Va bene signoras e signores

Why does health insurance cost so much?

Here's part of the reason:

How 'bout ANOTHER $17 Trillion ObamneyCareBux©?

Last time we looked, ObamneyCare© had racked up an additional $111 billion cost overrun, and we remarked at the time how ironic it was that that might have been a low-ball guesstimate.

Little did we suspect, though, a "massive $17 trillion funding gap."

Ooopsies.

"The $17 trillion in extra promises was revealed by an analysis of the law’s long-term requirements ... when combined with existing Medicare and Medicaid funding shortfalls, leaves taxpayers on the hook for an extra $82 trillion in health care obligations"

Which begs the continuing question: How many more of these little nuggets still lurk in the belly of the beast we had to pass in order to find out what's in it?

Wouldn't you like to be a pepper, too?

No, not that kind of Pepper, this kind:

"The food that inspires wariness is on course for inspiring even more wonder ... scientists reported this week ... that chili peppers are a heart-healthy food with potential to protect against the number one cause of death in the developed world."

The key ingredient, capsaicin, is why a lot of Asian restaurants include those little pepper symbols next to their spicy dishes. Many folks already use skin care and pain relief products containing the fiery capsaicinoids; this is apparently the first study to suggest that they help the heart in more ways than one:

"They lower cholesterol levels ... They also block action of a gene that makes arteries contract, restricting the flow of blood to the heart and other organs."

As with all things, moderation is the key; Dr Zhen-Yu Chen, Ph.D., who was involved in the study, warns that "we certainly do not recommend that people start consuming chilies to an excess."

Of course.

Now please pass that glass of cold milk.

[Hat Tip: FoIB Holly R]

Cavalcade of Risk #154: Call for submissions

Ken Faulkenberry hosts next week's CavRisk. Entries are due by Monday (the 2nd).

To submit your risk-related post, just click here to email it.

You'll need 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")

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

Thanks!

Disingenuous ObamneyCare© Proponents

Since the train-wreck itself is indefensible on any logical or legal grounds, it just make sense to hire union members to astro-turf ginned up protests. Here, a gaggle of SEIU-related "women" explicitly discuss how much they were paid for their participation:

[Courtesy of The Daily Caller]

SwedishCare: "Shut up or die"

Welcome to SvenCare©, where your nurses are hot (or not), you can literally be saved by the bell (or not), and you can call 911 but you better not say anything when you do:

"Swedish health authorities have come under criticism over the death of a woman whose repeated calls to emergency services were ignored because she was still able to talk."

But not, of course, for long. In Sweden, apparently, those cell phone minutes can kill you.

Literally:

"Jill Soderberg, 22, died in her home... shortly after she had placed her third and last call ... requesting an ambulance"

Hey, just because she was having major respiratory failure is no reason to be alarmed, right? After all, she could still talk, right?

Right?!

[Hat Tip: FoIB Jeff M]

Nate vs Chad: Entering the Ring

[Regular readers may recognize Nate Ogden as a frequent commenter and occasional guest-blogger here at InsureBlog. Well, it's our pleasure today to welcome Nate on board as a full-fledged Contributor. Nate's a Third Party Administrator in Northeast Ohio, and brings a very unique perspective to the whole insurance and risk-management business. In his debut post, Nate corrects the MSM on the subject of how self-funded plans are taxed. Welcome aboard, Nate! HGS]

Writing in the LA Times, Chad Terhune offers up his take on " a new type of self-insurance for small businesses with as few as 25 workers." While he does a better job than most media types (talk about a low bar), he still missed the mark. For one thing, this is not new at all. Some 15-20 years ago, there used to be a huge self-funded market for small groups. This is just a normal market cycle that repeats itself all the time. My family owns three TPAs(Third Party Administrators), we process the claims for self funded employers, and were based in Costa Mesa from 1980-2006. We had tons of 15 life, self-funded groups. There were carriers like Vasa Brougher that specialized in small group self funding.

For numerous reasons the market disappeared:

• Provider contracting favored the large carriers who did not rent their PPO networks. When you're self funded, you have to rent a PPO; generally, rental PPO's didn't have the deep discounts available to the "big boys." This was especially true in California until the Blues starting giving access to their PPOs 10 or so years ago.

• Poorly written COBRA laws made it extremely risky for small groups. Congress wrote the law, then left it up to the courts to interrupt the details. Large employers could afford a lawsuit while it put small employers out of business.

• The reinsurance market didn’t recognize the different needs of small employers compared to large ones, and thus the stop-loss policies didn’t provide all the protection small employers needed.

When we have these debates about health care reform and insurance it's important that the public be given accurate information. Small group self-funding is not some new concept just invented to circumvent State Regulation or PPACA reform. It has been around since the late 70's and early 80's. The failure of heavily regulated small group reform is just making it incredibly attractive right now. I would argue the reason you're seeing it more in California is that you have higher regulation there.

In most other States employers have been buying $5000+ deductible, fully insured plans, and then self-funding that deductible down. In California, most of the carriers worked hard to forbid this or to put enough restrictions on it to make it impossible.

Anyone arguing that self-funding only peels off the healthy risks has no idea what they are talking about. The vast majority of our business is groups that are moderately to very sick. Super healthy groups have premiums too low to make self-funding attractive. If everything works perfectly, they save a couple percent; if anything goes wrong, as it does on average once every five years, they pay considerably more. The groups flocking to self-funding are those that have been getting double digit rate increases year after year with no help from the carrier to fix the problem. Mr Terhune does mention getting claims data but doesn’t give it nearly as much discussion as it merits. Educating employees, often face to face, fighting with providers, finding waste and inefficiency is where the savings come from. Isn’t that what all groups should be looking to do?

Two more things: Mr Terhune is incorrect that self-funded groups don’t pay premium tax: they do, just on a smaller amount. This is one error the media always repeats and has for decades. Premium taxes apply to premiums (imagine that!), so the stop-loss premium is subject to them. For the most part, the claims paid by the employer are not subject to premium taxes (a handful of states have taxes based on claims).

Also, claiming that self-funded plans don’t contribute to the pools in PPACA is absolutely incorrect: self-funded plans have to pay the same per employee tax that fully insured plans do.

It sure would be nice to see the media care as much about accuracy as framing their message.

Health Wonk Review: SCOTUS in the news edition

FoIB David Williams hosts this week's round-up of wonky posts, focusing (unsurprisingly) on the health "care" reform case before the Supremes. If you've been following this (and who hasn't been?), here's your chance to see how folks on all sides see the case.

Wednesday ObamneyCare© Update

Even as the Supremes wrap up their little shindig, the train-wreck itself keeps on keepin' on:

"As the first quarter of 2012 comes to an end, more activities related to the Medical Loss Ratio (MLR) provision of [ObamneyCare©] will occur ... Foremost among these is the April 1 filing of a Supplemental Health Care Exhibit (SHCE) ... to assist state regulators in identifying and defining elements that make up MLR."

But that's just the beginning; there's more!

"In early April, [carriers] will mail letters concerning MLR to two groups of customers ... employers that are non-ERISA and non-government entities (such as churches and tribal groups) and may also be eligible for a rebate ... request that these employers provide written assurance that a certain portion of any potential MLR rebate paid to them will be used for the benefit of their subscribers."

Did you know about this requirement? Does your employer?

And there's this:

"[Carriers] will be legally required by [HHS Secretary Shecantbeserious] to pay the entire amount of any owed rebate directly to the subscribers of any terminated groups that cannot be located."

Of course! What could possibly go wrong with that?

FuneralCare©

Bob's been doing a yeoman's job of reporting on the SCOTUS ObamneyCare© trial, for which we're very grateful. Something came up yesterday, though, that I don't think got a lot of play in the MSM, and which seems to me to surpass even the "broccoli" argument. Justice Alito asked SG Verrilli:

"Do you think there is a, a market for burial services?"

The Solicitor General affirmed that he believed there was such a market, which allowed Justice Alito to ponder:

"[S]uppose that you and I walked around downtown Washington at lunch hour and we found a couple of healthy young people and we stopped them and we said, "You know what you're doing? You are financing your burial services right now because eventually you're going to die, and somebody is going to have to pay for it, and if you don't have burial insurance and you haven't saved money for it, you're going to shift the cost to somebody else."

At first blush, this would seem a stretch; after all, no one forces us to buy life insurance (which is what burial or mortgage insurance really is). But upon reflection, one is reminded that ObamneyCare© proponents repeatedly argue that we're all going to use the health care system at some point (a rather dubious assumption, to be sure), and that we must have insurance in place to (help) pay for that care.

Well, it may or may not come to pass that a given person will need health care, but there's no escaping the Man with the Scythe. That is, unlike illness, death is inevitable, so why aren't we required to purchase burial insurance, as well? It's the same premise, after all, with the added benefit of being true.

[Hat Tip: Co-blogger Kelley]

GayCare©?

Actually, this is almost exactly what we've been preaching here at IB for over 7 years:

"[GOProud] argues that the problem with our tax code isn't just that it discriminates against gays. It's that it discriminates against every American who doesn't have his or her health insurance through an employer."

Hear, hear!

What the GOPRoud folks propose is something quite radical: equality. That is, a system where health insurance should not only not be tied to employment, but that everyone who buys a policy should get the same tax break as employers do now.

And they're also against "one-size-fits-all" insurance plans:

"We want a system where individuals and couples can make their own health-care decisions. Health-care needs are too important to be left to the discriminatory whims of a third party."

Now, they're also in favor of cross-state insurance sales, about which we're ambivalent: Bob, for example, has argued persuasively that opening up sales across state lines is no great shakes, while Mike favors lifting those restrictions.

YMMV.

Kudos to GOProud.

ObamneyCare© and the MVNHS©: Twin sons...

Back in the late 70's, two really talented guys got together and created some timeless tunes. Their first collaboration was an incentive for a host of others who followed in their footsteps.

And so it is with the Much Vaunted National Health System© and ObamneyCare©. While the legal future of the latter is playing out as we speak, the former is well-established, and provides us a first-hand look at our own future under the bill we had to pass to learn what's in it:

"Thousands of elderly people are dying unnecessarily early because “despicable” age discrimination in the NHS is denying them treatment for cancer ... A lack of treatment or insufficient treatment is contributing to 14,000 deaths a year in people over the age of 75"

In England, they call that the NICE (National Institute for Health and Clinical Excellence). Here it's known as the IPAB (Independent Payment Advisory Board). They are, however, twin sons of different mothers.

Not exactly music to these ears.

[Hat Tip: PowerLine]

Shecantbeserious over-reaching - Again

Once again, Madame Secretary has weighed in on health insurers' legitimate rate-increase requests. This is clearly an over-step: nothing in ObamneyCare© grants her this power (and, in fact, it is solely the states' right to make these determinations):

"The U.S. Department of Health and Human Services (HHS) and state insurance regulators started the rate review program to implement a section of [ObamneyCare©]"

And, once again, here's the uproar from the States.

Essential Health Benefits and the Coverage of Contraceptives

A full and formal definition of essential health benefits (EHBs) is not yet available from HHS. Meanwhile, churches and church-affiliated benefit sponsors have strongly objected to the Administration's attempt to force them to cover contraceptives and "morning after" pills.

The Administration is now seeking comments by June 19 on how to address the objections - - while still ensuring that plan participants get contraceptive coverage. In other words, this Administration still wants to eat its cake and have it, too.

The Administration also recently released a set of “Frequently Asked Questions” that suggests employers determine EHBs using one of the HHS-designated benchmark plans. These FAQ's are found here (.pdf download).

Question/Response #10 is revealing:

First part of Q10. How would the intended EHB policy affect self-insured group health plans, grandfathered group health plans, and the large group market health plans?

A: Under the Affordable Care Act, self-insured group health plans, large group market health plans, and grandfathered health plans are not required to offer EHB.

The plain meaning of this sentence seems to be that these types of plans are NOT required to cover contraceptive services because they are not subject to federally-required EHBs in the first place.

Or so I thought.

Well not so fast, Sherlock.

Second part of Q10. How would employers sponsoring such plans determine which benefits are EHB when they offer coverage to employees residing in more than one State?

A - To determine which benefits are EHB for purposes of complying with PHS Act section 2711, the Departments of Labor, Treasury, and HHS will consider a self-insured group health plan, a large group market health plan, or a grandfathered group health plan to have used a permissible definition of EHB under section 1302(b) of the Affordable Care Act if the definition is one that is authorized by the Secretary of HHS (including any available benchmark option, supplemented as needed to ensure coverage of all ten statutory categories).

So the real test is: “if the definition is one that is authorized by the Secretary of HHS.“ Thus does Kathleen Sebelius keep her ultimate and final authority to personally approve or deny EHBs for any benefit plan- - even for those types of plans which the statute itself exempts. The government gave and the government has taken away; blessed be the name of the government.

This is further evidence that the Administration has no intention whatsoever to “compromise” with the sponsors of church and church-affiliated benefit plans. Expect no compromise even for church-affiliated plans that are self-insured, or in the large group market, or are grandfathered. Rather the Administration fully intends to force all plans to offer contraceptive coverage including those of church-affiliated sponsors who object on religious grounds, in apparent violation their First Amendment protections. Because Kathleen Sebelius says so – not because the statute says so.

My opinion: this issue is clearly about government overreach, not whether the particular social goal may be worthwhile. As citizens we should expect that our own government will always pursue its goals using legal and Constitutional means - rather than by double-dealing with us and by ignoring limitations placed on its powers in the Constitution and Bill of Rights. Maybe that's just me.

Contract Law vs ObamneyCare©

When I first posted on this late last month, I was skeptical that it would gain much traction.

As regards the (Evil) Individual Mandate that ostensibly free citizens must buy a product from a private vendor:

"[T]the age-old caveat that a contract entered into under duress is non-enforceable. Their stance is that, because insurance is, in fact, a contract, forcing one under penalty of law to sign on the dotted line renders it moot."

Now comes George Will, noting in the Washington Post that:

" [T]he elegant scholarship and logic with which it addresses an issue that has not been as central to the debate as it should be ... The individual mandate is incompatible with centuries of contract law. This is so because a compulsory contract is an oxymoron."

So maybe it is picking up steam.

Friday LinkFest

A veritable smorgasbord of interesting items:

■ First up, The Feds are starting to roll out new ObamneyCare© regulations in the hopes of answering lingering questions about implementation of this train-wreck.

Methinks they will generate more questions than answers.

■ FoIB Holly R sends us a pair of relevant stories. From The Atlantic, FoIB Avik Roy opines that ObamneyCare© proponents have it all wrong: the free market can provide the necessary answers to our health care financing and delivery woes.

■ She also tips us to the non-news that PresBo is still misrepresenting his own mother's health insurance "crisis;" apparently the man is incapable of differentiating between health insurance (which did, in fact, pay mom's health care bills) and disability insurance.

PresBo, lying? That's just crazy talk!

■ Bob D tips us to this little factoid:

"Computer Access to Patient Test Results Does Not Decrease Cost or Curtail Test Ordering"

So the digital age doesn't automatically cut costs? Hunh.

■ CareSource runs the Dayton (OH) Medicaid program; it's recently partnered up with Humana to "more effectively serve Medicare and Medicaid beneficiaries, particularly people who qualify for both programs." It's easy to see why Humana wants a piece of that action: they're a major player in the Cincinnati market, but not so much up the road here in Dayton.

■ And finally, loyal reader Patrick P points us to yet another Avik Roy piece, this one explaining the highly negative impact ObamneyCare© is already having on younger folks.

That's a wrap - Have a GREAT weekend!

Stupid Agent Tricks: Annuity and Jail

First, let me be clear that the (unfortunate) victim of this story, (former) insurance agent Glenn Neasham, is not stupid. From all accounts, his conduct was appropriate and aboveboard; he appears to be the victim of a vindictive and over-zealous prosecutor.

The "stupid" folks here are my fellow agents, who could give lemmings a run for their money (straight off a cliff). Stephen Forman, an agent himself, sums it up nicely:

"Should I not be optimistic that our fellow producers wish to band together and help Glenn Neasham? At first blush, you'd think so. But my experience in this industry leads me to believe the cavalry may not be coming ... I was only too happy to sign the pledge at America Needs Agents ... just over 1,100 have signed the pledge out of 228,000 health agents"

[ed: I just learned about the pledge and signed it; the current total is 1,136]

He goes on to list other, similar efforts, all doomed to failure because agents just can't be bothered to actually step up.

Now, you may be thinking: Henry, surely these are anomalies - agents care about their livelihoods, after all.

I wish.

Let me share my own experience in a similar situation. About 10 years ago, a major carrier decided to change their commission structure from a percentage of premiums to a flat per member fee. Fair enough. But they went a step further, making this change retroactive, in clear violation of the agent's agreement.

About two dozen of us met at a local restaurant to compare notes and plan strategy. One colleague brought along an attorney friend who specialized in arbitration. We agreed that we would proceed, in accordance with the agent's agreement.

One of the hats I wear is Continuing Education instructor, primarily for folks who work in the health side of the business. In that capacity, I had a fairly large contact list of agents all around the state, folks who would be directly impacted by this. I offered up my list, and we sent out a mass mailing to about 300 or so fellow agents, asking them to join us in our fight.

We got back maybe a handful of replies. In fact, by the time we eventually settled with the carrier, there were exactly 8 of us (out of the original 24 plus the additional 300 from the mailing) left standing.

Mind you, joining us would have required zero financial contribution, nor did we ask for any time or effort. Just some words of support.

Cue the sounds of crickets chirping.

So it comes as no surprise to me that Mr Neasham is left to twist alone in the wind, nor that out of hundreds of thousands of agents, less than one half of one percent can even be bothered to click a link and supply an email address.

So who's worse, the prosecutor or us?

Why's the beef?

Um, Henry, shouldn't that be "where's the beef?"

Not so fast.

On the one hand:

"The study found that cutting the amount of red meat in peoples’ diets ... could prevent almost one in 10 early deaths in men and one in 13 in women."

On the other, those that survive may be happier:

"Women who reduce lamb and beef in their diets are more likely to suffer depression ... When we looked at women consuming less than the recommended amount of red meat ... we found that they were twice as likely to have a diagnosed depressive or anxiety disorder"

Make mine rare, please.

Cavalcade of Risk #153: Elite Eight edition

Jason Shafrin presents this week's collection of interesting risk-related bloggetry. Take a chance and stop on by.

NB: I'd like to apologize to all participants whose emails were bounced. I inadvertently mistyped the email addy (leaving off the crucial "v" in "cavrisk") and didn't catch that. Mea culpa!

Denial River

What is it with people completely ignoring reality? In this case, it's the folks at the Congressional Budget Office (CBO). Last time we checked, they'd just realized that ObamneyCare© is going to cost over $1.7 trillion to implement, or roughly double what they'd previously projected.

Their current delusion is that ObamneyCare© won't lead to the mass extinction of the group health insurance market, despite widespread evidence that it will:

"Forecasters at the Congressional Budget Office (CBO) ... are refusing to predict that [ObamneyCare©] will lead to a sharp drop in enrollment in employer-sponsored health plans ... will require most employers over a certain size to offer health coverage ... will permit the employers to get out of offering coverage by paying a penalty for each employee"

Hmmm, let's see: Tens of thousands of dollars and major administrative headaches to comply with constantly changing plan design rules, or a few thou in fines.

The technical term here is: easy-peasy, lemon-squeezy.

Introducing: American Doctors 4 Truth

Last year's disingenuous take on Rep Paul Ryan's stance on Medicare has given birth to a new and formidable force:



Click here for more info on D4T.

Unintended Consequences (Part XXIV)

Our government’s attempts to control all aspects of our lives have numerous unintended consequences. In healthcare, one of these is directly related to the government’s staunch refusal to fix the Medicare Fee Schedule (which in turn affects other reimbursement arrangements) and to develop payments for medical treatments that actually cover the cost of the care being delivered: inadequately staffed medical offices.

The latest news is that the government is going to enact another "doc fix" to the fee schedule. The "fix" is that there will once again not be a cut (it will be moved to next year), but there will once again not be an increase, either; the fee schedule will remain fixed where it has been for over a decade.

The history of the doc fix is covered very well by Anthony Wilson and Hanna Dubansky. In their post “The Sustainable Growth Rate Formula: Then, Now … and Forever?” Anthony and Hanna provide a helpful timeline of the Doc Fix's many versions, from 2003 under President Bush, through this year under President Obama. It's very helpful background towards understanding the Sustainable Growth Rate formula (SGR), which drives so much of this.

Due to the continuing instability of payments since February 2003, physicians have been unable to financially plan for their business needs. When a business is faced with a continuing money crunch it has two choices: increase income or decrease costs. As medicine has a fixed payment (revenue) as determined by the SGR, physicians cannot increase revenue by increasing prices because the government has determined the cost of the procedure. Thus, they are left with one avenue: cut costs. In any business, payroll accounts for up to 30% of overhead and is one of the (if not the) largest costs. Now, a physician has a choice: does he cut his own salary or does he reduce his staff? 99.99% of the time, the physician will reduce staff. It is happening to more and more of my colleagues: physicians are letting go of managers and taking over the management of the offices to “save money”. Additionally, they are freezing or reducing wages for the remaining employees.

Now it does not take a business maven to predict what will happen. When a service industry that makes money based on the volume of people served begins to make drastic cuts in its personnel, how will that affect the quality of the business? The business will need to continue to see the same number of customers to maintain its current revenue level, but with fewer employees. And what is the number one complaint about doctor’s office? Long wait times:

* Industry average for a specialist is over three months.

* Long wait times in the office; appointments are set in 15 minute increments, but it takes closer to 25 minutes for a physician to complete an appointment.

* Finally, long wait times on the phone trying to talk to someone about your medical condition, your bill, or if your test results are ready.

Simply put, very few physicians' offices in America have adequate staff to deal with the demands. Add to that low pay, long hours, and (often) arrogant doctors and it is amazing that any medical office has staff at all.

So, the unintended consequence of not having a fee schedule that accurately reflects the cost of medicine today is a medical system that is unable to meet its core purpose - medical care - in an efficient manner. Physicians have decided that administration is the area to cut, leaving only medical personnel to man the fort.

But, Kelley, you may ask, why do I need that manager or billing office or scheduler if I only want to find out if I have strep throat or mono? Because the actual medical treatment done by the physician is only one small piece of the overall appointment life-cycle:

* People to make the appointment, check you in and verify your insurance

* Billing folks to make sure you’re up to date on any payments due and process your claim after the appointment

* Medical personnel to get you to the proper room and make sure all the coding is correct for your insurance claim

* A practice manager to make sure all the government regulations are met (OSHA, HIPAA, and HITCECH to name a few), and that the staff is appropriately trained

As in any system, if one of those components is removed, then the entire system will not work as efficiently. If the cog that ensures that the entire system works correctly is removed, then the system will eventually grind to a halt.

Most American’s believe that the money crunch to physicians will incentivize them to work harder for the fewer dollars. The opposite is true: physicians will not increase the number of patients that they see to make more money, they will simply cut overhead, which in this case is personnel, to ensure that their salary stays the same. The loser in all this is not the doctor, it is the American public.

Monday Afternoon (Not So) Funny

HHS Secretary Shecantbeserious offers this gem:

"Group health insurers will join with individual health insurers to fund a temporary individual health insurance reinsurance program ... officials developed the risk-management final rule and the analysis to implement provisions in [ObamneyCare©]."

Well, aside from the fact that the end-game is the elimination of health insurers, the use of the term "risk management" is quite rich, considering Ms Shecantbeserious has added convenience items birth control to the list of mandated benefits.

Self-awareness is apparently not a job requirement for Madame Secretary.

1,000 Words for Mid-March

Courtesy of our friend Holly R, the real reason the President isn't talking about ObamneyCare©:

[Photo courtesy of the Washington Post]

ObamneyCare© Doubling Down on Campus

Dropping all pretense at rational thought, Secretary Shecantbeserious and her boss have decreed that, henceforth, university students will be supplied "free" convenience items birth control:

"[Shecantbeserious] said student health plans will be treated like employees’ plans, meaning they will have to ... provide contraception without charging a copay."

First, it should be noted that, contrary to popular belief, convenience items birth control is not a "women's health issue." In fact, it is not a "health issue" at all. So it makes little sense to mandate that student health plans, mediocre as they are to begin with, should pay for it. The irony, of course, is that these plans don't actually pay very well (if at all) for real health care.

