Health, Risk and History

Interesting post by Frank Jacobs at Big Think titled "The Underwritten States of America." Mr Jacobs blogs about, of all things, maps. This one (and its companion at the link), identifies medical insurance underwriting "zones" in use in 19th century America. I must admit that, after almost thirty years in "the biz," I'd never heard of such a thing. It does make sense, though, especially given the state of health care "back in the day:"

[Click on map to embiggen]

For a complete explanation, as well as an updated map (in color!), go read the whole thing. It's pretty interesting.

UPDATE/CORRECTION: As Mike points out in the comments section, it's more likely that this is a life insurance rating tool. Still worthwhile, of course.

It's the Spending, Stupid

One of the primary benefits touted by proponents of MassCare was that forcing people to buy health insurance would drive down the cost of health care. On its face, this was clearly illogical, but enough folks bought into the idea that it became "common knowledge." Still, it was certainly the right of Bay Staters to test the hypothesis, which they have been doing now for some years.

The good news is that this gives the rest of us a way to gauge the relative success of that experiment:

"[A]mbulatory healthcare spending per capita was declining relative to the national average when Governor Romney first took office, but has steadily increased every year since then"

Okay, that's one data point "mittigating" against the thesis. Perhaps there are others which support it.

Or maybe not:

"Governor Romney inherited rising relative expenditures on health facilities, which fell slightly in his second year, but then continued to rise"

Darn.

Still, that's just Massachusetts; perhaps the other 57 states also experienced these trends. Add in the massive expenses associated with Medicaid and other Federally mandated programs, and surely the differential evaporates.

Stay with me here:

"As of 2009, Utah had the 13th least regulated health system in the country whereas Massachusetts had the second most regulated health system and Texas was in between, having the 29th most regulated system."

Now, each of those states has very different demographics, but they are still bound by the realities of budgets and requirements. Neither Utah nor Texas force their citizens to buy insurance, so based on the original hypothesis it would be reasonable to assume that these states would see dramatic increases in the cost of health care.

And yet the actual figures don't bear this out. The empirical evidence fails to demonstrate that forcing people to buy insurance reduces the cost of health care. So what now?

[Hat Tip: Ace of Spades]

MassCare© = RomneyCare© = ObamneyCare©

Ladies and Gentlemen, I give you ObamneyCare©'s biggest fan:

Cavalcade of Risk #147: Riskiest Startups edition

Jacob Irwin hosts this week's outstanding collection of risk-related posts, with interesting factoids about risk and starting one's own business thrown in for (very) good measure.

Happy New Year!

Feeforall

Ah, ObamneyCare©, the gift that keeps on giving:

"Starting in 2012, the government will charge a new fee to your health insurance plan for research to find out which drugs, medical procedures, tests and treatments work best."

Back in the day, tax increases were voted on, if not by the taxpayers, then at least our duly elected representatives. But the law we had to pass to find what new taxes are in it does away with all that silliness.

The new tax starts out at a modest $1, quickly followed by a 100% increase; future increases are pegged to the rate of inflation. If it makes you feel any better, the tax starts next month, and the IRS may well issue guidelines regarding it sometime next year.

Or not.

Regardless, you'll be paying that tax as part of your increased premiums.

What's that?

You want to know what this tax pays for?

Fair enough:

"The goal ... is to answer such basic questions as whether that new prescription drug advertised on TV really works better than an old generic costing much less."

Silly me, thinking that was the job, already funded by our existing tax-structure, of the FDA. By the way, this is another case of health insurance being conflated with health care: only those with private insurance are being taxed to pay for this new agency, while all health care consumers "benefit" from it.

Feel better now?

More Medi$cams?

While we've spent a lot of time talking about the so-called "Doc Fix," it appears that perhaps we need to "Fix Doc," as well:

"California-based Prime Healthcare Services buys financially troubled hospitals and turns them around ... She says Reddy told doctors how to diagnose patients he had never seen."

Ooops.

Now, one may argue that this is simply a game between how Medicare reimburses depending on how a procedure is coded, but:

"He encouraged the physicians to stop documenting syncope, which is fainting or dizzy spell, and instead use the term autonomic nerve dysfunction, which reimburses at a higher rate."

But here's where the story takes an odd twist:

"The Federal Bureau of Investigation (FBI) is looking into the billing practices of ... Prime Healthcare Services, following reports that it allegedly overbilled Medicare for rare and serious conditions at high rates"

I find this odd because one would think that this falls under the purview of HHS Secretary Shecantbeserious, not J Edgar Hoover. It's true that the FBI has been involved with the Maxim Healthcare case, but that's in addition to HHS and related agencies.

In fairness, we haven't heard Prime's side of the story, nor do we know just how wide-spread the (alleged) practice is. One wonders whether this is the tip of an iceberg, or common business practice. As we saw in the LabCorp case, what HHS calls "fraud" may really be nothing more than breaking arbitrarily-set rules.

[Hat Tip: FoIB Holly R]

The Gift of the Magi

A special story by O Henry that touches the heart in a special way. The Christmas season is not about material gifts but about gifts of the heart.

The First Christmas

Healthcare: It's What's for Lunch

Michelle Malkin has an interesting post on LA's school lunch program, and the dangers of mandates. Briefly, the First Lady's campaign for healthier foods in schools has led the Los Angeles school district (the nation's 2nd largest with over over 690,000 students) to do away with such traditional favorites as chicken nuggets and corn dogs in favor of "beef jambalaya, vegetable curry, pad Thai, lentil and brown rice cutlets, and quinoa and black-eyed pea salads."

Yum.

Now those kinds of foods may appeal to adult taste buds, but one might question whether youngsters would be all that interested in them.

