The MVNHS© gets one right (Finally!)

In an effort to keep abreast of the sagging fortunes of the MVNHS©, Bob offered this tip:

"A 58-year-old British transsexual Tuesday lost her court battle over the state-funded health service's refusal to pay for a breast enlargement."

As deflated as I'm sure she (he?) must feel over this turn of events, I have to say that the "local National Health Service branch's refusal to pay for breast augmentation surgery, at a cost of £2,300 ($3,300)" strikes me as fitting, given that "human rights violations" aside, this kind of surgery would almost never pass the "medical necessity" test.

In related news, the patient, currently known only as "C," was also denied her (his?) request for a name change to "DD."

COBRA/ARRA Update: Tough Luck Edition

Rather than take a principled stand on whether or not to extend the extension, Nancy and Harry have bailed in favor of a long, peaceful Holiday Weekend, secure in the knowledge that at least they're insured:

"Legislation that would provide an extension of federal extended unemployment benefits ... was not approved by the Senate prior to adjourning for the Memorial Day holiday weekend ... As of now, the measure is a scaled down version that extends filing deadlines through November and does not include the COBRA subsidy."

Come Tuesday, when their benefits cease, a lot of newly-uninsured folks may (rightly) wonder why they've been left behind.

Hope and Change, anyone?

What you can learn in a briefing . . .

OKaaay, so Thursday I attended a briefing on the Mental Health Parity legislation – the law enacted in 2008, for which "interim final regulations" were published in February 2010.

The moderator explained that to comply with the law, insurers and self-funded plan sponsors must first compare how their plans reimburse for expenses other than mental health treatment. That's so they'll know what to do to achieve "parity". Parity: "The quality or state of being equal or equivalent" (Merriam-Webster) Simple everyday concept any school child will grasp.

Stick around, we’re not finished.

Turns out the legislation defines the required parity standard that insurers and self-insured plan sponsors must use. Mental health expenses must be reimbursed using the predominant cost-sharing method in the plan being tested. And the law helpfully defines "predominant" as the method used for two-thirds of the reimbursements in the plan. Say there’s a deductible and then the plan pays 90%. Mental health expenses must be reimbursed at the same 90% after the same deductible.

Uhhh, now where you going? We're still not finished.

See, most group plans, aren’t that simple. The large majority of privately-insured people are enrolled in group plans. Most group plans use a variety of cost-sharing techniques. In fact, it's estimated (the moderator said) that a very large number include deductibles, AND copays, AND coinsurance in a variety of ways. An office visit or a prescription for example might be reimbursed at 100% after a $20 copay. Hospital outpatient expenses might be subject to a deductible, and then paid at 80%. Inpatient expenses might be paid at 90% after a per-confinement copay, or after a deductible - or without either a copay or a deductible. And so it goes. It turns out that there are a great many plans in which most (or even all) expenses are subject to one or another form of cost-sharing and yet NONE constitute 2/3 of the reimbursements. In other words, for these plans there is no "predominant" cost-sharing method.

Well, so what, you might well ask?

Well, so this: the law further requires that, if there is no predominant cost-sharing method, the plan must reimburse mental health expenses at 100%. So in these common group plan design types, "parity" does not mean "being equal or equivalent." Instead it means that mental health benefits must be reimbursed BETTER than most other types of expenses.

Yet another chapter in the ongoing saga of "The law is a ass."

New Wave Carrier Trick

[Warning: Long post ahead]

Recently, I attended a training session for United HealthCare's new line of small-group (2-50 lives) products. As these things go, it was reasonably well-done: not too long or wonky, plenty of time for questions, and cookies and brownies available to help pass the time. For me, though, the most important part was the concepts and vision that I see embodied in this new line; regular readers know that I'm no shill, but there are some important lessons to be gained, and a number of questions that will be resolved only with the passage of time.

Basically, "Multi-Choice" (as it's called) seems to be an evolutionary (not revolutionary) outcome of UHC's All Savers program. For many, many years now, the basic principle of group health insurance has been "defined benefit;" that is, we look at what's covered, what the co-pay amount and deductibles are, that kind of thing. Then we tweak those to fit the employer's (and, to a lesser extent, the employees') budget. Hence, shopping every year at renewal.

Multi-Choice (M-C) works a bit differently. First, UHC considers this a "strategy" as opposed to a "product." And indeed, that seems apt: in this market, the carrier (like most others) offers a dizzying array of configurations (up to 150!). By contrast, M-C offers but two: Package A and Package B. What they've done is cut the 150 different options down to 30 or so, and then bundled them. Each "package" offers a couple of dozen or so different plan designs, from low deductible co-pay plans to high-deductible HSA's (and pretty much every point in-between). An employer picks a package, and then chooses a few different options that will be offered to his employees. For example, he might choose Package A, and select plans 3, 7 and 15 as choices for his employees. Each person chooses whichever plan design best suits, and that's that. The employer is obligated to pay a percentage of the premium, but his total cost is understood and agreed upon at the outset: he doesn't much care who chooses which product because his contribution has already been defined.

I think we're moving in that direction anyway: there aren't, for example, many "defined benefit" retirement plans out there. Instead, we see IRA's and 401(k)'s which are predicated on the contribution, not the expected benefit. So it goes with health insurance, as well. This is actually a pretty smart survival move: how better to cope with Obamacare©'s taxes on "rich" benefit designs?

Well, actually, the most cost-efficient way will be "none of the above."

The other interesting, and perhaps unnerving, thing is how prescription drugs will be covered. Currently, an employer chooses an underlying health plan and one of several different rx options. That will go away under M-C: there will be just the one option, called "Specialty Pharmacy." I must confess that I don't yet fully understand all the intricacies of this particular new design, but I'll do my best to communicate the general idea: medication is one of the biggest drivers of health care costs (and, as we know, health care costs drive health insurance costs). According to UHC, "specialty medications" (e.g. injectibles) are used by less than 1% of its insureds, but represent an astonishing 20% of its pharma claims (I suspect that this ratio holds pretty much true with other carriers, as well).

