Cavalcade of Risk Reminder

Submissions for the upcoming C of R are due by tomorrow (Monday the 3rd). Submitting a post is easy:

■ Via email

■ at the Blog Carnival

or

■ at Ferdy's

Don't forget, if you've seen a relevant post at another blog, feel free to submit it, as well. If you have any questions, stop by the C of R home page, or drop us a line here.

Have a great (and safe) 4th of July!

Insurance Dispatch

My latest column is up at The Medical Blog Network. We look at how cat claims are paid under both Co-Pay and High Deductible plans.

Comments welcome!

Cavalcade of Risk - Submissions Due

Next week's C of R is on Wednesday the 5th, hosted by Trader Knowledge. Be sure to get your entry (either your own post, or someone else's) in by Monday the 3rd.

This is a great way to showcase your risk-related work, and it's easy to submit:

■ Via email,

■ At the Blog Carnival, or

■ At Ferdy's

Latest Health Wonk Review

The HWR continues to grow, and this edition is packed with over a dozen interesting entries. Our host, Jack Mason at HealthNex (for whom I subbed a while back), has done a terrific job: grouping posts according to subject, and including helpful reviews of each one.

The folks at Workers Comp Insider have a timely post about a WC claim that made it all the way to the Supreme Court. I found it quite relevant, because the outcome of this case will impact the health insurance industry, as well.

More Buckeye Shenanigans

In recent weeks, we’ve reported on a number of cases of (apparent) agent malfeasance. Courtesy of a good friend (and colleague; Thanks, Pete!), we learn that the issues are far from resolved:

"If you’re paying an insurance broker to find the best group policy for your employees, should the broker be allowed to collect a commission from the company you select? If so, shouldn’t he at least have to tell you that he is working on commission?"

The answer, of course, is Yes. Interestingly, though, only the former is a matter of law. "Full disclosure" means something contra-common sense here in the home of the Reds and "The Tribe." One would think, after the very public disclosures of the two above-referenced cases, and the penalities levied against the carriers, that some legal reinforcements would be on the way.

One would be wrong:

"Nor has the department had any luck finding a lawmaker willing to sponsor a bill that would require insurance brokers to disclose to their customers such third-party payments."

It's obviously in the clients' best interests for such protection to be in place, but implementing such safeguards may not be as simple as it would appear. For one thing, such a bill would have to be broad enough in scope to cover all the various permutations of such arrangeements, but narrow enough that it doesn't hinder the agents' ability to make a living. Incentives can also help the client: currently, the two 800 pound gorilla's (UHC and Anthem) dominate the market. One way other carriers can begin leveling the playing field is by encouraging agents to more aggressively promote them.

Competition is healthy. Obfuscation is not.

UPDATE: Kathie Bracy has a related post, asking if the State Teachers' Retirement System is involved in this brouhaha. Ripples and eddy's.

And now for something completely different...

In looking through our logs, I saw that we've had a visitor from this site. It's fun, and interesting, and eye-opening.

Take a look.

Mazel Tov, Joe!

FoIB Joe Kristan has been named as a Best Blog by Tick Marks:

"Tax blogs are primarily written by attorneys, but there is a significant number of accountants who write tax blogs...My four blogs in this category that I read most frequently presently would be: Roth CPA Updates (Joe Kristan)"

Way to go, Joe!

Super Grand Rounds

Our host for Grand Rounds this week, Dr Stuart Henochowicz, has organized almost 40 entries, assigned each to a general topic, and provided interesting and helpful capsule summaries of each one. WoW!

Dr Rob Lamberts, posting over at Healthy Voices, has an interesting, provocative but ultimately informative article about dietary supplements. This is a $14 billion industry, which is largely unregulated. Recommended.

Just Swell...

In what may (or may not) be a harbinger of the times, installation of (and enrollment in) self-funded (S-F) plans seems to be on the rise:

According to Benefit News (an industry newsletter), there has been a dramatic rise in the popularity of such plans. Interestingly, this seems to be an "across the board" increase: affecting pretty much every permutation of product design, including (apparently for the first time) Consumer Driven Plans.

What does this mean?

Good question [ed: thanx!].

First, let's examine how S-F plans work. S-F plans are a way for employers to purchase health care insurance. Typically, an employer pays $x to an insurer, which administers the plan and pays the claims. The premium is fixed for a period of time (almost always a year), at which time the premiums are reevaluated (Latin for "jacked up"). At the end of the year, one of two things will have occurred: the claims will have greater than the premiums paid in, in which case the employer owes the insurer: zilch. Or, the claims will have been less than the premium, in which case the insurer will refund: zilch. Pretty simple.

With S-F plans, the employer agrees to pay for the first $x, and will turn to the insurer only if the actual claims exceed this previously agreed-to amount. The idea is that the premiums are lower, because the employer has, in effect, chosen a VERY high deductible. Again, two eventualities are possible: claims are less than expected, so the employer saved money. Or, claims are higher than expected, and the employer will owe the insurer some cash [ed: this is a highly abbreviated explanation of self-funding].

