Billion Dollar Santa

If you've ever seen Elf or the Rudoph movie, you know that Santa's workshop isn't exactly a state-of-the-art manufacturing facility. Nevertheless, he and his hard-working assistants do face some daunting challenges, not the least of which include reindeer and elf injuries, potential mid-air collisions, and more.

According to risk management biggie Lockton, the big red guy will need "about $1.2 million to pay for insurance coverage.That will buy him peace of mind and about $1.175 billion in coverage for all of the exposures his workshop faces in the making and delivery of toys to children around the world."

Click on through to see all the other exposures the big guy may need to address.

[Hat Tip: FoIB Julie Ferguson]

Cavalcade of Risk #173: Call for submissions

Van Mayhall hosts the last Cav of 2012 next week. Entries are due by Monday (the 24th).

To submit your risk-related post, just click here to email it.

You'll need to provide:

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

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

We've started scheduling 2013 Cav's, and need hosts for March and April. Just click here to grab yours!

Thanks!

The ObamaTax and the MVNHS©

As our existing health care system winds down, it's worth noting how even the most vulnerable among us benefited from it:

"[D]uring my wife’s pregnancy with our second child ... this fight changed from political to personal. This is Zoe’s story.The doctors examining the ultrasounds consistently made unwelcome suggestions during the pregnancy. They would find something “abnormal” on a test, and request another scan. At the rescan, they would rule out the first concern, but find another."

Sad, yes, but a story that's told many times every day, due in large part to the incredible advances we've made in medical tech and the like.

"In May, we were blessed with a beautiful baby girl. Three of her fingers were fused together ... We have met with various medical professionals to discuss treatment options. There were several possibilities discussed, and we were able to weigh these options for the best fit: Zoe’s surgery is scheduled for the day after Christmas."

So, a happy ending, no?

Well, for baby Zoe perhaps, but not her siblings or cousins yet-to-be:

"There will certainly be appointments before and after treatment that include the specialist and the primary care physician. Both offices are reporting that access to doctors is becoming more difficult. Both offices are reporting decreased options for medical services and for drug therapies. There is now a two-week wait for the doctor"

Wait a minute, Henry, this all sounds very familiar. Why is that?

Ah, so glad you asked:

"A seriously ill baby was forced to wait in an Accident and Emergency ward for more than 12 hours because there were no suitable beds available anywhere in the UK."

This is "health care" under a government-run  system. And it's only going to get worse in Jolly Ol' as "specialists yesterday warned the Department of Health about a national shortage of intensive care beds for children this winter."

Welcome to OUR future.

A Very Merry Health Wonk Review

Come join Julie Ferguson as she hosts a holiday-themed edition of the Health Wonk Review. If you've ever wondered why Rudolph's nose is red, well you'll learn about that, too.

On a serious note, don't miss Jaan Siderov's very timely post on balancing privacy rights, Electronic Health Records and mental illness.

Silly State Tricks

While I certainly appreciate the sentiment, I fear that stunts like this are counter-productive:

"South Carolina state Rep. William Chumley, R-Spartanburg, S.C., has prefiled a bill, H. 3101, that could make trying to implement PPACA in South Carolina a felony punishable by a fine and imprisonment."

Five other states have proposed similar legislation, but enforcement may be...um, problematic.

In this instance, it seems pretty clear that Federal law trumps state (although anyone with actual citations to the contrary is welcome - nay, encouraged - to share them in the comments).

The problem with this strategery is that it sucks needed oxygen from the far more viable efforts to derail the ObamaTax via Fed-run Exchanges. While the intent is certainly praiseworthy, these legal maneuvers are actually counter-productive.

Court: Obama must rewrite contraception mandate to accommodate religious liberty

 As many are aware, there is a serious ongoing dispute between the Obama administration and employers - particularly religious employers such as churches, hospitals and schools - over the issue of mandated coverage of contraceptives in medical insurance plans.  These employers have filed many lawsuits based on the First Amendment.

Within the past 2 weeks, the Obama administration has suffered two separate defeats in court.

Yesterday, December 18, in Wheaton College v. Sebelius, the U.S. Court of Appeals for the D.C. Circuit ordered that the Obama administration must rewrite its regulation:

"Health and Human Services Secretary Kathleen Sebelius cannot enforce the Obamacare contraception mandate as it is written, but must follow through on a promise to rewrite the rule to accommodate religious liberty".

This order was reported in the Washington Examiner here.

The Examiner also reported on this previous decision on December 7th.  In this decision, the United States District Court for the Eastern District of New York dismissed a DOJ challenge to Archdiocese of New York v. Sebelius.  The dismissal thus allows that lawsuit to proceed.  The Archdiocese of New York is contesting the same contraceptive mandate. 

In the earlier decision the trial judge noted that the president promised to accommodate the concerns of religiously-affiliated institutions - even while HHS went ahead and finalized the proposed regulation without change. The judge mocked the administration in his opinion, stating "“There is no, ‘Trust us, changes are coming’ clause in the Constitution.”

Calling up the Reserves

Co-blogger Bob, FoIB Rick B and I have been engaged in an email discussion about carriers using their reserves to "buy down" current premiums. The uncertainties inherent in the ObamaTax make it even more complicated.

Rick got the ball rolling by posing this conundrum:

"When ObamaCare starts, how will carriers be assured of enough reserves to cover all the pre-ex that they’ll be paying?  You know there will be an obamaload of claims in the first few months."

Bob was quick to reply that "for certain they will get all the sick folks, just like what happened with PCIP. It won't take long for claims to exceed premiums. Of course the $63 per head reinsurance premium will help . . . . some. I doubt that money will flow quickly enough to really matter.

Reserves are for claim fluctuations and runoff claims. My guess is the carriers will start a new block for Guaranteed Issue (2014 business and later) and will run that as a separate line of business. Reserves will be established from excess premiums (ha-ha) and those reserves will be used to cover as much of the influx of big claims as possible. They can do some internal shifting of funds as needed, but in order to collect the reinsurance I am certain they will have to show losses.

A lot depends on the exchanges, subsidies, etc as to how much backlash there will be over being forced to give up the plan you had and the new premium levels.

I still maintain the feds don't have the money to pull this off nor will they have the mechanism in place to monitor everything, calculate subsidies, etc.

It will be interesting to say the least."

I was invited to join the fray, and wondered if there would actually be any reserves left. After all, it's not unreasonable to predict HHS Secretary Shecantbeserious mandating their use to subsidize costly new premiums.

Bob quickly jumped on that prediction:

"If HHS demands carriers use reserves to stabilize premiums, it is game over for the carriers. Statutory reserves are set by the states and designed to protect the policyholder (as well as the state guaranty fund). If reserves are depleted for this nonsense it jeopardizes the entire system."

[He says that if as if it's a bad thing, from Mme Secretary's point of view]

"Internally, carrier reserves are not one big pool but are separate accounting blocks. Statutory reserves by line of coverage, reserves by block (including closed books), claim stabilization reserves. There is nothing prohibiting the carrier from borrowing from one reserve block to shore up another but it is rarely done. States will conduct audits of carriers from time to time and if the reserves do not meet state guidelines the carrier is put on a watch list."

Mike disagrees with my premise altogether:

"This is not going to happen.  A reserve isn't a stack of money lying around pretending it's not profit.  It's really just part of claims already incurred that the insurance company must eventually pay.  One can argue about the level of required reserve, but HHS will lose any battle to use reserves as a  . . reserve.  As I've already said, "reserve" is a lousy name and induces people to misunderstand what they are.  Reserves are already committed to pay claims.  Therefore they cannot be spent a second time."

He also points out that " the cost of pre-existing conditions for people who buy a new policy on or after 1/1/2014 will be a cost the insurance company has not previously insured and which its premiums do not currently reflect. And therefore the insurance company will reflect the higher cost of its new policyholders on and after 1/1/2014 in its premium rates. It is from this latter group of policyholders - not the already-insured group -  that the obamaload of pre-ex claims will emerge."

Which brings us to yet another challenge: what happens when carriers, forced to use reserves to subsidize premiums, lack the funds to pay claims? Typically, that's where the states' Guarantee Funds step in, but it's not entirely clear what will happen when multiple carriers go down the tubes.

Perhaps the Mayans were optimists.

PCIP Dominos Begin to Fall

North Carolina's Pre-Existing Condition Insurance Plan (PCIP) is shutting its doors to new business:

Seems they've run out of funds, and the state legislature has closed the purse. Two classes of folks are "grandfathered in," however: folks who are HIPAA-eligible and those who are eligible for the Health Coverage Tax Credit.

Some observations:

First, I found it interesting that the Tar Heel state's program allows folks coming off of COBRA to sign up (even after February 1). Here in Ohio, one must be uninsured (no COBRA, etc) for at least 6 months before signing up.

Second, it's hard to imagine that this isn't just the first hole in the PCIP wall - once the other 57 states catch wind of this development, look for at least a few others to follow suit.

Third, I found this caveat chuckle-worthy:

"If you are currently enrolled as an Inclusive Health member, this does NOT affect you. Your coverage and your renewal, if applicable, will continue."

6 words.

[Hat Tip: Jeff M]

ObamaTax Anxiety

A very good question here is whether Xanax will be covered under the ObamaTax:

"President Obama pledged repeatedly that his health care scheme would not touch the vast majority of Americans who are satisfied with their coverage ... "If you like your doctor, you will be able to keep your doctor, period. If you like your health care plan, you'll be able to keep your health care plan, period."

As we have seen, these are all lies. And now, on the eve of the Exchanges, and of massive rate hikes, Americans are more anxious than ever about how badly they're going to be mauled.

Wonder if dog-bites are covered?

ObamaTax Increases

Remember when our Glorious Leader promised that the ObamaTax would lower health insurance premiums by 3,000%?

Good times, good times.

Of course, FoIB Avik Roy just had to harsh our mellow:

"Last week, Aetna ... held its annual investor conference in New York, in which company executives laid out their detailed assessment of the post-election environment for health insurance ... In some markets,” said Aetna CEO Mark Bertolini, increases in premiums could “go as high as 100 percent."

Luckily we've got a roaring economy that can handle that kind of pressure.

Docs + Hospitals: 1,000 Words

What happens when hospitals buy up doc practices? Well, they're now called ACO's (Accountable Care Organizations), but it appears that the only "accounting" is in the increased cost of that care. FoIB Jeff M tips us that:

"Some routine cardiac tests cost more than twice as much in hospital-owned clinics as they do in independent cardiology offices."

Or to put it another way:

Dollar$ for Exchange$

Here's an interesting thing:

"[HHS Secrreatry Shecantbeserious] expected to be running zero exchanges ... Congress has not yet appropriated the money to let [her] hire exchange employees."

So, no money, no plan, and no transparency.

Rotsa ruck, Kathy.

Foundering Exchanges

As noted in our sidebar, the new ObamaTax Exchanges are due to go online in about 10 months. That is, if all goes well. But how likely is that?

You be the judge:

"Only 15 states have told the federal government they plan to operate health insurance exchanges under [ObamaCare], leaving Washington with the daunting task of creating online marketplaces for two-thirds of the country."

What's so amusing about this is that I have some pretty good second-hand knowledge of how this will likely turn out. My better half is a highly successful Professional IT Project Manager. When I shared with her how and when this whole Federal effort was supposed to play out, she shook her head in disgust. You see, she's worked on projects of this nature many, many times, and understands what's necessary to implement them.

I was also discussing this remarkable (unprecedented?) effort with co-blogger Mike, who told me of a seminar he'd attended, years ago, that included both executives and IT-types. At one point, Mike told me, the "suits" asked "why cant you just build what we want?"

To which the IT guys replied: "because you don't ever TELL us what you want!"

And this was in the profit- and success-driven private sector.

Rotsa ruck with this in the not-so-driven gummint one.

[Hat Tip: FoIB Holly R]

Avik on Medicare Age Eligibility

Earlier this week, we posted our take on a recent HealthBeat blog post decrying the idea of raising the Medicare eligibility age. Forbes blogger (and FoIB) Avik Roy also weighed in, with a thoughtful and provocative post at The Apothecary. His thesis is that raising the Medicare eligibility age would be a major step in the right direction:

"[I]n fact, raising the retirement age will help free up resources that could be used to achieve true universal coverage in the United States ...  Obamacare subsidizes health insurance for everyone under 400 percent of the federal poverty level—$60,520 for a two-person household—lower-income seniors would be protected under any increase in the retirement age."

That sounds right to me, and Avik offers several more on-target rebuttals to those who oppose the concept, including the fact that the "Congressional Budget Office projects that this would save $148 billion between 2012 and 2021."

I suggest reading the whole thing, but I want to focus here on some of the comments folks left.

Two in particular stand out:

"[T]he Republicans did everything within their power to protect the status quo with regard to the 44 million working and yet uninsured Americans."

The fact is, the ObamaTax, even if/when fully implemented, will leave some "30 million non-elderly Americans" without health insurance. By design. So who are the obstructionists here?

This one did provide a nice chuckle:

"You appear to be supporting cost shifting from government to everyone’s pocketbook"

Self-awareness: how does it work?

Unclear - Breathlessly Unclear - On the Concept

Hank just referenced this LA Times article that is dramatically headlined “Blue Shield of California seeks rate hikes up to 20%.”  The article also suggests Blue Shield “. . . use some of its record-high reserve of $3.9 billion to hold down premiums.”

The headline and article are misleading about rates, and the surplus suggestion is a bad idea that won't go away.

The rate discussion in the article is another example of the sensationalism typical of most media reporting on medical insurance.  The Times actually does supply a little good info  - but you'll find it only if you read past the first few paragraphs. That's also typical of medical insurance reporting,

In the very first sentence Times says:  “Blue Shield of California wants to raise rates as much as 20% for some individual policyholders” I think it’s clear that the Times means fewer than half of these policyholders  The individual market makes up less than 10% of all policyholders.  So fewer than 5% of Blue Cross policyholders are getting a 20% increase.  That’s not sensational, so the Times spun its reporting the other way.

The article goes on to state “In filings with state regulators, Blue Shield is seeking an average rate increase of 12% for more than 300,000 customers.” (the article suddenly falls silent about whether these “customers” are individuals or groups).  OK, how reasonable is 12%?

You must read down to the 13th paragraph (!) of the Times article to find out:

“The insurer said its medical costs for this segment of the business grew 10.6% and what it actually pays is rising 12.5% after adjusting for its portion after customer deductibles.”

Other insurers not only in California but all across the US are experiencing similar rises in their annual medical costs.  So it seems to me an average premium increase of 12% is perfectly reasonable. LA Times chose to sensationalize these mundane facts.  I'm not saying a 12% increase is something anyone will like.  I am saying 12% is reasonable based on the cost of medical care Blue Shield is obligated to pay for.  Remember, medical insurance premiums are high because medical costs are high.  Medical insurance premiums rise because medical costs rise.

LA Times also sensationalizes its discussion of surplus.  It says there are calls for Blue Shield to “use some of its record-high reserve of $3.9 billion to hold down premiums."  Well, are we expected to check our wits at the door when confronted by terms such as "record-high" or big numbers like "$3.9 billion"?

The Times lead source for these calls is Laurie Sobel, a senior attorney for Consumers Union in San Francisco: "Blue Shield is sitting on a huge surplus that is beyond what is required or necessary," and she said "It should be used to hold down rate increases when it hits these extraordinary levels."

Neither Attorney Sobel, nor Consumers Union, knows what level of surplus is the right amount, yet both are quite certain that present surpluses are too high.

Sobel also says the excess surplus “should be used to hold down rate increases”.  As Hank states, that’s a bad idea. It was a bad idea when Consumers Union touted it back in 2010.  It’s a bad idea now

Following CU’s lead, the Times swallows the notion that the BCA and regulatory minimum requirements are sufficient – ignoring the many changes in business conditions (including passage of PPACA and the MLR requirement as Hank notes) that have occurred since those minimums were established.  The shortcomings of the Consumers Union position were noted at InsureBlog back in 2010.

Consumers Union could do a better job of preparing when it advocates on this issue  - and so could LA Times.

One final comment.  One must read to the very end of the Times article  - the 24th and 25th paragraphs – to find this:

“Larry Kirsch, a healthcare economist in Portland, Ore said . . . "There ought to be a reasoned analysis for when is enough," Kirsch said. "There always seems to be a 'sky is falling' story. I say prove it to me."

Kirsch appears to be referring to insurance companies who claim the sky is falling.  But his comment applies with equal force to advocates like Consumers Union and the media who seem always show up with their own breathless claims that the sky is falling.  Kirsch is right though that analysis and proof are necessary to establish appropriate yearly premiums AND for the appropriate level of surplus each not-for-profit insurer should hold.  I’m certain Blue Shield provided a full analysis of their premium calculations in their rate filing with the State.   Perhaps it’s time for an industry-wide, rigorous update of surplus requirements.

Unclear on the concept

Contrary to popular belief myth, the ObamaTax will not "lower premiums by 3000%" Anyone with health insurance has already seen the rate increases (above and beyond medical "trend"), and it's only going to get worse.

