And Best of All, It's FREE!

Obamacrap continues making headlines with reports of how great life is going to be going forward. Folks in the Show Me state are celebrating coverage for autism. While not directly tied to Obamacrap this is certainly a reason to ring in the new year.

According to NECN:

The law requires insurers to cover $40,000 a year of "applied behavioral analysis" for children through age 18. Many parents credit the intensive therapy with making dramatic improvements in their children.

No mention of how much premiums will increase to provide this $40,000 benefit but no doubt many will believe this is free.

And this from WCBD in Charleston:

Jenny Backus from the Department of Health and Human Services says "the insurance companies can't cap off about how much benefits you can get." and "insurance companies can't discriminate against children with pre-existing conditions."

And for those on Medicare, the so-called donut hole is getting smaller.

Seniors will get free preventive benefits. They'll also have access to the end-of-life counseling that gave birth to all that talk of death panels. Doctors will be urged to talk to older patients about their end-of-life wishes.

Free end of life counseling. This is a good thing?

Honest... I ran out of gas. I had a flat tire. Someone stole my car. There was an earthquake. A flood. Locusts. IT WASN'T MY FAULT, I SWEAR TO GOD

“If I had seen the memo, I would have suggested it be worded differently,” Blumenauer told The Hill.

Aw, gee, not your fault then, huh?

Thus this bozo retreats into one of the oldest, most cowardly, and least-ethical managers’ excuses in history. Blame your secretary.

Makes one wonder: if this bozo’s staff had only bothered to SHOW him the health care reform act before he voted for it - would he have voted against it?

I think it’s worth noting that this bozo is a U.S. representative from Oregon - the state that already operates a death panel for its Medicaid population. Blumenauer (or his staff, anyway) seems to believe it’s working well enough to foist it off on the rest of us. Yeah, well, first please read about Barbara Wagner. Right here.

Oh, Nuts!

From time to time, readers ask why we constantly refer to the MVNHS© or CanuckCare as exemplars of socialized medicine. After all, we're told, other countries also employ such schemes, to no ill effect. Perhaps they're right.

On a tip from Bob, we have this story from the land of meatballs:

"A Swedish man was forced to have his penis amputated after waiting more than a year to learn he had cancer."

Ooops.

Maybe that's not what our critics had in mind. But the cat's out of the bag, so to speak, and the details demonstrate that it's not just the British and Canadian systems that fall short. In this case, an otherwise healthy 60-year-old man had what appeared to be a urinary tract infection, but was instead diagnosed with "a simple case of inflammation" (and not the good kind, either). When the medication for that condition failed to make headway, he was directed to another facility.

Unfortunately, that fine establishment put him on a waiting list, so he went almost another half year before being seen. Problem is, it turned out that the "inflammation" was, in fact, cancer. Because he'd been denied treatment for so long, the only option left was amputation.

So much for the "heads above the rest" Swedish medical system.

But wait, there's more!

Lest we become too complacent about our own socialized medical scheme, aka Medicare, it's worth noting that "Medicare officials are debating whether the agency should cover a new prostate-cancer treatment."

At $93,000 a pop, one can understand why, but again, this smacks of rationing. One supposes that it's only fair, since Avastin, a treatment for women with breast cancer, is also under review. All of which makes sense, of course, if one presumes (as is only reasonable), that the Death Panels are real, and we're seeing their initial roll-out.

A Risky Snow Job

We've discussed "special event" insurance before, but here's a story that fits the season:

"A North Carolina jewelry store owner made a $400,000 bet against a white Christmas — and lost."

Alan Perry, the store's owner, promised to refund all his customers' purchases between Thanksgiving and a week or so before Christmas if Asheville experienced a White Christmas.

It did.

So did he "lose" that bet?

No, not really: he had the foresight to purchase one of those aforementioned "special event" policies, which paid off just under a half million dollars. So he's out the (most likely nominal) premium, but bought a sleighful of great publicity and good will.

And that's a risk well worth taking.

Will Medicare Go Bust For Boomers?

As part of the leading edge of baby boomers, an article on the ills of Medicare funding caught my eye. The health insurance for seniors program never was designed to be on a sound footing. It was more of a political boondoggle to make LBJ and the Great Society look good.

While I do not think Medicare (or Social Security either) will go away, these social programs are not financially sustainable in their current form. A new poll from AP-GfK reflects some of the doubts about Medicare.

63 percent of boomers in the poll dismissed the idea of raising the eligibility age to keep Medicare afloat financially. But when the survey forced them to choose between raising the age or cutting benefits, 59 percent said raise the age and keep the benefits.

That won't work, especially with Obamacrap changes breathing down our necks.

If the start date for Medicare matches the age for full benefits under Social Security, those who are not covered by an employer group health plan will be left in the lurch between age 65 and whatever date they become eligible for Medicare.

Plus, Obamacrap is going to double health insurance premiums by 2014. How many 64+ year olds will have an extra $2500+ per month to pay for health insurance?

Someone needs to talk to those who took the survey and explain the facts of life.

Medicare is a middle-class bulwark against the ravages of illness in old age. It covers 46 million elderly and disabled people at an annual cost of about $500 billion. But the high price of American-style medicine, stressing intensive treatment and the latest innovations, is already straining program finances. Add the number of baby boomers, more than 70 million born between 1946 and 1964, and Medicare's fiscal foundation starts to shake.

That's roughly $11,000 per year per person And Medicare only covers about 80% of medical bills, exclusive of prescription medication. The balance is either paid for out of pocket, or through a Med supp plan.

And $500 billion is roughly 15% of the current federal budget. What happens when the number of Medicare beneficiaries almost double over the next 10 years?

When forced to choose, even a majority of Republicans said they would rather pay higher taxes (53 percent) than cut benefits (38 percent). Among adults in their 20s, who'd face a whole career paying higher taxes, 61 percent said they would be willing to pay more to preserve benefits. Only 29 percent of boomers said keep taxes the same but cut benefits

Well that sounds nice but here is the rub.

Medicare taxes have been increasing since first used in 1966 when the rate was 0.7% (half paid by the employee, the other by the employer) and was only paid up to the Social Security wage base. The cap was lifted in 1990 and applied to all wages, even earnings in excess of the wage base. Currently the total HI (hospital insurance) tax is 2.9%, over 4x the rate in 1966.

In addition to raising taxes, every year Congress cut's benefits and raises the premium charged to seniors for Medicare Part B.

Medicare is like everything else the government tries. It has cost more than they ever imagined, they have never done a good job of managing costs and now they want to provide health insurance for the rest of the citizens. Medicare is going bust but can be fixed. It is not too late to stop Obamacrap from the same ending.

