Up-Lyfting Update

Last week, we noted car-sharing service Lyft's first passenger fatality, and pondered the insurance implications thereof. Since this situation is a bit outside our wheelhouse, we turned to P&C expert (and long-time FoIB) Kevin Sullivan.

I really didn't know what questions to even be asking, what issues (beyond the obvious) were relevant, and what part the location (California vs, say, Ohio) would play in this whole scenario. He kindly supplied not only the necessary questions, but the answers, as well Take it away, Kevin:


The insurance test here:  Will Lyft's Commercial General Liability, or Business Auto coverage defend the Lyft driver?

IMHO, it doesn't matter if it's the driver's fault.  Everybody's getting sued.  Lawyers cost money [ed: this is a point our friend Bill M made, as well].

If the driver has a commercial auto policy, and he's not found criminally negligent (drunk, on drugs, etc), they defend/settle.  My guess:  The driver has no such insurance.  Personal Auto expressly EXCLUDES using your vehicle to make money.  However, the coverage exists, otherwise, you wouldn't be able to get a pizza delivered to your house.  The Pizzeria (Lyft) purchases that cover.

Back to Lyft: 

1.  Is the driver named on Lyft's policy?  Or is he listed on just an "Additional Insured" endorsement? 

2.  $1,000,000 Combined Single Limit?  Liability only?

3.  What carrier wrote the Lyft policy?  That would tell me a TON...

Looks like Lyft's insurance is prepared to pay or defend.

Here's how this is all going to go down:  Settlement will occur, nobody will know how much.  Lyft will either need to find another carrier, or pay a TON more in premium.  A non-renewal (cancellation) is also possible.  Again, I'd need to know the carrier before I'd guess.

Lyft could go out of business for not being able to find a new insurance carrier.  That won't matter: another service will come along, and replace them.  Ride-sharing ain't dying.

In the big picture, the carriers are playing "wait and see" with this new auto niche.  Trust me, they are crunching numbers right now, and will develop a product for the "part time TNC (Transportation Networking Company) driver" for Uber, Lyft, Sidecar, etc.

If they had HALF A CLUE, the TNC's would create a "driver's association" for ALL ride share drivers.  As a member of the association, you'd get access to the association’s insurance plan at $X,XXX per year [ed: similar to how many professional organizations sponsor life or disability insurance].


Thanks, Kevin!

This is still a relatively immature market, with plenty of room for expansion, and missteps. But as Kevin notes, there's just too much pent-up demand, primarily tech-driven (all those iOS and Android apps aren’t going to drive themselves, after all). And the centuries old taxi-cab model with its expensive (and increasingly outmoded) barrier to entry just doesn't seem sustainable. On the other hand, folks want to know that they're protected from the risk of someone else's driving.

Something's gonna give, it's now a question of how and when.

Peanut Butter and Chocolate

You got feckless, clueless punditry in my O'Care deceit lectures.

No! You got O'Care deceit lectures in my feckless, clueless punditry.

Kiddies, kiddies, please calm down. You're both right:

[Source]

Now Playing: HIX (Health Insurance Exchange)

Interesting video primer on how the Exchanges (are supposed to) work:

Three Strikes, Herr Gruber....

If you've been following the saga of Jonathan "Fredo" Gruber, you know he's on record for speaking his mind calling the American electorate stupid. Now comes word that he's been at it again:

"A third video has surfaced of Obamacare architect Jonathan Gruber bragging about pulling the wool over the eyes of the American public in order to help implement Obamacare."

Third time's a charm, right?



                         [Skip to 29:26 for money quote]

Cavalcade of Risk #221: Post-election round-up edition

Claire Wilkinson hosts this week's collection of post-election risk-related bloggetry. From upcharges for where you shop to high wire (literally!) acts, you're sure to find something interesting.

Thanks, Claire!

Obamacare's House of Cards

Did you know almost 25% of individual health insurance premiums paid for exchange plans go directly to taxes and fees? Did you know that you, as taxpayers, are funding 76% of the total premiums? While some call American voters stupid, the reality is consumers are simply uninformed about the Unaffordable Care Act.

While the law passed in 2010, taxpayers are now learning about the complete lack of transparency coupled with misdirection and layers of bureaucracy created in Obamacare. This is because during the first four years all of the warm and fuzzy benefits were implemented. These provisions were popular because they were perceived as expanding coverage for no cost. In fact the major cost provisions didn't start until this year. Here is the breakdown of what it costs taxpayers.

According to HHS Secretary Burwell through mid-October 404care.gov enrollment was at 7.1 million people. According to HHS, in June the average premium was $346 per month. Taxpayer subsidies pay $264 of the premium while the consumer pays the remaining $82.

• Taxpayer subsidies ($264 per enrolled)         $1,874,400,000
• Consumer payments ($82 per enrolled)            $582,200,000
• Total Premiums ($346 per enrolled)              $2,456,600,000

There are numerous taxes and fees such as the medical devices tax, the Boehner tax (tanning beds), and the hospital tax which consumers don't see. These started in the first four years of Obamacare and are indirectly impacting your premiums. However, the new taxes and fees starting in 2014 have a direct impact on premiums. These are measurable and have a direct impact on what you pay in premiums. Here is the breakdown of four taxes/fees and what they cost based on the enrollment figures from above:

• PCORI Fees ($2 PEPY)                                         $14,200,000
• Reinsurance Fees ($63 PEPY)                           $447,300,000
• Exchange User Fees (3.5% of premium)            $85,981,000
• Health Insurance Tax (2.4% of premium)         $58,958,400
• Total premiums paid to the government:        $606,439,400

[PEPY = Per Enrollee Per Year]

It's not rocket science to see that the government is taking in more than consumers are paying. It should also be eye opening to know that the government is taking in more of your premiums than insurance companies are retaining for administrative costs.

The next time supporters of the law claim big bad insurance companies are raking in huge profits it would be good to remember that if we really wanted lower premiums the best way to do it is remove government bureaucracy from the equation.

O'Care Potpourri

■ In keeping with the politically correct stance of providing vital services convenience items for women, but not for men, Medical Mutual has announced that "Drugs Used to Treat Erectile Dysfunction No Longer Covered in Individual and Small Group Metal-Tier Plans (On or Off Exchange)."

That little blue (?) pill is now excluded.

#waronmen

■ We've talked before about some of the shadier links that are floating around, ostensibly to direct folks to the official 404Care.gov site, but actually not. Got this one in email today:

"Sign up For health-insurance Under the affordable Care - act-  avoid Penalties"

And then this link:

hXXp://www.XXX.co.at/l/lt7F19079Q1237AD/1245E7599IG115271HC229CT146978585H2202568847

Which does not in fact, lead to the real site at all.

Shocking, I know.

■ As we've been saying for quite a while, the whole "Navigator" idea is dangerously attractive to ill-intentioned folks. After all, they're (largely) unlicensed and unvetted, and, well, this will surely come as no surprise to IB regulars:

"A terrorist from Jordan briefly worked as an Obamacare navigator in Illinois while authorities remained unaware of her conviction for involvement in a deadly grocery store bombing and two other attacks."

But what could possibly go wrong?

Bastiat & Graboyes: The Legend Continues

Frédéric Bastiat, a noted 19th-century polemicist, is most widely-known for the Parable of the Broken Window (widely regarded as the underlying reason for New York Mayor Rudy Giuliani's successful cleaning up of Times Square, for example).

In the grand tradition of the forward-thinking, our good friend Bob Graboyes (Mercatus Center senior research fellow) has just been awarded the prestigious Bastiat Prize for Journalism by Reason magazine.

A heart-felt Mazel Tov to Bob!

Not Ready for (Sub-)Prime Time

So I spent a great deal of yesterday afternoon on the phone with the friendly - if hapless - folks at 404Care.gov. Turns out, one of my "Grandmothered" Anthem clients may be eligible for a subsidy, which means the (dreaded) Marketplace. We'd already picked out a plan, now we needed to enroll her.

Since her December renewal triggers a Special Open Enrollment, we were looking for a December 1 effective date. She's actually pretty fortunate: as I explained to her, it's not yet Open Enrollment season (that starts this coming Saturday), so there were likely only hundreds, perhaps thousands of folks vying for coverage at any given time today. Come the weekend, and especially next Monday, that will swell into the millions.

And yet, well, what you see at the top of this post is what we encountered multiple times. So we took their advice and called the toll-free number.

And spent the next two hours (really!) speaking with a delightful young lady named Destiny (last name withheld because she isn't the problem). Like us, she was unable to successfully access the system; in fact, she had to ask for my client's information several times as the system gobbled it up and spat out error message after error message. If it spat out anything at all (she was experiencing more hang-time than Michael Jordan).

Ultimately, we had to bag it (my client had another appointment, as did I) and we'll pick up again in the morning. We did ask Destiny if there was a better time to call, and she assured us that the call center is open 24/7, and one time's as good useless as any other.

And remember: this is the off season - still think they'll be up for the real deal?

I'll let you know how it goes today...

Great Expectations

It appears that Exchange enrollment for Obamacare isn't going to be what it was cracked up to be.

Back in 2011 CMS released released their summary forcast showing that in 2014 exchanges were expected to enroll 13.9 million. For 2015 that number was 15.9 million. Now comes word from HHS that actual enrollment as of mid-October there are 7.1 million people enrolled and that they are lowering expectations in 2015 to between 9 and 9.9 million. Why? Because they want it to be "accurate...analytically based."

I always thought meteorologists had the best job security. They could be wrong half the time and we forgive them. Now I'm thinking the best job is forecasting for Obamacare. When HHS/CMS make a mistake they simply "downgrade" expectations. Only in this situation we shouldn't forgive them.

Obamacare Architect: "Call it the Stupidity of the American Voter"

Jonathan Gruber...watch the video.

Nuff said.

Breaking: SCOTUS to hear King

The Supreme Court has just agreed to hear arguments on whether or not folks in states with Federally-run Exchanges are eligible for subsidies.

Hunh.

Cavalcade of Risk #221: Call for submissions

Claire Wilkinson hosts next week's edition. Entries are due by Monday (the 10th).

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

You'll need to provide:

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

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

Health Wonk Review: Post-election edition

Jennifer Salopek at Wing of Zock (which, BTW, would make a great name for a band) hosts this week's round-up of wonky posts, with special focus on the future of O'Care in this new era.

Have ObamaCare, Will Travel (With a Twist)

Tired of reading all those sob stories about folks losing their health insurance? Ready for some good news for a change?

Well, you're in luck:

"According to the Department of Health and Human Services, foreign diplomats... are eligible to participate in an array of medical programs administered by the federal government, including participation in Health Insurance Marketplaces."

WooHoo!

And all you middle-class whiners who make too much for a subsidy will be glad to know that at least someone's making out like a bandit:

"[A] foreign diplomat could satisfy the statutory criteria to be eligible for a premium tax credit and cost-sharing reductions.”

Isn't that great? Who wouldn't want to make sure that foreign visitors here enjoy the same a better level of benefits and access to health care than we simple proles do?

Don't be a hater.

[Hat Tip: FoIB Holly R]

Rubber, Road and Lyft: Insurance Crisis? [UPDATED]

If memory serves, we first addressed the insurance challenges of ride sharing some 3½ years ago:

"When you bought your policy, you agreed to the coverages and exclusions in the policy, and also to your own (minimal) obligations, one of which is to inform the carrier of a "material change" in the risk."

At the time, we noted that hiring out your vehicle, or offering rides therein, made you a commercial insurance risk, and that personal auto policies explicitly exclude this from coverage. Fast forward a bit to this past Spring, and we restated the problem in the age of Uber and Lyft:

"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."

Again, the problem is whether or not one's policy allows for commercial use, and whether or not one had alerted one's carrier to the change (and obtained appropriate cover).

The challenge takes on a new urgency today:

"A spokeswoman for rideshare service Lyft says one of its drivers was involved in a multi-car crash in Northern California that left a man dead"

It appears that the Lyft driver was at fault (swerving to avoid a broken down vehicle), so the question arises: did he have appropriate insurance? We don't know, but one suspects that we'll soon find out. In the meantime, I've reached out to our favorite P&C guru for his thoughts.

Stay tuned....

UPDATE: Thanks to Kevin Sullivan, we have a bit more on this developing story:

"While a driver is providing a ride or on the way to pick up a passenger, Lyft offers $1 million in liability insurance, and $1 million in uninsured/underinsured motorist coverage. That coverage, which once was “excess” — kicking in only after a driver’s personal auto policy had been exhausted — became primary coverage in July."

Here's why this is important: it's possible (perhaps likely) that the underlying coverage - that is, the driver's insurance - will not cover this event. That being the case, it couldn't be "exhausted" and therefore Lyft's plan might not come into play at all.

Since Lyft's policy is now considered primary it shouldn't matter whether or not the driver's insurance steps up.

Time will tell.

Renewals vs "Grandma"

A couple of weeks ago, Anthem sent me a list of my clients whose plans renew this December. These are so-called "grandmothered" plans, but because Anthem chose not to participate in the expanded transition program, no changes can be made to them: my clients' only choice is to keep them or ditch them.

So I put together a brief (but informative) email explaining this, and sent it to the folks to whom it applied:

"Good morning!

As you know, there have been (and continue to be) a lot of changes with health insurance. Your current Anthem plan is "grandmothered;" that is, you may keep it as-is, or we can shop it around.

Your current rate is: $xxx
Your December renewal rate: $xxx

Based on recent experience, don't expect great results from shopping for a new plan (sorry!): your current plan doesn't meet all of the new ACA mandated requirements, but a new plan would (and I'm seeing some pretty horrendous rates on those). If you're interested in checking that out, here's a link to our (private) Exchange - it does NOT go to the .gov site:

[link]

There, you can see if you're eligible for a subsidy and get quotes for different plans. Of course, I'm always happy to run those for you if you'd prefer (or even just walk you through).

Thank you so much for the opportunity to be of service!"

As you might imagine, I've had quite a few replies: folks are generally pleased to have been kept in the loop, and most have asked me to see what else is available. Curiously, only one or two seem to be eligible for a subsidy, but we can't get those rates yet.

In the meantime, we started ...

Wait, what do you mean "we can't get those rates yet?" It's less than two weeks until Open Enrollment starts, and the carriers haven't figured out what they're going to charge? How can that be?

Have you not been paying attention? We reported a month ago that carriers were enjoined by Our Betters in DC© from disclosing Exchange-related testing results, which of course would include details such as rates. Makes sense, really: after all, we have to hide the site in order to learn what's in it.

Right?

As I was saying, I began running quotes for my December renewals, and (as expected) they weren't pretty. By way of example:

Client 1 - HSA plan, current rate $241, renewal rate $276, comparable ACA-compliant plan $540

Client 2 - HSA plan, current rate $355, renewal rate $432, comparable ACA-compliant plan $1,020

[ed: Almost all my clients are in HSA-compliant plans. Funny, that]

The point is, there don't seem to be any attractive options for these folks; their best bet is to stay put, at least for the nonce. I'll add that I see no reason to be optimistic about the January 1 rates - when they're finally released.

Hoosier Health Insurance Goes Bye-Bye

Looks like 30,000 Hoosiers really hate their current insurance. After all, the Precedent explicitly promised them that if they liked their plan, they could keep it:

"Notifications have been sent out to 30,000 residents of Indiana informing them their health insurance plans no longer meet the requirements of the Affordable Care Act, also known as Obamacare, and will be cancelled at the end of this year."

Easy come, easy go...

The $958 Fallacy

Randy Essex, editor of the Glenwood Springs (Colorado) Post Independent, has an interesting, if disingenuous, article on a recent health care claim. Briefly, he underwent what he called "routine blood tests" that had previously cost him $45, and for which he was recently dinged $958.

He then proceeds to complain about transparency, pricing and claims, without ever actually demonstrating any knowledge of what actually happened.

So let's deconstruct this for him, shall we?

By his own admission, his previous tests cost him $45 because he had a (presumably generic) co-pay plan. Of course, the tests cost much more than $45, and he pre-paid the balance with inflated premiums (versus a catastrophic, HSA-compliant plan).

Flash forward a few months, and he has a new (catastrophic, presumably HSA-compatible) health insurance plan. As an aside, he laments that he was a victim here: "The only thing that had changed was my insurance, which, like so many other workers’ plans in America, had been switched by my employer to a high-deductible policy."

Here's a new flash, Randy: your employer can't require you to sign up for his group plan. You could always say "no, thanks." Look for that option to go away, though, as employers dump their employees onto the Exchanges.

But I digress.

Next, Randy admits to a very stupid choice: "the doctor wanted to put me on Lipitor, and I acceded. I hated it and stopped." This is called "self-medicating" and is generally a very stupid idea. At the very least, you should discuss this in advance with your physician (for whose services you've paid, by the way).

He goes on to detail his most recent encounter, and it's here that things begin to go sideways quickly:

First, he laments that he needs "to be able to see the prices without spending hours on the phone." Most carriers have made this information available for years (heck, we first wrote about it almost exactly 9 years ago!). Then he "assumed this was a preventive, covered procedure meant to help lower my risk of heart disease" (emphasis added: we all know what happens when we assume). Rather than assume, why wouldn't you ask the purpose, and then check to make sure? Based solely on the article, it sure seems to me that this was diagnostic, not preventive, and thus subject to the deductible.

Generally speaking, even diagnostic items would be eligible for in-network pricing, but that appears not to have been the case here:

"The bill also showed an insurance adjustment that lowered my cost by $1. One. Dollar." After speaking with the plan administrators, he was assured that this was a mistake and that it would be corrected, but that seems not to have happened. Rather than pursue a solution with the insurer, though, he indicts "the clearly ridiculous cost, the complete lack of transparency in medical prices and the lack of any real consumer choice."

Really, Randy? I don't think so: you have no idea what drives those "ridiculous costs," such as malpractice and other liability insurance, lab fees, the actual costs to run the various tests, and of course the experts to analyze the results. The lack of transparency is on you: why didn't you check the carrier's site, or ask the tech? Most likely he (or she) wouldn't know, but could direct you to someone who did. And finally, you had your choice of any number of facilities where this work could be done (Google and/or your carrier's site come to mind).

No, it's much easier to blame others for your own lack of foresight. On the flip side, congrats on your lower lipid level.

[Hat Tip: FoIB Holly R]

1,000 Words on the ObamaTax

[Hat Tip: FoIB Jeff M]