IPAB MIA

Missing ObamaTax deadlines is nothing new for HHS Secretary Shecantbeserious, and this time it may be a blessing in disguise for any folks feeling a bit under the weather:

"Under [the ObamaTax] ... government officials in charge of keeping Medicaid afloat have until Tuesday to report whether costs for the fiscally foundering program will exceed expectations ... the Independent Payment Advisory Board Death Panel ... still doesn’t exist."

Maybe they could get some folks from Canada to help out.

Behold the future of health care

While Medicaid "patients" rack up the "free" healthcare, those actually charged with delivering that care are left holding the proverbial bag:

"As many doctors struggle to keep their practices financially sound, some are buckling under money woes and being pushed into bankruptcy ... Chapter 11 bankruptcy filings by physician practices have spiked recently"

There are, of course, multiple reasons - lower insurance reimbursements, prohibitively high compliance and regulatory costs and an anemic economy. And, of course, the increasing costs of ObamaTax-required EHR compliance and the like.

The bottom line, though, is that demand is going up while supply seems to be shrinking. Care to guess where that ends up?

The problem with free Insurance

This doesn't apply just to insurance but when you offer someone an unlimited amount of something for free they are very likely to find uses in ways you never intended. For example, if I am cold and you offer me an unlimited amount of priceless framed paintings I would burn them to keep warm. My need isn't art to admire but staying warm.

This thoughtful Medicaid recipient found a very affordable way to get to town without the cost of maintaining a car or a bus pass:

"The Dorchester County Sheriff's Office says 51-year-old Audrey Ferguson of the Dorchester community has called EMS at least 100 times in the last seven years.

On the way to jail, Ferguson told a deputy why she called for an ambulance so many times.

According to the incident report, Ferguson said she didn't have a car and this was the only way she had to get around and Medicaid paid for it anyway. It was part of her benefits."

You would think after the 25th or 50th ambulance ride someone on the payor side might start asking questions, especially if you had ambulance rides and no hospital bill following them. On a claims report that would appear as something that required taking someone to a hospital yet no treatment rendered, should have thrown up some red flags. 

News from all over the 58 states...

■ Ohio: Senate Republicans, in an uncharacteristic display of competence, have put the kibosh on Gov Kasich's plan to expand Medicaid in the Buckeye State. I'm pretty sure that's a sign of the Apocalypse.

■ California: Surprising exactly no one, fewer employers in the Golden State are now offering group health insurance:

"The percentage of California employers that offer health care coverage to their employees has plummeted ... only 49% of employers with between three and nine employees offered coverage"

The numbers are slightly better for employers with between 10 and 49 employees.

Look for that to change as The ObamaTax lingers on.

■ Nevada: Long-time IB readers may recall the story of the guy whose COBRA premium was a bit short:

"[C]ancer patient Ron Flanagan lost his insurance coverage because his premium payment was $.02 short ... They are required to follow the law, which they (apparently) did."

Now the good news is that Mr Flanagan's coverage was eventually reinstated, but this was far from a slam-dunk.

The folks who run the Silver State's health insurance exchange are pro-actively addressing this potential pitfall. They were "asked about customers who fail to pay their premiums, or fail to pay as much as they are supposed to pay, by the end of the grace period."

Turns out, it's not a lot different than the example of poor Mr Flanagan:

"QHPs cannot reinstate individuals who are getting advanced premium tax credits (APTCs) and fail to make their share of the payments by the end of the grace period"

Which means that, if you're getting a subsidy, you'd better make darned sure you send in your premium.

'Course if you don't, and you get cancelled, you can just stiff your doc. One supposes we'll see a lot of that.

About that Prevention and Public Health Fund

It seems that the White House is getting itself into a little bit of a pickle.  Early this week the House GOP introduced a bill to take money from the slush fund Prevention and Public Health Fund to re-open the high risk pool. Almost immediately the White House issued a release that President Obama will veto the bill. He will veto it because:

"The Affordable Care Act created the Prevention and Public Health Fund to help prevent disease, detect it early, and manage conditions before they become severe. The Fund supports critical investments such as tobacco use reduction, and programs to reduce health-care-associated infections and the national burden of chronic disease, as well as helping to ensure Americans have access to affordable coverage for preventive benefits. By concentrating on the causes of chronic disease, the Fund helps more Americans stay healthy." 

So if this is what the fund is for then why is HHS taking $54 million from it to pay for Navigators? What about the $454 million that is being taken from the fund to pay for building the Federal Exchanges?

Inquiring minds want to know.

Throwing Water on a Grease Fire

PPACA was passed solely by Democrats. There was not a single vote from a Republican in favor of the law and not a single vote from a Democrat against the law. One would assume that expanding access to insurance for those who are without insurance and are high risk would come from Democrats right? Right?

Wrong!

This week Joe Pitts (R-PA) introduced the Helping Sick Americans Now Act. Essentially this bill would take money from the Prevention and Public Health Fund and re-open the high risk pool that was closed by the Obama Administration last month due to "cost concerns". The bill would also eliminate the 6 month waiting period for someone to enroll in PCIP.

Unfortunately, there are a number of unsettling things about this bill and PCIP. First, it's amazing that Democrats who wrote the law to protect those who need it most are fighting this and doing nothing to revive the broken program. Second, Republicans are willing to fix something broken with a law that they know is going to be a complete "train wreck". Third, while I commend House Republicans for showing some compassion I must ask "what are you thinking?". This bill is going to create an even quicker death spiral of the health insurance industry by expediting the no pre-existing conditions, guaranteed issue, community rating nightmare that we are all going to see in 2014.

The GOP should know that PCIP has served as a sample for PPACA in 2014. It has clearly failed. I just wish they would learn how to put the fire out properly.

Cavalcade of Risk #182: Call for submissions

Jeff Root hosts next week's Cav. Entries are due by Monday (the 29th).

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.

Terrorism Insurance?

We've all seen the horrific pictures of the Forum restaurant and the Lenox hotel, as well as the shattered glass from other businesses along the busy thoroughfare that was the site of the attack. Aside from the incredible human toll, though, there's a business one, too:

"Companies could lose insurance payouts for property, lost income and other damage if the bombings are officially declared an act of terrorism by key U.S. officials" [emphasis added]

That last bit is important, and we'll get to it in a moment. First, though, it's important to know that acts of terror are typically excluded from commercial (business) insurance policies, but is also generally available as a rider (for an additional premium). The business owner decides which coverages are important, and which ones are worth an extra premium, knowing that the added cost affects his bottom line now, while a potential exposure may or may not affect it later.

Choice about coverages is nice, isn't it? It's times like this that I envy my P&C colleagues.

In the event, claims arising from the attacks may or may not be covered, depending on whether or not the owners purchased that terrorism rider. If they didn't, the claims may still be paid if DHS (or equivalent) declines to officially categorize the incident as terror-related. We may never know, but businesses still shuttered a year from now might be a clue.

By the way, I also wondered about life insurance claims in this instance. Back in the day, there were often exclusions for acts of war and the like, and it occurred to me that terror might be a problem for life insurance policy holders, as well. I checked with our primary carrier, and was told

"Some Accidental Death riders include a war exclusion, which would not pay the ADB In the event of “war, declared or undeclared, or any act of war”. Some very old life policies may have a similar exclusion, but typically this is not included as part of [modern policies]. So, generally, the answer is that these types of claims would be paid."

Good to know.

[Hat Tip: FoIB Holly R]

Health Wonk Review: Money Tree edition

As maples and oaks begin to blossom, we turn our attention to another kind of tree, the much vaunted 'Pachira aquatica.' Well, knot really - ours is metaphoric in nature [ed: ISWYDT]. As I leafed through the submissions, it was easy to see where this was headed. Going out on a limb didn't appeal to me, so I decided to let the posts just naturally fall. Into place.

I do realize that some of these posts will be more poplar than others, but please give each one a fair shake. Thank you!

■ First up, Louise Norris takes a look at health insurance costs versus subsidies under the ACA. She notes that, for some folks, paying the penalty (versus premiums) makes good sense. On the other hand, she also points out that some (such as well-off seniors) may find the premiums a better deal.

■ Hospital blogger Brad Flansbaum is a fan (as are we) of transparency in health care. In his post, Brad explores how much financial info really is available to folks interested in knowing, for example, just how many dollars go where. Starting with a simple document (IRS Form 990) he drills right down to the truth.

■ The Sequester has been much in the news lately, from air traffic controllers to White House tours. HWR's co-founder Joe Paduda takes a look at its impact on health care; specifically, how it impacts Medicare (reimbursement cuts), genetic screenings ($365 million up in smoke) and a tidy list of others.

■ I've said this before, but it bears repeating: if you're not reading (my favorite health care economist) Jason Shafrin regularly, you're missing out on important info. This week, for example, Jason digs deep into Medicare Part D, and finds some interesting trends. For example, who knew that the low cost prescription plans were so popular? Well, you will, and you'll know why once you click on over.

■ Health Business Blogger David Williams reports on The Bay State's next big effort: to try to rein in health care costs. As MassCare served as a primary influence for the ACA, I think we're all interested in any lessons we can learn from their efforts.

■ Over at Health Care Renewal, Roy Poses has some sharp words for providers that take advantage of lower-skilled workers to pad exec's paychecks, and especially when the folks involved run an ostensibly charitable institution.

■ I really like this post from Peggy Salvatore: she manages to bring a very human perspective to a typically dry and impersonal subject. She takes a look at health insurance "back in the day" and contrasts it to what it's become (and becoming). She even manages to make MLR understandable; and if you don't know what MLR is, then all the more reason to check out her post).

■ Health Access blogger Anthony Wright takes a look at the President's proposed budget, noting that it includes full funding for the ACA and most of Medicaid. On the other hand, Medicare doesn't fare so well, and Anthony explores the President's priorities. Big dollars indeed.

■ John Goodman has a fascinating piece on a significant care coordination effort that brings together providers, patients and payers in a more cost- and treatment-effective way. He then explains how this concept can apply to a much bigger population (like, the US).

■ Guest blogging at Health Affairs, Paul Ellwood (considered the "father of managed health care") proposes a unique "indexing" system for health care that essentially converts Medicare from a fee-for-service to a capitated model in order to rein in runaway health care costs.

■ Of course, it wouldn't be a Heath Wonk Review without some blatant politics, but this one might surprise folks that know me as a "whinger:" The Stupid Party lives up to its name trying to throw more dollars down the PCIP drain, and is taken mightily to task for its efforts.

Joe Paduda hosts the next edition at Managed Care Matters on May 10th. I'm certainly rooting for him.

Right Remedy, Wrong Patient?

From Politico, this:

"Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join"

Seems to me the solons have it almost exactly backwards.

I think the correct move would be to exempt EVERYONE EXCEPT lawmakers, Capitol Hill aides, plus administration employees and political appointees.

Wait, what?

FoIB Holly R sent us this link:

"Scammers Find Fertile Ground In Health Law"

Interesting article, but they never mentioned the biggest scam of all.

Wonder why that is?

Have Gun, Will Insure?

I've been engaged in an interesting email conversation with a gentleman who believes that we can - and should - require some sort of liability insurance for legal gun owners. Aside from the Constitutional issues, there are a number of problems with this idea.

Mr Harvey has had an op-ed piece published in the online Insurance Journal (Mazel Tov!) which will be the subject of this post.

Mr Harvey begins by bemoaning that  "the level of death and injuries [caused by guns] is unbearable"

Based on...what, exactly? How many is "unbearable?" It would be nice to have some statistics which compare, say, gun deaths and automobile deaths in a given year. But Mr Harvey provides no such objective evidence.

So we will:

According to the CDC, there were 33,687 automobile-related deaths in 2010 (latest available), vs 31,672 firearm-related deaths (which includes firearm-related suicides, by the way). Why aren't the former just as (let alone more) unbearable? And believe it or not, there are folks who drive without insurance.

Who knew?

He goes on to say that "[p]roviding compensation for victims is important."

No argument there. That's why states have victims' compensation funds, which cover not only violence by guns, but knives, ropes and hammers, as well.

Why are the victims of the latter three less worthy?

He then opines that "[i]nsurance companies help reduce hazards from people’s actions."

Thereby displaying a brilliant lack of understanding. Insurance does no such thing. It simply mitigates the cost of those risks (or hazards).

"Required gun insurance will provide similar protection and safety."

Yes, because Chicago gang-bangers are all calling Flo and Mr Mayhem about buying coverage. The reality is that there's really no way to enforce this without registration (which takes it out of the realm of insurance).

"Insurers will demand safe practices and secure storage of guns as a condition of giving favorable rates."

Most legal gun-owners already do this. How many gun-related homicides or injuries are caused each year by legal gun-owners? Perhaps that information is available, but for now we must take Mr Harvey's word for it. Call me skeptical.

He then informs us that "proposed bills ... would require liability insurance with high limits for guns. This would be painful to gun owners without providing much relief for shooting victims, because ordinary liability insurance doesn’t cover intentional acts or what happens after a gun falls into the hands of a “bad guy.”

Ah, finally got something correct. So what do you propose to do about it?

"Gun insurance needs to be no-fault in nature and be applicable to situations where shootings often happen. Many shootings are not done by the legal owner of the gun involved"

That last bit is also correct. And so....?

"Studies by insurance providers and regulators are needed."

Ah, studies are needed.

No doubt.

Still waiting on what they're supposed to find, and how one develops "no-fault gun insurance."

One supposes that this will be the panacea we need to deal with the "unbearable" burden of gun-related violence.

Or maybe not. For some reason, Mr Harvey meanders off into the world of home and auto insurance, looking for answers.

Unfortunately, they seem to elude him. Here, he avers that homeowners insurance can indemnify innocent bystanders (aka lenders):

"Fire insurance with an “open mortgage clause” pays a lender when owners commit arson."

It does no such thing. If you burn down your house, the insurance company is not going to pay a dime, to you or the lender. The "open mortgage clause" simply means that, if/when there's a legitimate claim, the lender is indemnified to the extent of its loan. But burning down your own house isn't a "legitimate claim."

Sheesh.

Having struck out there, he turns to auto insurance (with equal success):

"Motor vehicle insurance applies to “road rage” incidents in Massachusetts and some other states"

Now he's just making stuff up - there is no legal definition of road rage in Massachusetts, so any liability that might arise does so from some other predicate cause.

His 2nd Amendment "analysis" is equally spurious, but since it's irrelevant in this context we'll let it go.

The basic problem with the whole idea is that there are really (at least) two issues here: legal and practical.

From the legal standpoint, you can't insure against a liability you don't have. For example, your umbrella policy protects you when you get sued for someone slipping on your icy sidewalk. But you have no liability if it's out in the street in front of your home, so there's no coverage for that.

Now if you shoot the neighbor while he's down, that's a deliberate criminal act, and your insurance isn't going to help you. So we'd have to re-define liability insurance  to include deliberate criminal acts. That'd help with the road-rage, too, one supposes.

Good luck with that.

The second, more practical challenge is that this applies only to law abiding citizens, who by definition cause far fewer gun-related deaths and injuries. Mr Harvey may be a successful retired businessman, but he has a very poor grasp of basic insurance principles.

5th Amendment Insurance?

Okay, this one tickles me:

"Looking for someone who knows they will NOT buy health insurance next year. Pls get in touch"

The intrepid soul who tweeted (twitted?) this odd request is Dan Gorenstein, a reporter for Marketplace.org (which "presents news on business, economics, and money"). The request seems odd, because a quick search turned up no similar requests from him for, say, folks who planned to cheat on their taxes next year, or rob a bank, or drive under the influence. Perhaps those are more "spur of the moment" decisions than deciding in advance not to buy insurance?

In the event, one wonders if Mr G plans to shield the alleged-future miscreant's identity from the IRS and/or Ms Shecantbeserious. Or if he/she will simply become an "anonymous source." Either way, it'll be interesting to see if a) anyone responds and b) how the story will go.

Sympathetically, one supposes.

Which is sort of a double-edged sword: too sympathetic, and one runs the risk of copy-cats, which any self-respecting member of the elite media would prefer to avoid. But too little might turn their readership off.

Quite the conundrum, no?

More ObamaTax wage cuts

We've mentioned how the ObamaTax has adversely affected college faculty by forcing incentivizing institutions to reduce hours to avoid health insurance fines taxes.

FoIB Holly R reports that this trend is, in fact, picking up steam:

"Maricopa Community Colleges are cutting 1,300 temporary workers back to less than 25 hours a week"

Even though the relevant portion of the ObamaTax doesn't take effect until 2014, the government plans to use a "one year lookback" provision (similar to COBRA compliance determination) to see if any fines taxes will be due.

And the train-wreck keeps on rollin'.

Tale of Three Gov's [UPDATED]

■ First up, Ohio: Recently, the Ohio House put the kibosh on Gov Kasich's plan to expand Medicaid. It should be noted that this is still an ongoing battle political skirmish, but it highlights the fact that this is far from a "done deal."

■ Next, uber-wonk Avik Roy reports that legislators in the Wolverine State have also voted to turn aside their Governor's plan to expand Medicaid in that state.

Ohio's Kasich and Michigan's Snyder, both Republicans, face prolonged battles within their own party as they try to implement this key "feature" of the ObamaTax.

■ David Adams runs the Kentucky Progress blog, where he's been doing yeoman's work keeping track of ObamaTax implementation in the Bluegrass State. Turns out, Kentucky Governor Steve Bashear (the lone Democrat in our little triumverate) believes he has the power to unilaterally install an Exchange. David actually filed suit against the Governor, and has been detailing the lawsuit's progress on his blog.

Good stuff.

UPDATE: Co-blogger Bob Vineyard has some potentially bad news for folks in Ohio and Michigan:

"Rejecting the Medicaid expansion in the federal health care law could have unexpected consequences for states where Republican lawmakers remain steadfastly opposed to [the ObamaTax] ... could mean exposing businesses to Internal Revenue Service penalties and leaving low-income citizens unable to afford coverage"

But we were promised that it would lower premiums by 3000% - what happened?

The Media Trivialize Medicare Advantage

I wish they knew how to stop.

Here’s a recent example from the April 19 Wall Street Journal Page B4. [subscription required]

In its 6^th paragraph, the article states:

“The Medicare Advantage plans at issue typically combine basic Medicare benefits with extras, such as gym memberships.”

This statement trivializes Medicare Advantage by failing to describe the real importance of Medicare Advantage plans.  It’s a common media failure, particularly disappointing when parroted in the WSJ.

The truth is, Medicare Advantage benefits for medical care are much superior to basic Medicare (Part A and Part B).  The media almost never explain this.  They mention “gym memberships” instead.  As a result the administration intent to reduce funding for Medicare Advantage might seem reasonable when, in fact, it's not.

Ask yourself:  would seniors drop their basic Medicare and enroll in Medicare Advantage for something so trivial as a gym membership?  Of course not.

Something else explains why 25% of all Medicare-eligible individuals -12-14 million people - have voluntarily enrolled in Medicare Advantage plans.

The “something else” is that Medicare Advantage is much better insurance than basic Medicare (Part A and Part B).

Seniors who only have basic Medicare risk bankruptcy.  Oh, sure we can buy a “Medicare Supplement” plan to get additional coverage  - at our own expense.  But Medicare Supplement is not cheap.   Basic Medicare plus a typical Medicare Supplement plan can easily run to more than $300 per month, per person.  Why choose that when Medicare Advantage plans typically cost less than $300 per month, especially when offered thru a former employer?

In addition to the monthly premium cost, basic Medicare Part A requires a copay equal to $1,184 per hospital admission. Part B requires an additional $147 annual deductible – after which Medicare pays 80% of remaining allowable covered expenses (like all insurance, not all expenses are allowed or covered so the effective percentage usually works out to less than 80%).  Medicare enrollees pay the difference WITHOUT LIMIT; this means catastrophic expenses can bankrupt seniors who have only basic Medicare.  Basic Medicare is such bare-bones coverage that it would not qualify to be offered on the State Exchanges under ObamaCare.

By contrast, Medicare Advantage plans normally have only one deductible and normally reimburse at 80% up to an annual limit, after which Medicare Advantage pays 100%.   In my case the annual deductible is $300 and the most that I can pay in any year is $3,000.  That’s real insurance.

The media ignore these facts.  Maybe it’s because they take a little time to describe, and require a little thought to understand.  Whatever, the media act as though they believe people who don’t know, don’t care.  Thus they trivialize Medicare Advantage.

I think it’s really important for everyone to know the real deal so they can make a good decision for themselves and their families (and so politicians can’t blow smoke at them).  As it is, I think the media deceive people to believe that Medicare Advantage plans should be de-funded because they offer nothing more than a few “extras” like gym memberships.

This is how the media trivialize Medicare Advantage.  They are sadly mistaken.

Kathy says so

"U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius today assured yet another congressional panel that the [ObamaTax] exchanges will be opening on schedule."

Okey-dokey, Kathy.

If you say so...

MVNHS© Death Panels

Coming soon to the 58 states:

"[MVNHS©] doctors are prematurely ending the lives of thousands of elderly hospital patients because they are difficult to manage or to free up beds ... there was often a lack of clear evidence for initiating the Liverpool Care Pathway ... a 71-year-old who was admitted to hospital suffering from pneumonia and epilepsy was put on the LCP by a covering doctor on a weekend shift."

We've discussed the Liverpool Care Pathway (LCP) before; it's basically the British version of the ObamaTax Death Panels. What's remarkable about this item is the sheer numbers of seasoned Brits going under the LCP bus:

"The [MVNHS©] kills off 130,000 elderly patients every year ... doctors had turned the use of a controversial ‘death pathway’ into the equivalent of euthanasia of the elderly."

Well, it is free health care - you just get what you pay for.

[Hat Tip: FoIB Peter K]

Captain Obvious to the white courtesy phone, please

In theory, the ObamaTax requires that, beginning next January, every American (citizen) must buy health insurance, or pay a penalty tax. The problem is that the penalty tax is rather inconsequential:

"95 Tax Penalty Begins in 2014 Yet Most Say They Are Unswayed ... The tax penalty for not purchasing health insurance will start at $95 per individual or 1 percent of household income, whichever is greater"

Less than $100 a year! Doesn't seem so onerous. But even those 1%'ers [ed: I see what you did there] might be sorely tempted to take a pass, as well. After all, you'd have to get up into some hefty figures for that 1% to come close to premium levels we'll see after the dust has settled.

Let's say you bring home $250,000 a year (not unreasonable for two professionals): that penalty tax comes to $2,500, or just over $200 a month. There is no circumstance under which one will find a family plan for anything even remotely close to that, and they're not going to be getting any subsidies to mitigate the premiums, either.

On the other end of the spectrum, those on the lowest economic rungs, who probably would qualify for subsidies, aren't going to be especially moved, either: $95 a year is just about $8 a month, How likely is it that, even with a subsidy, their premium's going to be that low?

Exactly.

Irony or Common Sense?

The latest firm to fight back against the birth control convenience item mandate imposed by Ms Shecantbeserious is Eden Foods, which makes and markets soy-based drinks (among other products). They don't find the mandate particularly healthful, and are seeking to opt out of it. As Eden's CEO puts it:

"I'm not trying to get birth control out of Rite Aid or Walmart, but don't tell me I gotta pay for it"

So of course advocates of a national healthcare system immediately pounced on this rather sensible business decision as reprehensible:

"I think we're going to have to put up a list of companies on our website that actively oppose implementation" of health-care reform, says Erin Gill-Ninehouser of the Pennsylvania Health Access Network, which touts [the ObamaTax]"

Nice straw-man you've got there, Erin. Keep it away from the flames.

Ha! [Updated & Bumped]

Two-and-a-half (2 1/2) years ago, Mike noted that "Senate Finance Chairman Max Baucus, who wrote most of the [ObamaTax] ...  is telling me not to worry about all the rattles I hear in this Cadillac he sold me (that I can't afford)"

Fast-forward to today:

"[Senator Max Bacus (D-Montana)] who helped write President Obama's health care law stunned administration officials Wednesday, saying openly he thinks it's headed for a "train wreck."

Oh really?

Appears that the "esteemed" Senator from Big Sky Country is an IB reader.

UPDATE: But of course it's a "train wreck," Max. Here you tell us that you couldn't read the bill which you wrote because you didn't understand it because you let the "experts" write it so you didn't need to:



That about right, Max?

[Thanks to co-blogger Patrick P for the video!]

PCIP - A True Story

Wednesday was a tough day for me. One of my long time group clients has a small union division. I am very close personally and professionally with both sides of the negotiating table. They have trusted my recommendations and know that I have always stepped up to make sure that everything that is done is in the best interest of both parties.

The employee (Jim) who heads up the union representation has been through a rough several years. In 2005 his mother (Jane) was diagnosed and beat breast cancer. In 2007 his father (John) was diagnosed with lung cancer. In 2008 his wife was diagnosed and beat breast cancer. Unfortunately while his wife and mom were given clean bills of health his father took a turn for the worse and ended up terminal.

John was the sole breadwinner of the family and losing his income without long term disability insurance was devastating. Financially the family had spent down all of their assets to continue payments for their bills.

From a health insurance perspective, the plan available to the employee carried a $600 annual out of pocket maximum (Yes, you all read that correctly). When John passed in the middle of 2009 his life insurance and pension kicked in for Jane. Not only that but Jane was eligible for COBRA under John's employer sponsored insurance plan. Here was our conversation back then:

ME: Jane, you are eligible for COBRA for three years. This will give you the best insurance coverage at the most reasonable price. Because of your cancer history individual carriers are not willing to insure you. The other option is Ohio's Guaranteed Issue Product. At your age the premiums are more than double what COBRA will cost and benefits are less.

JANE: If this is the only choice then I will have to take COBRA. I can't believe how expensive this is. John never had to pay a penny for insurance through work.

Fast forward to Fall of 2012. Jane is coming off of COBRA and I am meeting with her and her son. With her breast cancer history only being seven years removed, I was finding it very difficult to insure her. Not only that but with little to no income and assets paying for the premiums was going to stretch the budget.

ME: Jane, we have exhausted all of our options for you and we still don't have an insurance company willing to take you based on your past cancer history. With the changes in the health law we have found that many of the insurance companies have become more strict in their underwriting. They aren't as lenient as they used to be. The only option to keep you insured is the expensive Ohio Guaranteed Issue product that we discussed a couple of years ago.

JANE: What about President Obama's health care law? Doesn't it allow me to purchase insurance no matter what my health is?

ME: That is a part of the law but doesn't begin until 2014.

Jane and her entire family are strong supporters of President Obama and his signature law. Knowing little bits and pieces and hearing from the Union that represents her son and her late husband she inquired with me about "that high risk pool thing". I informed her that while it would provide decent benefits at a very affordable price she wasn't able to participate.

JANE: Why not?

ME: Because the law says you have to go without insurance for six months before you are eligible.

So that is what she did. She went without insurance. Now I have to call her and tell her that they suspended the program.

Unintended consequences are having a real impact. I doubt you will ever see this story or any like it in the mainstream media, but they are occurring everywhere. If you have encountered an experience similar to this one type a short comment. I would love to be able to share with my client that they are not alone. And you never know, if there are enough responses we might just be able to get someone in the MSM to actually pay attention.

Buyer's Remorse (The Roof's Caving In)

From the "Careful What You Wish for Files," Cato Institute's Michael Cannon tips us that "[a] labor union representing roofers is reversing course and calling for repeal of the federal health law, citing concerns the law will raise its cost for insuring members."

This from the folks at The United Union of Roofers, Waterproofers and Allied Workers who worry that the ObamaTax "could lead members to lose their existing health plans."

No kidding?

Welcome (late) to the party, pal.

Stupid GOP Tricks

It's easy to pick on folks like San Fran Nan who admonished her fellows to pass the bill to learn what's in it, but what excuse do these rocket surgeons have?

"House Republicans are moving quickly on a new bill to strengthen ObamaCare's temporary insurance plan for people with pre-existing conditions ... The measure seeks to shore up the Pre-Existing Conditions Insurance Plan (PCIP) ... The Obama administration announced earlier this year that it would suspend enrollment in the PCIP"

That last is a bit disingenuous - the truth is that the program ran out of dollar bills. Nevertheless, the whole cockamamie idea is a waste of time and resources.

Here's why:

PCIP suffered from a fatal flaw: the requirement that one be uninsured for (at least) 6 months to be eligible. That turned off enough people that the program struggled even to get folks to sign up. Nevertheless, they still managed to run through all $54,000,000 [CORRECTION: $5 Billion] in less than three years, all the while racking up major claims expenses (as in: $5 in claims per $1 in premiums. That's no way to run a railroad, son).

But it gets worse:

Put all of that aside, and consider the timing. At best (and this is improbable, bordering on the fantasy) they can resuscitate the program for June 1. Remember, though, that there's a 6 month wait before folks can apply and, as regular readers know, this usually translates to coverage effective on the first day of the 7th month.

So folks who were in line on March 1, who couldn't sign up because the program was closed to new entrants can hope to sign up in time for a July 1 effective date. But wait: that means they'll have - at most - five months of coverage before the plan sunsets in favor of The ObamaTax Guaranteed Issue directive. And of course, anyone who hits that magic 6 month jackpot after June 1 has even less time on (and benefit from) the plan.

But it gets worse (how?!): remember the fact that few eligible folks even bothered to sign up? What makes the geniuses in DC think that's going to change now, when those sweet, sweet Exchange subsidies become available in January?

It is to weep.

And another one bites the dust

Well that didn't take long. Monday it was movie ticket-takers, today it's pulse takers:

"The parent company of Reading Hospital, Reading Health System, laid off 210 employees today as part of a cost-cutting plan that also will eliminate an additional 181 jobs ... Hospital officials said the cuts are in response to changes in the national health care system, including cuts in Medicare and Medicaid reimbursements to hospitals."

The ObamaTax: the gift that keeps on giving taking.

Cavalcade of Risk #181: "What if" edition on-line

Jason Shafrin hosts this week's very timely Cavalcade of Risk. Timely? Yup: Jason deftly weaves this week's Cav around the horrible tragedy in Boston, presenting each post under the rubric of "What if?"

Well done, and quite thought-provoking.

Limitations

This seems to be a very strange case:

"Julie Heimeshoff ... worked in public relations at Wal-Mart. In August 2005, she filed a group long-term disability (LTD) insurance claim, saying that she was unable to work due to lupus and due to pain from fibromyalgia."

Now, fibromyalgia is not to be taken lightly: it's "a disorder characterized by widespread musculoskeletal pain accompanied by fatigue, sleep, memory and mood issues."

The challenge is that, unlike (say) a broken leg, there may be no obvious cause or way to verify the extent of a person's condition. So these can be tricky claims to adjudicate. In this case, Hartford Life (the LTD carrier) seems to have taken over a year to deny the claim. One presumes that there was a flurry of medical records flying back and forth between Hartford and Ms Heimeshoff's health care provider(s).

About a year after the initial denial, Ms H appealed the denial; Hartford re-confirmed it a few months later.

Fast forward to 2010 (remember, the claim was initially filed in 2005 and denied in 2006) and she sues Walmart and Hartford. Hartford argues that that she'd run out the clock because she'd failed to "[begin] any legal actions within three years after the date when she was supposed to give the company proof of her loss, rather than three after the date when the claim accrued."

That part's important, because it's where I had to call in some expert help - more on this in a moment.

In the event, Ms H countered that the statute of limitations didn't apply because they were talking about two different time periods, and Hartford's was incorrect. She lost that round in 2012 (some 7 years after the initial claim), and proceeded up the food legal chain where the 2nd U.S. Circuit Court of Appeals upheld the the lower court's decision.

But that's not the end of it: the case has been appealed to the Supreme Court, which has agreed to "take up only first question presented -- about when a statute of limitations should accrue for judicial review of an ERISA disability adverse benefit determination."

What I was having (and am still having) so much trouble with is the whole timing issue. Or, rather, issues: there's a time lapse of a year between the initial claim and the original denial, then another year before the appeal, and then three more years until she filed suit.

So I turned to a good friend who is also an experienced hand in the non-medical benefits field (and specifically, group short and long term disability cover). Over the course of several emails, he helped me come to understand the basic issue (and kudos for his patience with me!):

"Walmart has deep pockets, and as her employer prior to disability her attorney is certainly going to include them, along with the insurance company in the suit.  My guess is that they were simply hoping for some nice settlement check at that point, but alas, they'd missed the statute of limitations.   I have to feel for the lady on some level if she's hurting, but if so, why did she wait so long?

Her first filing was in 2005, so if she were ultimately going to file suit, then it would've had to be done within 3 years of when she first provided proof of loss, which would be no later than 2008"

That was the sticking point. And it helped to finally understand what SCOTUS is looking at: When does the clock actually start?

If it's the first denial (2006), then three years is up in 2009, but she waited to file her suit until 2010. That seems open-and-shut. But it's apparently not that simple (else why would they agree to take it up?). If it started with the confirmation of denial in 2007, though, she seems to have sneaked in under the wire.

I think the lesson to take from this is that if your claim is denied, and then denied again, maybe it's time to see a lawyer, and not wait until the last minute to do so.

Something new under the sun

Say what you will about the ethics of this, it's refreshing that even today folks are clever enough to come up with new insurance products:

Pirate Party launches file-sharer fine insurance"

The idea is that folks who share potentially illicit files over the internet and are caught doing so can turn to this new venture to pay any actual fines that are levied.

From what little I've been able to learn, this seems more analogous to those "sharing" plans set up by some churches:

"The plans share similarities in that the members pay monthly dues to cover some of the administrative fees associated with these plans. Above the dues comes the sharing of others burdens ... They are not insurance. This alone can create issues when the chips are down so to speak. If your claim is not paid, where do you turn?"

Aye, cap'n, thar's the rub.

Still, an innovative solution to a potentially pesky problem.

Thoughts and Prayers...

To the victims and their families in Boston.

Monday Afternoon LinkFest

■ As we've previously noted, The ObamaTax continues to kill jobs. Now, some folks who used to work at the movies will have to settle for just attending them (if they can even afford to):

"The nation's largest movie theater chain has cut the hours of thousands of employees, saying in a company memo that [ObamaTax] requirements are to blame ... Regal, which had revenue of $2.8 billion in 2011, is the latest company to respond this way to the Affordable Health Care Act's requirement that employees at companies of a certain size who work more than 30 hours per week be provided health coverage"

But they won't be the last. Count on it.