Rock, Meet Hard Place

If the stakes weren't so darned high, this would be funny (think pathos):

"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 ... City attorneys, however, countered by contending that doing so could devastate other city services and that Cincinnati never promised that retirees' medical coverage would never change."

Facing a potential $60 million annual shortfall to pay for these bennies, the City is looking to cut its losses. On the other hand, the retirees, some making well in excess of $100,000 a year in retirement benefits, believe that their generous medical coverage (much better than most private sector employees could hope for) are sacrosanct:

"...the central issue ... is whether City Hall may change ... the medical plan former city workers initially received upon retiring ... Two former city employees testified Tuesday that retirement handbooks and briefings by city pension officials led them to believe that the city could not "reduce, change, revoke or eliminate" their health coverage after they retired."

Attorneys for the Queen City countered that these retirees apparently aren't averse to any changes, "only ones that cost them more money. Dental and vision coverage, for example, has been added to the coverage without complaint."

Something else to ponder: starting next month, "more than 10,000 baby boomers per day will turn 65." Talk about fighting City Hall.

[Hat Tip: FoIB Holly R]

Cavalcade of Risk #121: Year End Edition

The inestimable Wenchy presents this year-end collection of great risk-based posts, conveniently categorized as "insurance-related" and "non-insurance related." Either way, she's got you covered.

Employers get mental, see the light

As we've noted many times, mandates increase insurance costs. But when is a mandate not really a mandate? As Mr Miyagi said in the second Karate Kid movie: "Best way to avoid punch, no be there." And so it is with the Mental Health Parity mandate; the law, enacted in 2008, requires that group plans which offer any mental health benefits must treat mental health-related claims the same as any other illness. That means no internal caps or restrictions on, say, in-patient days or out-patient counseling. Of course, this leads to increased claims, and even higher premiums.

What to do, what to do?

Well, if you're the Screen Actors Guild or the Plumbers Welfare Fund, you notice the little "out:" if you don't offer any mental health benefits, you don't have to worry about "parity."

And that's just the (sensible) conclusion to which these two groups, among others, have come:

"The guild's health plan represents one of a small number of unions, employers and insurers that are scrapping such benefits for their enrollees because of a 2008 law that requires that mental-health and substance-abuse benefits, if offered, be as robust as medical or surgical benefits. By dropping such coverage, providers can circumvent the requirements."

See, that wasn't so difficult.

[Hat Tip: FoIB Holly R]

ObamaCare© and the *Other* Constitutional Problem

We've spent a great deal of time explaining why the (Evil) Individual mandate doesn't pass Constitutional muster, but there's an even more (potentially more damaging) issue: the General Welfare Clause. To fully appreciate its relevance to ObamaCare©'s fate, we'll need to rewind all the way back to the beginning of the year, and the shameful "Cornhustler" deal:

"Under the terms of a deal Nelson cut with Senate leaders to secure his crucial vote for the health care package, Nebraska would be exempted from having to pay for the coverage of its new Medicaid enrollees ..."

And therein lies the kernel of the problem: ObamaCare©'s numbers rest almost entirely on the fact that it increases the Medicaid burden on the states (and definitely see Bob's explication of how this applies in the real world outside the Beltway). The case currently popping in Florida, wherein 20 of the 57 states are challenging ObamaCare©'s legality, rests almost entirely on this issue.

But what, exactly, is the General Welfare Clause? Since I'm not a lawyer (nor do I play one on TV ), I'll defer to the Wall Street Journal's Barnett and Oedel, both professors of constitutional law at prestigious universities:

"Although the constitutional objections to its individual insurance mandate—the requirement that any person who isn't provided insurance by his employer buy it on his own—have gotten all the public attention, the law also has a "general welfare" problem ... But the Court also acknowledged that "in some circumstances, the financial inducement offered by Congress might be so coercive as to pass the point at which 'pressure turns into compulsion'" ... ObamaCare won't alter Medicaid in a relatively small way. It's an "all in or all out" proposition ... but a threat of losing 100% of the single largest federal outlay to the states."

A 100% loss is, in the words of our silver-tongued Vice President, a Big...Deal.

How big, you ask?

How about:

"The annual federal spending on Medicaid is now over $250 billion, more than all federal spending on transportation and education combined, and it is climbing quickly. States on average devote about 18% of their tax revenues to Medicaid, typically funding between 40% and 50% of their state's total Medicaid costs."

Now take that last to 100%, and that initial 18% is, well.

The problem is that, although ObamaCare© does, in fact, have an "escape" (or opt-out) clause for the states, the penalty for exercising it is that aforementioned 100% onus. And it's that burden that lies at the crux of the current Florida case. You see, all that money that would have gone to, for example, Texas, will now flow instead to, for example Michigan. And that's welfare only to the Wolverine State. It's a "heads I win, tails you lose" proposition.

And that, too, is a Big...Deal.

[Hat Tip: Ace of Spades]

HHS Secretary Shecantbeserious on OTC: "Shut up, that's why"

As Bob recently noted, HHS Secretary Shecantbeserious has decreed that going forward, OTC (Over The Counter) med's may be eligible for FSA/HRA/HSA reimbursement only if they're accompanied by a prescription. In her original missive, Ms Shecantbeserious further prohibited the use of debit cards to purchase tax-qualified OTC med's (as to why she hates convenience, you'll have to ask her directly).

Now, thanks to alert reader and FoIB Jeff M, we learn that Kathy's backed off on her plastic-prohibition:

"The IRS last week backed off an earlier rule for next year that prohibits flexible spending and health reimbursement account holders from using debit cards to pay for over-the-counter drugs that now need a prescription."

Now, you may be wondering why I said "HHS Secretary Shecantbeserious has decreed" when, in fact, the IRS is the agency which has "backed off" the rule. The reason is that, in this instance, the IRS is simply the enforcer of the rules laid down by the Madame Secretary; it is at her feet that we lay the ultimate blame for this silliness.

Oh, you may also be wondering about the title of this post. It's pretty simple: in his email, Jeff M asked "If the product is available OTC, then why would someone need a prescription?"

And there's your answer.

Employer-sponsored LTCi: Some words of warning

Once again, we're delighted to welcome our resident Long Term Care insurance (LTCi) guru, Herman Bruns, to IB. Today, Herman sets his sights on plans offered through one's employer:

I was in my car the other day listening to a well-known "consumer advocate" on the radio, when a perfectly healthy 42ish year old couple called in asking what benefit amounts they should choose on the group LTCi plan being offered on the husband's job.