That's a lot of expensive med's.

So the new design has whatever out-of-pocket (OOP) accrues to the underlying medical plan, plus an additional OOP for med's. This is true of not only the co-pay plans (to be expected), but the HSA plans, as well. So one could meet one's high deductible health plan's deductible, and still experience additional costs for specialty medications.

Is this fair?

I really don't know.

On the one hand, I'm reluctant to use the term "fair" when talking about insurance, but in this case, I have to give it some weight. I don't have a problem charging more for smokers, or the morbidly obese, or those who engage in other less-than-healthy lifestyle choices. And I kind of like the idea of rewarding those who exercise regularly.

But:

One of my clients has MS. We've been trying to move that group for a while now, but have always run up against at least one of two problems: either the rate for the new carrier was higher than even the existing plan's renewal, or the new carrier's policy on MS med's was much more restrictive. Sometimes both. Obviously, Tom is one of those "1%ers" and, as such, a part of "the problem." No argument. My problem, though, is that MS, unlike, say, lung cancer or HIV, is not a behavior-driven or -caused medical condition. There's no food that he should have avoided, or loaded up on. No special exercise regimen or other lifestyle choice that will ward off MS. It's like blue eyes or brown: it's not something over which one has any control.

But that means that, under one of these new plans (and I'm not picking on UHC here: I truly believe that this is where we're heading, and Medicare already does this) Tom's total out-of-pocket could be an additional $3500 over and above the high deductible built into his employer's HSA plan.

And there it sits: I don't have a resolution. I understand that pharma represents a huge chunk of health care (and hence, insurance) costs. And one way to rein that in is by taking the high-end med's for very small subsets of insureds "off the table" (or at least to a different end of the table). But there's no "magic bullet," no operation or lifestyle change that would alter Tom's medical predicament.

ObamaCare© doesn't solve it, either, by the way: inherent in that scheme is the even more draconian solution of rationing.

Cavalcade of Risk #106: Call for submissions

Julie Ferguson hosts next week's Cavalcade of Risk, which also marks its 4th Anniversary. Submissions are due this Monday (the 31st). Please remember to 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.

We could really use some volunteers for hosting duty - please drop us a line to sign up!

Risk Management: It's Personal, too

Almost exactly 10 years ago, I was involved in a pretty bad auto accident. A young lady who wasn't paying attention thought she could beat a light, and - both cars travelling about 45 miles per hour - we collided almost head-on. Both cars were totalled.

We both walked away.

Undoubtedly, the fact that both vehicles were roughly the same size and weight helped, but I credit the fact that we were both wearing seat and shoulder belts as the primary reason we lived, let alone walked away with nary a scratch.

It's really this simple:



[Hat Tip: Ace of Spades]

Health Wonk Review is up

David Williams hosts this edition of great health policy wonkery. I like the move towards more matter-of-fact versions - Thanks, David!

More "Pass it to see it" News

■ ObamaCare© sets up a new entitlement for early retirees: the program, designed to subsidize groups with generous retiree benefits (hello: another union payoff!) with $5 Billion paid to employers to help defray costs not just for retirees, but their spouses and even dependents (including, of course, those 26 year old "kids.")

■ Ceridian reports that our CongressCritters are mulling yet another extension of the so-called COBRA subsidy (i.e. hidden tax); the current program is scheduled to sail off into the sunset next Monday (the 31st). It's still pending, so who knows.

■ HHS Secretary Shecantbeserious has fired back at Virginia's heroic efforts to fight ObamaCare©. She's relying on two arguments, neither of which strike me (a proud non-lawyer) as compelling: first, that the state (the State!) of Virginia has no legal standing to challenge the train-wreck. The second prong is that citizens of Virginia are also citizens of the United States [ed: d'unh!].

The former argument fails to consider that, if a state has no standing to challenge Federal over-reach in blatant disregard of the 10th Amendment, then who does? Anyone? Bueller?

The latter seems silly on its face: if a citizen of Virginia doesn't agree with a particular law, then that citizen is free to a) vote with his/her feet or b) run for office and change it (there may be other remedies, too, such as a voter initiative effort).

I have little doubt that we'll see similar responses to the suits brought by the other 19 states.

Isn't it Repealing?

By an overwhelming 2 to 1 margin, "we the people" want ObamaCare© repealed:

"Support for repeal of the new national health care plan has jumped to its highest level ever. A new Rasmussen Reports national telephone survey finds that 63% of U.S. voters now favor repeal of the plan ... Currently, just 32% oppose repeal."

Ooopsy.

Perhaps that explains this:

"41% Say Random Selection From Phone Book Would Do A Better Job Than Current Congress."

Indeed.

Medical Tourism Rising

First, consider this:

"In choosing Berwick, the Obama administration is implicitly admitting that the health care law passed by the Democrats in March will lead to the rationing of health care ... seemed to acknowledge that the new health care law would simply ration care in a transparent way."

[Hat Tip: RWN]

Let's dispose of the silly meme that health insurers "ration" care in any way. They cannot make a person undergo a procedure, nor can they withhold treatment. Insurers can only decide, within the contractual terms of the policy, whether or not they will help to pay for any such care. And let's remember, the most egregious claims denier of all is not Aetna, or Blue Cross or United Healthcare. It's Medicare. It's worth noting that Medicare itself rations care (through, for example, its power over providers).

In the event, once we officially transition to a nationalized health care scheme, folks will still need care, they just won't be able to find it here. So what to do? Well, we've discussed medical tourism many times here, but one question that keeps cropping up is "okay, smart guy, I get it. But how do I find where to go?"

