The Uninsured: Screwed Again

So let me get this straight: a bill we had to pass to learn what's in it, trillions of dollars of debt to finance it, a mandate tax penalty for choosing not to insure, all so we could extend coverage to the "43 million" uninsured.

And at the end of the day, we get...

"A new Congressional Budget Office (CBO) report says that under ... Obamacare, 30 million non-elderly Americans will remain without health insurance in 2022."

Words. Fail.

Missing the Point

This started as a comment to Bob’s post below - “Dying Poor” - but my comment began to run long and I think works better as a regular post.  

The NBER Working Paper (scroll to link "Were they Prepared for Retirement?") finds that 46% of people die with less than $10,000 in assets.  We already know that about 50% of taxpayers have so little income that they pay no income tax.  So is the NBER Paper helpful or even surprising information? I say no.  In fact, I think it misses the point.  Here’s what I think is the point.

Most long-term poor people have no significant income or assets before age 65; the same is true after age 65; and the same is true when they die.

OK then, what would be helpful to the long-term poor?  I think a wider acceptance of the things one must do to avoid poverty in the first place, would be helpful.  These things are easier said than done, but they are no mystery.  Search any variant of "how not to be poor" and you will find them.  For example, here is some extremely useful, fundamental advice:

"Avoiding long-term poverty is not rocket science. First, graduate from high school. Second, get married before you have children, and stay married. Third, work at any kind of job, even one that starts out paying the minimum wage. And, finally, avoid engaging in criminal behavior. If you graduate from high school today with a B or C average, in most places in our country there's a low-cost or financially assisted post-high-school education program available to increase your skills."

Why are such simple ideas ignored?  I think because (1) the ideas require a quality that has become uncomfortable for many modern Americans--personal responsibility (2) the ideas don't fit the popular notion that in most cases government assistance is necessary for most poor people, and (3) the ideas are not intellectualized in some professorial research paper.

But even a professorial research paper can fail to be useful by missing the point, as I think this NBER Working Paper does.

This brings us to the connection with insurance - at least conceptually.  That concept is the failure to be useful by missing the point.

Our country's health policy leadership  - with notable exceptions - has typically missed the point by continually failing to distinguish medical insurance from medical care.  Somehow, it's all "healthcare" to them.  But the two are very different, and the difference matters. 

Medical insurance is expensive because medical care is expensive.  The cost of medical insurance is rising because the cost of medical care is rising.  The cost of medical care is clearly the more fundamental problem.  But our health policy leadership insists on “solving” that problem with federal subsidies – that is, with insurance.

Our leadership has missed the point about financing medical care.  They misdiagnose the problem and they mislead the rest of us.  This is no way to lead a nation and it’s no way to solve the problem.   America’s inefficient and highly expensive medical care system over the past 50 years is ample proof of this.  Obamacare is just another highly-expensive non-solution, born of missing the point.   

Hide-and-seek with the MVNHS©

Regular IB readers know something most folks don't: that Brits know how bad their health "care" system really is, and that many have already taken steps to protect themselves. The easiest way, of course, is to buy a private health insurance policy...

Wait, you didn't know that these existed? Well, the Much Vaunted National Health System© doesn't want you (or especially their own victims citizens) to know, either. But it's true:

"Private Medical Insurance also known as PMI allows you to have complete reassurance of knowing that, should the need arise you and your family can receive medical treatment privately, without waiting for the [MVNHS©] to treat you."

Well, that cat's apparently well out of the bag, as John Fund reports on the opening "ceremonies" of the 2012 Summer Olympics:

"600 doctors and patients recruited from National Health Service hospitals were featured in a bizarre tribute to socialized medicine, with children bouncing up and down on 320 hospital beds arrayed in front of a giant Franken-baby wrapped in bandages ... One of the core values of our society is that it doesn’t matter who you are, you will get treated the same in terms of health care.” [emphasis added]

Well, there's some truth to that, if by "care" you mean "death."

But the truth is out there, and British citizens are wising up to it:

"British papers report that a study by the research firm Lloyd’s TSB Premier Banking found that nearly two-thirds of Britons earning more than $78,700 a year have taken out private health insurance because they don’t trust the [MVNHS©]."

Most of those are apparently afraid of infections from "super bugs" increasingly present in the Brits' great health "care" system. They also know that when the government is in charge of health care, that care is going to be rationed.

