Big Doin’s in the Green Mountain State...

Yesterday (that would be Thursday the 25th), Vermont Governor Jim Douglas signed new legislation to (ostensibly) make health insurance more readily accessible and affordable.

Since this just popped up on my radar, I haven’t had time to really dig into it (as we did for Massachusetts’ efforts). On its face, it doesn’t look all that promising (new bureaucracy, taxes on smokes, employer penalties, yawn). But we’ll have an in-depth analysis shortly.

The point of this post, however [ed: was wondering when you’d get to that], is this observation:

While I’m not enamored of the mechanisms these states have chosen, I heartily approve of the method by which they are moving forward.

Surprised?

I am opposed to government take-over, whether by fiat or legislation, of healthcare. But this is a states’ issue; that is, there is nothing in the US Constitution granting the gummint the right to decide our healthcare, let alone the 15% of our economy it represents. The 10th Amendment, though, preserves for each state the right to address such matters as each sees fit. After all, folks (and employers) will vote with their feet: if the burden is too onerous, then jobs (and those that do them) will exit. If it’s not, well, good luck.

Each state is free to decide if and how to address the issue. I would much rather see it play out this way (as messy as it may well turn out to be) than to have the entrenched bureaucracy in DC enact its version.

Just my $.02

More later.

O What A Tangled Web...

“United Healthcare of Ohio and Anthem Blue Cross and Blue Shield have signed consent orders with the Ohio Department of Insurance to resolve allegations of improper compensation to agents, Insurance Director Ann Womer Benjamin announced.”

Insurance companies cheating?! Say it ain’t so, Joe.

Apparently, United HealthCare (no stranger to this blog) added a little “vig”to the comp it paid some of its (no doubt favored) brokers. This in addition to the fee said brokers were already being paid by the public agencies doing the shopping.

Having no personal experience in this particular market (well, not really: I recently quoted a small local parks district, but a) they were already with UHC, and b) they weren't paying me anything), I'm somewhat surprised that these brokers were pocketing fees in the first place; generally, we're paid a commission when we actually sell a case. By the carrier.

To make matters worse (not sure how that’s possible), UHC Home Office Critters (HOC’s) also lied to the Department of Insurance investigators. Memo to UHC staff: “Um fellas, that’s a no-no.”

Gee, I wonder what they lied about.

The state’s other major player also seems to have had its hands in the cookie jar.

“Anthem Blue Cross Blue Shield, based in Mason, Ohio, signed a similar agreement April 3, paying $30,000. Anthem was not accused of lying to the department.”

On the plus side, they apparently ‘fessed up, thereby mitigating the disaster. Seems that, unlike in the UHC kerfluffle, Anthem HOC’s didn’t know that their brokers were double-dipping.

I also found this tidbit interesting: “Also unclear was why the Department of Insurance was enforcing compliance with Ohio ethics laws, which typically are enforced by the Ohio Ethics Commission.”

On the one hand, I teach a course on Insurance Ethics (and no, that’s not an oxymoron)(or any other kind), which class is approved by the DOI. So, technically, I suppose that they do have a horse in this race.

But on the other hand, the Department is not known for aggressively rooting out alleged carrier corruption. So it’s intriguing to see them actually digging into this matter [ed: metaphor alert].

Kevin Grady, the broker at the center of this storm, appears to be an agent in Columbus. His web page is unremarkable; he doesn’t appear to be a particularly flashy kinda guy.

In any case, Mr Grady apparently made out pretty well in this deal (well, until now, anyway): $137,000 from the school district he was ostensibly representing, plus a cool half mil from UHC.

What, he couldn’t settle for a nice calculator or some golf balls, like the rest of us peons?

I particularly liked this characterization from an email sent by one United HOC: “My guess is that the broker doesn’t want to have to deal with the account directly on a fee basis because of the amount of ‘extortion,’ I mean commission being demanded.”

Mr G now will likely lose his license, face substantial fines, and will probably have to return his (allegedly) ill-gotten gains.

But hey, it sure was fun while it lasted.

But wait, there's more!

Paging Miss Cleo!

Tax seer Joe Kristan, fresh from waxing his Ouija Board, has a (fortune-)telling post about a tax-dodging clairvoyant.

Guess the guy needs a new Magic 8ball.

Under the Microscope (Part 2)

In Part 1, we looked at some of the goals and assumptions underlying the Bay State’s new health care law, MassHealth.

Today, we’ll take a look “under the hood.”

Some time ago, Bob told us that, under the then-proposed regs, there’d be an annual fine of almost $300 per person for companies (with 11 or more employees) that fail to provide health coverage. As he pointed out, this is hardly more than a slap on the wrist ($300 a year fine for $4,000 a year or more premium). That, of course, is back in. Those of us familiar with the Law of Unintended Consequences are now wondering: what about cases where both spouses work outside the home? There are good and valid reasons to have one (family) policy. So, if a spouse waives off, is the $295 fine waived?

What do you think?

But wait, there’s more!

Introducing the "Commonwealth Health Care Connector" another new bureaucracy tasked with providing access to “affordable health insurance products” to individuals and small businesses. Folks with jobs will be able to buy their insurance through this Connector. The good news is that this would allow for portability of insurance as individuals move from one job to another. The bad news is, it’s set up as an authority under the Executive Office of Administration and Finance, and overseen by a separate, appointed board of private and public representatives.

As in: “I’m from the government, and I’m here to help you.”

So that’s what’s in store for the group market. But what about the individual market? Well, we’ve got that covered, too:

The individual part of MassHealth requires that, as of July 1, 2007, all residents must obtain health insurance coverage, provided that there are affordable options available to them at that time. Every person who files an individual return for the tax year 2007 will be required to indicate whether or not they have had health insurance coverage, claimed an exemption or had a certificate issued by the "Connector." If the Department of Revenue determines that this requirement is not met, a tax will be assessed to the individual. A sliding “affordability scale” will be set annually to determine affordability. Sweet.

I’m reminded of a favorite old saw: “Be careful what you wish for. You might just get it.”

Another Ethical Dilemna...

Some months ago, I posed an ethical question about what to do with funds raised to help save a little girl’s life (she unfortunately passed away before using them). Today, I’d like to pose another:

Suppose you are a physician whose uninsured patient requires an expensive, but life-saving, medication. The patient’s family wants you to write the scrip on another family member who is insured.

Well?

(Thank you to Rabbi Dr. Asher Meir)

A New Kind of Carnival

Having participated in the Carnival of the Capitalists and of Personal Finance, Grand Rounds and the Health Wonk Review, I noticed something missing.

There doesn't seem to be a comparable compendium [ed: cut it out] for those of us involved in the business of risk management.

That's about to change.

The Cavalcade of Risk is dedicated to the world of risk management; generally, this means insurance, but that’s not a requirement, nor should it be.

The purpose of the C of R is NOT to provide a forum for folks to simply advertise their services, or bash their competitors, or tout any one concept as a panacea. Rather, it is to provide a forum for exploring how each of us defines and manages risk: in business, in our finances, and in our lives.

Please pop on over, read the intro, and submit your own (or even someone else's) post.

Thanks!

And Grand Rounds...

is up, hosted (for the thrid time) by Dr. Emer. With 50 posts, Dr E has done a tremendous job (trust me, I know how hard it was to organize 11!).

I'm a Sweet-N-Low man myself, but this GR entry, from Amy at Diabetes Mine, has the scoop on all the various coffee-sweetening options (and tea, too, I suppose). Be sure to ask about Stevia.

The Health Wonk Review (Lucky #7)

Well, that’ll teach me to volunteer! This week’s putative host has apparently gone AWOL, so HWR honcho Joe Paduda accepted my offer to substitute. Please forgive any mistakes, errors, runs, drips or streaks.

So, a coupla days late, but none the worse for wear (I hope!), here’s this week’s foray into the world of policy, infrastructure, insurance, technology, and managed care bloggers. Enjoy!

■ Politics, Policy, Economics

Jared Rhoads, of The Lucidicus Project, has an interesting article about Massachusetts' new healthcare legislation. Comparing commentary from various members of the free-market community, he concludes that, even as mixed as the free-market folks are, the conservatives are worse. His solution: rights-based capitalism protected by limited government.

Frequent IB foil Jill Quadango posts her presentation to the Democratic Senators Issues Conference on why 46 million Americans lack healthcare. If you haven’t read her book, One Nation Uninsured (which we reviewed last fall), this is a good summary of its contents, and conclusions. While I don’t often agree with Dr Q, she is a compelling and interesting author.