Case in point:

"Health insurer Blue Shield of California wants to raise rates as much as 20% for some individual policyholders"

But that's not the point of this post.

This is:

"prompting calls for the nonprofit to use some of its record-high reserve of $3.9 billion to hold down premiums"

Reserves are the "cushion" insurers are legally required to hold back to fund potential future claims. Using them to subsidize current premiums is not only illegal, it is incredibly stupid.

The promise that is the basis for an insurance contract is the one to pay for (legitimate) claims. If those funds have already been spent on premiums (and remember, under MLR at least 85% of those dollars must be spent), where's that "cushion" when it's really needed?

D'unh.

Three's a charm

Could the Buckeye State save almost a quarter of a billion dollars with a new  Medicare/Medicaid pilot program?

Perhaps:

"Ohio is the third state to get approval from the federal government for an experiment to improve health while reducing costs to care for a population of disabled Ohioans with multiple chronic conditions who receive both Medicare and Medicaid benefits."

Five carriers - Aetna, UHC, CareSource and two others - will participate in the program, scheduled to launch next September. It's basically a capitation plan; insurers receive a monthly stipend per insured (or "beneficiary" in gummint-speak) to cover all care. Like the ObamaTax MLR requirement, carriers must pay out at least 85% of those dollars in claims.

For a bit of perspective, keep in mind that Ohio currently spends something like $5 billion a year in Medicare/Medicaid claims, and the program (if successful) is expected to save $243 million over three years. That's about $81 million a year (at best), or about 1.5% of that $5 large.

Yowza.

[Hat Tip: FoIB Holly R]

DocFix Cliff

Last time we looked, Kelley noted that - once again - the government had chosen to kick the "doc fix" down the road. The "doc fix" is the temporary patch necessary to keep physicians' Medicare (and by extension, every other 3rd party) reimbursements from crashing to the ground.

As Peter Suderman points out, the "doc fix" is inherently unfixable because, well:

"The way the doc fix developed is somewhat convoluted ... The formula tied total spending on physician payments to inflation, in hopes of keeping physician spending from growing faster than the economy as a whole ... If the doc fix is allowed to occur this year, physicians face a 26.5 percent cut in Medicare fees."

The end result is that, by not realistically addressing the problem, it gets larger and larger, so that (for example), the "doc fix" today represents $25 billion. While that may seem small potatoes in comparison to the overall debt, it's still a pretty good chunk of change that may or may not go into doctors' pockets.

Your doctor's pocket.

[Hat Tip: HotAir]

Medicare Eligibility

It's often difficult to draw a bright line between policy and politics, but we'd be remiss if we didn't point out a rather glaring double-standard. Last week, we hosted the Health Wonk Review, which included this diatribe from Maggie Mahar:

"Boehner proposes slicing social safety net programs ... he continues to insist that we raise the age when Americans can apply for Medicare from 65 to 67 ... asking those who have worked harder to wait another  two years before receiving Medicare seems cruel."

But that's not all:

"But, fairness aside, when you look at the numbers, it turns out that the claim that we can save billions by requiring that everyone wait until 67 before applying for Medicare is bogus."

Okay, so when will we see her post lambasting President Obama for suggesting this very thing:

"President Obama didn’t rule out raising the Medicare eligibility age from 65 to 67 as part of a comprehensive package to avert the so-called “fiscal cliff,” during an interview with ABC News  ... Obama told Barbara Walters that keeping younger seniors out of the health care program is “something that’s been floated” and didn’t immediately reject the idea."

But why woudn't he reject it out of hand if, as Maggie (and others) claim, it's both "cruel" and "bogus?"

We await with bated breath.

[Hat Tip: FoIB Holly R]

Cavalcade of Risk #172 now online

Michael Stack and Rebecca Shafer make their CavRisk hosting debut this morning with this week's roundup of risky posts. Ever considered the risks of using Social Media in your business? How about disability insurance for nannies? Do stop by.

Reminder: We're scheduling 2013 Cav's, and need hosts for February and March. Just drop us a line to claim your slot.

ObamaFees: Missed one!

Earlier today, we discussed the ObamaGotcha due in 2014, but inadvertently omitted one due in just a few weeks. The Patient Centered Outcomes Research Institute (PCORI) fee starts out at the low, low introductory rate of just $1 per insured per year, then doubles the next year (such a deal!), and is then further "indexed" (a Latin word meaning "increased") every year after that.

But Henry, it's such a small amount, and surely it's for a good cause, right?

You be the judge:

"The assessed fees are to be contributed to the Patient-Centered Outcomes Research Trust Fund (PDF) that will fund comparative effectiveness research. The research will evaluate and compare health outcomes and the clinical effectiveness, risks, and benefits of two or more medical treatments and/or services."

Of course, of course.

And we all know how well that line of reasoning works out.

By the way, the PCORI price tag? A cool $2.6 billion (that's with a B). Nice.

[Hat Tip: Medical Mutual of Ohio]

MLR = More Lousy Results

Medical Loss Ratios (defining how much of each premium dollar must go to claims) continues to wreak havoc with the health insurance business, with the individual market taking the brunt:

"Large and small group plans seem to have done better in 2011 than in 2010, but individual insurance operations seem to have done worse"

The end result is that underwriting has tightened, carriers have left the market (and thus reduced competition), and carriers are laying off employees (granted, some of those were likely overdue, but still).

As the individual market dries up, and as the ObamaTax Exchanges come on-line, look for things to get worse.

Oh come on now, Henry, how could they get worse? After all, the Exchanges will be professionally run, carriers will have to take all comers, and pre-ex is a thing of the past.

Well, the "professionally run" claim is dubious, at best, and the guaranteed issue provision - coupled with an end to limiting pre-existing conditions - means that premiums are set to skyrocket. Of course, the subsidies will ameliorate that problem.

Right?

ObamaTax "Gotcha!"

By now, you've probably seen the news that, much like your phone bill includes a charge to pay for others' "free" service, come 2014 your new health insurance bill will include one to pay for folks with pre-existing conditions:

"The [$63 per covered person]  charge, buried in a recent regulation, works out to tens of millions of dollars for the largest companies"

Of course, you'll never see that, because employers usually pick up all those costs.

Just kidding!

Here's my favorite quote:

"Most of that is likely to be passed on to workers."

No: all of it will be passed on to employees - employers never pay any health insurance premiums. Never have, never will.

Sheesh.

ObamaTax for Vets

No, not those vets, but veterinarians.

Now, you may be wondering what the ironically-named Patient Protection and Affordable Care Act (the ObamaTax) has to do with pet care, but it's nothing new to long-time IB readers. Almost 2 years ago, we reported on BoCare©, "to extend federal funding for vet's (as in veterinarians) in order to spend even more money (that we don't have) so that Fido can enjoy the same kind of health care that we enjoy."

Apparently, they take this pretty seriously in DC, and so now we have a new IRS rule that "some medical devices used in veterinary practices will be hit by Obamacare’s 2.3 percent device tax."

One supposes that it's fair for Fifi's leg pin be treated the same as her owner's new pacemaker, but the reality is that - of course - it ain't Fifi footin' the bill.

To be fair, that leg pin probably won't be affected, but items such as exam gloves and catheters (to name two) will be. So expect your next vet bill (not to mention your own insurance premiums) to be higher.

Why's that, you ask?

Pretty simple, really: you don't expect the vet to pick up the higher costs, do you?

Rx Recall: Atorvastatin [Updated]

The drug, a generic version of Lipitor), is being recalled by its manufacturer.

From Medical Mutual email:

"Ranbaxy... has announced a retail- or pharmacy-level recall of multiple lots of this medication ... The recall includes several lots of 10mg, 20mg and 40mg atorvastatin tablets distributed between September 25, 2012, and October 26, 2012. It does not include the 80mg tablets." [emphasis in original]

NB: As Mike points out in the comments, be sure to check your bottle's label. So far, at least, Ranbaxy is the only manufacturer involved in this.

The voluntary recall is due to the possibility that some batches may have been tainted by some foreign material (small glass particles).

If you've got some on your shelf, now'd be a good time to head back with it to the pharmacy.

UPDATE: And Bob sends along links to the latest on the matter from the FDA:

FDA Statement on the Ranbaxy Atorvastatin Recall

Questions and Answers on the Ranbaxy Atorvastatin Recall

Thanks Mike and Bob!

There's more than one "cliff"

We know the cost of insurance is driven upward by the rising cost of medical care.  In a similar way the cost of medical care is driven upward by the growing cultural apathy in America toward personal health care.

That is, more and more Americans are apathetic about taking even simple steps to protect their personal health in the first place.  Result:  a growing need for medical care, driving higher total medical cost and higher insurance cost.

And, keep in mind, health care (as opposed to medical care) is virtually free.

I fear what this means is that a demand-management strategy for America’s medical cost problem thru so-called "wellness" programs has little chance of success.

Why do I "fear" this is true?

Because this cultural apathy toward personal health care plays right into the worst command-and-control instincts of government.

Medical spending – Medicare, Medicaid, VHA, TRICare, etc - is the largest single slice of the national budget. Medical spending is also the largest deficit driver – Obama himself said 3 years ago “nothing else comes close”.

It seems to me that our government even now sees no alternative to hard-rationing controls. Is it so surprising that ObamaCare creates significant new machinery necessary to impose such a system? Or that the regs issued so far create even more such machinery?

In a way, I feel the country is like Wile E. Coyote. We’ve run headlong off a cliff chasing something we don't know how to catch.  Now we are temporarily hanging suspended in  mid-air; after a brief cartoon moment we face the inevitable crash to the desert floor.

Kasich and the ObamaTax

[Original post updated and revised]

Contrary to some reports, the newly enacted House Bill 613 is not an attempt by the Ohio GOP to "[enable] socialized medicine."

In fact, it's designed to put strict limits on how "Navigators" in the new Ohio Exchange can operate, and requires them to adhere to the same regulatory and licensing guidelines as real agents, including obtaining Errors and Omissions coverage and completing Continuing Education requirements.

In fact, you can read the actual text of the bill here.

As FoIB Patrick Paule points out, the bill "also underscores the important role that ODI will play in the process.

I don't want navigators (who aren't licensed and have no E & O) to have free reign to do whatever they want in Ohio."

Excellent points!

I'll try to connect with the bill's sponsor, Barbara Sears, for her thoughts on how this will likely play out.

[Special IB Thank You! to reader Patrick Paule]

Is Life Insurance going over the (Fiscal) Cliff? [UPDATED]

Maybe:

"The potential elimination of many tax preferences currently afforded life insurance is one facet of today’s fiscal cliff discussions ... proposals include provisions that could result in the imposition of taxes and elimination of deductions for both individual and corporate-owned life insurance policies"

More ominously, the two primary tax benefits of life insurance - tax-advantaged build-up of cash values and tax-free death claims - are also under fire. This makes sense: why should responsible people gain an advantage over those who plan to fail fail to plan?

Gee, I'm just full of good news today, aren't I?

ADDENDUM: Jeff Root has an interesting post about life insurance and buy-sell arrangements, how they're used and how they work. It occurs to me that taxing the death death benefit in those situations could create a triple-whammy: the premiums aren't deductible, the death benefit would be taxable, and there may well be taxes on the transaction (sale of the business interest) as well.

Ouch!

Cavalcade of Risk #172: Call for submissions

Rebecca Shafer next week's Cavalcade of Risk - Entries are due by Monday (the 10th).

To submit your risk-related post, just click here to email it.

You'll need to provide:

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

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

We've started scheduling 2013 Cav's, and need hosts for March and April. Just click here to grab yours!

Thanks!

Why HSA's are ObamaDoomed

Had an interesting discussion yesterday with a North Carolinian colleague. He asked me to share my thoughts on the future of Health Savings Account (HSA) high deductible plans, and it occurred to me that I should probably also share these thoughts with the wider IB audience.

It goes something like this:

Back when HIPAA (remember HIPAA? aka Kennedy-Kassebaum?) was first passed, the focus was almost exclusively on its impact on health insurance. But buried deep within, there was a little provision that would have a great impact on another line of business: long term care insurance.

Nutshell: Pre-HIPAA, long term care insurance (LTCi) benefits were received tax-free. These plans were non-standardized, but had to be approved for sale by state insurance departments.

HIPAA standardized language and benefits, and conferred tax-free benefits status only (and specifically) on plans that met the criteria (ie were standardized). The problem was that it didn't specifically state that non-standardized ("compliant") plans' benefits were tax-free (or taxable).

Carriers decided that it wasn't worth the headache to offer both compliant and non-compliant-plans (guess which ones they chose to market).

The same thing will happen with HDHP's (High Deductible Health Plans). Under the ObamaTax Exchange rules, all plans are standardized ("Platinum, Gold," etc). There's nothing that prohibits carriers from offering non-compliant plans outside the Exchanges, but why would they?

Hence, HSA-compliant plans go by-bye.

Which brings up several interesting questions:

First, what happens to the HSA funds you've already accumulated? No one really knows, but my best-guesstimate is that they'll freeze (no more funds may be contributed), but you'll still be able to withdraw them for eligible expenses (or roll them into an IRA). YMMV.

But what will happen to in-force HDHP's? Or, for that matter, any existing health plan? So-called "grandfathered" plans will be exempted, but the reality is that very few of these will exist come 2014 (and they'll all be gone a year or so later). Carriers will not offer any but "compliant" plans at all (inside or outside the Exchanges). The administrative and accounting burdens would be too great (see: non-HIPAA compliant LTCi plans above). My educated guess is that we'll see this:

Mid to late 2013, all non-compliant plans will be withdrawn from the market.

Beginning with 2014 renewals, insureds (group and individual) will be offered the choice of keeping their non-grandfathered plans for another year (and be subject to the whopping $95 ObamaTax) or be "mapped" (re-written) to a comparable compliant plan with no underwriting (or a richer, underwritten compliant plan).

In 2015, all non-complaint plans will be mapped (transitioned) to comparable compliant plans.

Since HSA's are, by definition, non-compliant (their out-of-pocket maximums exceed those allowable under the ObamaTax), they'll be gone by 2015, latest.

What was that?

"If you like your current health insurance plan, you can keep you're current health insurance plan?"

What moron told you that?

Health Wonk Review: Festival of Lights edition

Contrary to popular belief, the Jewish Festival of Chanukah has nothing to do with a can of oil that lasted 8 days (it didn't). It is at once an inspiring and a dark story, about both liberation and intolerance. As with almost all things Jewish, the sweetness is tempered with bitter reality.

On the other hand, the celebration of the holiday (which begins this Saturday evening) is pretty cool: fried potato pancakes (latkes), spinning the dreidl and lighting candles each night serves as a fun and meaningful way of acknowledging our rich heritage.

So for this edition of the venerable Health Wonk Review, I'm going to light up the posts with pictures of some of our favorite Chanukah accoutrements as well as some of the more off-beat ways the holiday is celebrated around the world.

But first:

My mother once gave me two sweaters for Chanukah. The next time we visited, I made sure to wear one. As we entered her home, instead of the expected smile, she said, "What's the matter? You didn't like the other one?"

Bet you'll like these great posts.

■ Our very first entry comes from Adam Fein, who sends in this wonderfully wonky post about new CMS rules on how prescription drugs are to be covered under the PPACA's [ed: known around these parts as the ObamaTax] Essential Health Benefits mandate. Thorough, yes. Dry, nope.

■ Forbes' Avik Roy draws a line in the sand, arguing that opposing ObamaCare doesn't go far enough, arguing that Republicans need to be offering their own, more conservative set of solutions.

[Our family's secret latke recipe...]

■ Dr Jaan Siderov offers both an interesting blog post and "aliquots of Aquavit" (the latter guaranteed to "knock the unwary on their behinds").

The former, though, may have a similar effect, as he reviews an evidence-based article from the Journal of the American Medical Association (JAMA) that shows that a state-of-the-art electronic health record (“EHR”) was associated with a significant increase in utilization. Now that's a bitter brew!.

■ Soaring in on the Wing of Zock, Dr Drew Lee (a Fellow at the  American Medical Student Association) examines a proposed $10 million cut in funding for graduate medical education.

Speaking from his own experience, he's concerned that this will lead to major problems in health care, including deterring would-be physicians from considering the critical (but often low-paying) field of primary care.

[The dreidl - a spinning toy - includes the Hebrew acronym for "A Great Miracle Happened There" (left). In Israel, the final letter changes the wording to "A Great Miracle Happened Here"]

Perspectives

FoIB Jeff M sends us this tidbit:

"North Carolinians projected for enrollment in a health-insurance exchange in 2014 could have the nation’s lowest level of covered pharmaceutical drugs"

The article goes on to (unfavorably) compare the Tar Heel State's prescription med requirements to those of Virginia and West Virginia.

It's a pretty transparent ploy, but it completely misses the point, so let's correct that lede:

"North Carolinians projected for enrollment in a health-insurance exchange in 2014 could have the nation’s lowest premiums."

There, that's better.

Told Ya So: Primary Care edition

We've been beating this particular drum for a while (most recently, here): fewer and fewer folks are interested in becoming part of the primary care provider world. After all, after spending years (and precious dollars) in medical school, why would you opt for the bottom rung of the health care income ladder?

Makes no sense.

In a heartening development, it appears that medical school students are figuring that out, too:

"More than three-quarters of U.S. medical students continue to shun primary care for higher-paying specialties, setting the stage for a shortage of doctors as the population ages and health care expands"

And I would submit that that's a low-ball guesstimate, since the ObamaTax creates more demand and lower reimbursement rates. If one is bright enough to get into medical school, one is probably bright enough to read the writing on that particular wall.

Sleep tight.

MVNHS©: "We don't play favorites"

That is, doesn't matter if you're a factory worker or an elected government official, your life (or that of your loved one) really doesn't count for much in Jolly Old:

"Ann Clwyd broke down as she spoke about the final moments of Owen Roberts, who contracted pneumonia after being admitted [to a hospital]. They had been married nearly 50 years."

But these things happen, right?

I mean, there's no evidence that the "caregivers" of the Much Vaunted National Health Service© mistreat or abuse their wards, right?

Um:

"[H]er husband was squashed against the side of his bed, his lips dry, and cold from a fan that had been turned on for a patient in an adjacent bay."

The Goddess of Irony does her best Cheshire Cat here:

"Ms Clwyd, the Labour MP for Cynon Valley since 1984 and Tony Blair’s former human rights envoy to Iraq" [emphasis added]

Through the looking glass, indeed.

But hey, don't just take my word for it:

ObamaTax cuts the Cheese(cake Factory)

Ah, the wonderful world of the ObamaTax:

"Cheesecake Factory CEO David Overton spotlighted the looming economic impact of [the ObamaTax] implementation, especially on small enterprises: "For those businesses that don't cover their employees, they'll be in for a very expensive situation." Overton also warned that the cost of the law would be passed on to customers."

No kidding.

Bon appetit!

LinkFest Tuesday

■ FoIB Michael Cannon reports that support for "universal coverage" is way down; in fact, he says, the majority of Americans now oppose it:

■ Seth Menacker tips us to this Wall Street Journal item on the intersection of plastic surgery, health insurance, and the holidays:

"After many cosmetic procedures patients want to go underground during the days-long recovery period, which might involve swelling, bruising and oozing ... This year, with Christmas and New Year's both falling on weekends, a patient can be under the knife or laser beams early in the week and still be presentable by the time the parties start."

Dr Adam Schaffner, a noted New York plastic surgeon, says that he's long noted "a dramatic increase in demand for procedures around the holidays. This could be due to the extra down time, or perhaps people meeting their annual insurance deductible.”

■ And because DC wouldn't be DC without spewing forth hundreds of pages of regulations every day, we have crap results like this:

"The Centers for Medicare & Medicaid Services (CMS) has proposed 373 pages of regulations that could affect how health plans fund and draw from new, multi-billion-dollar risk-management programs."

These kinds of regs, which are all a result of the ObamaTax, are a big reason why businesses are reluctant to grow and to hire: after all, they never know from day to day what new burdens they'll be forced to shoulder.

■ And speaking of which, the ObamaTax is taking a major toll on those it was ostensibly meant to help the most:

"About 100 servers, line cooks and dishwashers working at the Charleston Crab House don’t have health insurance ... they will either receive coverage or face financial penalties."

Because no one really knows for sure how all of the mandates and fines penalties taxes will ultimately play out, businesses have no way to know what they should (or should not) be doing. All they really know is that costs are going up and revenues going down.

Countdown to Exchange

The gauntlet has been thrown:

"Gary Cohen, director of the Center for Consumer Information and Insurance Oversight (CCIIO), told a panel of state insurance regulators that the U.S. Department of Health and Human Services (HHS) "will be able to open our doors" on Oct. 1, 2013."

Color me skeptical.

But hey, he's from the government, and DC folks never lie, so we'll take him at his word. Because we're so impressed with the job that Mme Shecantbeserious has done thus far, we've added a new feature in the sidebar: a Countdown to Coverage Clock.

We await with bated breath.

Health Wonk Review Comin' Up - Another Nudge

We'll be hosting this week's Health Wonk Review, and (as usual) the emphasis will be on "health policy, funding, insurance, managed care, infrastructure, IT, the uninsured, economics and trends."

You can submit your wonky post here, and be sure to include:

■ Your name
■ Your blog's name
■ Your post's link
■ A brief summary of the post

Submissions are due by this Wednesday (the 5th),  but early birds get better seats at the table (hmmm, bit of a mixed metaphor, that). And speaking of seats at the table, make sure to bring some apple sauce and sour cream (and maybe some peanut M&M's).

And matches. Definitely matches. Or a lighter.

Avik's Apothecary

FoIB Avik Roy's Weekly Digest is a must read for serious health care policy wonks. His insights and analysis are at once easily understood and remarkably thorough. Here's this week's edition - and we recommend signing up for his email distro list so you don't miss out.

Tiers in my eyes

No, that's not a typo, but the latest strategy by Big Insurance to find creative ways to rein in costs, of both health care and health insurance It's actually a pretty cool idea.

FoIB Jeff M recently attended a Lunch-And-Learn put on by Blue Cross/Shield of North Carolina (pizza, natch). The purpose was to roll-out the next generation of group insurance products, and some of the new strategies being built into them in anticipation of the full implementation of the ObamaTax in a little over a year.

BX introduced two new plans for 2013: "Blue Value" for groups of 1-50 1-48 (what rational employer wants to butt up against the mandate?) and "Blue Select" for groups of 51 and up.

They share a common goal: to reduce rates by anywhere from 2-12 percent over existing plans.

And how, exactly, do they intend to accomplish this?

Common sense. That is, under the ObamaTax, there's a practical limit of how much you can tweak the internal plan design. Ratings structures will be closely monitored by Mmme Secretary Shecantbeserious, and the Medical Loss Ratios will continue to exert downward (or is that upward?) pressure. Carriers have already "adjusted" how prescription drugs are covered, what with separate deductibles, tiered co-pays and cost-sharing, formulary changes, and the like. There's not a lot of wiggle room left on those.

But the concept of "tiers" doesn't have to apply only to meds. What if you could unbundle your provider network, and steer your insureds to cheaper/more efficient docs and hospitals? Might not that improve the bottom line? Of course it would, but how to get that to happen?

Well, you bake it into the cake policy.

Take a look at the different plan designs (generously provided by Jeff M and available here). The change is clearest with the Blue Select plans, where there's a 20% out-of-pocket differential between Tier 1 and Tier 2 providers. That's a heck of an incentive to go online to confirm that your doc (or hospital) is in the "right" Tier.

It has an additional effect, as well: when you reward something, you get more of it. By incenting insureds to patronize Tier 1 providers, BX is rewarding both the consumer (who pays less) and the provider (who, presumably, enjoys a bump in patient count). And Tier 2 providers will get this message, one way or the other.

Very interesting - Thanks, Jeff!

From the P&C Files: Marathon Insurance

No, not that Marathon, this one:

"The New York Roadrunners Club and its insurers have been waging a pitched battle the past four weeks over how much money race organizers will be able to reclaim in the wake of last month's canceled New York City Marathon."

When Mayor Bloomberg cancelled the annual event (in the wake of Hurricane Sandy), it seemed like the right thing to do. After all, tens (if not hundreds) of thousands of area residents were still without power, and relief efforts were (at best) haphazard. Add in the fact that area hotels were at capacity with displaced storm survivors, and there seemed no reasonable way to actually hold the run.

Now, in addition to all the other financial headaches, there's the matter of the non-refundable entry fees prospective participants had to pony up for a chance at glory, and the millions more would-be spectators had plunked down for tickets.

Hard to believe but we first covered the concept of "Special Event" insurance over 6 years ago:

"Special Event insurance is just that: coverage to protect one from a sudden loss during some unusual activity or promotion. Think "$1 million Hole In One Contest."

Well, the New York City marathon is indeed a "special event," and had (propitiously) obtained coverage through a Lloyd's of London syndicate. Of course, these things are never as simple as they might at first appear:

"A person familiar with the Lloyd's deliberations said the company already has authorized a "large payment," a sign that it has acknowledged liability, even though the running club actually decided on its own to cancel the race. The person said Lloyd's is still working with NYRR officials regarding the size of the payment, and a significant disagreement remains."

Of course, of course.

The "disagreement" stems from the fact that the event organizers don't "have enough money to refund all the investments made in the race by runners, sponsors, broadcasters and the travel partners who arranged trips for foreign participants."

On the other hand, "the marathon has a clear no-refund policy, even if severe weather forces organizers to cancel the race." So it's unclear (at least to me) why there's a problem: doesn't "no" mean "no?"

Beats me.

Nurse: 50cc's Johny Walker, Stat!

Gotta love the Kiwi's:

"The 65-year-old Taranaki man suddenly went blind when vodka he had been drinking reacted with his diabetes medication. He regained his sight only after hospital staff administered expensive whisky."

Seems that the gentleman, a catering tutor, was celebrating his parents' 50th wedding anniversary (yeah, I didn't get the math there, either) with hooch his students had gifted him. When he found himself unable to see, he made haste to the nearest hospital. As surgeons cut him open, they got a string whiff of "nail polish remover" and believed they'd found formaldehyde poisoning. The standard treatment is to administer ethanol, which tends to counteract the methanol (a component of formaldehyde):

"Auckland City Hospital intensive care medicine specialist Tony Smith said administering ethanol was a well-established treatment for methanol poisoning.

It worked because the ethanol competed with the methanol and prevented it from being metabolised into harmful formaldehyde, which can cause blindness."

So what was this magic potion?

"Johnnie Walker Black Label. It was good whisky, yeah."

L'chaim!

Don't Ask, Don't Tell: MVNHS©-style

So, what do (sickly) grandparents and their (sickly) grandchildren have in common?

They both get to travel the Liverpool Pathway, and at least half of them aren't even asked about it:

"Almost half of dying patients placed on the controversial Liverpool Care Pathway are never told that life-saving treatment has been withdrawn ... around 57,000 patients a year are dying in [MVNHS©] hospitals without being told that efforts to keep them alive have been stopped."

Well, why should they be?

After all, it's not their money being spent on care. And, of course, there's the remote chance that they (or their parents) might raise nasty, totally unnecessary objections. Of course, this is entirely logical: what sense would there be in disclosing the distasteful fact that while health "care" is free, there's a finite supply of it, and that supply is much more efficiently spent on folks who have some hope of survival, right?

Now, if this sounds familiar, it should: the ObamaTax's IPAB's Death Panels are right around the corner to enforce this course of (non-)treatment on us.

Pleasant dreams!

Health Wonk Review Comin' Up

We'll be hosting next week's Health Wonk Review, and (as usual) the emphasis will be on "health policy, funding, insurance, managed care, infrastructure, IT, the uninsured, economics and trends."

You can submit your wonky post here, and be sure to include:

■ Your name
■ Your blog's name
■ Your post's link
■ A brief summary of the post

Submissions are due by next Wednesday (the 5th),  but early birds get better seats at the table (hmmm, bit of a mixed metaphor, that). And speaking of seats at the table, make sure to bring some apple sauce and sour cream (and maybe some peanut M&M's).

And matches. Definitely matches. Or a lighter.