Cavalcade of Risk #131 now up

Emily Holbrook makes her CavRisk hosting debut with this outstanding edition. It's short, sweet and right on point.

Joe K goes big time

Our good friend (and favorite TaxBlogger) Joe Kristan was recently quoted in the Wall Street Journal.

Mazel Tov, Joe!

Chasing Profits

The New York Times' Reed Abelson is a good writer, but (as with so many in the MSM), she seems unable to distinguish between "profits" and "profit margins." What's the diff, you ask?

Here's a good example:

"ABC Widgets builds 100 widgets, and sells them for $1 each. First they have to buy the materials for about 60c, then assemble and market, for about 15c. Then they sell for $1 and give the govt 18c in taxes per widget. That means each widget costs 93c to make, leaving ABC with a 7c profit margin per widget. If they sell all 100, they make $7 in profit.

Next year, material and assembly costs a little more, so they raise the price of the widgets to $1.50. Costs end up at $1.43, which leaves a profit margin of 7c again. But widgets are popular this year, so they sell 200!

ABC Posts Record Profits of $14! Congress to investigate!"

Now, let's contrast that with Ms Abelson's intellectually vapid take:

"The nation’s major health insurers are barreling into a third year of record profits ... The nation’s major health insurers are barreling into a third year of record profits"

There's more, but that's the gist. The problem is that the cost of health care keeps increasing, and carriers can't go back and assess insureds (or previously insured folks) for their losses. They have to price for what may come, and there's no sign that the rising cost of health care delivery will abate any time soon (or at all).

Still, one is tempted to say "that's all well and good, Henry, but these profiteers are making obscene amounts of money on the backs of their insureds."

Uh-hunh.

Let's go back to the widgets: how much money should ABC be allowed to make? Remember, ABC provides employment (and thus an income) to those who make the product. Their employees count on those paychecks; if ABC doesn't make enough money to stay in business, well...

So they need to make a profit, and they have to decide the scope of that profit. So, another question: is 5% enough? 10? How much would you be willing to settle for?

It's an important question because this chart, which our own Mike Feehan graciously sent along, shows exactly what other related players in the health care delivery and financing consider "reasonable:"

[Click graphic to embiggen]

Is 4.4% a "reasonable" return on investment? In this economy, perhaps so (take a look at your 401 201k); but it's a fraction of that claimed by some others. As an aside: how long do you think doctors will settle for sub-2% returns? And what does that bode for future availability of health care?

Now, if only the MSM would take a remedial econ class.

[Hat Tip: FoIB Holly R]

Saving Medicare

Over the years, we've chronicled the precarious path on which the 45 year old program finds itself. The $64,000 Question is whether or not it's too late to change its course.

The Center for Freedom and Prosperity's Dan Mitchell lays out the stakes, and the possibilities:



[Hat Tip: RedState]

Grand Rounds is up

The venerable weekly collection of interesting medblog posts is hosted this week at the Prepared Patient blog.

It's (Oddball) Claim Time!

We've reported before on some unusual insurance policies, but here's something different: unusual insurance claims. FoIB David Law passes along this infographic of "Dodgy Insurance Claims:"


[Click here for full graphic]

Naturally, something like this begs for vetting, so I first went to snopes for debunking. After poking around for a bit, and finding no related items, I was pretty well convinced that the list was legit. But I'm a belt-AND-suspenders kinda guy, so I grabbed a few of the items and Googled them. Sure enough, I found supporting cites for enough to satisfy even my cynical view.

Thanks, David!

Health Wonk Review: Spring Renewal edition

[UPDATE: HWR now back up - Thanks to Roy Poses for the heads' up!]

Spring is traditionally a time to air out the house, clean out the garage, and generally spruce up the homestead. One important task in this process is reducing the clutter. To that end, this week's HWR is simple in design, sparing in verbiage, and focused on the beauty of my fellow wonkers' efforts. As advertised, it's first in, first up:

■ David Williams

HBB's David Williams notes the irony (and arrogance) of Nature magazine's efforts to promote more patient advocacy - behind a $32 firewall.

■ Jaan Siderov

Speaking of social media, Jaan offers his Ten Commandments, er, Rules for health care organizations that want to tap into the power of Twitter, FaceBook and the like.

■ Glenn Laffel

Of course, Nature, Twitter amd FaceBook aren't the only new tech available to Health Wonkers: over at Pizaazz, Glen Laffel discusses how cloud computing is already impacting health care organizations. Glenn offers a case study of how one start-up was recently knocked for quite a loop.

■ Jason Shafrin

Do Medicare patients really have to wait longer to see their doc than those with commercial insurance? Our favorite health care economist, Jason Shafrin, has the (perhaps not surprising) answer to that question, and a handful more.

■ Roy Poses

Roy wonders why physicians are so reluctant to seek legal counsel before signing potentially career-ending contracts.

■ Peggy Salvatore

So here's the question: is it really necessary for providers to fully implement EMR? To which Peggy has a simple answer ("Only If You Want To Get Paid") as well as some interesting alternative financing ideas.

■ John Goodman

As usual, John's not afraid to tackle the big issues. In this post, he looks under the hood of Congressman Ryan's plan to reshape Medicare (with a special cameo from Diana Ross and the Supremes!).

■ Louise Norris

Another longtime HWR contributor, Louise reports on the underwhelming decrease in the number of covered lives in Colorado's small group health insurance market.

■ Anthony Wright

Looks like Anthem Blue Cross is playing chicken with California's Insurance Department by raising rates even after being told not to.

■ Tim Jost

As ObamaCare© wends its way through the judicial system, Tim outlines the arguments in the 4th Circuit, focusing on whether the Act is even Constitutional.