If you follow the Medblogosphere, then you’ve certainly read Marcus Newberry’s great blog about health promotion, healthy lifestyle and disease prevention. In this post, the good doctor tells us about the late Jane Jacobs, author of “The Death and Life of Great American Cities.” He compares her thesis that cities are vibrant living systems with the reality of the current situation in health care. As usual, he brings a refreshing insight.

David Williams, proprietor of the Health Business Blog, has an interesting (and provocative) take on Google Health. He tells us that, although the offering itself is weak, Google is also exploiting the goodwill of volunteers under its so-called "Co-op" program. Problem is, it’s not a co-op at all.

Behind The Wheel, brought to you by the folks who run Marketplace MD, is a fun and engaging blog (I know, because I visit it pretty often). This entry is a virtual survey of Consumer Driven Health Care, covering over two weeks' worth of nuggets from blogs, the media, and academic journals. I was particularly pleased to read that Marketplace’s founder has been published by Health Affairs, twice. Mazel Tov, Doc!

PhD-to-be Jason Shafrin, posts as the “Healthcare Economist.” This week, he tells us that the British government is shifting childbirth policy away from hospital delivery and towards births in the home, and asks if this good policy. His post also raises the point that government dictating where you have to give birth to your child is one of the costs of nationalized healthcare.

HWR founder Joe Paduda has some thoughts about the GOP's efforts to pass Association Health Plan and medical malpractice reform legislation. He wonders if it’s necessarily a bad thing that it “ran into a brick wall.” IB’s Bob Vineyard discussed this a while back, and I’d love to read a debate between them (hint, hint).

The final entry in this category is my own: in many markets, one insurer dominates. Some in the governing class object to this, and have proposed dubious solutions. We explore the situation, and possible resolutions.

■ Business of Healthcare

Tony Chen, one of a group of high-powered bloggers at Hospital Impact, has a thought-provoking post on what the mission of hospitals could be in the future. He looks at how Mayo, Johns Hopkins, the Cleveland Clinic and other A-list facilities operate now, and what their mission might look like in the future. Talk about Future Shock.

■ Technology, IT

Dmitriy Kruglyak at The Medical Blog Network offers a Consumer Health IT report from the 2006 CDHCC (Consumer Directed Health Care Conference and Expo). He says that Intuit's designs on healthcare connectivity are the most notable, and a panel of investment experts discussed how the industry is likely to evolve. It’s quite a full report, with everything from Rules Engines to Data Mining.

■ Miscellaneous

Jon Coppelman, who writes at the Workers Comp Insider, examines a recent ADA case involving Liberty Mutual Insurance. That case should raise red flags for employers: by granting FMLA leave for treatment, the employer was apparently held accountable for making "reasonable accommodations," even though it appears that none were requested. In other words, “no good deed goes unpunished.”

Well, that's it for this week's edition of HWR. Tune in on June 1rst when Dmitriy Kruglyak hosts at The Medical Blog Network.

Another Money Monday...

The Carnival of the Capitalists is up. This week's edition is hosted at Integrative Stream. Each entry is posted in a specific category, which makes it easy to navigate.

I really liked this post by Joe Kristan over at Roth & Co. Somehow, I had skipped over it when I first saw it on his blog; that was a mistake, because it's a great example of something being too good to be true.

You can catch the current Carnival of Personal Finance at Frugal for Life. Instead of categories, Dawn's chosen a newspaper metaphor. Very interesting, and easy to read.

After my recent (awful) experience with my own insurance carrier, I found this post at the Dividend Guy. He asks whether a personal experience should color a business one.

Playing SOLItaire...

Last fall, Joe Kristan at Roth and Co told us that "Dead Peasant" insurance was dead. But, much like George Romero’s nightmarish vision, the idea may not be.

Stranger Owned Life Insurance (SOLI) is part of the “premium financing” phenomenon. Although it seems to be “under the radar” at the moment, SOLI threatens to become a potentially bigger issue in the life insurance industry than even COLI.

Why?

Because the stakes (and the dollars) are higher, and because the rhetoric is turning nasty. And the financial press loves nothing more than it loves a brutal, knock-down fight among industry insiders.

