Intriguing Employer Tricks

Regular readers know that we're big fans of Consumer Driven Health Care (CDHC). When consumers (insureds) have "skin in the game," they're more likely to be careful health care shoppers. After all, if it's their cash at stake, there's an incentive to become actively engaged in the process. The fly in this particular ointment has always been a lack of transparency in the actual cost of care.

When we use the buzz-word "transparency," we generally turn to the McDonald's model; that is, when I walk into a Ronnie Mac's, I can look up and see exactly what my fries and Diet Coke will cost. This isn't always applicable to health care, especially when it's an emergency, but certainly for chronic illnesses or elective procedures, it should be easy to find the cost of a given service (of course, this wouldn't take into account potential complications, but it's a starting point nonetheless).

One major benefit of this model is that cost-conscious health care consumption can have a positive effect on the cost of delivery. If providers have to compete not just on outcomes but also price, then it's a win-win for consumers.

And that's just what Prodigy Health (a health services holding company in Buffalo, NY) has decided to do with its group health benefits. Like many (most?) employers that offer (and subsidize) group health insurance, Prodigy looked around for some way to rein in skyrocketing costs. They found the answer at the drive-thru:

"Before the new program, workers' incentive to shop around was limited because they had no idea — or any easy way to find out — that prices for many types of medical treatments varied widely."

The "new program" is elegant in its simplicity: the company sets the price they'll pay for a given procedure, and then employees (or their covered dependents) call in for a list of local providers who meet that price-point. They can also opt for another provider, but would then be responsible for the cost difference.

And it's not just a wing-thing, either: on the other coast, Safeway Foods has a similar program in place.

By shifting not just the cost, but the responsibility for health care back to the insured, employers are accomplishing several things: first, of course, is a potential cost savings. But beyond that, it's a signal to folks that we need to be more actively engaged consumers - who goes and buys a car without checking the price? Look for more of this to take hold as tech and prices begin to catch up.

Shameless Self-Promotion Bleg

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From the Spindle: Wednesday Link Potpourri

Here are some interesting tidbits that, for one reason or another, never made it to full-post status:

First up, healthcare in England (Olde and New).

"A leading teaching hospital faces closure as a result of the financial crisis gripping the NHS ... The health trust, one of the largest in the country, is effectively bust."

But, but, but: we've been told (ad nauseum) how much more efficient gummint-run healthcare is, and how much money it saves.

Meanwhile, in New England, RomneyCare© continues to implode:

"Five years after Gov. Mitt Romney signed Massachusetts’ groundbreaking health care legislation, it has met its chief goal of extending insurance coverage to most residents — but with costs rising faster than inflation, lawmakers face the challenge of how to pay for it all."

An unforeseen circumstance, or a feature?

You be the judge.

Just remember: ObamneyCare© is based on this model, as well.

And finally, in breaking news, a major story that will not be a surprise to regular readers. Via email:

"Medicare scam by Labcorp & Quest Diagnostics costs taxpayers billions of dollars ... The complaint accuses LabCorp, the second largest medical lab in the country, of illegal kickbacks to insurance companies that pressure their in-network doctors to send lab work to LapCorp exclusively."

I'm looking into interviewing the individual behind the lawsuit; let me know in the comments if you'd like more info.

UPDATE: Our interview with the principal litigant is here.

State-based Medical Care: Rx or Bust

It ain't just the MVNHS©:

"Swiss drug giant Roche Holding AG has stopped delivering its drugs for cancer and other diseases to some state-funded hospitals in Greece..."

Oh, the humanity! That evil, greedy Big Pharma, putting innocent lives at risk in favor of their obscene profits?

Wait, what?

Turns out, it's not so much greed as necessity:

"...some state-funded hospitals in Greece that haven't paid their bills."

Oh.

But surely Greece is an outlier here, what with their well-publicized financial turmoil, right?

Um, not so much:

"Roche may need to adopt in Spain, as well. Some state-funded hospitals in Portugal and Italy have also fallen far behind on payments"

But I thought that state-run health care was more efficient and saved more money than our terrible private-sector system? And that folks got better care with fewer delays and hassles?

What's next?

That would be the newest form of healthcare delivery, self-serve:

"Patients at some hospitals now must take their prescriptions to a local pharmacy, and ... bring them back to the hospital to be administered"

Yikes! But surely this is an exceptional time, what with the global economy and all, right?

Guess again:

"There are hospitals "who haven't paid their bills in three or four years"

So this has been going on for over 4 years? Since before ObamneyCare© was even passed? But how could that be? That whole effort was based on the premise that our system was inferior to the European model, but now that turns out not to have been the case?

Okay, as terrible as this is, it's only one drug manufacturer, so things will start improving, right?

Oh:

"Roche isn't the first pharmaceutical company to stop supplies to some Greek buyers. Denmark's Novo Nordisk S/A last year stopped shipping certain brands of insulin"

Those poor diabetics! Why would Big Pharma leave them twisting in the wind?

Hmm, maybe a clue here:

"Greece said it would cut the prices by more than a quarter."

Arbitrarily nationalize and then artificially reduce the price of a commodity? One wonders what they might have been thinking when they made that brilliant move.

Luckily for Greece, their national health care system is far superior to our version. Or maybe not:

"(C)ritics of the health-care system say it is bogged down in waste."

Ya don't say.

Cavalcade of Risk #140: Doom & Gloom edition

Dr Jaan Sidorov presents this week's collection of risky, often scary posts, all tied together with a big dollop of (very dry) humor.

Don't miss this one!

As long as we're being silly: Bruce Banner, CLU

MSN had a rather silly little post the other day, wondering if Batman needs life insurance:

"A survey asking which fictional characters need life insurance suggests most of us don't know much about coverage."

After reading the article, it's apparent that the author still doesn't.

Let's do a little fisking, shall we?

First up, the strange case of Batman. His alter ego, Bruce Wayne (who lives in stately Wayne Manor, of course), is quite well off. One might think that his vast assets would mitigate the need for life insurance, and that's just what the article says.

