Shecantbeserious steps in it, jumps up and down

I don't understand why the various states' Departments of Insurance aren't up in arms about ObamaCare©'s blatant flaunting of McCarran-Ferguson:

"Today [May 19th, 2011], The Department of Health and Human Services (HHS) issued a final regulation to ensure that large health insurance premium increases will be thoroughly reviewed... In 2011, this will mean rate increases of 10-percent or more must be reviewed by state or federal officials."

A few months ago, Mike averred that this would, in fact, be good news:

"HHS has once again underestimated the intelligence of the American public ... The increase to premiums year over year, and over many years, tracks exactly with the increase in the cost of medical benefits paid."

That is, he offers proof of our oft-repeated claim that the increasing cost of health care drives the increasing cost of health insurance.

I think he's right, but I think there's another point here that's gone unremarked. Some of us are old enough to remember the early 70's, when gasoline became subject to price controls. The result was, at first, longer lines at the pump, and eventually rationing (ie you could fill up only every other day). Health insurance companies can't ration health care, of course, but they certainly can ration health insurance. I've already noticed a significant tightening in underwriting, and much higher than "normal" rate increases (particularly in small group).

To illustrate this point, imagine that Washington imposes strict new safety and efficiency requirements on automobile manufacturers, and then limits how much they can charge for new cars. Does this make any sense?

But that's exactly what's happening with health insurance: new mandated benefits, and a cap on how much more insurers can charge for providing them.

There are two points to be made here. First, as regards McCarran-Ferguson, why aren't state DOI's asserting their jurisdiction over rate increases? Why have they ceded that function to HHS and the minions of Secretary Shecantbeserious?

Second, it's apparently not just legacy media types who don't "get" simple, basic economic principles. The one in operation here is supply and demand: when you add "freebies" to insurance policies (routine exams, mammograms and colonoscopies, to name a few), people will go get them. Problem is, there are only so many providers, which means that there will be waiting lines and higher costs.

Of course, Ms Shecantbeserious (as well as Barry, Harry and Nancy) would probably view those as features, not bugs.

Risk Management and PGI

At its heart, insurance is a risk management tool. Whether that risk is loss of income, or damage to a vehicle, or the loss of one's life, insurance is a way to mitigate a risk.

One risk that business owners face is the loss of their personal assets. Say you own Acme Widgets, a small C-Corporation that's looking to expand. One financial option open to you is a line of credit, but the bank wants you to sign for it with your personal signature, not just as the President of Acme Widgets. On the one hand, you really need the money; on the other, now your own personal assets are on the line.

What to do?

Well, Asterisk Insurance may have the answer: Personal Guarantee Insurance (PGI).

What PGI does is to "cover a substantial portion of all guarantors’ net liability to a lender if the underlying business should be unable to repay its bank loan."

You can actually cover up to 70% of that risk (which makes sense: any more and you run into moral hazard). It's pretty simple: if you have this coverage, and your business fails, the carrier will cover up to 70% of any shortfall, potentially saving a substantial amount of personal assets.

The rate's determined by the amount of the loan and nature of the business, so it could be expensive. But for additional peace of mind, and the opportunity to save or expand one's business, it's a pretty cool new tool.

[Hat Tip: FoIB Bill M]

Cavalcade of Risk #132: Call for submissions

Russell at Chatswood Moneyblog hosts next week's 5th Anniversary edition. Entries are due by Monday (the 31st).

NB: We're now using this submission tool: 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).

MVNHS©: Water, water, everywhere

You know that old saying "take two aspirin and call me in the morning?"

Well, in Merry Ol' England, they're skipping the actual aspirin part, and prescribing Dihydrogen Monoxide:

"Doctors are prescribing drinking water for neglected elderly patients to stop them dying of thirst in hospital."

Apparently, some 800 (perhaps more) seniors die of dehydration in British hospitals every year. Another 300 are killed off die of malnutrition, ignored by hospital staff even as they (literally) starve to death.

It's almost as if a nationalized system of health care uses some kind of "death panel" to help keep costs down. Good thing they weren't smokers.

RIP, Chuck

Turn on the TV, check out the movies, fire up Hulu, and you'll never find "The Exciting Adventures of [your name here], Insurance Agent." Sure, there was Banacek and Longstreet, but they were insurance investigators, not agents. Truth be told, there's generally little danger (or "real life" excitement) on my side of the desk; sure, it's exciting when that big case comes through, but that hardly makes for riveting television fodder. Even Evel Kneivel had hung up his pen and rate-book before his jump across the Grand Canyon.

Sometimes, though, real life has a way of delivering a wake-up call that even the most staid of professions can be dangerous:

"A KYW Newsradio traffic reporter has died — murdered, police say, in a random attack over the weekend ... The 52-year-old from Waterford, Camden County was doing another of his jobs — selling insurance and checking on clients." According to his obituary, Charles Fricker was apparently quite the entrepreneur: DJ, radio traffic guru, and agent for the Continental Insurance Company.

A full life, cut short way too soon.

Godspeed, Charles.

Memorial Day Health Wonk Review

Health Affairs' Chris Fleming hosts this week's eclectic collection of interesting posts on health care policy. I really appreciate (and like) how it's organized: crisp and clear.

Enjoy!

Can Medicare Be Saved?

We'll leave the obvious follow-up question ("should" it be?") for another time.

The short answer is, "yes, yes it can be," but don't take just my word for it:

MVNHS©: No Smoking, Christianity

Alternate title: MVNHS© Hits Bottom, Continues Digging

Long-time readers may recall that Britain's Much Vaunted National Health System© appears quite willing to appease those who practice Islam (including forbidding "health care workers from eating at their desks during Ramadan"). Christians, on the other hand, are offered no such accommodation:

"A Christian doctor in England has been threatened with an official warning from his professional body for discussing Jesus with a patient ... Richard Scott, a doctor for 28 years, is under investigation ... and faces disciplinary action after he suggested to a 24-year-old man that he might find solace in Christianity."

Oh, the humanity!

Heaven forfend that a believer in some other Abrahamic faith should share harmless advice (and one wonders what Ezra Klein would counsel in that circumstance).