But don't just take my word for it:

"A 2007 survey of almost 1,000 physicians by Doctors’ Magazine found that ... one in five doctors knew patients who had suffered as a result of treatment rationing."

Bread and circuses, and health "care."

Cavalcade of Risk #163: Gold medal edition

Julie Ferguson explodes off the starting blocks with a first-place (and first-class) roundup of all things risky. Take a break from London and head over to Julie's place.

Ha, ha, ha - Thud

Apparently, humor doesn't sell so well:

"Geico's quirky gecko, Progressive's peppy Flo, Allstate's mischievous Mayhem ... aren't just ubiquitous but some of the most clever icons created by Madison Avenue."

True dat. My favorite is the Mayhem guy, especially in the family dog commercial. Not a big fan of the gecko, or the Nationwide guy with the microphone. Still, one would think that these kinds of commercials would be highly effective: after all, they get your attention and promote brand recognition.

Turns out, not so much:

"[T]he heavy emphasis on humor-based advertising appears to be generating little more than expensive chuckles ... Nationwide's fourth fresh ad campaign since 2005 is a marked departure from the swelling tide of laugh-infused TV, radio and digital ads its marketers believe is choking consumer interest."

The emphasis appears to be leaning towards "warm and fuzzy" and away from laugh-tracks. The key, of course, is differentiation:

"The challenge is how to stand out from the other guy," says Jon Swallen, a longtime industry ... The fact that Nationwide is changing its approach suggests that they're attempting to carve a place where they can attempt to stand out."

Which, of course, makes sense.

On a related note, Progressive's "Snapshot" program seems to be paving the way for a new auto insurance rating model: pay-as-you-drive. This also makes sense: think about cell phones. A lot of us have monthly plans but leave minutes on the table, or run up big overage bills. But stop into Target or Walmart (to name just two) and one is faced with a broad array of pre-paid options. Whether or not this type of business model will work with car insurance is anyone's guess, but at least the industry's starting to think a bit outside the box.

MassCare Floundering

It's lobster season (or so I've been told), and the water's boiling on the progenitor of ObamaCare::

"Sure enough, 79% of the newly insured are on public programs. Health costs—Medicaid, RomneyCare’s subsidies, public-employee compensation—will consume some 54% of the state budget in 2012, up from about 24% in 2001"

Oy, that's a 225% increase in the overall "curve." Adding insult to injury, health care spending by the state's government has increased almost 60%. And to top it all off, the Bay State "spends more per capita on health care than any other state ... Costs are 27% higher than the U.S. average"

So, more money, but better care, right?

Right??

Maybe not:

"Under [a recently passed “cost containment” bill], all Massachusetts doctors, hospitals and other providers must register with a new state bureaucracy as a condition of licensure—that is, permission to practice. They’ll be required to track and report their financial performance, price and cost trends, state-sanctioned quality measures, market share and other metrics."

More red-tape means less time for health care delivery.  But wait, it gets even more Orwellian:

"No registered provider is allowed to make “any material change to its operations or governance structure ... without the commission’s approval ... As the commission polices the market, it can decide to supervise the behavior of ... doctors and hospitals that are spending too much on patient care."

Well, I'm sure that will gladden the hearts of actual health care providers. Because that kind of thinking worked out so well in the 70's.

He's baaaack!

My better half and I spent last week in beautiful, friendy and clean Montreal. It was an amazing trip, a truly historic city filled with friendly, warm and helpful people, great food and interesting sights (and sites). I would recommend it to anyone who wants a taste of Europe without a "hop across the pond."

A very special Thank You to Bob for holding down the fort here at IB all week. He's a great co-blogger, and an even better friend.

Now, back to the grindstone for moi.

Cavalcade of Risk #163: Call for submissions

Julie Ferguson hosts next week's Cavalcade of Risk - Entries are due by Monday (the 6th).

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).

Thanks!

On the Colorado tragedy, medical bills and health insurance

Our hearts of course go out to the victims of last week's horrific shooting spree, and we wish the survivors a quick and full recovery. But some folks have already decided to politicize the attack, noting that "[s]ome of the victims ... may face another challenge when they get out of the hospital: enormous medical bills without the benefit of health insurance."

The article then goes on to speculate, with zero evidence, that even though there's "no exact count of how many of them don't have insurance ... statistics suggest many of them might not be covered."

