Cavalcade of Risk #181: Call for submissions

Jason Shafrin hosts next week's Cav. Entries are due by Monday (the - dreaded - 15th).

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.

Stupid IHCNews Tricks

So I'm on the mailing list (correction: I was on the mailing list) of some outfit called IHC News. They send out weekly (?) tidbits about various industry goings-on. Today brought forth this gem:

"HSAs Will Thrive Under the ACA"

Oh, do go on....

"Roy Ramthun, who was the senior health policy advisor to former President George W. Bush and now runs his own HSA consulting company, has done the math and can say for sure that HSAs are most likely not going anywhere any time soon."

Oooh, that's good - if surprising - news.

Oh, wait:

"The problem that HDHP options face is whether they meet this standard by themselves, as it was previously unknown whether HSA contributions could be taken into consideration. To this day, it is still an unanswered question." [emphasis added]

And how, exactly, was this bit of fluff even worth my time?

So this genius has "done the math" and his answer is "we still don't know."

Wow, how insightful.

Now, co-blogger Nate points out that "an HSA with anything short of max deductible and no contribution would pass," and that's a fair cop. But without the ability to sock away tax-advantaged dollars in anticipation of future claims, you're not talking "HSA" at all.

Back in the early 90's I became an early adopter of MSA's (Medical Savings Account plans, the forerunners of what came to be known as HSA's). At the time, these were simply very high deductible plans, and folks were encouraged to set up their own savings plans at their local bank (or mutual funds, etc). The idea was to take the dollars one saved versus a typical co-pay plan and sock those away. There was no special tax advantage to this (although a lot of my clients set up mutual funds using tax-free options - and no, I can't recall what those were called - tax-free funds?). They would discipline themselves to use the money only for medical expenses. And these worked just fine.

But they were not "HSA's" with special tax advantages and legislation (and no rules, either, of course: you picked the plan that worked best for you).

Now, would this idea work under the ObamaTax? I don't see why it wouldn't. But again, words are important, and these would not be proof of "thriving HSA's." And it certainly doesn't take a special former presidential advisor to see this.

Smoking is a Pre-existing Condition

Already true in DC.   And it's coming soon to every insurance policy sold on the Health Insurance Exchange in your neighborhood.

This news comes from an article in National Review Online which you can find here.  Why is it important? Because this is about a lot more than smoking:

 "There will be thousands and thousands of decisions like this in the coming years, and voters will have very little recourse against them. That is part of the genius of bundling the welfare state with the regulatory state"

The NRO article tells the story, there's nothing to add.  You need to read this story because the largely unaccountable Health Exchange Boards will surely affect us all - and that right soon.

Of course this is just another of the many wonderful trinkets we were promised we would find after, you know, the bill was passed.

Yeah, that bill.

Potential abuse in Transitional Reinsurance Program

A few quick points: Hospitals account for 50% of all spending and a good portion of excess cost. A number of hospitals own their own insurance carriers. Not all hospitals are bad/a problem; some just "work" the system really well. It is this history of working the system that makes this such a problem.

I'm in DC at a payor conference and the IRS was explaining the workings of the Transitional Reinsurance Program (TRP) to protect carriers writing individual guarantee issue policies. Once an individual exceeds $60,000 the TRP will reimburse 80% of expenses up to $250,000. That works out to 80% of $190,000 or $152,000 of losses ($250k - $60k is $190k; $152k is 80% of that)..

Most of my business is under 50 lives, so they are not required to offer group insurance; sending everyone to the Exchange is a very viable option. We can usually beat the carriers, though, by managing claims and cost and educating members. A great area of savings is moving care from the hospital charging 300% of Medicare to the one willing to contract at 140% of Medicare.

Look what happens now that the government has stepped in to make things "fair:"

A 30 life group has one person with large known claims. The premise of insurance is that the premium would need to equal the known cost of the claim, plus other claims, plus fixed costs; to make this point, though, we are just going to focus on this one claim.

Hospital with their own insurance carrier usually charges 1000% of Medicare and collects 300%. A claim that Medicare would pay $50,000 on would be billed at $500,000 and paid $150,000.

Under my self funded plan we would steer that claim across the street and only pay $70,000. Still a lot of money for a 30 life group. But under TPR look what happens if the employer just drops their insurance:

Hospital sells them an individual policy and lowers the PPO discount to 500% of Medicare. The hospital now collects $250,000 instead of $150,000 for an increased profit of $100,000. But it gets worse; The carrier lost an additional $100,000 but will now get a reimbursement from TRP in the amount of $152,000. Previously the hospital made $150K and the carrier side broke even on their premium. Now the Hospital side makes $250,000 and the carrier makes premium minus $60K.

What should only be a $70,000 claim in the first place is costing the system $250,000 plus the subsidy of $152,000 or $402,000. The subsidy comes out of the pocket of the competition (me). ACA just turned a $150,000 bill into $402,000 and made it that much harder to compete.

Health Wonk Review: Questions Time

Louise Norris hosts this week's most excellent round-up of wonky posts, with an emphasis on some of the unanswered questions surrounding health care reform. One of the things I most appreciate is how much attention she lavishes on each entry, presenting not just a quick summary but some real context.

Kudos, Louise!

Have you ever wondered...

Medical Mutual of Ohio has a report on what drives health care costs (and hence, as regular IB readers already know, health insurance costs). Among the findings:

■ More than half of the $2.6 trillion spent on healthcare in the United States each year is wasteful spending

■ Healthcare spending is not translating into better outcomes for U.S. residents

■ Two-thirds of U.S. consumers surveyed said they had received excessive medical testing

■ The single largest contributor to higher health insurance premium spending in 2010 was the hospital sector, where insurers paid out $48 billion more in 2010 than they had just five years earlier

There's more, and it's eye-opening. Click here for the full report.

$urprise,$urprise, $urprise

Who coulda seen this coming?

"The Obama administration expects to have spent $4.4 billion in fiscal 2012 and 2013 on grants to states that are building new marketplaces to sell subsidized health insurance ... A year ago, the administration had anticipated spending about $2 billion."

A billion (or two) here, a billion (or three) there, and pretty soon you're talkin' about real money.

Well D'unh!

From FoIB Holly R:

"Democratic Sen. Jay Rockefeller, one of the towering architects of Obamacare, on Tuesday openly criticized program managers for not moving quickly enough to build the system ... Obamacare is "so complicated and if it isn't done right the first time, it will just simply get worse."

Oh ye of little faith. How could it not get worse?

But never fear, HHS Secretary Shecantbeserious is on the case.

Wait, what?

"Health and Human Services (HHS) Secretary Kathleen Sebelius said Monday that she did not anticipate how complicated implementing the [ObamaTax] would be"

Not to worry, though, we have top men working on it right now.

Top. Men.

Confusion reigns

This is a story about (un)intended consequences and how two seemingly disparate social hot-buttons can wreak havoc with each other. Ultimately, it's also about how misunderstanding and miscommunicating key facts can cause confusion and resentment.

About a year-and-a-half ago, we pondered whether same-sex couples would turn out to be a viable market. In the interim, same-sex marriage (SSM) has become a hot political issue, and today we have a story of how those two intersect.

At one of my favorite poli-blogs I recently ran across a comment from a fellow insurance agent. Comments at that site are anonynous, but I was able to connect with the commenter (I have my ways) to confirm that she is, in fact, a health insurance broker and that she was relaying what she believed in good faith to be accurate..

Here's the story:
 
This was amusing today. I'm an insurance agent. One of the lines I broker is health, and I got a call today from a woman who needed to find new coverage. She had been covered by her same sex partner as a domestic partner, but since Maryland passed gay marriage, she's now been told that she can no longer stay on the policy unless they get married. She was not happy with this turn of events:

"I mean, how fair is this? We don't want to get married, at least not right now, and we're being told we have to in order to maintain benefits? Heterosexual partners can be on the same policy as domestic partners, but now we can't? This sucks that they're forcing marriage on us."

As noted, I was able to confirm that the commenter is, in fact, a professional, independent agent. But we're sticklers for accuracy here, and this is a touchy enough subject that it seemed prudent to confirm some of the basic information. FoIB Jeff M pointed me to the Maryland insurance laws online; unfortunately, that didn't answer my questions. So I reached out to the Maryland Insurance Administration for confirmation.

In an impressive display of agency efficiency, my email was answered in one business day, and included an explanation of the true facts as well as documentation (available by request to interested readers):

"Mr. Stern:

The statute regarding coverage of domestic partners is § 15-403.2 of the Insurance Article. It has not been changed by the passage of the same-sex marriage law. I have attached a copy of a public letter by the Office of the Attorney General about same-sex marriage that discusses insurance.

[Redacted]
Maryland Insurance Administration"

So it turns out that the HR person with whom the caller was working was misinformed (or perhaps the caller misunderstood). Regardless, the lesson here is that even "experts" can be wrong, and it's often wise - and especially when one's financial and physical health are at stake - to confirm that what one is being told is, in fact, true and accurate.

Not a bad lesson, that.

[Hat Tip: Ace of Spades]

More network woes - or not

Hard to believe, but we started discussing Anthem-provider network issues 7 1/2 years ago:

"When Premier's network contract with Anthem expired on Jan. 1, Anthem stopped paying Premier directly for services at Miami Valley and Good Samaritan hospitals ... Now Premier wants its money, taking legal action on what Shaw called "the most egregious cases."

Fortunately, Cincinnati-area Anthem insureds who receive care at the University of Cincinnati's facilities may dodge that kind of bullet:

"UC Health says it has agreed not to charge patients insured by Anthem Blue Cross and Blue Shield higher, out-of-network costs even if the hospital system and insurer don’t strike an agreement on reimbursement rates by an April 15th deadline."

It seems that their agreement is up in a week, and that's got some Anthem insureds a bit nervous - and based on previous experience, rightly so. But UC Health's Diana Lara says not to worry, because they "don’t want to put patients in the middle. We care about our patients and certainly don’t want them to have to endure the stress of having to interrupt a life-saving treatment or change their physician.”

So it appears that, at least for the nonce, UC Healh patients insured by Anthem can rest a little easier, knowing they won't get hit with major out-of-network charges.

That's the good news. Here's the potentially bad:

Benefits costs are only one part of the equation. Typically, hospital-based services are subject to deductible and co-insurance requirements. That is, they have an annual deductible to be met, and often some additional out-of-pocket costs. These are calculated based on whether a service is received in or out of network. If UC Health is out-of-network, then whatever amount an Anthem insured pays for services rendered is likely to be reduced when calculating deductible and co-insurance credit.

For example:

Anthem allows $100 for an earectomy at a network provider. Joe has a $1,000 annual deductible, he pays the $100 and has just $900 to go. But if Dr Smith is out-of-network, Anthem allows only $65 for an earectomy (under the "Usual, Customary and Reasonable" rates they pulled out of their... calculated). So Joe owes (and pays) Dr Smith $100, but only gets $65 credited towards his deductible. That could get real old, real fast.

[Hat Tip: FoIB Holly R]

PCIP to The Future!

The $5,000,000,000 set aside for Obamacare's high risk pools has dried up. I know this is a shocker to learn that a government program would run out of money, but never in a million years did they think that enrollment in this program would end up being what it is. (yes, that was sarcasm) So effective February 16th the federal government shut down their pool and states who were running their own pools shut down on March 3rd. Most IB readers knew this was coming. It was just a matter of when.

Here in the Buckeye State PCIP has been an ongoing battle. We've had a long standing feud between our Department of Insurance and HHS. Before funding dried up we had to deal with eligibility and rating issues. Last week, Ohio Insurance Commissioner Mary Taylor provided testimony to the Energy and Commerce Health Committee on PCIP and the trials they've had with HHS. Ohio set up their own High Risk Pool through Medical Mutual of Ohio. It was funded by HHS but ODI was supposed to retain general authority over the pool including consumer appeals, rates, and eligibility. Ms. Taylor was very blunt in her testimony when she said:

"The ACA mandated high risk pool programs were often times just a heavy handed and bureaucratic extension of the federal government. The poor management of the program led to their unsustainability and, ultimately, the untimely decision to close enrollment in the program earlier this year."

So, what were the "heavy handed" things HHS did?

Back in 2011 the insurer, MMO, submitted rates with a 3% increase for the $2500 deductible plan and a 17% increase for the $1500 deductible plan. ODI reviewed and justified the rate increases. HHS refused to approve the rates and directed MMO to artifically reduce the rate increase on the $1500 plan and inflate the rates of the $2500 plan. Doing this can cause solvency issues and encourages adverse selection.

The second issue followed shortly thereafter and ended up in a lawsuit. This revolved around enrollment of individuals into PCIP who had previously been in limited benefit plans. Obamacare states that Mini-Meds are NOT creditable insurance plans, but for PCIP enrollment HHS considered these plans creditable. Once again HHS overstepped into what was supposed to be a state regulators authority and forced MMO's hand to determine these people ineligible. Even worse they forced people already enrolled out of PCIP.

With federal regulators overstepping their bounds at every turn its no wonder why states are refusing to set up exchanges. In the end the feds want total control. Exchanges and subsidies will be dictated by HHS and rationing and price fixing will dominate health care.

This would be so comical if it weren't so real.

Introducing...

Our newest co-blogger, Patrick Paule. Pat's a long-time commenter, and has penned some terrific guest-posts for us. His latest, about the new Navigators, is here.

When Pat expressed an interest in doing more of those, it just seemed natural to invite him on-board as a co-blogger, and he's accepted that invitation.

Patrick's been an employee benefits professional with Savage & Associates since 1997, where he's  been advocating for employers and individuals on their health insurance and other employee benefit plans.  In addition to serving his clients, Pat also has spent time serving on various community boards and is very active in the National Association of Health Underwriters. His effort as the Legislative Chair for the local chapter of NAHU has placed him in the position of being actively involved in the trenches of the Health Care Reform law.

A self-proclaimed (Iegend in his own mind) health nerd, Patrick has spoken on the impact and challenges of health care reform to various organizations, including several local Chambers of Commerce, many business groups, as well as to the clients of Savage & Associates.  He was featured in a July 2009 CNBC article on the costs and tax ramifications of health care reform and has also advised some of Ohio’s elected officials on different aspects of Obamacare.

Patrick and his wife reside in northwest  Ohio, with their three very active boys. In his spare time, he enjoys serving up some serious barbecue and grilling, watching his kids' sporting events, and playing a little golf.

Within his community he serves as President of the local  Jr. Jacket Basketball program and coaches his boys in their various extracurricular activities. He serves on the Savage Foundation Golf Committee that annually raises roughly $90,000 for local charities. He is an active member of the Advocacy Task force for the local Chamber of Commerce and also serves as a board member for the Bowling Green Community Development Foundation.

Welcome aboard, Pat!

Laboring under the MVNHS©

Coming soon to a hospital near you:

"Michelle Booth had her baby in a hotel room after London University College Hospital refused her admittance ...  the couple delivered their first child with only the aid of hypnotherapy CDs and two over-the-counter painkillers."

Remember, under socialized medicine (such as the Much Vaunted National Health System© and - shortly- the ObamaTax), it's all about saving money and rationing "free" health care.

Fortunately, there's a happy ending to this story:

"The baby weighs 8lb 8oz and is named George"

No thanks to the MVNHS©.

Shake, Rattle, Roll, Insure - UPDATE FROM DOWN UNDER

[Scroll down for update - HGS]

The Insurance Information Institute has a timely reminder:

Earthquake Insurance Is Not Just For Californians; Quakes Are Possible In Many Areas And Can Occur At Any Time

Here in Ohio, we're vulnerable to the New Madrid Fault, but there are lots of others that could affect any of the 58 states. And as the III folks remind us, "[e]arthquakes are not covered under standard U.S. homeowners or business insurance policies. Coverage is usually available for earthquake damage in the form of a supplemental policy from private insurance companies."

I checked with my own carrier, which is one of the few that does automatically include it, but many (most?) others don't. The coverage is usually available as a rider (for an extra charge).

And why would you even consider this coverage?

Well:

"Earthquake insurance provides protection from the shaking and cracking that can destroy buildings and personal possessions. It may cover increased costs to meet current building codes and costs to stabilize the land under your home. Earthquake insurance covers debris removal and pays for extra living expenses you may have while your home is being rebuilt or repaired."

That help?

If you're not sure whether or not you have this potentially critical coverage, best check with your homeowners insurance agent soonest.

UPDATE [Post originally published 4/4/13]

New Zealand blogger (and FoIB) Russell Hutchinson offers some first-hand knowledge on why this kind of cover can be so important. His insights are based on experience from friends and colleagues in the industry dealing with Christchurch (New Zealand's second largest city, which experienced a major earthquake in February, 2011):

This is a really important issue - as thousands of homeowners in Christchurch have found out over the last two years.

And it's not just the need for *some* cover, but to look particularly carefully at any state cover or assistance offered. It is easy to get lulled into a false sense of security when the state says 'yes we cover your land value' and the insurer says 'we cover your home' - what if you have a home that is relatively undamaged, sitting in the middle of land that has been 'red-zoned' - condemned for future building. That's a cover gap. That has happened to a good number of Christchurch homeowners.

Then there is the business cover - you need to contemplate longer periods of business interruption cover for earthquakes than you do with fire risks. Allow more than the 6 months typically taken - consider a year.

Then there are other small fish-hooks: can you claim for property as a loss when it is undamaged, but unrecoverable, because civil authorities do not permit access to a dangerous area? That's another big issue.

All told - look hard, and talk to your insurance adviser.

Thanks, Russell!

Slow Thursday Exchange news

We've been talking about the forthcoming Exchanges quite a bit the past few days, and very little of it was to report much progress in their implementation [ed: could that be because there's been precious little "progress" being made?]. Finally, though, some good news (of a sort):

"[HHS Secretary Shecantbeserious] ... [has] given 24 states and the District of Columbia conditional approval either to fully or partially run health insurance exchanges starting in 2014."

Wait, what?

"starting in 2014"

Um, anyone else catch the problem there? Here's a hint: Less than 180 days to go.

So here's a question for the Fair Kathleen: what happens on October 2nd?

Enquiring minds want to know.

Navigatin' Foole

Courtesy of FoIB Jeff M, we now have a hard copy of what it takes to become a "Navigator" making a cool $96k.

Here's a sample:

"To register with the FFE [Federally-Facilitated Exchange], brokers and agents will be required to provide personal identifying information (for example, name, date of birth and email address) and professional information (for example, affiliated company name and national producer number). Producers must also identify which market (individual or small employer) they intend to serve under the FFE ... HHS expects that broker and agent FFE registration and training will begin on or around July 1, 2013."

That's a scant three months away. Any bets on whether that actually happens on time?

Yeah, didn't think so.

But wait, there's more:

"To confirm each producer’s competency, brokers and agents will be required to complete applicable course modules in HHS’ training program."

Oooh, I can hardly wait.

Here's a sample exam question:

A 66-year-old woman with an income equal to 200 percent of the poverty level meets with you. She also has $25,000 in assets in the bank. She wants to know if she is eligible for any premium or cost sharing assistance:

1) No, because her income is too high...

Excuse me, but I was under the impression that giving tax advice without a license (and an insurance license alone won't do) was illegal?

Silly me.

Click here for a hard copy of the regs-so-far.

Dodging The ObamaTax

Maybe:

"At issue is a little-known loophole in [The ObamaTax] that enables health insurers to extend existing policies for nearly all of 2014."

First a caveat: no one knows exactly how things will play out come 1/1/14. For one thing, the Exchanges may not even be online. For another, there's some confusion about whether or not folks in states with Federally-run Exchanges will be eligible for tax subsidies. and there's confusion about how existing policies - grandfathered or not - will fare after the new year rolls around.

Current conventional wisdom is that plans written before - and still in force on - January 1 will stay that way until their 2014 renewal date. For example, a policy with a May 1, 2013 effective or renewal date would stay in force until next May, at which time it will go away and insureds would either be "mapped to" or eligible for one of the new standardized plans.

["Mapped to" means the carrier moves the insured directly to the new plan most closely resembling the one that goes away]

Over the past few weeks, I've spoken with reps from several of our carriers, and this seems to be what the industry expects to happen.

Of course, that may turn out not to be the case: it may well be that Ms Shecantbeserious and her minions will dictate that all current policies will be cancelled as of January 1. And who's to stop her?

However, if one accepts that the conventional wisdom is correct, and extant plans will remain in force into 2014, these same reps anticipate a flood of new business with final quarter 2013 effective dates, providing a bit of a safety net for folks heading into the storm of '14. Although I usually eschew tin-foil hats, I'll go out on a limb here and say that even this is no safeguard: there's nothing to bar the fair Ms Kathleen from unilaterally declaring all existing plans null-and-void on (say) December 31st, 2013.

Who wants to play chicken with HHS?

Cavalcade of Risk #180: Now online

Michael Stack hosts this week's collection of risk-related bloggetry. From geography to hoarding, you're likely to find something that piques your interest.

So head on over!

HOSTING BLEG: We're now scheduling Summer Cavs - just drop us a line to claim yours.

ObamaTax crumbling

We haven't written much about "the other" Exchange slated to go online shortly. The "Small Business Health Options Program (SHOP) exchanges" will enable employees of small groups to compare and purchase plans.

Oh, did I say will?

Sorry, my bad:

"The Obama administration now says a special system of exchanges designed to make it easier for small businesses to provide insurance will be delayed an entire year -- to 2015."

Ooopsies!

Turns out, setting these things up is no mean feat. And so HHS Secretary Shecantbeserious has thrown up her (no doubt well-manicured) hands on rolling out the small group Exchanges.

So here's a question: there are a LOT fewer small businesses than individual citizens, and they can't get this part right. So tell me about that countdown timer in the sidebar....

Tax Subsidy Blues (An Opus in Ooopsies)

One of the lesser-known pieces of The ObamaTax puzzle is that one "pre-qualifies" for any subsidy to which one might be entitled. That is, one signs up for one of the Exchange policies and part of that process is declaring guestimating one's 2014 annual income. It is partially upon that criterion that one's eligibility for a subsidy is based.

Here's a question:

What happens if you guess wrong?

Aye, therein lies a rub:

"Millions of people who take advantage of government subsidies to help buy health insurance next year could get stung by surprise tax bills if they don't accurately project their income ... What happens if you or your spouse gets a raise and your family income goes up in 2014? You could end up with a bigger subsidy than you are entitled to."

When you enroll in an Exchange Plan (since these are guaranteed issue, it is not an "application") any subsidy is based on your income. And since you probably won't know your 2013 total annual income in October, you can either guesstimate it or rely on your 2012 return.

But what if your 2013 income ends up being greater than your 2012 (hey, it could happen!)? That could spell trouble:

"If that happens, the law says you have to pay back at least part of the money when you file your tax return in the spring of 2015."

And who knows what your financial condition will be almost 2 years from now?

The ObamaTax: The gift that keeps on giving taking.

From the P&C Files: Members only

How to write this?

Over the years, we've chronicled some of the more, um, interesting things folks have sought to insure: their virginity, marathons, even football games.

But I think this one may be the most unusual yet:

"In an interview earlier this week, Van Halen frontman David Lee Roth surprised no one by revealing that he’d had his penis insured by Lloyd’s of London."

One shudders to consider the list of covered [ahem] exposures  such a plan would entail, but I've always said that, if price is no object, one can insure anything.

Even "Little Elvis."

ObamaTax Good News/Bad News

First the "good news. Remember this?

"A fast-food chain is slashing employee hours so franchise owners don't have to pay health benefits"

Well, turns out that is the good news, at least for Dave's Place:

"Wendy's Co. (WEN) initially estimated the health-care law would increase the cost of operating each of its 5,800 U.S. restaurants by $25,000 a year. But Chief Financial Officer Steve Hare told an investment conference ... that executives have cut the estimate by 80%, to $5,000 a year, primarily because they expect many employees to decline the insurance offering."

So those lucky few who do keep their full-time positions will most likely play chicken with The ObamaTax, either because they see it as the waste that it is or because they can't afford the premiums.

Over at Popeye's, for instance, most of their eligible employees don't sign up for health insurance now, before the major rate increases necessitated by The ObamaTax, and company execs don't expect any uptick in that:

"Ralph Bower, Popeye's president-U.S ... doesn't expect many more employees to enroll next year"

Funny how that's working out, isn't it? It's almost like the folks who didn't read the plan before they passed it didn't understand how it would work in the real world.

Hunh.

[Hat Tip: FoIB Sam B]

The VA as SP

Although we may not like to think so, the Veterans Administration health care system is, in fact, a single-payor, nationalized program. That is, the government finances and staffs it, administers it and decides who gets what level of treatment.

So how does it stack up against what's left of our private health care system?

Not so great:

"[T]he office that handles complaints from federal whistle-blowers says it has found a pattern of problems at a Department of Veterans Affairs medical center in Jackson, Miss., that raises serious questions about the hospital’s management practices ... “Collectively, these disclosures raise questions about the ability of this facility to care for the veterans it services"

And keep in mind: this is The Gray Lady, hardly a bastion of right-wing opinion.

Aside from the shanda that this is how we care for those who served our country, another real question is raised about how the rest of us will fare under the single-payor system that is the true goal of The ObamaTax.

Eh, what's up, Doc? I quit, that's what.

We've been noting the looming provider shortage for quite a while, driven in part by the increasing number of docs planning to retire rather than turn over control of care to a federal bureaucracy.

And that phenomenon seems to be accelerating:

"The 2013 Deloitte Survey of U.S. Physicians ... found that "Six in 10 physicians (62 percent) said it is likely many of their colleagues will retire earlier than planned in the next one to three years."

Now, just because one doc believes another one may be hanging up his (or her) stethoscope soon isn't dispositive, but it should give us pause. The very fact that this has become an issue is disturbing, and one can't help but wonder how soon it will be until we start seeing providers quitting en masse.

Cavalcade of Risk #180: Call for submissions

Michael Stack hosts next week's Cav. Entries are due by Monday (the 1st).

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.

HOST BLEG: We're scheduling Summer Cavs now - please click here to claim yours.

Queen City Drama Update

There are some new developments in a story we've been covering for the past several years. From our September 1, 2011 post:

"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"

Fast forward a year-and-a-half, and:

"Cincy Solicitor Curp tells Council Ohio Supreme Court will not hear appeal in lawsuit by retirees concerning health coverage."

So at this point, it seems that the citizens of Cincinnati have dodged a fairly sizable financial bullet. Be interesting to see if this snowballs into other municipalities facing similar economic disasters.

[Hat Tip: FoIB Holly R]

Fool me once...

Remember this:



Turns out, not so much:

"Millions of Americans will be priced out of health insurance under [The ObamaTax]  because of a glitch in the law that adversely affects people with modest incomes who cannot afford family coverage offered by their employers"

As we've long noted, one of the key promises was that folks unable to afford the new, sky-high premiums would get rate relief through a complex system of tax "credits." The catch, though, is that a lot of those people will fall through the cracks because the calculation ignores the cost of any spousal coverage one might obtain through an employer-based plan.

So many of those who were counting on those credits to ease their health insurance burden will be left to twist in the wind, unable to obtain "affordable" coverage but on the hook for the ObamaTax itself.

Gosh, if only they'd read it....

Couple of Simple Questions about Medicare and Medicare Advantage

The Obama administration expended huge effort to enact a law that will increase choices, coverage, and insurance funding for the general population.

At the same time it seeks to reduce choices, coverage, and insurance funding for seniors.

Why?

Is there some rationale that explains these two seemingly opposite objectives?

Household Income and Unintended Consequences

Interesting article on the increase in people sharing housing costs:

"With the cost of living on the rise and showing no sign of slowing down, total strangers desperate to save money are moving in together.

As CBS 2’s Dana Tyler reported Tuesday, older adults and even families are using this method to pool their resources. And the new communities are redefining the modern family."

ObamaCare and most public resources are based on Household Income. How will this affect those tests?

The Census Bureau includes in a household all of the people, related and unrelated, who occupy a house, apartment, group of rooms or single room that is intended for occupancy as a separate living quarters.

Often, lack of sufficient income is what drives these people to live together; how ironic if that then disqualifies them for assistance they would otherwise get. Or how planned?

Strange Bedfellows?

[Last week, Guest-Blogger Patrick Paule wrote about the potentially dangerous role untrained, unaccountable ObamaTax Navigators are slated to play in the Exchanges. This week, he's back with an update about efforts in the Ohio legislature to mitigate these problems. In fact, Patrick provided input on the bill in question. Although this concerns efforts in the Ohio legislature, the issues and problems are relevant in pretty much all 58 states. HGS]

Last week the LA Times ran an article on "enrollment assisters". The other day, Freedom Works ran a blog on navigators. The subjects of the articles will serve identical purposes and neither have received any significant news coverage. This is something consumers should be very concerned with. I find it ironic that a conservative group like FreedomWorks would agree with leaders of community organizations. Because based on the respective posts they both believe navigators shouldn't have to undergo the criteria below.

Breeanne Howe's post at FreedomWorks left me shaking my head. In the story Ms. Howe vilifies a Republican member of the Ohio House of Representatives and misrepresents the truth. Ms. Howe says that this member of the House has passed a bill which helps implement Obamacare. If she had done some better research she would have found that she is wrong on HB 3. While Ms. Howe is correct that HB 3 will regulate navigators, she misses the point as to why they should be regulated.

Throughout her article she summarizes the duties of what Navigators can and can't do. But she never mentions what HB 3 does in order to protect consumers from the things these (idiots) navigators say and do. Maybe if she would have read this (insert my prior post) and this (insert LA Times article) then she would have had a better understanding.

According to Ms. Howe insurance brokers across the country are "getting nervous about the prospect of competition" from navigators and that we have been lobbying for stricter standards on them. As an insurance broker I take exception to this comment.

I am not concerned about competition from someone who:

A. Doesn't have the ability to sell insurance.
B. Isn't licensed to do so.
C. Doesn't have ongoing education and training.
D. Doesn't have to undergo a background check or fingerprinting.
E. Doesn't have liability insurance in case of fraud or misrepresentation.
F. Has no basic understanding of health insurance products and the financial decisions people have to make to best suit their needs.

I am concerned with who is able to take me through the process of educating and purchasing insurance and doesn't have any of the above. According to the law, navigators can "facilitate enrollment in qualified health plans". In order to help with enrollment a navigator must have access to the consumers social security number, date of birth, annual income, tax returns, and other personal information. This is not the type of information I want to share with just anyone and why HB 3's passage is imperative.

Don't get me wrong, I agree with the basic principles of FreedomWorks. It's just too bad that an organization who wants this train-wreck repealed doesn't understand all of the reasons why it should be...

[Thanks, Patrick!]

Health Wonk Review: Where's Spring edition

HWR co-founder Julie Ferguson hosts this week's outstanding collection of interesting posts from around the wonk-o-sphere. It's a bit chilly outside, but you're sure to find something to wearm you up at this week's 'Review.

Policy Lost

As we pointed out last Fall, folks who fail to inform their families about existing life insurance policies do those left behind a grave disservice. For one thing, it gives the government even more ammo to micro-manage people's finances (who do you think pays carriers' compliance costs?). For another, it can cause unnecessary, and easily avoided, anguish.

The Insurance Information Institute has some pretty helpful hints on how to track down Uncle Phil's lost policy (or even just find out if he had one). Some of these are already known to regular IB treaders (checking with the MIB, for instance), but others are new to us:

• Look for insurance-related documents.
Search through files, bank safe deposit boxes, and other storage places to see if there are any insurance-related documents. Also, check address books in case any insurance agents or companies are listed. An agent or company representative who sold the deceased their auto or home insurance may also know about the existence of a life insurance policy.

• Contact previous employers.
Former employers may have a record of past a group policy.

• Check bank books and canceled checks.
See if any checks or automated payments have been made out to life insurance companies over the years.

• Check with the state’s unclaimed property office.
If a life insurance company knows that an insured client has died but cannot find the beneficiary, it must turn the death benefit over as “unclaimed property” to the state in which the policy was bought. If you know where the policy was purchased, you can contact the state comptroller’s department to see if it has any unclaimed money from life insurance policies belonging to the deceased.

Thanks, III!

Medicare digs deeper

In a comment to my post explaining how co-insurance works, Mike offered up a very helpful correction:

"... this is EXACTLY the way coinsurance works for Medicare Part B.Anyone with Part B is on the hook for 20% of their Part B expenses no matter how large those expenses might be."

Quite so, and it gets worse:

"Medicare Has Stopped Paying Bills For Medical Diagnostic Tests ... The Medicare agency decided to change the way it reimburses these sorts of diagnostic tests. But it’s been slow to decide on its new approach. So in the absence of a policy, the Medicare program is simply not paying its bills."

Briefly, some of the major labs were "gaming the system" (this was apparently legal, but far from either optimal or ethical). Instead of actually addressing that problem, though, Ms Shecantbeserious has decided to just stop paying the bills. This has had a sort of 'domino effect' because MedSupp plans basically just follow Medicare's lead. So Medicare supplement policies, which augment Medicare itself, are beginning to do likewise [ed: as Bob points out in the comments, Medigap plans ONLY pay if Medicare approves the claim].

One can see how this portends for the upcoming Exchange-based policies - when the government designs the plans (as they do with Medicare), the carriers will simply follow suit. So if The Fair Kathleen calls "foul" on some provider or another, those new ObamaTax policies will certainly do the same, leaving patients with even more out-of-pocket.

Oh frabjous day.

Piling on Kathy

As Nate pointed out earlier, actual experts in health care delivery and financing anticipate huge spikes in the cost of both. Ever on the bleeding edge, HHS Secretary Shecantbeserious has weighed in:

"Some people purchasing new insurance policies for themselves this fall could see premiums rise because of requirements in the [ObamaTax]."

Self-awareness, Kathy - what is it?

Obama Admin....that clueless or that dishonest?

In a story out this AM we are warned claim cost are expected to increase 80% in Ohio for those with individual policies. In basic math that would correspond to an 80% increase in premiums.

"While some states will see medical claims costs per person decline, the report concluded the overwhelming majority will see double-digit increases in their individual health insurance markets, where people purchase coverage directly from insurers.

The disparities are striking. By 2017, the estimated increase would be 62 percent for California, about 80 percent for Ohio,"

As if 80% increase in claim cost wasn't bad enough when the Obama admin tried to spin and respond to it, then it really started to get bad:

"The administration questions the design of the study, saying it focused only on one piece of the puzzle and ignored cost relief strategies in the law such as tax credits to help people afford premiums and special payments to insurers who attract an outsize share of the sick. The study also doesn't take into account the potential price-cutting effect of competition in new state insurance markets that will go live on Oct. 1, administration officials said."

First, giving someone a tax credit doesn't mean you spent less; an 80% increase in claim cost is still 80% more being spent, a problem regardless who is paying for it.

OK, so he helped people afford their premiums, when does he start helping the tax payor afford the government's share? $16+ trillion in debt plus 1 trillion deficits, where are our relief strategies?

Then with a closing only a bureaucrat/politician could muster, "price-cutting effect of competition," what the heck is that? Under Obamacare, individuals are spending tax-payor money and get to complete a 22 page application with a 60+ page instruction manual. Currently they make one phone call to a broker, maybe complete a 3-6 page app and the broker does all the work for them. The market just got infinitely more difficult and when the final buying decision is made they are spending someone else's money and they expect spending to go down?

"Having said that," Foster added, "actuaries tend to be financially conservative, so the various assumptions might be more inclined to consider what might go wrong than to anticipate that everything will work beautifully."

Really? When has a Medicare spending projection ever been overly conservative? When government has a 48 year track record of complete failure when it comes to running healthcare plans I think it is more than fair to say they have not been conservative enough.

ObamaTax "Train Wreck"

It sure is nice to see someone else using this metaphor:

"Illinois wants to be the engine that pulls states toward the Affordable Care Act, yet a metaphorical “train wreck” is just around the bend ... Illinois saved $1.1 billion last year, but lawmakers were expecting $1.6 billion in savings. The state has $2.3 billion in unpaid Medicaid bills."

Ooops.

Turns out, when you rob Peter to pay Paul enough times, Pete ends up flat broke, but Paul still needs his "money fix." Who'da thunk it?

And the hits just keep on comin':

"Hamos expects 509,000 new Medicaid patients in Illinois by 2017, when the [ObamaTax] is fully operational."

Just keep that last phrase in mind...

[Hat Tip: FoIB Holly R]

The Stupid: It Burns

So this arrived in email:

"Higher coinsurance rates correspond to higher annual limits on medical out-of-pocket costs"

Okay, I'll bite; after all, most non-HDHP (hight deductible health plans, like HSA's) have some cost-sharing (aka co-insurance), and 80/20 is pretty standard.

But what, exactly, does 80/20 mean?

Well, you won't learn the correct answer from the rocket surgeons at HealthPocket:

"A new analysis of coinsurance rates from HealthPocket, Inc., shows that the average coinsurance rate nationally for individual and family health plans is 20 percent, meaning that people with coinsurance are paying one-fifth of the costs on average for certain more expensive services such as hospitalization, child birth, emergency care, and others."

First, I would question their use of the term "average," which implies that lots of folks have plans with 70/30 or 90/10 (or even 60/40) levels. They most likely mean "typical." But that's far from their most egregious error. Look again at that sentence, and especially this:

"people with coinsurance are paying one-fifth of the costs"

Um, no, HP, that's not how co-insurance works. If you'd simply read your own policy, you'd see that, once the deductible is met, you're responsible for 20% of the next "x" number of dollars, after which the plan steps up from 80% reimbursement to 100% (of covered expenses, of course). That's why the next section of your little booklet tells you your "out-of-pocket maximum" for covered expenses. These will be higher if you choose out-of-network providers, of course.

And co-insurance doesn't just apply to "more expensive services," can also apply to lower cost items if you're in that co-insurance "corridor." All you really had to do was ask your agent to explain it to you before you fired off an email that just makes you look, well, stupid.

Better luck next time.

Disability Insurance, or Disability Lifestyle

Coming on the heals of the Time article taking hospital billing abuse mainstream, NPR drops a bomb on the disability racket.

http://apps.npr.org/unfit-for-work/

It is long but uses every bit of its length to drive the point home. Hopefully this can get the conversation started on reforming not only a broken but designed to never work system.

Time and NPR practicing real journalism, not at all what I expected from an Obama reelection.

CMS and You

Here’s my take on this interesting article from Avik Roy over at Forbes this morning, about progress toward implementation of Health Care Exchanges.

Gary Cohen, a CMS official involved in exchange implementation, said “my hopes are the range of things that could go wrong gets narrower.”

Henry Chao, an official at CMS, said he once held high hopes that the exchanges would run smoothly from the beginning, but “those hopes had been dashed”.

Hope?  Well, I hope that CMS and you have been clinging to more than “hope”.   I hope it, but I’m beginning to doubt it because so little hard evidence is emerging to suggest CMS and you will succeed.

Avik Roy mentions rate shock in his Forbes article.  I think CMS and you know that you face more immediate problems:

Let’s start with the fact that your CMS is even less able than the states to set up and run Exchanges in the 192 days remaining between March 22 and October 1 when Exchanges must be prepared to process January 1 enrollments.  It’s an open question whether CMS and you have the resources or the time.  You know full well that 26 states elected not to set up their own Exchange – meaning the implementation falls heavily on CMS and you, in each of those states.   From what you say now, it appears that CMS and you will have to step in and help still more states, ones that first said they could do the job, but now find they can’t.  

A second more immediate problem for CMS and you is more personal – what do you suppose the Fair Kathleen Sebelius said last week at the closed-door meeting of the Senate Finance Committee session on ObamaCare implementation? Do you think she is preparing to accept responsibility for any implementation failures?  Or do you think she is setting up CMS and you to take the fall for any tactical failure to execute the misguided health policy that she stoutly defended for 4 years?

 A third more immediate problem for CMS and you is revealed in the statement “Let’s just make sure it’s not a third-world experience.”

Yeah?  You mean CMS and you intend to work against the President’s wishes?  Good luck with that, Henry, Gary, and CMS.  Good luck with that, America.

Paying the Piper

Why is it that we're told - on the one hand - that insurance premiums are too high, but when an employer tries something as simple as a health screening to accomplish this, it's a terrible, horrible, no-good intrusion on our privacy?

Recently, drugstore behemoth CVS introduced a program to enable its covered employees to mitigate rate increases. They were asked to undergo a health screening which would report back to the company their current height and weight, blood pressure and the like. Employees who agreed avoided a surcharge, those who took a pass are now faced with a $600 annual rate hike.

Seems simple and fair enough.

But of course, what we say we want and what we're willing to do to get it are two different things:

"Critics and patients' rights advocates worry that this could be the first step toward firing sick workers and adopting a policy of discrimination."

Perhaps, but then again, no one's forcing these employees to purchase their insurance through their employer, either. Don't like the policy, then feel free to find another job or other insurance.

But Henry, you may be saying, how can I find a new job in this economy, or different insurance if I'm ill?

Good questions, but irrelevant: the entity which provides the insurance (in this case, CVS) gets to make the call on what plans are offered and how much premiums will be subsidized. To that end, they have an obligation to their stakeholders (including your fellow employees, by the way) to be as cost-efficient as possible with those expenses. Notice that they're not asking folks to get these screenings as requirements to keep a job, just the insurance.

Seems fair enough to me.

GKC, The Fence, and NARAB

Gilbert Keith (G. K.) Chesterton, the philospher and author, once sagely observed:

"In the matter of reforming things, as distinct from deforming them, there is one plain and simple principle; a principle which will probably be called a paradox. There exists in such a case a certain institution or law; let us say, for the sake of simplicity, a fence or gate erected across a road. The more modern type of reformer goes gaily up to it and says, "I don't see the use of this; let us clear it away." To which the more intelligent type of reformer will do well to answer: "If you don't see the use of it, I certainly won't let you clear it away. Go away and think. Then, when you can come back and tell me that you do see the use of it, I may allow you to destroy it."

Which is a rather more elegant way of saying "if it ain't broke, don't fix it." And if it's not clear whether or not it's "broke," then it behooves us to step back, take a deep breath, and make darned sure before we start "fixing" things.

Case in point: NARAB (National Association of Registered Agents & Brokers).

As we discussed the other day, this is a case of one proposed organization supplanting an existing, fully functional one, with no obvious answer to the question "cui bono?" [literally: "where's Sonny's key?"] The answer isn't immediately apparent, but there are clues:

"Strong support for legislation that would [create NARAB] was voiced today at a Senate hearing by officials representing the insurance industry’s primary agent and broker trade associations ...  the Insurance Retirement Institute, which represents life insurers who sell tax-advantaged products, released a study  ... indicating that maintaining state insurance licenses across multiple jurisdictions is a regulatory obstacle that may impede the sale of retirement income products."

Ah-hah! So the point of this little excercise becomes more clear: to facilitate sales of insurance products. In general, of course, I'm all for that - after all, it's how I make a living (well, apart from the mad, mad blog money). But here's what gives me pause: where's the opposition to this? Surely there must be, else why is it NARAB II? Why was it turned down the first time?

In cases like this, I think it's wise to admonish: Don't just do something, stand there!

Cavalcade of Risk #179: Spring has sprung edition

Jacob Irwin hosts this week's collection of interesting and thought-provoking risk-related posts, and on the first day of Spring, no less!

Do check it out.

And consider hosting one yourself - it's fast, easy and fun. Just drop us a note to claim yours.

ObamaTax Updates

■ From email:

"On March 8, 2013, [HHS Secretary Shecantbeserious] ... issued a Frequently Asked Question (FAQ) announcing that compliance with most [ObamaTax] provisions is being delayed for expatriate plans ... Expatriate coverage will qualify as minimum essential coverage for purposes of the individual mandate"

Expat health plans is a subject we've rarely (ever?) addressed here at IB. These plans cover American citizens who live abroad for 6 or more months (as well as any covered dependents).

■ And speaking of "covered dependents," we recently noted that The ObamaTax discourages group plans from covering spouses. Now, an industry group warns about the implications of that:

"A rule requiring employers to offer dependent coverage thus not only imposes an unnecessary administrative and cost burden on employers, it can actually harm the low-income employees whom the shared responsibility provisions were designed to help"

■ There's often a waiting period for new hires looking to get on their employer's health insurance plan. That can be up to several months of non-coverage (a great place, by the way, for a Short Term Medical plan). Now, the Fed's are looking to keep employers from exploiting that necessary wait-time to avoid certain ObamaTax challenges:

"[A] coverage access section that's separate from the play-or-play provision will require employers that do offer major medical coverage to limit any waiting periods that occur before coverage begins to 90 or fewer days"

So many rules, so many loopholes...

Tilting at Windmills

Meh:

"Sens. John Barrasso (R-Wyo.) and Orrin Hatch (R-Utah) are winning praise for a bill to kill the Affordable Care Act's tax on health insurance."

From whom? Certainly not their party's leadership, which has been conspicuously quiet on the matter.

Do go on, though, gentlemen:

"Higher insurance costs, fewer jobs and smaller paychecks is not what President Obama promised when he signed the largest expansion of government into law nearly three years ago, but that’s exactly what’s already happening"

That's funny, I seem to recall his promise to lower insurance costs by "3000%" as well. And of course, regular IB readers have known all this for years.

So why now?

Ah:

"The bill's introduction comes alongside a new industry report saying the coverage tax will cost 146,000 to 262,000 jobs by 2022, with the majority of losses hitting small businesses."

Which are, as most reasonably economically fluent folks know, the backbone of our economy.

So there's that.

The problem, of course, is that the Supremes have already given the tax their imprimatur, bestowing upon it a pretty significant legitimacy. Oh, sure, we'd love to see this pass, but then what?

Do they really think President Obama will sign it?

More likely, it's a way to keep the public's disenchantment with the train-wreck as high as possible, which isn't necessarily a bad idea. But I really woudn't hold my breath for it to bear fruit.

[Hat Tip: FoIB Holly R]