And that's where this handy new tool comes in:

"AllMedicalTourism.com has been founded by veterans in the consumer internet and healthcare fields to provide a trusted source of health information for consumers considering medical treatment abroad."

And so they have; click over to their site for a wealth of information on such things as fertility, heart surgery, even cancer treatment. Regular readers know our obsession with transparency; this site lists not only providers, but how much they charge. Is this the future of health care?

Time will tell.

[Hat Tip: SoIb Gail S]

Medicare Update: Good news is 50% off!

Actually, according to CMS Guy Jack Cheevers, folks covered by "Part D prescription drug plans will see 50 percent savings on their brand name and some authorized generic drugs when they enter the coverage gap, or donut hole, during 2011."

Best to stock up then.

For more info, click here.

Concentrated Markets, huh?

Thanks be to Bob for finding and posting the link to this article.

OK, so the AMA says “Competition in the health insurance industry is disappearing.” It cites growing “concentration” by market and pleads for “the Department of Justice (DOJ) and state agencies to more aggressively enforce antitrust laws that prohibit harmful mergers.”

The AMA report is not public unless you want to pay $150 for it or unless you are one of the 17% of doctors who belong to AMA. So at least a couple of questions come to mind:

1. In how many of those concentrated markets is the dominant player Blue Cross? I suspect the majority of them. And therefore I wonder if the AMA’s complaint is not really about some "absence of competition", but instead a complaint about Blue Cross. What makes Blue Cross such a popular choice for customers? And why does AMA care?

I also suspect the study shows there are in fact multiple competing insurance companies that dominate in different markets. Which prompts a second question:

2. Is it true that company A or C or U can be dominated by the Blues in some areas, but can dominate the Blues in other areas? Are they not the same companies with the same strengths everywhere? Yes? No? If one company is clearly dominant, why is there any competition at all, anywhere? If no company is clearly dominant, why is there “absence of competition”?

The only, or even the most likely, answers to these questions do not automatically involve “the absence of competition” or even the prevalence of “mergers”. (There are physician practice and hospital mergers too). And why should the only or even most desirable response be that “the Department of Justice (DOJ) and state agencies more aggressively enforce antitrust laws” ?

The answers to these questions are not stated in the AMA article and the study is not exactly public. Doesn’t it make sense that, before anyone accepts the AMA findings as described by some AMA spokesperson, AMA permit people to, you know, read the study itself to see whether it addresses these (and other) questions?

3. Finally, it’s a fact that physicians and hospitals agree to generally higher discounts for Blue Cross than they do for other insurers.

That's important because discounts affect net cost. The higher the discount, the lower the net cost. The lower the net cost, the more business an insurance company is likely to write.

So I wonder if doctor and physician negotiating behavior isn’t largely responsible for the Blue Cross cost advantage in the first place - which then leads to the greater market share that AMA is complaining about.

By setting up Blue Cross to win on lowest net cost, perhaps the doctors and hospitals have managed to channel the greatest number of patients to the very organization - Blue Cross - to whom they have given the greatest discounts. Doesn’t this cost the docs and the hospitals more? And then the AMA funds a study so they can complain about the "absence of competition". In the end, I wonder if the AMA is pushing this study as a means to defend their incomes, and not because of any “absence of competition” that is “not in the best economic interest of patients.” I wonder if the AMA isn’t worried more about the economic interests of doctors. I wonder if that isn’t the real reason AMA is so exercised about “concentrated” markets? (probable meaning: “Blue Cross has too many members”). I wonder.

Another Meme Bites the Dust

One of the favorite arguments espoused by the promoters of ObamaCare© is that, under our current system, uninsured folks are forced to use the ER as their primary means of care. Under the new regime, it's been argued, not only will there be less folks uninsured, but that the high costs of ER care will be mitigated.

There's one big problem with that assessment, though:

"Uninsured don't go to the ER more than insured."

Ooops.

Turns out, it's more about impatience than insurance:

"ER visits by the uninsured were no more likely to be triaged as non-urgent than visits by privately insured patients or those with Medicaid coverage."

In other words, one of the main arguments underpinning the "we have to do something now" crowd's rationale just got yanked. Oh well, back to the drawing board, right?

The MVNHS© Makes an Arse of Itself

For nine long years, young Jerome Bartens suffered from acute hearing loss. Doctors were stumped, until they finally figured out that it was due to a long-lost cotton ball.

But that's old news.

Apparently, the MVNHS© is now aiming somewhat, um, lower:

"A young mum died after a series of blunders by doctors who failed to spot a six-inch long toilet brush handle embedded in her buttock."

Yes, you read that correctly: the government-issue doc's so esteemed by our own proponents of nationalized health care missed a half-foot long toilet brush handle protruding from a rather obvious place. There is no humor here, only pathos:

"Cindy [the patient] ... spent more than ten hours in surgery at Nottingham's Queens Medical Centre but died from massive blood loss."

Now aren't you looking forward to our own new health care system?

ObamaCare©: Consequences Update

It may be considered bad sportsmanship to "pile on," but sometimes it's necessary. When Queen Nan said we'd have to "pass the bill to see what's in it," she wasn't kidding:

"Massachusetts medical-device companies say they’ll cut back on operational costs - and jobs - after a planned 2.3 percent tax on their products is implemented in 2013, according to a new survey."

The issue is that ObamaCare© mandates a new excise tax on certain classes of medical devices (including certain female-related products). This in turn is creating a chilling effect amongst those companies doing R&D on the next generation of life-saving devices. Which of course is good news for some, since it will mean less demand as these folks die off.

