Battling the Cylons...(BUMPED)

Believe it or not, I’m actually a pretty reasonable guy. Sure, I like to spend quality time yelling at insurance companies, and I don’t mind tilting at the occasional windmill of carrier “customer service” now and then.

But this is ridiculous:

Oriental Hut is a local restaurant that has been a client for many, many years. And they’ve had the same group carrier, VID, for almost three (which is quite remarkable in this market). Last Spring, one of their employees added her husband to the plan. Within two weeks, she learned that his premium would be almost $1000, and she called me to take him off because they couldn't afford that (yes, she should probably have called first to see what his rate would be, but she didn't; water under the bridge). In any case, I asked her to fax me the request, and we would have him taken off.

I faxed the request to the carrier, and presumed that all was taken care of; I never heard back from Oriental Hut that there was a problem until early September. Apparently, VID never took the husband off the policy, and had been charging the group for him all along. The employer told me this in early September, and I contacted our service rep to have it fixed. It should be noted that the employer handled it as he saw fit, which is to say, in a logical manner. Logic and insurance rarely coexist peacefully.

The employer simply deducted the amount that the (uninsured) husband was being charged, assuming that eventually VID would figure it out.

He was only partially correct.

In early September, the employer told me that the husband still hadn’t been taken off the group. I contacted our service rep, and within a week or so had confirmation that everything was now fine: he was cancelled as if he’d never been on it in the first place.

Early this month (October), the employer received a letter from VID confirming that they (VID) had, in fact, made a mistake; it basically reiterated what I had been told by email.

Case closed, right?

Don’t be silly: this is insurance we’re talking about.

Two days ago, the client received a cancellation letter from VID, informing him that the group was terminated for non-payment. Ooops.

Now, I had understood -- incorrectly, as it turns out -- that VID was charging for the husband’s May/June premium (one month), and that it was this $1000 that was in dispute. This was not correct: they were charging all the way through for him, a total of about $6,000. Their position is that, even though the husband was ultimately cancelled back to the original effective date, Oriental Hut should have been deducting the premium from his wife’s paycheck and forwarding said sum to them. They won’t reinstate the plan unless and until they receive that $6,000, which, of course, the employer has never collected. They will then reimburse that amount as a credit on the November invoice.

So, their position is: "we made a mistake, you're cancelled anyway, pay us $6,000 now to reinstate coverage, and we'll give it back to you in a few weeks."

Riiiiight.

As one can imagine, I’ve spent a great deal of the past 24 hours trying – in vain – to get VID to at least negotiate a more reasonable amount. They remain intransigent. I enlisted the help of my service rep, and eventually got as far up the corporate “food chain” as I could, all to no avail.

So, I played the only card I had left, which is the power of the gummint: I called the Department of Insurance, and was able to talk my way into skipping the on-line electronic form and directly to a specialist. The employer had to call her to grant me permission to act on his behalf, and I have submitted all the relevant details to her.

We now play wait and see…

Updates as warranted.

UPDATE 1 (Thursday 10/20): The plot thickens. The Claims Specialist at the DOI has received my email, and has started working on the case. OTOH, not a peep from the VID "supervisor," despite 3 voice mails. What to do?

As I pondered this dilemna, a fax comes in from the owner of Oriental Hut: another letter from VID, dated the 13th, indicating a balance due of only $1,700. As we recall from early math classes, $1,700 is less than $6,000, so this is a good thing.

Trouble is, I no longer trust the carrier, and neither does my client. So, I call VID to see what they say today. Ooops, still showing the $6,000.

So, a follow-up letter to the DOI Claims Specialist, including the new $1,700 balance letter, and the conclusion that we have now entered the realm of "bad faith." Back to wait and see...

UPDATE 2 (FRIDAY 10/21 AM): Promising developments. Late yesterday afternoon, the business owner indicated that he would be willing, for the sake of his employees, to capitulate on the $6,000. However, neither of us trusts the insurance company to reimburse those funds as promised. Hence, a quandary. The owner suggested that a letter from VID (confirming that once the funds were received the plan would be reinstated, and that the relevant funds would then be reimbursed/ credited on the November bill) would be acceptable.

I called my service rep with this proposal, and this morning received a fax that was about 75% of what we requested; that is, they would reinstate, and would reimburse, but indicated that this could be on either the November or December bill. My feeling is that if they can put it off til December, they will put it off to December, but it’s not my call. I got the owner’s voice mail, and left a message bringing him up to date. Then, back to my service rep requesting that VID tighten up the letter to specifically say November.

And that seemed to work: they agreed to the November reimbursement, but suggested that we hold a conference call between the 4 parties (the owner, my sales rep, the carrier’s billing rep and me) to make sure that we are all on the same page. The Good Lord willin’ and the creek don’t rise, this should take place early this afternoon, and the matter resolved by late this afternoon.

Well, sorta:

Two issues remain hovering in the background. First, the owner is of the opinion (and perhaps rightly so) that he and his employees should be reimbursed for the 4-5 days that they were without coverage while all of this was going on. I’m inclined to agree with him, but this seems to me a secondary issue that should be addressed after we have the group reinstated.

The other issue is that, even though we continue to negotiate an amicable resolution with VID, the Department of Insurance is “hot on the case,” and has opened its own investigation. Even assuming that the parties reach a satisfactory resolution, I’m not sure that we can “call off the dogs;” and to be perfectly frank, I’m not so sure that we should. After all, even if (when!) we resolve the reinstatement issue, the fact remains that this whole situation should have never reached this point in the first place. And the fact that we now have so many different written claims regarding how much is owed indicates a real problem at VID. There is justice to be served here, as well.

UPDATE 3 (FRIDAY 10/21 PM): No closure, yet. After a 1½ hour conference call (see above), it was finally determined that we could all agree at how unfair and unreasonable the situation was, but reinstatement would still take $6,000 and no letter would be forthcoming.

After the call, I spoke privately with the owner, who is seriously considering just letting the cancellation go through, and finding other coverage. I did remind him that this would be easier said than done [the subject, perhaps, of another post], and he indicated that he would consult with his employees about whether or not he should accept VID’s terms.

To sum up, the owner is willing to part with the $6,000, in return for a letter which would simple say “We accept your $6,000 and your group is reinstated. On the November bill we will refund to you the credits to which you are entitled.” Notice, the only reference to actual dollars is the premium. This seems an innocuous enough statement, and indeed is simply a reduction to writing of that to which VID verbally agreed.

Of course, I was disappointed: I had really expected and hoped for closure before the weekend. I mentioned my disappointment to a colleague, who opined “Henry, you’re trying to get this done from the bottom up. Why don’t you start at the top, instead?”

Excellent advice!

So, I googled for the company headquarters and explained my purpose, eventually landing at the desk of a very professional-sounding young woman. She was understandably reluctant to write such a letter until she had investigated the circumstances, and asked me to fax her what we had so far. She is also familiar with the claims investigator from the DOI, which may or may not be important.

And so it goes.

UPDATE 4 (THURSDAY 10/27 PM): Know when to fold 'em. Neither the "executive level" woman at VID nor the Claims Specialist at the DOI have returned repeated calls over the past few days, and the meter's running out. Ostensibly, the owner has until midnight on the 31st to make the payment, but realistically he must do so in the next 24 hours.

