a Dec. 31, 2007, report by the Alabama Department of Insurance indicates that the insurer's ratio of medical-claim costs to premiums for the year was 92%, with an administrative expense ratio (including claims settlement expenses) of 7.5%. Its net income, including investment income, was equivalent to 2% of premiums in that year.

In addition to these consumer friendly numbers, a survey in Consumer Reports this month reported that Blue Cross and Blue Shield of Alabama ranked second nationally in customer satisfaction among 41 preferred provider organization health plans. The insurer's apparent efficiency may explain its dominance, as opposed to a lack of competition—especially since there are no obvious barriers to entry or expansion in Alabama faced by large national health insurers such as United Healthcare and Aetna.

Similarly, Wal-Mart dominates many markets where they operate, AND they earn a lot of profit. When is Congress going to address this inequity?

I know, don't encourage them.

Coming Soon to a State Near You . . .

Looks like the folks in Maryland are getting a jump on Obamacare. According to this recently released memo from the Maryland Insurance Administration, CHANGE is coming soon.

Like the end of this month . . .

Effective 10/1/09 health insurance companies in Maryland will be required to adhere to the following.

• Prohibit carriers from asking about pre-existing medical conditions if the individual has not received care or advice during the 5 years preceding the date of the application.


• Prohibit carriers from asking about medical screening, testing or monitoring during the 5 years preceding the application


• Prohibits the carrier from attaching an exclusionary rider without prior written consent of the policyholder. (This is a red herring. Riders and rate surcharges are part of the offer which can either be accepted or rejected by the applicant).


• Allows a carrier to impose a pre-existing exclusion or limitation if that condition was not discovered during the underwriting process only if the condition was treated during the 12 months immediately preceding the application. The limitation can last for 12 months but is reduced by prior creditable coverage.

This is a bit of a conundrum.

If the carrier is prohibited from asking about conditions in the prior 5 years then how will they discover the condition? Even if a condition shows up in MIB (Medical Information Bureau) or Intelliscripts or similar service the carrier can't ask about the condition. Seems to me this will lead to a lot more declines.

The other way to find out about a condition is when it manifests or is treated after the policy is issued.

You just can't make this stuff up.

According to sources, none of the carriers operating in Maryland have made any official comments on this CHANGE. It makes me wonder if they have decided internally to simply stop accepting applications for October and later effective dates.

Of course changes like this require carriers to file new applications and policies with the Maryland DOI and wait on approval. New (much higher) rates will also have to be approved.

This effectively closes the door for new, individual health insurance policies in Maryland until further notice.

Looks like Maryland is now officially part of the United States of Obamaland. Wonder if they will change their name to Mary-Obamaland?

Change you can believe in.

Yes you can.

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.

Sgt. Friday Has Ideas About Obamacare

Seems Sgt. Joe Friday has his own ideas on change you can believe in . . .

Why We Need Health Care Reform

We never thought about health care until we actually needed it . . .

I have empathy for this woman, and what she and her family are experiencing. But if this is the way the Obama House wants to sell health care reform, it is lost on me.

Health insurance is no different from any other form of insurance. You must purchase it BEFORE you need it.

The guy in the casket at the front of the church probably needed life insurance, but it is too late to buy it now.

This story is reminiscent of the folks standing in front of the burned out apartment building claiming they lost everything because they failed to buy renters insurance. Why is this supposed to be my problem?

Dennis Miller Translates Obamaspeak

Dennis Miller weighs in on the Obamaspeech on Obamacare.

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...

Stupid Government Tricks - Health Care Reform

Health care reform is like the housing market. Everyone wants a bigger home for less money and they want it now.

Travel back in time a dozen years or so and Washington granted your wish. The folks in Congress, in conjunction with HUD, Fannie Mae and Freddie Mac decided anyone who wanted a home should have one.

Poof! It happened.

Anyone could get a loan, regardless of income or credit history. Demand for housing outstripped supply which fueled a rapid increase in the price of homes.

And then it all collapsed.

The government came in. Doled out money they didn't have. A lot of money. We, the taxpayers, have not yet begun to pay the tab for the housing market collapse.

Health care reform, at least the way Washington is going about it, could end up in the same place.

Roughly 85% of the population has health insurance and everyone has access to health care.

Compare that to 70% who own homes and most of the rest are renters. The homeless population is a moving target.