Trouble is: that's quite wrong.

Life insurance is not just for estate creation, but estate conservation. Given the profligate spenders in DC, Mr Wayne would most likely have a team of estate planners and attorneys scouring the books for ways to minimize estate taxes and the like. Permanent life insurance is a perfect fit for such cases.

Next, Peter Parker (aka Spiderman) gets the Investopedia treatment. The article notes that although Peter may well need coverage, his dangerously swinging lifestyle might make it difficult to come by.

Never fear, though: Peter's job as a news photographer probably grants him access to worksite insurance products (think Aflac and the like), including simplified or even guaranteed issue life insurance plans.

And although the article is about life insurance, we'd be remiss if we failed to point out that Aunt Mary ought to be considering some Long Term Care insurance for herself.

The piece has an obligatory reference to Harry Potter, as well. Here, it notes the lack of dependents who would suffer financially from his premature demise at the hands of Lord Voldemort. While that may indeed to be true now, we know that he eventually gains a spouse; what better way to protect his future insurability than with a life insurance policy bought, and priced, at a young age?

Following Spidey and Harry, we turn to Fred, Wilma and Pebbles (and don't forget Dino!). Of course, Fred most likely has at least some group coverage thanks to his employment at Slate Rock and Gravel Company. He should also have at least some life insurance that he actually owns, and which is not dependent on his continued employment.

Hot on the heels of Fred & Family we have the Queen of Big Hair, Marge Simpson. Here, I agree with the Investopedia folks:

"Marge also needs more life insurance than the aforementioned superheroes; her nonfinancial contributions provide vital services to the family."

That's because, as a stay-at-home parent, her income value to the family is non-trivial. In fact, it could be the equivalent of over $120,000 a year. That's a lot of Duff Beer.

Haggling will reduce the cost of health care: The eternal hope of optimists

Consumer Reports Magazine, in its Oct. 2011 issue, has an article How to Haggle with your Doctor. Once again we have an article that directs the consumer, in this case a patient, to haggle with a physician over the cost of medical care. While being able to haggle with a physician seems like a great way to bring down the cost of that health service, the reality is that the physician has the least control over prices in healthcare. Now, some of you non-trusting souls will say yeah, it is all the insurances. Nope, that is also incorrect. The entity with the most control over prices in healthcare is the U. S. Government. As many readers of my past blogs already know, Medicare prohibits any provider from discounting or in any way changing a charge for any patient for any reason. That one regulation nullifies this article, but let’s look at some of the finer points of it. The article present three possible scenarios, 1) You are healthy, 2) The unexpected occurs, and 3) You are having an elective procedure.

In scenario number 1 the article states: “Physicians, nurses, and other providers have a professional obligation to take your financial resources into account when recommending and delivering care”. Actually, providers cannot take your financial resources into account. The provider must recommend the best option regardless of price. To do otherwise would appear as if the provider is only looking at your financial resources and not what is best for you medically. This is a big no-no from the federal government. The federal government wants the provider to recommend the best treatment, period. That is why physicians are the last people who truly know what procedures cost since they cannot use that information to determine their plan of treatment.

In scenario number 2, the article suggests that you review your medical bill with the doctor after the treatment to ensure that the treatment was necessary. Well, if you are alive, I would think that determines that the treatment was necessary. But let’s look at this from another business, food. How many of us would haggle with a chef after a meal at a restaurant? “The chicken did not meet my standards of preparation and thus I would like to have a 50% discount”. The next sound you hear is laughter from the chef and the request to pay or he will be forced to have you arrested for theft. Unfortunately, a provider cannot have you arrested for theft after failure to pay since a provider delivers a service, not an actual product. As to collecting after the medical treatment, I heard a great quote from a manager of a large acute care facility, “Can I have my medical treatment back?”

The article then suggests that you ask a provider for the same discount that he takes from insurance companies. A provider signs a contract with an insurance company accepting lower reimbursement because the insurance company agrees to direct its customers to him for medical treatment. As an individual you have signed a contract with the provider that you will pay all fees as charged by the provider in accordance with your insurance contract. The provider has already agreed to a reduction in payment from your insurance company and now you want him to take less from you as well. Let me know how that works for you.

Section 3 actually has sound advice, which is do your research. Find out the costs, the charges, the results.

Health care is expensive because there is a perception that all diseases and injuries should be treated and cured and mankind should not suffer death any longer. Well, the reality is that man is mortal, man does die and the cost to keep man alive is, in some cases (cancer, heart disease, genetic complications and injuries) very expensive. It is a simple mathematical equation: the willingness to spend money on healthcare is directly proportional to the value one holds over one's quality of life. I for one have never haggled over my own or my family’s healthcare, and I would hope that you, dear reader, would not haggle over yours.

Grand Rounds is up!

Dr Ramona Bates hosts this week, with an eclectic collection of great medblog posts.

Let the Games Begin: AIDS version

This is kinda cool:

"In just three weeks, online gamers deciphered the structure of a retrovirus protein that has stumped scientists for over a decade ... their breakthrough opens doors for a new AIDS drug design."

Kind of reminds me of the SETI program that used a distributed computing model to track potential messages from "out there." In this case, scientists had hit a wall in their efforts to deactivate a protein called "protease," which "plays a critical role in how some viruses, including HIV, multiply."

Scientists in Washington state decided to give a computer program, called "Foldit," a go (it turns science problems into computer games). Gamers stepped up, and very quickly created helpful computer models, which the scientists can now use in their research.

Talk about bonus rounds!

BREAKING: Anthem Pulls PFFS

More on this shortly, but just received this in email:

"Anthem has made a difficult decision to non-renew all PFFS plans in all states and counties for 2012."

Regular readers may recall Kelley's post explaining how Private Fee-For-Service (PFFS) plans work. For now, the bottom line is that the $500 million hit Medicare took for ObamaCrap is already paying dividends.

And by "paying dividends," we of course mean "hurting seniors."

Dangerous Carrier Games

In addition to a great speaker, yesterday's festivities included a kind of "Expo" where one could meet with representatives of various carriers and other vendors. The gentleman from Assurant (nee: Time Insurance) touted their recently revamped "Access" program. It's essentially a simplified (as opposed to guaranteed) issue mini-med type program.

Here's the problem: he told me that the company recommends this plan for folks waiting to hop on the PCIP wagon.

Hunh?

Well, he continued, since it's not considered "creditable coverage" it doesn't count as "insurance."

Really.

A very simple search of the Ohio PCIP site yields this:

"To qualify for the Ohio High Risk Pool, you must meet the following eligibility criteria, as established by the U.S Department of Health and Human Services:

•Be uninsured for six months prior to the date you apply for coverage;"

Do you see the phrase "have creditable coverage" anywhere?

Me, either.

So, I contacted the folks running the Ohio PCIP initiative to confirm whether or not this was accurate.

Turns out, it is: as long as whatever plan one has is not "creditable," then it doesn't count.

Still, I'm a bit leery of this idea, and here's why:

The most generous mini-med I've seen includes a 6 month (sound familiar?) wait for pre-existing conditions (and the Access plan's is 12). So one is still gambling on any such condition, which would most likely be the one causing one to be uninsurable in the first place.

I think an agent would have to be very careful about pitching this, and I'm a bit surprised that any top tier carrier would be recommending their agents do so.

An Afternoon with the Commish

Yesterday, I had the opportunity to listen to a brief presentation by our new Insurance Commissioner, Mary Taylor. Although she took office only a few months ago, she had some interesting things to say, and gamely took questions from a group of (understandably) discomfited insurance agents (I got the first one).

We only had her for about half an hour; she spoke for maybe 20 minutes, but that was fine since it left time for questions.

Right out of the box, she mentioned that Ohio is a fairly competitive state, health insurance-wise. That is, we have several carriers vying for market share, which helps to keep rates in the reasonable range (by comparison to other states only, of course).

She spoke at length about ObamaCare©, as would be expected (she also observed that we probably had our own name for it, which was, of course, correct). One major concern is that it's expected to increase Buckeye state Medicaid rolls by 1 million people. When questioned about that later, she re-confirmed that this expansion was due exclusively to ObamaCare©, not the current economy (which, of course, also adds to those numbers).

Ms Taylor also expressed her regret at how Washington has forced so many ill-conceived mandates on the states (more on this in a few moments), and the current administration in Columbus is very much in the Repeal-and-Replace camp, with an emphasis on state-based reforms.

As mentioned, I got the first question. Before I asked it, though, I told her that "my co-blogger calls it ObamaCrap," which got chuckles from both her and my fellow agents.

My question for her was: "Given the boundaries of McCarran–Ferguson, why aren't state DOI's screaming bloody murder at HHS usurping their regulatory power?" Since I knew that she was relatively new to her job (she, like pretty much every Insurance Commissioner I've ever heard of, has no background in the industry), I gave her examples such as Waivers and Guaranteed Issue for kiddies (which has killed the child-only market), which were never in ObamaCare© itself but "forced" on the states by Shecantbeserious. Her answer was a bit disappointing, if not unexpected: she and her boss (she's also the Lt Governor) feel that the best way to fight it right now is by educating the public. Meh.

The other interesting question that came up was about Medical Loss Ratios (MLR). The question was why hadn't we (Ohio) applied for a waiver on MLR. She answered that they didn't think MLR was a problem here, since we have a pretty competitive market (for now). The guy who asked it followed up by pointing out that it does have a direct affect - on us.

She replied that she'd be happy to hear more about that - we'll do our best to oblige.

Overall, color me impressed: she only took office in January and, as much as I hate to admit it, health insurance is not her only raison d'etre. Hopefully, we'll see more proactive initiatives out of Columbus, especially in the fight against ObamneyCare©.

Cavalcade of Risk #140: Call for submissions

Jaan Sidorov hosts next week's CavRisk. Entries are due by Monday (the 19th).

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).

Thanks!

CLASS Warfare

Well, it only took seven-plus months, but the MSM has finally caught up with us:

"[G]overnment experts repeatedly warned that a new long-term care insurance plan could go belly up, saddling taxpayers with another underfunded benefit program, according to emails disclosed by congressional investigators."

Actually, we could have saved these investigators some time (and the taxpayers some cold hard cash), if they'd only simply read this:

"[A] plan that's guaranteed issue, with (ostensibly) no waiting or elimination period and "unlimited" benefits is not exactly a candidate for "most stable rates." In fact, the only real "certainty" is that rates will increase, perhaps quickly and dramatically, as those least able to find real long term care insurance (LTCi) flock to the government plan."

But we weren't even the first to draw this (rather obvious) conclusion:

"Seems like a recipe for disaster to me," William Marton, a senior aging policy official in the administration, wrote in an October 2009 email."

The problem, as both Mr Marton and our own fine selves pointed out, is that this type of plan will attract those least able to qualify for underwritten plans. That is, only the least healthy are going to want to sign up for a plan with a five-year waiting period, coupled with rates based on guaranteed acceptance. It is a recipe for disaster, which has been long known and discussed.

And there's this: recall that one of the most contentious pieces of ObamneyCare© is the (Evil) Mandate. The ostensible justification for the Mandate is that, without it, the guaranteed issue and community rating aspects won't fly. And so it may very well be for the CLASS(less) Act: without a mandate that all eligible workers participate, the program is unsustainable.

Of course, like everything else in ObamneyCare©, we had to pass it to learn just how awful it is.

Health Wonk Review: Our Own Words edition

FoIB David Williams hosts this week's collection of healthcare polity and policy, eschewing his usual format in favor of letting each of us summarize our own posts. Very cool.

Competitive Oncology

A close friend (for 40-some years) was diagnosed a year or so ago with breast cancer. She recently moved to Cincinnati, but her oncologist is in Columbus (a good hour-and-a-half drive each way). She likes her doc, but would prefer someone "closer to home," so she's started oncologist shopping.

I asked her how that was working, and about her criteria. The first doctor she met with claimed that the practice was quite cost-effective. Now, that's probably a good thing from the insurers' point of view, but not my friend's ("I don't want her being frugal with my care").

So what is she looking for?

Well, obviously that they "connect" on a personal level, but then she said "I want a doctor who's competitive." When I asked what that meant, her answer stunned and delighted me:

"I want a doctor who looks at the median life expectancy of cancer patients, and makes it his goal to have all his patients beat that."

Beat that.

Been tellin' ya so...

We've long maintained that ObamneyCare© would ring the death-knell for group insurance. It appears, though, that we may have miscalculated when that might happen.

Turns out, a lot quicker than even we'd anticipated:

"Fewer people received insurance coverage through their employer in 2010 than in 2009, and the number of people covered through government insurance programs continued to rise, according to 2010 data reported Tuesday by the U.S. Census Bureau."

This follows what we've long noted, that employers aren't stupid, and understand that the smart-money move is to let the taxpayer pick up employees' health insurance tab. It's also additional proof - as if any is needed - that the end goal here is single-payer.

The problem, of course, is that we now have fewer choices, although they are more expensive. As Ohio's Insurance Commissioner Mary Taylor notes:

"By requiring consumers to buy services they do not want or need, costs will rise significantly."

We're already seeing that.

She continues:

"Obamacare limits the deductible amount a consumer can choose to pay each year."

Say goodbye to HSA's, which were really the only product capable of actually affecting the cost of health care.

"Obamacare squeezes the rating rules for insurance carriers in Ohio forcing some to pay higher premiums."

This is one that, in my opinion, gets far too little play in the media. It means that companies have less room for differentiation, and thus competition. That, in turn, means less ability to reduce premiums, or even just mitigate increases.

Ms Taylor has more on this:

"And because choices are no longer rewarded, insurance companies will be forced to treat everyone the same resulting in skyrocketing premiums for many low-risk, health conscious consumers."

One of ObamneyCare© proponents' favorite go-to arguments is to compare health insurance to car insurance. Their point is that since auto insurance is "mandatory" (which, of course, it's not), health insurance should be, as well. What they don't tell you is that auto insurance companies can - and do - discriminate against young male drivers, and speeders, and drunk drivers.

But then, logic was never one of their strong suits.

[Hat Tip for Mary Taylor article: FoIB Holly R]

A(nother) Kick in the Kidneys [UPDATED!]

If there's a downside to almost 7 years of posts, it's that there seems to be very little new under the sun:

"A Nashville woman seemingly has to choose between her family's financial well-being and a distant relative's health ... The challenge is that the procedure would require her to miss quite a bit of work, and her employer is unwilling to guarantee that her job will still be there for her when she returns."

That was 4 years ago. Apparently, we've learned nothing:

"A Philadelphia mother was left jobless Tuesday after she took time off work to donate a kidney to her dying son and was fired during her absence."

As in the Nashville case, FMLA (Family Medical Leave Act) "does not apply to companies with under 50 employees."

I'm reminded of an aphorism: just because it's legal, doesn't make it right.

UPDATE: In the comments, Deon makes a very good point about the practical implications of this story. Recommended.

UPDATE #2: Ms Rendon "has been put back on full salary until another position opens up at her company."

On the one hand, this is great news for her. But as our commenter yesterday observed, this puts a lot of financial pressure on the employer. I'm not convinced that this is a win-win.

On Fraud, Abuse and Medicare

As Bob pointed out this summer, "fraud and abuse" represents a pretty hefty chunk of Medicare's budget. Of course, we'd all like to see less of both, but that agency's own culture of incompetence makes it darned unlikely:

"It started when Richard West went for some dental work and was told his Medicaid benefits had somehow maxed out ... He called various government hotlines but got no help."

What Mr West is referring to in the first place is something generally not known by we lowly citizens: that Medicare has limits on certain benefits, and that some of his had been used up without his knowledge, or consent:

"After checking his own medical records [he] discovered the company providing him with nursing care appeared to have overbilled Medicaid for hundreds of hours for people who were never there."

Now, multiply that by the almost 50 million people enrolled in Medicare, and the numbers boggle the mind. Certainly, most providers aren't engaging in fraud, but how many have to be to generate huge dollars, and lots of folks with exhausted benefits?

The story doesn't end there, of course:

"The case involved the U.S. Attorney’s office, the FBI, the Department of Veterans Affairs, the Department of Health and Human Services, and Medicaid Fraud Control Units in New Jersey, Virginia and Massachusetts."

All vying for a slice of the ($150 million) pie and bragging rights.

Even that, though, fails to illustrate the magnitude of the problem:

"One of West’s nurses ... had been told she would be paid $27 an hour. When she received her paycheck, it showed her hourly rate was only $21 an hour ... the manager of the office showed her payroll stubs indicating that she was being paid for administering to a patient she had never seen ... If you want to make the money, this is how we do it"

Indeed.

Mind you, this went on for almost a decade, and would still be draining our tax dollars were it not for a feisty, disabled Vietnam vet.

So: Thank you for your service to your country, Mr West. Twice.

More from the D'Uh! Dept.

As Bob noted a while back, the response to PCIP (Pre-existing Condition Insurance Plan) has been, well, underwhelming. There seem to be a number of reasons for this, but my hometown paper, The Dayton Daily News, may be on to something:

"Ohio's high-risk health insurance pool that began a year ago as part of the federal health care overhaul is facing higher-than-expected costs, which are limiting enrollment."

Ya think?!

Although touted as "one of the most successful in the country," Ohio's PCIP plan has so far attracted less than 2,000 suckers souls, while still managing to run through its initial $150+ million budget in record time. In fact, officials estimate that the plan will be full - and broke - by next year.

It was supposed to get us to full implementation of ObamneyCare© in 2014.

Ooopsies!

Kathleen Gmeiner, who runs the "advocacy group" Ohio Consumers for Health Coverage, sums it up for us:

"Unfortunately, the high-risk pool simply has fallen short of what it was originally hoped it could do."

Heh.

Our own DOI seems equally clueless; its assistant director for health policy, Carrie Haughawout, offered this scintillating analysis about how rates are regulated:

"somewhat mirror the market in the given state"

"Somewhat mirror?" What does that even mean? Either they're regulated based on claims and demographics, or they're picked out of the air.

Which is it, Carrie?

[Hat Tip: Bill M]

Well, D'unh!

Ladies and gentlemen, I give you the meme of the week:

"Drops in the number of major hospitals and major health insurers seem to contributing to increases in the cost of health coverage."

Ya think?!

Carnegie Mellon University economist Martin Gaynor shared this amazing observation with the health subcommittee of the House Ways and Means Committee.

We could have saved him the trouble.

It's elementary, dear Watson

Got this in email:

"WellPoint, Inc. ... announced an agreement today to create the first commercial applications of the IBM Watson technology. Under the agreement, WellPoint will develop and launch Watson-based solutions to help improve patient care through the delivery of up-to-date, evidence-based health care for millions of Americans."

Coming on the heels of our recent post on telemedicine, it sure looks like we're in for some interesting times ahead, healthcare-wise.

UPDATE: Speaking of Anthem, good news for (some of) their MedSupp clients:

"Anthem Issues Refunds to Qualifying Medicare Supplement Members in Several States (Colorado, Connecticut, Maine, Ohio and Wisconsin) ... These refunds range from approximately $66 to $1,450 ... This specific refund is based on total claims experience."

Don't spend it all in one place...

1331, 1332, Whatever it takes

And so the bill we had to pass to see what's in it just keeps on disgorging surprises. The newest twist is something called a 1331 Plan, aka Basic Health Program:

"The Section 1331 program is designed for people who earn too much to qualify for free Medicaid coverage but too little to have an easy time paying for coverage."

Which would be, what, pretty much anyone not on Medicaid?

Well, not really. To be eligible for one of these stripped down plans, one must be under 65, have a household income within a certain narrow range, and be ineligible for Medicaid.

Oh, and one more thing:

"Not be eligible for ... affordable employer-sponsored coverage."

No problem there, of course, since group health plans will be a thing of the past once ObamneyCare©'s in full force.

Also known as "standard plans," these policies would (theoretically) be offered by licensed health insurers or HMO's, and would be priced comparably with those offered by one's state's Exchange-based plans. They'd also include the standard (and stupid) 85% MLR requirement, and the now-questionable tax credits.

If this sounds unnecessarily confusing, even by government standards, welcome to the club.

9/11, 10 Years On

Five years ago, we participated in the "Project 2,996" campaign to remember and honor those killed in 9/11. Today, on the 10th anniversary of that terrible day, we reprise our original post, to which I will append this prayer:

Baruch atah Adonai, dayan ha-emet ... Blessed are you, oh G-d, the righteous judge.

[Originally posted 9/11/2006]

As regular InsureBlog readers know, my better half has long maintained that “there are no coincidences.” That is, she believes that everything happens for a reason, although we may not be aware just what that reason is.

As for me, I’ve gradually become 90% convinced that she’s right on this (in everything else, of course, she’s 100% right). But one evening, a few weeks ago, that all changed.

I have a confession: My name is Henry, and I’m a news junkie. It is my habit to stay up way too late reading news blogs. Which I was doing several weeks ago, when I came across an item about one man’s extraordinary effort to harness the power of the blogosphere, in tribute to our fellow Americans who died in The Towers, exactly five years ago today.

The concept was deceptively simple: 2996 victims, 2996 blogs, each one remembering a single person. Bloggers were invited to sign up, and each was assigned – at random – one name.

Stop for a moment, and consider this: one blogger, reading one news item, decides it’s the right thing to do, signs up, and is assigned the name of a person he’s never even heard of, let alone met. We’ll come back to this shortly.

And so I was assigned the name of Jerome Robert Lohez, given a photo of him, and told the briefest of biographical information: age 30, lived in Jersey City, New Jersey.

That was it. A name, a face, a place.

The assignment was simple: On September 11, post his name and picture.

But I’m a news junkie, and that wasn’t good enough. I had to know more about Jerome. So I Googled his name (hey, why not?) and came across a site that CNN put together in December of ’01. It had pictures and names, of course, but I also learned that Jerome, born in France, married Dening Wu some three years before The Towers fell.

One month before The Towers fell, Jerome got his Green Card, and the happy couple flew to Europe to celebrate with his family. When they got back, two days before The Towers fell, Jerome told Dening “Only in New York do we have so much sunshine."

That was Sunday, September 9, 2001.

On Tuesday morning, he left for work. And The Towers fell.

And now we've come full circle: One. Random. Name.

Jerome didn’t just work in The Towers. He worked for Empire Blue Cross and Blue Shield. He worked in the insurance industry.

90% doesn’t cut it anymore.

Thank you, Jerome, for the lives you touched, the joy you brought, your love for New York and America, and for the privilege of paying you tribute.

Au revoir, Monsieur Lohez, au revoir.

Drink up, ladies!

So it appears that women "of a certain age" may well benefit from not one, but two shots of the good stuff:

"A glass or two of alcohol a day in middle age could help women enjoy a happy and healthy retirement."

According to a recent, "major" study, having a glass or two of wine (red or white, ladies' choice) with dinner may help to prevent all kinds of health problems, from "cancer to heart disease" (alas: varicose veins aren't on the list).

The usual caveats apply, of course: "the study should not be used to justify ‘anything beyond very modest levels of drinking’."

Party poopers!

That Compassionate MVNHS©: Teatime!

Just when you thought it couldn't possibly get any worse, those caring folks from the very model for ObamaCare© dig a deeper (6'?) hole:

"The dispute flared following the furore over the deaths of two patients when the nearest ambulance crews failed to respond to 999 calls because they were on rest breaks."

The bottom line is that ambulance crews refuse to respond to folks in life-threatening medical condition because that would interfere with valuable break time.

Or, in 1,000 words:

Singin' the Back to School Blues

FoIB Bill M tipped me to this great article that's a must-read for college students heading (back) to school, especially if they're not taking full loads, or are late-bloomers:

"Oh, I’m 24 years old;
Part-time student, too.
Up ‘til this latest,
Things were looking cool.
But now my ‘rents called me
‘Bout this insurance thing they read.
Seems their homeowners’ policy
Just kicked me upside the head!"

(Catchy, ain't it?)

The bottom line is: don't assume coverage, check with your agent before loading up the U-Haul or minivan.

Or you, too, might be singin' the blues.

Housecalls, Shmousecalls...

We've chronicled the accelerating shortage of physicians, which is destined to become worse as ObamaCare© reaches its full stride. In the meantime, though, what are folks to do when they fall ill?

There's an app for that:

"Telehealth, or telemedicine as it was previously known, enables patients and doctors to connect anytime anywhere online or via mobile phone."

This is also a major boon for folks who live in the hinterlands who find themselves in need of a specialist.

"Telemedicine" per se isn't all that new, but until recently it's been well under the radar. As our health care delivery model changes to reflect the "new normal," it's expected that we'll see even more of this. And that's not necessarily a "bad thing:" there are certainly circumstances where an actual, in-person office visit really isn't necessary.

One area that has yet to catch up is, of course, health insurance: most plans cover "office visits" in one way or another, but I don't recall seeing the term "virtual" in any policy language thus far.

Maybe some day...

ObamneyCare©: One step forward, one step back?

A Democrat-appointed, three judge panel shot down Virginia's suit against the Evil Mandate:

"A federal appeals court on Thursday rejected Virginia's challenge to President Obama's health care law, saying in a ruling that the state doesn't have a right to bring a lawsuit."

Note that this isn't a ruling on the merits of the mandate itself, simply that Virginia lacks the "standing" to bring such a suit (although it's not clear who or what would have such standing in that case).

Meanwhile, the other legal battles continue their slog toward the SCOTUS.

And speaking of snafu's, FoIB David Hogberg (writing at IBD), has found an interesting (and potentially lethal) financing problem inside ObmamneyCare© itself:

"Because of a quirk in ObamaCare, people who buy health insurance through a federally run exchange may not be eligible for premium subsidies."

As Bob noted yesterday, pricing for these kinds of plans is heavily dependent on government largesse in the form of tax credits. As David notes, though, that subsidy is available only to folks enrolled through state-run Exchanges; those who live in states served by the Fed's version will likely be ruled ineligible.

Gee, wonder if maybe we should have read the bill before they passed it.

[Hat Tip: Michael Cannon]

UPDATE (via Gabriel Malor at Ace of Spades): Okay, now I get why the state of Virginia lacked "standing." Basically, it's because the state itself isn't subject to the mandate: its citizens are. And AG Cuccinelli didn't name any actual, you know, citizens as co-plaintiffs.

Ugh.

Come a Cropper?

Very few people willingly buy insurance, pretty much any insurance. Sometimes, the bank that holds our mortgage requires us to, or the state mandates "minimum limits" for those that wish to drive on the public roadways, or a personal desire to leave a financial legacy to the wife (or husband) and kids.

Sometimes it makes economic sense: health insurance to pay the big, unexpected claims or disability insurance to pay the bills.

Or crop insurance for farmers with mouths to feed (their family's and ours).

Now you might be wondering why I'd mention crop insurance here: aren't we mostly life and health guys?

Well, yeah, but.

A gentleman named Kent Olson recently penned an article for the PIA (P&C agents' professional association) bi-monthly magazine. The article urged Congresscritters to use the current crop insurance model for the new ObamaCare© Exchanges. The article makes a good (if not compelling) case for itself, but assumed (reasonably) that its readers would already be familiar with how crop insurance works.

I can (barely) spell it.

So I contacted Mr Olson, and we had a very pleasant chat. I asked him for the "nickel tour" of the product, and he gave me $100 worth, for which I am truly grateful. In order to understand Mr Olson's vision for Health Insurance Exchanges, one needs to have a modest understanding of how crop insurance works. Fair warning: some wonkery ahead, but I think you'll be glad you slogged through it, to see how someone not caught up in the day-to-day wrangling of health insurance views our future.

In the 1940's, through the early 80's, crop insurance (protection against financial loss due to poor yield) was financed and sold by a government agency, the Federal Crop Insurance Program. It offered limited products (one could insure only a handful of crop types), and was based on the one-size-fits-all model.

This program never really worked well, and was supplanted in the early 1980's by a newfangled partnership of government and industry (insurance carriers). The first major change is that it became privatized, with the carriers (and their reinsurers) taking the bulk of the risk, and the Fed's acting as a last-ditch backstop. The second major change is that the farmer himself also has "skin in the game;" that is, there's a hefty deductible (although it's not called that), as well as premiums based on a number of factors.

Soon, the plan was improved upon even further: new products were offered, additional crop types were available, and some premiums were subsidized to help make it even more attractive. The key, though, is that the product is marketed and sold by agents, not bureauweenies. And that's where we come to Mr Olson's take on ObamaExchanges©.

His thesis is that the "crop insurance program has succeeded due in large part to the involvement of private sector independent insurance agents. [ObamaCare©] can succeed as long as private sector health insurance agents and brokers are involved."

In short, he proposes that the Exchanges be true "partnerships" between the public and private sectors.

I was pleased as punch to see someone thinking "outside the bun" on this issue, and was especially grateful to see someone whose experience runs in areas of this business totally different than my own. This brings a fresh perspective to the debate, which is a good thing.

The problem is that insuring crops and insuring people are very different enterprises. While it's true that both crop and health insurance are based on the principle of indemnity, there are some key differences between the two.

For one thing, there is, in fact, limited underwriting that goes into crop insurance. Pretty much any farmer that wants to participate may buy in, but must do so by a certain date (say, early Spring). He can't, for example, come into the office in mid-August to buy coverage for his sere fields.

Contrast that with ObamaCare© circa 2014: Joe Shmoe, still undergoing chemo and on his way to the hospital for a liver transplant, can buy health insurance from the Exchange in between appointments, secure in the knowledge that he can't be turned down or made to wait for his pre-existing conditions to be covered, and that he'll pay the same rate as his perfectly healthy neighbor.

Of course, if he doesn't buy a policy, he faces a tax or prison sentence, because the government has mandated that he buy such a plan. And not just any plan: unlike the new and many choices available to the farmer, Exchange-eligible policies must include a myriad of special (and expensive!) benefits. And unlike the farmer, who has actual "skin in the game," HSA-style plans are now verboten.

And let's look at how that Exchange-participating agent might fare: after lengthy (and redundant) training sessions to become certified to sell each carriers' products, another intrusive background check and agreement to abide by strict (and stringently enforced) market conduct rules, the agent might be paid a nominal fee (not a commission).

While I certainly applaud Mr Olson's efforts, and truly appreciate both his expertise and his willingness to share it with me, I think this is a non-starter.

[Hat Tip: Bill M]

NB: At this time, no link to Mr Olson's article is available. I'll update the post to include it if/when that changes. HGS

Appropriate Government Tricks

Back in the day, I looked forward to delivering death claim checks as much for my own closure as my clients'. It's not that I wished that any client would die, but that the package I was delivering would last far longer than the sponge cake or relish tray.

Alas, a number of years ago carriers decided checks were out, and checkbooks were in. That is, instead of sending a simple check to the agent to be personally delivered to the beneficiary, carriers started sending checkbooks linked to "benefits accounts;" these look like plain old checking accounts, but "unlike a bank account, this money isn't protected by the FDIC, nor is it even held in a separate, specific account. It's just considered part of the carrier's overall assets."

Now, The Golden State is considering legislation to change all that:

"Members of the California Senate have voted 36-0 to approve ... a bill that would require life insurers to get a written declaration stating how the beneficiary wants to receive the benefit payment ... Current California law gives life insurers the ability to pay benefits solely through [those fake checking accounts]."

Bravo!

Now it may seem draconian to put that choice on the back of a grieving widow (or widower), but there's a sort of built-in opt out provision:

"[I]f a consumer failed to make a decision, the bill would let an insurer set up an RAA."

I'd like to see other states go this route, as well.

Cavalcade of Risk #139 is up!

Emily Holbrook hosts this week's lean and mean roundup of risk-related posts.

Medical Trends vs SG & A Trends

InsureBlog has argued for years that the cost of medical insurance is driven by the cost of medical care, and that the rise in the cost of medical insurance results primarily from the rise in the cost of medical care.

Most of the large consulting firms conduct annual (or more frequent) surveys of the insurance companies to help their clients understand and anticipate the annual rate of "trend" in medical costs and thus in their insurance or benefits costs.

I happened to see a recent survey conducted by Oliver Wyman Actuarial Consulting of Milwaukee. Oliver Wyman is a subsidiary of the international firm of Marsh & McLennan, which is also the parent company of the HR and benefits consultants, William Mercer.

The particular Wyman survey included responses from 104 insurance companies and benefits administrators that, together, cover more than 117 million Americans who are covered in employer, union, or association-sponsored group plans.

The reported median medical trends are not surprising--they range from 9% for HMO plans to 11% for PPO plans. In other words, this is approximately how fast medical benefit payments are rising in these types of plans. The different rates result from differences in utilization management between HMO and PPO plans and other technical factors.

The most interesting thing to me about the Wyman survey is that it included SG&A (Selling, General & Administrative) admin expense trends. The reported median for this category is 3.5%.

These results suggest that rising medical costs explain more than 70% of the median annual increase in group medical insurance benefits cost. The remainder is explained by the insurer's SG&A.

Grand Rounds: Jobs edition

DrRich (not a typo) has this week's eclectic roundup of medblog punditry, focused (laserlike) on jobs.

Labor Day

Here's a short update on the Early Retiree Reinsurance Program - ERRP. See earlier update here.

ERRP was enacted as Section 1102 of the Affordable Care Act, signed by the President on March 23, 2010. In Section 1102, Congress appropriated $5 billion for a temporary subsidy to "stabilize this market" by subsidizing employers' early-retiree insurance coverage until the Federally-mandated Exchanges become effective in 2014. Eligible retirees are age 55-64.

When the $5 billion runs out - there is no more insurance subsidy. It's important to know that HHS began accepting ERRP applications on June 29, 2010 and stopped accepting applications barely 10 months later, on May 6, 2011.

So other than that, how's it going?

The July 15, 2011 HHS update provides some tantalizing details. (there were 41 subsidies awarded above $10 million and 3 more between $9 million and $10 million, so I looked at all 44). There are several hundred groups in the list.

Total awards for all the groups now amount to about $2.7 billion. The top 44 groups account for more than $1.6 billion, or about 60%.

Of the 44, there were 4 groups I identified as "union" funds; 23 public-employee or public-retiree funds; and 17 private employer groups. The union funds account for 17% of the $1.6 billion awarded, public funds account for 52% and private employer groups for 31%.

The largest single award was to the UAW retirement trust-- $221 million. The second-highest award was to AT & T - $141 million. I think the AT & T award largely reflects Communication Workers of America retirees--but I can't be certain.

Key observations: (1) the program is already closed; (2) the program transfers a significant share of employer-incurred early retirement costs from the employers to the taxpayers; (3) the awards to public employers constitute a benefits "bailout" that avoids the messy political business of you know, actually proposing individual bailouts and then, you know, having an actual public vote in Congress; (4) as suggested for AT & T, there may be a lot more award money going to unions than meets the eye - - for example, awards to GM, Ford, Chrysler, Caterpillar, Delphi, and others may be UAW-related and (5) over 2/3 of the awards going to unions and public employers suggests a tilt toward rewarding the administration's political allies.

Finally the speed at which the administration has slammed the window on further applications suggests the $5 billion cost projection was substantially underestimated, or was never a "estimate" at all. (That is, it may have been determined as a set amount for a specific purpose). But about all the taxpayers will ever have a prayer of knowing for sure, even approximately, is the final bill we have to pay.

This Sceptered Isle - Part CCIV

Looks like a great opportunity here.

Now, if only Frau Oberst Sebelius can talk the NHS into managing U.S. hospitals . . .

Stupid Government Tricks: Premium Increase Edition

As Bob noted a year ago, HHS Secretary Shecantbeserious seems to have a bit of an internet fetish:

"HHS is proud of their site for all things related to health insurance ... So far, pricing inquiries top the list of requests"

Yup: make it easy for would-be consumers to get competitive quotes on various products, but don't give the actual, you know, prices.

Priceless.

But Kathy's now doubled-down on the stupid:

"[C]onsumers in every state can go to a federally-maintained website to view information explaining many proposed increases in the individual and small group market."

The idea is that interested consumers can check out rate increase requests made by various carriers. Of course, there's nothing they (or Ms Shecantbeserious) can actually do about them. One supposes that this sudden interest in transparency will have some positive effect, although I wouldn't hold my breath waiting for that.

If there is anything positive about this, it may be that now consumers can see the truth of our own meme that health care costs drive health insurance costs.

Think Kathy will "get" that?

Cavalcade of Risk #139: Call for submissions

Emily Holbrook hosts next week's CavRisk. Entries are due by Monday (the 5th).

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).

Thanks!

Queen City Drama, cont'd

As we noted late last year, Cincinnati is proving to be something of a canary in the coal mine:

"Retired city of Cincinnati workers argued in court Tuesday that City Hall is obligated to provide them for the rest of their lives with an extremely generous health coverage plan"

These agreements, forged by non-disinterested third parties with their union counterparts, essentially shifted the post-retirement health care costs of city employees onto the backs of the citizens and their children (sound familiar?). The problem, of course, is that with double-digit real unemployment in the private sector, these costs are becoming unsustainable (if they ever were such in the first place).

So the citizenry, via their proxies in City Hall, are fighting back against this massive financial obligation.

And they seem to be winning:

" [A] Hamilton County judge ruled today that City Hall has the right to alter retirees’ health coverage to require most to absorb a higher share of the cost ... Common Pleas Judge Norbert Nadel’s decision could save Cincinnati’s $2 billion retirement system tens of millions of dollars on city retirees’ medical coverage."

There's a very big "if" here, of course: the ruling is certain to be appealed, with who knows what results.

Still, it's an important battle won, as the war itself slogs on.

[Hat Tip: FoIB Holly R]

Good night, Irene?

Last year about this time, we discussed the effects of flooding in the Midwest, and how the Federales running the program seemed not to notice that they were paying out dollars that might be needed down the (waterlogged) road.

But that was then, and this is now:

"Margaret Wert bought her Wayne, New Jersey house in 1999, relying on assurances from her realtor that any occasional flooding would only amount to an inch or two of water. A week after closing, Hurricane Floyd put four feet of water in her basement.

Earlier this year, Wert, 45, got flooded again and received a payout of $5,000 on her government flood insurance, which costs her $1,200 a year. It wasn't enough to cover her bills, but it helped with the new stove, refrigerator and boiler.

But all of Margaret Wert's new appliances and much of her house are now ruined, after Hurricane Irene flooded broad swathes of New Jersey. This time, though, she has a message for the government insurance program."

Granted, Wayne isn't exactly beachfront property, but it's also not hundreds of miles inland. My initial take was that Ms Wert is in pretty much the same class as our erstwhile Midwestern rancher.

And to some extent, that holds; but there's actually a deeper, darker, more important lesson here, which my friend Brian D pointed out to me:

"In the United States ... insuring homeowners against flood damage is the sole province of the federal government."

Now you'll notice the ellipses, and what I redacted is important, but not yet crucial: we'll come back to it. The point here is that flood insurance is administered - and funded - by the government. It is, as Brian pointed out to me, a Single Payer System. In fact, it is a Single Payer System which some folks are required to buy.

Starting to sound familiar?

It is a mandatory, Single Payer System administered and funded by the federal government, and which is "a disaster itself, hanging on by a series of hard-fought annual extensions and the subject of a stalled reform bill in Congress."

Hmmmm.

Keep in mind, Irene came ashore as a much weaker storm than anticipated, and although the flooding and resulting damage has been extensive, it's no Katrina.

But what about the next one?

And the one after that?

Remember those ellipses?

Here's the complete quote:

"In the United States, uniquely in the developed world, insuring homeowners against flood damage is the sole province of the federal government." [emphasis added]

So unlike all those other countries that have (but are moving away from) single payer health insurance, we have a single payer flood insurance program. And how's that working out?

"In New Jersey alone, Governor Chris Christie has estimated losses could be in the tens of billions of dollars. The state has nearly $52 billion in flood insurance in force from the NFIP."

Gulp.

Or, as former FEMA Director Joe Allbaugh points out, "[i]t spends most of its time in the red. That's because it's another government program (where) the premiums that are charged are way under market value, in my opinion."

So we have a Federally administered and funded, mandatory, single payer insurance scheme that consistently loses money, and leaves claimants less than whole.

Remind me again, please: your money or your health?

Health Wonk Review: Meteorology and Unicorns edition

FoIB Avik Roy does an outstanding job hosting this week's roundup of interesting and provocatively wonkish posts. Enjoy!