Second, the "consciousness clause" opt-out (for religious institutions) is again paid short shrift:

"Religious universities will treat their student plans the same as their employees’ plans ... they will not have to directly offer contraception in their plans, but students and workers will be able to get birth control from their insurance companies without a copay."

This is stupid on two levels:

Yes, it means that these schools won't be directly funding convenience items birth control, but their students who (unfortunately) sign up for these plans are paying for it for themselves and their fellow students.

[By the way: anyone else notice the schizophrenic nature of ObamneyCare© here? These students, most or all presumably aged 26 and younger, are eligible to stay on Mom and Dad's insurance, but they're also supposed to buy the so-called student health plan? How does that even make sense?]

Third, there's this little gem:

"Religious schools that self-insure ... do not have to provide [convenience items] to their students. How the mandate will work for the employees of self-insured religious institutions is still being decided."

Well, perhaps we can help out here. FoIB Nate Ogden is a Third Party Administrator, and he has some thoughts on how self-funded plans will have to deal with this new mandate:

"In their latest effort to protect women from the unaffordable $9 a month for birth control, the Obama administration is proposing the TPA of a self funded plan provide birth control for free.

Here's the problem with that:

I charge $10-$25 Per Employee Per Month (PEPM) which works out to $120-$300 per year. My profit margins currently run around 10%, meaning I have $12-$30 per year per member after paying expenses like rent, salaries, paper, postage, etc. Obama and his HHS now wants me to cover up to $3000+ per year in contraceptive benefits per female employee/student. Obviously I can’t pay a $3000 bill with $30 of revenue so I would need to terminate clients.

Is this keeping the coverage you have?"

Regular readers know that that promise went under the bus a long time ago.

Shecantbeserious thinks you're a jerk

Pot. Kettle. Some assembly required.

Context: regarding a video admonishing young people to avoid name-calling, Madame Secretary recommends ... name-calling:

"Stop it! You know, you’re being a jerk! "

cf: Dunning-Kruger effect.

[Hat Tip: Co-Blogger Mike F]

Readin'. Writin' and (um) Dyin'?

As if seasoned citizens don't have enough to worry about, it turns out that those prototypical Three R's can also be lifesavers:

"Being unable to read and understand basic health information might have a deadly outcome for older people ... Specifically, the test assessed a person's understanding of written instructions for taking aspirin. About one-third of the participants could not completely understand the instructions"

And of course it's not just aspirin, but the myriad other pills that seniors are likely to be taking. Mixing up an aspirin and a vitamin probably won't be fatal, but doing the same with a blood pressure med and [fill in the blank] just might be.

Unfortunately, there doesn't seem to be an easy fix for this. Perhaps senior centers could offer remedial reading comprehension courses.

On the other hand, bet this makes HHS Secretary Shecantbeserious smile.

And so it begins...

The consequences of the new insurance mandate to cover convenience items birth control is heating up on the employer front:

"A conservative civil rights group has filed a first-of-its-kind federal lawsuit against the Department of Health and Human Services on behalf of a Missouri business owner who says the HHS contraceptive mandate violates his constitutionally-protected religious beliefs."

So it's not just the Catholic Church that takes exception to this ridiculous over-reach, but for-profit businesses, as well:

"Frank R. O'Brien, a Catholic, is the chairman of St.-Louis-based O'Brien Industrial Holdings, LLC, which operates a number of businesses that explore, mine, and process refractory and ceramic raw materials."

The company's core values reflect his own, and the new mandate directly affects its ability to conduct its business in a way that honors those values. While the company doesn't discriminate against those who profess a different faith, Mr O'Brien feels that the "mandate would require business people ... to leave their religious beliefs at home every day as a condition of doing business in our society."

Why does HHS Secretary Shecantbeserious (and her boss, apparently) hate the 1st Amendment?

Shecantbeserious takes a Padawan

"The federal government ... will probably be running health care exchanges in many states."

So sayeth HHS Secretary Shecantbeserious acolyte Sandy Praeger, Kansas Insurance Commissioner. Ms Praeger also leads the NAIC's (National Association of Insurance Commissioners) Health Care and Managed Care Committee.

Nothing but the big guns here.

On Ms Preager's world, each state's Exchange "is going to have a different flavor"

Uh-hunh.

She believes, for example, that each state will have the autonomy to define its own package of "essential health benefits," conveniently forgetting that ObamneyCare© is a Federally mandated plan. Does she also think that each state gets to define convenience items "birth control?" If so, she's in for a (very) rude awakening.

Shecantbeserious, Jr also believes (naively) that states will themselves "perform many functions for HHS, especially including the rate and form review and network adequacy functions" including the SERFF Program. The (ironically-named) SERFF is a "System for Electronic Rate and Form Filing;" its purpose is to generate income for the NAIC "streamline" various state-based ratings and filings.

As if to prove that one need not be self-aware to have an opinion, Ms Praeger doubles down, averring that "there could be some sort of memo of understanding between the federal government and the states with regard to integrating the SERFF system within the exchanges."

Were the stakes not so high, this would be laughable: haven't the Feds proven enough how determined they are to run the whole shebang?

Apparently not on Ms Praeger's home world.

Decapitating Global Budgets

Gotta give the ObamneyCare© folks credit: they sure know how to obfuscate the truth. Take, for example, their latest excursion into the bizarro world of rationed health care:

"Also encouraging is the spread of global payment plans as an alternative to the traditional fee-for-service system ... Global payments encourage physician practices to communicate with patients between visits, and to make better use of nurse-assistants and other professionals for routine care and follow-up."

Now here it is in English:

"We've run out or bankrupted most of the really good physicians here, and we've provided - at great taxpayer cost - insurance to thousands of slackers, thus creating an even greater strain on an already struggling system .. so we'll now go to a [de]capitated care model in hopes of staunching the flow."

Let's continue, shall we?

"To continue to make progress, global payment systems and tiered networks need to be expanded, and the government can help. The state could standardize the distinction between high-cost and moderate-cost providers, which can be an incentive for hospitals to lower their costs."

And now in standard English:

"Help! Our system is already bleeding dollars, we don't have enough providers as it is, and we've encouraged more folks than ever to seek care on the taxpayers' nickel. Let's just cut reimbursements so everyone gets the same crappy mediocre care."

That about do it?

[Thanks to FoIB Elena Marie for the tip!]

Cavalcade of Risk #153: Call for submissions

Jason Shafrin hosts next week's CavRisk. Entries are due by Monday (the 19th).

To submit your risk-related post, just click here to email it.

You'll need 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")

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

HHS on ObamneyCare©

What with ObamneyCare©'s current troubles - cost overruns, mandates for convenience items birth control, and will-they-or-won't-they Exchanges - it appears that HHS Secretary Shecantbeserious is definitely playing defense.

And so, she recently sent out one of her minions to explain the intricacies of the bill we had to pass to learn what's in it:

Health Wonk Review: St Paddy's Edition

Boston's Tinker Ready presents this week's green (as in Luck 'the Irish)-themed HWR. You'll be green with envy if you miss out on the green-tinted selection of great wonky posts.

Calling (for) the Question

Here's an offer for our loyal readers:

In email, dri.org ("The Voice of the Defense Bar") is offering access to attorneys representing both businesses in general and insurers specifically. These folks will be available to answer questions to new-media types (such as InsureBlog) about the ObamneyCare© suit(s) going before the Supreme Court later this month.

So:

If you have specific questions you'd like to ask one (or more) of these fine legal eagles, please leave them in the comments. If we get enough interesting questions, I'll take DRI up on its generous offer.

Pony up, folks!

Now Playing on SIFI

That would be "Systemically Important Financial Institution," a new phenomenon introduced by the Doddering-Frank reform law. Briefly, it seeks to force a square peg (an insurer, for example) into a round hole (ie banking), and subject that square peg to a battery of financial stability exams, aka "Stress Tests."

Which is what MetLife recently underwent.

And apparently failed:

"MetLife, Inc. (NYSE: MET) was one of four large financial institutions late Tuesday deemed to have failed a “stress test” imposed on large banking institutions by the Federal Reserve Board"

To which I say: "And so?"

In case our betters in DC hadn't noticed, an insurance company is not a bank. Just as convenience items birth control is not medicine, and squirrels aren't fish. Seems simple enough for even a DC bureauweenie to grasp, but apparently not:

"Industry analysts said the decision was based on evaluating MetLife by using criteria used to evaluate banks and not insurance companies."

But that's just folks who actually understand the difference between a bank and an insurer. In the meantime, the results now make it difficult for MetLife to shore up their own financials, barring them from a planned stock buyback and dividend increase.

Heaven forfend that a company try to improve its financial outlook.

To paraphrase Bob, "Clueless regulators, Papa Washington."

A $Billion here, A $Trillion There

Never let it be said that ObamneyCare© does things by half measures. Earlier this month, we reported that a CongressCritter had noticed an extra $111 billion had been added to the price-tag for this train-wreck.

Who knew that that'd be the low-ball estimate?

"[ObamneyCare©] will cost $1.76 trillion over a decade, according to a new projection released today by the Congressional Budget Office ... the ten-year cost of the law's core provisions to expand health insurance coverage has now ballooned to $1.76 trillion."

"Trillion." It's the new "Billion!"

Wednesday Health Tip

Offered without comment:

"Men who are circumcised may have a lower risk of developing prostate cancer, a new study finds."

According to the survey of some 3,400 males, about half of whom had prostate cancer, those who had undergone the procedure (presumably as infants) were about "15 percent less likely to have prostate cancer."

Them's good odds.

Koch vs Cato

No: Cato, as in "Cato Institute," the well-know libertarian think-tank. That Cato's been in the news of late, because several of its founders are embroiled in a lawsuit regarding the ownership of shares owned by a now-deceased partner.

There are, of course, political overtones in this case, but I'd like to concentrate on something else: the buy-sell agreement.

As we've mentioned before, a buy-sell agreement is a contract between the owners of a company (or other enterprise) about how to handle each other's ownership interests should one partner die. There are two basic methods (and copious variations thereon): Entity Plans and Cross-Purchase Plans.

Entity Plans are most often used when there are more than two owners. Under these plans, the company purchases the shares from the deceased's estate (or widow, or whatever). There is often a life insurance policy on each owner, payable to the company to fund that transaction.

Under a Cross-Purchase Plan, each shareholder agrees to buy out the interest of a deceased partner's estate (or widow, etc). Again, a life insurance policy on each partner's life is quite helpful in ensuring a fair and timely disposition.

Both methods, however, share a common theme: properly executed, they are legally binding contracts. That is, the widow or other heir doesn't get to decide whether or not to sell those shares.

Which brings us to the Koch/Cato kerfluffle [ed: I see what you did there]: based on the (admittedly sparse) information available, it doesn't appear that the partners' buy-sell agreement was well-written. Else how to explain this:

"[Ownership of] Cato was divided between four shareholders: the two Koch brothers, Cato president Ed Crane, and former Cato chairman William Niskanen ... At the heart of the dispute is the fate of the shares owned by Niskanen, who died in October .. The Koch brothers believe that they have the option to buy Niskanen’s shares, while Cato officials believe that the shares belong to Niskanen’s widow" [emphasis added]

A properly executed, legally binding buy-sell agreement would leave no room for the term "believe" in this context. Obviously, it's too late now to determine the late Mr Niskanen's desires or plans. But it could be a great lesson for still-vertical business owners to review their own agreements, to make sure that their heirs and partners don't have to resort to the courts for resolution.

Avik Roy *nails* it

Unlike ill-informed Ezra Klein, our friend Avik Roy actually knows what he's talking about when it comes to health care. And he's at his best when he brings to light issues and facts that no one else seems to have glommed on to (yet). For example, his latest:

"The US Government Spends More Per Capita On Health Care Than Almost Every Other Country"

This is a distinction I've not seen anywhere else, and it's an important one. Although we've log-debunked the canard that the US spends more on health care and gets worse results, Avik points out that the US government itself is a major spender that exacerbates an eminently-solvable problem. And he starts with shredding misconceptions from both sides of the political spectrum:

"Both liberals and conservatives believe that the American system is a "free-market" or "capitalistic" one, and that European systems providing universal coverage are "socialized" ... both of these conceptions go wrong."

By isolating and identifying how the *government* skews the numbers, Avik provides a real service for those of us seeking to find real-world solutions. And he makes an important point about those Medicare For All folks:

"The thing to remember in America is that we have single-payer health care for the elderly and for the poor: the two costliest groups." Avik goes on to compare and contrast some of the world's other health care systems. I don't necessarily agree with all of his conclusions, but his is an intellectually honesty discussion. By all means, Read the Whole Thing.

Diabetic? There's an App for that!

If you have diabetes - and a Smart Phone - then this could be just the ticket:

"Diabetics will be able to manage their condition with an Apple iPhone thanks to a device unveiled today.The £48 glucose monitor allows patients to check their blood sugar levels at any time using the phone."

Debuting in the UK, there's no word yet on when (or if) the $75 device will find its way to our shores (or whether Wilford Brimley will be touting it).

Medical Tourism Update

Earlier this year, Mike reported on a relatively new (or at least seldom reported) phenomenon known as "circumvention medical tourism." This refers to cases where the patient seeks treatment that would otherwise be illegal in his own country.

But here's a more compelling reason to travel abroad for health care:

"If you're willing to hop on a plane, you can find significant savings abroad."

And it's not just about cost, but choice:

"Some procedures lend themselves to international travel ... The five most-popular overseas procedures ... are cosmetic surgery, dentistry, orthopedics, in vitro fertilization and other reproductive services, and weight-loss surgery."

Obviously, some of these would be excluded from insurance coverage here (eg IVF and certain weight-loss procedures). But the point is that careful consumers could save money and (in some cases) receive higher quality care by hopping on a jet (or taking a cruise, one supposes).

Of course, not all procedures lend themselves to this method:

"Cancer is a gray area, with travel dictated less often by potential cost savings and more often by the desire to undergo treatment close to friends and family."

And the cost of the actual care doesn't include ancillary expenses (such as airfare and hotel rooms). Most insurance plans aren't going to help pay for this, unless one's plan specifies that it's covered, or one has a supplemental plan for the purpose.

And there's this: many folks also participate in "alternative benefits" plans (HSA's, HRA's and FSA's). According to our favorite Alternative Benefits Gurus, as long as the procedure would have been eligible had it been performed in one of the 58 states, then it should also be eligible if done elsewhere. So, for example, a purely elective cosmetic surgery that wouldn't be eligible here wouldn't pass muster if performed "over there," either. But, as in the back surgery example cited in the JWR piece, one could use some of one's Health Savings Account (for example) dollars to offset the costs.

Margaritas (probably) not included.