[Hat tip: HotAir]

Which brings us to Florida [ed: nice segue there, Henry], which is not entirely enamored of ObamaCare©'s "individual mandate." In addition to being evil, the mandate may well be an unconstitutional expansion of government power. At least that's what the Sunshine State's Attorney General thinks:

"The power of their argument lies in questioning whether Congress can regulate inactivity — in this case by levying a tax penalty on those who do not obtain health insurance. If so, they ask, what would theoretically prevent the government from mandating all manner of acts in the national interest, say regular exercise or buying an American car?"

A point we've raised numerous times, as well.

There are other less obvious costs, as well. FoIB Lyndsi Thomas directs us to this piece in the well-respected City Journal, where the Manhattan Institute's Center for Medical Progress' Paul Howard "touches on the tax levied on businesses for the partial federal subsidy that they receive for each retiree, the proposed Medicare cuts, $5 billion fund set up to offset health-care expenses for early retirees, and generally how the new law will cost taxpayers far more than expected and send health-care spending into the stratosphere."

Lots of red meat there.

Cavalcade of Risk #105 now online...

Nancy Germond hosts this week's Cavalcade of Risk, and it's no train-wreck. Do check it out.

Stupid AMA Trick: The 17% Solution

Do you presume that the AMA (American Medical Association) represents the vast majority of our physicians? I certainly did, until I read this eye-popping stat in the WSJ:

"[G]rowing opposition (to ObamaCare©) makes the actions of the AMA, which represents only 17% of the doctors in the U.S., look very bad."

That's less than one in five doc's, a very small minority of providers. So how did they "earn" the right to speak for all the rest? The simple answer is, they didn't. What they have done is leverage a mutually beneficial (and cozy) relationship with Washington into a much more powerful voice than deserved.

How did they accomplish this, you ask?

Remember those "diagnostic codes" which are used by providers and insurers (including Medicare) to determine reimbursement rates (not costs) for given procedures? Well, the AMA owns the exclusive rights to these codes, on which they earn royalties, and on which every provider is required to rely if they wish to be paid for services rendered by a 3rd party (i.e. insurance). As long as they scratch Congress' and Obama's backs, they continue to reap that benefit.

Their vested interest in ObamaCare© has little to do with covering the uninsured or expanding access to health care (which is a good thing, perhaps, since little of ObamaCare© itself has anything to do with those lofty goals). Instead, it's about maintaining (and, in fact, growing) its own coffers at the expense of the rest of us.

Why am I not surprised?

Connecting the Dots: Thanks, Nan!

Over the past two days, Bob has done yeoman's work bringing us up to speed on some of the scarier provisions of Obamacare©. You know, the ones we had to pass the bill to see? As Bob mentions, this involves the death spiral of employer-based health insurance, the potential death or exit from the marketplace of some (if not many) insurers, and the potentially earlier-than-anticipated demise of at least some of our seasoned citizenry.

As Bobby McFerrin so blissfully advised, though, "don't worry, be happy:"



“We see it as an entrepreneurial bill,” Pelosi said, “a bill that says to someone, if you want to be creative and be a musician or whatever, you can leave your work, focus on your talent, your skill, your passion, your aspirations because you will have health care.”

Get that? Go ahead and quit that low-paying (or high-paying, for that matter) job, because the rest of us will carry your load. One wonders what happens when we reach that tipping point, though: who pays the piper when no one's working? As Margaret Thatcher once thoughtfully observed: "The problem with socialism is that eventually you run out of other people's money."

[Hat Tip: RedState]

UPDATE: The Happy Hospitalist "gets it."

Cavalcade of Risk #105: Call for submissions

The Insurance Copywriter hosts next week's Cavalcade of Risk. Submissions are due this Monday (the 17th). Please remember to 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.

Gruesome Carrier Trick

Although it's an infrequent occurrence, insurance companies do go belly up. When this happens, it's up to the Department of Insurance in the state where the carrier is (was?) domiciled to swoop in an attempt to save the day. This is generally done by way of a process called "rehabilitation" which would probably make for an interesting (if overly wonky) post, but that's not why I bring it up.

Recently, the American Community Mutual Insurance Company found itself in dire financial straits, and was forced to withdraw from the marketplace. The Michigan Department of Insurance (DOI) has stepped in, and has assumed "operational control" of the company; that is, they're running the day-to-day operations while looking for a potential buyer (or whatever other mid- to long-range plan they hope to accomplish). When a similar circumstance overtook Shenandoah Life last year, the Virgina DOI immediately notified agents contracted to do business with ShenLife, warning us of dire consequences if we moved our groups to other carriers. What actual enforcement power they may have had in that regard aside [ed: none, really], they at least pro-actively looked to keep the marketplace steady.

Now comes word from FoIB Rick B that Michigan is apparently not following Virgina's lead in that regard. According to Rick:

"There are no flies on the Michigan Blues.

They are already offering agents $150 per-group commission incentives to get ACM groups to switch now through July 1, and $75 per group for those that switch between July 2 to Oct. 1. For individual plan members, they are reimbursing agents on the "A" commission schedule, 15%, for switchers."

So in addition to regular commissions for writing the group, some agents will receive special "signing bonuses" for deliberately undermining whatever efforts the Wolverine State's DOI might have in mind to salvage the harried carrier. As I replied to Rick, these guys give vultures a bad name.

[Hat Tip: FoIB Rick B]

Back to Basics: Life Insurance Edition

At a consumer-driven bulletin board to which Bob and I frequently contribute (Bob more than I, since he has more knowledge and experience), I recently became entangled in a kerfluffle involving the misuse of life insurance. The subject at hand (deconstructed here) stands on its own, but I'd like to revisit some fundamentals regarding how permanent (in this case, Whole Life) insurance policies work, and don't work.

The first concern is need: that is, how much life insurance is appropriate for a given individual (or couple, or family). This is paramount: without an assessment of the risk (i.e. the net financial cost of one's demise on one's family or business), it doesn't matter what kind of policy one buys. Simply buying a policy without regard to that underlying metric is a waste of one's time and money.

The second concern, then, is time-frame: that is, for how long will one need the insurance in force. Ideally, the appropriate amount is that which is in force on the day of one's demise. Often, this includes a mix of "term and perm" (permanent), and will be adjusted as one travels life's highway.

Finally, one arrives at the decision that at least some of the insurance will be permanent; to keep things simple, we'll assume it's Whole Life (WL). There are two basic kinds of WL, participating and Non-Participating, Par and Non-Par. Participating policies have a unique and useful feature called "dividends," and it is on these often misunderstood proceeds that we'll focus in this post.

In the life insurance world, "dividends" represent, essentially, a rebate: the insurance company, in determining the cost of insurance for a particular year, miscalculates and is obliged to rebate (or refund) any overage to its policyholders. The key point here is that these are miscalculations, and as such, are not guaranteed from one year to the next. Some companies point proudly to many years of miscalculating insurance costs, and thereby a long history of having to refund these overcharges. But they are equally quick to point out (as required by law), that these refunds are not guaranteed; that is, there is no certainty that next year will yield such a windfall, nor how much it might be.

In addition, these refunds are never to be expressed as "rates of return:" it would be inappropriate to classify a given refund as a percentage, or to imply that this is a valid ROI (return on investment). That's because participating whole life policies are not in fact, "investments," but "protection." The "percentage" is the carrier's rate of return, not the insured's. Anyone categorically stating that a dividend is guaranteed is, at best, misstating their nature and, at worst, lying about it. Which is not to say that dividends are a "bad thing," but simply one of many factors that go into the insurance buying process.

Why all this "inside baseball" about dividends and life insurance? Glad you asked:

If someone offers to you a life insurance plan with a "guaranteed" dividend, run - don't walk - away, because there is no such beast.

HWR: Founding Purpose Edition

"Health policy, funding, insurance, managed care, infrastructure, IT, the uninsured, economics and trends re same are all fair game. We avoid things clinical in nature."

That's the simple, 25 word "mission statement" of the Health Wonk Review. Yet each time I host (and I'm sure others have noticed this, as well), there are more submissions that fall outside these guidelines than within. So for this outing, I chose to ruthlessly apply two rules:

Only posts which actually meet the criteria and included a summary would make the cut.

On a more positive note, I'd like to thank Jetsetter Julie and Judicious Joe for founding this great carnival. I bestow upon them the august and coveted "Award of Wonkery."

And now, this week's (greatly abbreviated) selection of outstandingly wonky posts:

■ Health Policy

Eadwine Walter thinks we're headed toward a nationalized health care delivery system, and offers some insights on how best to understand it.

Channeling Conan O'Brien, Anthony Wright presents a cynic's view of the new reforms and how they'll impact us.

Color John Goodman unimpressed with the latest in cancer scare-mongering.

■ Funding

Adam Fein looks under the hood at CVS/Caremark's growing revenues, and legal problems.

■ Insurance

Ever wondered what, exactly, is a "medical loss ratio?" Jaan Sidorov has, and laments that the folks who crafted the new health care legislation (known around these parts as ObamaCare©) apparently didn't.

Jay Norris has a question of his own: why can't health insurance underwriting be more like that used for life insurance?

Now that we've redefined "adult" as "someone older than 26," Chris Fleming looks at how that will impact early retirees (who might still have young'uns at home).

HWR co-founder Joe Paduda looks at Coventry Healthcare as a model for implementing the new rules, and posits that "risk selection must be replaced by health management."

Our own Bob Vineyard reports that one unintended (?) consequence of ObamaCare© is that major employers will see the "fines" imposed for non-compliance as far more attractive than actual compliance.

■ Infrastructure

Uberwonk David Harlow reports on a Bay State initiative that will require providers to use certified EHR's, and what that portends on a national level.

■ IT

You think that hospital-issue gown lacks privacy? Peggy Salvatore thinks that some record-keeping schemes may be even more embarrassing.

Rich Elmore interviews Greg Parstons, the lead researcher and director for Accenture’s Institute for Health and Public Service Value, about health IT.

■ Economics

Of course Jason Shafrin headlines this category. He starts by recapitulating the conventional wisdom that economists abhor most forms of regulation. Then he asks whether economists would support the requirement that the FDA pre-approve all drugs for use in the U.S.

A Johnson and Johnson subsidiary's factory is shut down, and its products recalled, after an inspection found "dust, grime, and contaminated ingredients." Roy Poses takes to task the less-than-contrite CEO.

■ Trends

Victoria Kennedy puts down her own iPhone long enough to help us out with her Top 5 Health & Medical iPhone apps. Here's hoping that the crisis hotline number isn't busy.

Like John Goodman above, Maggie Mahar isn't too keen on how some cancer stat's are being misused. Her take is a bit different, though, and may well represent an interesting trend itself.

Is there a shortage of doc's, and if so, why? The Notwithstanding Blog has a unique take on why simply increasing the supply of med school students won't solve the problem.

■ And the Wonkiest of All

Austin Frakt submitted this masterpiece: "Making causal inferences in observational studies is more challenging than in randomized experiments. But econometric and statistical techniques have now improved to the point that a knowledgeable practitioner can draw causal conclusions from sound observational research. Though these techniques have already been employed in economics they have not been widely applied or appreciated in health services research. Given their utility and ease of application, that should end."

In true wonk-fashion, I ran this post through Google's translator (Wonkese -> English); click here for the result.

That wraps up this week's 'Review, please join us again on the 27th when we reconvene at David Williams' place.

$115 Billion and counting...

That's the latest guesstimate from the Congressional Budget Office on how much more ObamaCare© will really cost:

"The director of the Congressional Budget Office said Tuesday that the health care reform legislation would cost, over the next ten years, $115 billion more than previously thought."

