Insuring Ferguson: Update/Correction

Earlier this week, we posted on a couple interesting P&C-related items, one of which was the "civil unrest" in Ferguson, MO (there's a reason for the scare-quotes, we'll get to that directly). In that post, I reported - incorrectly - that riot-related claims would not be covered under standard commercial policies.

Ted Kinney, Director of Education for the Alabama Independent Agents association, graciously emailed me with a correction:

"Ferguson is probably more of a “civil commotion” than a riot.  Most standard policies do cover riot & civil commotion.  If  a covered peril damages property on the policy’s described premises, the business interruption coverage (if there is coverage) would also be triggered."

He went on the explain that "riot and civil commotion are not defined in commercial property insurance policies and forms (or homeowners forms, for that matter). Instead, major court decisions ... provide the guidelines, often based on dictionary definitions or statutes."

So there you have it: the damages, and the concomitant loss of business, are most likely covered - assuming, of course, that the store owners actually had policies in force.

Thanks, Ted!

Cavalcade of Risk #216: Call for submissions

Tim Dodge makes his CavRisk hosting debut with next week's edition. 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
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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.

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MVNHS© Rocket (but not Cancer) Surgeons

First, the good news: 66 year old Roger Mollison is cancer free.

That's good news because the folks who run the Much Vaunted National Health Service© don't exactly have a great track record when it comes to cancer care. The not-so-great news is that, despite their "best" efforts, they couldn't cure Mr Mollison of cancer.

Mostly because he didn't have cancer in the first place:

"Doctors at Ninewells Hospital in Dundee told Mollison to prepare for the final nine months of his life after diagnostic testing revealed a deadly case of mesothelioma"

Imagine the sheer horror of receiving such a diagnosis, and then undergoing years of debilitating (and expensive) chemo, hoping that it will buy at least some time.

And then learning that, contra the original diagnosis, he didn't have the dread disease after all. And just how did he learn this?

Sadly, you probably won't be surprised:

"It wasn’t until he received a second opinion in accord with a claim he was filing ... that he learned that he was not suffering from mesothelioma but rather a non-life-threatening asbestos-related illness."

Where's Emily Litella when you need her?

This Obamacare Winner Will Save $78,420!

Thanks to President Obama's promise of keeping their current plan my client is seeing his premiums increase by 13% for the upcoming plan year. Annual premiums for this company's 15 employees are going from $129,684 to $146,508.

They offer a very rich plan design (Platinumesque) and until October of 2010 they paid 100% of the premiums. Back then the company was spending $100,164. With a tough economy the owner made a difficult but necessary decision: employees would have to pay a portion of their premiums. They were asked to contribute 10% of the premium. Now they pay 15% of the premium.

You might be asking yourself, how is this employer an Obamacare winner? How are his employees winning? Allow me to explain.

In Ohio insurers are allowed to offer an "Extended Transition to Affordable Care Act-Compliant Policies." This is a DELAY in the law extended by CMS (after Obama promised you could) allowing people and small employers to keep their plans until they renew in 2016. Then this employer will be forced into community rated products with strict benefit mandates that must fall within narrow parameters at the renewal in October of 2016.

Why didn't we move them into an Obamacare compliant plan? They could have. In fact we did our diligence exploring various insurers in the market. There were several options to choose from. They would have had a different plan design but it would have been very similar to the actuarial value of their current plan. But doing that would have cost the company $224,928.

13% increases are unacceptable by Obamacare standards. For this company it will cost them $16,824 more this year than last year. That is a tough pill to swallow. But, words can't describe the pain from the $95,244 suppository had the company been forced into an Obamacare compliant plan - which is exactly what is going to happen in 2016.

Medical ID Theft Revisited

Back in February, we again sounded the alarm about Medical Identity Theft:

"Most identity theft in the United States is medical-related ... In 2012 alone, medical identity theft increased by nearly 25 percent, affecting 1.85 million Americans"

And things haven't really improved since then.

So what's the big draw for hackers looking to steal your records?

How about $50 a pop? Multiply that over thousands - or tens of thousands - of unsuspecting victims, and you've got quite the successful business model.

On the other hand, there may are some common sense ways to protect yourself from this risk (or at least mitigate it). A security consultant writing at LinkedIn offers some pointers for healthcare providers - might be a good idea to see if yours is taking the threat seriously:

■ Encryption. This seems pretty obvious, but it's also a pain (and we're all familiar with the ubiquitous sticky notes hanging from monitors).

■ Biometrics. This is even better, but of course it's also more expensive. On the other hand, higher demand may force prices down, so this may be the future.

Go read the whole thing - it's a quick read, and pretty informative.

(Sex) Ch-ch-changes

Well, it took some time, but the future is finally here:

"Then Payne, who had a wife and four children, realized she could no longer live as a man."

Wait, what?

Demonstrating the mother (er, father?) of all "pre-existing conditions," Ms Payne (and what a gloriously appropriate moniker) waited until her wife died of alcohol-related liver disease (gee, who could have seen that coming?) and then went shopping for a surgeon.

Thing is, this is expensive (if entirely elective) surgery, and she didn't think it was fair that she shoulder that burden alone. Her Blue Shield-issued ObamaPlan (and we taxpayers who foot some - maybe all - of the premiums) is now on the hook for some yet-to-be-determined chunk of change:

"She found an out-of-network doctor in Palo Alto who would do the surgery ... got a cashier’s check for nearly all her savings, $27,000, to pay the doctor, hoping her insurance plan would reimburse most of it."

You're welcome.

Her friend Jenny (Jerald?) hasn't been so fortunate: she also bought an ObamaPlan, but from the Volunteer State Exchange. Her doc was also out-of-network, and she had "no hope of reimbursement." Part of that is because her hormone regimen is only dispensed to women, and her ID still listed her as male (how cisgendered!). One supposes that that would be an easy fix (so to speak), but apparently not.

So of course she's moved to California, where she hopes to also glom onto a Covered California plan.

Wait, you didn't know that moving enabled you to buy a new plan?

Yup.

On the other hand, they probably don't have to worry about the free birth control.

Two Timely P&C Notes

■ Now that things seem to have down a bit in Ferguson, it's worth noting that the clean-up from all the looting and rioting will take some time, but that it's unlikely any of the damage will be covered by business owners' insurance policies.

According to P&C Guru Teresa S, "riots are not covered, therefore anything resulting from a riot is not covered.  It usually goes back to the government.  Looting, I would say is not covered due to it being part of the rioting."

So of course, you and I will become the insurers.

■ Now that school's starting back up, lots of student athletes will also be warming up on and off the field. Some of them, though, will become injured, perhaps bad enough to effectively end their college sports career - and scholarships.

Never fear, though,  California-based EPIC Insurance Brokers is now marketing their Education Protector plan:

"[T]he first of its kind policy that provides funds for tuition reimbursement in the event a student athlete is injured between receiving a verbal offer for an athletic scholarship or grant and signing a Letter of Intent, which binds the athletic scholarship or grant."

Apparently, they've done their homework [ed: heh] and determined that over 126,000 student athletes are expected to receive some $2 billion in scholarship money. That's a lot of cash at risk.

Cool idea.

Has Medical Tourism Jumped the Shark?

Over the years, we've written many times about medical tourism: from folks traveling to the US for treatments to folks who found better options abroad.

But this, this boggles the mind:

"The number of foreigners traveling to Switzerland to commit assisted suicide doubled over a four-year period"

Europeans made up the bulks of their "customers," the article didn't mention how many Yankees participated.

Tax Form 1040(OY)

Let's suppose that, against all odds, you've successfully navigated the 404Care.gov site and enrolled in an ObamaPlan. And let's further suppose that, against all odds again, you're deemed eligible for a subsidy.

Now - and bear with me here - let's suppose even further that you're gainfully employed and need to file your taxes. Piece of cake, right?

Um:

"Obamacare customers won’t be able to file their tax returns next year until the government sends them a form detailing their coverage and tax credits"

Well, we're all familiar with the prompt, efficient and accountable IRS, so no problem, right?

Well:

If you're due a refund, well then you're stuck: until you can attach those forms to your return, you're getting bupkis.

But that may be the least of it: what if you owe taxes? You can't complete the return without the form, so will you now owe penalties and interest, too?

And there's this: if you miscalculated (or just had a stroke of mid-year good luck) and end up making too much income, you're going to have to refund at least some of your subsidy back to Uncle Sugar. That's only fair, right?

Click here for a more detailed explication.

Carefree, or Free to Care?

Dr Rob Lamberts (whom we interviewed a few short years ago, when he dove into the concierge medicine pool) has a touching, sad but ultimately hopeful post on end of life care, and the compassion one can bring to the table:

"Thank you, sir, for letting me into your home.  Thank you for trusting me when you didn't want to trust a doctor.  Thank you for letting me help you stay at home and live out your last days as you wanted them to be."

Read the whole thing.

What's Old is New: The AMA, Medicare and Value

Almost four years ago, we wrote about a little known committee, nestled deep in the bowels of the American Medical Association (AMA), that exercised outsized power over how much money doctors will receive in Medicare reimbursements:

"Three times a year, 29 doctors gather around a table in a hotel meeting room. Their job is an unusual one: divvying up billions of Medicare dollars"

As reported at the time in the Wall Street Journal, "the influence of the secretive panel, known as the Relative Value Scale Update Committee, is enormous ... the impact of the decisions made by the doctors on the RUC goes well beyond physician fees"

And indeed, the effects are still incredible: that committee "with the assent of the government, has enormous power to determine Medicare prices by assessing the relative value of the services that physicians perform."

Pretty cozy: the government feeds them, and they divvy up the loot. Nice gig (for them).

But how does that affect thee and me?

Well, it's actually not that complicated: Primary Care docs (representing about 30% of US physicians) are at the bottom of the food chain, even though they are critical frontline actors when it comes to assessing a problem and recommending alternatives. And by "alternatives," we increasingly mean "specialists." And how does that work?

Well:

"[T]he committee has ... skewed Medicare fees in favor of expensive specialists over ordinary general practitioners ... Because Medicare fees are the baseline for the rest of the pricing in the health care system, this has had a broad effect, contributing to a situation where primary care doctors are in general underpaid, underappreciated."

Now , we're not playing the Rich Doctor, Poor Doctor game here, but it's worth noting that the docs who are most involved in our initial care are the ones with the least time at the payment feeding-trough. Here's why: Medicare fees drive (to a significant extent) private insurers' reimbursement schedules. So when that Relative Value committee essentially sets Medicare's fees, they're also effectively setting Anthem's, and Aetna's and Humana's (to name a few). And since most (but not all) docs still accept insurance, the effect is magnified.

It's also worth remembering that the AMA itself represents less than 17% of all US physicians, yet wields this enormous power with little (if any) accountability or oversight. Food for thought.