■ Avik Roy

Known primarily for fine cheese and chocolate (and watches, of course), Switzerland may be an unlikely holder of the title "World’s Best Health Care System," but Avik effectively pleads the case.

■ Jared Rhoads

If Switzerland is the Best Health Care system (see above), then Massachusetts may be a leading contender for the opposite appellation. Jared points out that, in the Bay State, fewer doc's are accepting new patients, and existing ones are facing much longer wait times.

■ Bob Vineyard

Our own entry comes from co-blogger Bob Vineyard, channeling Cato's Mike Tanner and Dr Jane Orient, on why ObamaCare© spells big trouble if you actually need care.

And that, dear readers, is that.

Please join us in a fortnight at the Health Affairs Blog, where Chris Fleming will host the next Health Wonk review.

Cavalcade of Risk #131: Call for submissions

Emily at the Risk Management Monitor makes her CavRisk hosting debut next week. Entries are due by Monday (the 16th).

NB: We're now using this submission tool: The BC WorkAround

Once there, you'll be asked to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post ("Remarks")

At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Dying to win?

I'm a big fan of life insurance (of course), primarily as a particularly effective risk management tool. As agents, we're often asked which is "better:" term or permanent. While there's really no "one size fits all" answer to that, my colleague Bill M graciously forwarded this email that he received from a client:

"I want to look at whole life and term. If I am going to spend the money. I might as well get something for it. Otherwise it is just a monthly lottery ticket that you may die this month."

Sometimes it takes our clients to most effectively articulate basic truths.

(Really) Stupid Client Tricks (P&C Edition)

In general, insurance is a one-sided contract: that is, the bulk of responsibilities (underwriting, paying claims, etc) rests with the carrier; the insured is tasked with paying premiums and not filing fraudulent claims.

Oh, and not interfering with the carrier's ability to effectively adjudicate those claims.

So, for example, it's considered bad form (and a breach of the insurance contract) for the insured to pro-actively undermine the carrier's right to mitigate (lessen) the potential cost and scope of a claim. Which is where the rocket-surgeons who run the Vienna Presbyterian Church in Virginia not only fall down, they actively trip themselves and their insurer:

"When officials at Vienna Presbyterian Church decided to acknowledge the church's failures in handling reports of sexual abuse by a youth ministries director ... it wasn't the church's lapses in responding to the abuse a half-decade ago that bothered the insurer — it was the church's plan to admit those lapses and apologize to the victims."

It's understandable that the church's directors would feel compelled to make amends, but in this case, it's not their money with which they're playing: it's the insurer's (and that insurer's other policyholders, who don't get a say in how VPC handles its errant employees). In short, be compassionate on your own nickel.

I'm fortunate to have access to two recognized experts in this particular field. Bill M (whom we've met before) is an independent agent who does a lot of work with small businesses. Teresa S is the Commercial Lines Manager for the agency in which I toil. Both of them agreed with my basic take on the issues, and added their own perspectives.

Bill sent me a copy of a typical "Minister's E&O" (Errors and Omissions) policy, which included "Duties in the Event of an Act, Error or Omission." He helpfully highlighted the clause specifying the insured's responsibility to "(a)ssist us, upon our request, in the enforcement of any right against any person or organizations which may be liable to the insured because of an act, error or omission."

To put it another way, a doctor can't go on the local news bragging about how many sponges he's left inside patients as a prank and then expect his malpractice insurer to back him up.

Teresa pointed out something else that VPC's elders seem to have missed: it's not just their congregants who were at risk (and who may have cause of action), but their guests. How many of these young women invited a friend to meet the "cool young minister?" And by "meet" I mean, well, there's the problem.

Both noted that since no lawsuits have been filed (yet), the carrier can't really do much of anything except continue to insist that the church's leadership shut up, and continue documenting their refusal to do so. Once those lawsuits start flying, though, watch for the carrier to try it's best to deny coverage.

I'll be on the sidelines, rooting them on.

Blogging from beyond...

First, our condolences to the Miller family of British Columbia; Derek Miller, the blogger behind penmachine died last week of colorectal cancer.

For once, this is not a post condemning CanuckCare©. Rather, it is a celebration of the life of a fellow blogger whom I never met; indeed, of a blog of which I'd never before heard.

Turns out, Mr Miller (it just doesn't seem right to call him "Derek") spent quite a lot of time blogging about his own impending demise, chronicling the progression of the disease which would ultimately take his life.

Rest in peace, Derek Miller. Baruch HaShem.

Shecantbeserious KEEPS digging

At some point, HHS Secretary Kathy "A W Livingston" Shecantbeserious became a parody of herself. The exact moment that this occurred is unclear, but certainly this kind of over-the-top rhetoric does little to diminish the feat:

"I think there's no question ... people will run out of money, very quickly [under the GOP Medicare plan if you have cancer]. And if you run out of the government voucher and then you run out of your own money, you're really left to scrape together charity care, go without care, die sooner. There aren't really a lot of options.”

Paging Dr Bugs Bunny.

First, it's pretty pathetic that the same agency which boasts Sir Donald Berwick would have anything to say about killing off old people: pots, kettles and all that.

More importantly, though, the so-called Ryan Plan would do no such thing. The "vouchers" would enable seniors to pick the plan that's right for them, but includes a safety net for the most catastrophic of claims. And it's pretty funny that the same political party that brought us ObamEchanges© would deride the same kind of mechanism for seniors.

Cato's Michael Cannon rebuts that "voucher-like Medicare reforms will lead to reductions in the per-unit cost of producing certain goods and services, and therefore to lower prices." Considering health care in this way helps to really drive home the point that costs are not, in fact, the same as expenses (a point that we've made repeatedly here at IB).

Michael also reminds us that "”nearly 30 percent of Medicare’s costs [spending!] could be saved without adverse health consequences.”

Indeed.

May Alzheimer's News

Alzheimer's is "the defining disease of the baby boomers," according to a new website brought to our attention by Diane Wright. Called generation alzheimer's [ed: lower case in original], it's an online roundup of information and resources for Baby Boomer's and those who care for (and about) them.

The site is a service of the Alzheimer's Association, and includes links, contact info and even videos like this:



Do check it out.

Medical $ociety $wag

As we know, the cost of medical insurance keeps going up, primarily as a result of the increasing cost of health care. Now, when we think of "health care," we generally have in mind our family physician, or perhaps the ER or an annual mammogram. And these are certainly important. But health care also encompasses equipment and medications, and all manner of other goods and services.

These are not free, nor are they generally inexpensive.

Time was, you could walk into your doc's office and see the Viagra pen on the desk, the Lexipro clock on the wall, and perhaps the occasional Crestor notepad on a desk. Those are dwindling, for a variety of reasons, but there's one area where this kind of business is booming:

"From the time they arrived to the moment they laid their heads on hotel pillows, the thousands of cardiologists attending this week's Heart Rhythm Society conference have been bombarded with pitches for drugs and medical devices."

Everything from customized key cards to logo-embossed carpeting, from huge convention hall display booths and company-sponsored parties. It's big business, and it's largely unregulated (which is not necessarily a bad thing, just worth noting).

Let's pause a moment and consider the nature of "swag:"

"The other day, I attended a CE (Continuing Education) class on Ethics. My fellow participants couldn't understand why I was giggling about an "Ethics" course given - for free! - to agents who'd received a "goody bag" full of tschochkes (chip clips, staplers, etc)."

Harmless enough, and certainly low-tech (and low-cost). But that vendor had to pay for the customized staplers and notepads, the cost of which is passed on to the consumer. So who pays for the hotel ballrooms and high-end tours provided gratis to the SanFran-bound heart specialists?

Well, it's not the manufacturers. Nor is it the doc's themselves. It's tempting to say, "well, Medicare or Blue Cross pays the hospital bills, so I guess this is on them, too." But of course that's sophistry: you and I as tax-payers (Medicare) and/or insureds (Blue Cross, et al) or - more simply - health care consumers pay those bills."

USAToday opines that "one area of medicine still welcomes the largesse: societies that represent specialists." But we already know that a "Medical Society" is simply an association of providers who pay dues for, well, whatever the Society does for them." As the old saw goes, money makes the world go 'round. And these organizations, as USAToday notes, benefit greatly from their relationships with vendors.

To be fair, the organization highlighted in the USAToday piece claims that "industry money does not buy influence and is essential to developing new treatments. Still, on Thursday the group unveiled a formal policy that, among other things, requires more detailed disclosure of board members' industry ties."

How nice for them.

The thing is, though, that there's really nothing inherently wrong with this kind of marketing: ever been to an Auto Show? Or the National Home Builders' annual shindig? It is, quite simply, capitalism at work, and it seems to be effective, at that. But let's don't kid ourselves: this does impact the cost of health care (and hence, insurance), and we need to acknowledge that it is, in fact, a part of the problem.

HWR here at IB

Next week, we're proud to once again host the Health Wonk Review, the bi-weekly roundup of health care policy and polity.

Please submit your posts via Blog Carnival (or email), and be sure to include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

Submissions are due no later than next Wednesday (May 11th), but be warned: this is "first come, first served."

Advertising Update

This past January, we celebrated 6 years "on the air." In all that time, we had never accepted paid advertising at InsureBlog. This was my decision, and I'm quite happy with it. It's not there haven't been opportunities; as one of the premier insurance law and health blogs on the 'net, we get quite a few inquiries.

Still, I resisted.

But, times change, and I have been ably persuaded to change my mind (see, sometimes old dogs can learn new tricks!).

And so, I'm proud to say that we've accepted our first paid advert here at IB, from the fine folks at Hiscox, business insurance experts from Across the Pond. Their ad can be found on the sidebar just below our linklist. Please feel free to click through - they're very friendly folks.

And if you'd like to discuss advertising opportunities here, just drop us a line. Fair warning: we're very picky.

Old Salt, New Facts

You know all those nanny-staters that want to drastically reduce the amount of salt to which we're exposed? Much like the Great Egg Cholesterol Scare of the 80's, this one's taking a licking:

"People who ate lots of salt were not more likely to get high blood pressure, and were less likely to die of heart disease than those with a low salt intake ... The findings "certainly do not support the current recommendation to lower salt intake in the general population."

Says whom?

That would be Belgian scientist Dr. Jan Staessen (no waffler, he), who oversaw an 8 year study of almost 4,000 Europeans (whose physiology, it turns out, is remarkably similar to our own).

Contrast this with current US guidelines that are based on "data from short-term studies of people who volunteered to be assigned to a low-salt or high-salt," a rather self-selected group.

Now, if you've got high blood pressure or a heart condition, it's probably a good idea to continue limiting your daily intake of sodium chloride.

As for the rest of us, it's pretzel time!

[Hat Tip: RWN]

Missing life policy?

As regular readers know, Bob and I are frequent contributors to an online consumer bulletin board. One question that continually pops up is how to find out if a recently deceased loved (or not so loved?) one might have had a life insurance policy in force at the time of death.

While there's no official central clearinghouse of life insurance policies, if you live in Ohio (or the deceased was a Buckeye), the Ohio Department of Insurance has some good news:

"The Ohio Department of Insurance’s missing life policy search service is a comprehensive search service that assists Ohio residents, and the families of deceased Ohio residents, in locating lost insurance policies purchased in the state."