The MVNHS© authorities have "written to Scott suggesting he accept an official warning." but the good doctor is having none of that. In fact, he's fighting back against what "he believes is a politically correct trend in Britain to persecute Christians for expressing their faith in the workplace."

We wish him Godspeed in his efforts.

One hopes that Dr Scott refrained from "lighting one up" or sharing a snack while dispensing spiritual advice. As FoIB Bob D alerts us, the MVNHS© is now looking to curb care for smokers and weight-enhanced individuals:

"[MVNHS©] North Yorkshire and York are preventing certain operations for the obese and smokers because they say unhealthy lifestyles lower their chance of success ... Now the government is saying that although you've paid into the system throughout your life, unfortunately you will not be receiving treatment ... you are a second-class citizen because you smoke, drink or are obese."

Now, one may argue that there are, or should be, consequences for one's lifestyle choices. But this is the very embodiment of Death Panels. Good luck with that "stiff upper lip" thing.

Helping Neighbors

Tax blogger Kay Bell switches gears a bit, and offers this round-up of ways we can help our devastated fellow citizens in Missouri, Kansas and Minnesota.

[Hat Tip: FoIB Joe Kristan]

Ezra Klein: Still Batting .000

One of ObamaCare©'s key features is the requirement that insurers cover routine, preventive care from dollar one. Of course, this increases premiums, but the trade-off, at least according to the "pass it to see what's in it" folks, would be well worth it.

Many years ago, I had an enlightening conversation with a company rep. I posited that paying for (or at least counting towards the deductible) routine preventive care was a win-win for insurers: catching that breast cancer early meant reducing the risk of very expensive treatment later on, and insured's would have an incentive to be aware of their own health.

The rep replied with what I still consider today to be one of the stupidest things I've ever heard from his ilk: "Well, you don't expect your car insurance to pay for tune-ups, do you?"

Now Bob's made this point many, many times, and I agree with it: how much more expensive would your car insurance be if it covered tune-ups, oil changes, and tire rotation?

But that's a far cry from the conclusion that a well-running car equals a safer driver.

In the event, the train wreck was rammed down our throats passed, and so carriers are required to pay for routine screenings.

Which is where Wunderkind Ezra Klein comes in:

"Robin Hanson posts some carefully conducted studies suggesting that certain cancer screenings don’t seem to have any effect on overall mortality. It’s not that they don’t work: The evidence says they catch cancers. They just don’t save lives."

From that questionable premise, Ezra concludes that "if you want to control health-care costs, you somehow need to convince, incentivize or otherwise conscript doctors into doing it for you."

Really?

In Ezra's world, "personal responsibility" is simply a non-starter: we should all abdicate our own judgment to the recommendations of our physicians.

Tell that to Jan.

What's amusing about Ezra's little epiphany is that his premise - that increased access to health care increases the cost of that health care - is so, well, passe. After all, we've been making this point for nigh on 6 years.

What took you so long, Ezzie?

[Hat Tip: Ace of Spades]

ObamaWaiver© Update: Old Eyes and Hawkeyes

We've long castigated the ostensible seniors' advocacy organization for throwing its own members under the ObamaBus©. But just like Harry Reid and others, this hypocritical group, which pushed long and hard for ObamaCare© itself, has received its own ObamaWaiver©:

"Although not specifically mentioned by name in the rate review rules finalized last Thursday by the Department of Health and Human Services (HHS), the rule that exempts Medigap insurance providers is clearly designed to benefit the largest seller of such policies and the biggest lobbyist for ObamaCare — the American Association of Retired Persons."

Bet you didn't know that AARP makes the bulk of its money not from its members (nominal) dues, but by its affiliation programs, including its line of Medigap plans.

Remember, this is the organization that's fine with Death Panels, just not the death of its own cash cow.

But of course, it's not just groups like AARP that want out from under this train wreck. Like Nevada and Maine, we can now add the home of Radar O'Reilly to the list of states that have requested their own ObamaWaiver©:

"Health insurers could avoid paying $3.4 million in rebates to customers if federal regulators allow Iowa to delay a component of health care legislation meant to curb insurance company profits and overhead."

That's the Medical Loss Ratio requirement.

"Six insurers pulled out of Iowa's individual health market last summer after [ObamaCare©] was passed ... State regulators fear that even more companies will leave."

So the idea that ObamaCare© will increase competition, choice and availability seems to be circling the proverbial drain.

Imagine that.

Billions and Billions (in taxes, natch!)

Something which cannot be stated often enough is the breadth and depth of ObamaCare©'s job-killing nature. Health insurance is a big-ticket item for many (most?) small businesses, and it's about to get worse. In just a few short years, the new ObamaTaxes© come online; these will add upwards of $90 billion in additional excise taxes on insurers.

Oh, wait: did I say "on insurers?"

I meant "on thee and me:" insurers (like all businesses) don't pay taxes, they simply collect them from their customers.

In this case, the initial ObamaTax©, set to take effect in 2014, sets the bar at $8 billion; that number increases to $14.3 billion four years later. It's actually worse than this; Sally Pipes, writing at Forbes, notes that:

"Because these new fees are not tax-deductible for insurers, each additional premium dollar raised to pay the excise tax will face 35 cents in income taxes. So the true cost of the excise tax to insurers is nearly $135 billion. They'll therefore have to jack up prices by $1.54 to generate one buck for the excise tax. And in states with income or premium taxes of their own, insurers will face an ever steeper bill."

Is there hope for change? A consortium of small business advocates thinks there is; they've put together a very useful website chronicling all the various taxes to which their members (and thus us consumers) will be subject. Called Stop The Hit, it's got a state-by-state breakdown of both the scheduled ObamaTaxes© and the percentage of small business-generated jobs.

As the site notes:

"One thing insurers and economists have agreed upon throughout the healthcare debate: new taxes on insurers inevitably means new costs passed along to customers. The group that experiences the most cost-shifting is the fully-insured market."

No kidding.

Long Term Care: Rising Tides

FoIB Holly R sent along this rather disturbing news:

"Costs of assisted-living care in Ohio are growing faster than the national average ... In Ohio, the annual cost of long-term care in an assisted-living facility is $39,900, and costs have risen 9 percent annually over the past six years. Nationally, the average cost is $39,135, with average yearly increases of 6 percent."

Some perspective's called for here, of course. For one thing, Ohio's average cost is only about 2% higher than the national. For another, this means that the average daily cost for assisted living in the Buckeye State is just shy of $110 per day. Most agents I know recommend about $150 per day for Long Term Care insurance (LTCi).

Oh, and one more thing: according to the article, the cost of nursing home care is somewhat lower in Ohio than nationally.

Still, this underscores the need to at least consider a LTCi purchase, since that close to $40,000 per year cost can quickly eat up one's life savings.

There's another reason that LTCi may make sense:

"Private long term care (LTC) insurance helps insureds with moderate disabilities stay in their homes longer and does not appear to crowd out informal caregiving."

Most seniors I've spoken with would prefer to stay in their own homes, rather than face the upheaval involved in moving and downsizing. Obviously, someone in the throes of Alzheimer's may not have that choice, but for those with less serious conditions, having the means to stay in one's home seems like a good thing.

On the other hand, the same study showed a disturbing phenomenon: "the researchers ... [identified] survey participants who believe they have LTC insurance but do not actually have it: Li and Jensen say confused consumers make typical LTC insurance penetration figures about 50% higher than they ought to be."

That's scary.

The Public Be Damned

A Tulsa, Oklahoma reader forwards this timely article

“expanding Medicaid would cost Oklahoma taxpayers 11 billion dollars in the first 10 years . . . the program’s expansion would mean 314,000 and 340,000 new Medicaid enrollees in this state . . . you are talking about four times more than we’ve ever spent on Medicaid.”

Despite the Administration’s claims that Obamacare will reduce health care costs – and cover these Oklahomans and even more millions of America’s uninsured at the same time - we all know that can’t be done. Sure we know it. We’ve always known it. Many of us hoped it could be true. Some of us pretended it could be true. But we all knew it couldn’t be true if we thought about it at all.

Similar Obamacare costs are going to hit every other state, too (although Nevada has received a statewide waiver. Why Nevada? Oh, c’mon, you know).

So the additional cost was not unexpected. This puts the media in the awkward position now, of pretending surprise in the attempt to camouflage their credulous and incompetent reporting of the debate on health care and the uninsured during 2007 – 2010.

Who exactly are the uninsured? According to the Kaiser Family Foundation in 2006, it’s surprisingly unambiguous: “people below 2X's the federal poverty level comprised about 65% of all uninsured.”

Well then, why don’t we establish a federal medical insurance program for the poor? Oh, I forgot. There’s already a federal medical insurance program for the poor – it’s called Medicaid. And because the poor make up 65% of the uninsured, it’s clear Medicaid has failed to achieve its [sole] purpose. So then, wouldn’t it make sense just to fix Medicaid?

Not the way the federales see it.

Main reason - a lot of public attention focused on a failed federal program would have been unacceptable, just when the federales had determined to launch a new and even bigger federal program. So the remedy could not be to fix Medicaid. No, these are federales at work, and our federales don’t fix no stinkin’ programs! Just “fixing” Medicaid would have wasted this crisis of the uninsured. The remedy must therefore be a massive, grotesquely expanded, and horrifically expensive NEW federal program whose ultimate aim is . . . whatever . . . or something, just so long as it’s enabled by expanded federal powers regardless of Constitutionality and, of course, incredible new taxing and spending authority.

Besides - fixing Medicaid would require enrolling the millions of the uninsured poor into Medicaid anyway, about half of which the states fund directly. So Oklahoma and the other states (not Nevada) face much higher medical insurance costs for their indigent populations, no matter what anyone calls it – Medicaid or Obamacare. And Obamacare has the advantage of investing so much more power with the federales. This crisis was definitely not wasted.

And no one can be surprised to learn who is going to pay for it all, either.

The public be damned.

Life(less) Partners

Five months ago, we reported on the bizarre tale of Life Partners (LP), "a fast-growing company in Waco, Texas, [which] has made large fees from its life-insurance transactions."

There were a number of problems in LP's business model, not the least of which was their on-call oncologist of dubious reputation, and the apparent lack of transparency on the part of the founding "Partner."

Adding to their woes this time around is this news from BusinessWeek:

"Life Partners Holdings Inc., which buys life-insurance policies at a discount and sells shares to investors, said Friday that it could face civil charges stemming from a federal investigation into how it forecasts the insured's life expectancy."

Dun'h!

It seems safe to say that receiving notice that one's company is the target of an SEC investigation, not to mention a potential civil suit, ranks right up there with arriving at the office and finding the "60 Minutes" crew waiting patiently on the stoop.

There's little question that the concept behind LP's business is valuable: look at how many carriers now include an Accelerated Death Benefit with newly-issued policies. The problem is that companies like LP seem to be taking advantage of both the insured and the (prospective) investor. As my father used to say, "bulls make money, and bears make money, but pigs go to market."

Told Ya So!

In case you were wondering, it was never about compassion for "those left behind."

No, I'm not talking about tomorrow's planned events, but this:

"Last week, we reported on efforts in California and Florida to force life insurance companies to keep (better) track of their insureds ...

It is not, and never has been, the responsibility of a life insurer to track its insureds. If you move, then you darned well better let folks ... where you're headed."

We opined at the time that "the state does not, in fact, care about whether or not the rightful beneficiary benefits, just that the state itself gets (at least) a cut."

Bingo!

"The current probe of life insurers’ death benefits payment practices could help beneficiaries and state unclaimed property funds recoup “north of $1 billion,” Florida Insurance Commissioner Kevin McCarty said today." [emphasis added]

Does anyone seriously think the state cares one whit about beneficiaries? Of course not: this is simply another means of extracting unearned dollars for financially-strapped state governments. It's shameful, unjustifiable, and a waste of resources.

Not that I have any strong feelings on the subject, of course.

Trip: Interrupted?

The Wall Street Journal had an interesting article the other day about risk management and vacation planning. With travel costs at an all-time high, it pays to ensure (and, perhaps, insure) that your hard-earned dollars aren't wasted.

We covered trip interruption and cancellation policies last year, and this new WSJ piece does a good job of exploring some of the "loop-holes" through which the folks who issue these policies can avoid paying out claims. They recommend "cancel for any reason" plans as the ones most likely to actually "pay off" if your trip is canceled or is cut short.