Employers who choose the S-F route do so because they believe that it will save them money. And apparently, a lot of employers must feel this way, because a lot more of them are choosing S-F. Whether or not they are correct, of course, only time will tell.

UPDATE: Please be sure to read the comments for additional factors that make S-F attractive.

Monday's Money

The Carnival of the Capitalists is up at Financial Methods blog. With 60 entries, that must be some kind of record! Divvied up into helpful categories, it's easy to "follow the money."

Bob has blogged before about the sometime hidden dangers inherent in regulating specific businesses. The Boring Made Dull (catchy, no?) has a related post, which guages the economic impact in real dollars.

And the Carnival of Personal Finance is also up, hosted this week by Mighty Bargain Hunter. It weighs in with 51 submissions, bulletpointed (?) and summarized.

Single Ma relates a funny, frustrating, enlightening and utterly fascinating experience in her quest for high-speed internet service. Way to go, SM!

Insurance Dispatch...

This week's column is up over at The Medical Blog Network. Using a real life example, we look at High Deductible vs Co-Pay plans.

Enjoy!

(Really) Cool Insurance News

Our friend Chris Parks, over at MedBill Advisor, has an interesting, and provocative, idea:

Med Bill Manager is a web-based tool that folks with HDHP's can use to help sort out what they really owe a provider. It's still in "beta," but you can get a rough idea of how it will work by clicking the link. Chris has been working with another FoIB, [Redacted], as he gets this new program up and running.

Perhaps the best part is the cost of this service: nada. Wow, a free tool to help save money. That surely has legs.

(Really) Strange Insurance News

I've always maintained that one can insure anything, so long as money (the premium) is no object.

Apparently, I have been wrong:

"Insurers have withdrawn the cover on their virginity taken out by three sisters in the event of the second coming of Christ"

Seems that the sisters purchased insurance against this unlikely event some 6 years ago. The policy, written for 1 million pounds (approximately $1.8 million), was "meant to pay for the cost of bringing up Christ if one of them has a virgin birth." The premiums for this unusual policy were about $180 per year, and was actually donated to charity by the underwriter.

As I have no horse in this race, I suppose that I should have no opinion either way. And, truth be told, I am ambivalent about it:

On the one hand, it seems to me that, if the policyholders were willing to pay the premium, where was the harm?

On the other hand, this seems (in my admittedly uninformed opinion) to be potentially offensive to my Christian friends.

Either way, this is one of the strangest insurance schemes I've ever seen.

What’cha gonna do?

For all the talk about Consumer Driven Health Care, the first step must be for the Consumer to want to take the wheel.

Unfortunately, it seems that many of us never got the memo:

“The [Great-West Healthcare] 2006 survey shows one in four consumers has set aside no money to pay for health care expenses, while only 39 percent have saved more than $1,000 and just 28 percent more than $2,000...Additionally, only 5 percent have used online cost or quality comparison tools, and just as few people associate the concept of responsibility with CDHPs [Consumer Driven Health Plans]."

In other words, of the 1,000 working adults (ages 18 to 64 – thus excluding Sir Paul), most have just not bought into the notion that there must be some personal responsibility for the cost of our care. Compared with a similar survey done last year, the researchers found that these folks are a little better at guesstimating the cost of health care, but are generally unaware of the real cost of it.

Apparently, less than 1 in 5 of this year’s participants claimed that they had learned the cost of medical treatment either before or at the time of treatment. This is disheartening, because it represents a 5% drop from last year, down from 22% in 2005.

Some of that, of course, rests with providers and insurers: if there is to be cost awareness, then consumers must have tools available to enlighten themselves. Thus, transparency rears its head. True, more carriers are buying into the idea, and at least going through the motions of providing access to this information. But until this is seamless and ubiquitous, I suspect that next year's survey will echo this one.

Also discouraging is the news that less than 2/3 of those surveyed believe that they can improve their own health, and thus mitigate costs, by adopting a healthier lifestyle. I’m not sure why that’s the case: we’re bombarded with that message 24/7: in print, on TV and radio, and of course here on the InterWeb.

Food for thought.

Fighting Back: An Update

As you may recall, one of my carriers has put in place a “freeze,” prohibiting agents from freely choosing with whom they do business (click here for details). When last we discussed this, I was awaiting an opportunity to discuss the situation with the Attorney General’s office.

That opportunity knocked yesterday. In a conference call arranged by my state rep’s able assistant, I had the pleasure of speaking, for about 45 or 50 minutes, with an attorney in the Anti-Trust office.

And it was a very interesting conversation.

First, she asked me to explain for her the nature and significance of the problem, which I did [ed: why didn’t you point her to the blog post, smart guy?]. She then asked a number of probing questions:

■ Is this switching very common? Is it an easy or difficult process? I told her that, as far as I am aware, it is not a very common practice; that is, I don’t know a lot of agents who switch around often. It does seem like a fairly easy process, though: just sign a form (much like an Agent of Record letter that a client might use).

■ Could an agent have more than one GA (General Agent)? Yes, but not for the same carrier. That is, perhaps GA #1 offers access to XYZ Mutual and ABC Life, while GA #2 offers Anon Life and ASAP Health. I could sign up with both of them, because each offers different carriers.

■ Are GA’s local, regional, or national? I’m not aware of national GA’s, at least in the types of insurance I generally sell.

■ Do I think that several GA’s got together and pressured the carrier to put the freeze in place? That was, as they say, the “money question.” I knew immediately that she was looking for evidence of conspiracy. The problem is that, really, I have no such evidence, merely speculation and logic. I explained to her that, much as I’d like to help on that issue, I really had no proof that this was the case. Of course, it’s the most logical explanation, but that’s not the same thing. Still, since it’s a possibility, perhaps she can use that.

I certainly hope so.

■ Do other carriers have such restrictions? Another great question, on a number of levels. Unfortunately, I didn’t know the answer, but promised to get it for her as quickly as I could.

By the way, here’s why I couldn’t answer that one: I cannot imagine a scenario where I would want to switch GA’s. I’ve had a terrific working relationship with my current GA for almost 10 years, and have no desire or reason to switch. BUT, it is appalling to me that a carrier could prohibit me from doing so.

Since I’ve had no (recent) experience in switching, I didn’t know whether or not other carriers also had a freeze on. The only reason I knew about this one was because a colleague had called to ask me about it, and I subsequently received a letter which confirmed it.

And so, I called my own GA, and asked them. Currently, none of their other carriers have such a freeze, although others have had, in the past. I’ll pass this information on to the Attorney General’s office, and await further developments. She did, however, ask me to send her a copy of the letter, which I promptly did.

Toward the end of my conversation with the AG, the subject of what outcome I’d like to see came up. That, too, is a good question. I thought for a moment, and answered that I really didn’t want “heads to roll;” rather, a simple cease-and-desist would be just fine. In other words, all I really want is for the AG to tell the carrier that this is wrong, and to stop it (and, of course, refrain from any future such freezes).

See, I’m not unreasonable. Just stubborn.

Cavalcade of Risk, #2

The second edition of the C of R is now up, presented by It's Just Money. As usual, it's an interesting and diverse group of posts, ranging from insurance to sunscreen. Best of all, each post is accompanied by LA Money Guy's summary.

Perhaps the most unusual is this post from Jeffrey at FoIB Personal Financial Advice. Having occasionally seen this show, I can see why he's hooked. I must confess, though, that I never made the connection between a game show and risk management. Very interesting.

You can learn more about the Cavalcade, including a schedule of upcoming hosts, at the C of R homepage.

Grand Rounds Today...

Hosted by Dr. Deborah Serani, a psychiatrist-cum-blogger. She posts at her eponymously named blog, and has done a terrific job organizing and highlighting 45 submissions. I also like the way she grouped them in a sort of movie storyboard motif, and appreciate that each "clip" has a note explaining its subject and significance.

Interested Participant contributed this compelling post about the British version of the AMA, which organization seems to condone, if not encourage, "non-voluntary" euthenasia. Talk about slippery slopes.

Sauce for the Goose...

Interesting post over at Marketplace, MD:

“In support of consumer-directed health care and an end to the mystery of medical prices, the American Medical Association (AMA) today called on the health insurance industry to end efforts to conceal their pricing systems for medical services.”

Bravo! Transparency, as we’ve noted many times here at IB, is necessary if folks are to become more proactive in their consumption of healthcare.

I’m having trouble, though, finding the corresponding AMA resolution requiring doc’s to prominently post their prices above the receptionist.

It must be there, somewhere.

Right?

More Healthful Food News...

Who says you can’t eat your cake and have it, too? In this case, of course, we must be referring to chocolate cake, perhaps made with Nestle’s brand chocolate:

“In a move that recognizes the modern world's twin obsessions — indulgence and guilt — chocolate maker Nestle said Monday it would purchase weight loss product maker Jenny Craig Inc. for $600 million.”

That’s right, the giant food conglomerate has us now, coming and going. We can indulge our sweet teeth, and then shed those unwanted pounds (and inches) when we’re sated.

If nothing else, one must applaud the company for its ingenious (if somewhat cynical) marketing synergy.

Just one more step toward the new food pyramid.

Quite Sunny Money Monday

It's days like this that makes me regret that I'm one of the six insurance agents in the known universe that doesn't play golf. Oh well...

The Anniversary Edition of the Carnival of Personal Finance is up, hosted by the folks at Consumerism Commentary (the carnival's founders). It's an especially interesting mix this week, because folks were asked to submit both a "regular" post and a favorite from the past year.

My favorite this week comes from the Holistic Economy blog, with this post about a new type of savings plan called an Individual Development Account. Very interesting.

And this week's Carnival of the Capitalists is hosted by Blog Business World, which collected, and organized, almost 50 posts!

A lot of folks in my industry back the estate tax. Joe Kristan at Roth & Co agrees that it's necessary, but suggests a better model.