Be interesting to see if any of the other 56 states follow suit.

ObamaBux© Dwindling

As the bill we had to pass to see what was in it continues to unravel, another major stumbling block becomes apparent:

"If the health care law survives the current legal and political attacks, it will soon come up against the law of economics."

Come 2014 the so-called Exchanges are due to come on-line; these will (ostensibly) enable individuals to purchase health insurance regardless of whether or not they've previously been covered, and on a guaranteed issue basis. This means that even folks with pre-existing conditions will have automatic and immediate coverage. As one might imagine, and as we've long noted, this comes at a very steep price: premiums are expected to be (at least) 3 times current levels.

But no worries, ObamaCare© promises to subsidize those extra costs through the largesse of government printing presses (and fellow tax-payers).

As we've already seen, though, these new and expensive promises seem to run out of money (and steam) sooner than anticipated. And there's ample reason to believe that this will also be the fate of the Exchanges:

"But, starting in 2019, individuals would have to shoulder an ever-greater share of premiums as cost curbs kick in ... The law's shift of premium costs to individuals "may be difficult to sustain," opines Doug Elmendorf, director of the Congressional Budget Office.

Ya think?

Jed Graham, writing at Investor Business Daily's Capital Hill blog, makes this keen observation:

"[V]irtually no one understands what the law means or how premium subsidies will grow over time — and it’s a near certainty that the confusion extends to the members of Congress who voted for it."

Quite so, and he has a pretty devastating graphic to demonstrate what he means.

The key here is that the law does nothing to curb health care costs, which means that health insurance costs will continue to rise unabated. And they become quite substantial quite quickly, which will further exacerbate the underlying problem.

Or, as Jed succinctly notes:

"Because costs would continue to rise faster than GDP, the shifting of premium costs from the government to individuals would continue indefinitely."

So what's the good news?

Glad you asked:

"House Republicans are fighting to stop the federal government from financing state efforts to set up health insurance distribution exchanges."

The bad news, of course, is that it faces stiff (most likely insurmountable) opposition in the Senate. Still, it's a start.

Cavalcade of Risk #130, Naked beasts run wild edition: Now online

David Williams presents this week's round-up of risky posts - and hold on to your hat (and anything else you may or may not be wearing).

Also: A Very Special CavRisk Thank You to Tom at Canadian Finance for the new BC Workaround!

DIAM: That's May!

May is indeed Disability Insurance Awareness Month. One common adage is that disability insurance is sold, not bought. That is, many (most?) folks don't really understand how valuable this coverage really is, perhaps believing that their car and home insurance will take care of them if they lose income through sickness or injury.

Here's what I mean:

Where's the Beneficiary? (A Stupid Government Trick Update)

Last week, we reported on efforts in California and Florida to force life insurance companies to keep (better) track of their insureds. That effort has now expanded to at least 35 of the 57 states plus the District of Columbia, "to look at how life insurers determine whether insureds have died and how they go about locating policy beneficiaries."

Oh, puhleeze!

It is not, and never has been, the responsibility of a life insurer to track its insureds. If you move, then you darned well better let folks - including your life insurer - where you're headed. An insured has but three simple obligations in order to maintain coverage: pay the premiums, avoid fraud, and advise the carrier of one's whereabouts. As I said in the previous post, one can just imagine the hew and cry if carriers even tried to track insureds (and/or beneficiaries). This is nanny-statism run amok.

FoIB Matt H sent us an interesting link that answers at least one question: Cui bono?

"The audit indicates that Metlife did not take steps to determine whether policy owners of dormant accounts are still alive, and if not, pay the beneficiaries — or the state if they cannot be located, the regulators said." [emphasis added]

So the ugly truth is that the state does not, in fact, care about whether or not the rightful beneficiary benefits, just that the state itself gets (at least) a cut.

How banal.

Is the Pool Half Full or Half Empty?

Of course, an engineer would advise that the pool is twice as large as it needs to be:

"The insurance exchanges for people with preexisting conditions aren't living up to expectations ... [ObamaCare©] set aside $5 billion to help those folks. But one year later, few people are taking that help."

Nice that the folks at the taxpayer-funded "news" organization finally noticed this; as Bob noted several months ago, " [t]he government sold 12,500 health insurance policies in 8 months and 700,000 cars in 6 weeks."

Bob pointed out several plausible, rational explanations for the underwhelming response. NPR, not so much:

"The high-risk pools enrolling the fastest are almost all in blue states."

So it's all about politics?

No, not really: the reason that so-called "blue states" are having so much "success" with these pools is that their population is already primed for the expansion of government into the health insurance biz. And, as Bob noted, it's not like folks have been beating down the door to sign up in any state.

This particular NPR piece, by the way, suffers from what we've come to call LRS (Lazy Reporter Syndrome). We've seen this before, of course, but NPR seems to have refined it to an art.

■ Example #1:

"Jose Cortes was a Spanish teacher at a college in North Carolina until strange things started happening ... By the time doctors figured out why he'd been acting so strangely, he'd been fired. Lost his benefits."

Really? What kind of college employs less than 20 people (the threshold for COBRA compliance)?

■ Example #2:

"[H]is wife, Anne ... says he had two options: Join her health plan at work, but that would take a year because of his preexisting condition."

Hello, HIPAA anyone? As long as there was continuous coverage (and the reporter never questions this), then there's no such wait.

These are such obvious, simple holes that I find it difficult to believe much else of what's being "reported" here. It's reminiscent, as well, of Bob's expose of the Baltimore Sun; that is, these are (or should be) routine parts of the fact-check process.

Or are "reporters" absolved of these?

[Hat Tip: FoIB Holly R]

Green Mountain State Shenanigans

Courtesy of FoIB Jeff M comes this rather bizarre news from Vermont:

"At least one roadblock stands in the way of Vermont's path toward becoming the first state to adopt a single-payer health care system: coverage for illegal immigrants."

As we've noted here before, illegals make up a disproportionate share of the uninsured (d'unh!), but it doesn't seem to occur to the fine folks of Vermont that there's a good reason for this. Namely, illegals are here, well, illegally. Since criminals are not particularly well-known for playing by the rules (hence the term "illegal"), it stands to reason that they're not rushing out to buy health insurance (well, along with the fact that they couldn't if they tried).

So the solution - natch - is to simply put them on the rolls, thus shifting the cost of their health care to the actual legal citizenry. Now, we're on record as supporting the "57 state laboratory" model of health care, so of course we recognize that Vermont is free to experiment with this notion at its own cost.

There's a deeper problem here, though, and it's neatly summarized:

"When we say health care is a human right, we mean for everybody"

That is so wrong, on so many levels, that it's challenging to know where to begin.

Of course, that won't stop us from trying.

First, folks who bandy about the silly notion that health care is a "right" overlook a fundamental issue: at whose cost? That is, if the delivery of health care is a "right," then that means that the state has the power to compel providers to treat anyone and everyone, regardless of whether or not they'll be paid for doing so.

Note that I'm not saying "paid fairly" ; after all, that's a judgment call. No, I meant what I said: that they be paid at all. That is, the right to health care would trump the expectation of payment for services rendered.

Of course, what these thoughtless individuals most likely mean is that the payment for health care should be made by the state, which means thee and me. That's really the underlying premise of "universal" health "care" (to use the disingenuous and patently false terminology of its proponents). Note that there's no talk here of personal responsibility or accountability: it just "feels good."

Not a promising premise.

Disability Month ahead...

May is National Disability Insurance Awareness Month. In anticipation of this annual event, we bring you startling and compelling evidence that this is must-have coverage:

Cavalcade of Risk #130: Call for submissions and CavRisk News

David Williams hosts next week's edition. Entries are due by Monday (the 2nd).

NB: We're trying out a new submission tool:

The BC WorkAround

Once there, you'll be asked to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post ("Remarks")

At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

About those "sick notes"

During the unruly protests that took place in Wisconsin in February, several health care "professionals" handed out "medical excuse notes" to participants. While any rational lay person would immediately recognize this as a major ethical breach, it's taken this long for said "professionals'" employer to weigh in:

"UW Health doctors who wrote sick notes for protesters at the Capitol in February face penalties up to a loss of pay and leadership positions, the UW School of Medicine and Public Health said Tuesday."

[ed: "UW" is "University of Wisconsin"]

Nice to see the University taking a principled stand.

From the Mailbag: Thursday Linkfest

Three (apparently) unrelated but interesting items from our email:

■ Regular readers know that we're big fans of transparency in both the delivery and financing of health care. To that end, we're pleased to pass along the news of a new online database called Fair Health Consumer. Eric Hendrickson tells us that the site's purpose is to "provid[e] consumers with information they need to navigate the very confusing world of health care reimbursement; one service offered deconstructs the benefit forms that insurers provide us with anytime we visit our doctor or other healthcare provider."

That's been available since the beginning of the year, and they've recently added a new "Consumer Cost Lookup function" that lets health care consumers "view charge estimates for various dental procedures within their geographic area." And come August, the site's adding "costs associated with medical procedures ... Patients will be able to conduct their searches by procedure or service, by diagnosis (in the case of medical), or by utilizing the appropriate medical or dental terminology codes."

■ Long Term Care insurance is another favorite topic here at IB, and Genworth Financial's a major player in the LTCi market. According to email we received from Clint Kaminska, the carrier's put together a new "Genworth Celebrates Caregivers program," which includes "Long Term Care resources aimed to support families and caregivers in talking to loved ones about big issues like aging, money, health and planning for end-of-life care."

It's a website with a variety of resources, including articles, advice and links.

■ Daniel Kessler, a professor of business and law at Stanford University and a senior fellow at the Hoover Institution, has an interesting piece at the WSJ that explains how ObamaCare© actually punishes the productive members of our society:

"This new entitlement ... will damage the country's long-term fiscal outlook. It also will introduce far-reaching negative effects on rewards to work and bizarre new inequities into American life ... There is also the likelihood that ... income taxes on upper-middle income families will have to be raised ... to finance the cost of the subsidy, the Medicaid expansion, and other provisions of the new law. Both of these effects exacerbate the law's negative work incentives."

It's a chilling and eye-opening look at this trainwreck.

Is there an app for this? (Stupid Government Trick)

Recently, "smart" phones have been in the news for surreptitiously tracing users' whereabouts. That might actually be a good problem to have, though, if you're the beneficiary of a life insurance policy:

"State regulators in California and Florida say they will be looking to see how well life insurers are doing at determining when the life insurance policy insureds have died."

There are, in fact, several issues here, and it's not necessarily as "open and shut" as the authorities may wish it to appear.

The first problem is that, contrary to what the state bureauweenies may wishcast, it's not the insurance company's responsibility to keep tabs on its insureds: it's the insured's responsibility to keep the carrier apprised of his (or her) location. In fact, I daresay that privacy hawks would be mightily put out if an insurer was proactive in this regard.

And I call BS on this one:

"John Chiang, the California controller, says his office has been auditing 21 insurers to evaluate compliance with state unclaimed property claims.

The audit has found widespread problems with efforts to locate beneficiaries of life policies and annuity contract death benefits."

So. What?

If you care enough about your loved ones to buy a life insurance policy, then you darned well ought to make sure that they have a clue as to:

a) It's existence,

and

b) It's location.

