Recently, FoIB Rick Byrne tipped me to a fascinating, if convoluted, story out of northeast Ohio. There's as much small-town politics as group health insurance in this tale; I'll be focusing on the latter as much as possible.
Briefly, this suburb of Youngstown is home to some 12,000 residents. It's governed by an eight-person city council, and and has about 60 employees. These employees (and some of the city council staff) are covered by a group health insurance plan issued by Anthem, which has recently notified them of a renewal rate increase.
And thus our story unfolds.
A short time ago, one of the council members proposed deleting staff from the group plan. Dan Yemma, an insurance broker himself (although not the agent for the city's plan), thought that only certain classes of employees should be covered, and that shrinking the group would be an efficient way to save money. For whatever reason, this proposal was deep-sixed, and things went on as they had.
To a point:
The Anthem renewal increase was for 13% (a not unreasonable percentage in this market, but well above the city's anticipated budget for insurance). The agent of record, Michael Caparso, agreed to "shop" the group, which is generally a good idea. Until recently, this would have involved simply generating a census (a list of employees, their family status and ages, etc) and adding whatever additional underwriting information was available (autistic dependendents, pregnant spouses, etc) in order to generate a "pre-screened" rate. Absent that medical information, the carrier would simply issue a "street rate" quote; that is, one which assumed (rightly or wrongly) that everyone was in fine health. In the past year or so, though, carriers have become more stringent in their screening process, and now require completed applications (or waiver form) for each employee. This can be a real burden if one is seeking quotes from multiple carriers; the good news is that pretty much every carrier will generate a quote off of a UHC application.
And so, the agent supplied apps to everyone, and all but one were completed and returned. The one holdout was the aforementioned council member with an apparent axe to grind. He refused to submit either a completed application or a waiver; without that, the carriers wouldn't issue a "pre-screened" quote.
[ed: it should be noted that throughout the linked article and the emails I've received, folks keep referring to these as "binding quotes." They are not: a "binding quote" in this instance is an oxymoron. What they're really talking about are "pre-screened" numbers]
The city's dilemna was that they really couldn't afford the 13% hit from Anthem, but their agent's hands were tied because of the missing form.
And there things stood. And (apparently) stand.
When I first read Rick's email, I was a bit puzzled by a number of issues. First, I didn't understand why the other council members didn't force their recalcitrant colleague to cough up the form (although I really didn't know what leverage they may have had to do so). I was also puzzled by the revelation that the city auditor, who was tasked with getting and evaluating the quotes, was on the city's plan and apparently felt it was her only option. Finally, I wondered about some of the things that Mr Yemma allegedly said, which did not reflect well on his professionalism or ethics. A number of things just didn't add up for me, and so I decided to do a little research.
Jeanne Starmack, the reporter who broke the initial story, quickly and graciously responded to my email asking if she'd be willing to discuss the situation. In reply to my questions, Ms Starmack told me that, as of the 5th, Mr Yemma had yet to submit either a completed application or a waiver. She also noted that the other council members really had no means by which to force him to comply: "He's not an employee, he's an elected official and they can't make him do anything." That makes sense, of course, and explains why there's been no official sanctions. I had wondered if there was perhaps some professional jealousy involved (since he's an agent, but not the agent), but Ms Starmack quickly quashed that. She also helped me understand exactly which kinds of folks he'd have preferred be taken off the plan: "the city council, the mayor, the law director and the auditor." Interestingly, she also told me that the city's group insurance is the auditor's "only source of insurance."
Ms Starmack told me that, in a series of emails, the auditor and Mr Yemma had quite a few disagreements about what was necessary to obtain pre-screened quotes. According to the article, and Ms Starmack's email, Mr Yemma claimed that it was not, in fact, necessary for him to submit an app or waiver in order to obtain the necessary quotes. Since we already know that this is untrue, I was a bit nonplussed that he would make this claim; as an agent himself, he either knew it and was lying, or he'd slept through a few CE classes. Neither of those alternatives seemed likely to me.
In Part 2, we'll learn the Insurance Department's reaction, as well as information directly from two principles: Mr Yemma and the city auditor.