■ We generally discuss genetic issues as they relate to insurance, but this story is intriguing on its own:

"The Supreme Court seemed worried Monday about the idea of companies patenting genes that can be found inside the human body, as it heard arguments in a case that could profoundly reshape U.S. medical research and the fight against diseases like breast and ovarian cancer."

Turns out (and who knew?!) that the Patent Office has been "awarding patents on human genes for almost 30 years." Really? I don't get it.

This case, though, may be a bridge too far. It seems that Myriad Genetics is looking to patent "two genes linked to increased risk of breast and ovarian cancer," and some some folks aren't too crazy about the idea.

■ Finally, this little gem from FoIB Holly R:

"President Barack Obama's budget would raise her Medicare premiums and those of other comfortably retired seniors, adding to a surcharge that already costs some 2 million beneficiaries hundreds of dollars a year each."

Ooops.

In a variation on "bracket creep," millions of Medicare beneficiaries face increased premiums and cost-sharing because of inflation. Kind of a double whammy; as New Mexico resident Sheila Pugach (a retired city worker) puts it, "[I'm] being penalized for prudence, dinged for saving diligently."

Sorry to tell you this, Sheila, but you ain't seen nothin' yet.

Waitin' on the MVNHS©

Coming soon to an ER near you:

"Hundreds of thousands more patients are being forced to wait longer than four hours for emergency care as A&E departments across the country struggle due to closures and staff shortages."

"[C]losures and staff shortages"

Hmm, I know there's a word for that, just can't seem to think of it.

Oh, yeah.

But remember, health care under the Much Vaunted National Health System© is free.

When you can get it.

Long Term Care News [UPDATED & BUMPED]

[Scroll down for Update]

A pair of interesting articles from LifeHealthPro's Allison Bell offer an interesting juxtaposition of the future of Long Term Care insurance (LTCi). Long term readers may recall the government's ill-fated CLASS Act, which was (mercifully) put to rest. But like a low-budget zombie, the idea that government knows best refuses to die:

"[H]ealth policy analysts have concluded in a new report that having any kind of mandatory long-term care insurance (LTCI) would probably be a lot more effective at shoring up the U.S. long-term care (LTC) system than any imaginable voluntary system."

Reading between the lines, it appears that these folks think forcing people to buy long term care coverage is a good idea, and perfectly legal.

Now why would they think that?

Which brings us to the next little challenge: as we know, rising health care costs cause health insurance premiums to go up. Since LTC insurance is based on the same principle (indemnity), it stands to reason that increased costs of actual long term care is having a direct effect on LTC insurance premiums. But don't just take my word for it:

"[T]he underlying cost of long-term care (LTC) keeps climbing ... The daily rate for a semiprivate nursing home room rose 3.5% ... the assisted living facility inflation rate is much higher than it was last year"

You get the picture.

Here's the thing: try as they might, our Betters on the Potomac© have yet to repeal the immutable law of Supply and Demand [ed: don't give 'em any ideas, Henry!]. When one considers the ever-shrinking universe of LTCi carriers, and adds in millions of new folks forced to purchase coverage, well, you can see the problem.

Which brings us back to the first item: if the private market can't handle the influx of new business, then the next logical step is another government-run boondoggle.

Yippee.

UPDATE - La Plus Ca Change: My favorite health care economist, Jason Shafrin, notes that "[c]aring for sick parents, however, is not a new problem. Consider how the English dealt with this issue in the 13th century ... Putting one’s parents out to pasture in a nursing home has very deep historical roots in Western Europe."

Click through for an example from the 13th century.

[Original post published 4/12/3]

Piling on...

Hank and I both put the role of Navigators in the spotlight earlier today [here and here]. However it seems that the folks in DC are getting into the act, too.

A Letter from the House Committee on Energy and Commerce was sent to HHS Secretary Sebelius today requesting more information on Navigators and their roles. It gives HHS until the end of April to respond.

I'll put the odds of a response from HHS to the committee at 54 million to 1.

Navigator$

Last week, Bob pointed out that Navigators can expect to rake in up to $96,000 a year "advising" people about how to game the system buy insurance through the new ObamaTax Exchanges

And this morning, Patrick delved into how the whole Navigator enterprise is being funded..

So, what's the deal?

LifeHealthPro's Allison Bell reports that there are some major bucks available enticing folks to set up their own Navigator businesses:

"[HHS Secretary Shecantbeserious] has posted a grant application aimed at individuals and organizations that want to be "navigators," or ombudsmen, for "federally facilitated exchanges" (FFEs) ... Each grant would cover a 12-month period ... In Texas, for example, CCIIO says it would like to reach 4.9 million uninsured people and has about $8.2 million in navigator funding"

And of course most of the other 58 states (those with Federally-run Exchanges) will be promised their share of the graft largesse, as well.

So how big a deal is it to get in on the ground floor? Helpfully, Madame Kathleen has made available a 41-page instruction manual to accompany the 17 page application (including the onerous-sounding "Burden Statement"). Interestingly, that Burden Statement seems to say that the whole thing should take just over an hour to complete.

Uh-hunh:

The application includes 12 pages of Mandatory Documents, plus 4 more pages of Optional ones plus (as mentioned) the Burden Statement.

Yikes.

Still interested?

Well, we always aim to be helpful here at InsureBlog: you can download the full set here.

Just don't forget us when you're pulling in the big bucks, m'kay?

Forensic Accounting and the PPACA Slush Fund

This week HHS opened up the grant application process to receive PPACA money for Navigators. From Bob's earlier post it sounds like easy money that can be made hand over fist. So with $54,000,000 in grants available, I figured why not head over to grants.gov to take a peak at the application process for myself.