Sheesh!

Worksite Woes

Many years ago, working class folks bought life insurance from companies specializing in "industrial" policies. No, this didn't mean that plans were forged from raw steel; rather, these policies had relatively modest death benefits, usually meant to cover final expenses. Rather than check-o-matic, premiums were collected (often weekly) by "the insurance man" working his debit (route).

Those days are long gone, but the need for these kinds of plans still exists, and that market is now served by so-called "worksite marketing" programs. Some are well-known (Aflac); many aren't. The basic idea, though, remains the same: small face amounts, simplified underwriting and easily-budgeted premiums (the agent collecting his debit has been supplanted by payroll deduction of premiums).

Unfortunately, even that affordable market is now facing a major challenge:

"U.S. sales of voluntary group insurance products and individual products sold at the worksite fell 2.9% in 2010 ... The drop between 2009 and 2010 “is the first decrease that we have seen in the industry since we began tracking sales in 1997."

Although life sales in general seem to have picked up, sales of these plans have plummeted: "The top carrier experienced a 5% drop in sales."

So what's behind this precipitous decrease? Well, if real unemployment stands at almost 16% (and it does), and folks are somewhat soured on the economy (and they are), and gas is approaching (or over) $4 a gallon (and it is), then something's got to give. And it doesn't seem a stretch to conclude that at least part of that something is more life insurance.

Dumbing down the biz...

Way back in the day (when I first started in this industry), there was a particularly pernicious group of agents we called "termites:" their sole mission in life, as directed by the home office of now defunct A L Williams, was to dupe unwitting victims into cashing out perfectly good permanent life insurance policies in favor of a long-discredited concept known as "BTID" (buy term and invest the difference). We'll leave the particulars for another day, but the main problem these folks ran into was that, once they ran through their list of "soft targets" (usually family and friends), they were gone.

ALW was eventually supplanted by Primerica, which carried on the former's ignoble tradition. Both models depended upon one thing: new warm bodies, which must be licensed. The failure rate for these agents was enormous (in fairness, it's never been all that terrific for the industry as a whole: contrary to popular belief, being a successful agent is often quite difficult and requires years of persistence).

Now it appears that the folks at Primerica are facing an even greater challenge: getting those warm bodies licensed in the first place:

"About 80% of Primerica recruits don't actually become insurance agents, often because they flunk state licensing exams ... That's a problem for the company, which, more than any other insurer of its size, depends on agents to sell policies."

No kidding.

And their solution?

Oh, you're gonna love this:

"Make the tests easier. [Primerica] asserted to state regulators that the exams aren't only too hard in some places, but might also be racially biased, putting African-Americans and other minorities at a disadvantage."

Whoa!

Did they just play the race card ?!

I believe that they did.

So the insurer with the "country's largest life-insurance sales force" just said that black people are too stupid (and/or uneducated) to pass a licensing exam. That must come as a shock to the many talented, bright, hard-working and successful black (and women) agents I've met in my almost 30 years "in the biz." This is more commonly known as "the soft bigotry of low expectations," and it is no less offensive when applied to minorities in the insurance industry than in any other context.

The reality, though, is much uglier; this isn't about "fairness," but greed:

"Some regulators worry that simplifying the tests could open the door for unqualified people to sell complicated policies. They say the problem isn't necessarily the tests ... but Primerica's own recruiting program. While some companies require candidates to have college degrees ... Primerica is different. It lets almost anyone sign up, so long as they don't have a criminal record and can pay a $99 fee to cover training and licensing costs, among other minimum standards."

So a pulse and a c-note gets you in the Primerica door. And there's the real story: according to the company itself, Primerica has "processed" over 900,000 wannabes over the past five years. That comes to over $89,100,000, or roughly $17,820,000 a year in "fees" from folks who may - or may not - actually pass muster. That's a lot of incentive to make it even easier, no?

[Hat Tip: Doris F]

Quick: Duck!

After erstwhile Aflac spoke(something) Gilbert Gottfired was cut loose due to his remarkable insensitivity (much less business acumen), the call went out for a set of replacement vocal chords.

After auditioning well over 12,000 would-be duckmeisters, the worksite insurance behemoth has given the nod to a Minnesota radio sales manager and father of three, 36 year old Daniel McKeague:

"McKeague recorded a 30-second clip at radio station KQRS in Minneapolis, where he works, uploaded it to Aflac's website and later did a more formal video audition.

After learning early Tuesday that he was selected for the gig, McKeague said he's known for doing silly voices."

Gotta love a happy ending.

Say, is that a policy in your pouch?

While we've blogged on the general topic of pet insurance before, this item really jumped out:

"An anonymous donor has purchased a $50,000 insurance policy to help an Oklahoma woman keep her pet kangaroo as a therapy pet. "

It's not really "pet insurance" per se: rather, it's a liability policy required by a yet-to-be-enacted local ordinance pertaining to the keeping of "exotic pets." It's similar to those required by landlords concerned about (for example) pit bulls and the like. The idea is that these animals may pose a more existential threat to others than the family goldfish or poodle.

The article's a little sensational: I doubt very much that the $50,000 referred to the premium; more likely, that's the policy limits, and the premium is a small fraction of that. We'd appreciate any input from our P&C-type readers on that score.

Regardless, it's still a generous and thoughtful gesture, and a great example of insurance as risk management tool.

Stupid Carrier Tricks #1648

Apparently, some carriers still don't quite get that our clients do not belong to them, and that we don't much like "poachers."

The rocket surgeons who run United Healthcare seem to think that agents are simply a "necessary (for now) evil" that can be ridden roughshod over:

[Click to embiggen]

The letter, from Operations CEO Dirk McMahon, says in part that "you now have access to a designated employer service team ... who will handle all your benefit needs."