Most people pay something for health insurance and health care, but about 25% of the population is covered by Medicare and Medicaid and pay little or nothing for their coverage. The cost of health care to them is significantly discounted.

When Washington tried to expand the housing market by making mortgages available to almost everyone they interfered with free market forces and the result is the mess we have now.

The same thing will happen if they interfere with health care, but what they are attempting to do is even worse than what they did to the mortgage market.

They wanted to make mortgages available to 30% of the population but without unraveling what was working for the other 70%. Of course along the way some folks who already had a home mortgage decided to jump on the wagon and refinanced their homes up to and sometimes even exceeding the fair market value.

Washington wants to make health insurance available to everyone but in doing so, they want to completely unravel a system that is working for 85% of us and make health insurance more expensive for everyone.

It is like saying not only should everyone have a home but the home will be in an upscale neighborhood with the best schools. Everyone will have 5 bedrooms, whether they need them or not, a 3 car garage and a pool.

The health insurance plan Congress has designed allows everyone to have the best coverage starting at birth. Like the mortgage market, no one can be refused health insurance. Your health insurance plan must cover all preventive care services with no out of pocket to you. There will be no deductibles or coinsurance, only a copay for even the most expensive of services. If you earn less than $66,000 you will get money from the taxpayers to help you pay your premiums.

Sounds sweet, but just like the mortgage collapse, this plan will fail as well.

They say they want to make health insurance available and affordable for everyone but their plan will do just the opposite. Nothing proposed will lower the cost of health care, or health insurance. In fact, you could very well see the total cost of health care balloon out of sight and health insurance premiums double overnight.

And this.

There are not enough primary care physicians to handle the increased workload.

Once health care is "free" demand will outstrip supply, prices for health care will go up and the doctor shortage will result in queues.

If you want to see health insurance premiums drop two things have to happen.

Less demand for health care and more risk sharing by the insured.

Premiums for health insurance are inflated by 20 - 30% to comply with state and federal mandates.

Everyone who has health insurance now is paying for things whether they want them or not. Why? Because some politician decided there needed to be a law REQUIRING health insurance companies to cover the expense.

Mandates vary by state, so depending on where you live some of these things may be covered or not. But some of us at least are paying for services by chiropractors, podiatrists and social workers. I have never been to a chiropractor or podiatrist but I am paying an additional premium so others can use that benefit.

If not for the fact I am married to a social worker I would say I had never seen a social worker either.

I am also paying for mammograms and pap smears as well as well child care and wigs.

Don't need any of those either.

And these are just state mandates.

Because I live in Georgia I am paying an extra 1% to cover telemedicine and I don't even know what that is, but I have it.

Eliminate mandates and watch premiums drop by as much as 30%. Your $800 family insurance premium could become $560 overnight if you weren't paying for drug abuse counseling, dental anesthesia and all those other mandates. If you are single and paying $150 the premium could drop below $100 by eliminating mandated benefits.

Roughly 30% of the population is obese. Not just overweight, but obese.

Lifestyle choices, including overeating and lack of exercise consume roughly 40% of health care expenditures.

A healthier lifestyle plus eliminating mandates could reduce premiums by as much as 70%.

Now we are talking real savings, not some mumbo jumbo Washington-speak where health care reform will save or create affordable health care for everyone. Anyone who buys that line needs their head examined.

Since the politicians want to make bigger, more expensive health insurance, I am waging my own battle against high health insurance premiums for myself and my clients. Most of them understand there are things you need covered by health insurance and things that don't require health insurance.

They don't need health insurance for routine doctor visits but do need insurance to cover a surgeon or oncologist. They don't need insurance for a generic antibiotic but do need it for a $4,000 cancer drug. They don't need insurance for a minor emergency but do need insurance for a major hospital stay. They don't need insurance for maternity but do need insurance if complications arise. They don't pay an insurance company double premiums to cover a maintenance drug but choose a plan that excludes coverage and pockets the savings.

By purchasing insurance for only what they need, my clients are saving thousands of dollars each year. Instead of sending $8,000 or more to the health insurance company and never seeing it again, they are sending $4,000 and pocketing the savings in a tax sheltered account.

They don't need or want Washington to reform anything. In fact, they want less government interference in their lives and more freedom to choose.

I try to help them get their wish.

Smaller cars, bigger health insurance, Poppa Washington.