Right-brainers take note: this is what $1 Billion in crisp new $100 bills looks like:
Now multiply that by 115.

Kinda takes your breath away, doesn't it?

President Obama vs WellPoint

On Sunday's radio address, President Obama made some very strong comments about an insurance company attempting to rescind coverage of women who developed breast cancer. Although unstated in his address, the remark was appeared to be targeted at WellPoint.

Today's Wall Street Journal covered WellPoint's response, but the print version omitted the full text of WellPoint's letter. It makes interesting reading...

Letter to President Obama from Angela Braly, WellPoint CEO

ObamaKidsCare©: Up is Down?

One of the crucial memes during the run-up to O'Care© was that, despite all evidence to the contrary, it was going to result in lower insurance rates. Exactly how expanding coverage for tens of millions of people would result in lower costs for everyone was never actually explained, but we were assured that, once it was passed, we'd see how it would work.

We now know that, despite an initial screwup by the Feds, the provision allowing "children" (and by "children," we mean 26 year-olds) to stay on their parents' insurance plans is in effect. Remember, we were promised that this would reduce costs.

Perhaps not surprisingly, the truth is at odds with the promise:

"Letting young adults stay on their parents' health insurance until they turn 26 will nudge premiums nearly 1 percent higher for employer plans, the government said in an estimate released Monday."

We needn't remind informed readers that when the gummint estimates a 1 percent hike, the real number will be vastly higher. Just one more promise under the bus.

Ode to a Grecian Earn

Sorry for the (horrid) pun, but I have a question. If, as we've been told over and over, we urgently needed top-to-bottom health care "reform," that our current system is so badly broken, and that only the gummint can make it right, then how come:

"Racing to secure financial aid and avoid a debt default, the Greek government has agreed to austerity measures ... removing the state from the marketplace in crucial sectors like health care."

What??!!

A reduced governmental role in the health care sector will increase productivity, lower debt and potentially save the Greek economy?

Who'da thunk it?

[Hat Tip: Hot Air]

Paying Dividends

FoIB and outstanding tax-blogger Joe Kristan is featured in an interesting post at Investors Business Daily:

"Taxpayers owning C corporation stock might also want to take a bullet, figuratively speaking, this year. That’s because the tax rate on dividends will either leap or soar in 2011."

With his trademark wit and keen ability to explain sometimes arcane tax issues to those of us who can barely spell CPA, Joe explains some of the lesser-known downsides to tax news.

May is National Disability Insurance Awareness Month: Take Two

By way of reader Nat Harward, here's even more news-you-can-use. In my post last week, I posited that disability income insurance (DI) is "valuable, but undersold and underbought." Nat tells us that, according to a recent LIFE (Life and Health Insurance Foundation for Education) survey:

■ 25 percent of workers cannot say for certain whether they have disability insurance coverage.

■ Of those who say they do have coverage through their employer, a majority cannot pinpoint how much they have.

■ When asked about what percentage of their salary would be paid to them if they were to become disabled, 39 percent had no idea and wouldn’t guess while 21 percent greatly overestimated their coverage, supposing policies would pay anywhere from 70 to 100 percent.

In a way, that's even more troubling, because it gives folks a false sense of security. And it's really not difficult to find out if one has such coverage, and how much it would actually pay. If one works for a large employer, a call to HR should do the trick; if not, why not ask the boss?

And if you haven't already, please check out the original post on this.

Off to a good start

I have a copy of a letter dated April 19 in which HHS Secretary Kathleen Sebelius asks employers and insurance companies to ignore what the new health care reform law actually says, as regards extended dependent coverage.

Specifically, she asks employers and insurance companies to "maintain coverage for young adults who could be dis-enrolled in May". In effect, Sebelius is saying ignore the law and cover the dependents now, because . . . well, because I’m asking you.

She is doing this because the new health care reform law does not mandate extended dependent coverage until the first policy period that begins after September 22, 2010.

I see this is even more proof – as if more proof were needed - that the Congress never read this monstrosity they created. And if a few of them did read it? Even they clearly did not understand it. Because if they understood it, they would have provided for dependent coverage continuity in the law, avoiding the coverage gap created by the law as written, passed, signed by the President - and now recognized as worthy of being ignored, by none other than the Fair Kathleen.

One assumes the rest of the law is still to be obeyed. Until further notice.

Carnival of Personal Finance is up

Madison at My Dollar Plan presents this week's round-up of helpful personal financial posts. Be sure to check out the video (about a third of the way in) about last week's market freefall.

ObamaCare© vs Jobs

Over at PowerLine, Paul Mirengoff writes that "[e]mployers thus have a strong incentive not to employ more than 50 workers. By avoiding that threshold, they won't have to provide health insurance and will gain a cost advantage over competitors." That's because ObamaCare© requires employers with 50 or more employees (which includes, mathematically, even part-timers) to provide health insurance. Now, regular readers know that employers don't actually pay for health insurance anyway, but I'd like to expand on Paul's point a bit.

If it's a given (and it is) that employers don't pay health insurance or taxes, it follows that they won't pay any fines, either. We noted some weeks ago (far in advance of the MSM) that "employers may consider exiting the employer health market and send employees to state-run insurance exchanges;" so the effect is actually magnified.

Hunh?

Let's revisit that 2006 post on unintended consequences:

"When Joe was hired, his employer budgeted $60,000 for Joe's compensation; $50,000 is paid to Joe as wages, and the other $10,000 is sent to the insurance company and various government agencies (and, of course, some is to defray the costs of vacation and sick days, etc)."

