Stoopid Client Tricks -- Basic Economics II

Last week I received a call from an old client. He has been paying for his son’s health insurance policy and wanted to cancel it. It seems that the son had gone in for his annual checkup and, with a $1500 deductible, the policy didn’t pay for all the lab tests.

A bit of background…This family was uninsured and had virtually no assets when their teenage son almost died from Leukemia. Medi-Cal (a.k.a. the taxpayers) picked up the tab for his treatment. He fully recovered, but needed to have periodic exams to make sure that it had not recurred. When the Dad contacted me, I found out that he had a small business. With California’s guaranteed issue rules, this meant that he was eligible to set up a group policy. I set one up and the family moved off the dole.

Four years later, the business went under. Since COBRA wasn’t an option and the son certainly wasn’t insurable, he took out a HIPAA policy. Premiums were around $230 per month for a $1500 deductible plan, Rx coverage, and $35 doctor office co-pays. No annual maximum and a $5 million lifetime maximum. Altogether not a bad policy.

It’s now been three years since the HIPAA policy was issued and the Dad wants to cancel it. Not only didn’t it pay for the lab tests (It did sharply discount them.), the family’s now into “herbal medicine”. Herbal Medicine? That’ll help big time if the leukemia returns. Luckily, he’s probably again eligible for Medi-Cal.
Besides telling him that he’s an idiot, what would you do?

An editorial comment: This illustrates why the "high deductible" solution, as proposed here in California, won't solve our health insurance crisis. Health insurance simply isn't perceived as insurance. It's evaluated with a mental cost / benefit calculation and if the cost is greater than the benefit, many people make the (entirely rational) decision to not buy it. Medi-Cal limits the downside. Now, if that didn't exist, and the cost of a recurrence of the Leukemia was charitable care or a probable death, do you think he would be dropping the policy?

La Plus Ca Change...

Please excuse my French. It's the start of a famous quote: The more things change, the more they stay the same.

Or, as Yogi Berra once observed: It's deja vu all over again.

Our readers may recall that not so long ago, Anthem and a local group of providers had a falling out, with predictably (at least by us) problematic results. Claims went unpaid, or reimbursed at drastically reduced levels, checks were cut to insureds instead of providers, there were daily diatribes in the local press (some pro-Anthem, others pro-Premier).

In short, it was ugly (if you don't believe me, just do a search here on "Premier").

Maybe there's something in the southwest Ohio air (or water), but it appears that an eerily similar brouhaha is shaping up in the Cincinnati market. There, the big player is the Cincinnati Health Alliance, comprising some 8 hospital networks and who knows how many physicians. Reading the press is weird: it sounds like a rerun of the Anthem-Premier grudge-match. The carrier claims that the Alliance's demands are out of reason, while the providers aver that Anthem is playing hard ball with their patients' care.

Sound familiar?

Fortunately, I have access to top secret materials (not really: these are flyers sent out by the providers, pleading their case) that may shed some light on the matter.

For Anthem's part, they claim that the Alliance is already overpaid, and that meeting their new demands would be unfair to premium payors and other providers.

Of course, we all know who really ends up with the short end, right?

Carnival Monday

The Carnival of The Capitalists is up at Political Calculations. Host Ironman is apparently a serious geek: he's got it laid out in an easy-to-navigate spreadsheet format, sortable and categorized. Very cool.

With April 15 peeking around the corner, Joe Kristan has a timely post on the AMT, and how congress is exploring ways to make a bad situation even worse.

Insurance Dispatch...

Graduations and job changes can make insurance a challenge. In this week's 'Dispatch, we take a look at how Short Term Medical plans can help out.

Check it out at Tusted.MD

Cavalcade #22: Submissions Due

Submissions for next week's CoR, hosted by Sentinal Effect, are due this coming Monday (the 26th).You can submit your (or someone else's!) risk-related post via:

Blog Carnival

or

Email

Please include:

■ Your blog's url

■ Your post's url

■ The trackback url (if applicable)

■ A (brief) summary

PS We're scheduling hosts for Early Summer '07, so don't wait too long to sign up!

Health Wonk Review

This week's HWR is hosted by medblog biggie Matthew Holt. Lots to choose from this time around, with some twenty posts, all with helpful context.

Educators are grappling with the idea of school vouchers, but until I saw this post from Jason Shafrin, I didn't know that there's a similar concept being bandied about for health insurance.

Stupid Admin Tricks

Well, why not? We've had Stupid Carrier and Stupid Client tricks, and now we have a new category.

So what brings this on?

One of my groups, which has been a client for almost 20 years, recently agreed with me that they should change from their generic co-pay plan to a high deductible plan coupled with an HRA (Health Reimbursement Arrangement). The primary benefits of this move were two-fold: the employer saved a great deal on the premium (one of those unfortunately-rare cases where the price differential was substantial), and could afford to generously fund the reimbursement account.

Regular IB readers know that we almost always redact the names of carriers when we discuss them. This is not so much for purposes of liability as it is that most carriers do stupid things, so that it is not really useful to identify which one in any given scenario. But what happened in this instance was so egregious that I feel compelled to actually name the entity involved.

The carrier we're using in this case owns an HRA administrative company, called Definity. Their offer is simple and attractive: if you write your case with the parent company, Definity will set up and administer your HRA for free. This can be significant: set-up fees alone can run into the hundreds of dollars, and on-going administrative services into the thousands.

Still, it is said that free advice is worth what you pay for it, and so appears to be the case with free HRA administrative services.

Of a Monday, I called the number I had, to get the ball rolling (arrange for paperwork and instructions to be sent to the client). But when I called the number I had been given (by the carrier), the "gentleman" who answered refused to identify either himself or his company. That was odd, so I asked if I had gotten the right number, was this Definity? Instead of answering this reasonably straight-forward question, he asked if I was a "member." Hunh?

So I asked again, had I connected with Definity. He replied that he couldn't tell me that (would he have had to kill me?) unless I confirmed that I was a member. I pointed out that he was being moronic, that all I wanted to know was whether or not I had dialed the correct number, and if this was indeed Definity. He refused to budge, so I asked for his supervisor. I was told that "Dan" was not going to be available to me, and I observed that this was idiotic. The "gentleman" objected to this characterization, and warned me that if I persisted, he would hang up. I replied "Too late!" and disconnected. Redialing the number, I was connected with a different person, who was apparently empowered to divulge the fact that this was, in fact, Definity, but that the number I had been given was for claims, not "sales," and that she couldn't connect me to that one.

At this point, it occurred to me that I had learned something quite valuable: if these folks were this incompetent when I'm trying to get a relatively simple plan set up, I can only imagine how poorly they would have managed the arrangement itself. Thankfully, I was able to save my client from such a fate by referring him to a local admin who charges a reasonable fee for his services. It's true: Definity's plan was free but, at that, it would have been far too expensive for my tastes.

Sick Time Blues...

According to a new poll, conducted by the Wall Street Journal and Harris Interactive, some 80% of us think it's a good idea to require our employers to give us paid sick days. To add insult to injury, almost as many claim that employers who take a pass on this unofficial tax will end up paying for it anyway.

Perhaps mitigating this entitlement mentality is the finding that about half of the 2,700 respondents understand that such a requirement would have adverse effects on their employers' business. So, there's some hope, after all.

What sparked this whole debate? Well, it seems that (no surprise) San Francisco now requires employers to grant paid sick time to their employees. And, certain members of Congress (who shall remain nameless) are looking to expand this nationally.

This would be in addition to exiting FMLA legislation, and could have some deleterious effects on our competitiveness in the global marketplace. And, of course, it could mean that a lot of Mom-and-Pop shops will find themselves shuttered, forced out of business by even more required benefits.

And this is, indeed, a "benefit:" many of us already have employer-subsidized health insurance, as well as short or long term disability cover. In effect, this kind of law would force employers to self-insure short- (or potentially long-) term disability claims. Since we know from previous excercises that employers don't pay premiums or taxes, such a mandate will lead to higher prices, fewer jobs, or both.

Kinda sickening, isn't it?

Ho Hum

What’s happening with the Massachusetts universal health plan these days? Oh, nothing. Or maybe everything. Perhaps your reaction will depend on - or even change - your mood.

"Mar. 20--Leaders of the business community and major health insurers called yesterday for the state to delay for two years, until July 2009, the requirement that all residents have health insurance that meets state standards."

"To spare thousands of insured residents from having to buy expensive upgrades, the letter also urges the Connector Authority to allow plans with no prescription drug coverage to meet minimum standards. It also asks that plans with dollar caps on lifetime coverage be included."

Dollar caps on lifetime coverage? Don’t I get junk mail offering that kind of plan every month or so??

Keep in mind the Massachusetts plan already includes a $2,000 deductible ($4,000 family).

As they say, read the whole thing.

Basic Economics

Let’s play a game. Roll time forward a bit…universal healthcare has arrived and you are now a Regional Head of the Healthcare System. You have an annual budget that you absolutely can’t exceed. The medical expenses for your region have been increasing and this year you’re going to exceed your budget. What do you cut? Medical staff? Drug expenditures? Or do you defer maintenance and maybe cut back on some housecleaning?

Want to see something interesting? Do a search on Google for “Canadian Hospitals filthy.” Then do the same thing for American hospitals filthy” and “NHS filthy.”

The Canadian search produces a stream of articles decrying deplorable conditions in their hospitals. The American search turns up articles on the VA system and, more interestingly, quite a few articles on the England’s National Health Service. At the time I ran the search, no civilian American hospital was mentioned on the first couple of pages of the search results. And the search on NHS produces an appalling number of hits.

According to the articles, both the NHS and the Canadian systems have one thing in common – both systems have cut back on cleaning as a way of saving money. In many cases, the cleaning staff has been replaced by subcontractors…I assume by the lowest bidder willing to agree to the contractual terms. Thing are so bad that, according to one of the articles, one dying patient left money in his will to clean the windows of his ward.

The result has been predictable… the incidence of secondary infections has increased to hundreds of thousands of cases per year. Antibiotic-resistant bacteria are flourishing (click on the findarticles.com link) and killing thousands of people annually. All in all, it sounds like many hospitals are equivalent to what you’d expect in a Dickensian novel.

Take a look at these articles:
Here
And here
And here
The environment that is described is truly disgusting.

Can this happen here?

Absolutely. It’s basic economics…a question of resource allocation. All it will take is the establishment of a centrally managed non-competitive health care system. When budgets are tight and somebody has to decide between purchasing medicine and having an “extra” janitor, guess which one will lose out. The lack of medicine will have an immediate measurable impact. The loss of a janitor? Well, I guess the other ones can just work a bit harder.

You disagree? Need another example? Look inside of one of California’s public school bathrooms. The same principle applies. With no extra money, sanitation isn’t high on the priority list…just ask my kids.

To be continued…

Carnival Monday!

The Lazy Man and Money blog hosts this week's Carnival of Personal Finance. It's an interesting and diverse compendium of over 4 dozen posts, neatly categorized and helpful annotated.

We've blogged on Identity Theft here at IB, most recently here, so I found Money Smart Life's post on the IDT risks hidden inside our copiers to be both timely, and chilling.

Insurance Dispatch...

In this week's 'Dispatch, I share my thoughts on the proposed HPV vaccine mandate.

For those IB readers who may be unfamiliar with the subject, check it out at Trusted.MD

BS Update

A couple of weeks ago, I expressed my doubts about mandated HPV vaccination. Among other things, I questioned the efficacy of such a program, as well as the wisdom of implementing it.

If anything, I may have underplayed the hand:

"A researcher who worked on a vaccine for the human papillomavirus is warning that it hasn't been tested on young girls, is "silly" for states to mandate the vaccination, and in a worst-case scenario could even increase cervical cancer rates."

Dartmouth professor Diane Harper actually worked on the study which formed the basis for the vaccine's approval, and notes that it was tested only on women aged 15 to 25. In fact, she believes that it's most helpful for those who are at least 18. It also appears that at least one member of the Centers for Disease Control's advisory committee on immunizations has reported that "while the vaccine may be helpful, it should not be mandatory."

What really brought it home for me, though is her assertion that "it's not been tested for effectiveness in younger girls, and administering the vaccine to girls as young as 9 may not even protect them at all. And, in the worst-case scenario, instead of serving to reduce the numbers of cervical cancers within 25 years, such a vaccination crusade actually could cause the numbers to go up." [NB: that link seems to work only sporadically]

She echoes my concern that we really don't know what the long-term effects of the vaccine will be. I generally try to err on the side of caution, which would initially seem to be "heck, go for the vaccine - after all, where's the harm?" But the risks here are great, and the downside is particularly troublesome.

It's nice to be validated.

Blues News You can Use...

Sometimes, a carrier can actually contribute something helpful to the on-going debate about health care and health insurance. For example, the Blue Cross Blue Shield Association has published its 2007 Medical Cost Reference Guide.

In it, you'll find some interesting (and enlightening) numbers:

■ In 2006, health care spending in the U.S. reached $2.2 trillion

■ The gummint continues to account for almost half the total costs, mostly through public programs like Medicare and Medicaid

■ Private health insurance accounts for about one-third of the total

■ About 2/3 of us are covered through commercial (private sector) insurance plans, mostly through our employers

There's lots more, if you're willing to dig a little.

Cavalcade of Risk #21 is up...

Rita Schwab hosts this stellar edition, with 32 excellent posts, in 7 "risky" categories.

We at IB have long argued that the cost of health care drives the cost of health insurance, and blogger biggie Arnold Kling's post really drives this home.

Grand Rounds...

Bertalan Meskó, blogging at ScienceRoll, hosts this weeks 'Rounds. Built around a Monthy Python theme (NOBODY expects the Monty Python Grand Rounds!), and rife with Python video, this remarkable effort (over 50 posts!) by a 4th year medical student is a lot of fun.

I've been meaning to link this for some time: You may recall our post on Baby Ashley, and especially the blogging efforts of Dream Mom. well, she's collaborated with a neonatal doc to produce a compelling blog mini-series about the travails of a newborn. Recommended.

GrannyScam Update

Regular IB readers may recall our story from last summer, wherein two elderly women bought insurance policies on the lives of homeless (and helpless) men, and then (allegedly) ruthlessly murdered them for the death benefits.

At the time, I was skeptical of the tale, because it seemed so far fetched (even in this day and age). Turns out, though, that truth is stranger than fiction:

"Checks and life insurance forms show that two women made millions from the deaths of two transient men they are accused of killing, a prosecutor said in a preliminary hearing Monday.

Helen Golay, 76, and Olga Rutterschmidt, 74, are accused of befriending the men, convincing them to sign the women's names on to their life insurance policies before drugging and running them over in secluded alleys."

Both women have pleaded "not guilty," and may soon face trial.

In an ironic twist, at least one of the issued policies was for accidental death only, and the insured (apparently) died of natural causes. The best laid plans...

Hoosier Health Care Provider?

Here at IB, one of our pet topics (and interests) is transparency in health care, about which we've written numerous times. Now comes word from Indiana that a group of Hoosier business-folks have glommed onto a new Federal initiative which seeks to offer more information about the quality of care offered by health care providers.

Under the guidance of HHS honcho Mike Leavitt, the US Department of Health and Human Services has launched an on-line project called Value-Driven Health Care (okay, so they're not so creative at names). The project's motto ("Transparency: Better Care Lower Cost") seems to sum up its mission nicely. At the website, consumers can learn about what transparency is all about (well, at least the gummint's take on it), and even find pilot programs that may help them in their search for quality health care with understandable prices.

Indiana Governor Mitch Daniels is a big fan, and recently signed an executive order agreeing to collect information on the quality of care provided to the state's 30,000 employees. The Indiana Health Information Exchange is touted by the HHS as a pilot project to initiate methods of reporting on quality of care. Presumably, this information will become available to the private sector, as well.

I've mentioned before that Transparency has been in its infancy...one supposes that it's now reached toddlerhood.

Carnival Monday...

The Carnival of Personal Finance is now up, hosted this week at The Sun's Financial Diary. Our host has accumulated 64 links, most with helpful commentary.

Our friend Jeffrey Strain, who blogs at Personal Finance Advice, has some tips on where not to hide your goodies.

And this week's Carnival of the Capitalists is available at Small Business Trends blog, where hostess Anita Campbell presents 28 interesting choices.

Nina at Queercents has an interesting post on "creative" marketing ideas. Something about the right hand, I believe.

P1K

Wow.

InsureBlog began life just a little over two years ago, and this marks our 1,000th post. One supposes that it would be appropriate to mention the latest on champagne and insurance, but alas, there seems to be a drought on the subject.

So I'll raise my own flute (metaphorically speaking) to my co-bloggers: Bob Vineyard, Bill Halper and Mike Feehan, and toast them for a job well done.

Here's to the next 1,000.

Insurance Dispatch...

This week's 'Dispatch covers a recent survey showing employers don't know how much they spend on disability benefits, and employees don't seem to care.

Check it out at Trusted.MD

Heads I win, Tails You Lose...

On the one hand, I'm used to seeing unlikely information coming out of the insurance industry, but this is kind of strange:

"U.S. individual life insurance sales rose 7 percent in new annualized premium in 2006, a pace unmatched since 2000, according to the quarterly survey by LIMRA International."

So who's (or what's) LIMRA, and why is this strange?

First things first:

LIMRA is the Life Insurance Marketing and Reseach Association (on whose Producer Panel I serve, along with thousands of my closest friends). They're kind of an industry-sponsored think-tank and research bureau. In a March 7, 2007 press release, LIMRA announced that the industry was breaking all kinds of production records. Well, not the industry so much as insurance agents.

Great!

Maybe.

The Medical Information Bureau (about which we've written before) has a somewhat different story:

"North American Application Activity for individually underwritten life insurance declined 7.4% in January year-over-year, according to the MIB Life Index. Applications were off 3.3% when compared to December 2006."

Seems like quite a disconnect. I say "seems" because it appears that while the LIMRA piece touts sales growth for the whole of 2006, the MIB report indicates things slowed down in January 2007, which is apparently typical. What's still troublesome, though, is that "(y)ear-to-year activity comparisons have been falling since March 2006."

Something to watch.

Cavalcade #21: Submissions Due

Submissions for next week's CoR, hosted by Rita Schwab, are due this coming Monday (the 12th).

You can submit your (or someone else's!) risk-related post via:

Blog Carnival

or

Email

Please include:

► Your blog's url

► Your post's url

► The trackback url (if applicable)

► A (brief) summary

PS We're scheduling hosts for Spring '07, so don't wait too long to sign up!

Health Wonk Review...WooHoo!

Joe Paduda hosts this week's HWR, and boy, it's a doozy! Along with almost a dozen and a half interesting, insightful and thought-provoking posts, Joe includes spicy commentary and analysis.

I just discovered attorney-blogger Eric Turkewitz recently, while hunting for interesting Cavalcade of Risk posts. His HWR entry on why doc's may want to think twice about promoting malpractice suits is a must-read.

And while not part of HWR, please check out this article at SoloGig News (a resource for freelancers). Our own Bob Vineyard is interviewed, and shares some tips for entrepreneurs looking for health insurance. Mazel Tov, Bob!

Health Care Reform or Something - Massachusetts Style

Bob's already commented on this developing story; here are some more details as reported by The Boston Globe on March 5th:

"Governor Deval Patrick yesterday unveiled significantly lower prices." How much lower? Look in the 10th paragraph “average monthly premium for residents of Eastern Massachusetts of $305. That indicates a decrease of nearly 20 percent in premiums from the earlier bids” (why is the good news always buried in the 10th paragraph?)

But averages can cover up a lotta things. For example:

1. The plans are age-rated. The least-expensive plan is offered by Neighborhood Health Plan (a Boston-area Medicaid insurer) and costs $175 a month - provided you are age 35-39. If you are over 56, the premium is $347 a month. Who will actually pay the "average" premium? Anyone?

2. The plans are geographically-rated. "coverage will be less expensive in Central Massachusetts compared with the eastern and western parts of the state."

3. The benefits are bare-bones at the lowest price points, even for the Boston Medicaid insurer. The plan "covers preventive care, office visits, hospitalization, and prescription drugs". Mandates? what mandates? More: "The annual deductible for the basic plan would be steep: $2,000 for an individual and $4,000 for a family" and "Similar plans from the three major health plans". Stripping the benefits sure does lower the premium, but isn’t that a tactic that only the greedy private insurance companies use? Yikes.

The Massachusetts plan is widely called "health care reform" but it looks and sounds to me like plain-old insurance, subsidized by the State. In other words, true to a grand Boston tradition, Gov. Romney "stuck a feather in his cap and called it macaroni". And now Gov Patrick is doing the same.

The Eye of the Storm

Time for another of our occasional forays into the dark and mysterious world of Property and Casualty insurance. Last week, Bob wrote about State Farm (et al) and the insurance market aftermath of Katrina.

NOLA wasn’t, of course, the only area affected by hurricanes in the past few years; Florida has certainly seen it’s fair share (or more) of the deadly storms. And, of course, the insurance market there isn’t exactly considered a rosy picture.

But one carrier is bucking the trend, and intends to begin writing business in the Sunshine State:

“As most big insurers are cutting back coverage in Florida and other coastal states after a string of catastrophic hurricanes, Mr. Buchmueller has started a company offering policies that hardly anyone else wants to sell — and at as little as half the going rates.”

His “hook” is that his company will only write homes that are worth at least a million dollars. Why?

Well, for one thing, the industry’s own statistics seem to show that such homes (especially newer ones) are better built, with features (such as special windows and shutters) that are, to coin a phrase, hurricane-resistant.

And although he hasn’t explicitly said so, it occurs to me that such homes will also generate larger than average premiums, as well as little “extra’s” like scheduled items (lots of jewelry and art), and excess liability umbrellas (insert your favorite “umbrella in a hurricane” joke here).

He’s also hedging his bets in another way: limiting the amount of business (number of homes) that he’ll write this year (his first), and using a lot of reinsurance to offload his own exposure.

[ed: Reinsurance is a mechanism insurers use to limit their own potential losses. They contract with insurance “wholesalers” for specific amounts, so that the policy is really insured by at least two entities]

If nothing else, I like the creative thinking that went into this kind of plan. As to whether or not it’ll work, well, there’s always the next hurricane season to test it out.

Grand Rounds...

Four time host GruntDoc (a first!) has put together a terrific collection of some 60 posts, and (TaDa!) no theme. There are however, interesting categories and helpful context.

And for those keeping score, Bob's up 2 to 1 (yes, my post made it in).

Here at IB, we often talk about the pitfalls of nationalized health care. An English physician, who lives that "dream," has some insights on how expectant mom's can anticipate being treated under such a system.

Carnival Monday (Yay!)

MapGirl hosts a terrific Carnival of Personal Finance this week. Built around a Circus theme, she's put together almost 60 high quality posts, in a half dozen clever categories.

What's more, she put Bob's post on the perils of mandatory coverage at the very top...WooHoo!

It will come as no surprise to regular IB readers that I found Wenchypoo's helpful (and unique) kitchen tips to be the Star of the Show.

The Carnival of the Capitalists is also up, at its new home: Bizosphere. CotC honcho Jay has "rebooted" this venerable financial potpourri, "to return to the root concept of showing off the best business and economics posts you might not otherwise see."

In this case, he's posted 19 entries (out of 34!), and we're pleased that Bob's post on the dangers of carriers being forced to pay claims that weren't really covered made the cut. (hmmm, looks like a two-fer for Bob, we'll see if I make the Grand Rounds Cut tomorrow).

In the event, I really lit up for this post at Photon Courier; it's an illuminating expose of light bulbs.

Insurance Dispatch...

This week's column asks "What’s the relationship between insurance and risk?" Even though you can buy wedding insurance, and cancer insurance, should you?

Check it out at Trusted.MD

Stupid Carrier Tricks # (What, 327?)

We’re a very small agency, in a little suburb of a modest-sized Midwest town, but we do provide health insurance for those of our employees who want (and/or need) it. For a number of reasons, we’ve stayed with the same carrier for more than a few years (NTTAWWT). Of course, we’ve changed configurations over those years; the most recent was selecting a slightly higher deductible and installing an HRA (Health Reimbursement Arrangement).

Our renewal came up recently, and we had to make some choices. On the one hand, we’re not dissatisfied with the coverage and overall service of this carrier (they’re no worse – and no better – than anyone else currently in this market), but the experience I’m about to relate certainly earns it a spot in our (not so) coveted Pantheon of Stupid Carriers:

Our current plan is no longer being offered, but was a fairly typical PPO. We had coupled it with the HRA. The carrier’s automatic renewal option (the plan we’d go on by default, unless we specified otherwise, and which we’ll call Option A) is attractive: a $2,000 deductible, then 100%. Office visits are on our own nickel, but count towards the deductible (something the present plan’s co-pays don’t do). There’s still a prescription drug (rx) card, but it would be subject to that $2,000 deductible, which is “non optimal.” On the other hand, the rate is some $700/month lower than a plan with benefits similar to our present one. That would enable us to bump up the HRA numbers to offset the increased out of pocket.

But the deductible/rx tie-in is a non-starter. So I asked if they had a plan that did everything this new one would, but with an rx card that’s “turned on” from the get-go (no deductible). Turns out they do (we’ll call it Option B), so I asked for a quote on that plan.

So far, so good.

So what’s so stupid?

Well, I get all the numbers, and see something very strange : for one thing, they included the numbers for the plan we don’t like (Option A), but the premium is now some $170/month lower than what my actual renewal, which I got from the carrier in the first place, says it costs. They also included the plan we did want (Option B; same as Option A, but the rx card has no deductible), and it’s even less! Now, I’m not usually one to look a gift horse in the mouth, but this is getting stupid: why would the “better” plan (Option B) cost less than the not-as-good one (Option A)? And why are the numbers for Option A now almost $200 a month less than what we were originally told?

But wait, there’s more! I noticed on the speadsheet the carrier sent that there were TWO versions of Option A (the plan we don’t like). They were absolutely identical in benefit structure, but had two different product numbers. Plus: one was almost $200 per month more than the other.

I’ve asked, and I gotten the following response from the carrier (BTW, I’ll give them credit: at least they did respond):

“Yes, the premium is typically higher on the [“better”] plans vs. the [“not as good”] due to the up-front [no deductible] drug card. I have seen a few cases come back where that is not the case but they are pretty rare.

Additionally the [two identical but for price plans] are priced differently primarily due to experience. The [one] series did not run as well as they anticipated which has caused them to receive a higher rate than the [other] series.”

Okay then.

I do this for a living, and am reasonably adept at it, and this blows even me over.

(Warning to those who will say “Well gee, Prof, all the more reason for a national plan, so we don’t have this kind of confusion.” Oh yeah? I’ve got three words for you: I. R. S.)

Across the Pond: Is the NHS "Buggy?"

I really shouldn't make fun of this [ed: but you're going to anyway, aren't you?], but this newest cost-cutting move by England's "much vaunted National Health Service" is too good to pass up:

"THE NHS could save a fortune, free up beds and prevent killer bug MRSA by treating wounds with MAGGOTS.

The larvae take only five days to clean a wound compared to 89 with more conventional treatments."

I'd heard of using leeches to "restore circulation in blocked blood veins," but this technique goes a step further; touted as a replacement for anti-biotics, these little bugs could save the government-run health system millions of pounds.

It may be only a matter of time before this medical breakthrough catches on over here. I suppose that means that Bob and I will have to stop referring to home office critters as "lousy maggots."

I Call BS!

There's a populist-driven whirlwind racing across the land, based on sketchy data, fear of the unknown, and a firm belief that the gummint is (or should be) empowered to make sure that nothing bad ever happens to us or our fellow Americans.

And no, I'm not talking about (so-called) Global Warming.

Recently, the Governor of Texas decreed that young women must be immunized against the dreaded HPV virus. Here in the Buckeye State, a similar effort is afoot. Other states are even now taking up the banner of this "righteous cause," whose proponents consider those with reservations dangerous, misinformed, misogynistic, you name it.

After all, who could be against the health of our children (see, men are susceptible to HPV, as well)?

Well, I am, for one.

"But Prof," you may cry, "you have two (lovely) daughters of your own, surely you want to protect them?"

And indeed I do.

I do.

It's my responsibility, and part of that responsibility is to make an informed decision. Here on IB we talk a lot about personal responsibility when it comes to health care, and I would be a hypocrite if I didn't walk that walk. So let's take a look at the whole brouhaha through the lens of risk:

HPV is the Human PapillomaVirus (no relation to Papillon, of course), which is a virus that causes abnormal tissue growth (warts) and is often associated with some types of cancer. The Centers for Disease Control suggest that up to one fourth of American women (ages 14 to 59) are infected with the disease. And how do they know this? Oh, very simple: by testing vaginal swab specimens from less than 2,000 women. Yup, that's right: less than 2,000 out of an estimated 100 million women in this age cohort.

Gee, what a great statistical model!

And then there's the question of just how dangerous this "menace" really is: less than 3,700 American women are expected to die from HPV related cancer this year. While that's a terrible tragedy, let's keep a bit of perspective, shall we: about 4,000 people die in fires every year; almost 5,000 drown; 5,500 are hit by cars and die; heck, food poisoning kills some 6,500 folks every year (if we assume, reasonably, that half of those are women, then why aren't we outlawing food?).

And by the way, why just daughters? Dr. Eileen Dunne, the CDC's lead, um, person on this issue, says that "HPV prevalence is thought to be high in men as well, but none were studied." Gee, thanks!

There doesn't seem to be a percentage-based definition of an "epidemic," but according to at least one, it's characterized as "(t)he occurrence of more cases of a disease than would be expected in a community or region during a given time period." If some 25% of women (and who knows how many men) have now been infected by the HPV, then why hasn't the CDC called it an epidemic? Gosh, how many people have to become infected?

Now, I won't pretend to advocate that people avoid this vaccine like, well, the plague. But I darn sure can't agree that it's the role of our government to force our daughters (and again, why not our sons? Are they disposable?) to be vaccinated against a sexually transmitted disease. And no, I don't have my head buried in the sand: remember we talked about risk? Well, look again at those stat's about other causes of death. We could easily outlaw swimming pools and cars, require homes to be built of concrete and furnished 100% with non-flammable items, and eat only specially processed (nuked?) foods.

Why aren't the nannies pushing for that?

Cavalcade of Risk #20 is up!

Renthusiast hosts this end of February issue, with some new faces, interesting categories, and helpful commentary.

Be sure to check it out!

The Renthusiast can tell you, hosting a Cav is fun, easy, and a great traffic booster. For your chance, just drop us a line.

Outsourcing HR

International HR (Human Resource) firm Hewitt Associates recently surveyed some 100 larage companies here in the US. These companies represented about 2 million employees between them, so we're not talking a lot of Mom & Pop Shops.

What they found is that HR executives are increasingly concerned about attracting, retaining, and growing new talent. Toward that end, it's becoming readily apparent that we're in for a period of sustained outsourcing of HR functions:

Carnival Monday...

This week's Carnival of Personal Finance has a celebrity theme (in honor of the Oscars, one presumes). It's a literally star-studded gala of interesting posts, hosted by Henry and Matt at Binary Dollar.

I'm not sure what to make of the fact that our own Mike Feehan is represented by the Guvernator (has the host been reading some of Mike's previous posts?).

And it appears that Joe Kristan, at Roth and Co, must be smiling enigmatically. I'm not sure why, but his post on the importance of accurate record-keeping is a classic.

An Override By Any Other Name...

[From time to time, we’re privileged here at IB to publish posts by esteemed “guest bloggers.” This post, by a gentleman who prefers to remain anonymous, details a disturbing trend in the insurance industry. While we usually prefer not to rely on “anonymous sources,” I can personally vouch for the integrity and inside knowledge that this gentleman brings to the table. Where relevant, I’ve also included links to previous IB items in which he’s had a hand. HGS]

Everyone in the health insurance business has had the subject of overrides come up during their career. Either they have taken part in them, wish they could have, or declined to be part of this monetary form of bribery. Agents and brokers who did “partake” enjoyed extensive additional compensation based on how much business they placed with a certain carrier. They built huge agencies, enjoyed huge lifestyles and grew huge egos. And they steered business to companies that paid the most, keeping out of competition those companies that paid them the least. Some of that compensation is believed to be 2, 3 or even 4 times the regular commission being paid. No one knew what was being paid and it was never disclosed to the customers. This was the equivalent of the Wild Wild West!

In the last two years the Ohio Department of Insurance has investigated this practice in Columbus and other areas (yet to be announced), solicited agreements from Anthem and United HealthCare on the subject, and has recommended the suspensions of agents who have misled their clients regarding compensation. Now Anthem has publicly said they pay “no overrides” of any kind to any agent, just “regular commissions” and any bonus due. While this remains true for the most part, how would a certain local agency pay a starting account manager $70,000 a year, expand and open 2 new offices in Columbus and Cincinnati, continue to hire non-sales personnel and remodel their palatial headquarters every few months with lots of bling? And pay their producers 50% of the standard commissions to boot?

By way of comparison, most large agencies pay their “producers” (that is, the agents who actually write the business) 30 to 40 percent of the commission, and little (if any) of any overrides or bonuses. If a “mega-agency” can afford to pay its producers 20 to 25% more commissions on a given piece of business, it seems likely that it’s making more than “the normal” compensation.

Welcome to the world of “Expense Reimbursement.” This flies under the radar of the dreaded 5500 (industry standard disclosure form). What keeps XYZ Mutual from paying a portion of an agency’s monthly payroll and other expenses? A well-known insurance agents advocacy organization, The “Big I,” recently published an article on this issue as it pertained to our Property & Casualty brethren. In an email exchange with the article’s author, I asked if he’d heard of such a thing on the group side of the business. He replied:

“With regard to the national HMOs my understanding is that volume "bonus" schedules are fairly commonplace for larger producers. I also believe this applies to the traditional group dental/disability/life carriers. However, some of the national carriers are pressing for disclosure of incentive compensation. There has been a feeling that since the Schedule A attachment to the Form 5500 discloses commissions, disclosure is less of an issue. But, some carriers are reviewing incentives such as Expense Reimbursement Allowances because these are undisclosed payments and won't show up on the 5500.”

Pretty amazing if this is going on! Is this another Marsh situation? Is this a level playing field for all? Will competition be eliminated even further? And will the smaller agent be gobbled up by the big agent?

Inquiring minds want to know.

Insurance Dispatch...

In this week's Dispatch, we revisit a previous IB post on how new legislation can help turn health care expenses into tax savings.

Check it out at Trusted.MD

News From the "D'uh! Dept"

I think the headline pretty much says it all:

Meetings make us dumber, study shows

No kidding?

I see this all the time (at carrier “get togethers,” especially). The article sums it up quite nicely:

“The researchers speculate that when a group of people receives information, the inclination is to discuss it. The more times one option is said aloud, the harder it is for individuals to recall other options…”

It’s often called the “echo chamber” effect, and it’s easy to get sucked into it.

I have a few more thoughts on this, but I have to get to, well, you know.

Cavalcade #20: Submissions Due

SPECIAL NOTE: We've been selected by Blog Carnival as their Featured Carnival for February 23rd. We'll be "splashed" all across their homepage all day!

Submissions for next week's CoR, hosted by Renthusiast, are due this coming Monday (the 26th).

You can submit your (or someone else's!) risk-related post via:

Blog Carnival

or

Email

Please include:

► Your blog's url
► Your post's url
► The trackback url (if applicable)
► A (brief) summary

PS We're scheduling hosts for early Spring '07, so don't wait too long to sign up!

HSA: More Good News

I have a healthy skepticism when it comes to “breaking news” from insurance companies, even when that news tends to confirm that which I already know to be true. So, I was initially a bit dubious when I saw the title of this email which came across my monitor: “New HSA Data Reveals Positive Consumer Engagement.”

Among other entities, UHC (United HealthCare) owns a third party administrator (TPA) called Definity, and a financial institution (BANK) by the name of Exante [OT: how come there was so much gnashing of teeth when Barnett was handed down, allowing banks into the insurance biz, but when carriers seek inroads into banking, not so much?]. UHC uses the former to administer its Consumer Driven products (HRA, HSA, etc) and the latter to handle the actual funds.

In the event, UHC commissioned a study for the 2005 plan year, the purpose of which was to determine what effects, if any, Consumer Driven plans would have on insureds and their behaviors. The results, based on 25,000 covered lives, are striking:

As I had long suspected (based on the experiences of my own clients over the past 15 or so years), consumers are using their accounts as savings tools, including investment options as a means toward even greater accumulation. Some 86% of those in CDH plans (HSA-compliant) had opened an account, with an average balance of over $800 at year’s end.

Unlike their MSA forebears, HSA plans allow both employers and employees to make contributions (with MSA, it was either one or the other in any given year). And folks are taking advantage of that flexibility: over 2/3 of employers contributed at least some cash to their employees’ plans. What’s more, the average employer contribution was almost $900. And a similar percentage of employees contributed to their own accounts, to the tune of $1,200 (on average). Not too shabby.

Perhaps more interesting was the unexpected: nationally, some 60% of those who opt for High Deductible plans actually set up an account. But well over 80% of the folks in the Definity group set them up. UHC hypothesizes that this is due to employers using “an integrated health plan and bank account model.” I’m not sure that’s true: the key phrases here are “employer” and “employee.” That implies that most (if not all) of the 25,000 folks in the survey were covered under group plans. Most employers would want to keep things simple, and thus look towards setting up as seamless an arrangement as possible. Hence, the high percentage of health plans integrated with savings accounts.

Not surprisingly, the greatest single influence on the account opening rate seemed to be employer funding; that is, 91% percent of eligible employees opened an account if their employer made a contribution. Anyone that’s installed a qualified retirement plan (401k, SIMPLE, etc) knows that employee participation is heavily dependent on employer participation.

The other good news in this report is a decent fisking of one of the more pernicious criticisms of Consumer Driven Care: that such plans favor higher income individuals.

Not. True.

Some 80% of eligible low-income employees (those earning less than $25,000 annually) opened an HSA. And over 50% of these made their own contributions to the account, as well.

About the only thing that surprised me was that the size of the group mattered. That is, almost 90% of employees in large groups (5,000+) open an account; that drops to about 80% in small groups (1-99).

Go figure.

Wonky Thursday

Julie Ferguson, of Workers Comp Insider fame, hosts a terrific Health Wonk Review. In fact, it's the First Anniversary of HWR, and Julie presents a fitting tribute, with 14 excellent posts, and excellent context support.

Remember Y2K? Well, we're leading up to DST2k7 (not to be confused with MST3K). Confused? Don't be: read Shahid's post on the potential impact of the new Daylight Savings Time rules.

On Letters...

Regular IB readers may notice that the suffix following my name has changed. I recently earned my CBC designation, after a relatively short but very intensive course of study.

The initials stand for Chartered Benefits Consultant, and is awarded by the National Association of Alternative Benefits Consultants. Very briefly, the designation reflects a more indepth knowledge of so-called "alternative benefits" (such as FSA, HRA, etc) with special emphasis on the burgeoning field of Consumer Directed Health Care.

Since I've been intimately involved in that last for some 15 years, it seemed logical to make it a bit more "official;" hence, the designation.

I'd like to thank the academy...er, uh, my co-blogger Bob Vineyard for manning the fort late last week, as I was in class for two full days finishing up (BTW, his post on Stupid Doctor Tricks garnered the most ever hits for IB -- Congratulations, Bob!). I took the test on Saturday; some multiple choice, the bulk essays on specific case studies.

Anyone interested in my final grade is free to ask.