So, what is SOLI? It’s a potentially dangerous game of financial cat and mouse: an investor (either an individual, or a syndicate, or a commercial lender) approaches a likely mark – er, uh – prospect, almost always a seasoned citizen. He then makes the prospect an offer he can’t refuse:

"You purchase $10 million of insurance on your life. We'll advance the premiums for two years at an interest rate of 12% to 15% and take a collateral assignment on the policy. You pay nothing. You don't even have to pay any interest--it accrues with the loan. At the end of two years, if you want to continue the coverage, you pay us the interest you owe and repay the principal. It's a non-recourse loan. That means you risk nothing. If you don't want the coverage at the end of two years, no problem. We'll take over the policy and you have no liability. You owe nothing. Best of all, we'll pay you $250,000 in cash up-front to sweeten the deal."

If you’re the prospect, this is pretty enticing; after all, what is there to lose? But what’s the incentive for the investor, the one putting up those two years’ worth of premiums?

Well, obviously, there’s the potential of a big windfall if the insured assumes room temperature (although that’s problematic, too, as we’ll see in a moment). But mostly, it’s the “glitch” in how life insurance is priced for those of advanced years. A lot of carriers price these plans with the assumption that many, if not most, will lapse. That’s probably a safe bet, since these plans can pretty expensive. Counterintuitively, though, it’s also what makes this “non-recourse premium financing” so attractive: because the carriers assume that a lot of the plans will lapse, they price them “lower than the amount that would have to be charged to maintain adequate reserves if all policies were held to maturity.” [ibid]

So, by keeping the policy “alive,” it’s pretty likely that it will pay off sooner, rather than later, and provide a nice windfall to the investor. Sweet.

So what’s the problem? Well, first, there’s the little matter of “insurable interest.” That is, the beneficiary of a policy must have some financial stake in the insured (for example, the family breadwinner, or a key employee, or the business owner himself). Heck, even with COLI, at least the employer had an ostensible such interest in the employee. But there is no such relationship in SOLI: these are perfect strangers, looking to make a (potentially) quick buck.

So what’s the harm? Yes, there’s the moral hazard: a danger that the beneficiary may get “impatient,” and hasten the payoff date. And, since there are tax implications, it potentially puts the industry under a microscope (not that there’s anything wrong with that). From the insured’s standpoint, though, I’m not sure I see a downside. The real risk, it seems to me, is to the investor whose money is at risk. And, I suppose, the carrier, but no one forced them to price their policies to make this idea attractive.

Zombies, anyone?

RELATED: It gets worse.

Paint me a Picture...

Two weeks ago, we blogged on the topic of carrier domination; that is, where one insurer has a disproportionate share of a given market.

Well, they say a picture is worth a thousand words.

This just in:

Thoughts from a Medical Office Manager...

[Kelley A Beloff, MSW, is a Certified Medical Office Manager. For years, she has dealt with the real world issues of HIPAA, PHI and other regulations that dictate how she must run her (very busy) physicians' office.

Today, she offers her insights -- and the benefit of experience -- to InsureBlog readers. Enjoy!]

When I got into the office this morning to start another day in a busy doctor’s office, I did my usual routine. Backing up the computer program, going on line to check my emails, and there it was: another article about the costs of health care.

As a Health Care Professional, I strive to keep up to date with all information relating to the health care field. This article was from USATODAY.com and titled “Shopping for Health Care Prices can be pretty confusing.” As I read the article, it was obvious that the author did not talk with anyone who actually works in a physician’s office, so I thought I would correct some misconceptions related in the article.

There is a quote from Dianne Kiehl, Executive Director of the Business Health Care Group of Southeast Wisconsin. Ms. Kiehl states that “(i)f you walk into a (doctor’s office) and ask, ‘What does it cost?’ they can’t tell you. (The medical industry)…is trying to keep this information a secret.” This statement is not only incorrect, but shows a lack of knowledge of the operations of physicians’ offices. Firstly, physicians and their staff are not clairvoyant, we cannot predict what treatment each patient will need prior to any appointment. While there are set fees, such as the office visit (CPT Code 99213), there are other factors which can influence the cost of an appointment: A patient can come in for a visit for an illness, but during the course of the visit the patient reveals that two days ago she fell and twisted her ankle. Suddenly, the appointment has gone from an office visit for an illness to a visit for an illness and a possible bone break or fracture. The appointment has become more complex, the physician needs to order an X-ray, the staff may need to set up the patient, and the appointment becomes more costly due to the higher level of medical treatment. This happens in our office frequently and this exact scenario happened to me with my daughter. Since each appointment with a physician is unique to that patient’s care, it is impossible to predict or “quote a price for care” prior to the appointment.