Wednesday Potpourri

■ Craig Gottwals has the scoop on the latest Golden State efforts to come into line with the new group waiting period requirements:

"A year and a half ago, California decided that the 90-day waiting period limit imposed by PPACA ... was too long and cut that period to 60 days via a series of confusing state laws."

After driving benefits folks nuts trying to comply with conflicting federal and state requirements, the state's finally shelved their own ill-advised rule. Click on through for why this is so critical.

■ Speaking of small groups, the news on the alleged SHOP (small group marketplace) isn't promising for the folks in DC:

"[Secretary Burntwell] is allowing insurance commissioners in states that are part of the federally facilitated marketplace to opt out of SHOP’s employee-choice provision for 2015 if they determine that it would produce adverse selection. So far, 18 states were given permission to do so."

That's about half of the states with Fed-run Exchanges. Something about preference cascades?

■ And it's not just small businesses looking for group cover; entrepreneurs have long had to procure coverage on their own, something that's becoming easier said than done. FoIB Holly R tips us to this story of one such fledgeling businessman who left his previous employer to strike out on his own:

"I quickly discovered I would need to qualify for a “special enrollment period” to purchase a new plan at this time. Otherwise, it appeared, I would need to wait for open-enrollment season in November ... Please Note: If you enroll in COBRA you are not eligible for special enrollment until the next open enrollment period or until your COBRA maximum period expires."

Oopsies.

■ Do you ever get the impression that the 404Care.gov site was designed and implemented in (and for) Bizzaro World? You may not be too far off:

"Investigators at the U.S. Government Accountability Office (GAO) created 12 fake health insurance test applicants and, for now, at least, have gotten qualified health plan (QHP) coverage for 11 through the [404Care.gov website]."

And that's the (ostensible) good guys; wonder what the Chinese hackers are up to....

■ Remember Fuller Brush and Avon folks? Well, they're no longer pushing cleaning and beauty supplies:

"[Some Navigators] can sell exchange plans and services door-to-door ... "

The new regs apply primarily to those working for the Fed-run Exchanges, but could also impact state-run ones, as well.

Remember, though, these are folks with no background checks or accountability, and minimal insurance training. But sure, let 'em in the house, they're (mostly) harmless.

■ Finally, Thanks to Bob, we'll leave you with this eye-opening video of Aetna Chairman Mark Bertolini discussing the major changes to our health care system. Bottom line: our new ObamaTax-based system is unaffordable (but you knew that):

Facebook for Physicians

Earlier this month, the Wall Street Journal reported that Wellpoint and Blue Shield of California are partnering to create a Health Information Exchange, or HIE.

An HIE is a federally-funded network designed to “allow patients’ records to be shared digitally among the providers caring for them.”

HIE’s already exist in several parts of the country.  The Journal article cites an HIE in Indiana in which more than 100 hospitals and 25,000 physicians participate.   There is an HIE in my state, Connecticut.

According to the article, the California HIE will - for example - ensure that physicians will have immediate access to patient information in emergencies [which suggests the database is not strictly limited to a patient’s own physicians after all] or ensure that a specialist could review past test results and avoid ordering duplicates.

In general, the theory behind an HIE predicts that when physicians have more complete and readily available patient information, duplication and patient risks decline, and patient outcomes improve.  This is a rational prediction based on experience; HIE’s simply bring better technology to bear.

The theory also appears to predict that more effective care will be less costly by much more than enough to offset “user fees” that the HIE charges to its participating providers.   HIE’s will test this theory.

And in theory I suppose, the HIE databases will be secure – which is not quite to say unhackable.  No doubt this will also be tested.

According to the Journal, the two California insurers “want hospitals, doctors and other insurers around the state to contribute their patients' information as well. In turn, they will be able to draw on records for their patients that were placed in the exchange by other participants.”   The Journal further explains what “contribute” means.  It means automatically posted - i.e.,  “Patients' records automatically will be included in the new California network if their health plans or health-care providers join”

However, individuals will be able to “opt out and block their information from being shared.“ [btw, I don’t recall being offered this opt-out in Connecticut].

Also, “Patients initially won't be able to see their own records but should get that ability later, the insurers said.”

So let’s review.  These California insurers and providers are bringing up a huge new hackable database of personal health information; the database will automatically contain the information they post for their members/patients; all physicians can readily access the database; but, initially at least, the members/patients won’t be able to see their own records.

Cool.  It’s Facebook for Physicians.

UPDATE [HGS]: FoIB David Williams has a related post discussing Patient Portals:

"They’re good for checking lab results, asking non-urgent clinical questions, renewing prescriptions, managing appointment schedules, patient education and paying bills."

Transparency redefined

We've long been fans of transparency in health care, both its delivery and its financing. That is, the ability of the consumer to pre-determine how much a given procedure or med may cost, in order to make an informed decision.

But transparency only works well when both parties participate: providers and insurers offering useful and informative tools (generally on-line) and consumers taking advantage of them.

But what happens when the biggest provider and financer of health care refuses to play?

Well, then, you get this:

"The White House has rejected a request to publicly disclose documents relating to the kinds of security software and computer systems behind the federal health care exchange website ... We concluded that releasing this information would potentially cause an unwarranted risk to consumers' private information"

Orwell called this "doublespeak," and it's an excellent example of the genre. We already know what a complete mess the various contractors have made of the Exchange's so-called "security." To add insult to injury, "Obama instructed federal agencies in 2009 to not keep information confidential "merely because public officials might be embarrassed by disclosure, because errors and failures might be revealed, or because of speculative or abstract fears."