No, Mr McMahon, that's my job. Yours is to try to rein in renewals, and provide excellent service to all your insureds.

And I don't even appreciate the sentiment: it bespeaks an arrogance that must surely permeate the Home Office.

On the other hand, it's sure a great incentive to really start thinking about moving business to other carriers.

Industry News: Life and Health edition

■ First up, some (good?) news from the Medical Information Bureau (MIB):

"U.S. life insurers researched more requests for individual coverage in March than they did in March 2010, and activity for older applicants continued to be strong."

That's interesting on several levels. First, it suggests that more folks are buying life insurance (although at least some of these are likely replacements for older policies). Second, it may also be a reflection on the decline of the economy: if folks had been counting on their investments to fund their estates, then life insurance can be an attractive means of making up for unexpected shortfalls.

■ Next, Aetna's making some interesting changes in how they'll handle individual medical insurance going forward:

"1. New 15-day lead time requirement"

When applying for a new policy, the earliest effective date one can claim is two weeks out. So if you're thinking about switching to an Aetna individual plan, don't wait 'til the last minute.

[ed: United Healthcare requires a month has changed their issue date policy to 15 days, as well]

"2. A requested effective date can no longer be changed to an earlier date"

On its face, this makes sense: backdating is problematic. But what they're really talking about is a case where, for example, you apply today (April 22nd) requesting a June 1 effective date (obviously observing the new 15-day rule). Your approval comes back on May 3rd, and you decide that you'd really rather have the new plan effective May 15th. Nope: no can do. This makes no sense, since the 15-day rule is still being met, and it's not a question of new claims in the interim.

And last (but definitely not least):

"3. 90-day limit for choosing a future effective date following an appeal"

This one's kind of (unnecessarily) complicated: what it applies to are cases where an applicant is turned down for coverage and appeals the declination. Under the new ObamaCare© rules, the applicant has 180 days to appeal the decision. But Aetna's added a twist: "the applicant must choose an effective date within 90 days of the original signature date on the application." Here's the example given:

"An applicant signs an application on 12/31/2010 and is declined for coverage on 1/15/2011. The applicant has 180 days from 1/15/11 to appeal his/her declination ... If Aetna overturns the declination decision and approves the coverage, the applicant may be enrolled for an effective date that is within 90 days of the signature date on the application."

They then give various dates from January through April. The problem is that one could end up paying for many months where there was no coverage in force. So one could win the battle, and ultimately lose the war.

The MVNHS© Bites (Back)

Offered without (additional) comment:

Baby Joseph Update

Last time we checked in with Baby Joseph was a month ago, at which time he had been evacuated from Canada to St Louis. His prognosis hadn't really changed, but his level of care was much improved.

Now we learn that "(f)ifteen-month-old Joseph Maraachli, known to the world as “Baby Joseph,” was transported from ... St. Louis, where he received a tracheotomy last month ... He arrived in Windsor, Ontario, Thursday morning."

As regular readers know, there was never really any question as to the ultimate result here: Baby Joseph does not have a long life expectancy. So this was never about quantity of life, but quality:

"The tracheotomy was done to alleviate some of the baby’s discomfort, and now Joseph is able to breathe on his own without mechanical assistance."

Doesn't seem to me to be all that much to ask for. Yet the bureauweenies running the Canadian health "care" system would rather an innocent child suffer than provide the inexpensive palliative care that was requested, and ultimately provided by the actual health care system here.

&*$# Health News Links

An inexpensive diabetes medication may hold a key to curing breast cancer:

"Scientists have developed a new test that identifies patients who could benefit from the cheap treatment. They found that the people whose cancer cells “fed” off high-energy compounds were more likely to see their tumours spread or to die ... If cancer cells are consuming high-energy food, this makes a tumour more aggressive and harder to treat. However, patients could benefit from metformin, which cuts off this fuel supply."

Turns out, the Metformin effectively cuts off the cancer's "food supply," literally starving it to death.

Until that protocol's approved here, though, there's another low-tech ameliorative available:

"Scientists from Keele University found that letting forth a volley of foul language can have a powerful painkilling effect, especially for people who do not normally use expletives ... The team believes the pain-lessening effect occurs because swearing triggers the ''fight or flight'' response."

And you don't even need a danged prescription!

Cavalcade of Risk #129 now online

Bob at Christian Personal Finance makes his CavRisk hosting debut with this week's roundup of risk-related posts.

Grand Rounds is up...

Julie Rosen presents this week's roundup of great medblog posts. As usual, it's an eclectic collection, but the underlying theme is patient-centered care.

Passover 2011/5771

Passover is, at its heart, a celebration of freedom (although not necessarily liberation). Tonight, we celebrate the first night of this weeklong holiday, breaking bread (literally!) with people we know and love and, often, total strangers. May all our lives be blessed with freedom and liberation.

Shecantbeserious hits bottom, keeps digging

It's becoming ever more difficult to take HHS Secretary Kathy Shecantbeserious, well, seriously. To wit:

"We pay 2 1/2 times what anybody else pays in the world, and our care outcomes look like we're in a developing country.”

Leaving aside the obvious logical disconnect inherent in that statement, to which 3rd world country is she referring? Great Britain? Canada? Sweden?

She goes on to say that "(i)t takes about 17 years from the identification of a procedure, to have it fully incorporated into the medical community. But in health care, we say that's OK."

What's your point, Kathy? That the FDA takes too darned long to approve new procedures and med's? Well, how about taking that up with your counterparts at that agency? How does adding even more bureaucracy move that ball forward?

And referring to the (evil) individual mandate, this is priceless:

"I do think it's a precarious notion of not having some kind of individual responsibility."