Which brings us to the other side of the visa: travel medical insurance. Many health insurance plans (and Medicare) "stop at the border." So it's important to make sure whether or not your plan will cover you on the high seas, or overseas (or in Toronto or Cancun, for that matter). One thing that most "regular" plans may lack is emergency medical evacuation coverage; these claims can mean big bucks out of your pocket. The article notes that "for less than what you pay through airlines, you can buy an independent policy with $50,000 medical and dental coverage and $250,000 or more in evacuation coverage."

While we're not necessarily recommending that much coverage, it's comforting to know that it's available. If you're planning a major (ie expensive) trip any time soon, our own Bob Vineyard may be able to help. He's set up a helpful site with plenty of options, including some for groups traveling together, exchange students, even folks going on safari. Very cool.

Breaking: First Nancy, now Harry [UPDATED]

Un-freakin'- believable:

"ENTIRE State of Nevada Scores Obamacare Waiver"

Words fail (for now).

Just two days ago, Bob noted that SanFranNan had scored 20% of the latest ObamaWaiver©s for her district. He wisely observed that "we have to pass the waivers in order to know what is in them."

The term "prescient" comes to mind:

"The Health and Human Services Department announced late Friday that Nevada had secured a statewide waiver from certain implementation requirements of the Obama administration's health care law, because forcing them through, the department found, "may lead to the destabilization of the individual market."

At issue is the new Medical Loss Ratio rules which (among other things) dictate the percentage of premiums collected that must be paid out. It appears that (current) Senate Majority Leader Harry Reid's home state just dodged a major bullet.

One is tempted to ask, of course, why he was so gung-ho for ObamaCare© in the first place, since he must have known, from a simple reading of the bill, that this was in it.

He did read the bill, right?

UPDATE: Not to put too fine a point on it, but it seems that Harry, Nancy and Barry have replaced Santa, the Tooth Fairy and the Easter Bunny in terms of largesse.

Don't believe me?

Here's 1,000 words or so:

Punishing the Good Guys

[Caution: long rant ahead]

Last week, a good friend and colleague called to ask for help on what had become a rather complicated case. His clients, a husband and wife, were about to lose their health insurance - through no fault of their own - and had asked him for help. While he dabbles in this area, he's really a (very, very good) P&C guy, and turned to me for advice.

Bill and Mary are in their sixties (he's 68, she's 61). Bill was recently (May 3rd) laid off from his long-time job, in anticipation of the company closing its doors. He'd received his COBRA election info, but was unsure of his next step. He called my friend, who then called me.

Bill's going to be okay: he can (and will) pick up a Medicare Supplement plan, as well as his Part D coverage, on the "open market."

But Mary has a problem: after a thorough pre-screen, we've determined that she's uninsurable.

You're probably thinking "okay, Henry, what's the big deal? They've got the COBRA info, she'll just glom onto that."

Would that it were so simple:

In its infinite wisdom, the CongressCritters who drafted the Consolidated Omnibus Budget Reconciliation Act made it very clear that COBRA was a continuation of one's existing group coverage. Implicit in that definition is a major problem: if there's no group, then there's no continuation of that coverage, and so there's no insurance.

Period.

Which leaves Mary with very few, mostly sub-optimal [ed: why not just say "crappy?"] choices:

■ Open enrollment with a local HMO (with a very high premium and some major limitations)
■ Applying - and being declined - for coverage (which gets her on a state-mandated Guaranteed Issue plan)
■ A conversion plan (very expensive, verry crappy)
■ The new ObamaPool©

None of these are really great choices, but it's that last one that has me seething:

The ObamaPool© plan has decent benefits, reasonably decent rates, is Guaranteed Issue, and will cover her (numerous) pre-existing conditions.

There's just one catch:

She'll have to be uninsured for (at least) six months before she's eligible.

That's correct: she and Bill have played by the rules, staying insured even when times were tough, and she can't access the same coverage that her no-goodnik neighbor - who's never bothered to buy insurance, even though she could well afford it - is free to waltz in this afternoon and buy with basically a signature and a (smallish) check.

This is outrageous. Unconscionable. Immoral.

We are punishing people for playing by the rules, for being responsible, productive citizens, for taking personal responsibility This isn't about politics, it's about something far more important: justice.

Fresh Air PSA

The Fresh Air Fund provides free summer vacations to New York City children from low-income communities. Every year, some 10,000 kids benefit from this opportunity. In its over 130 years of service, the FAF has provided almost 2 million youngsters with access to unique programs and, of course, fresh air.

The Fund's Sara Wilson tells us that they're "in need of host families for this summer. Host families are volunteers who open their hearts and homes to children from the city to give them a Fresh Air experience that can change lives."

Sara's put together a really useful "microsite" that explains the program and how you (or someone you know) can help. Just click here to be whisked away to fresh air and a chance to help those less fortunate.

Alphabet Soup Update

■ First up, courtesy of our friend Joe Kristan, next year's Health Savings Account (HSA) contribution limits:

For singles, the max you can drop in will be $3,100 (up $50 from this year); for families, it's $6,250 (up $100). Remember, you need to be covered by a qualifying High Deductible Health Plan (HDHP) to make contributions. The 2012 minimum deductible for these plans remain at the 2011 level ($1,200 for singles, and $2,400 for families).

Some HDHP's include additional out-of-pocket requirements above the deductible (I hate these). These will increase $100 for singles and $200 for family coverage next year.

■ FlexBank's Lou Gellenbeck sent along this helpful info on how ObamaCare©'s new W-2 reporting requirements affect Health Reimbursement Arrangements (HRAs). The key take-away is that they're "exempt from the new W-2 reporting requirements for group health plans."

But what's that really mean?

Lou explains:

"Starting in tax year 2012 ...employers that file 250 or more Forms W-2 for the preceding calendar year [must] report the aggregate reportable cost of applicable employer-sponsored health insurance coverage provided on each employee's annual Form W-2...

Aggregate reportable cost does not include amounts contributed to a Health Savings Account (HSA), the amount of any employee salary reduction election to a health Flexible Spending Account (FSA), or the cost of coverage under a Health Reimbursement Arrangement (HRA). This reporting will be for informational purposes only and will not affect tax liability.

