Howdy Pardner: LTCi Update [Updated & Bumped]

[Please scroll down for update]

Regular readers may recall my report, almost two years ago, on my 8-hour long Long Term Care class. That was a mind-number; not so the "refresher" course I attended yesterday afternoon. Taught once again by local LTCi guru Ray Copenheaver, this 4-hour course was anything but mind-numbing. We heard from Ray about some very interesting new developments (I'll get to these in a moment). A registered nurse explained some of the differences between levels of care, and a local Elder Law Attorney provided invaluable insights into the inner workings of Medicaid. Atypically, this class "flew by,"

There are some new developments on the Long Term Care insurance (LTCi) front, and I'll cover some of the highlights (and one potential lowlight).

As an aside, if you're a consumer looking for advice about whether (and/or when) you should consider buying LTCi, I heartily recommend Herman Bruns' post on the subject.

First up, reciprocity: As a result of the Deficit Reduction Act of '05, all 57 states now offer some form of "reciprocity." That is, if one buys a Partnership Qualified (PQ) plan in Ohio (for example), and moves to Florida, the safety net provided by the plan is honored in The Sunshine State. That reciprocity, by the way, even extends to states such as New Mexico, even though there are no such plans currently available for sale in that state. NB: Wisconsin is apparently an exception, but that's being resolved even now.

Another interesting development is the implementation of the Pension Protection Act of '06. One of the provisions in this legislation make it possible for folks to "trade-up" to an annuity with a long term care rider. For example, someone with a "regular" annuity may be able to trade it in, on a tax-advantaged basis, for one with a long term care rider. It's one way to stretch one's long term care dollars even further.

The "fly in the ointment" is the CLASS(less) program: The Community Living Assistance Services and Supports Act is a part of ObamaCare© that "mandates the creation of a national long-term care insurance program that will provide average benefits of no less than $50 per day to help people pay for non-medical expenses." As I opined before, I'm quite sure that the gummint will find a way to screw up Long Term Care, as well. On the other hand, it may be beneficial as an example of "how not to do it;" that is, it may well motivate folks to finally consider buying a real LTCi plan.

UPDATE: Almost forgot something else I learned at this class. One carrier has developed (and is test-marketing) a new configuration which offers a zero day elimination period (in other words, benefits begin pretty much right away) but pays on an 80/20 basis. It's apparently priced significantly lower than current products.

Typically, products come in three "flavors:"

■ Reimbursement, which is the most common. Here, you pay the bill (to the nursing home, for example) and submit the receipt to the carrier.

■ Indemnity, which typically costs about 10-15% more; these don't require receipts, and pay the daily benefit.

■ Cash Benefit, which cost even more than Reimbursement, but pays the full amount directly.

The "new" plan works a little differently. Say you buy such a plan with a $100 per day ($3000 per month) benefit. You go into a nursing home that costs $110 a day. They'll pay 80% of that $110 (or $88). If the cost was $150 a day, they'd cap the reimbursement at the $100 you bought (not the $120 that represents 80%). It's fairly new, and I don't have any other details, but expect to see more carriers introducing these kinds of products.

Where's My Free Health Insurance?

The phone lines are lighting up. People are calling insurance companies, agents and doctor's offices wanting to know about the free health insurance.

"They're saying, 'Where do we get the free Obama care, and how do I sign up for that?' " said Carrie McLean, a licensed agent for eHealthInsurance.com.

Sorry. The free health insurance doesn't start until 2014 and if you want it free you must qualify for Obamacaid (formerly Medicaid).

McLean said the call center had been inundated by uninsured consumers who were hoping that the overhaul would translate into instant, affordable coverage.

Always someone looking to mooch off the hard work of others.

Yo, Mass. How's This Working For You?

In Massachusetts, everyone is required to have health insurance. Consumers can buy health insurance policies from an Exchange (called the Connector) with benefits designed by the government. Health insurance premiums are regulated by the government. Health insurance companies are not allowed to deny anyone, regardless of their health or pre-existing condition.

Sound familiar so far?

So what could possibly go wrong?

After the state denied 235 of 274 requests for rate increases, carriers decided to withhold offers for new plans in the state’s Health insurance “Connector.”

Wow. No one could have seen that one coming.

Insurance Commissioner Joseph G. Murphy said he has asked insurers to quote rates for new coverage through the state’s Health Connector website by week’s end, and reminded them that they are required by law to do so. The new quotes would use base rates set last year, plus additional factors such as the age and size of a company’s workforce, Murphy said.

“If we don’t see the rates posted by the end of the week, we have a variety of enforcement tools at our disposal, including the ability to fine carriers,’’ warned Murphy. “It’s imperative that consumers have information available to them as they consider their purchasing options,’’ he said.

When did Massachusetts become part of the Soviet Union?

Veronica Turner, vice president of Local 1199 of the Service Employees International Union United Healthcare Workers East, released a statement suggesting “insurers are unnecessarily shutting their doors as a negotiating ploy’’ in their dispute with the state.

Don't unions withhold their services if they don't get what they want? Sounds like the pot calling the kettle black.

I could be wrong, but I don't think this health insurance for everyone in Massachusetts is working so well.

Doc's on the Record

Dr Marc Siegel, a New York internist, has some storm warnings for folks who think that ObamaCare© is a good idea:

"More than 40 local and national medical societies representing over half a million doctors came out against the health reform legislation."

That's a lot of providers who don't think that this will end happily. Dr Siegel may, in fact, be a closet IB reader: he posits that covering all those pre-existing conditions will inevitably cause insurance rates to rise (although, to be fair, we're far from the only ones who've made this point). The more immediate problem, as he sees it, is that doctors will be seeing a lot more patients for a lot fewer dollars, at a time when their own overhead is rapidly increasing.

The other major disaster looming on the good doctor's horizon is the coming shortage of physicians. According to the Association of American Medical Colleges, it's expected that we'll be shy some 160,000 (that's thousand!) doctors over the next decade and a half.

My only complaint with Dr Siegel's analysis is that he seems to be laboring under the mistaken belief that this was ever about health care in the first place.

Cavalcade of Risk #102

The "Ironman" does an absolutely fantastic job hosting this week's roundup of risk-based posts. Replete with his patent-pending ratings system, it's chock full of thought-provoking ideas and analysis.

We're looking for folks to host June and July Cav's - please drop us a line to volunteer.

The True Cost of ObamaCare©, Part ??

This video neatly and succinctly encapsulates the true cost of ObamaCare©:



[Hat Tip: Bob Vineyard]

Scam or Implementation?

When I saw this headline, "Scam alert issued on new health care law" I immediately thought "good, someone's finally called ObamaCare© what it really is." But alas, it's a hit piece on some poor, hard-working individuals looking on the bright side of our new health care financing system:

"Some of the [entrepreneurs] are going door to door claiming there's a limited open-enrollment period to buy health insurance now."

Which is, after all, quite true: once the new law is in full effect, there will be limited types of plans and providers, and most insurance policies are likely to be quite unaffordable.

The article says that "Health and Human Services Secretary Kathleen [Shecantbeserious] said Tuesday she's writing state officials about a proliferation of scams involving the new health care law." Not sure why she'd do that; seems to me that she should be directing her correspondence to Sens Nelson and Landrieu (to name just two), since they're primary instigators of the scam writ large.

Perhaps she'll get to that, eventually.

An Insurance Mandate in Action

Thanks to a pointer at National Review Online, I found this article in the Boston Globe Sunday April 4:

"Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses." . . . "The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month."

Ouch - but there's more:

"The problem is, it is less expensive for consumers — especially young and healthy people — to pay the monthly penalty of as much as $93 imposed under the state law for not having insurance, than to buy the coverage year-round. This is also the case under the federal health care overhaul legislation signed by the president, insurers say."

. . . also the case under federal health insurance overhaul legislation. Swell. What can possibly go wrong?

But, the people are pretty smart huh? We figure this stuff out. How's come the legislators don't figure this out? They had actuaries and insurance experts advising them. Don't the legislators pay attention? Who DO they listen to? What were they thinking by making the penalty so much less than the premiums? Did they think they were doing some kind of big favor for people who still couldn't afford insurance?

Oy Canada! Runaway Costs Coming Home to Roost

So our "broken system" needed a mutli-trillion dollar fix, based at least in part on the "success" of Canada's?

Not so fast there, pardner:

"The light bulb has gone on and the Ontario government has finally realized that the current method of financing health care in this province is not sustainable ... Premier Dalton McGuinty warned that if serious reforms are not implemented soon, health spending will consume 70 cents of every provincial dollar spent in 12 years. Not only would this increase government rationing of health care services, it would also crowd out other critical public services."

A couple of key points here:

■ What exactly comprise "serious reforms?" Is the Premier perhaps hinting at returning to a privatized system?

■ I found this little throw-away particularly delicious: "increase government rationing of health care services." In fact, this is a profound admission that the Canadian system is, in fact, based on rationing health care, and they still can't hold down costs.

Boy, I'm thrilled we've chosen that route, too.

ObamaMath and ObamaPools

Where can you purchase a $200 item for $100?

In ObamaWorld.

HHS Sebelius has released some guidelines for the new medical risk pools that will hit the streets in 90 days. We already addressed some of the potential problems in an earlier post.

Now it seems others are catching on as well.

The N Y Times makes these observations.

State high-risk pools, all of which operate at a loss, paid a total of $1.9 billion in claims in 2008, according to a recent report by the Government Accountability Office, an investigative arm of Congress. The average claims per person totaled $9,437 in that year. Premiums paid by beneficiaries accounted for 54 percent of the money used to operate the existing high-risk pools. Assessments collected from insurance companies accounted for 23 percent of the total, while state general revenues and other taxes accounted for most of the remainder.

Currently risk pools charge 125 - 200% of standard rates, but the ObamaPool has a different math book.

Premiums in the new program will be set at “standard rates,” based on the average premiums charged by private insurers for similar coverage in the individual market.

“If I have cancer, my rate cannot vary based on my having cancer,” said Jeanne M. Lambrew, director of the Office of Health Reform at the Department of Health and Human Services.

For those of you playing along at home, see if you follow this.

Rates currently charged by risk pools are higher than the ObamaPool and those premiums are insufficient to cover the claims. But the ObamaPool uses new math to come up with better benefits and lower premiums.

Must be magic.

Or ObamaMath (like those 57 states he visited and the 3000% premium reductions that were promised).

Dr. Lambrew said the new program would “build on what works.”

I guess you need to define the word "works".

A plan that covers really sick people but does not charge enough to cover their claims would only work in Obamaworld. In the real world, that would be a plan that doesn't work.

So using ObamaMath to set up an ObamaPool in ObamaWorld makes perfect sense.

Healthcare and the oPad

ObamaCare© in easy-to-follow format:



[Hat Tip: Lucianne]

Drive By Health Insurance

Drive by health insurance is killing the health insurance market in Massachusetts and will do the same when Obamacare goes live.

Thousands of consumers are gaming Massachusetts’ 2006 health insurance law by buying insurance when they need to cover pricey medical care, such as fertility treatments and knee surgery, and then swiftly dropping coverage, a practice that insurance executives say is driving up costs for other people and small businesses.

Gosh, who could have seen that coming?

The typical monthly premium for these short-term members was $400, but their average claims exceeded $2,200 per month.

That's better than playing the lottery.

the phenomenon is likely to be repeated on a grander scale when the new national health care law begins requiring most people to have insurance in 2014

No kidding.

The problem is, it is less expensive for consumers — especially young and healthy people — to pay the monthly penalty of as much as $93 imposed under the state law for not having insurance, than to buy the coverage year-round. This is also the case under the federal health care overhaul legislation signed by the president, insurers say.

Well yeah, but Obamacare is going to create a budget surplus which will save us from going bankrupt.

In February, (Gov. Duval) Patrick filed legislation that would give his administration sweeping authority to cap rates charged by insurers and medical providers. The bill included a provision that would restrict enrollment for consumers who are buying insurance on their own to two annual periods — in June and December — but includes exceptions for people facing life changes, such as loss of workplace insurance or the birth of a child.

Let's see. Wait until a child is born then buy health insurance. Yeah, that worked so well for the folks in Texas.

Rebirth and Renewal

Easter is one of the most holy days in the Christian world. While secularists have tried to commercialize the day with bunnies, chocolate candy and dyed eggs, Easter Sunday holds a special meaning to the rest of us.

For sure, it is a time to attend church services and many families use this as an opportunity to gather for a Sunday meal that for some odd reason usually involves ham.

A deeper meaning for Easter is the message to Christians everywhere that this is a time for rebirth and renewal. Just as the death and resurrection of Jesus led to the birth of what would later be called the Christian religion, Easter gives us time to reflect and perhaps start in a new direction.

Blessings to all who are celebrating this holy day.

Doc's Behaving Badly

Although I stand by my suspicions as to how politics may well influence how health care is eventually delivered, this is most definitely out-of-bounds:

"A Florida doctor who opposes the new health care law posted a sign on his office door telling patients who voted for President Obama to get care "elsewhere..."

Aside from the obvious (and insurmountable) problem of identifying which patients voted for whom, this sets a very bad precedent. What's to stop physicians from refusing to treat patients who buy Global Warming (or doubt it), or are in favor of tax hikes (or cuts)? This doesn't seem to be very much in keeping with the Hippocratic Oath.

I also wonder if there aren't professional ethical issues, as well: although we know that local "medical societies" are (to say the least) lax regarding these guidelines, that doesn't excuse providers from actually following them.

Georgia's High Risk Pool

For starters, Georgia does not have a high risk health insurance pool. Not yet any way. But part of Obamacare includes a provision to establish or expand high risk pools at the state level.

Many states already have established risk pools, but some, like Florida and Maine have been closed to new entrants for some time due to lack of funding. Just this week, HHS Sebelius sent letters out to all 57 states informing them of risk pool funds and asking for feedback on their desire to participate.

I didn't realize this was an option.

The feds are using $5 billion of our money they don't have to seed this new program. I am sure the Chinese are happy we are putting their money to good use.

Individuals who are interested in participating in this newly created pool must meet the following requirements.

Be a citizen or national of the United States or lawfully present in the United States;

Not have been covered under creditable coverage (as defined in Section 2701(c)(1) of the Public Health Service Act) for the previous 6 months before applying for coverage; and

Have a pre-existing condition, as determined in a manner consistent with guidance issued by the Secretary.

Now that's interesting.

You must have a pre-existing condition that is consistent with the guidelines as determined by the HHS. Wonder what those guidelines are and if they will have to be amended once someone with an illness or condition not on the list complains?

Premiums Must:

Be established at a standard rate for a standard population (that is, not exceed 100 percent of the standard non-group rate); and

Not have age rating greater than 4 to 1.

This conflicts with information provided an an internal memo sent to at least one state Department of Insurance a few weeks ago. That aside, charging a rate that is "not greater than 100% of a standard non-group rate" is insufficient to cover the risk associated with those previously deemed "uninsurable".

In other words, this won't fly.

So expect to dig deeper to pay the taxman enough to float this baby.

The 100% of standard premium cap is less than the guideline used in any state that currently has a risk pool. Caps currently run from 125% to 200% with most states in the 150 - 200% range.

HHS Sebelius was former insurance commissioner of Kansas, then governor, before taking a position in the Obama cabinet. One would think that she would know the 150% rate cap for the Kansas risk pool was not adequate and would not promote a program that is doomed to fail.

Apparently that is not the case.

No word yet on what Georgia will do, but my guess is they will let the feds run it. Why gear up for a plan that will be abandoned by 2014?

Food Pyramid Update

It's been several months since last we updated the (in)famous InsureBlog Food Pyramid, so we're pleased to bring our readers good news from the breakfast front:

"A high-fat breakfast of bacon and eggs may be the healthiest start to the day, a new university report showed."

Woo hoo!

Alas, no word on whethe ror not turkey bacon (my breakfast "meat" of choice) qualifies.

Cavalcade of Risk #102: Call for submissions

"Ironman" at Political Calculations hosts next week's Cavalcade of Risk. Submissions are due this Monday (the 5th). He would like to remind you to 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.

We REALLY need hosts for May - please drop us a line to claim your slot.

ObamaCare© Online

Thanks to our own Mike Feehan, we can now make available a searchable version of ObamaCare©.

Just click here - you'll need to "unzip" it once you've downloaded it.

It is a treasure trove of heretofore undocumented info on our new health care "system."

The Geniuses Behind ObamaCare©

Noted rocket surgeon and ObamaCare© advocate Rep Hank "Geophysicist" Johnson (D-GA) puts us some knowledge:



Get that? "“My fear is that the whole island will become so overly populated that it will tip over and capsize.”

And this is the kind of scary-smart DC-insider who will be determining your health care.

Heading for the Exits

Some states have learned when they put the squeeze on insurance carriers in an attempt to appear "consumer friendly," the carriers simply pick up their ball and bat and go home.

Lately we have heard a lot of saber rattling over premium rate increases. In fact, Obama and the clan used this as their drum beat to drive the vote on health insurance reform.

That, plus some heavy bribery in a vote buying scheme.

But I digress . . .

It seems the state of Massaconfusitts is following in the path of HHS Sebelius in trying to brow beat health insurance companies into submission over requested rate hikes.

Insurance Commissioner Joseph Murphy said he had disapproved 235 of 274 proposed rate increases because they included "excessive increases and rates unreasonable relative to the benefits provided."

Some of us know where this is headed.

If the carriers don't get what they need they will simply withdraw from the market. This happened with homeowners insurance in Florida. It happened in northern states when the DOI imposed suppressive underwriting rules combined with rate restrictions on health insurance.

Murphy's decision covered all 19 of the plan increases proposed by Blue Cross Blue Shield of Massachusetts, 63 of the 64 plan increases proposed by the Blue Cross HMO, all 47 proposed by Fallon Community Health Plan and all 36 proposed by Tufts Health Plan. The 33 plans offered by three out-of-state, for-profit insurers — Aetna, ConnectiCare and United HealthCare — all were approved. Each does relatively little business in Massachusetts.

There are some curious oddities in that quote.

Note that all requests for rate increases by FOR PROFIT insurers were granted.

Note also that they do "relatively little business" in MA.

I can speculate as to why it happened this way but I will let our readers form their own opinions.

Reading further this appears to be almost certainly political grandstanding and has no basis in sound principles of risk management and accounting.

If the denial stands one has to wonder where Massachutians will get their mandatory health insurance. It certainly won't be from the carriers who had their rate adjustments denied.

Smaller cars, fewer health insurance options, Poppa Washington.