This from a member of the least fiscally responsible administration in memory (if not history). Pot, meet kettle.

Stupid Broker Tricks©: WC Edition

Kevin Sullivan runs the Rucking Insurance blog, where he writes about insurance and rugby ("rucking" is a rugby term having to do with ball possession). Inspired by our continuing Stupid Agent Tricks© series, Kevin has the sordid story of what happens when an agent betrays his client's trust. Recommended.

Cavalcade of Risk #129: Call for submissions

Bob at Christian Personal Finance makes his CavRisk hosting debut with next week's edition. Submissions are due this Monday (the 18th), and Bob asks that you include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

You can submit your post via Blog Carnival.

More than just Klingon

As if the last little "present" from Ms Shecantbeserious wasn't enough, there's a raft of new notices on its way to businesses which stubbornly continue to offer group health insurance. Here's a preview:

"On March 31, several Federal agencies released for public comment various documents regarding Accountable Care Organizations (ACOs). The central document includes the Proposed Rule released by the Centers for Medicare & Medicaid Services (CMS) on ACOs under the Medicare Shared Savings Program."

Oh, goody!

But wait, there's more:

"Also on March 31, CMS issued a notice entitled, "Early Retiree Reinsurance Program." This notice announces that the ERRP will no longer accept new applicants after April 30, 2011."

We've discussed this program before, noting that it's basically an accounting ruse to funnel extra ObamaCash© to worthy entities.

But we're not done yet. Last fall, we noted a new W-2 requirement, allegedly voluntary this year, but set to become mandatory later on. According to the new release:

"This is an informational reporting obligation and does not cause excludable employer provided health care coverage to become taxable."

Color me skeptical.

Booze (Health) Nooze

First, the bad news:

"Alcohol causes about 13,000 cancers a year in Britain ... A team of researchers found that most of these cases were caused by people drinking more than the recommended daily limits"

Thus (perhaps) proving the old adage about moderation.

And if you're thinking "no problem, I'll just fuhgedaboutit," well, think again:

"Drinking to forget your problems? Scientists have found that drinking will actually help you to remember them."

Oops.

Turns out, drinking can actually increase activity in the areas of the brain that enable us to remember things.

And there's this:

Drinking can actually increase activity in the areas of the brain that enable us to remember things.

Who knew?

Don't get sick on the MVNHS©

One of the more odious aspects of rationed care is that, just like at the deli, waiting on line until one's number is called can be tedious. Unlike the line at the deli, of course, is what's at stake while you're tapping your feet:

"The most seriously ill patients in the NHS have become the victims of “neglect” as surgeons are forced to focus on hitting waiting list targets for pre-planned operations ... while the NHS has succeeded in reducing waiting times for pre-planned operations ... this has come “at the cost of relative neglect of the needs of the patients admitted as emergencies.”

Translated, this means that the concept of "triage" is taking a back seat to expediency. When the government runs health care, it's the bean counters - not the caregivers - that set the priorities, often to the detriment to those whose very lives are at risk.

It's simple supply and demand, really: when the government promises "free" health care to everyone, then everyone wants their piece of the pie. Of course, the supply of those able to actually deliver that care is finite, and so waiting lists become the de facto order of the day. What happens if you're in dire straits but have a high number? Well, the odds are you're not going to get the best of (or perhaps any) care.

This is, of course, a direct consequence of the nature of the Brits' system, and soon to be of ours. Not to be a tease, but our Resident MOM (Medical Office Manager) will have some words on this as regards the new ACO's (Accountable Care Organizations) shortly.

Stay tuned....

How to say ObamaCare© in Klingon

No idea how I missed this before, but in correspondence from February, United Healthcare (UHC) advised its group clients that effective this July, "[ObamaCare©] requires that group health plans make certain member notices available [in] non-English languages when specific group thresholds have been met."

According to the memo, if there are a number of folks who are literate only in some language other than the erstwhile official tongue of the land, then UHC has to offer those folks EOB's and other routine notices in their native language.

Gee, that's not going to add to the cost of health insurance.

Group admin's are then told to log onto a dedicated UHC website to complete a survey which will determine whether or not they're affected. But of course, everyone's affected by this silliness, since it increases the cost to handle day-to-day transactions, and for which everyone's rates will have to be increased.

The silliest part?

This:

"If you do not [take the survey], we will assume that your group does not meet the threshold."

Just another Stupid Government Trick©.

Medicare and Claims: The Search is on...

The Senate is considering a bill that would create a "searchable Medicare claims database that the public can access at no cost."

On the one hand, Ms Shecantbeserious and her minions would be responsible for building and maintaining the database, which aims to provide more transparency in how and where Medicare expenses are paid.

On the other hand, Ms Shecantbeserius and her minions would be responsible for building and maintaining the database, which means that exemptions from participation will no doubt be available for unions and providers who make the appropriate, um, contributions.

Who's in?

Reining in costs: Networking revisited

As agents, we often tout a carrier's broad network of providers as a selling point. The idea is that switching insurers doesn't have to mean finding a new primary care doc, or leaving one's favorite cardiologist. It's always been a case of "bigger is better."

But is it?

Sometimes, as in the case of Sutter Health, one provider network can drive costs up while simultaneously reducing choice. But hospital chains such as Sutter's aren't the only model:

"Thousands of employers ... are opting for 'narrow network' HMOs, which offer notable savings on insurance premiums but also offer fewer medical providers."

In this case, by reducing access, it's hoped that insurance claims costs (and hence, premiums) can also be reduced. This makes a lot of sense: choice costs. That is, more flexibility means more admin costs, which are in turn passed on to the insured.

One key question left unanswered here, of course, is whether reducing "choice" also reduces "quality." One supposes that time will tell.