Eh, what's up, Doc? I quit, that's what.

We've been noting the looming provider shortage for quite a while, driven in part by the increasing number of docs planning to retire rather than turn over control of care to a federal bureaucracy.

And that phenomenon seems to be accelerating:

"The 2013 Deloitte Survey of U.S. Physicians ... found that "Six in 10 physicians (62 percent) said it is likely many of their colleagues will retire earlier than planned in the next one to three years."

Now, just because one doc believes another one may be hanging up his (or her) stethoscope soon isn't dispositive, but it should give us pause. The very fact that this has become an issue is disturbing, and one can't help but wonder how soon it will be until we start seeing providers quitting en masse.

Cavalcade of Risk #180: Call for submissions

Michael Stack hosts next week's Cav. Entries are due by Monday (the 1st).

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

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

HOST BLEG: We're scheduling Summer Cavs now - please click here to claim yours.

Queen City Drama Update

There are some new developments in a story we've been covering for the past several years. From our September 1, 2011 post:

"Retired city of Cincinnati workers argued in court Tuesday that City Hall is obligated to provide them for the rest of their lives with an extremely generous health coverage plan"

Fast forward a year-and-a-half, and:

"Cincy Solicitor Curp tells Council Ohio Supreme Court will not hear appeal in lawsuit by retirees concerning health coverage."

So at this point, it seems that the citizens of Cincinnati have dodged a fairly sizable financial bullet. Be interesting to see if this snowballs into other municipalities facing similar economic disasters.

[Hat Tip: FoIB Holly R]

Obamacare Exchanges Hide and Seek

Carriers are being coy about their decision to play the Obamacare HIX Wheel of Fortune. Some have hinted they may not participate in any exchanges, while others say they will pick their battle ground.

Regardless, consumers will have FEWER choices than before Obamacare and prices will definitely be higher.

Knowledge@Wharton: You have earlier said that there are a lot of bumps in the road ahead of the Affordable Care Act. You have also indicated that the price of insurance isn't likely to be going down anytime soon. Can you tell us a little bit more about that?

Broussard: First, I want to say that we are very positive [about] the fact that health care reform is going to expand coverage.... But it is going to raise the cost of care. 

Wharton

The indirect result is Obamacare will raise the cost of health insurance. The cost of health care will increase in many areas due to new Obamataxes on medical devices, prescription drugs and services.

Knowledge@Wharton: In terms of the health insurance exchanges, the latest reports out of Humana are that you hope to be part of them in 10 states?

Broussard: That's right.

Knowledge@Wharton: Can you name the 10 states?

Broussard: We're not revealing the 10 states. These are states where we have a significant presence today and states where we feel that we can offer the best plan for members that participate in the exchange. It's really the bigger states that we're focusing on.

Knowledge@Wharton: I'm guessing that some of these states will be state-established exchanges, and some federal-established. Do you have any sense of which will be better for you in terms of a business model?

Broussard: I don't know if one is better than the other from a financial point of view or, for that matter, ease of use. But we do think that a federal-funded exchange is easier for us because we have to deal with the rules of one exchange as opposed to dealing with the multiple rules of each state.

Interesting that Humana (and possibly other carriers as well) see federally managed exchanges as the lesser of two evils. 

Regardless, fewer states means fewer choices.

Fool me once...

Remember this:



Turns out, not so much:

"Millions of Americans will be priced out of health insurance under [The ObamaTax]  because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers"

As we've long noted, one of the key promises was that folks unable to afford the new, sky-high premiums would get rate relief through a complex system of tax "credits." The catch, though, is that a lot of those people will fall through the cracks because the calculation ignores the cost of any spousal coverage one might obtain through an employer-based plan.

So many of those who were counting on those credits to ease their health insurance burden will be left to twist in the wind, unable to obtain "affordable" coverage but on the hook for the ObamaTax itself.

Gosh, if only they'd read it....

Couple of Simple Questions about Medicare and Medicare Advantage

The Obama administration expended huge effort to enact a law that will increase choices, coverage, and insurance funding for the general population.

At the same time it seeks to reduce choices, coverage, and insurance funding for seniors.

Why?

Is there some rationale that explains these two seemingly opposite objectives?

Medicare Advantage Cuts - The Big Lie

Medicare Advantage cuts are coming. There is no debate about that. A combination of Obamacare cuts and CMS directives means less funding for Medicare Advantage plans in 2013.

Seniors on Medicare will have fewer choices. Medicare Advantage plan premiums will be higher. Copay's, deductibles and out of pocket maximums will all increase due to Medicare Advantage cuts.

So where is the lie?

For many, Medicare Advantage plans cost you more than original Medicare and a good Medicare supplement plan.

Medicare Advantage plans are fine . . . until your health changes.

Then you pay, and pay, and pay. In some cases as much as $6700 out of YOUR pocket over the course of a year. If you have a Medicare Advantage HMO plan there really is no cap on your out of pocket expenses.

If your illness or injury spans more than one calendar year your out of pocket will continue to climb, possibly wiping out your life savings or forcing you to file bankruptcy.

Even Medicare Advantage PPO plans can result in you spending over $12,000 out of your own pocket for health care.

The relatively tiny premiums paid for Medicare Advantage plans are nothing compared to the THOUSANDS you will pay out of your savings when your health changes.

For just a few dollars more than most pay for a Medicare Advantage plan you could own a Medicare supplement insurance plan N and have much less out of pocket exposure than you will have under a Medicare Advantage plan.

When the 2013 Medicare Advantage cuts kick in, your maximum out of pocket will soar with higher monthly premiums, higher copay's, higher deductibles and higher out of pocket maximums.

If you are on a really tight budget, Medicare supplement plan F with a high deductible is a good choice.

Most of us are old enough to remember the Fram oil filter commercial where you are told "You can pay me now, or pay me later".

Medicare Advantage plans are the pay me later design.

Medicare Advantage cuts are coming. Get out now while you still can.

Household Income and Unintended Consequences

Interesting article on the increase in people sharing housing costs:

"With the cost of living on the rise and showing no sign of slowing down, total strangers desperate to save money are moving in together.

As CBS 2’s Dana Tyler reported Tuesday, older adults and even families are using this method to pool their resources. And the new communities are redefining the modern family."

ObamaCare and most public resources are based on Household Income. How will this affect those tests?

The Census Bureau includes in a household all of the people, related and unrelated, who occupy a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters.

Often, lack of sufficient income is what drives these people to live together; how ironic if that then disqualifies them for assistance they would otherwise get. Or how planned?

Strange Bedfellows?

[Last week, Guest-Blogger Patrick Paule wrote about the potentially dangerous role untrained, unaccountable ObamaTax Navigators are slated to play in the Exchanges. This week, he's back with an update about efforts in the Ohio legislature to mitigate these problems. In fact, Patrick provided input on the bill in question. Although this concerns efforts in the Ohio legislature, the issues and problems are relevant in pretty much all 58 states. HGS]

Last week the LA Times ran an article on "enrollment assisters". The other day, Freedom Works ran a blog on navigators. The subjects of the articles will serve identical purposes and neither have received any significant news coverage. This is something consumers should be very concerned with. I find it ironic that a conservative group like FreedomWorks would agree with leaders of community organizations. Because based on the respective posts they both believe navigators shouldn't have to undergo the criteria below.

Breeanne Howe's post at FreedomWorks left me shaking my head. In the story Ms. Howe vilifies a Republican member of the Ohio House of Representatives and misrepresents the truth. Ms. Howe says that this member of the House has passed a bill which helps implement Obamacare. If she had done some better research she would have found that she is wrong on HB 3. While Ms. Howe is correct that HB 3 will regulate navigators, she misses the point as to why they should be regulated.

Throughout her article she summarizes the duties of what Navigators can and can't do. But she never mentions what HB 3 does in order to protect consumers from the things these (idiots) navigators say and do. Maybe if she would have read this (insert my prior post) and this (insert LA Times article) then she would have had a better understanding.

According to Ms. Howe insurance brokers across the country are "getting nervous about the prospect of competition" from navigators and that we have been lobbying for stricter standards on them. As an insurance broker I take exception to this comment.

I am not concerned about competition from someone who:

A. Doesn't have the ability to sell insurance.
B. Isn't licensed to do so.
C. Doesn't have ongoing education and training.
D. Doesn't have to undergo a background check or fingerprinting.
E. Doesn't have liability insurance in case of fraud or misrepresentation.
F. Has no basic understanding of health insurance products and the financial decisions people have to make to best suit their needs.

I am concerned with who is able to take me through the process of educating and purchasing insurance and doesn't have any of the above. According to the law, navigators can "facilitate enrollment in qualified health plans". In order to help with enrollment a navigator must have access to the consumers social security number, date of birth, annual income, tax returns, and other personal information. This is not the type of information I want to share with just anyone and why HB 3's passage is imperative.

Don't get me wrong, I agree with the basic principles of FreedomWorks. It's just too bad that an organization who wants this train-wreck repealed doesn't understand all of the reasons why it should be...

[Thanks, Patrick!]

Health Wonk Review: Where's Spring edition

HWR co-founder Julie Ferguson hosts this week's outstanding collection of interesting posts from around the wonk-o-sphere. It's a bit chilly outside, but you're sure to find something to wearm you up at this week's 'Review.

Policy Lost

As we pointed out last Fall, folks who fail to inform their families about existing life insurance policies do those left behind a grave disservice. For one thing, it gives the government even more ammo to micro-manage people's finances (who do you think pays carriers' compliance costs?). For another, it can cause unnecessary, and easily avoided, anguish.

The Insurance Information Institute has some pretty helpful hints on how to track down Uncle Phil's lost policy (or even just find out if he had one). Some of these are already known to regular IB treaders (checking with the MIB, for instance), but others are new to us:

• Look for insurance-related documents.
Search through files, bank safe deposit boxes, and other storage places to see if there are any insurance-related documents. Also, check address books in case any insurance agents or companies are listed. An agent or company representative who sold the deceased their auto or home insurance may also know about the existence of a life insurance policy.

• Contact previous employers.
Former employers may have a record of past a group policy.

• Check bank books and canceled checks.
See if any checks or automated payments have been made out to life insurance companies over the years.

• Check with the state’s unclaimed property office.
If a life insurance company knows that an insured client has died but cannot find the beneficiary, it must turn the death benefit over as “unclaimed property” to the state in which the policy was bought. If you know where the policy was purchased, you can contact the state comptroller’s department to see if it has any unclaimed money from life insurance policies belonging to the deceased.

Thanks, III!

Medicare digs deeper

In a comment to my post explaining how co-insurance works, Mike offered up a very helpful correction:

"... this is EXACTLY the way coinsurance works for Medicare Part B.Anyone with Part B is on the hook for 20% of their Part B expenses no matter how large those expenses might be."

Quite so, and it gets worse:

"Medicare Has Stopped Paying Bills For Medical Diagnostic Tests ... The Medicare agency decided to change the way it reimburses these sorts of diagnostic tests. But it’s been slow to decide on its new approach. So in the absence of a policy, the Medicare program is simply not paying its bills."

Briefly, some of the major labs were "gaming the system" (this was apparently legal, but far from either optimal or ethical). Instead of actually addressing that problem, though, Ms Shecantbeserious has decided to just stop paying the bills. This has had a sort of 'domino effect' because MedSupp plans basically just follow Medicare's lead. So Medicare supplement policies, which augment Medicare itself, are beginning to do likewise [ed: as Bob points out in the comments, Medigap plans ONLY pay if Medicare approves the claim].

One can see how this portends for the upcoming Exchange-based policies - when the government designs the plans (as they do with Medicare), the carriers will simply follow suit. So if The Fair Kathleen calls "foul" on some provider or another, those new ObamaTax policies will certainly do the same, leaving patients with even more out-of-pocket.

Oh frabjous day.

Piling on Kathy

As Nate pointed out earlier, actual experts in health care delivery and financing anticipate huge spikes in the cost of both. Ever on the bleeding edge, HHS Secretary Shecantbeserious has weighed in:

"Some people purchasing new insurance policies for themselves this fall could see premiums rise because of requirements in the [ObamaTax]."

Self-awareness, Kathy - what is it?

Obama Admin....that clueless or that dishonest?

In a story out this AM we are warned claim cost are expected to increase 80% in Ohio for those with individual policies. In basic math that would correspond to an 80% increase in premiums.

"While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.

The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio,"

As if 80% increase in claim cost wasn't bad enough when the Obama admin tried to spin and respond to it, then it really started to get bad:

"The administration questions the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn't take into account the potential price-cutting effect of competition in new state insurance markets that will go live on Oct. 1, administration officials said."

First, giving someone a tax credit doesn't mean you spent less; an 80% increase in claim cost is still 80% more being spent, a problem regardless who is paying for it.

OK, so he helped people afford their premiums, when does he start helping the tax payor afford the government's share? $16+ trillion in debt plus 1 trillion deficits, where are our relief strategies?

Then with a closing only a bureaucrat/politician could muster, "price-cutting effect of competition," what the heck is that? Under Obamacare, individuals are spending tax-payor money and get to complete a 22 page application with a 60+ page instruction manual. Currently they make one phone call to a broker, maybe complete a 3-6 page app and the broker does all the work for them. The market just got infinitely more difficult and when the final buying decision is made they are spending someone else's money and they expect spending to go down?

"Having said that," Foster added, "actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully."

Really? When has a Medicare spending projection ever been overly conservative? When government has a 48 year track record of complete failure when it comes to running healthcare plans I think it is more than fair to say they have not been conservative enough.

ObamaTax "Train Wreck"

It sure is nice to see someone else using this metaphor:

"Illinois wants to be the engine that pulls states toward the Affordable Care Act, yet a metaphorical “train wreck” is just around the bend ... Illinois saved $1.1 billion last year, but lawmakers were expecting $1.6 billion in savings. The state has $2.3 billion in unpaid Medicaid bills."

Ooops.

Turns out, when you rob Peter to pay Paul enough times, Pete ends up flat broke, but Paul still needs his "money fix." Who'da thunk it?

And the hits just keep on comin':

"Hamos expects 509,000 new Medicaid patients in Illinois by 2017, when the [ObamaTax] is fully operational."

Just keep that last phrase in mind...

[Hat Tip: FoIB Holly R]

The Stupid: It Burns

So this arrived in email:

"Higher coinsurance rates correspond to higher annual limits on medical out-of-pocket costs"

Okay, I'll bite; after all, most non-HDHP (hight deductible health plans, like HSA's) have some cost-sharing (aka co-insurance), and 80/20 is pretty standard.

But what, exactly, does 80/20 mean?

Well, you won't learn the correct answer from the rocket surgeons at HealthPocket:

"A new analysis of coinsurance rates from HealthPocket, Inc., shows that the average coinsurance rate nationally for individual and family health plans is 20 percent, meaning that people with coinsurance are paying one-fifth of the costs on average for certain more expensive services such as hospitalization, child birth, emergency care, and others."

First, I would question their use of the term "average," which implies that lots of folks have plans with 70/30 or 90/10 (or even 60/40) levels. They most likely mean "typical." But that's far from their most egregious error. Look again at that sentence, and especially this:

"people with coinsurance are paying one-fifth of the costs"

Um, no, HP, that's not how co-insurance works. If you'd simply read your own policy, you'd see that, once the deductible is met, you're responsible for 20% of the next "x" number of dollars, after which the plan steps up from 80% reimbursement to 100% (of covered expenses, of course). That's why the next section of your little booklet tells you your "out-of-pocket maximum" for covered expenses. These will be higher if you choose out-of-network providers, of course.

And co-insurance doesn't just apply to "more expensive services," can also apply to lower cost items if you're in that co-insurance "corridor." All you really had to do was ask your agent to explain it to you before you fired off an email that just makes you look, well, stupid.

Better luck next time.

Vote for More Free Stuff

Not only did they have to pass the bill in order to know what was in it, but now it seems they had to contrive the application so we will know what they are really up to in Washington.

The 61-page online Obamacare draft application for health care includes asking if the applicant wants to register to vote, raising the specter that pro-Obama groups being tapped to help Americans sign up for the program will also steer them to register with the Democratic Party.

On page 59, after numerous questions about the applicant's identity and qualification for Obamacare, comes the question: "Would you like to register to vote?" The placement of the question could lead some to believe they have to register to vote to get health care.

Washington Examiner

Health insurance, not health care.

You don't need health insurance to receive health care and that includes a government designed Obamacare plan.

What does HHS plan to do with all the information it collects on each applicant and will pro-Obama groups like AARP and Families USA that might be tapped as "navigators" to sign people up to Obamacare, steer them to register as Democrats. Others have indicated that groups like Planned Parenthood and ACORN could also act as a navigator.

Inquiring minds want to know.

Disability Insurance, or Disability Lifestyle

Coming on the heals of the Time article taking hospital billing abuse mainstream, NPR drops a bomb on the disability racket.

http://apps.npr.org/unfit-for-work/

It is long but uses every bit of its length to drive the point home. Hopefully this can get the conversation started on reforming not only a broken but designed to never work system.

Time and NPR practicing real journalism, not at all what I expected from an Obama reelection.

CMS and You

Here’s my take on this interesting article from Avik Roy over at Forbes this morning, about progress toward implementation of Health Care Exchanges.

Gary Cohen, a CMS official involved in exchange implementation, said “my hopes are the range of things that could go wrong gets narrower.”

Henry Chao, an official at CMS, said he once held high hopes that the exchanges would run smoothly from the beginning, but “those hopes had been dashed”.

Hope?  Well, I hope that CMS and you have been clinging to more than “hope”.   I hope it, but I’m beginning to doubt it because so little hard evidence is emerging to suggest CMS and you will succeed.

Avik Roy mentions rate shock in his Forbes article.  I think CMS and you know that you face more immediate problems:

Let’s start with the fact that your CMS is even less able than the states to set up and run Exchanges in the 192 days remaining between March 22 and October 1 when Exchanges must be prepared to process January 1 enrollments.  It’s an open question whether CMS and you have the resources or the time.  You know full well that 26 states elected not to set up their own Exchange – meaning the implementation falls heavily on CMS and you, in each of those states.   From what you say now, it appears that CMS and you will have to step in and help still more states, ones that first said they could do the job, but now find they can’t.  

A second more immediate problem for CMS and you is more personal – what do you suppose the Fair Kathleen Sebelius said last week at the closed-door meeting of the Senate Finance Committee session on ObamaCare implementation? Do you think she is preparing to accept responsibility for any implementation failures?  Or do you think she is setting up CMS and you to take the fall for any tactical failure to execute the misguided health policy that she stoutly defended for 4 years?

 A third more immediate problem for CMS and you is revealed in the statement “Let’s just make sure it’s not a third-world experience.”

Yeah?  You mean CMS and you intend to work against the President’s wishes?  Good luck with that, Henry, Gary, and CMS.  Good luck with that, America.

Paying the Piper

Why is it that we're told - on the one hand - that insurance premiums are too high, but when an employer tries something as simple as a health screening to accomplish this, it's a terrible, horrible, no-good intrusion on our privacy?

Recently, drugstore behemoth CVS introduced a program to enable its covered employees to mitigate rate increases. They were asked to undergo a health screening which would report back to the company their current height and weight, blood pressure and the like. Employees who agreed avoided a surcharge, those who took a pass are now faced with a $600 annual rate hike.

Seems simple and fair enough.

But of course, what we say we want and what we're willing to do to get it are two different things:

"Critics and patients' rights advocates worry that this could be the first step toward firing sick workers and adopting a policy of discrimination."

Perhaps, but then again, no one's forcing these employees to purchase their insurance through their employer, either. Don't like the policy, then feel free to find another job or other insurance.

But Henry, you may be saying, how can I find a new job in this economy, or different insurance if I'm ill?

Good questions, but irrelevant: the entity which provides the insurance (in this case, CVS) gets to make the call on what plans are offered and how much premiums will be subsidized. To that end, they have an obligation to their stakeholders (including your fellow employees, by the way) to be as cost-efficient as possible with those expenses. Notice that they're not asking folks to get these screenings as requirements to keep a job, just the insurance.

Seems fair enough to me.

GKC, The Fence, and NARAB

Gilbert Keith (G. K.) Chesterton, the philospher and author, once sagely observed:

"In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."

Which is a rather more elegant way of saying "if it ain't broke, don't fix it." And if it's not clear whether or not it's "broke," then it behooves us to step back, take a deep breath, and make darned sure before we start "fixing" things.

Case in point: NARAB (National Association of Registered Agents & Brokers).

As we discussed the other day, this is a case of one proposed organization supplanting an existing, fully functional one, with no obvious answer to the question "cui bono?" [literally: "where's Sonny's key?"] The answer isn't immediately apparent, but there are clues:

"Strong support for legislation that would [create NARAB] was voiced today at a Senate hearing by officials representing the insurance industry’s primary agent and broker trade associations ...  the Insurance Retirement Institute, which represents life insurers who sell tax-advantaged products, released a study  ... indicating that maintaining state insurance licenses across multiple jurisdictions is a regulatory obstacle that may impede the sale of retirement income products."

Ah-hah! So the point of this little excercise becomes more clear: to facilitate sales of insurance products. In general, of course, I'm all for that - after all, it's how I make a living (well, apart from the mad, mad blog money). But here's what gives me pause: where's the opposition to this? Surely there must be, else why is it NARAB II? Why was it turned down the first time?

In cases like this, I think it's wise to admonish: Don't just do something, stand there!

Cavalcade of Risk #179: Spring has sprung edition

Jacob Irwin hosts this week's collection of interesting and thought-provoking risk-related posts, and on the first day of Spring, no less!

Do check it out.

And consider hosting one yourself - it's fast, easy and fun. Just drop us a note to claim yours.

ObamaTax Updates

■ From email:

"On March 8, 2013, [HHS Secretary Shecantbeserious] ... issued a Frequently Asked Question (FAQ) announcing that compliance with most [ObamaTax] provisions is being delayed for expatriate plans ... Expatriate coverage will qualify as minimum essential coverage for purposes of the individual mandate"

Expat health plans is a subject we've rarely (ever?) addressed here at IB. These plans cover American citizens who live abroad for 6 or more months (as well as any covered dependents).

■ And speaking of "covered dependents," we recently noted that The ObamaTax discourages group plans from covering spouses. Now, an industry group warns about the implications of that:

"A rule requiring employers to offer dependent coverage thus not only imposes an unnecessary administrative and cost burden on employers, it can actually harm the low-income employees whom the shared responsibility provisions were designed to help"

■ There's often a waiting period for new hires looking to get on their employer's health insurance plan. That can be up to several months of non-coverage (a great place, by the way, for a Short Term Medical plan). Now, the Fed's are looking to keep employers from exploiting that necessary wait-time to avoid certain ObamaTax challenges:

"[A] coverage access section that's separate from the play-or-play provision will require employers that do offer major medical coverage to limit any waiting periods that occur before coverage begins to 90 or fewer days"

So many rules, so many loopholes...

Group Rates?

In recent years, a growing number of doctors have begun holding group appointments — seeing up to a dozen patients with similar medical concerns all at once. Advocates of the approach say such visits allow doctors to treat more patients, spend more time with them (even if not one-on-one), increase appointment availability and improve health outcomes.

"With Obamacare, we're going to get a lot of previously uninsured people coming into the system, and the question will be 'How are we going to service these people well?' " says Edward Noffsinger, who has developed group-visit models and consults with providers on their implementation. With that approach, "doctors can be more efficient and patients can have more time with their doctors."

Some of the most successful shared appointments bring together patients with the same chronic condition, such as diabetes or heart disease. For example, in a diabetes group visit, a doctor might ask everyone to remove their shoes so he can examine their feet for sores or signs of infection, among other things. A typical session lasts up to two hours. In addition to answering questions and examining patients, the doctor often leads a discussion, often assisted by a nurse.

Insurance typically covers a group appointment just as it would an individual appointment; there is no change in the co-pay amount. Insurers generally focus on the level of care provided rather than where it's provided or how many people are in the room, Noffsinger says.

Everyday Health

Tilting at Windmills

Meh:

"Sens. John Barrasso (R-Wyo.) and Orrin Hatch (R-Utah) are winning praise for a bill to kill the Affordable Care Act's tax on health insurance."

From whom? Certainly not their party's leadership, which has been conspicuously quiet on the matter.

Do go on, though, gentlemen:

"Higher insurance costs, fewer jobs and smaller paychecks is not what President Obama promised when he signed the largest expansion of government into law nearly three years ago, but that’s exactly what’s already happening"

That's funny, I seem to recall his promise to lower insurance costs by "3000%" as well. And of course, regular IB readers have known all this for years.

So why now?

Ah:

"The bill's introduction comes alongside a new industry report saying the coverage tax will cost 146,000 to 262,000 jobs by 2022, with the majority of losses hitting small businesses."

Which are, as most reasonably economically fluent folks know, the backbone of our economy.

So there's that.

The problem, of course, is that the Supremes have already given the tax their imprimatur, bestowing upon it a pretty significant legitimacy. Oh, sure, we'd love to see this pass, but then what?

Do they really think President Obama will sign it?

More likely, it's a way to keep the public's disenchantment with the train-wreck as high as possible, which isn't necessarily a bad idea. But I really woudn't hold my breath for it to bear fruit.

[Hat Tip: FoIB Holly R]

Guest Blog: Stranger Danger - Health Insurance Exchange Edition

[Patrick Paule is a regular reader and commenter here at IB. Recently, he emailed us regarding an article about "insurance enrollers" in Exchanges. His extensive background in insurance and securities gives him a unique perspective on this potentially dangerous development, so we asked him to pen this Guest Post to explain the issue to our readers. HGS]

On January 1, 2014 you hear a knock at the door. Open it up and there stands a complete stranger. First thing he says is that he is an "insurance enroller" from -Insert Community Organization Here- . He asks to come in and help you understand health insurance. He will also explain the process of enrolling into an Obamacare exchange. Then he finishes his pitch by telling you that if your income level is low enough that it might be your lucky day and your insurance could be "free". What the person doesn't tell you is where the train wreck begins.

The LA Times had a nice little article on "insurance enrollers" last week. These are the people that the Federal Government believes can enroll people into Health Insurance Exchanges/Marketplaces (whatever they are calling them this week). California is one of the few states that has decided to create their own Exchange. Cover California, the state agency assigned with the task of implementing this train wreck, has taken an initial stance that these "insurance enrollers" should be screened to deter fraud and protect consumers. In fact, Obamacare backer and California Insurance Commissioner Dave Jones agrees, saying that without background checks and fingerprinting he thinks "there is a very real probability of immense consumer fraud." This seems pretty reasonable to me. After all, licensed insurance professionals must go through the process of background checks, fingerprinting, carry an E & O policy, and also have continuing education requirements every two years.

However, Cover Cal officials are preparing for a "battle" with community organizations over whether or not these “enrollers” should undergo background checks and fingerprinting (never mind the fact that they aren't even considering licensing these folks). Robert Ross, a Cover California board member and CEO of California Endowment, had the following to say about background checks:

"I have fears about adding bureaucratic mountains that slow us down." He goes further to say that "fingerprinting can come across in many of these diverse, ethnic communities as a scary, big-government thing." (Side note, isn't Obamacare a "scary, big-government thing?")

The "insurance enrollers" will play an important role in helping individuals understand complex terms like deductible and actuarial value, and to guide consumers through the “simple application process.” In order to complete the application, "insurance enrollers" will have access to information including: social security numbers, personal residence addresses, income data, tax returns, employment information, and dates of birth. 

Cover Cal is projecting that they will need 20,000 "insurance enrollers" to enroll the projected 1.4 million people this year and that outreach is extremely important. State officials will be paying these "insurance enrollers" $58 (!) per application. Depending on how you interpret this, it can obviously be a very lucrative deal or a very low income deal. But for the taxpayers of California, paying out $81,200,000 next year is not a simple drop in the bucket.

Cover California, and insurance exchanges in general, will be full of fraud and will cause more headache than good. Most people who enroll will have no idea exactly what they are purchasing. This will be the case especially if unlicensed idiots ”insurance enrollers” who don't have to undergo background checks or continuing education are allowed to perform the transactions. So, come January 1, 2014, the best thing to do when you hear that knock at the door would be to not answer it.

Thanks, Patrick!

Monday LinkFest

■ Remember that promise that The ObamaTax wouldn't add "one dime" to the deficit? Well, that may be literally true, but:

"Figures from the Government Accountability Office suggest that the Patient Protection and Affordable Care Act will in fact add 62 trillion dimes over the next 75 years."

Ooops.

Now, 75 years might seem like a long time, but don't be fooled, that's almost a $1 trillion dollars a year over and above any other spending.

■ We've written about rate increases in the Long Term Care insurance market, but what happens when a state forbids a carrier from doing so?

Well, Nutmeg State consumers (and would-be consumers) are about to find out:

"The Connecticut Insurance Department has rejected efforts by a unit of MetLife ... to increase rates on 5,800 long-term care insurance (LTCI) policies about 58 percent."

Their position is that, since Connecticut policy-holders haven't had a lot of claims, they shouldn't be subject to national rate increases.

Interesting ploy.

■ FoIB Holly R reminds us that, just because we have access to more health care information than ever before, we're not necessarily driven to access or use it:

"Consumers have access to more information than ever on the cost of their health care.Just one problem, according to a new study: They’re not interested."

Since we know for a fact that health care costs drive health insurance costs, this doesn't bode well for future health insurance premiums.

■ So the folks who are (allegedly) implementing the Exchanges think that there's no real role for agents going forward:

"The beauty of the exchange system is that if it works, you don’t have to use an agent,” said Jay Angoff, the first head of Office of Consumer Information and Insurance Oversight at the Department of Health and Human Services" [emphasis added]

"If it works."

Aye, thar's the rub!

■ And finally (Yay!), more news on the doc shortage front:

"[The ObamaTax] is gradually making the local doctor-owned medical practice a relic. In the not too distant future, most physicians will be hourly wage earners, likely employed by a hospital chain ... will almost certainly make the practice of medicine more expensive."

So, health care (and thus health insurance) becomes more expensive, efficiency and choice plummet, and we're worse off than before.

Hunh.

Ah, but it really is the ChargeMaster.....

It is great to see continued discussion of Steven Brills' tome in Time.In Sight thinks the charge master complaints are a distraction:

"However, from a system perspective, I think the chargemaster that Mr. Brill repeatedly attacks is a distraction. The chargemaster is the internal list of prices that every hospital keeps for every procedure and supply item that the hospital uses. These are the prices that Mr. Brill incredulously highlights: $1200 for one hour of a nurse’s services; $1.50 for a single Tylenol tablet that you can buy a 100 of for $1.49 on Amazon.

They are indeed ridiculous, and often created without rhyme or reason. Thing is, they’re also rarely used:

• The latest data (from 2009) shows that on average, 40.9% of hospital cases in the U.S. are paid for by Medicare. Medicare, which–as Mr. Brill describes–could give a rat’s *** (my words) about chargemaster prices and instead pays each hospital a set amount, about 90% of the actual costs of treating that patient (see graph below).
• Another 17.2% are paid for by Medicaid, which vary on a state-by-state basis but are usually some percentage off of Medicare rates.
• 30.5% are paid for by HMOs, PPOs, or other private insurance. According to Mr. Brill, these private payers negotiate rates that are 30-50% higher than Medicare rates (rather than negotiating downward from chargemaster rates)."

Where I think this argument falls apart is: why do 30.5% of claims get paid by HMOs, PPOs, and other private insurance? I think the author is of the mistaken belief that private insurance is willingly contracted at 30-50% higher then Medicare. This is actually far lower then what many private payors pay. At best they were pushed into such contracts, at worst they experienced coercion that would make the Mafia proud. This is where the charge master comes into play.

If you don't like paying the Cleveland Clinic Medicare at + 50% they will bill you Medicare + 500% and sue you if you don't pay. It is not a case that private insurance is happy with Medicare + 50%, they can't afford Medicare + 500% which is the alternative. If hospitals had reasonable charge masters that more closely reflected what they were actually willing to accept more people would go without PPOs.

In exchange to locking in excessive but not criminal profit margins PPOs afford the hospitals additional protections they desire:

1. Most PPO contracts give hospitals 12 months to submit claims, which can be disastrous for reinsurance contracts. The same contract that gives hospitals 12 months to bill requires they be paid in 30 days.

2. Limits on ability to audit or question the bills you receive are greatly curtailed, see State CA v Sutter Health & MultiPlan.

3. Pricing and discounts are protected by non disclosure agreements meaning private insurance doesn't know what they are getting into until the claim, and liability, is already incurred.

4. Can't favor one network hospital over another, i.e. if we identify a high cost PPO hospital a number of PPOs wont allow us to favor a lower cost PPO hospital.

Any analysis of all hospitals is just as worthless as any analysis that lumps all payors into one basket. Of the thousands of hospitals in the US there are maybe 250 to 500 "problem" hospitals that account for the majority of the excess cost. If we could just get routine and minor care to use alternate hospitals we could lower private spending by double digits.

More to follow....

Cleveland Clinic's take on Empathy

Came across this ad on Not Running a Hospital, Empathy: The Human Connection to Patient Care:



A 4 minute video on empathy, which apparently ceases to exist once the care stops and the billing starts. Billing 1000%+ of cost? Demanding 500%+ profit margins from PPO clients, suing those that don't hire a PPO and play by their rules for the difference.
I can see why the Clinic would be spending money to proclaim their empathy: patients won't see it otherwise unless they are covered by Public insurance or top of the line private insurance where cost is not an issue.

Not to worry Non-Profit Cleveland Clinic has plenty to spend;

In his annual "State of the Clinic" address, Cleveland Clinic CEO and President Delos M. "Toby" Cosgrove, M.D., reported that the health system's total revenue in 2011 increased 5 percent over 2010, reaching $6.18 billion. Operating income rose 22 percent to $305 million, and investments were up 10 percent, reaching $4.3 billion.

Obamacare Open Enrollment

Obamacare Dead Broke

I have a pre-existing condition and have been on the pre-existing condition insurance plan, Obamacare, for more than a year. My out-of-pocket expense was increased 10 percent in January.

Now, a new frightening message is active when I call the customer service number, (800) 220-7898.

All citizens should call this number and listen to the automated message, which affects our coverage and our bank accounts. Private carriers never would do this.

How would you feel if you paid your monthly premiums, used in-network facilities, obtained prior authorizations and followed the rules, all for coverage to hinge on the whims of federal funding? Regardless of prior authorization, if federal funds are exhausted, the insured is declined coverage. You are placed in a possible bankruptcy mode because the plan failed you, and you have no recourse. Where is the security in this wonderful plan for those with pre-existing conditions?

Insureds likely will be awaiting approval from Congress, like those who previously awaited unemployment benefits. We are then subjected to personal bankruptcy because we have no choice but to take a drink of the unread 2,700 pages of legal mumbo-jumbo Kool-Aid.

The insurance plan can announce federal funding loss negating its responsibility to its insureds. It can take your premium and not pay your claims. This is wrong, and I hope it does not affect you.

Government does not belong in the health-care industry.

The State

HIX Overload

When DC critters plotted the grandiose scheme to take over the delivery of health insurance they did not expect so much push back . . . at least not early on.

They thought carriers would rush to get on board and pick up thousands of new policyholders.

Most carriers are running away.

DC imagined lower premiums and more choices.

What they got were significantly higher premiums and fewer choices.

Washington just knew the states would be anxious to control their destiny and set up the exchanges (HIX).

At this point, the feds will have to run HIX in 33 states.

Gary Cohen, who spearheads exchange implementation for the U.S. Department of Health and Human Services, said some of the approved states face hurdles that could require Washington to step in with federal exchanges before open enrollment starts on October 1.

Cohen said the main hurdles for states are development of information technology systems for applicant enrollment eligibility and continued legal and political challenges from reform opponents.

"The biggest challenges are for states that started later. Obviously, they have less time," he said.

Reuters

Wonder if Mr. Cohen still believes in the tooth fairy as well?

"Vaping" vs Underwriting

Fellow insurance blogger Jeff Root poses an interesting question about life insurance underwriting and e-cigarettes: is "vaping" (e-cig users' preferred term) the same as "smoking?"

Leaving aside any health or social aspects, the issue becomes what rate class one may expect to receive if one uses e-cigs. Most life insurance applications ask about "tobacco use," so carriers seem as concerned about the nicotine as the smoke itself. But e-cigs don't really "combust" in the way that tobacco cigarettes (or cigars or pipes) do.

Jeff found that most carriers don't make that distinction, and consider e-cig users the same as those who light up their Marlboros. He notes that one company - Prudential - does offer a slightly better rate class for e-cig users than their conventional cigarette-smoking brethren.

I emailed my underwriter for our primary company to see what she has to say about this:

"Just saw an interesting blog post on e-cigarettes and life insurance underwriting. I hadn’t even thought about it. As far as I know, none of my clients use these, but who knows when I’ll run into someone who does?

From what I can tell, these things generally include a liquid form of nicotine, but no tar, etc from smoke. Here’s what it says at Wikipedia:

“Liquid for producing vapor in electronic cigarettes, known as e-juice or e-liquid, is a solution of propylene glycol (PG) and/or vegetable glycerin (VG) and/or polyethylene glycol 400 (PEG400) mixed with concentrated flavors, and optionally, a variable percent of a liquid nicotine concentrate … When heated, propylene glycol breaks down into H2O (water vapor) and CO2 (carbon dioxide)”

So far, doesn’t seem the same as tobacco smoke, but what I’m having difficulty finding out is where the nicotine comes from (is it extracted from tobacco leaves? If so, then technically this would be “tobacco use,” no?).

So I guess my question would be: would someone who is in generally really good health but uses e-cigs qualify for “[a better rate class than traditional cigarette smokers]?”

Be interesting to she what see has to say.

ADDENDUM: It occurs to me that the same issue arises when we look at other types of policies, as well; how do health, disability and long term care underwriters look at this? Methinks I have some more emails to fire off...

Cavalcade of Risk #179: Call for submissions

Jacob Irwin hosts next week's Cav. Entries are due by Monday (the 18th).

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

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

HOST BLEG: We're scheduling Spring Cavs now - please click here to claim yours.

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The Obamacare Application . . . Revisited

The folks in DC are hard at work trying to make applying for Obamacare a lot easier. The Kaiser Health News critters give us Dick and Jane Sign up for the Exchange . . . complete with 2 easy to follow video's.

The 21-page written application is printed in a fetching orange color. CMS estimates it will take 45 minutes to complete. 

Only 45 minutes . . .

And how do you feel after 45 minutes of your life that you will never see again if it turns out you are not eligible for premium subsidy?

At least the folks at KHN are trying to save you some time.

From the comments section:

Rebecca: Yes, you can buy a policy on the exchange. A related question is whether you will qualify for the APTC (the tax credit commonly mislabeled “subsidy”) which will probably reduce your monthly insurance cost. Here is a short decision tree that will work for most people:

—Are you eligible for a government insurance program? (Medicare, Medicaid, Tri-Care, etc)? If “yes”, you are not eligible for the tax credit.—Are you eligible for an employer group insurance plan? If “no”, you may be eligible for a tax credit. If “yes”, go to Q3.—If the answer to #2 is “yes”, then Q3: Is that plan “good enough” and “cheap enough”? If “yes”, then you are not eligible for the tax credit. If “no” you may be eligible for the tax credit.

If you’ve gotten this far, then you need to know your Adjusted Gross Income. If that amount is less than 4 times the Federal Poverty Level–about $45,000 for a single–then you will qualify for the tax credit. 

Wonder if Seinfeld's Soup Nazi will be working on the exchange?

No subsidy for you! Next!