The article continues and discusses how “insured patients are going to spend more of their own money, not just on premiums, but every time they go to the doctor, pick up a prescription or get admitted to the hospital”. This is true, but the article does not discuss the reasons why. One scenario that continues to happen in my office regarding patients paying more at their appointments has to do with Medicare versus Medicare HMO’s. Patients are not informed regarding the differences between the two, which causes major problems in the doctor’s office. First, patients believe that Medicare and Medicare HMO’s are the SAME. Time and again, I need to explain that these policies are not the same, in fact there are fundamental differences. Most common is the misconception that if a physician accepts Medicare, then they will accept the Medicare HMO. This is not the case: the physician’s office will only accept that HMO if the physician is contracted with the HMO’s company, e.g. Anthem, Humana, etc.

Patients do not know this fact until after they have signed with the company, seen their doctor, the doctor bills Medicare (since the patient thinks they are the same, the patient does not inform the office that they have a new insurance; it is not “new” to them), the bill is denied and the physician’s office bills the patient. At this point a month to several months have gone by, the patient has seen several doctors and suddenly has a pile of bills. Who does the patient blame: the insurance company, the insurance salesman, themselves, or the physicians office? I will give you a minute. The answer: the Physician’s Office. Why? Because we did not inform them that they were not covered under their “new” insurance (remember, they did not inform us of the change) and now we expect them to pay for their medical coverage. If they had known that the physician did not accept their “new” insurance, they would not have been seen, therefore it is our fault that they owe us money.

Secondly, the Medicare HMO may not pay for the services that Medicare was paying for and suddenly the payment for the same physicians appointment has increased. Again, who is to blame? Again, the Physician’s Office. “Why are you charging more for the same treatment I received last month under Medicare?” We are not charging more, your Insurance company is covering less of the bill. The charges are the same; there has been a change in how the bill is divided between the insurance company and the patient. This also relates back to why we cannot tell each patient what their care will cost prior to the appointment. Each insurance company pays based on it’s own internal calculations, and many time the physician’s office will not know the cost to the patient until the Explanation of Benefits (EOB) arrives in the mail.

What this article tiptoes around, but what I tell my patients, is that the patient is responsible for all the aspects of their own health care. This means understanding the insurance policy prior to signing anything, knowing if your doctor is in-network or out-of-network (i.e. takes your insurance or does not take your insurance) and finally, you the patient are ultimately responsible for all health care costs incurred by you.

I would like to thank Hank for letting me inform your audience.

Kelley A Beloff, MSW, CMOM

[ed: You’re welcome!]

Capitalist Underpinnings...

This week's Carnival of the Capitalists is (finally) up at Virtual Handshake. With over 80 posts, it's well worth the wait. I can only imagine wading through all of those, and annotating them as well (which our host graciously did).

I always wondered why Miss Cleo never saw her psychic network's impending demise; I mean, if she can see the future, surely she could see her future paycheck (or lack thereof). Well, Joe Kristan's CotC entry goes a step further: the tax (and domestic) problems of a Tennessee psychic.

Grand Rounds Time!

Dr Ibear, "a married physician in a medium volume Emergency Department somewhere in the Midwest," hosts this week's edition. There are over 50 entries this time, complete with (cute) illustrations.

This post, by David Williams (proprietor of the Health Business Blog) shines the light of truth on Google's new health care "co-op." Not a pretty sight.

Mixed feelings...

On the one hand, I represent the carriers whose products I sell. On the other hand, I work for my clients. As agents, we walk a thin line, balancing the interests of each of our “masters,” as well as our own.

Most of the time, this is relatively easy. The reason that lawsuits and claims disputes and the rest are news is because, for the most part, they are the exception. That is, most of the time the system works; maybe not perfectly, and perhaps not as smoothly as we’d prefer, but people are issued policies, claims do get paid, and life does go on.

And sometimes carriers do stupid things. I believe (naively, perhaps) that most agents don’t “push” particular carriers or plans just to win a trip or earn a bonus. Yes, those are nice, but they’re really just icing on the cake. Sometimes, carriers are pretty crass about these; for example, I’m getting fed up with annuity vendors offering 8, 9 or 10% commissions on their products, while paying the annuitant 3 or 4%. On the other hand, I don’t much care for the low, flat-fee commission structure that more and more health carriers are putting in place.

