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We've chronicled the accelerating shortage of physicians, which is destined to become worse as ObamaCare©
reaches its full stride. In the meantime, though, what are folks to do when they fall ill?There's an app for that:"Telehealth, or telemedicine as it was previously known, enables patients and doctors to connect anytime anywhere online or via mobile phone."This is also a major boon for folks who live in the hinterlands who find themselves in need of a specialist."Telemedicine" per se isn't all that new, but until recently it's been well under the radar. As our health care delivery model changes to reflect the "new normal," it's expected that we'll see even more of this. And that's not necessarily a "bad thing:" there are certainly circumstances where an actual, in-person office visit really isn't necessary.One area that has yet to catch up is, of course, health insurance: most plans cover "office visits" in one way or another, but I don't recall seeing the term "virtual" in any policy language thus far.Maybe some day...
A Democrat-appointed, three judge panel shot down Virginia's suit against the Evil Mandate:
"A federal appeals court on Thursday rejected Virginia's challenge to President Obama's health care law, saying in a ruling that the state doesn't have a right to bring a lawsuit."
Note that this isn't a ruling on the merits of the mandate itself, simply that Virginia lacks the "standing" to bring such a suit (although it's not clear who or what would have such standing in that case).
Meanwhile, the other legal battles continue their slog toward the SCOTUS.
And speaking of snafu's, FoIB David Hogberg (writing at IBD), has found an interesting (and potentially lethal) financing problem inside ObmamneyCare© itself:
"Because of a quirk in ObamaCare, people who buy health insurance through a federally run exchange may not be eligible for premium subsidies."
As Bob noted yesterday, pricing for these kinds of plans is heavily dependent on government largesse in the form of tax credits. As David notes, though, that subsidy is available only to folks enrolled through state-run Exchanges; those who live in states served by the Fed's version will likely be ruled ineligible.
Gee, wonder if maybe we should have read the bill before they passed it.
[Hat Tip: Michael Cannon]
UPDATE (via Gabriel Malor at Ace of Spades): Okay, now I get why the state of Virginia lacked "standing." Basically, it's because the state itself isn't subject to the mandate: its citizens are. And AG Cuccinelli didn't name any actual, you know, citizens as co-plaintiffs.
Ugh.
Very few people willingly buy insurance, pretty much any insurance. Sometimes, the bank that holds our mortgage requires us to, or the state mandates "minimum limits" for those that wish to drive on the public roadways, or a personal desire to leave a financial legacy to the wife (or husband) and kids.
Sometimes it makes economic sense: health insurance to pay the big, unexpected claims or disability insurance to pay the bills.
Or crop insurance for farmers with mouths to feed (their family's and ours).
Now you might be wondering why I'd mention crop insurance here: aren't we mostly life and health guys?
Well, yeah, but.
A gentleman named Kent Olson recently penned an article for the PIA (P&C agents' professional association) bi-monthly magazine. The article urged Congresscritters to use the current crop insurance model for the new ObamaCare©
Exchanges. The article makes a good (if not compelling) case for itself, but assumed (reasonably) that its readers would already be familiar with how crop insurance works.
I can (barely) spell it.
So I contacted Mr Olson, and we had a very pleasant chat. I asked him for the "nickel tour" of the product, and he gave me $100 worth, for which I am truly grateful. In order to understand Mr Olson's vision for Health Insurance Exchanges, one needs to have a modest understanding of how crop insurance works. Fair warning: some wonkery ahead, but I think you'll be glad you slogged through it, to see how someone not caught up in the day-to-day wrangling of health insurance views our future.
In the 1940's, through the early 80's, crop insurance (protection against financial loss due to poor yield) was financed and sold by a government agency, the Federal Crop Insurance Program. It offered limited products (one could insure only a handful of crop types), and was based on the one-size-fits-all model.
This program never really worked well, and was supplanted in the early 1980's by a newfangled partnership of government and industry (insurance carriers). The first major change is that it became privatized, with the carriers (and their reinsurers) taking the bulk of the risk, and the Fed's acting as a last-ditch backstop. The second major change is that the farmer himself also has "skin in the game;" that is, there's a hefty deductible (although it's not called that), as well as premiums based on a number of factors.