The good advice they got was that it was still ok at their age to get LTC insurance, as they had no problem affording the insurance. The radio host then proceeded to discuss the limited benefit choices that they had available with daily benefit amounts and inflation options. He did not discourage them from shopping; the challenge is that they had only until the end of the year to sign up for something, anything, on the job.

The problem I have with his advice is what was left unsaid: that group LTC insurance is almost NEVER a good choice for a reasonably healthy married couple, no matter who the carrier is. WHAT!!!… you say? How can this be?

People seem to think that if it is a group plan, it must be a good deal. After all, isn’t their wonderful health insurance a bargain at work? What people sometimes forget is that their health insurance is subsidized by their employer. They find this out the hard way when they get offered COBRA when they're laid off. Their Long Term Disability plan is certainly a good deal, too, but it goes away when they leave the job.

Long Term Care insurance, in almost all cases except for some executive comp plans, is NOT subsidized by the employer. If you think about it, you are EXPECTED to take it with you when you leave: What good would LTC insurance be if it went away when you retired at 65, or the rates doubled if you left your job, since you are not supposed to need it until you are 83 in general? Therefore, it's a fully portable plan, and you pay 100% of the cost through payroll deduction.

Since the employee pays full price, with maybe a small affiliation discount, the ONLY time group LTCi tends to be a good value is possibly for a single person, or for someone who may have health issues, and thus find it difficult qualifying without simplified or guaranteed underwriting. When the employee has a spouse, or a life partner, they would have to purchase two separate LTCi polices, each with an affiliation discount. However, and here comes the shocker…….when you purchase LTC insurance on the private market, the spouse (life partner) gets up to an 80% discount on his or her LTCi plan. This effectively blows away the rates they would have to pay for two plans on the job. [I should add that there are ways to properly structure group LTC plans that are a good value for couples, it is just that it is not done that often].

There are lots of other reasons that group plans tend to be a poor choice. Lack of “shared plan” options, not being “partnership eligible” (which could stop the government from taking your house one day to settle your LTC debts), and just general lack of options. Group plans offer limited choices to avoid confusing the employee too much.

At the risk of making this post way too long, the best examples I can give are:

■ IBM, unless they recently changed, uses John Hancock as their group LTCi carrier. I have sold John Hancock LTCi policies to IBM employees that had more benefits and cost less than they could get through their job. Now the last I recall, IBM is still a fairly large company, and it should really make you wonder why I can get their employees more coverage than they can. If I only had a list off all the married IBMers who bought a LTCi plan at work for them and their spouse in the last 2 years, I could switch them to a better cheaper policy and probably retire.

■ State of Georgia uses UNUM as their LTCi carrier. I ran numbers for a state employee the other day who was shocked that I can up with a better value than the state program. So, when is a benefit not a benefit?

■ I saw a local Georgia county school LTCi plan that required 3 ADL’s to qualify for payment, yet the standard on the individual market is 2 ADLs. This could be real tough at claim time one day.

■ The Federal plan (not to be confused with the Class Act), for its own government employees, has the exact same problem. How many unknowing married postal workers bought into this plan without realizing their plan was not partnership eligible and they paid too much? I met one a few months ago, and she was not happy.

And I could go on, but remember that even if the plan is cheaper for a single person, it is still not partnership eligible, which could be huge in the future.

Anyway, back to the purpose of the post, the radio host would have given the people better advice if he simply stressed that group LTCi tends to not be a good deal in general for married couples…….and they should IMMEDIATELY go to the open market first and see what else they can find from a LTCi specialist, and not sign up for anything on the job until they completed that task.

Hope this helps someone, and of course there are exceptions to every rule….else consider this a simple public service announcement. Happy holidays.

Thanks Herman, and Happy New Year!

Medicaid - It Pays to be Poor

If you are a child who is part of a poor family (as defined by the government) you are in luck. You are about to participate in the latest Obamabucks bail out.

The folks at The Slatest provide this Christmas cheer.

Two-thirds of uninsured American children are eligible for government health insurance, but many families don't know about the program. The Obama administration is moving to expand coverage by offering states $206 billion in Medicaid bonus payments for signing up previously uninsured kids, reports the New York Times

.

This begs the question, why don't they, or more specifically, their parents, know about Medicaid for their children? Why would someone refuse free health insurance unless the government failed to properly inform and promote this to potential recipients?

The funds will be distributed to 15 states, with Alabama receiving more than a quarter of the bonus money.

So Alabama wins the lottery, along with only 14 other states. And what about the other 42 states?

I suppose they snoozed so they losed. (Grammatically incorrect but it rhymed so poetic license used).

HHS wants to make a dent in the estimated 4.7 million uninsured children that qualify for Medicaid but are not participating. They will hope to accomplish this by spending $206 billion of taxpayer money to promote a "free" program.

If you can't encourage parents to sign up for a free health insurance plan, then how much more effective will it be when the government requires everyone to have health insurance they have to pay for out of their own pocket?

And about that bonus . . .

It is a reward for doing what the states were supposed to be doing any way, which is signing up children for Medicaid.

This is like saying we are going to pay you for doing your job, and then pay you again for doing it.

It's the E-Mail, Stupid!

Back in the day (20 or so years go), when I first began using email, a Good Samaritan gave me this bit of advice (to which I more or less scrupulously still adhere):

"Never write anything in email that you wouldn't want showing up in the next day's New York Times."

How incredibly prescient:

"While we are very happy with the result, we won’t be shouting it from the rooftops because we aren’t out of the woods yet,” Mr. Blumenauer’s office said in an e-mail in early November to people working with him on the issue ... We would ask that you not broadcast this accomplishment out to any of your lists, even if they are ‘supporters’ — e-mails can too easily be forwarded."

And where do you suppose this top-secret (and damning) email showed up?

You guessed it.

By now, you may be wondering what, exactly, the author of the email found so potentially damaging. No problem:

"Under the new policy, outlined in a Medicare regulation, the government will pay doctors who advise patients on options for end-of-life care, which may include advance directives to forgo aggressive life-sustaining treatment."

As we've previously written, the problem with the concept is that doc's now have financial incentives to push for a quick end to life. Certainly, that's one way to reduce the cost of health care (not to mention help with solvency issues under Social Security and Medicare), but is it right? On its face, sure: choice is almost always a good thing, and one (or one's loving family) should be told of all the choices available.

The problem is that this new missive seems to have been lifted, in toto, from an earlier effort on the part of the VA, written by "Dr. Robert Pearlman ... a man who in 1996 advocated for physician-assisted suicide in Vacco v. Quill before the U.S. Supreme Court and is known for his support of health-care rationing."

Which brings us back to the email: if this is such a benign and harmless effort, why the need for subterfuge? Inquiring minds want to know.

[Hat Tip: Ace of Spades]

Tetris vs PTSD

Over the years, we've documented the strange, but undeniable, effects that certain foods can have on our health. But strange - and helpful - health phenomena can come from even more remarkable sources.

Like video games:

"Flashbacks are vivid, recurring, intrusive and unwanted mental images of a past traumatic experience. They are a sine qua non of Post-Traumatic Stress Disorder (PTSD) ... clinicians would prefer to utilize some sort of early intervention to prevent flashbacks from developing in the first place."

That makes sense; medicine and other treatments come at a price, not to mention potentially negative side effects. Wouldn't it be great if there were a treatment protocol that didn't involve medication, intervention or incarceration?

Kevin Flynn would no doubt approve of this breakthrough:

"(R)esearchers at Oxford University appear to have found one. Remarkably all it takes is playing Tetris. Yes, Tetris!"

Read the whole thing over at Pizaazz, then fire up the ol' Atari.

Have yourself a merry little Christmas

Under PPACA, 85% or more of most medical insurance premiums must consist of reimbursed medical care expenses.

If insurers reduce their costs by 10%, the savings are 1.5%. (10% x 15%)

If medical service providers reduce their costs by 10%, the savings are 8.5% (10% x 85%).

Well, then, 8.5% would be more, wouldn't it?

So why is Milady Sebelius and HHS paying so much attention to insurance costs?

Perhaps because we had to pass PPACA so that we could find out what is in it?

Or, maybe because Milady Sebelius doesn't understand the difference between health insurance and health care?

Or, maybe because she understands the difference full well, but is afraid of the doctors?

I suspect the latter.

My opinion: Milady Sebelius' blend of cost mismanagement and cowardice once again illustrates the oxymoronic nature of "political leadership".

So have yourself a merry little Christmas . . . now.

A Different Kind of Christmas

Christmas means different things to different people. For some it is a time for family, gifts and lot's of food. For others, the secular side of Christmas is all they know, or care about. To some, Christmas is a time of celebration of the birth of Christ and remembering what many consider the true meaning of Christmas.

And for some, Christmas is just another day.

Regardless of your orientation or beliefs it is almost impossible to miss a change in the air this time of year. You can't turn on a radio without hearing the sounds of Christmas. Even talk radio will play Christmas songs as part of their bumper music.

Retail stores are decorated with Christmas glitter, Santa is in almost every mall, the Salvation Army bell ringers are outside stores with their kettle and news stories abound with stories about children.

But something different is in the air this Christmas. Yes, there are letters to Santa asking for the latest doll or electronic game but there also are more stories that touch the heart.

Many children are not asking for anything for themselves but for others. The requests, both in person to a mall Santa as well as notes dropped in the collection plate at church have taken on a more serious tone.

There are requests for some of the most basic things in life that many of us take for granted. Children are asking for a warm coat for their mom or medicine for a sibling that is ill. Some will ask for a real place to live but instead will spend yet another night in a shelter for the homeless.

Children are not the only ones asking, adults are joining them, not in letters to Santa but prayers for a job, or funds to allow them to keep the lights on and food on the table for their family.

Some requests cannot be fulfilled, such as those asking for healing from a terminal illness or to bring back a friend or relative that has died.

This year, celebrate the life you have and remember that, no matter how dark things may be for you, there are others who would gladly trade places.

Two thousand years ago on a hillside an angel appeared to shepherds with this announcement. "Fear not, for behold I bring you tidings of great joy, which shall be to all people."

Be an angel. Spread some good news.

Blessings.

A Christmas Treat

There's nothing like a warm, homemade Christmas Dinner.

And this is nothing like a warm, homemade Christmas Dinner, but it sure is funny:



As for my family, well, we'll be carrying on an ancient Jewish tradition:

Merry Christmas!

Cavalcade of Risk #121 Call for submissions

Wenchy hosts next week's End-Of-Year edition of the Cavalcade of Risk. Submissions are due by Monday (the 27th). Wenchy asks that you 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.

Reminder: The Cav is about risk, but not necessarily or exclusively about insurance. So feel free to think outside-the-box (e.g. driving and texting, the environment, vaccination, etc).

Opening our "Holiday" gift from the Elves at HHS

HHS has unwrapped its latest “Holiday” gift to the public – a spiffy new regulation in which HHS confirms, once again, its intention to ignore the rising cost of medical care in the United States.

Instead, HHS will require that health insurance companies “disclose and justify any rate increases of 10 percent or more.” The New York Times further notes, “The proposed rule represents a major expansion of federal authority in an area long regulated by states.”

For several reasons, I think the bigger picture is - this is good news. Because HHS has once again underestimated the intelligence of the American public.

First of all, the immediate effect will be to increase the cost of insurance, not reduce it. HHS will spend more money regulating, and the industry will spend more money responding to regulation. There will be few meaningful premium reductions - on the contrary, premium increases will be larger. (More about this below). You will pay for these higher costs thru your taxes, thru lower wages, thru the prices of products you buy, and of course thru your insurance premiums. Only Washington DC claims to save money for the taxpayers by forcing them to bear more cost. And isn't it always "for the taxpayers"? (Probably the same principle at work here as last year’s splendid federal insight that PPACA reduces the cost of medical insurance in part by taxing insurers an additional $60 billion annually.)

Anyway, here is a CORRECT insight: the rising cost of medical care explains almost 100% of rising medical insurance premiums. Check the numbers here, in Table 12, Lines 1 and 2. The increase to premiums year over year, and over many years, tracks exactly with the increase in the cost of medical benefits paid. That’s a fact.

The public does not understand this fact; mainly, I think, because the media have chosen to hide it; and the political classes pretend they don’t know about it.

However . . . the rate reviews now required by HHS will generate a great deal of public discussion that will be centered on this fact. Public discussion means no more hiding of the fact, no more pretending it doesn't exist, no more excuses not to know it.

In this way, the public will discover the correct insight that the underlying problem is the high and rising cost of medical care in the United States.

This correct insight won’t be easy to ignore, because there will be rate hearings every month, perhaps every week. Why? Because almost every insurance rate increase for every company will be higher than 10%. Why is that? Because the current trend in the cost of medical benefits paid is about 9%. And, as Table 12 linked above shows, insurance premiums follow the medical costs.

If the rate for 2011 is $100, one might expect that the rate for 2012 will be $109. And maybe it will be. But premiums are based on the actual medical benefits paid by the policies. If actual benefits paid exceed the estimated costs, the following year’s premiums will have to increase more than the base trend. Remember employers have found that PPACA will increase their 2011 medical benefit costs by 2% to 4% - - despite HHS hysterical blustering to the contrary. So the base trend rate will be higher than 9% meaning that for 2011, 2012 and on into the future, premium increases of 10% and more are likely to be common.

And, btw, incessant rate hearings will also remind people in every state what a fraud the government has perpetrated in claiming to have "reformed" health care. All the government has done is attempt to slap price controls on insurance. That does not come close to reforming the delivery of medical care so that it will cost less.

I am not talking about reducing the incomes of physicians. I think physicians earn their incomes. I'm talking about changes in the delivery system that will reduce their COSTS, so they can reduce their fees and still maintain their incomes. I’m talking about changes in the delivery system that will relieve hospitals of some of their COSTS, so their charges don’t need to be so high.

I’m also not talking about subsidizing insurance. All insurance subsidies do is pour oceans more money into a system that has not shown the will or the ability to restrain its own costs. That is no solution. In fact subsidizing costs makes the cost problem worse. It’s running thru Hell in gasoline pants. Unfortunately, it’s all our government has shown that it knows how to do.

Most other developed countries, and many developing countries, deliver medical care of comparable quality to the U.S. at substantially less cost. We need to understand as a nation how they do this, and a national debate will help meet this need. The rate reviews required by HHS will, I think stimulate just this sort of national debate. That is clearly not the outcome HHS expects. To which I say, good !

So, yes, please - - it's high time the public begins to understand that our insurance is expensive because medical care is expensive; and that our insurance premiums are rising because the cost of medical care is rising.

The cost of medical care is the problem that must be addressed. HHS is not doing it.

So I say, let the rate reviews and the debates begin. And I say, the sooner the better.

Shecantbeserious and the Uncertainty Bubble [UPDATED]

UPDATE: Definitely see Mike's more in-depth analysis of this idiocy.

Apparently, she just can't help herself: ObamaCare© applies to everyone, except it doesn't. Then the doc fix is in, except it isn't. ObamaCare© will insure millions of children, except it won't.

And the list goes on.

The newest twist is the (potentially illegal) usurpation by the Fed's of states' rights to regulate health insurance. In a blatant move to wrest those powers, without any apparent statutory justification, HHS Secretary Shecantbeserious has set her sights on rate increases:

"In a new HHS regulation ... if a health insurance company’s “proposed rate increase equals or exceeds a defined threshold, it would be considered ‘subject to review.’ The review process would then determine if the increase is, in fact, unreasonable.”

That threshold, by the way, is 10%.

Are you kidding me?

Here's the problem: by assigning an apparently arbitrary ceiling on costs over which insurers have little (if any) control, coupled with the draconian MLRs (medical loss ratios), insurers are hobbled. If they raise rates to cover costs, they face expensive regulatory battles. By law, they can't just "eat" the expenses, so they'll seek the path of least resistance: phased plan withdrawal. What will that look like? Well, come 2014, they won't be able to decline applicants for health issues. But for the next three years, you're going to see underwriters with guns pointed squarely at their heads, the result of which will be that marginally healthy folks will be declined or offered extremely unattractive rates.

Why is that?

Simple: if carriers know that they can't count on making up the difference next year, they'll impose them beforehand. The result: fewer folks insured, paying more premiums for less service (hey, those home office CSR's are cost centers, not revenue producers).

Way to go, Kathy!

Child Only Health Insurance - The Saga Continues

In response to Obamacrap and idiotic rulings from the Dept. of HHS, health insurance companies in all states ceased to offer "child only" health insurance plans in every state, including Georgia. Apparently the Socialist state of California has a better idea.

Extortion.

a new California law forced the insurers to change course. Beginning Jan. 1, it will prohibit those that abandon child-only coverage from selling new policies in the broader individual insurance market for five years

In Gestapo fashion, the state knows what is best for everyone.

They must be wearing rose colored glasses out there, the same ones issued to politicians in Washington, because they believe they can make things better for everyone by threatening to kneecap anyone who refuses to comply.

In the words of Michael Corleone, "It's not personal, it's just business".

So carriers that wish to continue writing individual health insurance business, at least until the government completely takes over that market, must comply with the wishes of the state.

Many things are interesting, and frightening at the same time, but notably the ability of government to dictate what companies must sell, the prices at which they are allowed to sell, and if they refuse to comply they are banished.

At what point was the American flag removed and replaced with a hammer and sickle?

"It's good that the insurers are back in the market, even if they had to be brought back kicking and screaming," said Anthony Wright, executive director of the consumer advocacy group Health Access California. "It will make a big difference for thousands of families."

Perhaps Anthony was sniffing glue right before making this remark, or else he is just stupid without any help from halucinogens.

It appears child only plans will return, but at what price?

Since the state in their infinite wisdom have placed a cap on the rate up for these policies the logical move for carriers is to file for new standard rates. New rates could apply to children only and those rates could easily be double, triple or more current rates.

In Georgia one health insurance company's rates for children under the age of 1 are higher than rates for a 40 year old.

Another option for health insurance companies would be to shift the losses from writing child only health insurance to older insureds (over age 18). We already know that many parents who have healthy children will simply forgo buying health insurance on their children while the parents of sick children will flock to this new deal like crows to road kill.

The cost of maintaining these policies will be prohibitively high and losses will have to be made up somewhere. The result will be like squeezing a balloon which will result in higher overall rates for everyone.

So how is this Obamacrap change working for you guys?

Just another stupid government trick.

MVNHS©: Achoo!

It seems that the Much Vaunted National Health System© is woefully unprepared for the massive outbreak of flu currently sweeping The Empire (exacerbated, no doubt, by the feet, er, meters of global warming piling up on its roadways and runways):

"The NHS Direct helpline is at ‘breaking point’ as parts of Britain experience the worst flu outbreak in a decade.

Patients calling the service are being forced to wait up to two days before they can speak to a nurse, and managers have launched an emergency recruitment drive."

Interestingly, the Service is itself digging deep, shoveling out almost $300 an hour to doc's in the most brutally-affected regions. That's interesting because it means that the doc's understand their own value to The System, and that System has no choice but to comply.

One wonders if there isn't a larger lesson here.

On the other hand, it's hard to know which is scarier: that the Brits are experiencing the "worst flu outbreak in a decade" on the one hand, while on the other "ministers and leading doctors insist the outbreak is ‘no worse than usual."

Cognitive dissonance: (apparently) not just a theory.

Wonder if that's a covered condition.

Rubbing Medicare the Wrong Way

Medicare spends more than $3.5 billion a year on physical therapy, but you gotta wonder when one doc collects more than $2.6 million over 2 years for back rubs and heat packs.

Dr. Christopher Wayne of Miami Beach likes to hang around with Paris Hilton and Steven Tyler of Aerosmith but even more than that he loves billing Medicare for 30 minute sessions of heat packs, massage and electrical stimulation.

Seems the folks at Medicare want to know more.

Dr. Wayne took in more than $1.2 million from Medicare in 2008, according to a person familiar with the matter, a large portion of it from physical therapy. That's more than 24 times the Medicare income of the average family doctor, according to a Wall Street Journal analysis of Medicare-claims data.

Wonder what tipped them off at CMS?

In 2009 he says he was placed on heightened scrutiny and eventually sold his business. But not until he had received more than $2.6 million from Medicare between 2007 and 2009, according to the person familiar with the matter.

Heightened security.

Seems to me it is more difficult to board a plane than it is to get money from Medicare.

A second doctor in Florida who pocketed more than $1.8 million from Medicare in 2007, much of it from physical therapy on patients with an extremely rare condition. Even after a Medicare antifraud contractor flagged this doctor, the agency paid him at least $6.7 million over more than two years

Do you get the idea maybe the folks in Washington really don't care what they do with OUR money? Or are they just that incompetent?

To protect law-abiding doctors and hospitals—the vast majority—Medicare is required to pay nearly everybody within 30 days. Medicare says it is reluctant to suspend payments to providers who may have made honest mistakes, out of concern that beneficiaries might go without needed treatment.

Honest mistakes? That just doesn't wash with me.

And these folks plan to take over the entire health care system. Frightening to say the least.

Breast Feeding? Don't Ask . . .

As posted before, Obamacrap requires employers to establish special areas where mothers can privately breast feed their infants.

Apparently that is not good enough for the Complainer in Chief. The law as originally worded only applied to private firms with more than 50 employees.

Obama asked the federal government to go a step further by establishing new guidelines for all federal employees, no matter their status, according to White House aides.

So now, even though most federal employees are exempt from almost every provision in Obamacrap, the government get's to pick which provisions they will apply to themselves but exclude themselves from other provisions.

For some reason the word "elitist" seems to fit.

First we had the special exemptions from Obamacrap for McDonald's and 221 of their special friends, now we have the White House deciding which provisions of Obamacrap should apply to federal employees.

STOLI Revisited

When last we discussed Stranger Owned Life Insurance (STOLI), it was in the context of certain actors (in the business, not entertainment, sense) duping vulnerable seniors into buying, and then selling, life insurance policies. What was missing from that equation was, of course, the ultimate owner of those policies.

Turns out, it's not so much owner as owners:

"Life Partners, a fast-growing company in Waco, Texas, has made large fees from its life-insurance transactions ... Since its founding 19 years ago, Life Partners has sold its clients rights to the proceeds of 6,400 life-insurance policies with a total face value of $2.8 billion."

It works like this: Life Partners (LP) arranges to buy a policy from, say, John Smith, a 72 year old in apparently poor health (and please note that term "apparently;" we'll be coming back to it), and then sells shares in it to individual investors. The investors believe that their contribution will be leveraged by the large face amount on the soon-to-be-announced demise of the insured. They rely on LP's expert, a Nevada-based oncologist with a less-than-stellar track record when it comes to actually making the call. Remember that word, "apparently?" Well, here you go:

"Dr. Cassidy said Life Partners paid him a monthly retainer of $15,000, plus $500 for every policy bought by Life Partners clients ... Life Partners put a life expectancy of two years or less on the insured person in a third of the 297 policies it sold ... A total of 262 were still alive, of whom 64% had lived at least twice the life expectancy Life Partners gave them, and 34% at least triple."

Ooops. Seems to me, the investors would have been just as well off using Bob's Magic 8-Ball.

So who really loses here?

Well, probably not the insured: it's almost a safe bet that if LP wants to buy your policy, you should be prepared for a long and healthy life. And not LP's CEO, Brian Pardo, who "holds about half of Life Partners' stock and owns a Lear jet." And certainly not Dr Cassidy, who's made over $1 million since hooking up with the LP folks.

No, it would have to be the poor saps who bought into this idea, and forked over $50,000 (minimum!) to do so. Caveat emptor, indeed.

Fees not the same as Income? Who knew?

How many times do we read of physicians' complaints that the fee allowances insurance companies use to reimburse them have not increased in "x" years? Is there a reasonable response to such complaints?

Yes, as Uwe Reinhardt of Princeton University explains today in the New York Times.

There are three charts in the linked article. I draw your attention to the third chart, "Medicare Spending on Physician Services 2000 - 2009". Here is Dr. Reinhardt's key insight, illustrated in this third chart:

". . . "the top line (in black) shows that, in spite of Medicare’s miserly fee updates, total Medicare spending on physician services per Medicare beneficiary actually has grown by fully 60 percent from 2000 to 2009, at an average annual compound rate of 5.4 percent. [snip] Thus, after blushing over miserly fee updates, taxpayers might go on to ask physicians why an average annual compound increase of 5.4 percent in spending per Medicare beneficiary was not enough to give the nation’s elderly good medical care and, if it was not enough, what would have been an adequate annual increase in Medicare spending on physician services — perhaps 7 percent, or 10 percent, of 15 percent, or how much?"

The phenomenon of income growth in excess of fee growth is not limited to Medicare spending nor is it limited to physician spending. It occurs in in hospital costs as well, both in Medicare and in the private sector.

So a reasonable response to a physician complaining about the absence of growth in insurance company fee allowances, is simply to ask - "has your income grown in the past x years?" For the majority of physicians the answer will be "yes" - as Dr. Reinhardt's data show.

In essence, this important insight is no more profound than to observe the purchase of two rakes at the hardware store costs more than one rake, even if the cost per rake has not increased in "x" years.

And while Dr. Reinhardt's findings are certainly welcome they are not, of course, news to insurance professionals including us at InsureBlog.

But, sometimes, it takes an academic study by a respected health economist at a prestigious university to explain the basics to a doubting public.

Thanks be to Dr. Reinhardt for making the explanation !

Grand Rounds: Resolutions edition

Chronic Babe resolved to host this week's roundup of inspirational medblog posts, and delivers a great edition.

Bone Marrow Models [UPDATED]

Quick, what do you think of when you hear the term "skimpily-clad models?" New car shows, or Victoria Secret catalogs, perhaps?

How about bone marrow?

NotWithStanding blog tipped us to this story about the Caitlin Raymond International (CRI) bone marrow registry service, which used "flirtatious models in heels, short skirts and lab coats" to convince random mall shoppers and baseball fans to offer up a swab of DNA. No harm, no foul, right?

Wrong: the service neglected to mention that it was billing insurers over $4000 a pop [ed: an interesting question would be "and how much did the insurance companies actually end up paying?"]. Adding insult to injury, CRI is actually a subsidiary of the UMass Memorial Medical Center (located in saucy Worcester. MA). Caught red-handed (so to speak), the hospital has agreed to suspend this practice.

Apparently, "volunteers" gave up more than their DNA: they were also asked for their insurance information, apparently without being informed that said insurance company would be dinged for up to $4300. So successful were these worthies, they got up to 185,000 swabbers. That math doesn't seem to add up, though: 185 thousand donors at better than $4000 per would be three quarters of a billion dollars in billings. That's a lot of loot, even by RomneyCare standards.

So next time you see a pretty girl in a short skirt, make sure no one swabs your wagging tongue.

UPDATE: Definitely click through to NWS's take on this. He hit the nail firmly on the head with this spot-on observation:

"This is one of those problems that seems like it could only be caused by idiotic regulation ... It’s an elective procedure that has absolutely zero health benefit for the insured party. New Hampshire’s legislators, in their infinite wisdom, decided to mandate coverage anyways."

Bingo!!

Medicare Supplement Insurance - Does Size Matter?

When buying Medicare supplement insurance, does size or financial strength really matter? Not really. The myth that a carrier rated "A" or "A+" is better than a "B" or "B+" Medigap carrier is just that . . . a myth.

When considering Med supp coverage all you really need to evaluate is the rate. All plans are standardized, so all Medigap plans "F" are identical, except for the rate. It doesn't matter if you buy a Blue Cross Medigap plan or one from AARP. The only difference is, how much will you be willing to pay for identical coverage?

I have clients all over the state of Georgia and when it comes to Med supp rates they are all over the boards. It is not unusual at all to see rates for the most expensive companies that are double the lowest rate.

Some people mistakenly believe if you pay more you get more.

Not so, you just paid more.

I recently ran a Med supp rate for a senior in Peachtree City, Georgia. He was looking for Medigap plan F but also wanted numbers on plan G.

In many cases the premium savings by switching from the popular (and expensive) plan F to plan G is significant . . . enough to more than cover your additional out of pocket for the Medicare Part B deductible.

The Medigap carrier I proposed is a "B+" company and one I have used off and on for 10 years. After asking a lot of questions I got a "Dear Bob" email telling me he did not want a small, B rated carrier. Instead he is willing to pay an extra $500 per year to have a "financially sound" carrier promoted by AARP pay his bills.

I suppose some seniors have money to burn.

After working with clients for more than 35 years, helping them find the best value for health insurance, I switched to the Medicare market earlier this year. The same kind of solutions available to my under age 65 clients are also there for 65 and over Medicare beneficiaries.

You really don't have to pay too much for Med supp coverage unless you just want to.

The open enrollment period for Medicare is about to end and many other seniors are just now turning age 65 and looking for solutions to their Medicare needs. Smart buyers really can save money by looking around and talking to local agents that are familiar with Med supp plans in their state.

The (Evil) Individual Mandate: It's Expensive, too

Although it's not often mentioned, the individual mandate isn't just unconstitutional, but it's darned expensive, too:

"Sen. Tom Coburn (R-Okla.) on Tuesday sent around the Congressional Budget Office's June estimate for repealing the mandate. The bottom line, according to CBO: Doing so would bring in $202 billion from its 2014 start date to 2019"

But at what cost?

Well, according to the CBO, it "would also cause the number of uninsured people to increase by 16 million."

Not so fast there, fella: first, it presumes that these are folks that wouldn't buy insurance of their own volition. It certainly can't be because they're "uninsurable:" after 2014, there's no such animal. According to the Census Bureau, there are about 307 million (legal) Americans; 16 million represents about 1/2 of 1% of that total. $200,000,000,000 seems like a pretty big price tag for such a statistically insignificant-sized group.

Which is not to say that their individual needs are insignificant (least of all to themselves), but it's further proof that ObamaCare© is not, and never has been, about seriously cutting the cost of health care.

Benefits Package #2: Now up

Evan Falchuk once again hosts this new carnival, a great compendium of health benefits posts from some new (to me) sources).

Package #3, the first of 2011, will be right here at InsureBlog.

That MVNHS©: Naughty Again

Geez, you'd think at this time of year, the folks behind the Much Vaunted National Health System© would be on their best behavior. After all, the Man in the Red Suit is keeping tabs on all the naughty boys and girls, especially those responsible for this:

"Hundreds of thousands of NHS patients are being denied routine procedures as dozens of trusts cut back on surgery, scans and other treatments in order to save money"

See, that's how rationing works, and that's what ObamaCare© is really all about. Now there are those who would argue - erroneously - that insurance companies do the same thing.

They don't:

Insurers simply finance care, they're not charged with delivering it. Not so a nationalized system (such as the MVNHS©): that scheme is responsible for providing care, not just paying for it.

Or not:

"Trusts around the country are refusing to pay for operations ranging from hip replacements, to cataract removal and wisdom tooth extraction."

[ed: Our Cousins Across the Pond© refer to hospitals as "Trusts." And yes, the irony is palpable]

Another key difference: insurers are regulated by the government. Nationalized healthcare systems are run by the government. When insurers screw up, they face fines and lawsuits. When government bureauweenies running the healthcare system screw up, they get raises.

Oh Brave New World, indeed.

We're gonna have rationing of medical care - so you better watch out !

Many, perhaps most, health policy planners believe that rationing of medical care is necessary and that the best way to ration medical care is to do it “invisibly”. Invisible rationing would not mainly be enforced by making people follow complicated rules, nor by price, nor by obliging people to queue up for treatment – but instead would flow naturally downward from government budget ceilings imposed on physicians and hospitals. The policy wonks usually then add “combined with universal health care access”. Sounds nice, doesn't it?

Well, I think this is more like a hope chest than a plan, and I think the experience of other countries reveals the difficulty in this set of beliefs.

First of all, the record shows that such rationing systems are not more fair or more humane. This blog alone has posted numerous examples of failures of government-run rationing systems to behave in uniform or humane ways, for example – here and here and here and here and here and here and here and here and here and here. There are many, many more examples, including Medicare and Medicaid in the US. The record shows that, among its other problems, explicit rationing results in (1) the use of governmental power to deny care and (2) everyone being treated equally poorly. Surely America can do better.

Can a system with budget ceilings hope to simultaneously offer universal access? I doubt it. I can’t think of a single example in which the access to care; or the quality of such care; or both, are not compromised when government sets the budget. Indeed, the reality of people queuing up for medical care and the linked examples from countries that have such budget controls refute this hope.

(Of course, the politically powerful or “the rich” are always able to escape these outcomes because they can jump the queue or pay extra for better treatment or go abroad for their care. Recall a couple of years ago the prime minister of a Canadian province who chose to visit a U.S. hospital for his treatment. That is but one of many similar examples.)

There are more specific questions people need to be asking themselves. Why would you prefer to give some politician or anonymous bureaucrat the ultimate power over your family’s access to medical care? Why would you want to allow the government to make such decisions for yourself or your family “invisibly”? Why would you accept decisions about your family’s medical care that are made without your knowledge? Or that are forced on your physician without your knowledge? Do you think these conditions would lead to more humane treatment - or would even make you feel more humanely treated? For my part, it all sounds more like a veterinary ethic than a medical ethic. That is, someone called “master” will make the important medical decisions for you and your family, and one day the decision will be to put you down. And these decisions will have the force of law. Seems to me that is highly worrisome, and not the best America can do.

I’m certain no one would feel more humanely treated if private insurance companies made these decisions about one’s family’s medical care invisibly, behind the scenes, unilaterally reducing the amount that will be spent, all without accountability. But then why in the world would you trust a government institution to take on this invisible role and be fairer or more humane? What government institutions have ever justified such trust?

Say it ain't so, Erin, say it ain't so !

Here's a report that says the widely-publicized weapons of mass carcinoma have not been found after all, in Hinkley California.

Maybe the mayor hid them in the sand.

Or maybe the State of California is in on the cover-up.

Or something.

The Truth Will Out

FoIB Bob D passed along a little nugget (via The American Spectator). During a recent news conference, Mr Obama responded to the suggestion that his signature legislative "victory" wasn't getting enough credit from the left. It's a very telling statement

"(I)n order to get stuff done, we’re going to compromise. This is why FDR, when he started Social Security, it only affected widows and orphans. You did not qualify. And yet now it is something that really helps a lot of people. When Medicare was started, it was a small program. It grew."

"It grew."

Hunh.

Let's dispense with the false analogy between Social Security/Medicare and ObamaCare©, and focus on what this startling admission signifies: a public repudiation of his own stated promises. That is, as ObamaCare© grows, it becomes more expensive, and more restrictive. It's also an admission that the plan is designed to fail in one of its most imprtant goals: to rein in the cost of health care.

Thanks, Mr President, for clearing that up for us.

HHS Shecantbeserious vs The Truth

Having lost in a court of law, HHS Secretary Shecantbeserious (and her attorney) has taken the case to the court of public opinion. To wit, an op-ed in today's Washington Post, wherein she repeated the oft-used - and completely erroneous - conflation of auto and health insurance:

"Imagine what would happen if everyone waited to buy car insurance until after they got in an accident. Premiums would skyrocket, coverage would be unaffordable, and responsible drivers would be priced out of the market."

Let's recast this, shall we?

"Imagine what would happen if everyone waited to buy [health] insurance until after they got [sick]. Premiums would skyrocket, coverage would be unaffordable, and responsible [citizens] would be priced out of the market."

D'unh!

How come no one's clamoring for a law that mandates coverage for wiper blades, or that requires insurers to charge the same rate for careful drivers and those with multiple DUI's?

More importantly, there's just no comparison between the term "driver" and "citizen." That is, one need only buy car insurance if one operates a vehicle on public roads. Take the bus? Insurance not required. Ride a bike? Insurance not required. Drive the '66 Blazer on your farm? Insurance not required.

Breathe the air? Insurance required, according to Shecantbeserious and her fuzzy-minded minions.

And there's this: in most (all?) states, one isn't actually required to buy insurance even if one does drive on the public roads. One has the option to post a "bond" as proof of financial responsibility. So why isn't this an option for the purchase of health care? Seems to me, fair's fair: if you want to conflate the two, then do it right: offer the option to post a bond and allow insurers to charge appropriately for the risk.

And, of course, drop this (evil) individual mandate nonsense.

Freedom of (from?) Association

From the mailbag:

"Something that I have counted on for 12 years is changing. The [State] Bar Association is dropping its group health plan effective 12/31/10.

Oxford insurance, which provides health coverage to the [State] Bar Association, has dropped coverage to the 60 members who are in the group. We have all aged, some members have major health issues, probably all of us have some minor ongoing health issues, and apparently are no longer a good risk. I have been covered by this plan for the last 12 years, since I became a solo practitioner. Now, with less than 30 days notice, I am scrambling to find alternate coverage or find an of-counsel relationship to become part of a law firm "group."

What are my options with regard to the [State] Bar Association on whom I have counted for my coverage for so long? Should I ask them to file suit against Oxford (what grounds)? Any suggestions of possible options would be much appreciated.

Thanks for any and all suggestions."

Thanks, Karen [not his/her real name] for your email; we'll do our best to answer your questions.

You've already answered why this has happened: "the 60 members who are in the group." Add in major (and minor but chronic) claims and an aging population, and what carrier would choose to stay on this risk? The sticking point is that little word "choose:" in most circumstances, the carrier has no such choice.

But this is an Association plan, so there's a loophole:

When you purchase coverage through an Association, rather than on the open market (preferably through a professional, independent agent), you're not a "policyholder," you're a "certificate" holder. There's a world of difference: a policyholder has a direct contractual relationship with the insurer, with specific rights and protections which a certificate holder lacks. Policyholders can (generally) be cancelled only for failing to pay premiums, for fraud or if the carrier goes bankrupt. In the latter case, one generally has recourse to the state's Guaranty Fund.

A certificate holder, however, has none of these rights. The organization (association) is the policyholder, and the carrier can drop it like a hot potato pretty much any time it wants (with proper notice, of course). If you could prove that the association didn't receive the proper notice (eg the policy says 60 days and they only gave 30), then the association (not you) may have a leg to stand on, but I would be very surprised if that were the case.

I don't know much about [your state's] insurance issues, but I would have to guess that being "of counsel" will have little effect on your ability to glom onto a larger firm's group coverage. After all, you'd still be an independent contractor, and most likely ineligible. Which is not to say that you shouldn't ask, but don't get your hopes up too high. Keep in mind, too, that you'd still be at the mercy of someone else's insurance buying (and shopping) decisions: what if the new group's plans become too expensive, or they don't offer a plan that fits your needs?

All of which to say: buy your own insurance. Consult with a local, professional independent agent, preferably one with at least 5 years of relevant experience. Don't know one? Then ask your relatives, your friends, your colleagues for referrals.

You'll be glad you did.

[Special Thanks to Bob, Bill and Mike for their help on this]