Seems they weren't so abstract or speculative, after all.

Cavalcade of Risk #215 – Dog Days of Summer Edition is up

Paul Dzielinski makes his CavRisk debut (a day early, how's that for promptness!) with an excellent round-up of interesting posts, and his own helpful insights on each one.

Bravo, Paul!

Stupid Congressman Tricks

Democratic member of the House Ron Barber is donating his Obamacare subsidy to charity! What a great act of kindness.

Under PPACA, all members of Congress are required to purchase their insurance through the DC Health Link. Unlike you and I, these congresscritters are allowed to receive their traditional employer contribution - not a subsidy - from the Federal Government under the FEHB Plan. This contribution, which could exceed $900 a month, comes from our tax dollars. It is also tax deductible to Mr. Barber.

To recap: taxpayers provide what could amount to $900+ per month for Mr. Barber and his spouse for health insurance that is tax deductible. Mr. Barber then goes on to donate this amount, which he also will deduct from his taxes, to charity. Yes, he is taking your money and giving it to charity and using it to his advantage for tax purposes.

Oh, and I almost forgot, Mr. Barber is 68 years old. Anyone see what I just did there?

Be careful what you wish for...

The other day, Mike posted about the efficiency of Britain's Much Vaunted National Health System©, and made this observation:

"[T]he UK has for years led the US in terms of restrictions on its citizens’ access to specialized medical services and newer technologies.  In many respects, such restrictions make sense where overutilization is known to occur; in many other respects, setting an army of bureaucrats on a mission to "cut medical costs" is a terrifying idea."

He went on to note that we're now "committed to a [similar] path over the next 20 years." To which I would reply: You wish it was that far out:

"More than 300 patient advocacy groups recently wrote Health and Human Services Secretary Sylvia Mathews Burwell to complain about some insurer tactics that "are highly discriminatory against patients with chronic health conditions"

And what's their beef?

"Coverage of expensive drugs tops their concerns."

No kidding.

Here's the very simple Econ 101 response: you can have it good, you can have it fast, you can have it cheap.

Pick any two.

That is, when carriers are forced to accept all comers, regardless of their health and what meds they're on, and to cover any and all pre-existing conditions, something's going to give: astronomical premiums, restricted networks, or lower drug coverage.

Or maybe all three.

The folks behind the complaints clearly understand what's at stake:

"[The Administration] ought to make it very clear that if there is any kind of discrimination against people with chronic conditions, there will be enforcement action"

Or else, what?

It's been clear to many of us for a (long) while now that this is actually by design; that is, the true end goal of the ObamaTax is, in fact, Single Payer. And that is clearly what these "advocates" would prefer: after all, the government, unlike the insurance companies, is compassionate and has access to a bottomless well of money.

Or so they believe.

Perhaps, though, they should look to the MVNHS© to see how that story *really* ends.

Hint: not happily ever after.

[And be sure to check out Bob's take on this, as well]

Yum!

On August 14, the Wall Street Journal carried this op-ed piece by Dr. Scott Atlas of the Hoover Institution at Stanford University (subscription required, sorry).

You’ll find it well worth the time to read. Particularly interesting to me is Atlas’ statement that “NHS insurance costs $3,500 annually for every British man, woman and child.” 

I looked up the corresponding figure for the U.S. in the National Health Expenditure Tables published by CMS each year.  Doesn't everyone know by now that the US per-capita annual expenditures are far higher than the UK’s?  So that’s not the interesting part.

The interesting part is that the annual US per-capita health expenditures were $3,500 back about 1994.   But in 1994, that level of expenditure was accepted in many quarters as conclusive evidence that the US needed single-payer medical care; that the private insurance industry had failed to control medical cost; and even that the American free market system had failed.  And here we are 20 years later observing the same annual $3,500 per capita . . . as evidence of NHS success in UK!  Meanwhile the much higher US cost is still accepted in the same quarters as evidence that the US needs single-payer medical care; that the private insurance industry is failing to control medical cost; and that the American free market system has failed.   

I’d like to suggest a slightly different interpretation.  I suggest the history shows that the UK trails the US on cost by about 20 years.  In other words, UK's cost reached our 1994 level in 2014; and so UK’s cost may well reach what ours is today, in 2034.  This interpretation also suggests the UK is not retarding the growth of medical cost any more successfully than the US.  The US is simply the leading indicator for cost growth over time.  This interpretation also suggests the higher US point-in-time costs arise from other factors.

I would also note that the UK has for years led the US in terms of restrictions on its citizens’ access to specialized medical services and newer technologies.  In many respects, such restrictions make sense where overutilization is known to occur; in many other respects, setting an army of bureaucrats on a mission to "cut medical costs" is a terrifying idea.  But the US now seems committed to a path over the next 20 years at least, that will produce similar sorts of deterioration in hospital services, growing wait times, and other restrictions on specialty and high-tech care as have  plagued NHS.  In this sense, UK is the leading indicator for the US.  Our policy leaders should be paying attention.

Of course, as we learn more about Obamacare, we may find the US is sinking to the more restrictive UK service levels much faster than anyone imagined - but accompanied by increasing, not reducing, cost.  Lower access to medical care - - higher prices - - Yum!

Kliff Diving with Sarah

Recently, longtime foil Sarah Kliff (she who couldn't understand her own Explanation of Benefits) set out to enlighten folks in flyover country on how to negotiate better prices for their health care:

"Earlier this year, I got an unpleasant surprise in my mailbox. A$820.19 surprise, to be exact ... Even as someone who writes extensively aboutAmerica's health care system — who had, coincidentally, recently attended a three-day seminar for a story on the subject — I was stuck."