Soon, the plan was improved upon even further: new products were offered, additional crop types were available, and some premiums were subsidized to help make it even more attractive. The key, though, is that the product is marketed and sold by agents, not bureauweenies. And that's where we come to Mr Olson's take on ObamaExchanges©
.
His thesis is that the "crop insurance program has succeeded due in large part to the involvement of private sector independent insurance agents. [ObamaCare©] can succeed as long as private sector health insurance agents and brokers are involved."
In short, he proposes that the Exchanges be true "partnerships" between the public and private sectors.
I was pleased as punch to see someone thinking "outside the bun" on this issue, and was especially grateful to see someone whose experience runs in areas of this business totally different than my own. This brings a fresh perspective to the debate, which is a good thing.
The problem is that insuring crops and insuring people are very different enterprises. While it's true that both crop and health insurance are based on the principle of indemnity, there are some key differences between the two.
For one thing, there is, in fact, limited underwriting that goes into crop insurance. Pretty much any farmer that wants to participate may buy in, but must do so by a certain date (say, early Spring). He can't, for example, come into the office in mid-August to buy coverage for his sere fields.
Contrast that with ObamaCare©
circa 2014: Joe Shmoe, still undergoing chemo and on his way to the hospital for a liver transplant, can buy health insurance from the Exchange in between appointments, secure in the knowledge that he can't be turned down or made to wait for his pre-existing conditions to be covered, and that he'll pay the same rate as his perfectly healthy neighbor.
Of course, if he doesn't buy a policy, he faces a tax or prison sentence, because the government has mandated that he buy such a plan. And not just any plan: unlike the new and many choices available to the farmer, Exchange-eligible policies must include a myriad of special (and expensive!) benefits. And unlike the farmer, who has actual "skin in the game," HSA-style plans are now verboten.
And let's look at how that Exchange-participating agent might fare: after lengthy (and redundant) training sessions to become certified to sell each carriers' products, another intrusive background check and agreement to abide by strict (and stringently enforced) market conduct rules, the agent might be paid a nominal fee (not a commission).
While I certainly applaud Mr Olson's efforts, and truly appreciate both his expertise and his willingness to share it with me, I think this is a non-starter.
[Hat Tip: Bill M]
NB: At this time, no link to Mr Olson's article is available. I'll update the post to include it if/when that changes. HGS
Back in the day, I looked forward to delivering death claim checks as much for my own closure as my clients'. It's not that I wished that any client would die, but that the package I was delivering would last far longer than the sponge cake or relish tray.Alas, a number of years ago carriers decided checks were out, and checkbooks were in. That is, instead of sending a simple check to the agent to be personally delivered to the beneficiary, carriers started sending checkbooks linked to "benefits accounts;" these look like plain old checking accounts, but "unlike a bank account, this money isn't protected by the FDIC, nor is it even held in a separate, specific account. It's just considered part of the carrier's overall assets."Now, The Golden State is considering legislation to change all that:"Members of the California Senate have voted 36-0 to approve ... a bill that would require life insurers to get a written declaration stating how the beneficiary wants to receive the benefit payment ... Current California law gives life insurers the ability to pay benefits solely through [those fake checking accounts]."Bravo!Now it may seem draconian to put that choice on the back of a grieving widow (or widower), but there's a sort of built-in opt out provision:"[I]f a consumer failed to make a decision, the bill would let an insurer set up an RAA."I'd like to see other states go this route, as well.
Emily Holbrook hosts this week's lean and mean roundup of risk-related posts.
InsureBlog has argued for years that the cost of medical insurance is driven by the cost of medical care, and that the rise in the cost of medical insurance results primarily from the rise in the cost of medical care.Most of the large consulting firms conduct annual (or more frequent) surveys of the insurance companies to help their clients understand and anticipate the annual rate of "trend" in medical costs and thus in their insurance or benefits costs. I happened to see a recent survey conducted by Oliver Wyman Actuarial Consulting of Milwaukee. Oliver Wyman is a subsidiary of the international firm of Marsh & McLennan, which is also the parent company of the HR and benefits consultants, William Mercer.The particular Wyman survey included responses from 104 insurance companies and benefits administrators that, together, cover more than 117 million Americans who are covered in employer, union, or association-sponsored group plans.The reported median medical trends are not surprising--they range from 9% for HMO plans to 11% for PPO plans. In other words, this is approximately how fast medical benefit payments are rising in these types of plans. The different rates result from differences in utilization management between HMO and PPO plans and other technical factors. The most interesting thing to me about the Wyman survey is that it included SG&A (Selling, General & Administrative) admin expense trends. The reported median for this category is 3.5%.These results suggest that rising medical costs explain more than 70% of the median annual increase in group medical insurance benefits cost. The remainder is explained by the insurer's SG&A.
Here's a short update on the Early Retiree Reinsurance Program - ERRP. See earlier update here. ERRP was enacted as Section 1102 of the Affordable Care Act, signed by the President on March 23, 2010. In Section 1102, Congress appropriated $5 billion for a temporary subsidy to "stabilize this market" by subsidizing employers' early-retiree insurance coverage until the Federally-mandated Exchanges become effective in 2014. Eligible retirees are age 55-64. When the $5 billion runs out - there is no more insurance subsidy. It's important to know that HHS began accepting ERRP applications on June 29, 2010 and stopped accepting applications barely 10 months later, on May 6, 2011. So other than that, how's it going? The July 15, 2011 HHS update provides some tantalizing details. (there were 41 subsidies awarded above $10 million and 3 more between $9 million and $10 million, so I looked at all 44). There are several hundred groups in the list.Total awards for all the groups now amount to about $2.7 billion. The top 44 groups account for more than $1.6 billion, or about 60%. Of the 44, there were 4 groups I identified as "union" funds; 23 public-employee or public-retiree funds; and 17 private employer groups. The union funds account for 17% of the $1.6 billion awarded, public funds account for 52% and private employer groups for 31%.The largest single award was to the UAW retirement trust-- $221 million. The second-highest award was to AT & T - $141 million. I think the AT & T award largely reflects Communication Workers of America retirees--but I can't be certain. Key observations: (1) the program is already closed; (2) the program transfers a significant share of employer-incurred early retirement costs from the employers to the taxpayers; (3) the awards to public employers constitute a benefits "bailout" that avoids the messy political business of you know, actually proposing individual bailouts and then, you know, having an actual public vote in Congress; (4) as suggested for AT & T, there may be a lot more award money going to unions than meets the eye - - for example, awards to GM, Ford, Chrysler, Caterpillar, Delphi, and others may be UAW-related and (5) over 2/3 of the awards going to unions and public employers suggests a tilt toward rewarding the administration's political allies.Finally the speed at which the administration has slammed the window on further applications suggests the $5 billion cost projection was substantially underestimated, or was never a "estimate" at all. (That is, it may have been determined as a set amount for a specific purpose). But about all the taxpayers will ever have a prayer of knowing for sure, even approximately, is the final bill we have to pay.
Looks like a great opportunity here.Now, if only Frau Oberst Sebelius can talk the NHS into managing U.S. hospitals . . .
Emily Holbrook hosts next week's CavRisk. Entries are due by Monday (the 5th).
NB: We're now using this submission tool: The BC WorkAround
Once there, you'll be asked to provide:
■ Your post's url and title
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At the bottom of the form, you'll see a drop-down menu; simply select "Cavalcade of Risk" then press "Submit" and you're good to go.
And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).
Thanks!
As we noted late last year, Cincinnati is proving to be something of a canary in the coal mine:
"Retired city of Cincinnati workers argued in court Tuesday that City Hall is obligated to provide them for the rest of their lives with an extremely generous health coverage plan"
These agreements, forged by non-disinterested third parties with their union counterparts, essentially shifted the post-retirement health care costs of city employees onto the backs of the citizens and their children (sound familiar?). The problem, of course, is that with double-digit real unemployment in the private sector, these costs are becoming unsustainable (if they ever were such in the first place).
So the citizenry, via their proxies in City Hall, are fighting back against this massive financial obligation.
And they seem to be winning:
" [A] Hamilton County judge ruled today that City Hall has the right to alter retirees’ health coverage to require most to absorb a higher share of the cost ... Common Pleas Judge Norbert Nadel’s decision could save Cincinnati’s $2 billion retirement system tens of millions of dollars on city retirees’ medical coverage."
There's a very big "if" here, of course: the ruling is certain to be appealed, with who knows what results.
Still, it's an important battle won, as the war itself slogs on.
[Hat Tip: FoIB Holly R]
Last year about this time, we discussed the effects of flooding in the Midwest, and how the Federales running the program seemed not to notice that they were paying out dollars that might be needed down the (waterlogged) road.
But that was then, and this is now:
"Margaret Wert bought her Wayne, New Jersey house in 1999, relying on assurances from her realtor that any occasional flooding would only amount to an inch or two of water. A week after closing, Hurricane Floyd put four feet of water in her basement.
Earlier this year, Wert, 45, got flooded again and received a payout of $5,000 on her government flood insurance, which costs her $1,200 a year. It wasn't enough to cover her bills, but it helped with the new stove, refrigerator and boiler.
But all of Margaret Wert's new appliances and much of her house are now ruined, after Hurricane Irene flooded broad swathes of New Jersey. This time, though, she has a message for the government insurance program."
Granted, Wayne isn't exactly beachfront property, but it's also not hundreds of miles inland. My initial take was that Ms Wert is in pretty much the same class as our erstwhile Midwestern rancher.
And to some extent, that holds; but there's actually a deeper, darker, more important lesson here, which my friend Brian D pointed out to me:
"In the United States ... insuring homeowners against flood damage is the sole province of the federal government."
Now you'll notice the ellipses, and what I redacted is important, but not yet crucial: we'll come back to it. The point here is that flood insurance is administered - and funded - by the government. It is, as Brian pointed out to me, a Single Payer System. In fact, it is a Single Payer System which some folks are required to buy.
Starting to sound familiar?
It is a mandatory, Single Payer System administered and funded by the federal government, and which is "a disaster itself, hanging on by a series of hard-fought annual extensions and the subject of a stalled reform bill in Congress."
Hmmmm.
Keep in mind, Irene came ashore as a much weaker storm than anticipated, and although the flooding and resulting damage has been extensive, it's no Katrina.
But what about the next one?
And the one after that?
Remember those ellipses?
Here's the complete quote:
"In the United States, uniquely in the developed world, insuring homeowners against flood damage is the sole province of the federal government." [emphasis added]
So unlike all those other countries that have (but are moving away from) single payer health insurance, we have a single payer flood insurance program. And how's that working out?
"In New Jersey alone, Governor Chris Christie has estimated losses could be in the tens of billions of dollars. The state has nearly $52 billion in flood insurance in force from the NFIP."
Gulp.
Or, as former FEMA Director Joe Allbaugh points out, "[i]t spends most of its time in the red. That's because it's another government program (where) the premiums that are charged are way under market value, in my opinion."
So we have a Federally administered and funded, mandatory, single payer insurance scheme that consistently loses money, and leaves claimants less than whole.
Remind me again, please: your money or your health?
Looking for info on Aetna's new Savings Plus plan, currently marketed exclusively in the Cleveland (OH) area. Specifically interested in cost differential with their "regular" plans. Please drop me an email if you have relevant info.
Thanks!
Fisher at the Health 3.0 blog has a very cool edition of Grand Rounds today, selecting quotes from each post and "tagging" them based on different themes.
We last noted the fact that ObamaCare©
=Doom for group health plans about two months ago. As we've noted all along, any sane employer is going to take a look at the Exchanges, then at the employer mandate and its concomitant fines, do some quick math, and come to the entirely rational conclusion that dropping group health coverage is a "no-brainer."
A few days (months) late and a few dollars short, the McPaper has finally glommed onto this exciting news:
"Nearly one in 10 midsize or large employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014"
Says whom?
Says Towers Watson, a major employee benefits consulting firm. And it's not just TW; Mercer (another independent health care and financial services research firm) has reached a similar conclusion: "8% are either "likely" or "very likely" to end health benefits once the exchanges start."
The TW report is actually a bit scarier (if one's spooked by these sorts of things), because it identifies another 20% of employers currently straddling the fence. What are the odds that the bulk of these are going to end up keeping their group plans?
Yeah, that's what I thought, too.
As a matter of policy, of course, I'm in the "anti-group" camp; that is, I don't think that one's health insurance should be tied to one's employment. But this isn't the way to get there.
[Hat Tip: Stop The Hit]
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