And since he just asked me for the hot-line number to make payments by phone, it appears that that is the course he has chosen.

UPDATE 5 (FRIDAY 10/28 PM): Paid the Piper. Well, the owner called in the payment, thereby obtaining some measure of closure. On the whole, I agree that it was the right thing -- or perhaps just the least wrong thing -- for him to do.

Now, we await the resolution of several loose ends:

First, will he receive the credits due him on the November premium notice?

Second, will we hear from the VID contact person?

Third, what (if anything) will the Department of Insurance do now?

On the Case...

In a recent post, my correspondent asked “(w)hen will WalMart buy some hospitals and offer their own health care?” I flippantly replied “never.” Apparently, I jumped the gun:

“Former American Online chairman Steve Case wants to shake up the health care industry with a $500 million company he founded [in April]. The Washington, D.C.-based firm, called Revolution, plans to buy controlling interests in companies that provide health care and wellness services.”

Thus far, Revolution has purchased four entities to serve as a sort of launching pad: one is a health news aggregator, another is a sort of referral and appointment service, the third offers software that enables consumers to manage their health info, and the last is a sort of community-based WebMD.

Once the company is “off the ground,” it plans to enter the health insurance marketplace, offering what looks like consumer-driven products in both the individual and group markets.

It’s not really clear how they’ll differentiate themselves from “the pack,” nor how competitive they’ll be. But it’s nice to see someone from “corporate America” putting up their own money. And, even more importantly, it’s these kinds of innovations that represent the real answers to the arguments put forth in the book we reviewed earlier.

Broken Trust...

If you’ve been following my Battle with the Cylons, you know that one of my clients is in the midst of a major “issue” with one of my carriers. As an independent agent, I represent the carrier, but I work for my clients. This puts me in the unenviable position of balancing their sometimes competing interests. All things being equal, though, my first loyalty is to my client.

The insurance contract is unique: it is called a “unilateral” contract because almost all of the onus is on the company; in general, the insured’s responsibilities are to pay the premium and avoid filing fraudulent claims. It is also unique in that the client’s premium buys, not a new car or CD, but simply a “promise” to pay for some potential future event (a claim). That promise rests primarily on one thing: trust.

Trust is defined as “belief or confidence in the honesty, goodness, skill or safety of a person, organization or thing." What happens, then, to the equation when the party which has made that promise ceases to be trustworthy?

This is no simple question, by the way: my client has been insured with VID for almost three years, and almost $200,000 in premiums. That’s a lot of trust. VID, by refusing to yield on one simple procedural rule, has destroyed all that.

As I was explaining to the owner a short time ago, my own position is now put in question: When I present a proposal to a client (new or current), I have to believe that the carrier(s) I present are worthy of the trust which I would have my client put in them. Now, knowing that in the case of VID that trust is suspect, do I have an obligation to warn my other clients about the circumstances?

As you can probably tell, there has thus far been no resolution to the ongoing situation. And time is running out.

UPDATE: Time ran out (see Update #5).

An Excellent Grand Rounds...

may be found at Hospital Impact. This one is special!

The Carnivals Are In Town...

This week's Carnival of the Capitalists is up over at BlawgReview.

While you're there, check out the entry on the new Tax Panel's proposals from our good friends at Roth & Company. It's a great place to start if you're interested in what's likely to happen tax-wise in the next few years.

And Consumerism Commentary hosts this week's Carnival of Personal Finance.

A Twofer...

Apparently, the human brain comprises some 100 billion cells (neurons).

I believe that I lost at least 250 million of those recently: I had the privilege of sitting through a “webinar” to become certified to sell the new Medicare Part D drug plan. Only a gummint-approved panel could come up with such a complicated, poorly designed, inconvenient, and altogether bothersome “benefit.” Actually, the fact that one must become “certified” to sell what should be a simple drug plan should be a tip-off that it’s anything but.

I also read Prof Quadagno’s response to my review of her book. I do appreciate that she has taken the time to offer her rebuttal.

She raises some interesting points, most notably that there may be value in an increased role for the government in the arena of health care coverage. Professor Quadagno believes that the "only reason the situation doesn’t look worse is that the government is picking up the slack." She has it exactly backwards: government cost-shifting is one of the most egregious components of the increasing cost of healthcare. And instead of answering my challenge as to where the issue of “fairness” may be found in our constitution, she proposes that the insurance industry should be even more regulated (i.e. restricted), and that government intervention is necessary to solve the (fake) problem of “46 million uninsured.”

She couldn’t be more wrong, and the new Medicare “drug program” brilliantly and irrefutably demonstrates why:

Let us suppose that, for the sake of argument, the nation’s seniors were all consuming vast quantities of prescription medication and that, as a class, seniors represented the poorest of our society. Such an argument would go “Gosh, now Grandma has to choose between buying food or her med’s. Why can’t the government do something?” And so the government convenes a special panel (because that’s what government does) which is comprised of everyone affected by the “problem” except a representative sample of seniors, insurance agents who deal with the public every day, or doctors who actually see patients; in short, anyone and everyone who could bring meaningful information and experience. Such folks would not be invited to participate, while special interest groups and government bureaucrats (but I repeat myself) decide that Dr Goldberg’s model would be the ideal place to start.

And so emerges Medicare Part D (for Debacle), a multi- multi-billion dollar program to (allegedly) enable seniors to afford their med’s. It looks something like this:

Let’s start by making this a completely voluntary plan, so that Grandma and Grandpa can feel comfortable knowing that they are free to choose whether or not they wish to participate. Then we’ll slap a 1% per month penalty on ‘em if they decide not to play along, and want to join up later. Such a deal!

Then, for those that do “choose” to enroll, we’ll impose a new $250 deductible for medications, to supplement the current $912 Part A and $110 Medicare Part B deductibles. Hmmm, that’s a total of almost $1300 in deductibles right out of the chute.

Okay, so Grandma meets her $250 deductible, and all her med’s are covered now, right? Well, not so fast: actually, Medicare Part D will pay up to 75% of the next $3,000 of (covered) med’s, or a total of $2,250. Of course, that means another $750 out of (Grandma’s) pocket, but that’s not so hateful, right? So, what’s next?

How about: Grandma gets to pay 100% for her med’s until she’s out of pocket another $2,850. Ouch.

Oh, but surely she’s done now, right?

Nope, she then gets to pay 5% of all her med’s until the end of the year, at which point the whole process starts anew. That’s right: an extra premium over and above the “regular” ones for A and B, a new $250 deductible, plus $750, plus $2,850, plus 5% of the rest after that. Yikes!

Now, if you’re still following, then it’s not complicated enough for government-think, so let’s muddy the waters a bit more:

Each year, there are only certain times when Grandma (or Grandpa, for that matter) will be allowed to switch plans. “Switch plans?” you ask. Yup, because everything we’ve been talking about so far describes what the government has decided is the appropriate product for insurance carriers to sell. Kind of like Henry Ford and his famous (although probably apocryphal) comments regarding color choices for the Model T. These are plans that must be approved for sale by the same folks who designed the “product.” And you can only buy into a plan at certain proscribed times. Don’t like the plan you bought? Tough, because you can only opt out or switch plans at specific times, as well.