But my number one pet peeve is carriers that just can’t get enough PR. These companies spend tens (sometimes hundreds) of thousands of dollars to sponsor sporting (and other) events, inviting their top producers to participate. That’s money that could be spent on claims, and product development and, yes, commissions for us peons.

So what’s got my knickers in a bunch?

An organization called ProCare has been sued by Blue Cross Blue Shield of North Carolina. ProCare is an independent organization that seems to have been a thorn in BX’s side for quite a while. I’ve actually blogged on them before, because I recognized a kindred spirit, especially as regards tilting at windmills.

According to ProCare, BX has sued them after they published “truthful but embarrassing information about the company's profligate spending at the U.S. Open golf tournament.” I’ll reserve judgment on the term “profligate,” but I have little doubt that much of what is spent on such activities is not necessarily in the interests of policyholders (or agents). As an ostensible non-profit, it seems to me that they are not easily defended.

The trial is set for, believe it or not, September 11 of this year. It’s possible, although unlikely, that it will be settled out of court. I characterize this possibility as “unlikely” because one of ProCare’s stated goals is to compel BX executive leadership (such as it is) to testify under oath regarding these expenditures. If nothing else, that would make interesting reading for those of us in the industry and, indeed, anyone who has insurance.

Since I can’t reproduce the email here (I’m apparently not the geek I thought I was), I’ve linked their site. I can’t in good conscience vouch for them; I have no connection with ProCare other than being on their distro list. But they seem to be on the level, if a bit zealous.

The truly sad part is that I know that BX is not necessarily the worst of the bunch. I wonder if this lawsuit will embolden others take on its competitors.

Monday Morning Carnival

2million blog hosts this week's edition of the Carnival of Personal Finance. If you're interested in learning more about 401(k)'s, he's got a batch of relevant posts right at the top.

With awareness of (and the threat of) identity theft on the rise, I found this post at My 1st Million at 33 to be very helpful.

A Rising Tide…

They say that a rising tide lifts all ships. The idea is that when good things happen, everyone benefits.

And that may well be the case with Empowered Consumer Heath Plans (yeah, I got tired of the HDHP acronym; alternate suggestions welcome):

According to ehealthinsurance, these plans are growing in popularity with young consumers and middle-income consumers. “The percentage of HSA-compatible plan purchasers who are ages 20 to 29 increased to 28% in 2005, from 20%, while the percentage in the 30-39 and 40-49 age categories fell.” In other words, younger folks are flocking to these plans, while those who should be in their prime earning years seem to be shying away.

That seems strange to me.

We’ve blogged before about this fallacy of the uninsured: that many of these folks are well able to afford cover, but choose to go without. That seems to be borne out by the ehealth survey [ibid]:

Researchers found that “previously uninsured consumers who bought health coverage in 2005 were much more likely than in 2004 to be over age 60 and to have annual incomes in the $50,001 to $75,000 category.”

And in fact, almost a third of those who purchased such a HDHP in 2005 were “in the $50,001-$75,000 income category were uninsured, up from 27% in 2004.”

Food for thought.

Under the Mass Microscope (Part 1)

Eight years ago, when Kennedy-Kassebaum (aka HIPAA) was being hammered (and subsequently rolled) out, a colleague and I downloaded and read the entire legislation (which, IIRC, ran some 200+ pages in a pdf file).

While everyone else was touting guaranteed issue, and portability, and even viaticals, Ray and I noticed something other things: NPI, and PHI, and other less than savory components.

We predicted that HIPAA would, ultimately, create at least as many problems as it purported to solve. And, ultimately, that seems to be the case.

So now we turn our attention to the oft-cited, but apparently less well understood, MassHealth insurance reform plan now being implemented in the Bay State. As is our wont here at IB, we’re going to look at some of the items that are currently “under the radar,” but which could very easily become profound. And, unlike some blogs, we won’t rely on the news media’s interpretation of “what it all means,” we’re going to be working strictly from the law itself.

The primary goals of the plan are:

■ To subsidize the purchase of private insurance for low-income individuals

■ To reduce the number of uninsured

■ And to direct more federal and state dollars to individuals and less to institutions

Lofty and laudable goals, to be sure, but are they the least bit realistic?

Well, let’s see.

The very first piece is about low-income folks. But many (most?) are already covered by Medicaid. So this is just good old-fashioned cost-shifting, or perhaps that should be “shafting.” And a lot of other folks choose to go “bare.” What happens to them?