Now let's presume that the cost of insurance has increased, say, 30% in the past 4 years (a reasonable supposition), and Joe's total cost of employment (what his employer puts in his paycheck plus sends to Washington and the insurer) has increased to $66,000 (a modest 10% over 4 years). If $13,000 of that represents his insurance costs, then the $2,000 "penalty" represents an 85% savings. Paying Washington an additional $2,000, but saving $13,000 in insurance premiums is an easy $11,000 net gain to his employer.

Now that's a good deal.

Friday COBRA/ARRA Update

As we noted previously, the latest COBRA/ARRA extension peters out at the end of this month. But according to admin guru Ceridian Benefit Services, it's looking increasingly likely that the extension will be, well, extended:

"Recently the Senate Budget Committee passed a bill that outlines the Senate’s health care priorities for the rest of the year. While the budget bill is not law, it signals that the Senate may extend eligibility for unemployment insurance and COBRA premiums subsidy until the end of the year."

No word yet on how we'd actually, you know, pay for that.
health insurance hdhp hsa cobra arra obamacare health care reform hipaa hcr masscare romneycare co-pays rx dental vision disability life insurance long term care ltc ltci sebelius cms smms medicare medicaid schip bonds surety short term medical mini med mini-med limited benefit defined benefit defined contribution deductible copay copays coinsurance co-insurance 80/20

HWR at IB

We have the delightful honor of hosting next week's Health Wonk Review. This is a great opportunity to see your best HWR-related post highlighted and available to a perhaps wider audience than "normal." Submissions should 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 health "policy, funding, insurance, managed care, infrastructure, IT, the uninsured, economics and trends" will be accepted.

You can submit your post (or even someone else's!) via Blog Carnival. Submissions are due no later than 9AM (Eastern time) next Wednesday (the 12th).

Caution: Short Term Wonkiness Ahead

Short Term Medical (STM) insurance is kind of an interesting product: written for a short, specific length of time (as opposed to year-to-year for "regular" major medical plans), they provide quick, simple and relatively inexpensive coverage for folks between jobs, or in their new job's probationary period, or for recent grads (although that market will probably take a hit due to ObamaCare©). Typical STM's couldn't be simpler: the plan's in effect from Date A to Date B, there's a deductible (which is the real point of this post), and some co-insurance. Doctor's visits, prescriptions, MRI's (and so on) accumulate towards that deductible and co-insurance; once the out-of-pocket maximum is reached, the plan pays 100% up to a specified amount (which may also change due to ObamaCare©).

All of that is by way of background for what I really want to talk about: the nature of the STM deductible. There are really three different iterations:

■ Policy Term

■ Per Cause

■ Per Day

"Policy Term" means that the deductible accumulates over the life of the plan (e.g. 3 months, or 62 days, etc). Per Cause means that there's a separate deductible for each claim (one for the broken arm, one for the stitches, another for the MRI). And Per Day means that each day that there's an expense, the deductible applies.

Now, I've always used plans with the Per Term deductible. This seemed (and seems) to me the easiest to understand and fairest to apply. But I received an email today from a marketer pushing the Per Day configuration, including some pretty compelling evidence that this may be a better way. They made their case with a simple FAQ:

A daily deductible means more out-of-pocket for [the insured].

False. [A Per Day deductible plan] actually minimizes out-of-pocket exposure with a low daily deductible instead of a larger, calendar-year deductible plus coinsurance out-of-pocket. The daily deductible, coupled with the added protection of a manageable out-of-pocket maximum, gives clients comprehensive benefits at an economical price.

And:

A daily deductible will be confusing for [the insured].

False. Once the daily deductible has been met, additional same-day covered charges are paid at 100 percent. The client will be able to clearly understand that his or her total out-of-pocket for a given day is the selected deductible amount.

That makes some sense to me, but I'm curious if any of our readers have had any experience with these types of plans, good or bad, which they'd like to share, as well as any conclusions about whether they're better or worse than Per Term plans.

The name is Bond, Surety Bond

No, we're not talking about James Bond's younger brother, but a very specialized area of insurance. Surety is a promise to pay, which sounds a lot like "insurance." But surety bonds are a bit more complex than "regular" policies.

And that's as far as this blogger's willing to go with the idea. Recently, we were offered some insights into this rather arcane area of insurance by Kevin Kaiser, a principal for Surety Bonds Dot Com, a nationwide leader in that sector of our business. Take it away, Kevin:

Although surety bonds are different than insurance, the two often get confused. It doesn’t help that “surety bonds” and “surety insurance” mean the same thing, which tends to confuse consumers. Making use of surety bonds guarantees project owners and contractors fulfill any and all contractual agreements.

■ The primary difference

Even though money could change hands, surety bonds are not insurance. Surety bonds involve three parties, whereas most insurance policies rely on policy holders’ premiums that cover any losses. Instead of placing the risk with one party, insurance policies usually distribute the risk over its policy holders.

■ How surety bonds work

Let’s consider an example. A city’s parks and recreation department wants to build an outdoor pool for the summer months. The city hires a contractor who gets a payment bond.

■ Surety bonds’ payments

Now, if the contractor fails to hold up its end of the contract, workers and subcontractors still get paid. The surety guarantees that the contractor pays any subcontractor who files a claim against the bond. Most surety bonds include a clause that requires the contractor (principal) to make such repayments when the surety pays out a claim. Thus, the city and surety do not assume any financial risk in the unlikelihood of the contractor’s default.

It seldom happens, but the surety has to cover costs if the principal cannot. Thanks to stringent underwriting procedures, surety companies eliminate unpredictable companies.

■ The cost of surety bonds

Surety bonds do not anticipate financial loss like insurance does. Consequently bond premiums typically finance underwriting and other prequalification services. The cost of the premium depends on the surety company, the type of bond applied for and the applicant’s financial history. One to four percent is a sound estimate of premium costs, but if a surety company classifies an applicant as high-risk, the premium falls between five and 20 percent of the bond amount.