She then goes on to offer five steps one might take to entice the provider to offer a price break.

As someone with many years of first-hand experience actually running medical practices, here's my take on her efforts.

First, Miss Kliff is “surprised” that, after visiting a medical provider, having been provided medical services, and receiving a statement after each visit outlining all the various codes and associated costs, she received a bill that somehow she was not expecting. I have dealt with many, many patients who are just as “surprised” as Miss Kliff that the doctor actually billed them for services rendered, and who actively seek ways to avoid paying their share. There’s nothing inherently “wrong” about asking for a break; the problem is that there are a lot of sound reasons why they’re generally not available.

And as a Medical Healthcare Executive, let me say that this is an extremely selfish attitude to take about your financial responsibility for medical care. The medical provider whose valuable services you received has bills to pay and he/she can only pay those bills by charging individuals for the care they provide. Was Miss Kliff forced to have the medical care or did she enter into a contract with the medical provider to pay for services rendered based on the guidelines of her insurance policy? This is why “negotiating down a medical bill” is nonsensical; by being in an insurance plan the price has already been negotiated down. When I set my fee schedule, I account for a discount based on the contract that I signed with the insurance company to treat their patients. That discount can range anywhere from 5% to 60%, depending on the usual and customary charge set by the provider and the amount negotiated to be paid by the patient/insurance company.

Miss Kliff outlines five steps that I would like to refute:

Step One, “stay in network,” is only viable for primary care. For specialty care, finance should not rule your decision, your medical care should.

Step Two, “negotiate beforehand,” is impossible:  the doctor cannot tell you what he is going to code in regards to your injury or illness until he has examined you and made a diagnosis. He then sets up a plan for care that is reviewed and modified at each appointment during the treatment. A treatment plan is individualized for each patient, so a provider is unable to quote the charge before treatment begins.

As to the suggestion of asking the provider to accept what an insurance company would pay, which insurance company price should apply? Each carrier pays a different amount for any service rendered. I received as little as $33.00 for a 99213 (mid level exam) and as high as $65.00 for the same code. If you want to pay the negotiated insurance price, buy an insurance policy; if not, pay your bill.

Step Three, “check your bill for errors.” If I’ve heard this once I’ve heard it a million times from patients unhappy that they had to pay for their medical care. The most common refrain was “my insurance company said you coded wrong”. In today’s electronic billing to clearinghouses this cannot happen. Any incorrectly coded claim is kicked back to be corrected before it even reaches the insurance company. In my years as a medical practice manager, I can attest that 98% of all problems were the fault of the insurance company, not the provider.

Step Four, “ask for a prompt pay discount.” This does not exist. When you sign a contract for an insurance policy you agree to pay your provider as soon as you are notified of your responsibility, thus you have already agreed to pay promptly. Why should I reward you for following the guidelines of your policy and hopefully the financial statement you signed when you entered into care with your medical provider of choice?

Step Five is “don’t be an asshole.” While this is always good advice, she does admit that, in the end, the doctor does not have to negotiate. In fact, she finally gets to the crux of the article, that “your bill isn't wrong, … you just think it’s too expensive.”

Here’s a news flash, Sarah: medicine is expensive. 

Authentic 404Care.gov gibberish

You really can't make this up:

"[T]hose looking for information about appealing a Marketplace decision are facing a brand new one: nonsense."

Here's 1,000 more words on the subject:

 [Click picture to embiggen]

 

I spent most of yesterday doing my annual Marketplace re-certification training (more on that Monday), so I can relate.

Cavalcade of Risk #215: Call for submissions

Paul Dzielinski makes his CavRisk hosting debut with next week's edition. 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.

We need hosts for Fall Cav's - Please drop us a line to claim yours. It's easy, fun and a nice traffic bump. Thank you! 

Health Wonk Review: Dog Days edition

Brad Wright presents this month's (only) roundup of health care policy and polity. I especially appreciate Brad's narrative style, weaving together several posts to create a storyline.

Nice!

Lists and honors

As one might imagine, we get a lot of self-promoting email here at IB, often in the form of "Top 10" lists and the like, in an effort to drum up links. Usually, these are just slapped together with no real effort to confirm whether all the blogs listed are even still on-line.

Sometimes, though, one will pop up that's actually worthwhile, well-researched and actually well-written. Such is the case with the Best Medical Assistant Program blog. They've just published their take on the Top 100 Health Care Blogs; I was pleasantly surprised to see that it's well-organized and the entries have actually been vetted. And it includes folks that I know are top-flight: Val Jones, Jason Shafrin, David Williams, to name a few.

The list is broken down by category: everything from General Health Care to Nursing, even Health Insurance. And speaking of which,. guess which blog took top spot in that category? Anyway, it's a badge we'll wear with honor. Thanks, Mae Rulona!

Back on the Oregon Trail

Readers may recall that, after $300+ million, the Beaver State health insurance Exchange managed to enroll....precisely no one.

The question then becomes: "And whose fault is that?"

Well, it depends. The state blames Oracle, the contractor resopnsible for designing and implementing the Exchange. And so it's apparently decided to withhold payment for services (not) rendered.

Which of course isn't sitting too well with Oracle, which is now suing Oregon for $23 million it says the state owes it. Seems rather gutsy, considering their "success" rate of 0, but that's not how they see it. They're blaming "the state's poor management [which] doomed the exchange."

