In a Nutshell: The "Debate" is Over (or Just Beginning)

[Welcome Industry Radar readers!]

If a picture is worth a thousand words, then this graph is worth perhaps ten thousand:

Take a moment to study it, and then think about this:

"What it shows is health care spending per person across a group of countries, along with life expectancies, average number of doctor visits per year, and whether a country has a system of universal health coverage."

That is, it is the first (AFAWK) time anyone has correlated all the various health care systems, along with each country's mortality and morbidity rates, along with a handful of other factors to which folks on both sides of the debate on health care "reform" often allude. One of the most persistent "call to arms" is that folks in other countries spend far less than we do on health care, yet enjoy longer life expectencies. Another popular meme is that because uninsured (and now "underinsured") folks don't see the doctor as often, their health suffers.

All wrong.

Or, more accurately, not correct.

If that puzzles you, then I urge you to click here to read "the rest of the story."

You'll be glad (or mad) you did.

[Hat Tip: Dr Val]

Grand Rounds: New Year's Edition

Grand Rounds founder Nick Genes hosts this year's first roundup of great medblog posts, and it's a doozy.

Doc's vs "Reform"

Dr Melissa Clouthier, blogging at RWN, has an outstanding video of real life physicians, not AMA hacks.

It's all good, but two "highlights:" Pay close attention at about 1:30, when one doc explains in simple but dramatic terms how "the private sector" has "allowed...physicians to actually take care of more patients."

Immediately after, another doc schools the Congresscritter on how many are truly uninsured. But the best part begins at about 4:05, when that physician - educated and trained in Canada! - is invited up to outline his take on what reforms are needed:



In fairness, kudos to Congressman Conyers for engaging in the first substantive and civil debate we've seen thus far.

Product Update: Variable Annuities

We don't write a lot about variable products, but they can be a valuable part of one's insurance portfolio. Briefly, variable products, such as annuities or life insurance, are cash-value insurance policies with "sub-accounts" that mimic mutual funds. In addition to regular state insurance licenses, agents who sell these plans must also be registered with the Fed's, and require additional training and accreditation.

"Fixed" products, which don't have these kinds of requirements, depend on the insurer to determine rates of return. On the other hand, they do include a (modest) interest rate guarantee - a kind of "floor" below which rates cannot, by contract, fall. Variable products typically don't have these, because the carrier has no way of knowing what kinds of "investments" you'll be making. In other words, almost all the risk is on the insured; on the other hand, they hold the potential for greater returns than fixed policies.

Variable annuities are, simply, cash vehicles that offer the purchaser some tax advantages over CD's or mutual funds. As with all investment-type vehicles, they come with a lot of extra paperwork (e.g. prospectuses, disclosure agreements, etc). Until recently, these plans were considered pretty consumer-friendly, meaning that they offered some pretty decent returns without a lot of risk. That, of course, cost the insurers money, so a new generation of these vehicles is hitting the market:

"...for an additional fee, consumers can buy downside protection. In simplest terms, the safety net often works like this: If the funds perform poorly, the consumer can swap the shrunken sums in them for lifetime payments of a guaranteed-minimum amount.

Those guarantees of lifetime payments were a major strain on insurers after the market slide of 2008 and 2009. Insurers quickly pulled the juiciest deals off the market—subbing in less-generous versions at higher prices."

In a way, that stands to reason: if one's downside is essentially put back on the, um, backs of insurers, one is going to come out ahead, regardless of market performance. While that's a laudable goal from the consumer's side, it's not a good deal for the carriers (or their stakeholders). The new products come with some new rules which make it more challenging for consumers to put off that risk. While these plans remain a valid, and valuable, tool for retirement planning, they also require more consumer discipline and knowledge. If this is the kind of thing you might be interested in buying (or even just considering), seek out a professional, independent agent with at least 7 to 10 years of relevant experience (and, of course, proper credentialing).

Best of luck with your 2010 retirement planning!

Carrier Update: Southwest Ohio Edition

Back in November, we alerted readers to a potential network-related issue here in the Dayton area. Medical Mutual's contract with Premier Health (one of the area's larger provider networks) had expired, and talks had broken down (as they will). Had this problem not been resolved, a lot of insureds would have seen some significant health care cost increases beginning last Friday.

We've been informed (via email) that the parties have reached an amicable agreement, and there was nary a burp in services. Thanks to our friends at the Industry Radar, here's the official news.

On a sadder (maybe) note, it appears that the American Community Mutual Insurance Company has hit the skids. According to email from a reliable source, the carrier has entered into a consent agreement with the Ohio Department of Insurance. Under the terms of the agreement, no new business has been accepted from Ohio beginning December 23rd. This affects both group and individual new business; existing policyholders aren't necessarily affected. Of course, the ability to generate income from new business affects renewal rates for current policyholders; look for some major increases in the near term.

[Hat Tip: Cornerstone]

New Year's Carnival of Personal Finance

The Financial Blogger presents the first CoPF of 2010. It's chock full of helpful tips for making this year a financial success.