The primary goals of Navigators are to maintain expertise in eligibility, enrollment, and program specifications as well as to conduct public education activities to raise awareness of Exchanges. Navigators are simply educators and facilitators. Nothing more, and nothing less. So when I went to the award information portion in the 41 page announcement my eyebrows were raised. It was there where my inner Inspector Gadget began to kick in. Under section 1 titled: Total Funding was the sentence: "This cooperative agreement funding opportunity is financed by 2013 Prevention and Public Health Funds (PPHF-2013)."

Buried in PPACA was this $10 Billion dollar gem known as the Prevention and Public Health Fund. The (slush) fund was established "to provide expanded and sustained national investments in prevention and public health, to improve health outcomes, and to enhance health care quality." Further, the fund must statutorily "improve health and help restrain the rate of growth in private and public sector health care costs." Moreover, the fund doesn't have to follow standard federal budget guidelines meaning HHS and it's subagencies have total control over how the money is spent.

So, how then does a Navigator improve health or restrain the rate of growth in health care costs?

They don't.

This is just another example of government being above the law that they had to pass before they could find out what was in it.

Cavalcade of Risk #181: Call for submissions

Jason Shafrin hosts next week's Cav. Entries are due by Monday (the - dreaded - 15th).

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.

Stupid IHCNews Tricks

So I'm on the mailing list (correction: I was on the mailing list) of some outfit called IHC News. They send out weekly (?) tidbits about various industry goings-on. Today brought forth this gem:

"HSAs Will Thrive Under the ACA"

Oh, do go on....

"Roy Ramthun, who was the senior health policy advisor to former President George W. Bush and now runs his own HSA consulting company, has done the math and can say for sure that HSAs are most likely not going anywhere any time soon."

Oooh, that's good - if surprising - news.

Oh, wait:

"The problem that HDHP options face is whether they meet this standard by themselves, as it was previously unknown whether HSA contributions could be taken into consideration. To this day, it is still an unanswered question." [emphasis added]

And how, exactly, was this bit of fluff even worth my time?

So this genius has "done the math" and his answer is "we still don't know."

Wow, how insightful.

Now, co-blogger Nate points out that "an HSA with anything short of max deductible and no contribution would pass," and that's a fair cop. But without the ability to sock away tax-advantaged dollars in anticipation of future claims, you're not talking "HSA" at all.

Back in the early 90's I became an early adopter of MSA's (Medical Savings Account plans, the forerunners of what came to be known as HSA's). At the time, these were simply very high deductible plans, and folks were encouraged to set up their own savings plans at their local bank (or mutual funds, etc). The idea was to take the dollars one saved versus a typical co-pay plan and sock those away. There was no special tax advantage to this (although a lot of my clients set up mutual funds using tax-free options - and no, I can't recall what those were called - tax-free funds?). They would discipline themselves to use the money only for medical expenses. And these worked just fine.

But they were not "HSA's" with special tax advantages and legislation (and no rules, either, of course: you picked the plan that worked best for you).

Now, would this idea work under the ObamaTax? I don't see why it wouldn't. But again, words are important, and these would not be proof of "thriving HSA's." And it certainly doesn't take a special former presidential advisor to see this.

Smoking is a Pre-existing Condition

Already true in DC.   And it's coming soon to every insurance policy sold on the Health Insurance Exchange in your neighborhood.

This news comes from an article in National Review Online which you can find here.  Why is it important? Because this is about a lot more than smoking:

 "There will be thousands and thousands of decisions like this in the coming years, and voters will have very little recourse against them. That is part of the genius of bundling the welfare state with the regulatory state"

The NRO article tells the story, there's nothing to add.  You need to read this story because the largely unaccountable Health Exchange Boards will surely affect us all - and that right soon.

Of course this is just another of the many wonderful trinkets we were promised we would find after, you know, the bill was passed.

Yeah, that bill.

Potential abuse in Transitional Reinsurance Program

A few quick points: Hospitals account for 50% of all spending and a good portion of excess cost. A number of hospitals own their own insurance carriers. Not all hospitals are bad/a problem; some just "work" the system really well. It is this history of working the system that makes this such a problem.

I'm in DC at a payor conference and the IRS was explaining the workings of the Transitional Reinsurance Program (TRP) to protect carriers writing individual guarantee issue policies. Once an individual exceeds $60,000 the TRP will reimburse 80% of expenses up to $250,000. That works out to 80% of $190,000 or $152,000 of losses ($250k - $60k is $190k; $152k is 80% of that)..

Most of my business is under 50 lives, so they are not required to offer group insurance; sending everyone to the Exchange is a very viable option. We can usually beat the carriers, though, by managing claims and cost and educating members. A great area of savings is moving care from the hospital charging 300% of Medicare to the one willing to contract at 140% of Medicare.

Look what happens now that the government has stepped in to make things "fair:"

A 30 life group has one person with large known claims. The premise of insurance is that the premium would need to equal the known cost of the claim, plus other claims, plus fixed costs; to make this point, though, we are just going to focus on this one claim.

Hospital with their own insurance carrier usually charges 1000% of Medicare and collects 300%. A claim that Medicare would pay $50,000 on would be billed at $500,000 and paid $150,000.

Under my self funded plan we would steer that claim across the street and only pay $70,000. Still a lot of money for a 30 life group. But under TPR look what happens if the employer just drops their insurance:

Hospital sells them an individual policy and lowers the PPO discount to 500% of Medicare. The hospital now collects $250,000 instead of $150,000 for an increased profit of $100,000. But it gets worse; The carrier lost an additional $100,000 but will now get a reimbursement from TRP in the amount of $152,000. Previously the hospital made $150K and the carrier side broke even on their premium. Now the Hospital side makes $250,000 and the carrier makes premium minus $60K.

What should only be a $70,000 claim in the first place is costing the system $250,000 plus the subsidy of $152,000 or $402,000. The subsidy comes out of the pocket of the competition (me). ACA just turned a $150,000 bill into $402,000 and made it that much harder to compete.