Um, no:

"L.A. school officials acknowledged that the sprawling district is left with a whopping 21,000 uneaten meals a day"

That's due in part, no doubt, to food preferences (the aforementioned nuggets and 'dogs), but there's another, deeper problem:

"[M]oldy noodles, undercooked meat and hard rice"

Now you may be wondering what this has to do with ObamneyCare©. It's simple, really: these initiatives are mandated (and subsidized) by Uncle Sugar, without regard to individual tastes, preferences or needs. Sound familiar? This results in massive waste and dissatisfied "customers." Which is also what we can look forward to under ObamneyCare©..

Interestingly, there's now sprung up a sort of "black market" for those taboo tasties. Will we see a similar phenomenon with health care under the new regime?

Inquiring minds want to know.

Cavalcade of Risk #147: Call for submissions

Jacob Irwin hosts next week's CavRisk, and wants your risk-related post. Entries are due by Monday (the 26th).

Submit your post via the The BC WorkAround.

Once there, you'll be asked to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post ("Remarks")

At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.

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

Thanks!

Insurance & Reality: 2,000 Words

What we show our clients (click pics to embiggen): What they see:
[Hat Tip: Deb C]

Health Wonk Review: Unwrapping the Wonkery edition

Gary Schwitzer hosts a Christmas-themed 'Review, complete with both serious and amusing entries, and a few treats scattered around, too.

Enjoy!

Sally Pipes up about the MVNHS©

Sally Pipes is, of course, well-known in her role as President of the Pacific Research Institute. Her main focus is health care studies, and she brings that expertise to bear on the canard that socialized health care is "a good thing."

In her recent article at Forbes, she points out that socializing medicine hasn't exactly helped the Brits: "The National Health Service (NHS) ... is being forced to shave $31 billion from its budget by 2015."

So much for efficiencies of scale and the purchasing power of government. As we've pointed out many times, none of the government-run systems have had any more long-term success in cutting costs than our own (soon to be gone) public/private hybrid. And they deal with those losses by reducing actual health care.

For example, "the NHS is raising the threshold at which patients qualify for treatment and lengthening wait times for surgeries determined “non-lifesaving.” There's a term for this kind of system, what could it be?

But of course, the MVNHS©-provided health care is "free" [ed: as in "worth what you pay for it?"]. Or is it? Ms Pipes has a thoughtful question: Brits' may be “guaranteed” access to care, but does it follow that they actually receive it?

Maybe, maybe not. But as we've documented - and Ms Pipes offers her own examples - an awful lot of sick folks don't receive either adequate or timely care. The problem is that the Brits make the same mistake as proponents of ObamneyCare© make here, conflating health insurance with health care, and assuming that the former will lead to the latter.

And yet, as Ms Pipes mentions, "[a] report released in October by Britain’s health regulator found that a stunning 20 percent of hospitals were failing to provide the minimum standard of care legally required for elderly patients."

Ooops.

She's not just gunning for the MVNHS©, either:

"Canada’s single-payer, government-run system — where any private health care is outlawed under the Canada Health Act — is similarly failing its patients."

In a recent survey of Canucks with chronic conditions, many expressed dissatisfaction with their level of care. But hey, it's free: beggars can't be choosers.

But of course it's not "free:" in addition to the major taxes that pay for the system, patients still have out-of-pocket expenses, sometimes major ones. And if you're in need of more immediate or extensive care well, there's no wall on our Northern Border, is there?

But if we're ditching our own much better system, the question must be asked: Why does ObmaneyCare© hate Canadians?

[Hat Tip: Stephen Northington]

Taco Bell and Health Care

Although we've been skeptical of Swedish health care (and correctly so), this doesn't seem to be attributable to negligence:

"A routine bowel procedure in Sweden was interrupted by a "powerful blast" likely caused by a buildup of methane gas in the patient's intestines ... doctors began an electrocautery, a procedure where the edges of the intestine where the polyp was located were burned to seal them ... Suddenly, there was a powerful blast in the room and the patient felt pain in his stomach"

I bet.

So, a cautionary tale about what and where to eat before such a procedure.

[Hat Tip: FoIB Bob D]

Do you believe in Miracles? Happy Hanukkah!

Hanukah 5772 begins this evening.

May you be blessed with joy and health this holiday season.

MediScams Alert

While we've been following the Richard West Medicaid whistle-blower case, it's easy to forget that a lot more folks (and providers) may be at risk of fraud.

Christine Seivers sent me the link to her post on an even dozen Medicare scams, and how you can avoid them.

Here's a sample:

"One of the more common ways criminals scam those with Medicare is by posing as Medicare employees, health care practitioners, or insurance representatives, something many may not be expecting. These fraudsters call, email, or send a letter ... remember that federal employees, working for Medicare or otherwise, will never phone or email you to get bank or Medicare information."

Do check it out, and pass it along.

Another Despicable Insurance Sales Idea

Over 6 years ago, we noted Prudential plc's horrific sales promotion encouraging its agents to celebrate terrorism. Apparently, the folks at Munich Re aren't longtime IB readers, else they would have known that this was a very bad idea:

"One of the biggest insurance companies in the world held a party for salesmen where they were rewarded with the services of prostitutes."

Oy.

Reinsurers are essentially wholesalers of insurance, and are generally "background noise" in the press. Individuals don't buy coverage from them (well, not directly), and many (most?) folks have never heard of these vendors.

So perhaps the rocket surgeons in charge of Munich Re believed that this would fly under the radar, with no one the wiser.

And to an extent, they were quite right:

"[T]he party had taken place to reward salesmen in 2007 ... There were about 100 guests and 20 prostitutes were hired."

What is it about insurers and ratios?

The good news is that the folks responsible for this little adventure are now gone and the company has since "introduced a new code of conduct."

Because the old one encouraged this behavior?

It bears repeating: Oy.