Let's leave aside for the moment that such speculation is what got Brian Ross in hot water in the first place, and grant that some (many?) of those at the theater were uninsured.

How come no one's asking "why?" It appears that most of those in attendance were young (teens, twenties and thirties), hardly a high-risk (and thus high premium) demographic. And remember, under the new health care law, those 26 and younger COULD have been on their parents' plans. That they chose to be uninsured is on them. Heck, the wife of one victim is pregnant – without insurance. How were they going to pay for that? HOW they ended up in the hospital has NOTHING to do with the fact that they CHOSE to be uninsured.

Some years ago, we discussed the sad case of "Amanda," another young person who chose not to buy insurance. She ran up almost $2 million in bills for cancer treatment. She didn't expect to get cancer any more than the folks in the theater expected to be shot.

The good news for the Colorado victims is that at least some of their bills will be waived, and their fellow citizens (and Warner Brothers) have generously contributed funds to help pay for their care. But using their plight to score political points is an insult to folks who do play by the rules and accept personal responsibility.

Agent in the Clink: Update

Last week, we reported on the unfortunate case of Aloha State insurance agent Kathleen Kau, who was recently sentenced to 10 years in prison for raiding her clients' insurance policies. We wondered what kind of life insurance policy came with a checkbook (as described in the original article), and reached out to the reporter and to TransAmerica.

We were unable to connect with the former, but yesterday got this answer from Cindy Nodorft (she's in Transamerica's Corporate Communications area):

"Thanks for your inquiry.  I’ve learned that the policy at issue was part of a block of business assumed by Transamerica Life Insurance Company that allowed policyholders to obtain policy loans.  This practice was discontinued in about 2005."

I guess that makes sense, although I'd never heard of carriers issuing checkbooks with loans. It strikes me that this sounds more like a line of credit than a typical loan, but at least we now have an answer.

Thanks, Cindy!

From the P&C Files: Iran, Shipping, Insurance and Oil

Although we primarily concern ourselves with life and health insurance, we're certainly no strangers to the Property and Casualty side of the biz. This item in the Washington Free Bacon Beacon (oops, sorry), piqued my interest:

"The insurance industry and ... lawmakers are attempting to water down a new Iran sanctions bill that would penalize any company that underwrites Iranian affiliates"

Since this is rather outside my bailiwick, I turned (again) to our resident on-call P&C guru, Bill M, who helped me get my head around it.

Here goes:

Acme Industries, which ships oil-drilling equipment to Iran, calls AIG (hey, it's called American International Group for a reason) for a quote. AIG asks all the pertinent questions (including what's being shipped, from where, to where, etc) and generates a quote. Acme likes what it sees, and purchases the policy.

Six months later, Acme is sanctioned for "bolstering the Iranian oil industry."

Under the bill currently wending its way through the House, AIG would then also be sanctioned.

The "prominent lawmakers" mentioned above would prefer to let AIG (or whomever) off the hook.

This item raises a number of questions:

First, would it have mattered if Acme had already been sanctioned before seeking that AIG quote? Are "sanctions" to this process what speeding tickets are to auto insurance?

Second, what if Acme had bought the policy from a broker in London? After all, it's not unreasonable to presume that a carrier might have offices in other countries in addition to a presence here.

If you have experience in this market, we'd appreciate any thoughts you might have on this.

ObamaTax: Told ya so

Bob mentioned this last night, but I wanted to toss in my 2¢. Regular IB readers won't be surprised that:

 "About one in 10 employers plan to drop health coverage when key provisions of the new health care law kick in"

I think that's lowballing it, and here's why:

First, the ridiculously onerous MLR requirements, which add nothing of value but do add lots of extra costs to group plans. Determining who's eligible, calculating employees' shares, and tracking down former employees who might have been covered for only a month sounds like a great reason to bail.

Second, those much-touted  small business tax credits (subsidies) were a complete bust; how bad is it when you can't even pay employers to offer group health plans?

Third, what about all those companies with, say 55 or 60 employees? They're over the mandate threshold, but not exactly in Fortune 500 territory. Letting go one or two folks might work (to get back below the threshold), but a dozen? Just doesn't sound viable. Smartest alternative? Dump the group and eat the fine.

Okay, maybe that's more like a quarter's worth.

Cavalcade of Risk #162: Come and get it!

Van Mayhall hosts this week's collection of interesting risk-related posts. Don't miss it.

And now, the Anti-MVNHS©

Yesterday, we reported on the sad fate awaiting seniors who trust the Much Vaunted National Health System© to keep them alive. As we noted, many are forced onto a lethal "pathway," denied fluid and meds.

In response to this growing scandal, "the anti-euthanasia charity Alert is distributing cards to patients to prevent this happening. The cards simply read: 'Please do not give me the Liverpool Care Pathway treatment without my informed consent or that of a relative.'"

The problem with the Pathway is that it is often "prescribed" without the permission (or knowledge) of the patient or his (or her) advocate. It's an attractive option - for the MVNHS©, natch - because it reduces costs with little or no effort. According to Dr Gillian Craig, a retired geriatrician and former vice-chairman of the Medical Ethics Alliance, "[i]f you are cynical about it, as I am, you can see it as a cost-cutting measure, if you don't want your beds to be filled with old people."

The cards act as garlic to vampires, hopefully fending off over-zealous providers from pulling the plug prematurely. Unfortunately, there doesn't seem to be any way to enforce them; that is, what's the consequence to the provider if that card is ignored? After all, it's the MVNHS© that's footing the bill (hey, it's free health care, right?).

Exchanges, Subsidies and intent

[Note: This post was co-written by Henry Stern and Bob Vineyard]

We've often lamented that it's too bad no one read the ObamaTax bill before they passed it, and with good reason. A fundamental problem is that the 2000+ pages of the bill, and the 13,000+ (so far!) pages of reg's promulgated to enforce it, keep handing up surprises. As we've pointed out, folks in states which opted for Federally-run Exchanges aren't eligible for the ObamaSubsidies, thereby driving their costs even higher.

Or are they?

Cato's Michael Cannon has been, perhaps, the most vocal in pointing out this discrepancy:

"This was no “drafting error.” During congressional consideration of the bill, its lead author, Sen. Max Baucus (D-MT), acknowledged that he intentionally and purposefully made that bailout conditional on states implementing their own Exchanges ... On May 24, the IRS finalized a regulation that says the law’s $800 billion [subsidy funding] will not be conditional on states creating Exchanges"

So what's the big deal?

The following appeared on a forum for insurance professionals in which Bob participates (it's about the ObamaSubsidies noted above):

"If you are ELIGIBLE to join any employer group plan where your portion of the premium is less than 9.5% of your income, then you won't get a subsidy. Next - drumroll please - this also holds true for dependents ... Due to the fact that the EMPLOYEE portion is less than 9.5% of the FAMILY income, the entire family is disqualified from a subsidy even if the employer pays nothing for dependent coverage."

In fact, and this is a real kick in the shins, it doesn't seem to matter whether you actually sign up for the group or not: maybe you found a better deal on the Exchange [ed: hey, it could happen!] and buy it, presuming that the net premium will be less because of the subsidy. Nope.

And it's no better if you do sign up for the group plan:

"Actually, the employer doesn't even have to pay a large portion in order for this to kick many families out of the subsidy ... a family of four must pay $729 in premium to equal 9.5% of their income if they make 400% of FPL. That means that any employer group health plan that charged that employee less than $729 for the EMPLOYEE-ONLY coverage would disqualify him and his dependents from receiving a subsidy. Nice."

And it only gets better worse:

MVNHS© "Expediting" Health Care Costs

One of the major problems facing nationalized health care systems is that, despite all promises to the contrary, they do very little (if anything) to reduce the cost of delivering care. There are, after all, only so many ways to do so; by far the most efficient (at least for the Much Vaunted National Health System©) is to simply deny it to "undeserving" folks:

"[S]ix doctors in the U.K. ... claim that the country has gone too far with a publicly funded program aimed at supporting terminally ill patients."

This word, "support" - I dunna think it means what you think it means:

"[T]he Liverpool Care Pathway program is being used to cut costs instead of as simply a more humane mode of care ... allows medical staff to withhold fluid and drugs in a patient’s final days"

Under the Brits' system, "support" means "death," which is an interesting (if macabre) spin on things. We've discussed 'end of life' care here at IB, and determined that there are no easy answers [ed: no kidding]. Although some folks (notably those who advocate it) applaud these "pathways" as both cost-effective and humane, they conveniently ignore the fact that the folks making the decision have a vested interest in the outcome:

"[T]he number of hospital deaths that implemented such end-of-life care measures doubled in the last two years."

That's a lot of dead grannies.

Blogroll Update

We're pleased as punch to add Jeff Root's interesting and helpful life insurance blog to our blogroll. Jeff's an independent life insurance agent, licensed in all 50 states(!), who specializes in high risk life insurance.  He works with consumers and agents alike, helping those with health issues obtain needed coverage at affordable rates.

Jeff performs thorough evaluations of a consumer's risk and submits that to underwriters with whom he's built lasting  relationships (as well as other general underwriting desks). He then screens the offers that come back and offers the best one(s). As Jeff says "it's something I wish most life insurance agents would do instead of taking shots in the dark."

Amen to that!

What makes his blog so interesting is that he shares these experiences in a consumer-friendly way. He believes that "there's a lack of helpful information for consumers with health issues on the web," and so he tries hard to fill that void. Do click through.

Cavalcade of Risk #162: Call for submissions

Van Mayhall hosts next week's Cavalcade of Risk - Entries are due by Monday (the 23rd).

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).

Thanks!

Another Agent in the Clink

Regular readers may recall the sad story of Glen Neasham, who sold an annuity and went to jail. A bit further west, insurance agent Kathleen Kau has just been sentenced to 10 years in prison for "stealing more than $360,000 over five years from two longtime clients."

Most definitely not good customer service.

I'm a little unclear on how this worked, exactly: "Kau opened a post office box to receive mail for her victims after falsely informing Transamerica Life Insurance Co. that a fire destroyed [their] home ... Kau also asked the insurance company to mail a checkbook allowing her clients to tap their life insurance account savings because of the home loss."

I've never heard of a policy that has a checkbook feature as a living benefit. I've reached out to the reporter for clarification, and will update this post if/when I receive that.

This case obviously differs greatly from Mr Neasham's: according to the story, the agent clearly set out to defraud her clients victims. The prosecutor noted that she stopped doing so only "because there was no money left in the victims' accounts." Although TransAmerica has reimbursed the looted funds, one can only imagine how difficult it will be for the insureds to ever again trust a financial advisor.

No winners here.

Outstanding Carrier Trick [UPDATED]

[UPDATE: To participate, click here, then click "Like"]

MassMutual and Easter Seals are once again teaming up to increase awareness of the important decisions and financial challenges facing families with special needs members. Taking advantage of social media, they've launched a cool FaceBook video giving folks a glimpse into the every day lives of a mother with a special needs child. What's more, MassMutual will donate $5 to Easter Seals for every "Like" the video garners.

Courtney Denning offered us the opportunity to interview Joanne Gruskos, director of MassMutual’s SpecialCares program, and we (of course) jumped at the chance:

InsureBlog: How did you become interested in/involved with MM and the special needs area?

Joanne Gruskos: Well, I'm a longtime employee of MassMutual, primarily in sales and marketing. After we started the trust company in 2000, we began to grow our relationship with Easter Seals. We had a lot of interest from trust administrators from around the country, which we took as an opportunity to do something new.

This grew into a partnership with the American College, with which we developed an exclusive special needs curriculum and designation. This is slated to go industry-wide in the near future.

IB: Would you share some of the home history of the MM/ES partnership?

JG: Let's say you're a financial planner. and one of your clients is a family with children developing just fine, and one special needs child. Your task is now complicated by the fact that you have to account for the parents' lifetimes, plus the special needs child's lifetime. This can be quite challenging.

And it gets more difficult: you have to coordinate this with government and other programs, because if you screw up eligibility, you could cost the family a lot of money. Easter Seals is instrumental in helping us thread these needles.

IB: Is there a central directory/database of folks who've earned the spcial needs consultant designation?

JG: Yes, in fact we have an extensive website that's chock full of helpful information, including advisors, FAQ's, all kinds of resources to help navigate all the different programs and opportunities.

IB: What would be the one thing you'd most like our readers to know about MM/ES and special needs?

JG: We believe that "who matters to you matters to us." In fact, we've distilled this into a short but powerful video that helps people understand more of what we do and why we do it.

We're here to help you when you're ready to start planning. This is such a critical need that we really don't push product, we push education.

Thanks, Joanne, for your time and insights. For readers who are interested in learning more (and for agents interested in pursuing the special needs designation), there's a wealth of information at the MassMutual Special Needs website.

Oh, and that video Joanne mentioned above? Here you go: