Connecting Dots (Again)

So there's this (from FoIB Holly R):

"The uninsured rate for U.S. adults appears to be leveling off ... The uninsured rate so far in the second quarter of 2014 is 13.4%"

Which is pretty much what it was before the ObamaTax and all its broken promises. Great. But it gets better (for a certain value of "better"):

"Almost none of the uninsured will end up paying the ObamaCare mandate penalty, according to an updated analysis by the Congressional Budget Office, which found that 87% will be able to claim an exemption."

So, after 4 years, billions of dollars and a failed website and enrollment system, we've made barely a dent in the number of those going without health insurance, nor incentivized them to remedy that situation.

Surely, though, the new regime has met the president's goal of significantly cutting the deficit, right?

Not so much:

"The CBO has consistently projected that President Obama's overhaul will reduce the deficit ... the agency quietly signaled that it can no longer make that projection; that the law had been changed and delayed so much that there is no longer a credible way to estimate the long-term effects on the deficit."

That's what happens when one uniltaerally decides which parts of the law will be enforced, and against whom.

Quelle surprise.

Cavalcade of Risk #210: Call for submissions

Jeff Root hosts next week's Cav. Entries are due by Monday (the 9th).

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.

Ms Shecantbeserious is out, and...

Ms Sylvia Burntwell is in:

"BREAKING: Senate confirms Sylvia Matthews Burwell to be HHS Secretary, by a vote of 78 to 17."

Not a surprise to IB readers, of course:

"[Burntwell] testified “in laborious detail about what she had found in Mr. Foster’s garbage on the night he died.”

I'm sure she'll be just as classy in her new position.

Health Wonk Review: No time to waste edition

HWR Founder Joe Paduda takes his turn at the helm again, with a fast-paced, content-rich compendium of the wonkiest posts you could hope for.

Stop on by.

Surprise, surprise, suprise! [UPDATED]

Or maybe not:

"More than 2 million people who got health insurance under [the ObamaTax] have data discrepancies that could jeopardize coverage ... About 1 in 4 people who signed up have discrepancies"

Wow.

Just. Wow.

Here's the thing: all these people think they have insurance (well, such as it is). Presumably most of them aren't going to the doc every day, so it may be a while until they find out that things are amiss.

What happens if that's in the ER after a heart attack?

Or the OR for that unscheduled caesarian?

Or at CVS for the insulin that just ran out?

Think those might cause some issues?

UPDATE: A reader points out (correctly), that the linked article is unhelpful as to the nature of the "discrepancies." While the point of this post was primarily to underscore the implications of them, it's a fair cop.

So, after a little digging, we found additional details:

"For consumers, a discrepancy means that the information they supplied, subject to perjury laws, does not match what the government has on record ... Most of the data conflicts involve important details on income, citizenship and immigration status — which affect eligibility and subsidies."

So it seems that this isn't about misstating age or location, but income and citizenship status. This is potentially explosive, because of the perjury issues, but also whether the coverage was ever actually in force.

Thanks, Matt, for the nudge!

Tuesday Potpourri

■ Britain's Much Vaunted National Health System© continues to defy attempts at parody:

"[MVNHS©] patients could be forced to pay for their bed and board in hospital unless there is a cash injection into health services after the next election"

Who knew "free" health care could cost so much?

[Pictured above: new MVNHS©-approved suturing kit]

Keep in mind that this is the system upon which our own ObamaTax is largely based.

■ And speaking of the ObamaTax, the IRS [ed: ever notice that "the IRS" can easily be shortened to "TheIRS?"] has helpfully released the new employer reporting requirements:

"First, Section 6055 requires health insurers and employers sponsoring self-funded group health plans to annually report to the IRS and to responsible individuals (the enrolled employees), whether the coverage constitutes minimum essential coverage under the ACA."

Seems reasonable enough, until you consider the admin costs of compliance. And there's this: people leave jobs and move away; is it now the (ex-)employer's onus to track them down?

Take a wild guess.

And lest we forget:

"Second, Section 6056 requires large employers ... to report to the IRS and to full-time employees for two purposes: To assist the IRS with enforcing the employer pay-or-play penalty; and To assist full-time employees with determining their eligibility for a [subsidy]."

"[E]nforcing the employer pay-or-play penalty" Looks like they're serious - good thing they can't force you to eat broccoli.

Yet. 

■ This is nice:

"The Obama administration is distributing fourth round of health plan rate review grant money to state insurance departments"

And now in English:

"Secretary Shecantbeserious is skimming off tax dollars and then sending out what's left to states which have knuckled under."

And how much of this largesse is she ready to dole out?

$40,000,000 of your money.

You're welcome!

Oh, you want to know the purpose of this grand gesture?

Here ya go:

"States can use the money to get the legal authority to review rate changes, to expand the scope of existing rate review operations, to make rate information available to the public through the Web, and to analyze medical claims reimbursement data"

Funny, but I thought the states already had the authority to review rate hikes, er, changes. And why, pray tell, does an Insurance Department need to "analyze medical claims reimbursement data?"

Inquiring minds want to know.

Hipsters and Health (insurance)

Our good friend Bob Graboyes, senior research fellow at George Mason University's Mercatus Center, has a really biting, witty and incisive post at Reason.com, about how young folks are the ones getting ripped off by the ObamaTax:

"One day, you'll be 60 years old with a big house" doesn't imply, "so pay big bucks now to subsidize unlucky me and my grand digs ... No one says a healthy 26-year-old should subsidize the life insurance for the 60-year-old because 26 is lucky and 60 is unlucky"

Read the whole thing (it's a quick read).

Ballsy Insurance Carrier Trick

I believe this may be a first:

"The Farmers Insurance Company is suing 98 Illinois towns, Cook County, and the Metropolitan Water Reclamation District of Greater Chicago, asserting they were insufficiently prepared to deal with the effects of global warming that allegedly caused  heavy rains and flooding in those areas last spring, damaging property, which led to expensive claims against the company"

Really?

At first glance, this seems pretty silly, but it appears that the entities involved may have hobbled themselves:

"Cook County, the City of Chicago, and other municipalities had “adopted the scientific principle that climate change has caused increases in rainfall amount” and to help address the problem had adopted the Chicago Climate Action Plan."

Seems like they have only themselves to blame.

One thing I'd like to know is why Farmers waited so long to take action. Here's what I mean:

Carriers do periodic inspections of properties they insure, and notify clients of any deficiencies. For example, it may be a roof badly in need of repair: the carrier may require the insured to have it fixed or the policy will be cancelled. So if Farmers knew about the Change Plan (which they obviously did), then were they actively following up to see if it was being implemented and, if not, why not?

Bizarre.

Maybe I can be of Assistance [UPDATED]

I have been closely following the VA situation - I cannot call it a scandal, for reasons I will explain - and wish to offer some much needed assistance. This is of interest to me for two reasons:

First, my husband served 8 years in the Air Force and as such is eligible for the VA Healthcare. However, even when he was in (1985-1992) we knew then that the VA did not deliver either on-time care or good quality care and we always planned on using the civilian system.

Second, of course, I am interested since I am in Medical Practice Management. As a previously certified medical manager with my MBA and over 15 years of management experience, I think I can help them solve the problem very quickly and easily.

“In a testy exchange Wednesday evening, Rep. Tim Huelskamp (R-Kan.), a member of the House Veterans Affairs Committee, blasted a government bureaucrat for his failure to do something about the 1,700 veterans who were waiting for primary care appointments at the Phoenix veteran’s hospital, but who were never placed on an electronic waiting list.”

So let’s break this down. How can the VA see and treat 1,700 veterans? In the civilian world, primary care appointments are approximately 15 minutes. So, 1,700 veterans seen at 15 minute intervals are 425 hours. When my husband was in the military he routinely worked 12 hour days. So, since this is an emergency, let’s set the workday for 10 hours, with staggered lunches so patients can continue to be seen. So, at 425 hours broken down in 10 hour days, that would be 42.5 days. So in a little over one month, every patient can be seen and this is based on one provider seeing all 1,700 patients. In the civilian world a primary care doctor normally sees 30 patients a day, so that doctor would see 1,700 patients in 56 days. At 20 business days a month, 12 months a year, a primary doctor sees a minimum of 7,200 patients a year; any primary doctor will tell you that they probably see double that number in a year.

This would solve two issues; 1) it would remove the need for wait lists, simply schedule the patient for their next appointment at the time of service (how many times has your primary care doctor put you on a wait list instead of scheduling your next appointment?) and 2) the veterans would have the care they deserve.

I did not call this a scandal because this is business as usual in the world of military medicine, or socialized healthcare in America. When my husband was in the Air Force we used the military healthcare system, which while it was not difficult, it was also not a pleasant experience. The issues revolved around lack of timely appointments, physicians unable to quickly treat a condition without first a lab test, x-ray, etc. (I once waited 5 hours in a wait room for the test results of a UTI so I could get medication. After 5 hours, the doctor gave me a prescription while he waited for the results), not willing to remedy a medical situation, (After driving 3 hours to the nearest base with an ENT, the doctor refused to remove my daughter’s ear tubes, which had been in over a year. Once we were civilian, she needed surgery to close a hole in her ear caused by the tube being in for over 2 years), and general attitude by the medical community that we, their patients, were a bother. Sound familiar?

This is not a new development, but instead an ingrained culture in the Military Medical Community. Now this is, of course, not true for every individual in the Military Medical Community, but being in the system and working in the civilian medical world this is the rule rather than the exception. If the government is serious about correcting this situation, then may I suggest that they pattern themselves after the civilian model, which has worked very well for decades or they can keep doing what they have been doing and getting the same results.

ADDENDUM [HGS]: Well, this guy certainly seems promising:

In case you were wondering...

Yeah, it was that bad:

"This document shows that, on its first full day of operation, October 1, 2013, Obamacare’s Healthcare.gov received only one enrollment! That’s one – out of 334 million Americans. On the second day, 48% of registrations failed to process."

Now, we've covered that part before, but here's something else to consider:

"As of October 31, 2013, there were 1,319,425 accounts created nationwide – but only 30,512 actual enrollments."

That's a 98% fail rate - and that's after they had over 3½ years to design, test and implement the Exchange.

And yet, Ms Shecantbeserious and her boss continue to tout the Exchange as a "success," and House Minority Leader Nancy Pelosi calls it "Beautiful:"

On Vaccines and Health Insurance

Over the years, we haven't been afraid to express our doubts about the efficacy and/or safety of certain vaccination regimes, notably Gardisil and the various flu varieties. we've not, however, weighed in (in any substantive way) on the controversy over the potential correlation of MMR vaccination and autism. The one link I could find that even touched on this was from early 2009:

"Turns out that the doc who connected the dots between the MMR vaccine and childhood autism may have significantly fudged his numbers"

But there is a large segment of our society that does buy into this connection, and they're having an effect:

"Between 2009 and 2010, there were 3,502 cases of mumps among New York City’s Jewish community ...  in 2010, 9,210 children in California contracted whooping cough ... it’s just a matter of time before insurers seek subrogation for claims stemming from outbreaks directly tied to an unvaccinated person."

Here's the problem: your unvaccinated child comes to school and causes an outbreak of, say, whooping cough. Presumably, this won't include the kids who've been vaccinated, but those who haven't are going to have some insurance claims.

Who pays for this?

First, it helps to understand the concept of subrogation. It's really pretty simple:

"The right for an insurer to pursue a third party that caused an insurance loss to the insured. This is done as a means of recovering the amount of the claim paid to the insured for the loss."

Here's an example: you get bit by a dog and go the the ER, which bills your health insurance company for the shots, x-rays and stitches. Your health insurance carrier then goes after the dog's owner (or their homeowner's insurance carrier) for reimbursement.

How does this relate to non-vaccinated kids?

Well, take that example of the child who caused a whooping cough outbreak. Would the various health insurance carriers paying out for expensive tests and treatments like to find a source for reimbursement? You bet they would, and guess who's coming under those cross-hairs?

Now, how likely is it that there'll be a spate of these cases? Probably not very, at least not yet. But if this movement continues to grow, then it seems probable that carriers - always on the lookout to maximize returns - are going to be looking for additional opportunities.

We'll definitely be keeping our eyes on this one.

Cavalcade of Risk #209: Risk Assessment edition

Claire Wilkinson presents this week's roundup of risky posts, focusing on the assessment side of the equation. From hurricanes to hamburgers, there's sure to be a post to pique your interest.

Thanks, Claire!

A dollar here, a dollar there... [UPDATED]

Remember when the ObamaTax was going to solve the "crisis" of the uninsured?

Yeah, about that:

"About half of uninsured Americans surveyed didn’t try to sign up for health coverage under Obamacare because they said they couldn’t afford it"

And by the way, kudos to Ms Shecantbeserious for making sure these folks knew about the subsidies.

Wait, what?

"[M]ost [were] unaware that financial assistance was available."

It's almost as if the whole excercise was screwed up from Day 1.

UPDATE: So just how many folks have signed up since Open Enrollment ended?

Hard Impossible to say:

"The U.S. Department of Health and Human Services has not released any QHP enrollment figures for the exchanges it runs since the end of the open enrollment period, and some observers say it may not release new QHP enrollment figures until the 2015 open enrollment period begins."

Here's a thought: if it was a rousing success, do you think they'd be keeping these numbers under wrap?

Interesting Carrier News

Not all of our company-related posts are for Stupid Carrier Tricks© [ed: believe it or not]. Sometimes, there's just interesting announcements. For example:

■ In Special Open Enrollment news, United Healthcare has come out with its take on what counts as a Qualifying Event. What's interesting to me is that, for once, a carrier also explicitly details those things which don't trigger a Special Enrollment, most notably: "Voluntarily ending coverage."

Why is that so notable?

Because I've been getting a number of folks complaining about their existing plan's premiums, and wanting to switch (as if an ObamaTax-compliant plan is a real bargain). I've had to explain to them that, even if I could find less expensive coverage, it does them no good until next Fall.

■ As one who has seen Hospice Care up-close-and-personal, let me assure you that there are no finer people in the health care delivery system. What's a shame is that not everyone even knows about Hospice, or how to access their services. In fact, Dr. Randall Krakauer (a vice president at Aetna) recently testified before a Senate committee on Aging " urg[ing] senators to improve end-of-life benefits for patients in Medicare Advantage plans by changing the rules that govern use of hospice benefits. Medicare managers should let enrollees who seem to have as many as 12 months to live use hospice benefits."

Typically, Hospice services are available only to those who face imminent death, not a year away. Expanding that could relieve some of the burden from traditional health care facilities.

■ Our friend (and Long Term Care insurance guru) Randy G tips us that Genworth has made available an interactive map comparing cost of (long term) care across all 58 states.

Of course, I checked my own beloved Buckeye State, and saw that the average cost for a (semi-private) room in a nursing home is north of $75,000 a year.

Are you prepared?

Cavalcade of Risk #209: Call for submissions

Claire Wilkinson hosts next week's Cav. Entries are due by Monday (the 26th).

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.

A New Twist on an Old(er) Idea?

We've been blogging about Medical Tourism for going on 8 years. Generally, we've referred to two "flavors:"

1 - Foreign nationals taking advantage of what they perceive to be superior health care here in the US, and

2 - Americans traveling abroad for less expensive treatment, ostensibly as good as what's available here.

But there seems to be a new and growing trend: inter-state medical tourism.

Hunh?

Here's the idea:

"The phenomenon of this new trend in medical travel -- inter-state to Centers of Excellence (COEs) throughout the country and inbound to the U.S. – is largely the result of the impact of U.S. health reforms, employer receptivity to introducing a medical travel benefit, consumer willingness to travel to other parts of the United States to access quality care with improved outcomes, and increased demand for more cost-effective care"

Nate's discussed this idea before, that higher cost doesn't necessarily translate to better outcome. And there's a growing sense among employers that this is an area that can be addressed. Currently, it appears that only self-funded plans will be able to easily add this benefit, but one wonders if there'll be a move among the fully-insured crowd to do so.

One obstacle, of course, is the ObamaTax and its requirement for plan conformity. Perhaps this could be marketed as an "ancillary" benefit, available to groups (maybe even individuals) who are willing to pay for it.

Health Wonk Review: Life's a Beach edition

Good morning, and welcome to this edition of the Health Wonk Review.

In casting about for a theme suitable to the occasion, my mind wandered a bit (as it's prone to do this time of year), and I flashed on a serene stretch of sand and crystal clear water (and no, I did not have my hands wrapped around an ice cold Corona).

And so, I figured I'd share some moments of calm as we plunge into the best of the blogosphere's posts on health care polity and policy:

■ First up, a blast from the past: Jared Rhoads has transitioned from the more traditional blog platform to the v-log model (Mazel tov, Jared!). He last hosted the HWR back in January of 2012. In this vid-post, he presents the Urban Institute's Howard Gleckman discussing the challenges of financing Long Term Care.

■ Next, Chris Langston (Program Director of the John A. Hartford Foundation) offers his take on how the Center for Medicare and Medicaid Innovation (CMMI) might improve its effectiveness.

■ Bradley Flansbaum thinks that maybe the P4P (Pay for Performance) train has lost its caboose. He points out that the P4P phenomenon isn't an exclusively American idea: the Brits have been at it for a long time, "with mixed results."

■ HWR co-founder (and all around mensch) Joe Paduda ventures into Workers Comp territory (watch out, Julie!), ACA plan rate increases, Medicaid non-expansion and a few other interesting tidbits in this eclectic (and interesting) post.

■ Health care guru Roy Poses is concerned about how much money is being thrown at the boob-tube over the past few years in attempts to influence the public's perception of ObamaCare. He's also leery of the anechoic effect (which he introduced and explained way back in '06: "Why is it that folks can behave like such miscreants and everyone turns a blind eye?").

■ David Williams offers us the transcript of a podcast he recently did with the director of a new, not-for-profit effort designed to provide unbiased information to help patients choose physicians. It's called "The Doctor Project," and David's interview provides some background and a progress report.

■ I refer to Jason Shafrin as my favorite health care economist for a reason: he knows his stuff. This time out, he explores how the ACA's Medicaid enrollment expansion has affected even those states which didn't opt in to it.

■ For some reason, I always smile when I see posts from Wing of Zock. Ann Bonham, PhD (chief scientific officer at the Association of American Medical Colleges) offers her insights on the need to address sex differences in pre-clinical research that relies on cell and animal models (Whew!). I say: Viva la difference!

■ Julie Ferguson is one of my very favorite blog-buddies: she coordinates the HWR, helps me out when I run into glitches with the Cavalcade of Risk, and always has interesting, thought-provoking posts. This one's sure to take your breath away, perhaps literally, as she presents a last letter from a dying miner caught in a 1902 collapse, and takes to task public authorities both here and in Turkey for failing to safeguard the lives of contemporary miners. 

 ■ Louise Norris is another great blog-friend, and this week she offers her perspective on reference-based pricing. She explains how it's really just another way of looking at the difference between in- and out-of-network costs, and that the patient just needs to be more aware of them.

■ Harold Pollack interviews Sabrina Corlette, a Research Professor and Project Director at Georgetown University’s Health Policy Institute. They discuss how the new health insurance marketplaces are actually working: how many have paid their premiums, differences between the kinds of available insurance plans, the likely impact of the “Cadillac tax” on high-expenditure insurance plans, and more.

■ Finally, our own Kelley Beloff (a Certified Medical Office Manager) posts about the reality of physicians' wages. Spoiler: they're not as great as you've been led to believe.

Thanks for stopping by, and please make sure to join us again in 2 weeks over at Joe P's place.

Predictive Analytics (A Risky P & C Post)

So, a few weeks ago, I attended one of our carriers' annual sales meeting. This is a fun-filled afternoon of speakers discussing topics ranging from commercial automobile polices to surplus markets, loss ratios and liability umbrellas.

Oh yeah, and 5 minutes on life insurance.

Oddly enough, I always enjoy this meeting, primarily to put faces and handshakes with voicemails and intercompany emails. And this year, my curiosity was piqued by the introduction of a new (to me, anyway) term: Predictive Analytics (PA).

This is a risk-assessment tool that enables Property and Casualty companies to further refine the underwriting process. After the meeting, I spent a few minutes with the gentleman who had discussed the topic, and he agreed to put me in touch with one of his PA experts.

A few days later, I had the opportunity to spend about a half hour on the phone with Sam (not his real name - carriers are generally skittish about speaking on the record, which I can understand). In the event, Sam was forthright and interesting. Here's the low-down:

Predictive Analytics (aka "modeling") is used primarily on underwriting commercial (and sometimes other) risks. It really began in the 90's with personal auto policies; it's an extension of a concept called "risk segmentation" that's used in addition to more traditional categories.

Basically, PA delves more deeply into the financial and demographic data of a given risk (property or business). This goes beyond, by the way, just credit scores (which are the subject of some controversy in the industry). In commercial lines insurance, this could include information from the Bureau of Labor Statistics and even the Census Bureau.

Sam stressed that PA is useful in the aggregate, but (obviously) can't predict how an individual risk would behave; it's an indication of what's "likely" to happen, not what's "going" to happen. Which seems a lot like traditional underwriting (just because you have diabetes doesn't mean you're going to lose a limb). The difference is something called "univariate" versus "multivariate" analysis.

Yikes.

Univariate analysis is generally used in traditional underwriting: things like construction (steel vs wood), protection class (is it near a fire hydrant) and occupancy.  These are looked at individually and summed up.

Mulitvariate analysis uses these, but then adds in financial, demographic and other information and - most importantly - how all of these factors interact with and affect each other.

And then there's the "secret sauce:" each carrier has its own formula for determining what weight to give each of these factors and how they interrelate: what's the propensity for a loss to which this information leads you? This will differ from carrier to carrier. That's why, for example, Company A might say "no thanks, we're not writing that" and Company B might say "hey, we'll give you a great rate!"

Sam also stressed that these models have to be constantly updated, as data and relationships change over time with the change in a carrier’s book of business. The models are (as noted above) customized for each carrier, but there's a bit of a catch to that:

There's a limited pool of Subject Matter Experts available in this field, so each carrier's models will be similar but still variable based on each carrier’s history and philosophy.

Thanks, Sam!

Health Insurance with Medicaid is the Perfect Gift

This is not a headline from The Onion. It was an email I received yesterday from the "team" at Healthcare.gov. Even better than the headline was the message that followed.

Mother's Day might be behind us but it's not too late to give your mother a special gift. Let the moms in your life know that health insurance is available through Medicaid and the Children's Health Insurance Program (CHIP)

Wait, I'm confused? Wasn't the last enrollment blitz focused on mothers telling their children to sign up? Obviously that didn't work since Obamacare fell way short of enrolling the necessary number of Young Invincibles.

I guess the "Nag Toolkit" used in Rhode Island didn't work either. Although I highly doubt any mom would want to use sites like Tinder, OK Cupid, Vine, SnapChat, or Twitter to inundate their kids.

The Loneliest Number

Three Dog Night had it right. After a 3+ year run-up to the 404Care.gov Exchange, the results were - too put it mildly - underwhelming:

"Only one person successfully enrolled in Obamacare on its first day of business, a nonprofit government watchdog group found ... 48 percent of enrollee hopefuls failed in their efforts on day two of Obamacare"

Anyone surprised?

Coming full circle, MVNHS© edition

Over the years, we've chronicled the many shortcomings of the Much Vaunted National Health System©, including its decision to pay for breast enlargements for teens but not spinal cord surgeries for tots.

And remember, this is one of the key models for our own shiny new healthcare scheme. That's because the rocket surgeons in Britain and Washington believe that government-run health care beats the private sector.

Comes now proof that they're both wrong:

"A failing NHS hospital has been voted the best for patient care just two years after it was taken over by a private company."

A scant 24 months ago, Hinchingbrooke hospital was described as a "basket case," almost $70 million in debt, unable to even keep and maintain accurate records.

What changed?

Turning its operation over to a private, for-profit partnership called "Circle." According to the firm's website, they now run 5 different "trusts" (hospitals), with Hinchingbrooke being the most recent (and perhaps most dire) client. In just two years, its mortality and re-admission rates, as well as the speed with which its able to treat cancer patients have all improved to award-winning status.

So what's the lesson here?

I think this sums it up:

"The key to their success was bringing business practises into the hospital ... Now there’s a future for the hospital and we know through the security of the contract that they can operate for a certain period"

Imagine that.

VA Wall of Shame

And the list keeps growing:

[Graphic courtesy Ace of Spades]

MVNHS© Priorities

Compare and contrast:

"More than 250 girls aged 16 and under have had breast enlargements paid for by the NHS ... Across all age groups, more than 3,000 women had augmentation surgery last year"

While bigger may be better, is this really the best use of precious health care dollars?

Ok then, what about a young girl - two years old! - who "was born prematurely and has a form of cerebral palsy which means she cannot use her legs(?)"

Cerebral Palsy is "a term used to describe a group of chronic conditions affecting body movement and muscle coordination. It is caused by damage to one or more specific areas of the brain, usually occurring during fetal development."

Treatment for CP certainly seems like a test-book example of what we call "medical necessity," while breast enlargement seems, at first glance, about cosmetic enhancement. Yet the Much Vaunted National Health System© is willing to spend who knows how many pounds for the latter, while denying young Sophie any chance at a "normal" (or at least much-improved) life:

"An operation on her spinal cord would enable her to take her first steps – but health chiefs have decided that it is  too expensive."

This is the direct result of government-run health care: no appeals, no accountability. And it is an underlying girder of our own new health care scheme. Think about that.

Oh: if you'd like to help Sophie's family raise the £25,000 ($42,000) needed to pay for the her surgery, click here.

[Hat Tip: Ace of Spades]

Point of Reference (Pricing)

Over the years, we've documented the phenomenon known as "PARE pricing;" that is, when one is inadvertently treated by an out-of-network provider. For example, you go in for arthroscopic knee surgery, choosing an in-network hospital and surgeon, but it turns out that the anesthesiologist is out-of-network, and you end up being on the hook for full price for his services.

And we've talked about a little known "gotcha" in plans where, even if you choose an in-network provider, you're still forced to pay full price because the procedure or service wasn't a "covered expense." An example of this might be elective plastic surgery.

But what if you go in for a covered procedure, at an in-network facility by an in-network provider, and you still end up paying substantially more than the in-network charges?

This is set to happen under a little known ObamaTax provision called "reference pricing" [ed: well, it might have been better known if the rocket surgeons that passed the bill had read it first]:

"The Obama administration has given the go-ahead for a new cost-control strategy called "reference pricing." It lets insurers and employers put a dollar limit on what health plans pay for some expensive procedures ... One way the new approach is different is that it sets a dollar limit on what the health plan will pay for a given procedure."

Let's stop right there: back in the day, we called these "indemnity plans" (and you still see them around as mini-meds). There would be a schedule of benefits, say $100 for an x-ray, and you were responsible for the balance if the actual cost exceeded this. Fair enough: you knew this going in.

But there is no such schedule attached to "major medical" or group plans, so how is one to know ahead of time? This is especially true for non-scheduled (emergency) procedures.

It may well be a way to "bend the cost curve down," but who sets the "right" price, and how does one determine this ahead of time?

There's another interesting (potential) conflict here: in Ohio, providers are forbidden from balance billing for covered in-network claims. How, exactly, will that circle be squared?

And how many more of these little "goodies" await us in the coming months and years?

Gullible to the Actuaries SWAG

Media outlets and health policy "experts" have been spewing over reports this week about the initial 2015 rate increases that have been submitted in Washington and Virginia. Headlines such as Six Reasons Obamacare Premiums are Going Up Next Year  and Big Obamacare Insurers Signal Big Premium Hikes have been the norm. These articles are coming from the left and the right with very different takes on whether or not Obamacare is increasing premiums. Want to know who is right?

None. Of. Them.

I'm going to let you in on a little secret - initial rate filings mean absolutely nothing. Especially filings for Obamacare compliant rates. Here are five (of many) reasons why we have no idea of what rates will look like.

1. The make up of the market isn't determined. While HHS issued a report on demographics by shopping cart they don't know who has paid, who will quit paying, or how many of the shopping carts were duplicates.

2. Insurance company rate submissions are based on little claims data and a short time frame (experience, trend); so whatever the rates end up they will not be credible. Setting the rates is like predicting the Cleveland Browns will win the Super Bowl in 30 years.

3. States will vary. Insurance markets had different variables for underwriting pre-Obamacare. This will lead to some having lower increases than others. Some states will also have a different make-up of enrollments. A state with a higher population of younger people might have a lower increase than one with an older population. Unhealthy states may see higher increases simply because the underlying risk is greater.

4. Speaking of pre-Obamacare, rates that were set last year assumed that nobody could keep the plan that they liked. By unilaterally changing his own law, President Obama actually distorted his risk pool. People in good plans that are healthy will stay in those plans where allowed. Because of community rating the medically underwritten plans that have good risk will be priced lower than the Obamacare mandated pool that must be equal regardless of health status. Why go into the peed in baby pool when you can stay in the less peed in pool?

5. The blanket figures in these studies use an aggregate number. This tells us little about how the rates will look for different metal tiers. 8% doesn't mean the increase is equal for Bronze, Silver, Gold, and Platinum tiered plans. Bronze plans might be 3% and Gold plans might be 15%. One carrier might also have a larger market share today and decide to eliminate Platinum plans because the risk in these products is very high. By simply eliminating a plan it could have adverse impact on their Gold plans or on their overall market share.

Rate watching is important. But before the MSM start throwing stones at each other remember, because of these and many other reasons actuaries are using SWAG as their calculation method.

In other words they are making a Systematic Wild Ass Guess.

The Richdoctor Myth Revisited

Several years ago, I posted on the myth of the "Richdoctor,"  a myth that is really about wealth envy and isn't supported by the facts. Fast forward a few years, and the effects of the myth have escalated. Fortunately, not everyone buys into it.

As an advocate of increasing physician reimbursement, it is refreshing to read an article in support of physicians being able to make more money. In “Why Primary-Care Physicians Need a Minimum Wage," Daniela Drake makes an argument for better pay for physicians:

“[T]he health insurance calculator for Southern California says a 62-year-old would pay $7,200 a year for the top plan. Most people resent paying this big a fee for something like insurance — and it’s easy to see why patients can be manipulated into thinking their doctor is being overpaid.

However, the math is simple. The average PCP has 2,500 patients and supposedly makes $180,000 a year. Therefore, the insurer is paying your primary care doctor $72 a year per patient — out of the $7,200 a year paid to the insurer. That’s 1% of the insurance premium. It works out to $6 a month (19.7 cents a day!) to have a highly trained professional overseeing your care.”

Wow, these number are depressing, but due to two errors in her calculations, the reality is actually much worse.

First, in regards to her example, she makes the assumption that a PCP (Primary Care Physician) only sees each of their patients once a year. So a patient load of 2,500 patients seen once a year would be a daily average of 10 patients. The reality is that most PCP’s see well over 30 patients a day, which is 7,200 a year.

Second, that $180,000.00 is only 20% of what the physician is actually paid. In medical office settings, 80% of the reimbursement paid to physicians goes into overhead, staff salaries and government mandated programs.

So let’s redo the math based on the realities of medicine today:

If $180,000.00 is 20% of the total reimbursement, then a PCP brings in $900,000.00 a year. Therein lays the misconception that doctors are overpaid, but remember: the doctor does not pocket that total. At a patient load of 7,200 patients that is $125.00 for a 15 minute appointment. This is great pay. But remember also that 80% of that total goes to pay the staff salaries and benefits, rent, utilities, as well as such government mandated programs like Electronic Medical Records and all other costs needed to keep a business running. So, after the doctor pays his bills he is left with $25.00 per appointment, which at 7,200 patients a year is $180,000.00.

So in her example she states that physicians are paid $72.00 per patient encounter, but the real number is $25.00 per patient encounter. I do agree with her statement that this is a bargain to have a highly trained professional oversee your healthcare:

"To have someone like that available for you at 19 cents a day [reality: it is closer to 10 cents a day] would strike most people as a bargain."

Ms Drake then goes on to quote Uwe Reinhardt, an economics professor at Princeton (about whom Mike has also written). Professor Reinhardt "has argued cogently against physician salary reductions and for salary raises. “Physicians collectively [earn] 20% of total health spending,” he wrote, “half is absorbed by practice expenses… physician’s collective take-home pay [is] only about 10% of total national health spending.”

Reinhardt points out that physician pay is such a small fraction of health care expenses, it wouldn’t do much good to cut it. In return we’d get “a wholly demoralized medical profession to which we so often look to save our lives. It strikes me as a poor strategy,” Reinhardt wrote. “A superior strategy might be to pay them very well for helping us reduce unwarranted health spending elsewhere.”"

This article is a great way to begin discussing the realities of how little PCP’s - and all physicians for that matter - are actually paid for the services rendered. However, instead of a minimum pay, which is more government intrusion, the best solution is to let competition set the charges, as is done by all other service providers:

Let’s look at hair stylists; have you ever seen a Government fee schedule for haircuts? Of course not! Each salon sets their prices and the customer chooses. The argument against doing this for medicine is that health care is a "right;" that doctors will make their prices so high that the paying public could not afford care. Going back to the hair stylist, why don’t they charge $150.00 for a haircut? Simple: people would not pay it and some stylist would learn that if they charge $45.00 for a haircut then they will get the customers. It is simple economics. Prices will stay low due to competition. I know that this is a radical idea, but how long before the best and brightest of our population learn that it is economically impractical to go into medicine?

In-and-Out Info

So, some ObamaTax news from different ends of the spectrum:

OUT - So you don't want to buy a health insurance plan, but you also don't want to pay the fine penalty tax surcharge; what to do?

Well, you could apply for an exemption. Ms Shecantbeserious and her helpful minions have made available a downloadable guide to the ins-and-outs of qualifying for a get outta jail free card.

Your tax dollars at work.

IN - On the other hand, you decide that yeah, it'd be a good idea to buy a plan after all, but the next Open Enrollment Period is still months away. Isn't there some way to open up one's own little enrollment period?

Indeed there is (or may be); Aetna helpfully emailed with a reminder that there are several different events that could "trigger" a Special Open Enrollment, including:

Permanent Move - this one may be tricky: you'll need to provide proof of both prior and new residence locations.

Employer's Bankruptcy - this is aimed specifically at retirees who were covered by a former employer's retiree health plan.

Birth - this would trigger a Special Open Enrollment Period for the entire family. But beware of timing!

Can I get fries with that?

Over a barrel, ObamaTax-style

We've long noted that the ObamaTax will likely kill off group health insurance plans. It's finally dawning on the MSM, as well:

"The idea that employers might drop their health plans and replace them with a "defined contribution" for employees has been around for years ...  Some analysts anticipate a major shift to these plans in coming years"

Well d'unh.

The idea is that employers will drop expensive and unwieldy group plans and just shift those dollars to directly to their employees.

[ed: actually, this concept is neither new nor necessarily evil. Employers that subsidize employee premiums do so out of funds that would have otherwise been paid directly to the employee. The benefit is that these funds aren't taxable to said employee]

As one might imagine, the employees are going to be the ones most harmed by this:

■ As noted above, premium dollars going directly to insurance companies aren't taxable. Dollars going to employees are. 

■ Under the new rules, employees can't use Health Reimbursement Arrangement dollars to pay premiums with pre-tax funds.

■ These "defined contributions" are, in fact, simply additional, taxable wages. How many workers will now see their tax bills take a big jump? 

■ And these "defined contributions" are going to bump a lot of employees out of contention for subsidies, increasing their out of pocket costs even more.

On the other hand, "increased tax liabilities" is just another way of saying "increased tax revenues," right?

[Hat Tip: Ace of Spades]

Red wine health news

Not that I'd have guessed this, but we've been blogging about the health benefits of the compound resveratrol for years. it can be found in blueberries and even peanut butter, but perhaps its most well-known source is red wine.

And therein may lie a problem:

"A new study published in JAMA Internal Medicine on the health effects of resveratrol – a compound found in red wine, dark chocolate and some fruits and vegetables – has generated a lot of sensational headlines"

This study claims that there are, in fact, "no health benefits from red wine and chocolate."

[ed: one wonders, then, about the anti-oxidant properties of dark chocolate - are these hype, as well?]

Sounds bleak, no?

Never fear, Dr Manny is here (Dr. Manny Alvarez is FOX News Channel's Senior Managing Editor for Health News; he is also a member of numerous professional societies). The good doctor has a number of qualms about the study:

"... there were many factors omitted in the study. We have limited knowledge of the lifestyle and family histories of these participants. Furthermore, surveys carry a certain degree of inaccuracy, because they rely on the honor system. And the researchers did not measure participants’ resveratrol levels at the end of the nine-year study period to see how these levels might have changed"

Seems like that last bit reflects a major fail on the researchers' part.

On the other hand, Dr Manny is also a bit leary of the purported benefits of resveratrol, and cautions us to be skeptical about some of the claims its proponents make:

"Many Americans may believe that taking a daily pill, like resveratrol, can prevent any number of diseases. That is not how diseases work."

So, is resveratrol a hero or a villain? Well, probably not the latter, but maybe not the former, either.

Cavalcade of Risk #208: Outstanding Debut edition

Jason Fisher makes his CavRisk hosting debut with a terrific roundup of interesting risk-related posts. It's a really well designed layout with helpful context.

Kudos, Jason!

Nice gig - $1B to Hit "Refresh"

On the one hand, this is an outrageous waste of taxpayer funds.

On the other hand, at least they're not actually enrolling anyone in ObamaTax plans.

On the gripping hand, they're still hiring:



[Hat Tip: Hot Air]

More VA Shenanigans

And to the (growing) list of Colorado, Texas and others, we now add:

"The Veterans Health Administration has placed two Durham [NC] VA Medical Center employees on administrative leave after learning the employees may have "engaged in inappropriate scheduling practices."

"Inappropriate."

Hunh.

And just what does the Veterans' Administration (a government-run health care scheme) characterize as "inappropriate?"

Can't tell you, don't know:

"It was not made immediately clear what sort of scheduling practices the employees may have engaged in."

Here's the thing, though: failing to disclose the nature of the transgressions certainly implies that they are far more egregious than "inappropriate." How badly did these employees screw up that their superiors won't even acknowledge the nature of their (mis)deeds?

Well?

[Hat Tip: HotAir]

The ObamaTax vs The Uninsured

Over the years, we've debunked the myth of the "47 million" uninsured. Nevertheless, there is no doubt that, prior to The ObamaTax, there were, in fact millions - perhaps tens of millions - of folks who had no health insurance (some by choice, some by circumstance). But it has always been the explicit purpose of The ObamaTax to bring the uninsured into the fold.

So how's that working out?

Well, we don't really know how many folks have actually bought (as in: chosen, enrolled in and paid for) a plan, but millions of Americans lost their existing coverage (repeated promises to the contrary notwithstanding):

"... the survey still indicates that three-fourths of enrollees were previously insured ... for all of the talk about 7-million this and 8-million that, the Obamacare exchanges’ expansion of coverage to the uninsured was far smaller."

So if we take the law's proponents at face value, then even by - especially by - their own standards ("47 million uninsured") the result is a miserable, rotting failure.

But then, that's not really "news," is it?

[Hat Tip: FoIB Holly R]

Alphabet Soup News: "Un-Excepted" Benefits

Our friends (and resident FSA/HRA/HSA gurus) FlexBank share some important news for employers that offer Flexible Spending Accounts (FSAs):

Best be careful how you have your plan set up, lest it be deemed "Un-Excepted."

Prior to the ObamaTax, FSA plans weren't terribly complicated or subject to many regs. That's all changed, and employers that get caught unaware of these changes face some significant additional costs.

"Excepted" FSA plans continue to enjoy tax-advantaged status and the various benefits that accrue to both the employer and employee in these arrangements. But plans that "fail the test" will be required to pay the Patient-Centered Outcomes Research Institute (PCOR) fee.

And in case you were wondering:

"The amount of the PCORI fee is equal to the average number of lives covered during the policy year or plan year multiplied by the applicable dollar amount for the year ... For policy and plan years ending after Sept. 30, 2013, and before Oct.1, 2014, the applicable dollar amount is $2."

Now, that may not seem like a lot, but if you have hundreds - or thousands - of employees, that two bucks can add up in a hurry.

But wait, that's not all!

In addition to the PCOR fee, employers whose plans have been ruled as "Un-Excepted" will be on the hook for "unlimited preventive services upon 2014 renewal." This means that, even if there's no actual cash left in an employee's account, the employer will have to pay for unreimbursed preventive care expenses.

Let's say Joe has $1,000 in his FSA, and blows through that by September. If he then has a routine physical in October, and the insurance pays all but $150 of it, the employer is on the hook for that extra $150. Again, that may not seem like a lot, but what if there are hundreds of employees playing that game?

And there's this:

If an employer has an "Un-Excepted" plan and is contributing $500 or more each year to each employee's FSA, then that contribution will now have to be "cashable;" that is, an employee can simply cash it out (he'll be liable for the taxes, natch).

So how does an employer keep on the straight-and-narrow? Well, there are two major criteria for maintaining "Excepted" status:

First, there's a limit on the maximum benefit payable under an FSA plan (this comes into play primarily on those plans where the employer also contributed).

Second - and this one's a doozy - there's the "Availability Condition." The helpful folks at FlexBank explained that there are several components to this condition. First, participation eligibility by class. That is, "so long as all of the employees in a class of participants eligible for the health FSA are also eligible for major medical coverage and the entry dates for both are the same, the Availability Condition will be satisfied.”

For example, Jiffy Widgets offers group insurance only to full-time employees, but opens up its FSA plan for everyone, full- or part-time. That's a no-no. Jiffy could offer group and FSA to only full-timers, but can't mix-and-match.

Then there's the waiting period. Some employers will allow new employees to start up an FSA their first day on the job, but require a 90 day wait to go on the group plan. That's now a no-no.

Finally (well, as far as this post goes), an FSA is considered "Un-Excepted" if the employer doesn't offer group health insurance. So all those employers that are considering deleting their group cover will have to now consider whether their FSA is important, because dropping the group but keeping the FSA means additional costs (which might eat up a substantial portion of the anticipated savings).

Want to know more? Well, our friends at FlexBank have graciously permitted us to link their FAQ, which has more detailed information.

Thanks, FlexBank!

Mandates and Consequences

Years ago, there was a cute advertising campaign with the slogan "It's in there!" The message referred to "homemade taste," and implied various wholesome ingredients.

Unfortunately, a concept that works for marinara doesn't translate well to health insurance, a lesson that seems to have eluded Tar Heel State legislators.

FoIB Jeff M tips us to this development:

"North Carolina insurance policy holders will pick up $10.5 million in additional premium costs if a bill requiring expanded coverage of chiropractic services ... is approved in the General Assembly’s short session opening this week."

We've long noted that mandated benefits drive up the cost of policies, often in ways that aren't immediately obvious. For example, this new chiropractic benefit will increase demand, benefiting chiropractors. But it's also a signal to other providers that they, too, should be clamoring to get on board the gravy train:

"Critics of the health mandate to lower patients’ co-pays for chiropractic services ... say Senate Bill 561 would entice other specialists, such as physical and occupational therapists, to seek similar payment parity. That would shift more costs from individual patients to all insurance consumers"

No kidding.

Now, one could argue that insurance is, after all, about "spreading the risk." And that's true, up to a point. The problem is that not everyone shares the same kinds of risks, and these mandates fail to take into account the disparate impact they'll have on other consumers while inflating premiums ever higher.

Need a lyft? (P&C Tricks Update)

Almost 3 years ago, we posted on the inherent risk problems of car- and ride-sharing services:

"Seeing a business opportunity in millions of cars that sit idle at office parking lots or on weekends, several start-up companies have introduced "peer-to-peer" car-sharing services ... Likewise, renting out your car to someone you've never met (and will probably never even see!) is a dramatic change in the nature of your insurance policy's risk."

Well, the folks in the Cornhusker State are catching up with IB:

"The Nebraska Departments of Insurance and Motor Vehicles are urging caution before people sign up for Internet services that connect drivers, riders and vehicle owners for car-sharing and ride-sharing."

They point out many of the same risks that we noted in '11, but also offer suggestions on how to address them. Here's a few:

• Review carefully any type of agreement involving car-sharing or ride-sharing.

• Before deciding to rely on insurance that is provided by others, that they are sure to get a copy of the policy and ask an insurance professional to make certain it covers all of their exposures.

Read the rest at the link (especially if you're considering this as a way to supplement your income).

[Hat Tip: FoIB Bill M]

Turismo Médico, CoveredCA-style

It's been a while since we last discussed medical tourism. Most of our previous posts on the topic involved residents of other countries traveling to the US for (superior) care.

Unfortunately, the ObamaTax has essentially turned this on its head:

"Californians unhappy with their forced Obamacare related healthcare packages are finding a cheaper and more efficient way to see a doctor — high tail it to Mexico."

In Tijuana, a doc visit goes for about $15, and the standard of care is apparently quite satisfactory.

Olé!

Cavalcade of Risk #208: Call for submissions

Jason Fisher makes his CavRisk hosting debut next week. Entries are due by Monday (the 12th).

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.