Specifically noted in the legislation is the requirement that employer contributions to a health FSA (i.e. matching contributions or where the employer seeds the health FSA with funds) must also be reported in certain situations. FlexBank's FSA clients will receive additional information on this part of the ruling in the near future under separate cover."

See why one's choice of administrator for these kinds of plans are local and accountable? Did your admin alert you to these changes?

She also reminds us that "comprehensive guidance on the W-2 reporting requirement may be found here."

Thanks, Lou!

Cavalcade of Risk #131 now up

Emily Holbrook makes her CavRisk hosting debut with this outstanding edition. It's short, sweet and right on point.

Joe K goes big time

Our good friend (and favorite TaxBlogger) Joe Kristan was recently quoted in the Wall Street Journal.

Mazel Tov, Joe!

Chasing Profits

The New York Times' Reed Abelson is a good writer, but (as with so many in the MSM), she seems unable to distinguish between "profits" and "profit margins." What's the diff, you ask?

Here's a good example:

"ABC Widgets builds 100 widgets, and sells them for $1 each. First they have to buy the materials for about 60c, then assemble and market, for about 15c. Then they sell for $1 and give the govt 18c in taxes per widget. That means each widget costs 93c to make, leaving ABC with a 7c profit margin per widget. If they sell all 100, they make $7 in profit.

Next year, material and assembly costs a little more, so they raise the price of the widgets to $1.50. Costs end up at $1.43, which leaves a profit margin of 7c again. But widgets are popular this year, so they sell 200!

ABC Posts Record Profits of $14! Congress to investigate!"

Now, let's contrast that with Ms Abelson's intellectually vapid take:

"The nation’s major health insurers are barreling into a third year of record profits ... The nation’s major health insurers are barreling into a third year of record profits"

There's more, but that's the gist. The problem is that the cost of health care keeps increasing, and carriers can't go back and assess insureds (or previously insured folks) for their losses. They have to price for what may come, and there's no sign that the rising cost of health care delivery will abate any time soon (or at all).

Still, one is tempted to say "that's all well and good, Henry, but these profiteers are making obscene amounts of money on the backs of their insureds."

Uh-hunh.

Let's go back to the widgets: how much money should ABC be allowed to make? Remember, ABC provides employment (and thus an income) to those who make the product. Their employees count on those paychecks; if ABC doesn't make enough money to stay in business, well...

So they need to make a profit, and they have to decide the scope of that profit. So, another question: is 5% enough? 10? How much would you be willing to settle for?

It's an important question because this chart, which our own Mike Feehan graciously sent along, shows exactly what other related players in the health care delivery and financing consider "reasonable:"

[Click graphic to embiggen]

Is 4.4% a "reasonable" return on investment? In this economy, perhaps so (take a look at your 401 201k); but it's a fraction of that claimed by some others. As an aside: how long do you think doctors will settle for sub-2% returns? And what does that bode for future availability of health care?

Now, if only the MSM would take a remedial econ class.

[Hat Tip: FoIB Holly R]

Saving Medicare

Over the years, we've chronicled the precarious path on which the 45 year old program finds itself. The $64,000 Question is whether or not it's too late to change its course.

The Center for Freedom and Prosperity's Dan Mitchell lays out the stakes, and the possibilities:



[Hat Tip: RedState]

Grand Rounds is up

The venerable weekly collection of interesting medblog posts is hosted this week at the Prepared Patient blog.

It's (Oddball) Claim Time!

We've reported before on some unusual insurance policies, but here's something different: unusual insurance claims. FoIB David Law passes along this infographic of "Dodgy Insurance Claims:"


[Click here for full graphic]

Naturally, something like this begs for vetting, so I first went to snopes for debunking. After poking around for a bit, and finding no related items, I was pretty well convinced that the list was legit. But I'm a belt-AND-suspenders kinda guy, so I grabbed a few of the items and Googled them. Sure enough, I found supporting cites for enough to satisfy even my cynical view.

Thanks, David!

Health Wonk Review: Spring Renewal edition

[UPDATE: HWR now back up - Thanks to Roy Poses for the heads' up!]

Spring is traditionally a time to air out the house, clean out the garage, and generally spruce up the homestead. One important task in this process is reducing the clutter. To that end, this week's HWR is simple in design, sparing in verbiage, and focused on the beauty of my fellow wonkers' efforts. As advertised, it's first in, first up:

■ David Williams

HBB's David Williams notes the irony (and arrogance) of Nature magazine's efforts to promote more patient advocacy - behind a $32 firewall.

■ Jaan Siderov

Speaking of social media, Jaan offers his Ten Commandments, er, Rules for health care organizations that want to tap into the power of Twitter, FaceBook and the like.

■ Glenn Laffel

Of course, Nature, Twitter amd FaceBook aren't the only new tech available to Health Wonkers: over at Pizaazz, Glen Laffel discusses how cloud computing is already impacting health care organizations. Glenn offers a case study of how one start-up was recently knocked for quite a loop.

■ Jason Shafrin

Do Medicare patients really have to wait longer to see their doc than those with commercial insurance? Our favorite health care economist, Jason Shafrin, has the (perhaps not surprising) answer to that question, and a handful more.

■ Roy Poses

Roy wonders why physicians are so reluctant to seek legal counsel before signing potentially career-ending contracts.

■ Peggy Salvatore

So here's the question: is it really necessary for providers to fully implement EMR? To which Peggy has a simple answer ("Only If You Want To Get Paid") as well as some interesting alternative financing ideas.

■ John Goodman

As usual, John's not afraid to tackle the big issues. In this post, he looks under the hood of Congressman Ryan's plan to reshape Medicare (with a special cameo from Diana Ross and the Supremes!).

■ Louise Norris

Another longtime HWR contributor, Louise reports on the underwhelming decrease in the number of covered lives in Colorado's small group health insurance market.

■ Anthony Wright

Looks like Anthem Blue Cross is playing chicken with California's Insurance Department by raising rates even after being told not to.

■ Tim Jost

As ObamaCare© wends its way through the judicial system, Tim outlines the arguments in the 4th Circuit, focusing on whether the Act is even Constitutional.

■ Avik Roy

Known primarily for fine cheese and chocolate (and watches, of course), Switzerland may be an unlikely holder of the title "World’s Best Health Care System," but Avik effectively pleads the case.

■ Jared Rhoads

If Switzerland is the Best Health Care system (see above), then Massachusetts may be a leading contender for the opposite appellation. Jared points out that, in the Bay State, fewer doc's are accepting new patients, and existing ones are facing much longer wait times.

■ Bob Vineyard

Our own entry comes from co-blogger Bob Vineyard, channeling Cato's Mike Tanner and Dr Jane Orient, on why ObamaCare© spells big trouble if you actually need care.

And that, dear readers, is that.

Please join us in a fortnight at the Health Affairs Blog, where Chris Fleming will host the next Health Wonk review.

Cavalcade of Risk #131: Call for submissions

Emily at the Risk Management Monitor makes her CavRisk hosting debut next week. Entries are due by Monday (the 16th).

NB: We're now using this submission tool: 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).

Dying to win?

I'm a big fan of life insurance (of course), primarily as a particularly effective risk management tool. As agents, we're often asked which is "better:" term or permanent. While there's really no "one size fits all" answer to that, my colleague Bill M graciously forwarded this email that he received from a client:

"I want to look at whole life and term. If I am going to spend the money. I might as well get something for it. Otherwise it is just a monthly lottery ticket that you may die this month."

Sometimes it takes our clients to most effectively articulate basic truths.

(Really) Stupid Client Tricks (P&C Edition)

In general, insurance is a one-sided contract: that is, the bulk of responsibilities (underwriting, paying claims, etc) rests with the carrier; the insured is tasked with paying premiums and not filing fraudulent claims.

Oh, and not interfering with the carrier's ability to effectively adjudicate those claims.

So, for example, it's considered bad form (and a breach of the insurance contract) for the insured to pro-actively undermine the carrier's right to mitigate (lessen) the potential cost and scope of a claim. Which is where the rocket-surgeons who run the Vienna Presbyterian Church in Virginia not only fall down, they actively trip themselves and their insurer:

"When officials at Vienna Presbyterian Church decided to acknowledge the church's failures in handling reports of sexual abuse by a youth ministries director ... it wasn't the church's lapses in responding to the abuse a half-decade ago that bothered the insurer — it was the church's plan to admit those lapses and apologize to the victims."

It's understandable that the church's directors would feel compelled to make amends, but in this case, it's not their money with which they're playing: it's the insurer's (and that insurer's other policyholders, who don't get a say in how VPC handles its errant employees). In short, be compassionate on your own nickel.

I'm fortunate to have access to two recognized experts in this particular field. Bill M (whom we've met before) is an independent agent who does a lot of work with small businesses. Teresa S is the Commercial Lines Manager for the agency in which I toil. Both of them agreed with my basic take on the issues, and added their own perspectives.

Bill sent me a copy of a typical "Minister's E&O" (Errors and Omissions) policy, which included "Duties in the Event of an Act, Error or Omission." He helpfully highlighted the clause specifying the insured's responsibility to "(a)ssist us, upon our request, in the enforcement of any right against any person or organizations which may be liable to the insured because of an act, error or omission."

To put it another way, a doctor can't go on the local news bragging about how many sponges he's left inside patients as a prank and then expect his malpractice insurer to back him up.

Teresa pointed out something else that VPC's elders seem to have missed: it's not just their congregants who were at risk (and who may have cause of action), but their guests. How many of these young women invited a friend to meet the "cool young minister?" And by "meet" I mean, well, there's the problem.

Both noted that since no lawsuits have been filed (yet), the carrier can't really do much of anything except continue to insist that the church's leadership shut up, and continue documenting their refusal to do so. Once those lawsuits start flying, though, watch for the carrier to try it's best to deny coverage.

I'll be on the sidelines, rooting them on.

Blogging from beyond...

First, our condolences to the Miller family of British Columbia; Derek Miller, the blogger behind penmachine died last week of colorectal cancer.

For once, this is not a post condemning CanuckCare©. Rather, it is a celebration of the life of a fellow blogger whom I never met; indeed, of a blog of which I'd never before heard.

Turns out, Mr Miller (it just doesn't seem right to call him "Derek") spent quite a lot of time blogging about his own impending demise, chronicling the progression of the disease which would ultimately take his life.

Rest in peace, Derek Miller. Baruch HaShem.

Shecantbeserious KEEPS digging

At some point, HHS Secretary Kathy "A W Livingston" Shecantbeserious became a parody of herself. The exact moment that this occurred is unclear, but certainly this kind of over-the-top rhetoric does little to diminish the feat:

"I think there's no question ... people will run out of money, very quickly [under the GOP Medicare plan if you have cancer]. And if you run out of the government voucher and then you run out of your own money, you're really left to scrape together charity care, go without care, die sooner. There aren't really a lot of options.”

Paging Dr Bugs Bunny.

First, it's pretty pathetic that the same agency which boasts Sir Donald Berwick would have anything to say about killing off old people: pots, kettles and all that.

More importantly, though, the so-called Ryan Plan would do no such thing. The "vouchers" would enable seniors to pick the plan that's right for them, but includes a safety net for the most catastrophic of claims. And it's pretty funny that the same political party that brought us ObamEchanges© would deride the same kind of mechanism for seniors.

Cato's Michael Cannon rebuts that "voucher-like Medicare reforms will lead to reductions in the per-unit cost of producing certain goods and services, and therefore to lower prices." Considering health care in this way helps to really drive home the point that costs are not, in fact, the same as expenses (a point that we've made repeatedly here at IB).

Michael also reminds us that "”nearly 30 percent of Medicare’s costs [spending!] could be saved without adverse health consequences.”

Indeed.

May Alzheimer's News

Alzheimer's is "the defining disease of the baby boomers," according to a new website brought to our attention by Diane Wright. Called generation alzheimer's [ed: lower case in original], it's an online roundup of information and resources for Baby Boomer's and those who care for (and about) them.

The site is a service of the Alzheimer's Association, and includes links, contact info and even videos like this:



Do check it out.

Medical $ociety $wag

As we know, the cost of medical insurance keeps going up, primarily as a result of the increasing cost of health care. Now, when we think of "health care," we generally have in mind our family physician, or perhaps the ER or an annual mammogram. And these are certainly important. But health care also encompasses equipment and medications, and all manner of other goods and services.