HOPE and Alphabet Soup

Bet you never heard of the Health Opportunity Patient Empowerment Act of 2006 (HOPE). No? Don’t feel too bad, most folks haven’t. Briefly, the Act, aka H.R. 6134, set out to clarify some confusions in how Health Savings Accounts (HSA’s) are managed.

Let’s pause a moment to review some favorite acronyms:

FSA: Flexible Spending Accounts. These ubiquitous jobbers were all the rage for a while, because they let eligible employees sock away tax-free dollars for unreimbursed health care expenses (and premiums, and day care). The downside: the notorious “use it or lose it” provision, which requires you to spend any moneys in the account.

HRA: Health Reimbursement Arrangements. These relatively new creatures enable employers to reimburse you for medical expenses, but you usually have to spend at least some of your own money first. The upside is, it’s your employer’s money going into the account; the downside is that you can’t cash it out if you leave (although some HRA's let you spend them down post-employment).

HSA: Health Savings Accounts. These are descendents of MSA’s (Medical Savings Accounts). Again, you put your own money in, pre-tax, but there’s no “use it or lose it” problem; the money just keeps rollin’ over. And, your employer can make deposits to the account, too. The downside to these is, well, I’ll have to think about that. Really, the major drawback (if it is one) is that you have to couple it with a special High Deductible Health Plan, which neither the HRA or FSA require (although it’s generally a good idea to use one if you’re going for the HRA).

IRA: Individual Retirement Account. What the heck’s an IRA doing in this discussion? Well, in case you didn’t know it, you can use your IRA to “seed” a new HSA, if you’re so inclined. Cool, hunh?

So, what’s all that got to do with HOPE? Well, in addition to using your IRA to help kick-start your HSA, you can use funds from your FSA, as well. That is, if there’s anything left in it. Since a lot of folks do end up with balances at the end of the year, there’s usually a mad rush for various medical expenses in December and January (the law says that FSA’s may be used up to 75 days after the end of the year; your plan may or may not have that provision). So your local One Hour Lens Mart may see a big spike in prescription sunglasses, for example. But what if you really don’t need to use those funds, but don’t want to lose them, either?

Well, HOPE to the rescue. Turns out, the law permits some FSA account holders a one time transfer of unused FSA assets into their HSA (offer good until Jan. 1, 2012), and those with HRA’s get the same privilege. That’s a good deal, because it means that folks can really pump up their HSA’s, cushioning the potential blow of a large claim. For those with an FSA, the deal’s good because it means that they don’t have to use their funds or risk losing them; for those with an HRA, it’s a way to make those funds portable.

Of course, if you do move the funds from an FSA or HRA, you don’t get to deduct the transfer from your taxes. But that seems a small price to pay for greater flexibility, and ownership. And in case you’re confused by all of this, the new guidelines include 13 examples showing how IRS officials want employers and employees to apply the new procedures.

Now you know.

ADDENDUM: A small, overlooked provision in President Bush's health care proposal would render much of this post moot. One part of his plan deletes the tax deductibility of medical expense FSA contributions. Ooops.

Manny’s Mandate

The New York Post reported 18 February:

“Poor New Yorkers will be entitled to free or low-cost medical treatment, under new rules meant to prevent hospitals from denying care to the uninsured.”

The new rules are actually final regulations implementing “Manny’s Law” - a mandate passed in New York about a year ago. That mandate strengthened earlier mandates requiring that hospitals give financial aid to indigent, uninsured patients. Among other things, the final regulations add a requirement to tell uninsured indigent patients that they are entitled to charity care. Sounds reasonable to me. After all why would a hospital want to keep that a secret, especially for a life-threatening condition? Read on.

“Manny” is Manual Lanza, a young New Yorker who was turned away from St. Lukes-Roosevelt Hospital in late 2005 because he had no insurance. Doctors and administrators at the hospital insisted he obtain Medicaid before they would agree to treat him. They did not tell him about other financial assistance available thru the hospital under existing New York law or, in fact, offer to help him enroll in Medicaid for which (I’m assuming) he was eligible. Manny subsequently died.

For many years, New York has mandated that its hospitals provide care to the indigent. Prior to 1997, hospitals tacked the cost of uncompensated care onto their bills for insured patients. Starting in 1997, New York began to tax insurance plans based on NY hospital benefits paid. Proceeds of this tax are placed into a pool managed by NYDOH and distributed among hospitals in New York. Of course, it’s the insured people who bear the ultimate cost of uncompensated care, whether financed by additional hospital charges or by taxes.

The state considers the provision of hospital services to be an entitlement for the indigent, and I agree the entitlement is necessary under present conditions. Because the entitlement is not called “insurance,” indigent persons receive hospital care and are still counted as “uninsured”. This meets the social need while pleasing the New York majority party, too, by not reducing the count of uninsured.

So what does this mean?

1. The uninsured “problem” is less serious than advertised. Despite the headlines and hustlers shrieking otherwise, “no insurance” does not really mean “no health care”.

2. Fix Medicaid, fix that problem. The number of uninsured Americans rises from the failure of Medicaid to fulfill its mission to insure the poor and working poor - because the clear majority of the uninsured are the poor and working poor.

Stealing private health information is not just about identity theft

“The case involved the theft and transfer of medicare patient information from the Cleveland Clinic in Weston, Florida. Defendant Ferrer Jr. purchased the patient information from co-defendant Isis Machado, a former Cleveland Clinic employee, who pled guilty on January 12, 2007 and testified against Ferrer at trial. The theft resulted in the submission of more than $7 million in fraudulent medicare claims, with approximately $2.5 million paid to providers and suppliers. According to the Justice Department, this is the first Health Insurance Portability and Accountability Act (“HIPAA”) violation case that has gone to trial in the United States.”

Read the whole Justice Department report here.

This theft of data led to fraudulent Medicare costs – paid for by our tax dollars. There is no reason to believe that private health plans are immune to similar thieves who want to cash in on fraudulent insurance claims, thereby driving up the cost of your insurance and mine. How much of this happens? The scary but true answer is: many have estimates, but no one really knows.

Patients, their family members, doctors, insurance companies and even lowly benefit managers have expressed frustration at the privacy rules arising from HIPAA. It’s true, these rules sometimes seem calculated to stop all the wheels of commerce at one swell foop. However it's important to understand more of the total story.

This case reveals a bit more of the total story - what the government is trying to prevent. Note that this is the first HIPAA violation that has gone to trial. If this is the kind of culprit that the feds are going after using HIPAA, I say more power to them.

Carnival Monday...

Sanjay Kumar, host of Simplify This, hosts a terrific Carnival of the Capitalists. In keeping with carnival founder's Jay's push toward greater relevancy, Sanjay culled about half the submissions, leaving, hopefully, "the best of the best." Even so, that's still over 20 terrific posts (including our own Bob Vineyard's submission on the perils of "going bare").

Two posts stood out: Joe Kristan, of Roth & Co, points out that not all public policy problems are necessarily tax problems. And David Maister discusses a true-life ethical dilemna, representing some major bucks and future business, and shows that "honesty (literally) pays."

The Carnival of Personal Finance is also up at Stock Market Beat . There are over 40 posts, in 9 interesting categories, with plenty of context, and a beautiful illustration.

Surfer Sam has a terrific post on Living Trusts, which are great places for life insurance plans to reside.

Insurance Dispatch...

An elite group of hospitals gets an A+ in saving lives, and empowered consumers want to know which ones. In this week's dispatch, we learn about a company that can help you find out.

Available now at Trusted.MD

Consumer Driven Health Care in action...

For the last several years, my family has been covered by a small business plan from Blue Cross of California. We’ve had one of their better PPO plans, with a $250 deductible and a $20 doctor’s office copay. Each year, as our renewal came around, the price has jumped up…most recently from a monthly rate of $1183 to $1358.

$16K per year for health insurance is simply too much. We just switched to Blue Cross’ $2400 deductible HSA plan. The premiums dropped by $785 per month…$9420 per year…for a plan with a family out-of-pocket maximum of $5500. This year I’m saving more in premiums than the worst-case annual claims. On top of that, there’s the tax savings on expenses that are run through the HSA account. Altogether it’s not a bad deal.

But, now when I go to the pharmacy, instead of paying $15 or $25 per prescription, I’m paying full freight, at least until I meet my deductible. So I decided to call around and see what a few local pharmacies would charge for a month’s supply of my latest cholesterol med, Simvastatin (the generic form of Zocor). The results were illuminating: Walgreen’s: $146 Longs: $88 Target $55 Costco: $13.56. That’s almost an 11:1 range in prices.

When I was paying a flat price per prescription, convenience was the determinant factor in filling a prescription. Walgreen’s is around the corner. Costco is 6 miles away. Sorry, Walgreen’s. From now on, I’m driving to Costco.

Cavalcade of Risk #19 is up!

SuperSaver has a sweetheart of a Valentine's Day CoR, complete with mouthwatering illustration.

Be sure to indulge yourself!

And don't forget, you can host a Cavalcade, too. Just drop us a line.

A Sweet Grand Rounds...

The Chronic Babe hosts a 'Rounds that would satsify any sweet tooth. With almost two dozen cavity-inducing entries, you'll be amazed (and impressed) with these nougats of the medblogosphere.

(I know, I may have overdone that last)

Given the theme, it seems only fitting to highlight this Diabetes Mine post, a letter to her pancreas. Well done, Amy!

Mental Health Parity

The Wall Street Journal today (13 February) reports the introduction of a Mental Health Parity bill in the Senate. This Bill would build on the Mental Health Parity Act of 1996 and require that, if mental health expenses are covered in an employer group insurance plan, they must be reimbursed the same as other health expenses in the plan i.e., cost-sharing, inpatient care, and outpatient care. Despite its name, the 1996 Act did not require full parity with other health benefits. The current Bill would produce full parity and therefore represents an expansion to mental health benefits in group insurance plans. The Bill requires States to go along, perhaps simplifying the rules for plans whose participants are located in more than one State. Employers having fewer than 50 employees would be exempt.

As reported, this Bill claims not to “mandate” inclusion of mental health in group health plans. Plans that presently do not cover mental health expenses would not be required to add such coverage, and plans now offering mental health benefits could delete them; as both of these possibilites seem far-fetched for employers having more than 50 employees, in practice this Bill is effectively a mandate.

There is a cost test – if benefit parity would require an increase in cost of more than 2% in the first year and 1% per year thereafter, the plan sponsor may “opt out” from the parity requirement although the nature of future cost tests is not mentioned.

The reporting is not clear whether the requirement applies only to insurance companies or also to the group plan sponsors such as employers, labor unions, governments, etc. Understanding this would help clarify whether the requirement falls only on insured plans or might also affect self-funded plans.

Apart from cost, I wonder about the effectiveness of outpatient behavioral care. I believe it’s still true that generally-accepted “best practices” and treatment protocols are not so well-developed and uniformly applied for behavioral health as in other branches of health care (where, BTW, substantial variation exists), which I think means there is less assurance of effective care. That is one reason why benefit plans have historically limited the coverage for such care. One thing for sure, the cost of the added coverage will be measured in tangible dollars.

The National Institute of Mental Health estimates that 25% of all Americans have at least one “diagnosable mental health disorder”. The providers represented by that organization stand to gain financially from this Bill. I believe NIMH and the behavioral health providers owe plan sponsors and the public in general, tangible and specific explanations as to how patients will benefit from the additional care, were this Bill enacted into law.

Carnivale!

This week's Carnival of Personal Finance is hosted by 2 Million blog. It's got a Rio Carnivale theme, and it's chock full of interesting financial advice (with a mind-numbing 65+ entries!). Great job!

Believe it or not, I did find one that just really stood out: over at the Credit Cave, you'll find an excellent piece on ethical considerations you should explore when looking for a financial planner.

ADDENDUM: This week's Carnival of the Capitalists is finally up, but I won't be linking to it.

Why not, you ask?

While I'm no fan of "themed" carnivals, I can appreciate that a prospective host may choose that route, if for no other reason than to keep the number of entries manageable. However, it is incredibly stupid to do so without announcing -- in advance -- that one is doing so, and what that theme is.

'Nuff said.

Insurance Dispatch...

Genetic testing is back in the news, and this week's column has the latest as it relates to insurance and employment.

Check it out at Trusted.MD

Terror Insurance...

Some time back [ed: that would be July of ‘05] , we reported on a horrific sales contest that rewarded insurance agents who adopted a “Bin Laden strategy” in their sales efforts. Although it was beyond tasteless, it was an essentially harmless bit of corporate stupidity; the only ones hurt were the managers who came up with this idiotic scheme.

Unfortunately, life has imitated art, after a fashion: Jordan’s Arab Bank has set up a quasi-insurance plan for families of Palestinian homicide-bombers. The “deal” is fairly simple, if not disgusting:

“In February 2002, a similar ad was placed in another publication, Al Hayat Al Jadeeda, again asking families of "martyrs" to go to the Arab Bank in order "to receive the tenth payment, totaling $5,316 for each family, donated by the Saudi committee." The generous donors ended up giving $1,594,980 to some 300 families in the occupied territories via the Arab Bank.”

Basically, the terrorists’ families are instructed to open an account at their local branch, into which will be deposited some $5,000. It’s not really “life insurance,” since there’s no underwriting or an actual policy (among other issues). But since someone has to die in order for a “beneficiary” to collect, it certainly mimics such a plan.

Words fail me.