[A Very Warm InsureBlog Thank You to Jeanne Starmack for her help]
Briefly, this suburb of Youngstown is home to some 12,000 residents. It's governed by an eight-person city council, and and has about 60 employees. These employees (and some of the city council staff) are covered by a group health insurance plan issued by Anthem, which has recently notified them of a renewal rate increase.
And thus our story unfolds.
A short time ago, one of the council members proposed deleting staff from the group plan. Dan Yemma, an insurance broker himself (although not the agent for the city's plan), thought that only certain classes of employees should be covered, and that shrinking the group would be an efficient way to save money. For whatever reason, this proposal was deep-sixed, and things went on as they had.
To a point:
The Anthem renewal increase was for 13% (a not unreasonable percentage in this market, but well above the city's anticipated budget for insurance). The agent of record, Michael Caparso, agreed to "shop" the group, which is generally a good idea. Until recently, this would have involved simply generating a census (a list of employees, their family status and ages, etc) and adding whatever additional underwriting information was available (autistic dependendents, pregnant spouses, etc) in order to generate a "pre-screened" rate. Absent that medical information, the carrier would simply issue a "street rate" quote; that is, one which assumed (rightly or wrongly) that everyone was in fine health. In the past year or so, though, carriers have become more stringent in their screening process, and now require completed applications (or waiver form) for each employee. This can be a real burden if one is seeking quotes from multiple carriers; the good news is that pretty much every carrier will generate a quote off of a UHC application.
And so, the agent supplied apps to everyone, and all but one were completed and returned. The one holdout was the aforementioned council member with an apparent axe to grind. He refused to submit either a completed application or a waiver; without that, the carriers wouldn't issue a "pre-screened" quote.
[ed: it should be noted that throughout the linked article and the emails I've received, folks keep referring to these as "binding quotes." They are not: a "binding quote" in this instance is an oxymoron. What they're really talking about are "pre-screened" numbers]
The city's dilemna was that they really couldn't afford the 13% hit from Anthem, but their agent's hands were tied because of the missing form.
And there things stood. And (apparently) stand.
When I first read Rick's email, I was a bit puzzled by a number of issues. First, I didn't understand why the other council members didn't force their recalcitrant colleague to cough up the form (although I really didn't know what leverage they may have had to do so). I was also puzzled by the revelation that the city auditor, who was tasked with getting and evaluating the quotes, was on the city's plan and apparently felt it was her only option. Finally, I wondered about some of the things that Mr Yemma allegedly said, which did not reflect well on his professionalism or ethics. A number of things just didn't add up for me, and so I decided to do a little research.
Jeanne Starmack, the reporter who broke the initial story, quickly and graciously responded to my email asking if she'd be willing to discuss the situation. In reply to my questions, Ms Starmack told me that, as of the 5th, Mr Yemma had yet to submit either a completed application or a waiver. She also noted that the other council members really had no means by which to force him to comply: "He's not an employee, he's an elected official and they can't make him do anything." That makes sense, of course, and explains why there's been no official sanctions. I had wondered if there was perhaps some professional jealousy involved (since he's an agent, but not the agent), but Ms Starmack quickly quashed that. She also helped me understand exactly which kinds of folks he'd have preferred be taken off the plan: "the city council, the mayor, the law director and the auditor." Interestingly, she also told me that the city's group insurance is the auditor's "only source of insurance."
Ms Starmack told me that, in a series of emails, the auditor and Mr Yemma had quite a few disagreements about what was necessary to obtain pre-screened quotes. According to the article, and Ms Starmack's email, Mr Yemma claimed that it was not, in fact, necessary for him to submit an app or waiver in order to obtain the necessary quotes. Since we already know that this is untrue, I was a bit nonplussed that he would make this claim; as an agent himself, he either knew it and was lying, or he'd slept through a few CE classes. Neither of those alternatives seemed likely to me.
In Part 2, we'll learn the Insurance Department's reaction, as well as information directly from two principles: Mr Yemma and the city auditor.
[A Very Warm InsureBlog Thank You to Jeanne Starmack for her help]
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