These are not free, nor are they generally inexpensive.

Time was, you could walk into your doc's office and see the Viagra pen on the desk, the Lexipro clock on the wall, and perhaps the occasional Crestor notepad on a desk. Those are dwindling, for a variety of reasons, but there's one area where this kind of business is booming:

"From the time they arrived to the moment they laid their heads on hotel pillows, the thousands of cardiologists attending this week's Heart Rhythm Society conference have been bombarded with pitches for drugs and medical devices."

Everything from customized key cards to logo-embossed carpeting, from huge convention hall display booths and company-sponsored parties. It's big business, and it's largely unregulated (which is not necessarily a bad thing, just worth noting).

Let's pause a moment and consider the nature of "swag:"

"The other day, I attended a CE (Continuing Education) class on Ethics. My fellow participants couldn't understand why I was giggling about an "Ethics" course given - for free! - to agents who'd received a "goody bag" full of tschochkes (chip clips, staplers, etc)."

Harmless enough, and certainly low-tech (and low-cost). But that vendor had to pay for the customized staplers and notepads, the cost of which is passed on to the consumer. So who pays for the hotel ballrooms and high-end tours provided gratis to the SanFran-bound heart specialists?

Well, it's not the manufacturers. Nor is it the doc's themselves. It's tempting to say, "well, Medicare or Blue Cross pays the hospital bills, so I guess this is on them, too." But of course that's sophistry: you and I as tax-payers (Medicare) and/or insureds (Blue Cross, et al) or - more simply - health care consumers pay those bills."

USAToday opines that "one area of medicine still welcomes the largesse: societies that represent specialists." But we already know that a "Medical Society" is simply an association of providers who pay dues for, well, whatever the Society does for them." As the old saw goes, money makes the world go 'round. And these organizations, as USAToday notes, benefit greatly from their relationships with vendors.

To be fair, the organization highlighted in the USAToday piece claims that "industry money does not buy influence and is essential to developing new treatments. Still, on Thursday the group unveiled a formal policy that, among other things, requires more detailed disclosure of board members' industry ties."

How nice for them.

The thing is, though, that there's really nothing inherently wrong with this kind of marketing: ever been to an Auto Show? Or the National Home Builders' annual shindig? It is, quite simply, capitalism at work, and it seems to be effective, at that. But let's don't kid ourselves: this does impact the cost of health care (and hence, insurance), and we need to acknowledge that it is, in fact, a part of the problem.

HWR here at IB

Next week, we're proud to once again host the Health Wonk Review, the bi-weekly roundup of health care policy and polity.

Please submit your posts via Blog Carnival (or email), and be sure to include:

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

Submissions are due no later than next Wednesday (May 11th), but be warned: this is "first come, first served."

Advertising Update

This past January, we celebrated 6 years "on the air." In all that time, we had never accepted paid advertising at InsureBlog. This was my decision, and I'm quite happy with it. It's not there haven't been opportunities; as one of the premier insurance law and health blogs on the 'net, we get quite a few inquiries.

Still, I resisted.

But, times change, and I have been ably persuaded to change my mind (see, sometimes old dogs can learn new tricks!).

And so, I'm proud to say that we've accepted our first paid advert here at IB, from the fine folks at Hiscox, business insurance experts from Across the Pond. Their ad can be found on the sidebar just below our linklist. Please feel free to click through - they're very friendly folks.

And if you'd like to discuss advertising opportunities here, just drop us a line. Fair warning: we're very picky.

Old Salt, New Facts

You know all those nanny-staters that want to drastically reduce the amount of salt to which we're exposed? Much like the Great Egg Cholesterol Scare of the 80's, this one's taking a licking:

"People who ate lots of salt were not more likely to get high blood pressure, and were less likely to die of heart disease than those with a low salt intake ... The findings "certainly do not support the current recommendation to lower salt intake in the general population."

Says whom?

That would be Belgian scientist Dr. Jan Staessen (no waffler, he), who oversaw an 8 year study of almost 4,000 Europeans (whose physiology, it turns out, is remarkably similar to our own).

Contrast this with current US guidelines that are based on "data from short-term studies of people who volunteered to be assigned to a low-salt or high-salt," a rather self-selected group.

Now, if you've got high blood pressure or a heart condition, it's probably a good idea to continue limiting your daily intake of sodium chloride.

As for the rest of us, it's pretzel time!

[Hat Tip: RWN]

Missing life policy?

As regular readers know, Bob and I are frequent contributors to an online consumer bulletin board. One question that continually pops up is how to find out if a recently deceased loved (or not so loved?) one might have had a life insurance policy in force at the time of death.

While there's no official central clearinghouse of life insurance policies, if you live in Ohio (or the deceased was a Buckeye), the Ohio Department of Insurance has some good news:

"The Ohio Department of Insurance’s missing life policy search service is a comprehensive search service that assists Ohio residents, and the families of deceased Ohio residents, in locating lost insurance policies purchased in the state."

Be interesting to see if any of the other 56 states follow suit.

ObamaBux© Dwindling

As the bill we had to pass to see what was in it continues to unravel, another major stumbling block becomes apparent:

"If the health care law survives the current legal and political attacks, it will soon come up against the law of economics."

Come 2014 the so-called Exchanges are due to come on-line; these will (ostensibly) enable individuals to purchase health insurance regardless of whether or not they've previously been covered, and on a guaranteed issue basis. This means that even folks with pre-existing conditions will have automatic and immediate coverage. As one might imagine, and as we've long noted, this comes at a very steep price: premiums are expected to be (at least) 3 times current levels.

But no worries, ObamaCare© promises to subsidize those extra costs through the largesse of government printing presses (and fellow tax-payers).

As we've already seen, though, these new and expensive promises seem to run out of money (and steam) sooner than anticipated. And there's ample reason to believe that this will also be the fate of the Exchanges:

"But, starting in 2019, individuals would have to shoulder an ever-greater share of premiums as cost curbs kick in ... The law's shift of premium costs to individuals "may be difficult to sustain," opines Doug Elmendorf, director of the Congressional Budget Office.

Ya think?

