The Media Trivialize Medicare Advantage

I wish they knew how to stop.

Here’s a recent example from the April 19 Wall Street Journal Page B4. [subscription required]

In its 6^th paragraph, the article states:

“The Medicare Advantage plans at issue typically combine basic Medicare benefits with extras, such as gym memberships.”

This statement trivializes Medicare Advantage by failing to describe the real importance of Medicare Advantage plans.  It’s a common media failure, particularly disappointing when parroted in the WSJ.

The truth is, Medicare Advantage benefits for medical care are much superior to basic Medicare (Part A and Part B).  The media almost never explain this.  They mention “gym memberships” instead.  As a result the administration intent to reduce funding for Medicare Advantage might seem reasonable when, in fact, it's not.

Ask yourself:  would seniors drop their basic Medicare and enroll in Medicare Advantage for something so trivial as a gym membership?  Of course not.

Something else explains why 25% of all Medicare-eligible individuals -12-14 million people - have voluntarily enrolled in Medicare Advantage plans.

The “something else” is that Medicare Advantage is much better insurance than basic Medicare (Part A and Part B).

Seniors who only have basic Medicare risk bankruptcy.  Oh, sure we can buy a “Medicare Supplement” plan to get additional coverage  - at our own expense.  But Medicare Supplement is not cheap.   Basic Medicare plus a typical Medicare Supplement plan can easily run to more than $300 per month, per person.  Why choose that when Medicare Advantage plans typically cost less than $300 per month, especially when offered thru a former employer?

In addition to the monthly premium cost, basic Medicare Part A requires a copay equal to $1,184 per hospital admission. Part B requires an additional $147 annual deductible – after which Medicare pays 80% of remaining allowable covered expenses (like all insurance, not all expenses are allowed or covered so the effective percentage usually works out to less than 80%).  Medicare enrollees pay the difference WITHOUT LIMIT; this means catastrophic expenses can bankrupt seniors who have only basic Medicare.  Basic Medicare is such bare-bones coverage that it would not qualify to be offered on the State Exchanges under ObamaCare.

By contrast, Medicare Advantage plans normally have only one deductible and normally reimburse at 80% up to an annual limit, after which Medicare Advantage pays 100%.   In my case the annual deductible is $300 and the most that I can pay in any year is $3,000.  That’s real insurance.

The media ignore these facts.  Maybe it’s because they take a little time to describe, and require a little thought to understand.  Whatever, the media act as though they believe people who don’t know, don’t care.  Thus they trivialize Medicare Advantage.

I think it’s really important for everyone to know the real deal so they can make a good decision for themselves and their families (and so politicians can’t blow smoke at them).  As it is, I think the media deceive people to believe that Medicare Advantage plans should be de-funded because they offer nothing more than a few “extras” like gym memberships.

This is how the media trivialize Medicare Advantage.  They are sadly mistaken.

Kathy says so

"U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius today assured yet another congressional panel that the [ObamaTax] exchanges will be opening on schedule."

Okey-dokey, Kathy.

If you say so...

MVNHS© Death Panels

Coming soon to the 58 states:

"[MVNHS©] doctors are prematurely ending the lives of thousands of elderly hospital patients because they are difficult to manage or to free up beds ... there was often a lack of clear evidence for initiating the Liverpool Care Pathway ... a 71-year-old who was admitted to hospital suffering from pneumonia and epilepsy was put on the LCP by a covering doctor on a weekend shift."

We've discussed the Liverpool Care Pathway (LCP) before; it's basically the British version of the ObamaTax Death Panels. What's remarkable about this item is the sheer numbers of seasoned Brits going under the LCP bus:

"The [MVNHS©] kills off 130,000 elderly patients every year ... doctors had turned the use of a controversial ‘death pathway’ into the equivalent of euthanasia of the elderly."

Well, it is free health care - you just get what you pay for.

[Hat Tip: FoIB Peter K]

Captain Obvious to the white courtesy phone, please

In theory, the ObamaTax requires that, beginning next January, every American (citizen) must buy health insurance, or pay a penalty tax. The problem is that the penalty tax is rather inconsequential:

"95 Tax Penalty Begins in 2014 Yet Most Say They Are Unswayed ... The tax penalty for not purchasing health insurance will start at $95 per individual or 1 percent of household income, whichever is greater"

Less than $100 a year! Doesn't seem so onerous. But even those 1%'ers [ed: I see what you did there] might be sorely tempted to take a pass, as well. After all, you'd have to get up into some hefty figures for that 1% to come close to premium levels we'll see after the dust has settled.

Let's say you bring home $250,000 a year (not unreasonable for two professionals): that penalty tax comes to $2,500, or just over $200 a month. There is no circumstance under which one will find a family plan for anything even remotely close to that, and they're not going to be getting any subsidies to mitigate the premiums, either.

On the other end of the spectrum, those on the lowest economic rungs, who probably would qualify for subsidies, aren't going to be especially moved, either: $95 a year is just about $8 a month, How likely is it that, even with a subsidy, their premium's going to be that low?

Exactly.

Irony or Common Sense?

The latest firm to fight back against the birth control convenience item mandate imposed by Ms Shecantbeserious is Eden Foods, which makes and markets soy-based drinks (among other products). They don't find the mandate particularly healthful, and are seeking to opt out of it. As Eden's CEO puts it:

"I'm not trying to get birth control out of Rite Aid or Walmart, but don't tell me I gotta pay for it"

So of course advocates of a national healthcare system immediately pounced on this rather sensible business decision as reprehensible:

"I think we're going to have to put up a list of companies on our website that actively oppose implementation" of health-care reform, says Erin Gill-Ninehouser of the Pennsylvania Health Access Network, which touts [the ObamaTax]"

Nice straw-man you've got there, Erin. Keep it away from the flames.

Ha! [Updated & Bumped]

Two-and-a-half (2 1/2) years ago, Mike noted that "Senate Finance Chairman Max Baucus, who wrote most of the [ObamaTax] ...  is telling me not to worry about all the rattles I hear in this Cadillac he sold me (that I can't afford)"

Fast-forward to today:

"[Senator Max Bacus (D-Montana)] who helped write President Obama's health care law stunned administration officials Wednesday, saying openly he thinks it's headed for a "train wreck."

Oh really?

Appears that the "esteemed" Senator from Big Sky Country is an IB reader.

UPDATE: But of course it's a "train wreck," Max. Here you tell us that you couldn't read the bill which you wrote because you didn't understand it because you let the "experts" write it so you didn't need to:



That about right, Max?

[Thanks to co-blogger Patrick P for the video!]

PCIP - A True Story

Wednesday was a tough day for me. One of my long time group clients has a small union division. I am very close personally and professionally with both sides of the negotiating table. They have trusted my recommendations and know that I have always stepped up to make sure that everything that is done is in the best interest of both parties.

The employee (Jim) who heads up the union representation has been through a rough several years. In 2005 his mother (Jane) was diagnosed and beat breast cancer. In 2007 his father (John) was diagnosed with lung cancer. In 2008 his wife was diagnosed and beat breast cancer. Unfortunately while his wife and mom were given clean bills of health his father took a turn for the worse and ended up terminal.

John was the sole breadwinner of the family and losing his income without long term disability insurance was devastating. Financially the family had spent down all of their assets to continue payments for their bills.

From a health insurance perspective, the plan available to the employee carried a $600 annual out of pocket maximum (Yes, you all read that correctly). When John passed in the middle of 2009 his life insurance and pension kicked in for Jane. Not only that but Jane was eligible for COBRA under John's employer sponsored insurance plan. Here was our conversation back then:

ME: Jane, you are eligible for COBRA for three years. This will give you the best insurance coverage at the most reasonable price. Because of your cancer history individual carriers are not willing to insure you. The other option is Ohio's Guaranteed Issue Product. At your age the premiums are more than double what COBRA will cost and benefits are less.

JANE: If this is the only choice then I will have to take COBRA. I can't believe how expensive this is. John never had to pay a penny for insurance through work.

Fast forward to Fall of 2012. Jane is coming off of COBRA and I am meeting with her and her son. With her breast cancer history only being seven years removed, I was finding it very difficult to insure her. Not only that but with little to no income and assets paying for the premiums was going to stretch the budget.

ME: Jane, we have exhausted all of our options for you and we still don't have an insurance company willing to take you based on your past cancer history. With the changes in the health law we have found that many of the insurance companies have become more strict in their underwriting. They aren't as lenient as they used to be. The only option to keep you insured is the expensive Ohio Guaranteed Issue product that we discussed a couple of years ago.

JANE: What about President Obama's health care law? Doesn't it allow me to purchase insurance no matter what my health is?

ME: That is a part of the law but doesn't begin until 2014.

Jane and her entire family are strong supporters of President Obama and his signature law. Knowing little bits and pieces and hearing from the Union that represents her son and her late husband she inquired with me about "that high risk pool thing". I informed her that while it would provide decent benefits at a very affordable price she wasn't able to participate.

JANE: Why not?

ME: Because the law says you have to go without insurance for six months before you are eligible.

So that is what she did. She went without insurance. Now I have to call her and tell her that they suspended the program.

Unintended consequences are having a real impact. I doubt you will ever see this story or any like it in the mainstream media, but they are occurring everywhere. If you have encountered an experience similar to this one type a short comment. I would love to be able to share with my client that they are not alone. And you never know, if there are enough responses we might just be able to get someone in the MSM to actually pay attention.

Buyer's Remorse (The Roof's Caving In)

From the "Careful What You Wish for Files," Cato Institute's Michael Cannon tips us that "[a] labor union representing roofers is reversing course and calling for repeal of the federal health law, citing concerns the law will raise its cost for insuring members."

This from the folks at The United Union of Roofers, Waterproofers and Allied Workers who worry that the ObamaTax "could lead members to lose their existing health plans."

No kidding?

Welcome (late) to the party, pal.

Stupid GOP Tricks

It's easy to pick on folks like San Fran Nan who admonished her fellows to pass the bill to learn what's in it, but what excuse do these rocket surgeons have?

"House Republicans are moving quickly on a new bill to strengthen ObamaCare's temporary insurance plan for people with pre-existing conditions ... The measure seeks to shore up the Pre-Existing Conditions Insurance Plan (PCIP) ... The Obama administration announced earlier this year that it would suspend enrollment in the PCIP"

That last is a bit disingenuous - the truth is that the program ran out of dollar bills. Nevertheless, the whole cockamamie idea is a waste of time and resources.

Here's why:

PCIP suffered from a fatal flaw: the requirement that one be uninsured for (at least) 6 months to be eligible. That turned off enough people that the program struggled even to get folks to sign up. Nevertheless, they still managed to run through all $54,000,000 [CORRECTION: $5 Billion] in less than three years, all the while racking up major claims expenses (as in: $5 in claims per $1 in premiums. That's no way to run a railroad, son).

But it gets worse:

Put all of that aside, and consider the timing. At best (and this is improbable, bordering on the fantasy) they can resuscitate the program for June 1. Remember, though, that there's a 6 month wait before folks can apply and, as regular readers know, this usually translates to coverage effective on the first day of the 7th month.

So folks who were in line on March 1, who couldn't sign up because the program was closed to new entrants can hope to sign up in time for a July 1 effective date. But wait: that means they'll have - at most - five months of coverage before the plan sunsets in favor of The ObamaTax Guaranteed Issue directive. And of course, anyone who hits that magic 6 month jackpot after June 1 has even less time on (and benefit from) the plan.

But it gets worse (how?!): remember the fact that few eligible folks even bothered to sign up? What makes the geniuses in DC think that's going to change now, when those sweet, sweet Exchange subsidies become available in January?

It is to weep.

And another one bites the dust

Well that didn't take long. Monday it was movie ticket-takers, today it's pulse takers:

"The parent company of Reading Hospital, Reading Health System, laid off 210 employees today as part of a cost-cutting plan that also will eliminate an additional 181 jobs ... Hospital officials said the cuts are in response to changes in the national health care system, including cuts in Medicare and Medicaid reimbursements to hospitals."

The ObamaTax: the gift that keeps on giving taking.

Cavalcade of Risk #181: "What if" edition on-line

Jason Shafrin hosts this week's very timely Cavalcade of Risk. Timely? Yup: Jason deftly weaves this week's Cav around the horrible tragedy in Boston, presenting each post under the rubric of "What if?"

Well done, and quite thought-provoking.

Limitations

This seems to be a very strange case:

"Julie Heimeshoff ... worked in public relations at Wal-Mart. In August 2005, she filed a group long-term disability (LTD) insurance claim, saying that she was unable to work due to lupus and due to pain from fibromyalgia."

Now, fibromyalgia is not to be taken lightly: it's "a disorder characterized by widespread musculoskeletal pain accompanied by fatigue, sleep, memory and mood issues."

The challenge is that, unlike (say) a broken leg, there may be no obvious cause or way to verify the extent of a person's condition. So these can be tricky claims to adjudicate. In this case, Hartford Life (the LTD carrier) seems to have taken over a year to deny the claim. One presumes that there was a flurry of medical records flying back and forth between Hartford and Ms Heimeshoff's health care provider(s).

About a year after the initial denial, Ms H appealed the denial; Hartford re-confirmed it a few months later.

Fast forward to 2010 (remember, the claim was initially filed in 2005 and denied in 2006) and she sues Walmart and Hartford. Hartford argues that that she'd run out the clock because she'd failed to "[begin] any legal actions within three years after the date when she was supposed to give the company proof of her loss, rather than three after the date when the claim accrued."

That part's important, because it's where I had to call in some expert help - more on this in a moment.

In the event, Ms H countered that the statute of limitations didn't apply because they were talking about two different time periods, and Hartford's was incorrect. She lost that round in 2012 (some 7 years after the initial claim), and proceeded up the food legal chain where the 2nd U.S. Circuit Court of Appeals upheld the the lower court's decision.

But that's not the end of it: the case has been appealed to the Supreme Court, which has agreed to "take up only first question presented -- about when a statute of limitations should accrue for judicial review of an ERISA disability adverse benefit determination."

What I was having (and am still having) so much trouble with is the whole timing issue. Or, rather, issues: there's a time lapse of a year between the initial claim and the original denial, then another year before the appeal, and then three more years until she filed suit.

So I turned to a good friend who is also an experienced hand in the non-medical benefits field (and specifically, group short and long term disability cover). Over the course of several emails, he helped me come to understand the basic issue (and kudos for his patience with me!):

"Walmart has deep pockets, and as her employer prior to disability her attorney is certainly going to include them, along with the insurance company in the suit.  My guess is that they were simply hoping for some nice settlement check at that point, but alas, they'd missed the statute of limitations.   I have to feel for the lady on some level if she's hurting, but if so, why did she wait so long?

Her first filing was in 2005, so if she were ultimately going to file suit, then it would've had to be done within 3 years of when she first provided proof of loss, which would be no later than 2008"

That was the sticking point. And it helped to finally understand what SCOTUS is looking at: When does the clock actually start?

If it's the first denial (2006), then three years is up in 2009, but she waited to file her suit until 2010. That seems open-and-shut. But it's apparently not that simple (else why would they agree to take it up?). If it started with the confirmation of denial in 2007, though, she seems to have sneaked in under the wire.

I think the lesson to take from this is that if your claim is denied, and then denied again, maybe it's time to see a lawyer, and not wait until the last minute to do so.

Something new under the sun

Say what you will about the ethics of this, it's refreshing that even today folks are clever enough to come up with new insurance products:

Pirate Party launches file-sharer fine insurance"

The idea is that folks who share potentially illicit files over the internet and are caught doing so can turn to this new venture to pay any actual fines that are levied.

From what little I've been able to learn, this seems more analogous to those "sharing" plans set up by some churches:

"The plans share similarities in that the members pay monthly dues to cover some of the administrative fees associated with these plans. Above the dues comes the sharing of others burdens ... They are not insurance. This alone can create issues when the chips are down so to speak. If your claim is not paid, where do you turn?"

Aye, cap'n, thar's the rub.

Still, an innovative solution to a potentially pesky problem.

Thoughts and Prayers...

To the victims and their families in Boston.

Monday Afternoon LinkFest

■ As we've previously noted, The ObamaTax continues to kill jobs. Now, some folks who used to work at the movies will have to settle for just attending them (if they can even afford to):

"The nation's largest movie theater chain has cut the hours of thousands of employees, saying in a company memo that [ObamaTax] requirements are to blame ... Regal, which had revenue of $2.8 billion in 2011, is the latest company to respond this way to the Affordable Health Care Act's requirement that employees at companies of a certain size who work more than 30 hours per week be provided health coverage"

But they won't be the last. Count on it.

■ We generally discuss genetic issues as they relate to insurance, but this story is intriguing on its own:

"The Supreme Court seemed worried Monday about the idea of companies patenting genes that can be found inside the human body, as it heard arguments in a case that could profoundly reshape U.S. medical research and the fight against diseases like breast and ovarian cancer."

Turns out (and who knew?!) that the Patent Office has been "awarding patents on human genes for almost 30 years." Really? I don't get it.

This case, though, may be a bridge too far. It seems that Myriad Genetics is looking to patent "two genes linked to increased risk of breast and ovarian cancer," and some some folks aren't too crazy about the idea.

■ Finally, this little gem from FoIB Holly R:

"President Barack Obama's budget would raise her Medicare premiums and those of other comfortably retired seniors, adding to a surcharge that already costs some 2 million beneficiaries hundreds of dollars a year each."

Ooops.

In a variation on "bracket creep," millions of Medicare beneficiaries face increased premiums and cost-sharing because of inflation. Kind of a double whammy; as New Mexico resident Sheila Pugach (a retired city worker) puts it, "[I'm] being penalized for prudence, dinged for saving diligently."

Sorry to tell you this, Sheila, but you ain't seen nothin' yet.

Waitin' on the MVNHS©

Coming soon to an ER near you:

"Hundreds of thousands more patients are being forced to wait longer than four hours for emergency care as A&E departments across the country struggle due to closures and staff shortages."

"[C]losures and staff shortages"

Hmm, I know there's a word for that, just can't seem to think of it.

Oh, yeah.

But remember, health care under the Much Vaunted National Health System© is free.

When you can get it.

Long Term Care News [UPDATED & BUMPED]

[Scroll down for Update]

A pair of interesting articles from LifeHealthPro's Allison Bell offer an interesting juxtaposition of the future of Long Term Care insurance (LTCi). Long term readers may recall the government's ill-fated CLASS Act, which was (mercifully) put to rest. But like a low-budget zombie, the idea that government knows best refuses to die:

"[H]ealth policy analysts have concluded in a new report that having any kind of mandatory long-term care insurance (LTCI) would probably be a lot more effective at shoring up the U.S. long-term care (LTC) system than any imaginable voluntary system."

Reading between the lines, it appears that these folks think forcing people to buy long term care coverage is a good idea, and perfectly legal.

Now why would they think that?

Which brings us to the next little challenge: as we know, rising health care costs cause health insurance premiums to go up. Since LTC insurance is based on the same principle (indemnity), it stands to reason that increased costs of actual long term care is having a direct effect on LTC insurance premiums. But don't just take my word for it:

"[T]he underlying cost of long-term care (LTC) keeps climbing ... The daily rate for a semiprivate nursing home room rose 3.5% ... the assisted living facility inflation rate is much higher than it was last year"

You get the picture.

Here's the thing: try as they might, our Betters on the Potomac© have yet to repeal the immutable law of Supply and Demand [ed: don't give 'em any ideas, Henry!]. When one considers the ever-shrinking universe of LTCi carriers, and adds in millions of new folks forced to purchase coverage, well, you can see the problem.

Which brings us back to the first item: if the private market can't handle the influx of new business, then the next logical step is another government-run boondoggle.

Yippee.

UPDATE - La Plus Ca Change: My favorite health care economist, Jason Shafrin, notes that "[c]aring for sick parents, however, is not a new problem. Consider how the English dealt with this issue in the 13th century ... Putting one’s parents out to pasture in a nursing home has very deep historical roots in Western Europe."

Click through for an example from the 13th century.

[Original post published 4/12/3]

Piling on...

Hank and I both put the role of Navigators in the spotlight earlier today [here and here]. However it seems that the folks in DC are getting into the act, too.

A Letter from the House Committee on Energy and Commerce was sent to HHS Secretary Sebelius today requesting more information on Navigators and their roles. It gives HHS until the end of April to respond.

I'll put the odds of a response from HHS to the committee at 54 million to 1.

Navigator$

Last week, Bob pointed out that Navigators can expect to rake in up to $96,000 a year "advising" people about how to game the system buy insurance through the new ObamaTax Exchanges

And this morning, Patrick delved into how the whole Navigator enterprise is being funded..

So, what's the deal?

LifeHealthPro's Allison Bell reports that there are some major bucks available enticing folks to set up their own Navigator businesses:

"[HHS Secretary Shecantbeserious] has posted a grant application aimed at individuals and organizations that want to be "navigators," or ombudsmen, for "federally facilitated exchanges" (FFEs) ... Each grant would cover a 12-month period ... In Texas, for example, CCIIO says it would like to reach 4.9 million uninsured people and has about $8.2 million in navigator funding"

And of course most of the other 58 states (those with Federally-run Exchanges) will be promised their share of the graft largesse, as well.

So how big a deal is it to get in on the ground floor? Helpfully, Madame Kathleen has made available a 41-page instruction manual to accompany the 17 page application (including the onerous-sounding "Burden Statement"). Interestingly, that Burden Statement seems to say that the whole thing should take just over an hour to complete.

Uh-hunh:

The application includes 12 pages of Mandatory Documents, plus 4 more pages of Optional ones plus (as mentioned) the Burden Statement.

Yikes.

Still interested?

Well, we always aim to be helpful here at InsureBlog: you can download the full set here.

Just don't forget us when you're pulling in the big bucks, m'kay?

Forensic Accounting and the PPACA Slush Fund

This week HHS opened up the grant application process to receive PPACA money for Navigators. From Bob's earlier post it sounds like easy money that can be made hand over fist. So with $54,000,000 in grants available, I figured why not head over to grants.gov to take a peak at the application process for myself.

The primary goals of Navigators are to maintain expertise in eligibility, enrollment, and program specifications as well as to conduct public education activities to raise awareness of Exchanges. Navigators are simply educators and facilitators. Nothing more, and nothing less. So when I went to the award information portion in the 41 page announcement my eyebrows were raised. It was there where my inner Inspector Gadget began to kick in. Under section 1 titled: Total Funding was the sentence: "This cooperative agreement funding opportunity is financed by 2013 Prevention and Public Health Funds (PPHF-2013)."

Buried in PPACA was this $10 Billion dollar gem known as the Prevention and Public Health Fund. The (slush) fund was established "to provide expanded and sustained national investments in prevention and public health, to improve health outcomes, and to enhance health care quality." Further, the fund must statutorily "improve health and help restrain the rate of growth in private and public sector health care costs." Moreover, the fund doesn't have to follow standard federal budget guidelines meaning HHS and it's subagencies have total control over how the money is spent.

So, how then does a Navigator improve health or restrain the rate of growth in health care costs?

They don't.

This is just another example of government being above the law that they had to pass before they could find out what was in it.

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.