So there you have it: a perfect example of how government restriction of the insurance market place impacts how its citizens are allowed to purchase only “government designed and approved” products. No real free market here, folks, just move along. Of course, it’s left to the imagination as to whether or not this represents the solution to any identifiable problem. And it most certainly represents what happens when we put government in charge of even a small piece of the health care pie. Imagine what it would do with the 15% of the economy the whole pie represents.

I appreciate that Prof Quadagno probably truly believes that such onerous government control would make things “fair,” but she still hasn’t addressed how “fair” is even relevant. And programs such as Medicare Part D demonstrate that “fair” isn’t even a good idea.

For more information on the new Medicare Part D plan, or for any other Medicare issues, contact your state’s Department of Insurance or medicare.gov.

Actuaries Miss, Too...

No one likes rate increases (okay, no one who isn’t an insurance company employee likes rate increases). Sometimes, though, they’re inevitable and justified.

And sometimes they’re not:

According to The Segal Company, health care costs projected for 2004 were way off: actual costs were lower than expected, pretty much “across the board.” For example, PPO costs were projected to rise by almost 14%; they actually rose about 10% -- a difference of almost 30%.

HMO’s and POS (Point of Service) plans were presumed to rise by about 13% each, but only grew by 11.5%; not so great a disparity as with PPO’s, but significant nonetheless.

Interestingly, we seem to have hit a plateau of sorts. It’s important to remember that trending accounts for only part of the overall rate picture, there are other factors, as well. But it is notable that costs seem to be rising at a much lower rate than had been assumed. Some of this may be due to the increased presence of Consumer Driven Health Care (CDHC) plans, such as HRA and HSA.

Interestingly, in their 2006 Health Plan Cost Trend Survey, Segal notes that “2006 will mark the third consecutive year of lower projected trend rates for medical plans. Still, medical plan trend rates are three to four times the rate of general inflation.” And they also note that “trend rates for prescription drugs continue to moderate and are close to 1998 levels.”

We’ve discussed the impact that prescription medication has on overall health care costs. According to the same Segal report, “trend rates for prescription drugs continue to moderate and are close to 1998 levels." This is good news, especially since the gummint is about to roll out its new Medicare Part D drug program (about which I’ll be posting later this week; stay tuned).

What I take away from this is that the health care market is not in such dire straits as the punditry would have us believe. It’s also heartening to think that the drive toward more consumer driven care may be having a bigger impact than previously believed.

Some Blogservations...

Okay, so Noah Webster I’m not. But I couldn’t think of a more appropriate term to describe what I’ve noticed regarding a couple of my recent posts:

In the past week or so, I’ve published two fairly controversial posts; one on a new book touting nationalized health care coverage, and the other on the issue of medical necessity as it relates to In Vitro Fertilization (IVF).

Both of these tend to be “hot button” issues nowadays, and what became readily apparent is how much thought and care went into most arguments on both sides of these issues. I’ve noticed that on some blogs, the comments section in posts like these tend to be quite vitriolic, but InsureBlog readers have offered cogent and articulate arguments without being argumentative.

Another relatively new (at least to me) phenomenon is the cross-blog (or multi-blog) debate that arose as a result of the IVF post. No less than four blogs are involved in discussing the issue, from several points of view and with respect for others’ viewpoints. I’m not sure why I’m so surprised; perhaps it’s from reading posts and comments at some of the poliblogs, which tend to run to rather heated exchanges, with little actual knowledge either offered or accepted.

In any case, I’m really enjoying the back and forth here, and look forward to reading more of the same. Thanks!!

Medical Necessity vs IVF

In our backyard, we have a woodpile from which we feed our fireplace during those notoriously harsh Ohio winters. This summer, a clan of bees decided to make their home therein, a fact of which I became acutely aware when I went to retrieve some wood for our outdoor firepit. Apparently, bees do not like to have their natural habitat disturbed, and I was treated to a stinging demonstration of their displeasure.

I mention this anecdote because, while commenting on an excellent post over at the Health Business Blog, I have managed to set off a swarm of indignant women: another commenter, Susan opined that In Vitro Fertilization (IVF) should be a covered medical expense, and others soon joined the chorus.

I demurred, thus setting off the swarm.

Because I am an insurance critter, I tend to see these things through the simple lens of “risk.” Risk is defined as “the chance or possibility of loss,”and insurance is all about managing risk. I am of the opinion that lifestyle choices such as IVF do not fall under the aegis of risk management. Now, in my own defense, being of the Y chromosome crowd, I am perhaps less sensitive to this issue than XX’ers [ed: is that even a word?]. Nevertheless, I stand by my analysis.

It may be helpful to define what constitutes “medical necessity,” at least insofar as IVF, or Viagra, or baldness cures are concerned. For example, I readily admit that I am close to actually mainlining Rogaine these days, but it does not seem to me reasonable that my insurance policy should reimburse me for that. After all, no one has ever died or became acutely ill by becoming bald. Likewise, search as I have, I can find no evidence that anyone ever became seriously ill, let alone died, because they were unable to easily conceive.

So, what then constitutes medical necessity? Well, according to the standard industry definition, “medical necessity refers to treatment which is required to treat or care for symptoms of an illness or injury or to diagnose an illness or condition that is harmful to life or health.” Thus, we see that IVF fails to meet the threshold of “medical necessity,” ergo it should not be covered by insurance.

But Prof, you may ask, what about all those other “lifestyle” treatments and medications that insurance covers, like Viagra, or “the pill,” or even hair transplants?

There are actually two answers here. The first is that some med’s and procedures are covered because of competitive pressure (Viagra), or collective bargaining (“the pill”). And some, such as hair transplants, are covered by brute force of the gummint. That is, coverage for such treatments has been mandated by various state and/or federal legislatures, and thus became part of the contract, as well as 17% (or more) of the cost of your medical insurance.

So, when an IVF advocate demands coverage for that regimen, she is saying that she believes that you and I should help pay for her to conceive a baby (or babies). There are only two ways that this is going to happen:

An insurance carrier (or some insurance carriers) will determine that this is an under served market, and offer it as an optional benefit. Of course, this presupposes that there is a huge groundswell of folks who want and/or need IVF treatments, and are willing to pay extra for that coverage, and that other insureds don’t mind the premium increase to cover them.

More likely, though, she means that she wants IVF to be a mandated benefit, and thus advocates that the government should force you and me to help pay for her to conceive a baby (or babies). I may well have had my own plans for that money, but will now have to re-budget because those dollars have been forcibly taken from me, and given to her. Somehow, that doesn’t seem quite fair.

Now, I suspect that none (or very few) of those who advocate coverage for IVF really want to take my money from me, nor would they explicitly agitate for that. But that is precisely what they are advocating, whether or not they realize it. Their argument seems to be that they somehow deserve to have children, and I am standing in their way because I am reluctant to help them pay for that wonderful privilege. By this logic, of course, the costs of adoption should then be a covered medical expense as well. Again, I must pull out my lens, squint carefully through it, and declare that neither of these rises to the level of medical necessity, and wishing that it were so isn’t going to change that diagnosis.

It will be interesting to see how those who favor IVF coverage will address this post.

One Nation, Uninsured: A Review (Conclusion)

In Part 1 we learned about Prof Jill Quadagno’s new book setting forth the case for a national health insurance plan. The introductory chapters tended to focus on anecdotal “evidence,” which I do not find compelling. But the rest of the book follows a more rigorous argument, and at least makes an attempt to justify its conclusion.

Dr Q begins the actual meat of the book by laying out the history of medical care and cost at the beginning of the last century. She traces the evolution from private pay to corporate benefit – how we ended up with employer-based health insurance. By the 60’s, as our population continued to age (as folks started living longer and longer), Medicare and Medicaid became dominant forces in the health care delivery system. The Professor then discusses the genesis of national health insurance that began in the early 70’s, and sets up a sort of conflict between providers and legislators, lamenting the forces of the medical industry’s lobbyists. Of course, this fails to take into account the incredible power of the lobby of “care by government:” the legislature itself.

By the early 80’s, TEFRA ushered in HMO’s, based primarily on the tax breaks such entities would enjoy, thereby legitimizing what we lovingly call “managed care.” Dr Q argues (and I tend to agree) that this marked the beginning of a period of unimaginable premium growth. She seems to set up, however, a sort of tension between federal and state regulators; this particular argument left me unmoved.

The mid-80’s, Dr Q writes, brought us COBRA to “plug some of the holes.”

And then there came HIPAA. The goal was, of course, admirable. But it contains so many provisions, some of which are only now becoming obvious (and onerous), that one wonders why this would be a good argument on which to base the need for national health insurance. It’s as if one built a brand new, 8 lane superhighway, but put barbed wire on the guardrails, and abruptly ended the road in the middle of a pit of quicksand. This makes no sense to me.

Her argument seems to be that the current system is “unfair.” I’ll even stipulate that she’s correct, that the system (as it is today) is unfair.

So what?

Where is the Constitutional prohibition against “unfairness?” Better yet, where is the Constitutional mandate for “fairness?” Because some people are not treated fairly, must everyone else be brought down to the lowest denominator? Wouldn’t it be more “fair” to make an effort to bring those less fortunate up to a better level? Nationalizing almost 15% of the economy in order to help a minority of the population seems pretty silly to me.

If one wishes to see a very real world example of what happens when the gummint nationalizes an industry, try taking a train. The passenger rail system, nationalized in 1971, is hardly a model of efficiency: it is expensive, inconvenient, and not well-known for its timeliness of service. Would we want those traits in a national health service?

I think not.

Is the current system perfect? Of course not. But we enjoy a level of care, as a society, that is unequalled in world history. There are a myriad of cost-effective ways to fix and improve the current system, which well serves over 85% of the (legal) population. Seems a shame to toss it out.

I would like to thank the Oxford University Press blog for the incredible opportunity, and the vote of confidence. And I also appreciate Dr Quadagno’s patience with me as I put together this review, as well as for the initial link that started this whole ball rolling. I certainly hope that I didn’t disappoint.

This Week's Grand Rounds...

may be found over at doulicia, who's done a terrific job of culling and organizing a lot of interesting posts.

BTW, she describes herself as a "labor doula;" I'd never heard the term before. Turns out, "(t)he word Doula comes from the Greek meaning ''in service". A Doula is a Professional Labor Assistant who understands the emotional and physical needs of a woman in labor, and provides continuous support and care for a woman throughout labor and deliver." Interesting.

Wearing Genes to Work, Redux

We’ve looked before at the issue of genetic testing and employment, most recently here and here. Now, at least one company, IBM, has committed to protecting its employees’ privacy by explicitly avoiding the use of genetic information.

In a (very) recent New York Times article, IBM announced its decision to ignore such results in both its hiring practices and when dealing with its various workplace benefits.

On the one hand, genetic testing can be a valuable tool in assessing risk, diagnosing conditions, and finding cures. The concern is, of course, that the information can also be used to discriminate against folks who have markers for certain illnesses or proclivities, but of course have no control over their genetic makeup. By being the first out of the gate on this issue, IBM has set the bar. It’ll be interesting to watch how other companies in the tech sector, and then in the business arena in general, choose to address this now high-profile issue.

Kudo’s to IBM.

UPDATE: Jack from the HealtNex blog has additional information on this story.

Weekly Carnivals...

WooHoo! Carnival of the Capitalists turns two today. Rob over at BusinessPundit hosted the very first CotC, and shares some of its history, as well as some thoughts on where to go from here.

And Hello Dollar's Frank has done a great job with this week's Carnival of Personal Finance. Mosey on over.

A New Transparency...

We’ve talked before about transparency in regard to health care costs. Recently, though, Aetna has really taken this concept to a new level. A new pilot program currently underway in the Cincinnati, OH market aims to make real numbers available to Aetna insureds who choose the Consumer Driven Health Care (CDHC) model, such as HSA or HRA.

We all know that carriers negotiate prices with providers, and we have some vague notion that these prices are significantly less than the “street rate” that doctors (and others) charge patients who either don’t have insurance, or aren’t in-network. Until now, though, we had no idea what those costs really are.

The primary idea behind CDHC is that insureds will make better health care choices if they have the tools to decide what is and what isn’t covered, and how much their out of pocket’s going to be for a given service or procedure. And that’s great on paper; the problem is that we consumers have never really had the one tool that would be most helpful: “how much does that cost?” If one knows ahead of time exactly how much a given service is going to cost, instead of guessing and then waiting for the EOB (Explanation of Benefits), then one can make more informed decisions about that service. Or one could even shop around for the best price (although I’m not personally all that enamored of “shopping around” for healthcare services, I recognize that a lot of folks have no problem with it). After all, even gas stations advertise their prices out front, so we can decide where to go to fill up. Why shouldn’t the same information be available when we’re shopping for an item even more expensive than gas?

According to the WSJ, the negotiated rates for some 600 common services are available, on-line, to Aetna CDHC’ers [ed: is that even a word?]: “For instance, an internist in the University of Cincinnati area charges Aetna or its members $161.32 for a visit from a new patient with moderate to severe problems, while another physician a few blocks away charges $132.23 for the same office visit. The first doctor also charges $41.89 for a chest X-ray taken from two angles, while the latter's price is $34.34.”

Of course, there’s more to this than just raw numbers, and we’ll explore those other issues in Part 2. Stay tuned…

UPDATE: David Williams over at the Health Business Blog has an interesting post regarding a potential downside to consumers' health care decisions based on dollars alone.
UPDATE 2: An exclusive interview with Aetna's Medical Director sheds even more light on this exciting innovation.

Interesting White Paper on HSA's...

Thanx to Jeff over at Tusk & Talon, we learn that Dr David Hogberg (with whom this blogger has corresponded) has a new study out on a number of issues regarding HSA's. He discusses some of the problems of state mandated benefits, and how these interefere with the HSA market. Recommended.

Helpful InsureBlog HSA posts here and here.

Grand Rounds is up...

Dr Donnell over at The Haversian Canal has done a really nice job, breaking down a LOT of posts into interesting categories. Check it out.

L'Shannah Tovah!

Happy New Year 5766 to my (fellow) Jewish InsureBlog readers. May the New Year be one of health and happiness for you and your families.