[Hat Tip: Bob Vineyard]

Told ya so (v13+)

As we've long documented, ObamneyCare© creates many more problems than it (ostensibly) solves: fewer choices, higher costs, increased compliance issues, the list goes on. But that's just us, right? We're (obviously) industry shills with an axe to grind.

(Which, of course, doesn't change the fact that we've been right)

Well, then, how about some corroboration from an actual employer who can attest to all these things?

Keith Ashmus, a co-founding partner of Frantz Ward LLP, helps run a medium-sized law firm in Cleveland. Of their 120 employees, about 70 are attorneys, and the rest are there to keep things running smoothly. They've been participating in Medical Mutual of Ohio's COSE (Council of Smaller Enterprises) small group health insurance plan for some time, and been quite satisfied.

Unfortunately, they've now run into the buzz saw that is ObamneyCare©:

"With the advent of the Affordable Care Act, we have been concerned about compliance. Our high deductible plan has deductibles higher than what apparently will be permitted."

Like many firms, they've recognized the value of Consumer Driven Health Care plans, including Health Savings Accounts (HSAs) and Health Reimbursement Arrangements (HRAs). Unfortunately, these types of plans are taboo under ObamneyCare©, even though (or, perhaps, because) they work.

"By purchasing our plans through COSE, we have not had to pay a two percent premium tax on group health insurance as mandated under Ohio law."

While 2% may not seem like much, if one posits a $500,000 annual health insurance bill (a not unreasonable supposition), then that represents $10,000 in savings. It's unclear (but unlikely) whether that exemption will still be available through the Exchanges.

And so the firm has been choosing "grandfathered" renewal options in order to avoid the problem. The challenge, of course, is that this has become increasingly difficult, and expensive. Not to mention the fact that these will be phased out rather soon, anyway.

"Given our pay scale, it is unlikely that our employees will qualify for subsidies on any state exchange."

There are two issues implicit here: first, there's the tacit acknowledgement that they'll likely be doing away with their group plan altogether. Second, should Ohio choose to go with a Fed-run Exchange, there'll be no such subsidy available regardless of their employees' economic status.

"Then in 2018 and later, the administration of the so-called “Cadillac” tax appears likely to be incredibly burdensome to employers."

Quite right, and as Mr Ashmus notes, this will be a double-whammy: first, there's the added expense of calculating the various expenses and such, and then reporting these to the carrier, which must then determine whether or not a tax is due (and don't forget that the added expense for this "service" will be borne by the employer, not the carrier). Finally, if there is, in fact, a tax due, well, someone's got to pay it, and (again) it won't be the carrier.

One more item I found interesting: with all the emphasis and press on so-called "wellness" programs, the nagging question has always been "and so?" Well, here 'tis:

"In an entity as small as ours, the positive impacts of wellness programs are unlikely to be felt in our health care costs, since community rating puts everyone’s experience together.":

This is the ugly little secret: unless you have a self-funded plan, your rates are determined primarily by the experience of the pool in which you've been placed. So even though your group may have had a "good" year, your rates are going to go up to offset the sicker groups.

But here's the real problem, also neatly put by Mr Ashmus:

"The uncertainty about what will happen with the Affordable Care Act ... is a definite barrier to planning for our insurance benefit program and expansion of our firm."

This goes beyond just the insurance issues, of course; how does one plan if there's so much doubt about whether or not what you choose today will be doable, or even legal, tomorrow?

Perhaps someone should have read it before they passed it.

[Hat Tip: FoIB Holly R]

MVNHS©: So sue me!

As we've so often documented (most recently here), The Much Vaunted National Health System© is primarily concerned with depriving its "clients" of actual care. This is the natural and inevitable result of a government-run health "care" system, so it's hardly surprising to read that (at least) one hospital is now the target of litigation based on its (alleged) egregious misconduct:

"Lawyers are planning a "class action" on behalf of 23 families who contacted them with "shocking" claims of indignities and the most basic failings in care ... A 35-year-old father-of-four who ... wasted away because staff did not know how to fit a feeding tube ... A man who fell into a coma after contracting E.coli, apparently from a filthy catheter"

In other words, typical government-provided health "care." And these apparently represent only "the tip of the iceberg." In some cases, patient dehydration had grown so rampant that doctors were forced to prescribe dihydrogen monoxide.

Of course, that's when health "care" providers could actually be found: "Buzzers went unanswered, several patients were left sitting in soaking bedclothes for hours, or in their own faeces."

Good thing that won't happen here.

[Hat Tip: PowerLine]

Kentucky CE Update (Annuities)

Speaking of annuities, Kentucky has recently added a new suitability requirement to its Continuing Education regulations. Ohio's had that a little while, as well.

Annuities aren't for everyone, but they do have a place in many folks' financial plans. Growth in an annuity, unlike a CD, is tax-deferred, which can allow for higher growth. And one can "annuitize" an annuity, which can provide for a lifetime income stream.

There are some downsides as well, of course: significant penalties if one cashes out too early, and the taxes are deferred, not eliminated.

The CE requirement is there to make sure that agents are explaining these advantages and disadvantages, and that the client understands all the risks, benefits and rules of what could be a major purchase. Above all, it's designed to ensure that such purchases are appropriate.

Everything Old is New Again

So, have you heard about the new, exciting, cutting-edge "Longevity Insurance" plan?

Here's how it works:

You take a lump sum of money (say, from an under-performing CD) and put it in one of these newfangled "longevity annuities." After a while (say, 30 years), it begins to pay out a lifetime stream of income. Now, if you die before you get to that magic time 3 decades hence, well, you're outta luck (unless you elected one of those innovative "non-forfeiture options").

I know what you're thinking: "Henry, this bleeding edge, tech-driven concept sounds vaguely familiar. Why is that?"

That's because it's also known as a deferred annuity - a vehicle that's been around since the dawn of time.

Are they a good idea? Maybe so, maybe not. Are they a new idea?

Not on your life.

ERRP - We have to pass this bill so that you can find out what is in it.

This is a follow up to Bob’s Tapped Out post of December 13.

HHS has now reported that, thru December 2, the Early Retiree Reimbursement Program (ERRP) has paid out just over $4.5 billion or almost 91% of the authorized funds. This total amount was distributed among approximately 2,700 group sponsors of pre-Medicare retiree plans.

The HHS report shows that the UAW retiree trust has received over $387 million - which is, all by itself, 8.5% of the total distributed.

Other facts revealed in the report:

• There are 17 plans that each received more than $50 million, and together these 17 plans account for a bit over $1.9 billion, or about 42% of the total ERRP payments.
• Only 3 of these top 17 are corporate plans (Boeing, Verizon, and AT & T) - - the remaining 14 are either union funds or public employer retiree plans.
• There are 66 plans (including the top 17) that each received $10 million or more, and together these 66 plans account for almost $2.9 billion, or about 63% of the total ERRP payments.

If you scroll thru the entire HHS report, you'll see a large number of plan sponsors that are clearly union funds. Some of the corporate retiree plans in the report likely contain a lot of union retirees - for example, Verizon and AT & T probably contains a significant number of retired members of the Communication Workers of America; Boeing probably contains a large number of IAM and other union retirees too. You'll also see a large number of state and municipal plans that I'm sure also contain a lot of public employee union retirees. In other words, while it's not possible using this HHS report to pin down the exact share of the $4.5 billion that was paid to plans covering union retirees - it seems very unlikely that share is less than 50%.

About 12% of the US workforce is represented by unions.

Recall that ERRP's $5 billion funding was part of the health care reform act. The administration says that these funds were intended to provide financial assistance for pre-Medicare retiree group plan sponsors thru 2013 - keeping in mind that the exchanges and other main provisions of the reform act become effective in 2014. The attached document states that HHS stopped accepting new applications for these funds after May 6, 2011 - not even a year after the first applications were accepted. HHS has now announced that even the plans already approved will not be reimbursed for any claims incurred after December 31, 2011.

So how did it happen that the funding was exhausted so quickly? Was it just sloppy actuarial work?

I don't think so. Here's my guess – ERRP was never intended to do what the administration told us. Instead, it was intended all along as a big "thank you" to the unions (including public unions) that had helped with the 2008 election. I recall that the UAW submitted its complete application almost immediately - almost as though they knew in advance what to do. Other types of plans found out about ERRP in due course but in my opinion, payments to other plans were not part of the main intent. However those payments did serve a useful purpose as a smoke screen; I mean, an extra couple billion might cover the tracks nicely and what's another couple billion anyway?

Here’s an additional observation regarding the HHS notice. Its cover text includes 4 whole examples - count 'em, 4 - to illustrate how the ERRP payments "significantly benefitted employers across the country."

And here, verbatim, is what HHS says about these 4:

1. The City of Minot in North Dakota has over 2000 plan participants and has received $112,933 in ERRP reimbursements. As a direct result of these reimbursements the City was able to reduce 2012 premiums by 17 percent.

2. Silgan Containers Manufacturing, located in California, has received $246,152 in ERRP reimbursements. Silgan will use funding to offset claims costs by about 5 percent.

3. To date, Elkhart County in Indiana, has received $84,175 in ERRP reimbursements. They have been able to use this funding to help maintain coverage, and keep costs down, for over 1400 plan participants. Specifically, with the help of ERRP funds, Elkhart County was able to reduce employee and retiree premiums for 2011 and maintain that lower rate for 2012.

4. In Minnesota, East Central Energy has over 250 plan participants and has received $13,272.37 in ERRP reimbursements. East Central Energy has used ERRP funds to offset increases to claims costs by 7 percent.

These 4 plan sponsors appear to include fewer than 5,000 people and the total ERRP payout for these plan sponsors was less than $500,000. Yet the HHS report claims "ERRP has benefited over 5 million people to date" and has issued payments in excess of $4.5 billion..

Why does HHS offer examples including only one-tenth of one percent of the people it claims to have "benefitted ??? Why does HHS offer examples that comprise only one one-hundredth of one percent of the total payments? Is it because HHS tried but could not find better examples among the dozens of large plans that cover many thousands of people? Is it because HHS wants the public to believe that most of the money is going to small plans--rather than to the giant plans such as UAW and The Ohio Public Employee Retirement System? Is it because (as I suspect) there was some hidden agenda behind ERRP that has now been carried out? I doubt we’ll ever know why HHS chose such lame examples or learn whether there was, in fact, some hidden agenda.

Regardless, and whatever the explanation may be, the examples HHS offers are at BEST laughable.

"We have to pass this bill so that you can find out what is in it"

Yes ma’am, we remember. True then, true now.

Metadata, anyone?

Nick Genes (founder of Grand Rounds) has a very interesting piece on a potentially dangerous consequence of Electronic Medical Records (EMR):

"Metadata standards for health information exchange are being debated in DC; eventually even discrete bits of health data such as medication lists will have metadata tags associated with them, distinguishing between, for instance, admission medication lists and discharge medication lists."

So what is "metadata?" Basically, it's all the little changes and notations that aren't visible when reading a document, but are contained in the file itself. This could include deletions, additions, redactions, you name it.

If you're a patient or an insured (or know one or the other), you need to read the whole thing.

Skin Flick

Saved or Created . . .

HHS and the Obama administration are taking credit for saving or creating health insurance coverage for 2.5 million adult children . . . a paradoxical term at best, but I digress.

Administration analysts found that nearly 36 percent of Americans age 19-25 were uninsured in the third calendar quarter of 2010, before the law's provision took effect. That's over 10.5 million people.

By the second calendar quarter of 2011, the uninsured dropped to a little over 27 percent, or about 8 million.

The difference is nearly 2.5 million more young adults getting coverage.

Yeah, I suppose.

These are the same folks that say unemployment compensation drives the economy and saves or creates jobs.

A Generic Season

Recently received emails from both Anthem and Medical Mutual, announcing changes in how cholesterol-lowering meds will be handled going forward. Effective this month, the generic form of Lipitor is being made available to insureds of both carriers.

From Medical Mutual:

"Medical Mutual® and its Family of Companies support the use of generic drugs as an effective way to keep costs down for our members and plan sponsors. This position is important given recent news stories about United Healthcare, Coventry, Catalyst Rx and Medco Health Solutions, Inc. (Medco), our pharmacy benefit manager, promoting brand name Lipitor® instead of its much-anticipated generic."

What this seems to be saying is that at least a few other carriers (and MMO's own PBM) are still pushing the more expensive brand-name version, with its concomitant higher co-pays.

The email goes on to note that "atorvastatin" (the "first generic equivalent for Lipitor") is available now, and other manufacturers' versions should be available beginning next summer. Both of these developments would seem to be good news for consumers, since competition generally means lower prices.

Anthem's announcement would seem to echo this theme:

"As of 12/01/11, the generic drug atorvastatin has been added to the preferred brand tier and is being processed with a preferred brand copayment for Medicare MAPD and PDP plans."

But, this doesn't hold true for "regular" insureds:

"Effective immediately, Express Scripts* will continue to dispense Lipitor through the home delivery program. Members participating in the home delivery program will pay the same copayment as for the generic atorvastatin."

One would think that they'd be pushing the generic over the brand-name, but that doesn't seem to be the case here. Not sure what to make of that.

Stupid Client Tricks: Luxe Edition

If you owned three (three!) new and/or late-model Beemers, would you leave the keys in them while they sat unattended?

Well, that's apparently what a Dobbs Ferry, NY resident did:

"[P]olice Lt. James Guernieri says each of the luxury cars had a push-button ignition system. The starter doesn't work unless its accompanying fob is in or near the car.

He says the homeowner had moved all the cars on Saturday to make room for Christmas decorations. He says the man then left a fob in each car."

Must have been some great decorations.

Cavalcade of Risk #146: Strollin' through the garden

Russell Hutchinson hosts a delightful and eclectic edition of the Cavalcade of Risk. Take a moment to (virtually) smell the flowers while you're there.

Tapped Out

In an effort to gain support for Obamneycrap, Congress included funding for early retiree employee heath insurance. Many employers took them up on their offer.

Perhaps too many . . .

The Obama administration announced plans Friday to wind down a $5 billion fund to pay for health insurance for early retirees, including the institution of a Dec. 31 deadline for employers to tap into the remaining funds.

It seems $5 billion doesn't go very far these days.

I must be getting old. I can remember when $5 billion seemed like a lot of money.

Are Docs Going to Abandon Medicare?

Are Georgia doctor's leaving Medicare? Quite a few will not accept ANY Medicare Advantage patients while others will only participate in one or maybe two plans. If you have original Medicare + Medigap your odds of having a doctor treat you improve dramatically.

As in years past, Congress is slow of foot to do anything about permanently fixing Medicare and will most likely follow the same path as before and patch the reimbursement system with what is referred to as the "doc fix".

Unless lawmakers act before the end of the year, doctor reimbursements are scheduled to be reduced even as providers complain current reimbursement rates don't cover the cost of care.

The result: Many doctors are declining to take on new Medicare patients and many are thinking about disenrolling in the system, reports the Association of American Physicians and Surgeons, which has historically opposed Medicare.

The pay cut, unless Congress overrides it, will be roughly 30%.

"Disenrollment is a way to evict occupiers from doctors' offices and the patient-physician relationship," suggests Dr. Jane M. Orient, the association's executive director. "Occupiers include bureaucrats, bounty-hunting auditors, federal prosecutors waiting for doctors to trip up on complex rules -- and AMA [American Medical Association] officials and committees who make up complicated codes and dictate the 'relative value' of all covered services."

Seems "occupiers" is the latest buzz word for vultures.

I like it.

since 1996, the system has been larded with new requirements that have increased bureaucratic hassles and imposed greater costs on providers for everything from enrolling in the system to billing procedures, the association said. Those doctors who wish not to participate in the program need to opt out every two years.

More government interference in the private sector. Another jobs killer except in this case it is a health care killer.

"Under the U.S. Constitution, Congress has no express authority to compel physicians to enroll in a government program in order to serve their patients, or to regulate the practice of medicine," she said in an article published in the winter issue of the Journal of American Physicians and Surgeons.

There's that pesky Constitution getting in the way again.

"Formally opting out of Medicare has grown in popularity. But a tantalizing alternative approach is emerging: disenrolling from Medicare altogether," Schlafly wrote. "We are unaware of a court case establishing or forbidding this option. Government may prefer not to test its authority over disenrolled physicians rather than risk a new precedent against its power.

"A consequence of the 'Obamacare' litigation may be to resolve this issue too. If 'Obamacare' is invalidated for going beyond the constitutional authority of the federal government, then that precedent may also limit federal authority over private contracts with disenrolled physicians."

Things that make you go hmmmmmmmm . . .

Georgia Medicare supplement plans currently include most Georgia doctors and hospitals.

On a wing and a....

When one thinks of a health care "team," one envisions doctors, nurses, and pharmacists. But how about adding one more: the Preacher (or Priest, or Rabbi)?

"Chaplains are seeking bigger roles in hospitals and in some cases joining the medical-care team, as new research shows positive spiritual guidance and discussion can help improve a patient's medical outcome."

This is, perhaps, a bit trickier than it may seem: there's a difference between religion and faith. And of course it's not so easy to quantify a chaplain's efficacy compared to, say, the surgeon's. Still, the concept is intriguing, and gaining momentum:

"Medical schools are adding courses on spirituality and health, and training residents to consider patients' spiritual needs."