■ Getting a surety bond

Applicants with mediocre credit or a fledgling business can still obtain a surety bond. Of course, lower credit scores make applicants more likely to be labeled high-risk [ed: we understand that this is the case with, for example, home and auto insurance, as well]. Some startup companies may be legally required to get a bond to pay for an operation license. To determine what kind of bond an applicant receives surety companies consider credit, references, reputation, financial reserves and the ability to operate among other things.

The time it takes for a surety to approve a bond depends on the type of bond, restrictions of the surety and the underwriting process. After paying the premium, applicants will probably get the bond in one or two days. Processing a surety bond may take up to four days, though some sureties approve bonds immediately.

Thanks, Kevin! I have to admit, I’d never really considered the surety side of the biz before; this helps make it a bit more accessible.

ObamaCare© Lacks Teeth

In what's sure to be disappointing news to Austin Powers, it turns out that key portions of ObamaCare© don't apply to stand-alone dental coverage (I guess the ADA's lobby was all gummed up). For example, restrictions on annual and lifetime benefits caps don't apply, nor does the requirement to carry 20-somethings.

That really bites.

[Hat Tip: The Dental Care Plus Group]

EMR: Homespun Privacy?

Sometimes, two seemingly disparate items hit my radar simultaneously, and it's interesting to see if there's a "connection" of some kind. Of course, some of these are more obvious than others, as in this case.

My friend Holly R sent me the link to a new, free program that organizes and stores your medical info on your computer. We've seen that on-line services like Google let you centralize your personal health data, but they also raise (legitimate) privacy concerns. On the other hand:

"HeyDoc! ... lets you organize detailed data about your health. But all of it is stored on your computer. It remains under your control. You can use it however you'd like."

That last part may be the most important: "You can use it however you'd like."

When you control the data, you get to make those decisions. Contrast that concept with:

"Vice President Joe Biden, touting the importance of electronic health records, on Tuesday announced $220 million in grants for 15 communities to pave the way for wide-scale use of health information technology."

These programs may sound similar to HeyDoc!, but there's at least one big difference:

"Under the government policies, patients will not be able to opt out of having an electronic health record, said Sue Blevin, president of the Institute for Health Freedom."

Given how easily credit and other information has been compromised, that seems a legitimate concern. I'd feel a lot more sanguine about this idea if it weren't so Orwellian. This administration seems quite comfortable forcing people to toe the line (cf: Individual Mandate). I thought they were "pro-choice."

Cavalcade of Risk #104: What's on the menu?

Jason Shafrin, aka The Healthcare Economist, presents a tantalizing buffet of delectably risky posts. Try the veal, he's here all week.

May is National Disability Income Awareness Month

We talk a lot about health insurance (to pay the docs and hospitals) and life insurance (to pay the funeral home and provide funds for those left behind), but we don't write a lot about disability (or income replacement) insurance. This valuable, but undersold and underbought, coverage can help put food on the table and keep a roof overhead if one is seriously hurt or ill.

Many people believe - erroneously - that Social Security is all the safety net they need. Of course, a lot of folks also believe - erroneously - that Medicare will pay for their long term care needs. Neither of these are really true in practice, which is why it's so important to understand what disability insurance can (and can't) do, and how much one might need.

Fortunately, the folks at the Life and Health Insurance Foundation for Education (LIFE) have set up a helpful, easily navigable website so folks can get a clear picture of how this kind of coverage works. Called LifeHappens, there are all kinds of tools and resources available, including videos like this:



Do check it out.

Grand Rounds: The 1st (Annual?) Non Narcissist, Non Personally Aggrandizing Edition

This one's special: as usual, there are some terrific medblog posts. But the Grunt Doc has added a twist: he requested that we "don’t send me a post of yours, send a post of someone elses’." Want to know who I "nominated?" Then click on over.

Callous

Last weekend, we went out to dinner in Palo Alto with some friends. As we were walking back to our car, we passed a well-dressed lady at an outside restaurant with her chihuahua sitting on her lap. On the next block were a couple of homeless men sitting on the sidewalk, asking for money and holding various cardboard signs.

David turned to me, "You know, I bet that dog gets better health care than those homeless guys."

I replied, "Probably, but the dog gets put down when it develops an expensive enough medical condition."

I'm curious. Can anybody cite authoritative stats (and the source) on the average lifetime cost of treating an indigent person through the Medicaid/MediCal/Medicare/MediEtcetera/VA systems?

Congressional ObamaCare© Screw-up, Cont'd

Several weeks ago, we reported that the Congressional Research Service had concluded that ObamaCare© "may remove members of Congress and Congressional staff” from their current coverage, in the Federal Employees Health Benefits Program, before any alternatives are available."

As if that wasn't bad enough, now comes word from the CRS that "[ObamaCare©] could impose tens of millions of dollars in fines on Congress, state and local governments."

But that's not even the worst of it:

"[A] slew of states are challenging the health-care law’s legality in court. If governments were found to be exempt in court, a ruling could establish one set of rules for the private sector and another more lenient set for the rapidly expanding public sector."

In short, there are now even more constitutional questions than just the individual mandate. And on top of that (gee, it's not like we want to pile on, it's just so darned easy), "[a] spokesperson for Speaker Nancy Pelosi admitted the government would be considered an “employer” under the law, thus subject to the fines."

In short, no one really knows. And as Bob's pointed out, there are actual, legal deadlines looming. What happens when (I think we're past "if") these aren't met?

A good friend forwarded an email invitation he'd received from a local insurance agency. These rocket surgeons boast that they'll "provide ... the most complete, accurate and up-to-date information available ... After this seminar, you will know what is fact, what is fiction, and you will understand the reality of what is "yet to be determined."

Quite an accomplishment, considering the folks that actually wrote this train-wreck don't have a clue. Could be worth it for entertainment value, though.