And how did it do that?

Well:

"The state chose to serve as its own systems integrator, or general contractor, overseeing the project, a task Oracle claims it was not qualified to perform"

One is reminded of the old adage about being one's own lawyer.

Actually, this makes a lot of sense: based on the performiance of the folks in DC who oversaw the 404Care.gov site rollout, it doesn't seem a stretch to believe that the same hubris exists at the state level.

Which isn't at all comforting.

Of course, the other side of that coin is that Oracle may simply be living that other old adage: the best defense is a strong offisense.

To wit:

"Internal state documents show state technology analysts and other contractors on the job had for years been issuing warnings and [sic] Oracle's performance"

[ed: one presumes the author means about Oracle's performance]

He said, she said. Ultimately, the court(s) will decide.

Less for More

During the debate on Obamacare we were promised lower costs, better benefits, and additional consumer protections. These promises have been modified, but continue forward through many of the supporters of the law as well as the Obama Administration.

However, there are a few big secrets they aren't telling you - ones that year after year will negatively impact everyone. They are called actuarial value, cost sharing limits, and indexing. Two of these occur on the benefit side and the other on the premium side. Actuarial value, indexing and cost sharing are wonky words so let me break it down so that even a member of congress can understand.

Actuarial Value and Cost Sharing go hand in hand

The impact of cost sharing is attributed to what CMS describes as "Protecting Individuals from Excessive Out-of-Pocket Expenses". Most would think that this is a good thing ast protects people from catastrophic claims. What cost sharing really does, though,  is to determine what a person's worst case scenario of medical bill costs will be. For 2014 the worst case scenario (out-of-pocket maximum) is $6,350 for a single person and $12,700 for a family. These figures were hard for consumers to swallow. So creating something that protects individuals should help reduce these figures, correct?

In setting the policy standards the cost sharing component must be updated annually. The formula they use to set the maximum is based on average premiums per enrollee based on employer sponsored insurance (not individual!). This data comes from the National Health Expenditure Accounts. They throw these numbers into their magic formula and presto, they have a new percentage. For 2015 it is 4.21%. This results in a new maximum annual out-of-pocket limit of $6,600 for singles and $13,200 for families. Wait, what? HHS is protecting consumers from "Excessive Out-of-Pocket Expenses" by increasing our potential costs by $250 a year? Yep, they are.

Which brings us to Actuarial Value (AV). We've covered this several times before (here and here to name two). AV is a method HHS uses to determine how much of your medical costs an insurance plan must pay versus the amount you must pay. This is commonly referred to as Metal Tiers. Basically there are four tiers. Platinum, Gold, Silver, and Bronze. The better the metal the better the benefits. So why is this relevant to the cost sharing requirement?

Every year CMS updates a calculator that determines if an insurance plan meets the strict requirements of what Obama considers "good" insurance. Once again they use a crazy formula that only us health nerds can come close to understanding. Here's the rub: if the out-of-pocket maximums increase and other factors stay the same that means that a plan that has good benefits this year will not have good benefits in the future. Why? Because as one variable grows it means that other outputs must also change. The result is that the best plans available on the market today will have to increase their out-of-pocket maximums in order to stay in the "good" insurance range.

If you plug a current benefit design into the AV Calculator from 2014, then do the same benefits into the new 2015 updated version, you will see that the percentage drops. Over time, plans that have a very low out-of-pocket will no longer be offered because good insurance doesn't equal "Obamacare good" insurance. These tiers aren't designed to change, so as time goes on the health insurance plans people like, even the Obamacare compliant ones sold today, will no longer be available. Think about that for a moment: Obamacare increases your out-of-pocket maximums and calls that "better" insurance.

Indexing of Premium Contributions

Every year the IRS will update a crazy formula to determine how much people will have to pay for their health insurance. The results of the formula are updated into the Applicable Percentage Table. This is what the table looks like for 2014.

This isn't a surprise as it reflects what Obamacare deems "affordable" and has been since we first started learning what was in the bill. What is a surprise though, is that these figures are going up. The variable percentages for these payments relative to income are adjusted to reflect any percentage by which premium growth exceeds income growth. For 2015 here is the new table.

As long as premium growth exceeds income growth (high probability) consumers will pay a greater percentage of their income EVERY YEAR! Wait, it gets worse. In 2019 if subsidies are greater than 0.5% of GDP - which many predict will happen - then an additional adjustment will kick in based on premium growth minus inflation. This is called secondary indexing. The impact here is that when this threshold is broken the amount of federal subsidy will decrease, causing consumers to pay even more of their income for premiums.

These three things above are going to cause you to pay more to get less. For those of you who still think this is going to cost less and give you more should remember these lyrics to the old 80's song by Naked Eyes: You made me promises, promises. Knowing I'd believe promises, promises. You knew you'd never keep. Promises, promises. Why do I believe?

Anthem Update

So, our (nearly) month-long saga has come to an end. Mostly:

"We received confirmation today that the member’s $1200 accumulator has been transferred to the new ACA plan."

Translated: my client's pre-ACA-plan expenses will count toward her new ACA-compliant one.

Which is great news indeed.

Now, given that, why the "mostly" qualifier?

Well, it would be nice to know:

■ Why did this take so long to resolve?

and

■ Is this just a special accommodation for my client, or is this true for other policyholders in similar binds?

One presumes that the answer to the latter is that it's universal, but we don't know for sure.

I've reached out to our rep, asking for an answer. Stay tuned...

Shortsighted Agency Tricks

Perhaps you've seen this story:

"An insurance company settled a lawsuit with a Los Angeles man by dropping off buckets full of thousands of quarters, nickels, dimes and pennies"

Aside from the fact that the firm is misidentified as an insurance company, the story is at least credible on its face.

But we know from years of experience that the Mainstream Media has a very poor track record when it comes to getting insurance-related stories correct. So we reached out to Adriana's for comment:

■ via email, which has gone unanswered
■ via phone (neither of the numbers on her website are correct)
■ and via "chat"

That last was pretty interesting: I visited the agency's site and got a pop-up "chat" box. I jumped at the opportunity, and was soon texting with CSR3. I introduced myself and explained that I was looking for their side of the story.

This was what I got:

"We do apologize about what is being reported in the media. At this time, I cannot comment on this matter but I can assure you the company will release an official statement soon. Adriana’s Insurance has been in business well over 20 years, and we value your opinion, we regret to see this being transmitted in the way it is by the media."

And then he/she "hung up" (exited the chat).

This is stupid. A story like this gets "legs" very quickly (especially when the victim is the quintessential Grandpa). And perhaps a major reason that it's "being transmitted in the way it is by the media" is because the agency is making no effort to get out in front of it; indeed, they're turning away opportunities to do so, further damaging their brand.

In this age of alt- and social-media, you really can't do that and expect to do well.

'Tis a shame.

Messy Client Trick

Have you reviewed you own life insurance coverage lately? Do you know who owns it? Who's the beneficiary? Who can tap the cash value?

Here's a story about the dangers of assuming:

One of our agency's clients - we'll call him Steve - called the other day looking to withdraw some cash from his life insurance policy. The good news is that there's plenty of it available. The bad news is: it's not available to him.

Hunh?

Turns out, the policy is owned by his father's (former) company; Dad bought coverage on Steve, paid for it, and named himself and Steve's wife as the primary beneficiaries.

There are, in fact, several messes in play here:

First, since Dad owns the policy, only he can access the cash values. And, only he can change the beneficiary. And why would he want to do that? Because, as it stands now, if (when?) Steve dies, the insurance company is going to cut one check, payable to both Dad and Wife, and they can try to figure it out from there.

So, no worries, we transfer the ownership from Dad to Steve. No harm, no foul, and Steve can then tap the cash and make his wife the sole beneficiary.

Wait - did I say "no harm, no foul?"

Oops.

Here's the harm and the foul:

Dad owned and paid the premiums on the policy for 20+ years. When he signs over ownership to his son, all that sweet, sweet cash value money is taxable.

Whoa there, Henry: I learned in Insurance 101 that only the gain (or profit) in the cash value is taxable. What gives?

Ah, padawan, that is only a part of the story: you are quite correct, if you're talking about Dad cashing in the policy. But he's not: he's transferring ownership to Steve, and thus the entire cash value (equity, if you will) is taxable to Steve.

Now, is this a big deal? Maybe not: we're talking $15,000 here, not $150,00. But still, this needs to be considered.

Now, I had started to propose this alternative:

Why not have Dad withdraw $10,000 from the policy and gift that to Steve, leaving just the remaining $5,000? That way, he's cut his tax liability by two thirds.

NB: I am NOT an accountant (nor do I play one on TV, nor did I stay in a Holiday Inn Express last night).

Anyway, most of this mess might have been avoided had Steve asked some questions after his father retired and ostensibly left him the policy, and addressed these issues then.

So, have you checked your policy lately?

All aboard the Exemption Train

Remember back in the day, when we had over 40 million uninsured folks, and we had to completely upend the existing health care delivery and finance systems to get them coverage?

Ah, the good ol' days:

"The CBO report ... also finds that about 30 million Americans are currently without health insurance"

Wait, what?

That can't be right: we've got this state-of-the-art enrollment website, comprehensive health care plans with low, affordable premiums (thanks in part to easily understood and verifiable subsidies), and the threat of substantial penalties for failing to buy a plan.

Right?

Right??!!

Turns out, not so much: that same CBO report projects that "the number of those who don’t have to pay fines to opt out of Obamacare — the exempted class — is going to hit 25 million by 2016."

Hunh.

Part of the problem, of course, is that the fine penalty tax is pretty much pre-empted for millions of people who have been given (illegal) waivers by the Obamastration. And it's only going to get worse as this year's Open Enrollment season spins up this Fall, and folks start to see their January renewals nuking their bank accounts, even as their subsidies begin to dry up.

Wait a second there, Henry: what do you mean about those subsidies "drying up?"

Oh, sorry, got ahead of myself:

"People who decide to stick with the coverage they've already gotten through Obamacare, rather than switching plans, are at risk for some of the biggest premium spikes anywhere in the system."

At issue is the so-called "auto-renewal" process (about which Pat has written), which allows folks who've bought ObamaPans to just set-it-and-forget-it; rather than face again the frustration of the 404Care.gov site and all its machinations, one can simply step back, do nothing, and one's current plan is "good" for another year (although that process may be short-lived as the Actuarial Value catastrophe beckons).

Problem is, there's a pretty good chance - bordering on a likelihood - that one will then face not one but two rate increases: an explicit one ("Thanks for choosing Amalgamated Health Insurance, your rate increase for the coming year is 10%") but also an implicit one:

"[M]any of those consumers will find that their subsidies don't go as far next year, even for the same plans ... The size of each person's subsidy is tied to a "benchmark" plan ... But as those plans raise their rates and new options come to the market, they'll often lose their benchmark status to cheaper competitors"

Bet you didn't know that.

Don't feel bad: most folks don't, and that's likely by design. Carriers don't want you to move, and the government certainly doesn't want you to know the true cost . But that doesn't make the problem go away: as new carriers enter the market (and they will - having sat out the initial season to get a feel for how things play out, they're more likley to want to jump in this year). And since they don't have last year's losses to make up, they can offer plans at lower rates, which then become the benchmarks, which then cause a lot of auto-renewers to lose even more ground.

Sweet deal, no?

Bob G hits the Big Time (Again)

Our good friend Bob Graboyes has an interesting article in this week's US News and World report:

"Repeal and replace" is a misguided strategy for getting past the Affordable Care Act ... It is hopelessly utopian, strategically suicidal, emotionally deadening, operationally hollow, and needlessly partisan"
And then he gets feisty.

Seriously, really great analysis from an acknowledged expert.

Rascally insurance conundrum

So here's a thought:

Aside from some zero's and commas, what's the difference between a Rascal and a Tesla? After all, they both have wheels and an electric motor, and can operate on city streets and in store parking lots.

Admittedly, only one is required to be licensed by the state, and its operator insured against potential liability. But where's the fairness in that?

Such is the question posed, albeit less benignly, by the Farm Bureau and State Farm insurance companies:

"They’re insisting that the drivers of motorized mobility scooters should be required to get the same insurance as car and truck owners."

This is in response to a case in Michigan that involves a paralyzed man, zooming innocently along on his motorized wheelchair, hit by an SUV. Apparently, he had no license to operate a motor vehicle, nor did he have automobile insurance coverage. 'Course, he didn't need to:

Wheelchairs, motorized or not, aren't considered motor vehicles under the law, nor could the gentleman have bought auto coverage if he'd wanted to: it's not available for Rascals, at al.

Now, if he owned a home or rented an apartment, his homeowner's policy would most likely have covered him (assuming that he had such a policy). I reached out to the PIA's Ted Kinney (whom we've met before) for his take. Ted told me that:

"I can’t speak for all policies but I know that the ISO homeowners policy provides both property and liability coverage for vehicles designed to assist the handicapped. I don’t know any auto insurer who will cover them on an auto policy. hese vehicles are not subject to motor vehicle registration.

It’s possible that this case might cause insurers to look at this issue if they think they can charge for coverage on an auto policy that a homeowners policy provides for free."

The key criteria here is "[t]hese vehicles are not subject to motor vehicle registration." Absent that, auto insurance just isn't available. Now, is it possible that some enterprising carrier will comeup with a special Hoveround policy? Maybe, but until then, it seems like the two carriers ought not to "bet the Farm" on winning their way.

[Hat Tip: FoIB Holly R]

Cavalcade of Risk #214: Bottom Line edition

Jaan Sidorov once again brings his considerable talents and sense of style to bear as he hosts this week's collection of outstanding risk-related posts. The coolest part? He highlights the key concept of each post to ensure that you know what you're getting into.

Great job, Jaan!

Mostly Harmeless Carrier Trick

So this pops up on FaceBook:

MassMutual does some really outstanding insurance outreach and awareness work, and deserves credit for that.

And I realize that posting a status on FB is relatively low-cost (aside from the no-doubt miniscule stipend earned by the intern tasked with composing and posting it).

But really: what is the point of this exercise? How does it raise industry awareness, or even move would-be customers to consider MM as a potential carrier?

And it's actually self-reinforcing, since it ultimately directs the reader not to an agent or even the home office, but a Pinterest page.

Way to move the ball forward, MassMutual.

No Care For You!

We've long chronicled the difference between health insurance and health care, and noted that simply having the former does not guarantee access to the latter.

Now, Alert Reader (and FoIB) Jeff M tips us that:

"Obamacare plans have shrunk payments to physicians so much that some doctors say they won’t be able to afford to accept Obamacare coverage"

That's not news to regular IB readers, but this may be: Connecticut internist Dr. Doug Gerard concludes that "I cannot accept a plan [in which] potentially commercial-type reimbursement rates were now going to be reimbursed at Medicare rates"

In English, this means "we can't afford to stay in business accepting only ObamaTax plan reimbursement rates."

But don't just take my word for it; as co-blogger Kelley observed just a few months ago:

"At a patient load of 7,200 patients that is $125.00 for a 15 minute appointment. This is great pay. But remember also that 80% of that total goes to pay the staff salaries and benefits, rent, utilities, as well as such government mandated programs like Electronic Medical Records and all other costs needed to keep a business running."

And when those reimbursements fall even lower, the doc has a simple decision to make: can he afford to keep seeing those patients?

Increasingly, that answer is likely to be "No."

Trending: Disability stats

Thanks to our friend Andy Linneman, we learn that:

■ More than 30 million Americans between the ages of 21 and 64 are disabled

■ 44% of employees say they have about a 1% chance of becoming disabled during their working years.

■ 60% of consumers are concerned about their ability to support themselves if they were to become disabled and unable to work

I just met with a client who, as the result of a recent stroke, has lost 95% of her hearing. She's struggling to make ends meet, and we even had to tap into her life insurance policy to help pay bills until Social Security Disability kicks in (if it ever does).

One surefire way to have prevented some of this would have been a disability insurance plan, either through work or individually.

What's in your disability plan?

Cavalcade of Risk #214: Call for submissions

Jaan Sidorov hosts next week's Cav. Entries are due by Monday (the 4th).

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.