Nothing prevents one from praying in pre-op, with or without the aide of a trained professional. And there's some evidence of linkage between physical and spiritual well-being:

"Studies indicate as many as 40% of patients with serious illnesses like cancer struggle with spiritual concerns, which can harm emotional and physical well-being"

Evidence of this is, by definition, somewhat anecdotal, but that doesn't make it any less valid. And there's some objective evidence that spiritual and physical well-being are connected:

"Studies indicate that chaplain visits can result in less patient anxiety, shorter hospital stays and higher satisfaction."

As the article notes, these are not definitive, but they're certainly worth exploring. Like chicken soup, what's the harm?

MLR is Stupid - Part II

Even more proof that MLR (Medical Loss Ratio) as mandated by Obamneycrap is stupid. The New York Dept of Insurance has decided that health insurance companies overcharged policyholders in 2010 and has ordered them to refund $114 million.

Empire’s refund payment to consumers was tallied at a little over $61 million. The other big New York player, UnitedHealthcare, has an affiliate (Oxford) involved in the refund.

Empire BlueCross BlueShield is New York’s largest insurer. In terms of overall membership, across business lines, the for-profit plan insures nearly 6 million New Yorkers. It is New York’s second largest insurer in the Small Group market, with about a 15% market share.

Empire Blue Cross, the states largest insurer is expected to refund a little over $61 million to some 6 million residents.

For those without a calculator, that works out to $10 per insured.

Seems like we need a new category.

Stupid MLR tricks.

Medicare Advantage - Oops! I Made a Mistake

Did you buy a Medicare Advantage during open enrollment and now regret it? The Medicare Advantage Disenrollment Period begins in January and ends on February, 14.

Your doctor does not accept that MA plan and you feel you are stuck.

Not necessarily.

If you signed up for an Advantage plan and now regret it, you will want to return to original Medicare with a wide choice of doctors. Good news! You can disenroll from your Medicare Advantage plan between January 1 and February 14.

You an disenroll by doing any of the following:

• If you have a MAPD (Medicare Advantage with Part D) you can send a letter to your carrier telling them you wish to disenroll. You can also enroll in a new Part D plan which will automatically disenroll you from the MAPD.


• If you have an MA plan without Part D, you must request disenrollment from your MA plan which will start an SEP (Special Enrollemnt Period) allowing you to enroll in a new PDP.

Disenrolling in an MA plan may also trigger a GUARANTEED ISSUE situation allowing you to enroll in any Medigap plan without answering health questions.

If you enrolled in an Advantage plan for the FIRST TIME, either when you first became eligible for Medicare Part B or you left Medicare to join an Advantage plan. If you leave the Advantage plan during the first 12 months you may have a guaranteed right to return to Medicare and a Medigap plan.

You should apply for a new Medigap plan no later than 63 days following the end of your Medicare Advantage coverage. Your new Medigap plan cannot become effective before the date of your application.

You may also have other guaranteed rights to purchase a Medicap plan without answering health questions. Call us. We can help.

Even if you do not have a guaranteed right to purchase a GA Medigap plan you may still qualify if you are in reasonably good health. We have helped people age 80 and younger find an affordable Medigap plan once we determine they still qualify.

Matrimony vs Cancer

A while back, Bob noted that "7 percent of U.S. adults married so one or the other could get on a partner's health insurance plan."

He found that statistic "astounding," as did I.

But maybe it's not so far-fetched:

"There are some big-time benefits to the old ball and chain: Married men tend to live longer ... They're also less likely to die from cancer compared to guys who never marry."

This conclusion is based on a recent study published at BMC Health, which found that "[r]ates of all-cause and cause-specific mortality are higher among unmarried than married individuals ... excess mortality of the never-married compared to the married has increased steadily for men, in particular the elderly."

But the stats for those of the fairer sex aren't much better: "Among elderly women, the excess mortality of the never-married compared to the married has increased ... there are indications of an increasing excess mortality of the widowed."

So maybe wedding cake is a panacea.

Possible MS Breakthrough?

Multiple Sclerosis (MS) "is a chronic, often disabling disease that attacks the central nervous system (CNS) ... Symptoms may be mild, such as numbness in the limbs, or severe, such as paralysis or loss of vision."

Treatment is expensive, and generally used to impede the disease's progress and ease some symptoms. There's no known cure.

Or is there?

"An Italian doctor has been getting dramatic results with a new type of treatment for Multiple Sclerosis ... In an initial study, Dr. Paolo Zamboni took 65 patients with relapsing-remitting MS, performed a simple operation to unblock restricted bloodflow out of the brain - and two years after the surgery, 73% of the patients had no symptoms."

That's pretty dramatic results.

His theory is that MS is caused by a build-up of iron in the brain, and that by increasing bloodflow, it can be "flushed out."

There's still a lot of testing to do, and questions to be answered, but this could hold great promise from those with the dreaded disease.

Health insurance vs Sickness insurance

As we've noted before, Bob and I contribute to a consumer advocate's bulletin board, where we try to help folks resolve insurance-related problems. Over and over again, it becomes apparent early on that most folks don't really understand what they've bought, how it works, or what's actually covered (or excluded), all because they bought the plan and then filed it away without actually reading through it.

Courtesy of Humana, here's a pretty easy-to-understand but nonetheless comprehensive primer on how you can get the most out of your health insurance:

The Price is Wrong

As we've pointed out (repeatedly), no rational employer is going to continue offering group health benefits to employees once the Exchanges come on-line. FoIB Holly R sent me an article this morning that asks an intriguing question regarding that assumption: not about whether it's valid (it is), but what it will cost the employee once that happens.

It's an excellent question, one which I had not previously seen addressed: how much is it likely to cost Joe Lunchbox to move from his employer's group health plan to one offered through the Exchange (and potentially subsidized by his fellow taxpayers)?

Turns out, the cost could be substantial:

"Lockton, a Kansas City-based company that consults with mid-sized companies on health insurance benefits ... predicts [employees'] premiums would increase anywhere from 79 to 125 percent if they lose employer coverage and have to go to the exchange."

Here's 1,000 words to explain it:

[click graphic to embiggen]

How's that Hopey-Changey thing working out?

Cavalcade of Risk #146: Call for submissions

Russell Hutchinson hosts next week's CavRisk, and wants your risk-related post. Entries are due by Monday (the 12th).

Submit your post via the The BC WorkAround.

Once there, you'll be asked to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post ("Remarks")

At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.

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

Thanks!

AEP Extension - UPDATED

Apparently, those Medicare Advantage plans are still more popular than ever. So much so, in fact, that HHS Secretary Shecantbeserious has recognized that not everyone who wanted "in" was actually able to sign up (cf: blind squirrels).

Just got this in email from Anthem:

"CMS officials are providing flexibilities to current Enrollment Guidance to ensure all enrollment requests submitted during AEP are processed. The extension is for this AEP only.

[Carriers and agents] may assist beneficiaries in completing an enrollment request if the contact was initiated prior to December 8, 2011. This would only include call backs to beneficiaries who we were unable to assist on or before December 7th, due to high call volumes or difficulty in accessing CMS' On-line Enrollment Center (OEC).

All return calls must be made, and applications completed and received by 11:59 p.m. local time on Saturday, December 10th."

Heh.

UPDATE: Clarification on who's eligible for the extension:

• All marketing and/or soliciation activities must end with the close of AEP as of 11:59 p.m. on December 7, 2011.
• Agents may not accept new AEP applications after December 7, 2011.
• Agents who receive inquiries about enrolling in a Medicare plan after AEP should refer the beneficiary to the Medicare toll-free information line (1-800-633-4227) or have the beneficiary call the government-funded State Health Insurance Program (SHIP).
• If you have received AEP applications today or later, please submit the enrollment for processing. [Carrier] enrollment department will verify eligibility.

Stupid Homeowners Tricks: Again

Sometimes I weep for humananity:

"Firefighters in Tennessee let a home burn to the ground because the owners did not pay a $75 fire subscription fee"

Wait a minute, didn't we already read this last year:

"Each year, Obion County residents must pay $75 if they want fire protection from the city of South Fulton. But the Cranicks did not pay ... Because of that, not much is left of Cranick’s house."

Turns out the homeowner, Vicky Bell, is a slow learner:

"People in the city of South Fulton have fire protection, but those in the surrounding county do not unless they pay a $75 annual fee."

Ms Bell knew this, and knew that the Cranicks had recently provided empirical evidence that the system "works" as advertised. But she had a darned good excuse:

"Bell and her boyfriend said they were aware of the policy, but thought a fire would never happen to them." [emphasis added]

Uh-hunh.

In related news:

"I knew I should have bought health insurance, but thought cancer could never happen to me."

And:

"I knew I should have bought disability or long term care insurance, but thought a stroke could never happen to me."

And, finally:

"I knew I should have bought life insurance, but..."

[Hat Tip: FoIB Bill M]

Fraud, Abuse and Medicare - Updated

As we reported in September, a tenacious Medicaid beneficiary blew the whistle on fraudulent behavior by his nursing care provider:

"After checking his own medical records [he] discovered the company providing him with nursing care appeared to have overbilled Medicaid for hundreds of hours for people who were never there"

Well, Richard West is in DC today, recounting his tale for the House Oversight Committee:

“This [fraud] is wholly unacceptable,” said Rep. Trey Gowdy, R-S.C., “This is why people have lost trust in the institutions of government and why our fellow citizens have so little trust that we are spending their money as carefully as we would spend our own"

Let's hope that he, and we, finally get some justice.

Taking on Big Blue

In many areas of the country Blue Cross dominates the health insurance market. Some would say they have an unfair advantage because of their not for profit status.

However that argument doesn't fly with most Blue plans because most have long converted to either stock or mutual companies, and some are publicly traded.

Along comes Aetna and decides to take another track.

Aetna claims Blue has a competitive advantage because of a little known "most favored nation" status. According to Crain's Detroit Business News:

In its suit filed today in the U.S. District Court in Detroit, Aetna charges that in 2005, Blue Cross "implemented a scheme" to enter into "exclusionary contracts with hospitals under which it agreed to pay hospitals more money if the hospitals increased the rates they demanded to treat patients covered by its competitors' health plans."

That is interesting wording.

What a hospital, or any other provider, bills for charges is identical. However what they agree to accept as "paid in full" will vary. It may seem like semantics but there is a difference.

It's like Wal-Mart having a coupon sale on TV's. If you have the coupon you pay $200. If you don't you pay $250.

The list price is the same. The difference is, some folks pay less under terms of a contract. The contract is between the store and those with coupons.

In an interview with Crain's, Andy Hetzel, Blue Cross' vice president of corporate communications, said the company has used most-favored-nation clauses in its contracts only to negotiate the best prices so it can to keep premiums to customers as low as possible.

So what would happen if the MFN clause is rendered invalid?

Premiums (and out of pocket expenses) for Blue Cross policyholders would rise, but there is no guarantee premiums and OOP would drop for other carriers.

This is no different than Sunbeam coffee makers sold by Wal-Mart and other stores. If Wal-Mart buys 500,000 coffee makers from Sunbeam and J C Penney buys 30,000 coffee makers, who would get the better price?

Is Aetna now part of the occupy Wall Street cry babies?

Thanks to Henry Stern for this tip!