Jed Graham, writing at Investor Business Daily's Capital Hill blog, makes this keen observation:

"[V]irtually no one understands what the law means or how premium subsidies will grow over time — and it’s a near certainty that the confusion extends to the members of Congress who voted for it."

Quite so, and he has a pretty devastating graphic to demonstrate what he means.

The key here is that the law does nothing to curb health care costs, which means that health insurance costs will continue to rise unabated. And they become quite substantial quite quickly, which will further exacerbate the underlying problem.

Or, as Jed succinctly notes:

"Because costs would continue to rise faster than GDP, the shifting of premium costs from the government to individuals would continue indefinitely."

So what's the good news?

Glad you asked:

"House Republicans are fighting to stop the federal government from financing state efforts to set up health insurance distribution exchanges."

The bad news, of course, is that it faces stiff (most likely insurmountable) opposition in the Senate. Still, it's a start.

Cavalcade of Risk #130, Naked beasts run wild edition: Now online

David Williams presents this week's round-up of risky posts - and hold on to your hat (and anything else you may or may not be wearing).

Also: A Very Special CavRisk Thank You to Tom at Canadian Finance for the new BC Workaround!

DIAM: That's May!

May is indeed Disability Insurance Awareness Month. One common adage is that disability insurance is sold, not bought. That is, many (most?) folks don't really understand how valuable this coverage really is, perhaps believing that their car and home insurance will take care of them if they lose income through sickness or injury.

Here's what I mean:

Where's the Beneficiary? (A Stupid Government Trick Update)

Last week, we reported on efforts in California and Florida to force life insurance companies to keep (better) track of their insureds. That effort has now expanded to at least 35 of the 57 states plus the District of Columbia, "to look at how life insurers determine whether insureds have died and how they go about locating policy beneficiaries."

Oh, puhleeze!

It is not, and never has been, the responsibility of a life insurer to track its insureds. If you move, then you darned well better let folks - including your life insurer - where you're headed. An insured has but three simple obligations in order to maintain coverage: pay the premiums, avoid fraud, and advise the carrier of one's whereabouts. As I said in the previous post, one can just imagine the hew and cry if carriers even tried to track insureds (and/or beneficiaries). This is nanny-statism run amok.

FoIB Matt H sent us an interesting link that answers at least one question: Cui bono?

"The audit indicates that Metlife did not take steps to determine whether policy owners of dormant accounts are still alive, and if not, pay the beneficiaries — or the state if they cannot be located, the regulators said." [emphasis added]

So the ugly truth is that the state does not, in fact, care about whether or not the rightful beneficiary benefits, just that the state itself gets (at least) a cut.

How banal.

Is the Pool Half Full or Half Empty?

Of course, an engineer would advise that the pool is twice as large as it needs to be:

"The insurance exchanges for people with preexisting conditions aren't living up to expectations ... [ObamaCare©] set aside $5 billion to help those folks. But one year later, few people are taking that help."

Nice that the folks at the taxpayer-funded "news" organization finally noticed this; as Bob noted several months ago, " [t]he government sold 12,500 health insurance policies in 8 months and 700,000 cars in 6 weeks."

Bob pointed out several plausible, rational explanations for the underwhelming response. NPR, not so much:

"The high-risk pools enrolling the fastest are almost all in blue states."

So it's all about politics?

No, not really: the reason that so-called "blue states" are having so much "success" with these pools is that their population is already primed for the expansion of government into the health insurance biz. And, as Bob noted, it's not like folks have been beating down the door to sign up in any state.

This particular NPR piece, by the way, suffers from what we've come to call LRS (Lazy Reporter Syndrome). We've seen this before, of course, but NPR seems to have refined it to an art.

■ Example #1:

"Jose Cortes was a Spanish teacher at a college in North Carolina until strange things started happening ... By the time doctors figured out why he'd been acting so strangely, he'd been fired. Lost his benefits."

Really? What kind of college employs less than 20 people (the threshold for COBRA compliance)?

■ Example #2:

"[H]is wife, Anne ... says he had two options: Join her health plan at work, but that would take a year because of his preexisting condition."

Hello, HIPAA anyone? As long as there was continuous coverage (and the reporter never questions this), then there's no such wait.

These are such obvious, simple holes that I find it difficult to believe much else of what's being "reported" here. It's reminiscent, as well, of Bob's expose of the Baltimore Sun; that is, these are (or should be) routine parts of the fact-check process.

Or are "reporters" absolved of these?

[Hat Tip: FoIB Holly R]

Green Mountain State Shenanigans

Courtesy of FoIB Jeff M comes this rather bizarre news from Vermont:

"At least one roadblock stands in the way of Vermont's path toward becoming the first state to adopt a single-payer health care system: coverage for illegal immigrants."

As we've noted here before, illegals make up a disproportionate share of the uninsured (d'unh!), but it doesn't seem to occur to the fine folks of Vermont that there's a good reason for this. Namely, illegals are here, well, illegally. Since criminals are not particularly well-known for playing by the rules (hence the term "illegal"), it stands to reason that they're not rushing out to buy health insurance (well, along with the fact that they couldn't if they tried).

So the solution - natch - is to simply put them on the rolls, thus shifting the cost of their health care to the actual legal citizenry. Now, we're on record as supporting the "57 state laboratory" model of health care, so of course we recognize that Vermont is free to experiment with this notion at its own cost.

There's a deeper problem here, though, and it's neatly summarized:

"When we say health care is a human right, we mean for everybody"

That is so wrong, on so many levels, that it's challenging to know where to begin.

Of course, that won't stop us from trying.

First, folks who bandy about the silly notion that health care is a "right" overlook a fundamental issue: at whose cost? That is, if the delivery of health care is a "right," then that means that the state has the power to compel providers to treat anyone and everyone, regardless of whether or not they'll be paid for doing so.

Note that I'm not saying "paid fairly" ; after all, that's a judgment call. No, I meant what I said: that they be paid at all. That is, the right to health care would trump the expectation of payment for services rendered.

Of course, what these thoughtless individuals most likely mean is that the payment for health care should be made by the state, which means thee and me. That's really the underlying premise of "universal" health "care" (to use the disingenuous and patently false terminology of its proponents). Note that there's no talk here of personal responsibility or accountability: it just "feels good."

Not a promising premise.