Almost a year ago, when this plan was embroyonic, I asked “where are the teeth?” Well, we got ‘em: introducing the “Health Insurance Responsibility Disclosure” form, “to be completed and signed, under oath, by every employer and employee doing business in the commonwealth,” failure to comply with which “may be subject to sanctions under chapter 111M.”

Whatever that means (but it probably isn’t fun).

Believe it or not, there’s more. Click for Part 2.

Restraint of Trade, and A Lesson...

For a very, very long time, most types of insurance have been sold through the General Agency system. Briefly, a carrier contracts with a General Agent, which acts as a distributor, usually for several carriers. The GA then contracts with individual agents who actually sell the product to the public. The GA provides technical and administrative support to the agents, and acts as a conduit for compensation (commissions, overrides, bonuses, etc). Very good GA’s act as advocates for the agent if there are “issues” with the carrier, and act as “backup” for the agent if a client has one (see: Cylons).

Because we enjoy a free market system, agents are free to move among GA’s, picking the one (or ones) that best suit their needs.

So far, so good.

Now one carrier has adopted a strange and provocative tactic: it has “frozen” such transfers. That is, if I represent that company, and I have a problem with my GA, well, too bad. I can’t switch to another one.

And that is “restraint of trade.”

Now, I happen to have an excellent GA, and can’t imagine a situation where I would wish to change to another one. But, I fervently enjoy my freedom to do so should the need arise. When I received the letter this afternoon, announcing this new company directive, I immediately called the Attorney General’s office.

Now, you may ask, “Henry, it’s an insurance company, why didn’t you call the Department of Insurance?” There are two answers:

First, this is a legal, not an insurance, issue and second, the DOI is useless in this matter. Their primary constituency is not the consumer, nor the agent, but the carriers. So even if they could do something, it's unlikely that they would.

So, I spent the next 40 minutes being shunted around the AG’s office, growing more and more frustrated because no one seemed to know whether or not there was anything they could do. At one point, a (nice) lady admitted that they didn’t do much legal work in her area, which led me to ask why I was paying their salaries.

Eventually, I ended up with an actual, real live attorney. So, for the fourth (fifth?) time, I repeated my story. He replied that the Department of Insurance (DOI) was his client, so he didn’t see what he could do. I am proud to say that I did not, in fact, point out to him that I was his client, since I pay his salary. Rather, sensing that this would not move the ball forward, I let it go.

He did give me the phone number for the Anti-Trust Department, and wish me luck.

I decided that I needed a bigger gun.

One of my clients also happens to be my State Representative, so I decided to bring the Legislative Branch into play. I called him, and explained the situation. At first, he offered to speak with the DOI, but I was able to redirect him toward the AG’s office. He promised to have someone from Anti-Trust call me, and (more importantly) to call him back, so that he could stay in the loop (and involved).

That’s the game so far; I’ll keep you posted on my progress.

Oh, the lesson? If you’re an insurance company, try not to tick me off.

UPDATE (5/12/06): A gentleman from my Rep's office called, and I explained the situation to him. He's promised to contact the Anti-Trust folks at the AG's office, and to stay in the loop, as well. And indeed, I've been copied an email he sent to the AG's office.

It would be nice to know if there are other agents (and/or brokers) who are affected by this unfortunate decision. If so, please email me (addy in profile).

More Number Crunching...

According to the Kaiser Family Foundation, an average person with medical expenses pays 35% of those costs out-of-pocket; the rest is paid by insurance.

More than 40% of those OOP costs, by the way, are for prescription meds. Ouch!

The balance of the OOP is office visits and dental care. Remember, though, YMMV.

And remember the old 80/20 rule? Well, it still holds: the 20% of our fellow citizens with the highest spending account for 80% of medical costs. To put a finer point on it: the 5% of Americans with the highest spending account for about 49% of total health expenditures.

The really BIG numbers come in when we step back and look at the big picture: total U.S. health expenditures will end up around $2.16 trillion this year, and are projected to reach $4 trillion in 2015. That's a lot of Tums.

But wait, there's more!

According to a recent WSJ/Harris poll, support for rewarding providers based on outcomes seems to be fading:

What's striking to me is that, while everyone talks about only wanting the best of care, there seems to be little support for paying for that: only about 20% of those surveyed believe that "it would be fair for patients to pay more to be treated [by providers that] provide better care."

Um, folks, you get what you pay for.

UPDATE: David Williams at the Health Business Blog has more.