Disability Insurance Update

My friend Jeremy Fink (of Assurity Employee Benefits) recently sent along the latest report from the Council for Disability Awareness on its 2011 survey regarding long-term disability (LTD) benefits.

The survey, of about 75% of the players in the LTD market, includes surprising information:

■ $8.3 billion was paid out in long-term disability claims (that's about a point higher than 2009)

■ About 587,000 disabled folks received LTD payments (up slightly over '09)

■ Fifty-six percent of participating carriers reported increased claim incidence from 2009 to 2010 (most suggested this was a result of the Obamaconomy)

■ Unfortunately, fewer employers even offered LTD benefits than in the recent past

■ The top cause of new claims, representing just shy of 30% of them, was for Musculoskeletal system and connective tissue diseases (which was also the top cause for existing claims)

[Click here for the complete report.]

Think you don't need disability insurance?

Think again:

Insuring $outhpaws

About 10% of the population is left-handed, which is itself interesting because, just on the basis of common sense, one would think that the percentage would be closer to fifty. Apparently, it's a recessive trait, so lefties are left in the minority.

Which is nice, but what does this have to do with insurance?

Well, according to the Wall Street Journal, "[l]eft-handedness appears to be associated with a greater risk for a number of psychiatric and developmental disorders," which is not to say that southpaws are necessarily crazier than the rest of us normal people righties.

After almost 30 years in the insurance business, though, I can tell you that I have never seen the question "are you right- or left-handed?" on any application, and my P&C colleagues assure me that they haven't, either. But the Journal had an interesting article yesterday about the increased health risks that go along with being a lefty.

Frankly, I'm unconvinced that there's any reason for underwriters to be concerned. Still, it's interesting to contemplate, as this video explains:

Green Jobs?

The federal government, that would be "our" government, has awarded a contract to a firm to set up Obamneycrap health insurance exchanges. The $93.7 million dollar contract will create hundreds of new jobs . . . in Canada.

The health insurance exchanges are part of Patient Protection and Affordable Care Act, the March 2010 health care overhaul law. Millions of uninsured Americans will be able to buy private health insurance through the online exchanges starting in 2014. Taxpayer funds will cover the cost of premiums purchased through the exchange

Makes you wonder why Canadian programmers are superior to US programmers . . . or even those in India.

Stupid Media Tricks

As we've seen so often, the media just loves its memes, to the exclusion, unfortunately, of clarity and intellectual honesty.

The latest case in point:

Health claim denials top Ohio insurance complaints

"A newspaper's analysis shows the most common complaints received by the Ohio Department of Insurance come from people who had health claims denied."

And this is news, why?

Well, because if we're looking to supplant the current private-industry model with a government-run one (and we are), what better way to demonize that pre-existing model than by pointing out how (apparently) unfair it it is.

Now, I was told that there'd be no math, but I find this interesting:

Out of the 3,100-odd claims covered by the report, "43 percent were from people whose insurers would not pay a medical bill." Now, there are an estimated 11 and a half million Buckeyes. If we take the (disputed) percentage of 15% uninsured, that leaves almost 10 million insured Ohioans, generating 1,300 claims.

That means that .0001% of Buckeyes had a big enough claims problem that they actually filed a complaint.

Ooooh.

By the way, the same report indicates that the Department of Insurance found less than 20% of those complaints credible.

Here's a question for the rocket surgeon-cum-reporter:

How many of these claims were disputed because the insured couldn't be bothered to either read his/her policy, or to stay in-network, or to have disclosed pre-existing conditions?

Here's a clue:

"The newspaper says the number of complaints is small compared with the millions of health claims handled in Ohio."

Oh, then why didn't you say so in the first place?

[Hat Tip: FoIB Holly R]

MLR is Stupid

Obamneycrap has decided to treat the health insurance industry as a regulated monopoly. There are inherent problems in that approach.

The federal government has no direct authority to regulate insurance. That duty was deferred to the state under the McCarran-Ferguson Act of 1945.

Perhaps the same folks that never bothered to read the Constitution, or the law they passed known not so affectionately as Obamacare, either never read McCarron-Ferguson or chose to ignore it.

The second problem, as if issue number one isn't enough, is insurance is marketed in a competitive environment. In spite of comments otherwise, most insurance products (and certainly health insurance) do not operate as a monopoly.

Which brings us to the MLR debate. The federal government has decided it is within their purview to dictate policy benefits, premiums, who must be covered, the conditions under which a policy must be issued and also have decided what is an appropriate payout formula for claims.

MLR requires carriers that write fully insured group health insurance plans to reserve no more than 15% of premiums for administration and overhead.

Carriers that write individual major med may use no more than 20% of premiums for administration and overhead.

In other words, the medical loss ratio for fully insured group health must be no less than 85% and for individual major medical, no less than 80%.

Sounds fine to some but there is a flaw, especially when you consider carriers operate in a free market. If their price is too high they will not write new business and may well lose existing business.

If it is too low they may find themselves losing money which usually means an over-correction the other way moving them to the non-competitive side of the fence.

Some of the Congress critters have pointed to areas where a carrier (usually Blue Cross) have captured 60% or more of the market. Their view is, the carrier is unfairly controlling the market and effectively eliminating competition.

OK, let's play along with that for a moment in light of MLR.

Say HHS decides to investigate the carrier and wants to audit their books to see if they are adhering to MLR. Upon doing so, they learn the carrier's MLR for fully insured group health is 75% instead of the mandated 85% figure.

Will HHS then tell the carrier to lower their rates to come into compliance with the 85% rule? If the carrier does so will not that make them even more competitive, leading to an even more market domination.

But what if the audit shows the carrier has an MLR of 90%? Will they make them raise their rates?

I doubt it.

Basically in addition to being stupid, MLR punishes the competition if a carrier tries to pull a fast one and retain more premium dollars for themselves but also punishes those who are efficient.

There is a word for that.