Blogging will (of necessity) be light the next few days...but your patience will be rewarded.

This Week's Money Must-See's...

JD over at Drakeview has done an outstanding job with this week's Carnival of the Capitalists. He's even created a chart of posting history for the past two years of CotC's history (and you thought I was a geeek!).

Our friends up north host this week's Carnival of Personal Finance at the Canadian Capitalist. I for one really appreciate the easy to read, straight ahead style.

If you participate in a Deferred Compensation plan, then you'll definitely want to check out Joe Kristan's post on some new regulations that are in the mill.

UPDATE: Joe's been quoted in an article in Forbes Online today about these new regs. Congratulations!!

Not Pulling Their Weight...

Turns out there’s real dollars at stake for overweight employees. That may seem like a “dunh” moment, but it’s backed up by some hefty numbers: According to a new study, obese employees are costing their employers hundreds, and sometimes thousands, of dollars a year. These losses come in the form of increased health care costs and higher absenteeism.

The study defined obese based on one’s “body mass index.” BMI is a measure of body weight relative to height, and seems to correlate with body fat. According to the National Institute of Health, a BMI of 30 or higher puts you in the obese category.

What’s particularly interesting is that these costs grow directly in proportion to one’s BMI: for example, the study found that the heaviest 3% of employees accounted for over 21% of health are costs. Ouch!

As this blog has previously mentioned, making healthy lifestyle choices not only makes one, well, healthy, but it also helps to hold down healthcare costs.

Asking the Wrong Questions: Conclusion

In Part 1, we broached the subject of rate increases. And in Part 2, we looked at the questions we need to ask about why they went up.

Now let’s talk about what we can do about it.

Well, the first, obvious move is to contact your agent to see what other carriers are available in your area, and how they stack up – both in financial status and rates – to your current carrier. Of course, ones current health status (as well as those of covered family members) will play a role in this process. And remember, just because the new carrier’s rates are better this year, don’t forget that they’re subject to the same issues as your current insurer. That is, their rates are going to go up next year, too. Doesn’t mean that you shouldn’t make the switch, but you need to know that it’s a temporary fix.

Another item to discuss is what, if any, different deductible and/or co-insurance levels will do to help mitigate the rate increase. This is especially relevant when discussing an HSA, because if one has a decent “cushion” built up in the actual account, one can afford to raise the deductible and/or the co-insurance percentage.

There’s one more piece that’s been bugging me: in his email, my friend lamented that he couldn’t afford to raise his prices 30% to match the increase in his health costs. While I obviously sympathize with him, the comparison really isn’t useful. There are pieces to the healthcare puzzle that we, as consumers, have handed over to our insurers, and they have an obligation to pay certain costs. When those costs rise – and they do: med’s especially, but all the high tech stuff isn’t cheap, either – the insurer has an obligation to both it’s stakeholders (owners) and its insureds to have enough money on hand to meet those increasing costs.

Here’s an imperfect, but hopefully useful, analogy: no one likes the price of gas, and it’s especially frustrating when it’s $2.59 on the way in to work, and $2.89 on the trek back home. The only thing that seems to have changed in the intervening hours is that a hurricane is now threatening refineries. But the gas “in the ground” at the station still cost what it cost last week when it was delivered. So why does the price go up? It went up because of the anticipated future cost to replenish the tanks. In the same way, insurers have to guess at the future cost of the services for which they’re going to have to pay.

This is the part of the post where I stand up to receive the slings and arrows of those who will call me a shill for the industry. So be it. But the fact that some carriers raise their rates by some obscene (by our standards) amount doesn’t diminish the fact that the costs of delivering medical services continues to rise, and we want someone else to pay the lion’s share of those costs.

Asking the Wrong Questions (Part 2)...

In Part 1, we broached the subject of rate increases.

Insurance underwriting refers to the practice of obtaining and then evaluating information about the current health of the prospective insured. Of course this starts with the information on the application, but it may also include doctors’ records, or even a physical exam. All of this gives the underwriter a decent “snapshot” of the applicant's current health.

But as the insured ages, so does that underwriting information. In the case of an individual, claims are paid, health conditions arise or worsen, new medications are prescribed. In the case of a group, in addition to those health factors, the make-up of the group also changes over time. The result of all of these changes is that the initial information, on which the rates were based, become obsolete (i.e. “stale”), and this because the risk has changed, the premium will also.

Now, take that same principle, and apply it to a block of business (in other words, a large group of policies). As the group ages, and as claims are paid, and as the overall health of the group declines, rates increase. At first, this isn’t necessarily a terrible thing; after all, we’ve come to expect some increases along the way. But as year after year brings increase after increase, people “trade in” their old, expensive policies for a newer one, with cheaper rates (remember, the new policy will benefit from new underwriting, and will generally be less expensive).

That is, the healthy individuals (or groups, as the case may be) will find other coverage. But if your health has really declined, then you may have no choice but to stay put. And you’re not the only one in that boat: maybe that block of business has a LOT of unhealthy folks in it. So the claims mount up, and fewer and fewer insureds are left in the original “pool” of those who signed up. Welcome to the vicious cycle we call the Death Spiral.

As my colleague Bob Vineyard notes in the comments section of that post, there’s another factor, as well: age (band) changes. Just getting older affects our premiums. Some companies rate people based on their actual age each year, while other lump folks together in age bands. There’s really no “better” or “right” way, each has its own pro’s and con’s. If you’re rated by “attained age,” then your rate only goes up a relatively small amount, but it does this every year. If your carrier bands people, then your rate doesn’t change because you turned 42. But you’ll be hammered when you hit 45. Your choice.

Okay, so we’ve asked and answered the right questions. Now, what to do about that rate increase. Stay tuned for the exciting conclusion in Part 3.

Carnivals Up!

This week's edition of the Carnival of Personal Finance is up at the Free Money Finance blog.

Nice job, too!

And, after a scheduling problem, the Carnival of the Capitalists is available at Any Letter. Thanx to Any Letter for saving the day!

(More) Tales From the Trenches...

Sometimes - and I know that this will come as a complete surprise – I tick people off. Not necessarily on purpose, mind you, but by happenstance, or providence, or just plain luck. Today’s episode may be instructive:

Sally and I had been playing phone tag all week; we finally connected early this afternoon. Sally was interested in medical insurance for her husband, and she reminded me that we had discussed this last year. At the time, he had been cancer free for 4 years or so, and I had told Sally that carriers really preferred at least 5 years treatment and cancer free.

So, Sally informed me that it had now been five years, and asked what kind of plans and rates would be available. I suggested that, before we went through a lot of paperwork, perhaps she could tell me a little more about Rob’s current health.

“Oh, he still smokes, but he only takes one medicine, it’s [name of post-chemo med],” she informed me. I knew from experience that this particular med would render him uninsurable in the “standard” markets, and told her so.

“Oh, well, then, he’ll just stop taking it and we’ll say no on the application.” As one might imagine, I was less than sanguine about this suggestion, and I told her so.

“Well, we have ALL of our insurance through your agency; surely you can do SOMETHING.” You’ll be pleased to know that I didn't ask her to stop calling me Shirley, but I was still unable to help her. She continued, “otherwise, we’ll move all of our policies to another agency.”

This particular threat has never really moved me; if a client doesn’t understand that I really don’t make the rules, then there’s precious little that I can do to convince them to listen. So I expressed my regrets, and started to suggest another course of action.

But Sally was having none of that, and hurriedly closed the conversation, informing me that she would be calling back later to cancel her other policies.

Now, I thought about this for a while: someone had just threatened to fire me as her agent because I was doing my job in an ethical and reasonable manner. Isn’t that just the least bit odd? So I called a friend of mine, who agreed with my course of action, and asked if there was anything I could have done for Sally’s husband.

“That’s the funny part of this,” I said, ”I was trying to tell her that we have a high risk plan that may do the job, but she hung up on me before I could get all the words out.” My friend asked what I planned to do, and suggested that I shouldn’t punish Sally’s husband, who needed the coverage, for Sally’s unreasonable behavior.

He had a point.

So, about an hour later, I called Sally back, and explained that I did have access to a plan that might work for her husband, and that I had been trying to tell her that when she hung up on me. She apologized, and the upshot is that she asked me to start the paperwork on the new plan, and also to see what we could do for herself and her child.

Being right is good, doing right is better.

Sometimes, Carriers Do the Right Thing...(UPDATED & BUMPED)

It should be apparent by now that I am hardly any insurance company's shill. But when one does something right, it's appropriate to acknowledge that.

Today, I received this email from United Healthcare:

"To help affected UnitedHealthcare members receive the care they need without unnecessary delays or disruptions, we are temporarily changing our claims payment policy for affected members. Payment of the health care services provided, regardless of location or network status, will be reimbursed at UnitedHealthcare's in-network benefit level."

This means that victims of Katrina don't have to sweat whether or not the providers they see are in-network. It also means there's one less hassle. One could argue that this is hardly altruistic: for one thing, it's good PR. For another, it's probably less of a headache from UHC's end, as well.

But I believe that why one does something is less important than that the right thing is done.

Kudos to UHC.

UPDATE: Just received another email from United: "With Hurricane Rita heading towards land, we are committed to supporting our customers and members during this time. We are focused on helping people receive the care they need. The measures that were put in place for Hurricane Katrina are at the ready for those impacted by Hurricane Rita"

Among other things, they've eased the process for folks to "buy ahead" on their meds, so that they don't run short during the crisis. I'm going to second Chad's remarks in the comments: double Kudo's to UHC.

Asking the Wrong Questions...

Recently, I received an email from a good friend (who is NOT a client) lamenting the latest increase in his family’s health coverage. I happen to know that said coverage is through a well-known and well-established carrier, and is in fact an HSA plan. He wrote “(m)y Health Insurance premium just went up $400!” Now, there was no indication as to whether that was $400 a month, or a year, nor did he mention what percentage of his premium that $400 represented.

And really, that’s the important number: absent some yardstick, there’s no real way on knowing just how grievous that rate increase is. Look at it this way: if his annual premium before the rate increase was $3500, then a $400 dollar increase is about 12%, which isn’t really all that hateful. But I really don’t know, because that information is missing. The reason I mention this is that I often get calls from folks who give me raw numbers, but with no context, so I have no way of knowing whether or not I can help them.

The email went on to report that when he called the carrier to question the increase, he was told “TO BE THANKFUL that it was only a $400 raise - that most parts of the country went up 30%.” Now, the company rep shouldn’t have been so blasé about something so important, and it really doesn’t matter what rate increases other folks got.

The email concluded by asking “(w)hen will WalMart buy some hospitals and offer their own health care?” That’s really two questions, each easily answered: 1) never and 2) they already do.

All of which is background to the real point of this post [ed: ‘bout time you got around to that!] which is my reply to him: “You’re asking the wrong questions.”

So, what are the “right” questions?

Let’s start with the premise that my friend is hardly an exclusive case: lots of folks have health had their health plans for a long time, and have become frustrated at the ever-increasing rates. There are two primary reasons that one sees substantial rate increases on older business: one is “stale underwriting,” and the other is the legendary “death spiral.”

So the first question is “what’s stale underwriting?” The second is “what’s the ‘death spiral?” and the third is “what can I do about either or both of these?”

We’ll answer the first two questions in Part 2, and the last one on Part 3.

Great Office Visits...

start before you get there. David Williams over at Health Business Blog has a helpful post about preparing beforehand for your next encounter, "Planned Patienthood."

Check it out.

On the Bleeding Edge...

of Consumer Centric Health Care. I make the distinction between Consumer Driven vs Consumer Centric because the plans we’ll be looking at encourage an insured to take at least some responsibility for their care. On the other hand, neither one would be HSA-compliant, so we’ll skip the CDHP label (at least for now).

My industry just loves acronyms: CDHP, HSA, HRA, PPO, you name it. Well, let’s add another one to that list: Self Directed Health Plan (SDHP). One of my carriers has just introduced one such, and it’s a pretty neat idea. They start with a high deductible group plan, and while they strip out the doctor’s visit co-pays, they leave intact the prescription drug card, as well as the co-insurance. The high deductible and absence of co-pays helps lower the cost dramatically.

“Well, Henry, what’s the big deal,” you may ask, “after all, we’ve seen low-end plans before.” What makes this one unique is that the carrier is paying the employee to stay healthy: the plan includes a Self Directed Account, funded solely by the insurer. That’s right, the carrier puts in $1,000 a year for each covered employee ($2,000 for families), to pay for routine and preventive care. Services such as annual physicals and immunizations get reimbursed directly by the carrier, but still count toward one’s annual deductible. Pretty cool.

A little bird tells me that one of our eastern seaboard states is working with an insurance company to develop and market a policy that’s also “out there:” all covered employees of companies that sign up for this coverage receive “executive series” medical exams. In fact, so do their covered spouses and children.

Once the employee’s (or family member’s) current health is assessed, they’re enrolled in a treatment plan (if applicable). They receive full policy benefits if they follow “doctors orders,” but receive a significantly lower level of benefits if they don’t. This will be very helpful for those with chronic conditions such as diabetes, Crohn’s, hypertension, etc.

The program is still in the planning stage, but the carrier, exam provider and re-insurer are all in place. So far, details are scarce, but I’ll pass them along as I learn of them.

Stay tuned…

Rounds and Carnivals...

SoundPractice is hosting Grand Rounds this week.
The Carnival of Personal Finance is up over at Optimized Living.
And you can find this week's Carnival of the Capitalists at Willisms.

An Ethical Question...

A few weeks ago we heard the story of Haley Knutsen, the brave 9 year old who suffered from leukemia, and whose parents’ medical plan had come up short. Folks from around the country rallied to raise funds for her treatment, which was to have included a transplant.

Yesterday, we learned the sad news that Haley had lost her 7 year battle with leukemia. We also learned that her parents intend to donate the money that has been raised on Haley’s behalf to another young person who faces a similar challenge.

Which raises the question: are such monies fungible? In other words, is it right that Haley’s parents treat the funds that were raised as solely their own, to do with as they please, rather than return them (if possible) to the folks who actually contributed?

On the one hand, it’s hard to imagine that someone who donated money to little Haley would have a problem with that money going to another little girl (or boy) with leukemia.

On the other hand, when one donates money on behalf of a specific person (or cause) is it wrong if that money is diverted to something (or someone) else? I seem to recall that, after 9/11, some charities took money earmarked for 9/11 victims and spent that money on another worthy cause, which caused some controversy. Isn’t this the same thing?

Just wondering…

Sad News...

Elisa over at HealthyConcerns reports that little Haley Knutsen has lost her battle with leukemia. Donations to her transplant fund are being forwarded to another young leukemia patient being treated at the same facility.

Our hearts and our prayers go out to Haley's parents, and community.

My First Book Review...

Recently, I was asked by Oxford University Press to review their new title “One Nation, Uninsured” by Professor Jill Quadagno of Florida State University. I met Dr Quadagno (virtually) at the OUP blog where she had posted an article which linked here. I left a few comments, which prompted the blog’s editor to contact me, offering a chance to review Dr Q’s new tome.

Dr Q is a proponent of national health care (not necessarily socialized medicine, BTW), while I am a staunch opponent. This seemed like a great opportunity to get inside the mind of someone with whom I vehemently disagree, to see if there is any common ground, and to see what makes such a person “tick.” It’s also a valuable opportunity to test my own thought processes, and my own beliefs.

SPOILER ALERT: I’m still a staunch opponent of national health care, let alone socialized medicine.

I’ve decided that the fairest way to do this is to offer first my opinion on the quality of the writing, and then on the quality of the content.

As to the first, I found the book to be a fairly easy read. The chapters flow well into each other, and her style is unusual for a member of academe: she doesn’t talk down to her audience, nor assume that we’re experts in the field. If you’re a proponent of a national health care system, this book will help you understand a bit more about how one might work, and some of the challenges such a plan might face. If you’re a free market advocate, it’s not likely to be that useful for you, other than as for intellectual exercise. Either way, the $28 MSRP seems high; however, it’s available from Walmart for $17.

As to content, well, that’s another story. Dr Q opens with what I consider the weakest form of debate: anecdotal evidence. That is, tearjerker stories (which I do not doubt are true) about how the weakest among us have been let down by the system, who can’t afford or qualify for insurance, folks who had insurance and lost it. Of course, I am not unsympathetic to their plight (who would be?), but anecdotal evidence is never going to win a fact-based debate. I can tell all kinds of success stories about folks who have excellent insurance, who were able to buy it even though they weren’t in Olympic-athlete condition, and folks who were able to save money with insurance.

So what?

All this does is reduce the debate to “my story’s better than yours,” not move it forward.

One of the major problems I have with those who push for government-based health care is that we already have two such systems in place: Medicare and the VA. Both of these are not just comparable to, but are actually the embodiment of, national health care systems. The Medicare model is a bit less restrictive; the VA model is exactly what nationalized health care will look like.

Now, do any of the fine folks who yearn for national health insurance ever point to these two institutions as models of efficiency? Of world-class levels of care? Of course not. But if they are truly interested in a fact-based, as opposed to an emotion-based, debate – that is, a debate on the merits – then they must readily concede that their arguments are indeed without merit.

Believe it or not, there are eight chapters in the book; this introduction has touched only on the first. We’ll look at the others in the coming weeks.

Another CDHC Post...

As in Consumer Driven Health Care, but this time from a different perspective: prescription medications. Under the typical CDHC model, meds are subject to the high deductible that drives the plan. Once that deductible (which includes meds, office visits, etc) is met, then they’re covered at the higher rate (usually 100%).

But as we all know, prescriptions account for a disproportionate slice of the health care expense pie. So, is there some way to bring those costs more in line, to underscore the savings available in CDHC?

Well, yes: “Medco Health Solutions (has) announced major additions to its consumer-directed pharmacy plan that promotes the use of preventive and chronic medications by lowering the out-of pocket costs of these drugs to consumers enrolled in high-deductible health plans.”

As we’ve discussed before, HSA’s (Health Savings Accounts) are the primary vehicle for CDHC (although certainly not the only one). Under new guidelines, HSA plans can include a deductible waiver for certain preventive meds. In other words, that lipitor you’re taking to lower your cholesterol, or the meningitis vaccine for your son headed off to college, can skip the deductible and go straight to the 100% reimbursement level. Not bad.

Medco’s lowering their price for such drugs, which amplifies the savings already built into the HSA. Much as using a PPO network when choosing a doc, using Medco preventive meds can lower one’s out-of-pocket, as well. These discounts really only affect those with CDHC plans that require some co-insurance after the deductible; obviously, if you’re already at 100% reimbursement, the discounts are irrelevant (at least to you).

This is one more arrow in the CDHC quiver. It’ll be interesting to see what part of our healthcare delivery system steps up next.

ReliefConnections.org

N Z Bear has a new site that matches those in need with those who can help. InsureBlog readers have already shown a remarkable generosity; I'd really encourage everyone to keep that momentum going. Thank you!!

Like a Bridge Over Troubled Waters...

“When you’re weary, feeling small,
When tears are in your eyes, I will dry them all”

So go the lyrics to Simon and Garfunkel’s 1970 hit. And it’s probably fair to say that all of us have bad days, or weeks, or even months. But we don’t have to “go it alone.”

EAP’s (Employee Assistance Programs) have been around for years. But they’re kind of under the radar for most folks. They’re part of a group of insurance-related products that people tend to take for granted (like hearing tests, or wellness programs). And that’s a shame, because these programs can be a vital part of one’s well-being.

An EAP seeks to “assist employees and family members with substance abuse, mental health, family, and other problems that negatively affect their job performance.” They’re usually part of a group insurance plan that covers employees and their dependents. Most are embedded in the plan; that is, they’re automatically available to any covered family member. Sometimes, it’s as simple as a “nurse-line;” others include substance abuse regimens.

According to CorpCare (an EAP firm in Atlanta), about 1 in 5 of their cases involved marital or family problems [ed: gee, there’s a surprise!]. The most prevalent issue, though, is stress: ComPsych, an EAP based in Chicago, says that 40% of their stress cases cited workload, while another 34% had “people issues.” Once can imagine that there will be a spike in EAP claims based on the recent Katrina experience.

So, why don’t we hear more about EAP’s? Well, part of the reason is that most of the time, when looking at group medical plans, they take a backseat to the more commonly used benefits, such as doctor visits and prescriptions. But that’s changing, too: more companies are using EAP’s to help train their employees in more advanced “people skills:” conflict resolution, job performance reviews, and workplace behavior. With the rise of EPLI (Employee Practices Liability) claims, such as sexual harassment and the like, such issues become even more urgent.

Rest easy…

It's Carnival Time Again!

Grand Rounds is up over at Sneezing Po (gesundheit!).

You can catch the Carnival of the Capitalists at Crossroads Dispatches.

And finally, the Carnival of Personal Finance can be found at Smart Money Daily.

As usual, they're all chock full of useful info, presented in an easy-to-follow manner.

Just Hop on the Bus, Gus...

And let your group insurance pay the fare. Well, it’s not really that simple, but with gas prices so high, even insurance folks are getting into the act.

Believe it or not, in addition to healthcare and daycare, some transportation expenses are also tax qualified. No, you can’t just deduct the subway token on your next 1040EZ, but “(q)ualified transportation benefits can be provided directly by you or through a bona fide reimbursement arrangement.”

Under a Qualified Transportation Expense Plan (QTEP), employees can save up to 40% on their out-of-pocket expenses on certain transit and parking costs. These expenses, which have to be associated with their commute to work, can be paid with pre-tax dollars. They’re most commonly used in major cities by commuters who take mass transit, but they’re also available to workers who use carpools.

In a recent survey, the Society for Human Resource Management found that 14% of employers offered a QTEP (or other transit subsidy). That’s about 1 out of every 7 companies: not bad for a benefit that’s been so long under the radar.

Now, there are some rules and guidelines for companies that want to go this route [ed: ugh!]. For one thing, QTEP’s can’t be offered under a Section 125 (i.e. “cafeteria”) plan; that’s because they’re enabled under Section 132, which has its own rules:

1) There are monthly dollar limits, any reimbursements that go over these limits become taxable income to the employee

2) There are special rules about how (and when) benefits are calculated

3) It’s not really “use it or lose it,” because unused funds can be rolled over. They can’t, however, be cashed out.

4) Employees can “join up” any time during the year, not just at Open Enrollment

I suspect that the reason we haven’t seen more of these is twofold: first, they’re not as well known (or as aggressively marketed) as their Section 125 “cousins. And second, until recently, there hasn’t been such a hue and cry over gas prices. If they continue to hover in the $3/gallon range, though, don’t be surprised to see more airplay given to QTEP’s.

Blogging for Katrina (bumped)...

UPDATE: This link goes to a clearinghouse that aggregates companies which match donations. You can use it to see if your employer offers matching.

UPDATE II: The BlogBurst Katrina Fundraiser is now over, having raised well over $1 million. Thanx and kudos go to N Z Bear, et al for the incredible efforts. Please take a moment to check out the new Web Relief Project Directory, which lists current web-based relief projects.

UPDATE III: Thank You!! According to N Z Bear, InsureBlog readers have donated almost $2000 toward the Hurricane Katrina BlogBurst Fundraiser. In fact, we're in the Top 40 of ALL 1,850+ participating blogs. Wow. BTW, you can still contribute here.

Regardless of your political pursuasion, fellow Americans are hurting, and we in the blogoshere can help.

N Z Bear is coordinating a special page to raise money to help those affected by Hurricane Katrina. The special "blogathon" officially began last Thursday (September 1) here.

"There's no America out there except America to respond to it. We've got to do it ourselves."

--Col. Austin Bay (on the Hugh Hewitt Show, Tuesday, August 30)

Give til it hurts.

This Week's Carnivals

Grand Rounds is up over at Corpus-Callosum (which is, according to my dictionary, "the largest white matter structure in the mammalian brain." Hmmmm...).

The Carnival of Personal Finance is hosted this week by Savvysaver.

And the Carnival of the Capitalists may be found at ReThinkIP.

Have fun!

Mixed Blessings (Conclusion)...

In Part 1, we discussed a recent study that looked at the (hypothesized) relationship between genetic diseases and intelligence. The subjects of the study happened to be a specific population of Jews, who on the one hand display above-average intelligence, but on the other are more prone to a deadly disease. Now, what does this have to do with insurance?

We’ve addressed the general topic of genetic testing in insurance underwriting before. It’s been many years since insurance applications asked one’s race, and I’m reasonably certain that (with the exception of certain fraternal carriers), the question of religion wasn’t even brought up [ed – if any readers know otherwise, please let me know].

The question arises, however, as to whether or not carriers should be testing for such potential time bombs. In other words, is it necessarily a good thing that genetics-based underwriting is prohibited? If insurance is truly about risk management, then doesn’t it make sense that a carrier should have an accurate picture of that risk?

In Great Britain, the government and the insurance industry have been wrestling with this dichotomy for some time. A voluntary moratorium was recently extended; insurers in GB have agreed to abjure from using “predictive genetic test results” until 2011. And here in “the colonies,” a recent HCFO article acknowledges that “(g)enetic testing will undoubtedly have broad effects on health care financing in the insurance context and elsewhere.”

The challenge is going to be one of balance: insurers need accurate and complete information about a given risk, while prospective insureds shouldn’t be penalized for something over which they have no control. As noted in Part 1, certain populations are at increased risk for certain conditions: blacks and sickle cell, Ashkenazim and Tay-Sachs, women and breast cancer, etc. If insurers can’t ask about race and religion, then how do they accurately price a given risk? On the other hand, when we read about how vulnerable information databases may be, how do we trust such information to remain private?

I sympathize with the carriers’ need to know as much as possible about a prospect’s health history, and can even see how genetic information can be useful in correctly pricing a risk. But I think that this is far outweighed by an individual’s right not to be adversely affected by such information over which, after all, one has no control.

There is one area of insurance where such information can, and should, be exploited: according to the HCFO study, “genetic testing is most often used to confirm diagnoses or to predict who is most at risk for a particular disease or condition. Advance knowledge of risk factors could point to preventive services or the need for early detection, and could allow providers to more cost-effectively target services.” The goal should be to balance the “good” (claims management, preventive care) with the “bad” (risk to privacy, unfair discrimination).

We live in interesting times.

Mixed Blessings...

"Your child can be smart, or he can be healthy."

Which would you choose? At first blush, this calls to mind the "straw man argument" we've discussed before, but it may not be.

A recent study on the relationship between the (legendary?) intelligence of Ashkenazic Jews and their risk of a dreaded genetic disease (Tay-Sachs) has sparked an intense debate.

First, though, it's probably helpful to explain "Ashkenazic Jew." There are two populations of Jews in the world, although they share a mutual heritage and homeland. One, the Ashkenazi, hail primarily from eastern Europe. The other, Sephardi, come from the Mediteranean area. Because Jews prefer to marry other Jews, there is a limited gene pool, which tends to exacerbate genetic problems.

Tay-Sachs is a genetic disorder that almost exclusively afflicts Jews of Ashkenazic descent (similar to sickle cell anemia to those of African descent). This is a bad thing.

Ashkenazic Jews tend to score much higher than the mean on standardized intelligence tests; this is a good thing.

Hence the dilemna.

The problem is that, in some ways, the inadvertent experiment that has led to these results -- that is, the fact that Ashkenazic Jews tend to marry other Ashkenazic Jews, and produce Ashkenazic offspring -- looks a lot like a systematic program of eugenics, such as was undertaken by the Nazi's.

As one can imagine, such an image doesn't sit well with either scientists, or the Ashkenazim themselves. Thus the fierce debate.

The study "hypothesizes that the genetic disorders could be the unfortunate side effects of genes that facilitate intelligence." In fact, the authors of the study had some difficulty even getting it published in the first place. There is a very real concern that some in the lunatic fringe would find great joy in using the results of the study for their own nefarious goals.

When Drs Richard J. Herrnstein and Charles Murray first published their controversial book (The Bell Curve) almost a decade ago, they ran into a buzzsaw of politically correct criticism. Perhaps this explains why this new study is still under the radar: it has the potential to brew up the same kind of reaction.

And yet, the study of this unusual relationship may help further our knowledge of how genetics works, and could conceivably lead to medical breakthroughs.

So, why are we talking about this on an insurance blog? Part 2 is here.