Alphabet Soup News: "Reform" Edition

As regular readers know, we're big fans of consumer-centric health insurance (e.g. HSA's). These kinds of plans have demonstrated a unique ability to actually impact the cost of health care. It's a shame, then, that one of the results of current "reform" efforts will be to eliminate them from the marketplace. The withdrawal won't be immediate, but gradual, through attrition.

We can see this occurring in real-time, as ObamaCare immediately imposes a 40% rate increase on the cost of certain medications. This will disproportionally affect those least able to cope with it, since OTC (over the counter) med's are usually much less expensive than comparable prescription-only versions:

"[I]f you pay for any of these items with money in your flexible spending account (FSA) or health savings account (HSA) ... you will face an effective tax increase of up to 40 percent on these items in the health care bill..."

The current "reform" legislation removes non-prescription medications from the "approved" list for plans subject to 213d requirements. This has the immediate effect of increasing their net cost, and thus discouraging their use. It's hard to reconcile that result with the purported goal of reining in the cost of health care. Indeed, it's obviously going to have the opposite effect.

But it's merely the first step in excising the one piece of Kennedy-Kassebaum that has continued to irritate the nanny-staters: tax-qualified health savings accounts. Once the "Exchanges" are up and running, the underlying high deductible products that drive HSA will be outlawed; FSA's will continue, since they encourage spending, which is apparently the (counter-intuitive) goal of ObamaCare.

Cavalcade of Risk #95: Decade's End Edition

Jaan Sidorov presents the last Cavalcade of Risk (for this decade). Remarkably, this also marks the 2 year anniversary of Jaan's outstanding Disease Management Care Blog.

Mazel Tov, Jaan, and keep on posting!

We're scheduling for early 2010 - please drop us a line if you'd like to host.

Careful What You Wish For: Breast cancer Edition

Earlier this year, my better half's mammogram showed an irregularity. Because we've been spared, thus far, from having to live under ObamaCare, she's had relatively easy access to this critical care, and was quickly referred to a specialist who determined that all was fine.

Of course, we were greatly relieved to learn that there was no problem, after all, but how would that have played out under ObamaCare?

Fortunately (for us), we can see quite clearly how she most likely would have fared:

"Women are still waiting months to find out whether they have breast cancer, the Government figure in charge of tackling the disease admitted ... any woman with signs of breast cancer would be seen by a specialist within two weeks by 2008.

The deadline was later extended to the end of 2009 but the cancer czar has admitted the NHS will still fail to hit the target."

Since the MVNHS© represents a model upon which our glorious new system would be built, such a dire shortage of care should send shivers up and down the spines of women (and those who love them). Early detection is key to successful treatment of theis terrible disease, which kills some 40,000 women here each year. And that's with our current regimen - how many more will die if we go the route of our Cousins Across the Pond?

Well, we can get at least a partial answer to that, one which also puts the lie to those who think nationalized health care systems are superior to our own:

"Around 45,000 women develop breast cancer every single year, and survival rates are lower than in comparable Western European countries - largely because the UK is so bad at spotting signs of cancer early."

'Nuff said?

Grand Rounds: Final '09 Edition

Jessica Otte presents the last of this year's Grand Rounds. This one reflects on the year just past, and looks forward to new beginnings.

Carnival of Personal Finance: Year End Edition

Mike at Gather Little by Little presents 2009's final Carnival of Personal Finance. As usual, it's a fun way to see what's out there on the finance front.

Raucus Baucus

One of ReidCare's (a subsidiary of ObamaCare, LLC) primary architects is unhappy with his political foes; as this clip demonstrates, his articulation of this displeasure is a model of decorum and sobriety:

Cavalcade of Risk #95: Call for submissions

Jaan Sidorov hosts next week's Cavalcade of Risk. Submissions are due this Monday (December 28th); please include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

You can submit your post via Blog Carnival or email.

Clueless in Nebraska

Cornhusker State Senator Ben "Clueless" Nelson is hoping that his fellow citizens are as dense as he is. Continuing to tout a popular (if discredited) meme that mandating health insurance is no different that mandating auto insurance, he demonstrates a depth of ignorance that's hard to understand. After all, one would think that a Senator (of all people) would grasp the difference between a function reserved to the states (Hello, 10th Amendment!) and an unprecedented grab for citizens' rights.

To wit:

"Sen. Ben Nelson (D-Neb.) said Wednesday that Congress is given the constitutional authority to mandate that individuals buy health insurance in "probably the same place” that states get the power to mandate that people purchase auto insurance."

There is so much wrong here that it's hard to know where to begin.

First, states only mandate auto insurance for those who choose to operate a motor vehicle on public roads. Own a farm? Don't need insurance for that combine (unless, of course, you're taking it to the drive-in on Saturday night). Don't own a car? No insurance required to ride the bus or subway, or take a cab.

Or ride a bike, for that matter.

That is a far, far different animal than requiring citizens to buy a product simply by being alive.

Second, as noted above, states' rights are not the same as the Fed's. Just because a state is legally allowed to do something does not automatically confer that same right on the federal government.

The 10th Amendment reserves to the states rights and privileges not set forth in the Constitution. Licensing automobiles, for example, is done at the state level, not the federal.

Third, this whole idea that auto insurance and health insurance are the same thing is utterly absurd. Yes, they are both predicated on the principle of "indemnification," but then so are disability and homeowners insurance. But no knowledgeable person conflates those two. If you really want to illustrate auto and health insurance as identical, then why isn't there legislation to outlaw underwriting in for the former as well as the latter? Why should folks with multiple DUI's pay any more than those with nary a speeding ticket? And why should folks who drive late model SUV's pay any more than those happily chugging along in their '76 Gremlins?

And, of course, why doesn't auto insurance pay for windshield wipers and a new set of tires? Or oil changes?

One reason, of course, is that mandating these kinds of changes would render auto insurance unaffordable.

I'm confident that our readers can connect the dots from there (even if erstwhile Sen Nelson, et al, can't).

Un(?)Intended Consequences

I forwarded the link to this article to my co-bloggers, with the tongue-in-cheek heading of "Looks like I picked the wrong week to quit selling life insurance." My point was that the "Exchanges" threaten to put health agents out of business:

"Consumers must buy policies from their employers or through the exchanges--but, either way, their choice of coverage is limited to one of four basic insurance plans that the government sanctions."

The whole article is a must-read, but as an agent, I meant that under such a scheme, I'd have to concentrate more on non-health insurance sales. In his reply, my co-blogger Bill made an excellent point:

"Tell your clients to buy it now. Life insurance will only get more expensive as ObamaCare cost controls kick in."

It's spot-on because, given the Death Panels and inevitable rationing, not to mention the death of new medical innovations, we can expect two things:

■ Increased mortality, and

■ Decreased life expectancies

The former means that carriers will need to drastically increase their "reserves" (funds set aside, by law, to fund future expected claims); the latter means that actuaries will have to dramatically reevaluate risk. Both of these will lead to increased premiums for life insurance policies, and, perhaps, fewer choices for those making long-range plans.

Bugs and features.

Look, Overhead!

If you own a small business, you've probably purchased coverage for your office equipment, maybe a truck or three, and of course your business liability insurance. But have you considered what would happen if you were to become disabled for any length of time? Hopefully, you've already purchased disability income insurance on yourself (and, perhaps, some key people), which will help keep food on your family's dinner table.

But what about keeping your company's doors open?

One of the most often overlooked types of coverage is Business Overhead insurance (BOi). This valuable coverage can help pay for everyday, on-going expenses like the phone and electric, rent, even some salaries. Unlike "regular" disability insurance, these plans are written for a short time horizon; they typically pay out for only one or two years. That's because they're designed to help keep the business afloat if one recovers quickly, or to buy one time to sell the business if not.

Also unlike personal disability policies, the premiums for these plans are generally tax deductible business expenses, which helps lower their net cost. And since they're written with relatively short benefit periods, the gross premiums aren't too hateful, either.

That's very interesting and helpful, Henry, but where do I go to buy BOi?

As with any type of disability (or life, or health) plan, your best bet is your local professional, independent agent. He (or she) will know which carriers have the right plan (or plans) for your type of business model, and can help coordinate your various other coverages with it.

Grand Rounds: Coming Together edition

Nancy Brown hosts this festive round-up of medblog posts, celebrating holidays from Christmas to Eggnog Day. Think of it as holiday treats for your mind.

Cost vs Care: An Osteo-Conundrum

As we've frequently stated here at IB, health care costs drive health insurance costs; and we've chronicled various examples of how this plays out in the real world. Sometimes, the lessons are readily observable, but sometimes, the conclusions aren't so obvious.

Case in point: Fosomax and Osteoporosis/penia. Does increasing consumers' awareness of a potential problem lead to unreasonably expensive, and perhaps unnecessary, treatment? Does Big Pharma wear a white hat or a black one? Is there necessarily a conflict between ethics and profit motive?

NPR has a fascinating look at how a well-known, and frequently prescribed, medication came to be ubiquitous, and offers insights into how DTC (direct to consumer) advertising can run up demand. It's a little disturbing but, I think, not entirely unfair to either side of the debate (such as it is).

I'd be very interested in our readers' take on this.

Gift of ObamaCare: A Taxing Experience

FoIB and gifted tax-blogger Joe Kristan reports on a timely idea for your last minute shopping list.

How much? For a WHAT??

Tom Harkin, Democrat Senator from Iowa said this last week - look at the clip below, about 15 seconds in:

"What we’re building here is not a mansion – it’s a starter home."

Who else but one of Reid’s Racketeers (or one of Pelosi’s Plunderers) could POSSIBLY look at a $900 BILLION house and call it a starter home?

UPDATE [HGS]: Here's the vid to which Mike referred: