Those Marvelous Rebates

The folks in LaLa land were greeted with this posting from the California Dept of Insurance. Seems the MLR rebates have been calculated and the results are in.

• Blue Shield of California Life & Health Insurance Company: $10.8 million rebate to policyholders in the individual market; approximately 239,595 subscribers impacted; $45.15 average rebate per subscriber;

• Kaiser Permanente Insurance Company: $277,034 rebate to policyholders in the individual market; approximately 21,823 subscribers impacted; $12.69 average rebate per subscriber;

• Connecticut General Life Insurance Company (CIGNA):$3.4 million rebate to employers in the large group market; approximately 89,575 subscribers impacted; $37.70 average rebate per subscriber;

• Anthem Blue Cross Life and Health Insurance Company: $1.3 million rebate to policyholders in the individual market; approximately 407,429 subscribers impacted; $3.16 average rebate per subscriber;

• Aetna Life Insurance Company: $3.4 million rebate to employers in the large group market; approximately 84,428 subscribers impacted; $40.50 average rebate per subscriber;

• PacifiCare Life and Health Insurance Company: $789,615 rebate to employers in the large group market; approximately 63,600 subscribers impacted; $12.42 average rebate per subscriber.

2700 pages, over 12,000 additional pages of regulations and interpretations so policyholders can get a refund ranging from $3 - $45.

I mean really?

Nobamacare

Nobamacare is a real possibility thanks to the Supreme Court Decision. If the states refuse to participate in key parts of Obamacare the law quickly becomes Nobamacare.

If any state declines to participate in the expansion, the Department of Health and Human Services (HHS) could strip that state of 100% of its Medicaid dollars. Every voter in that state would continue funding Medicaid through payroll taxes twice a month, but now would be subsidizing the other 49 states. Rejecting the expansion would thus be a political death wish for any governor or legislature.

 This coercion is an unconstitutional violation of state sovereignty, so the Court struck down part of ObamaCare’s massive Medicaid expansion.

​By rejecting Medicaid expansion, millions will have to forego the "free" health care entitlement.

​Next, the states will need to refuse to create the exchanges. This forces HHS to establish them, paving the way for Nobamacare.

But there are no tax subsidies if HHS runs an exchange, so no incentive for people to flock to the exchanges; they’d pay full price. While many high-risk individuals would do so, it would still be vastly more expensive. Many will instead choose to pay the penalty (tax?) for violating the individual mandate.

Perhaps the rocket surgeons on Congress should have thought of that before writing this bill.

Since HHS-run exchanges have no subsidies, for states refuseing to create exchanges, no employer in that state will be subject to that penalty. This means business owners will band together to lobby their state not to set up exchanges.
This will create an unworkable patchwork nationwide, between states with semi-socialized medicine and healthcare costs spiraling out of control, versus those with private-sector medicine. Expect doctors, insurers, and providers to flock to these friendlier states, creating an increasingly unbalanced system. Then ObamaCare will start coming apart at the seams, and momentum will build to repeal and replace.

​Sounds like a plan to turn Obamacare in to Nobamacare.

​I like it.

Medicaid Patents Get Short Sheeted

Sixteen states impose a monthly limit on the number of drugs Medicaid recipients can receive and seven states have either enacted such caps or tightened them in the past two years, according to the Kaiser Family Foundation (KHN is a program of the foundation). The limits vary across the country. Mississippi has a limit of two brand-name drugs. In Arkansas adults are limited to up six drugs a month.

Since June, Alabama has had the nation’s stingiest Medicaid drug benefit after limiting adults to one brand-name drug. HIV and psychiatric drugs were excluded. On Aug. 1 the state will relax the limit to its previous level — four brand-name drugs — after the restriction saved more money than expected and the state received money as part of a settlement with a pharmaceutical company.

read more . . .

Pizza Getting Cold

A successful pizza restaurant owner wants to expand and open a new restaurant but is putting off plans because of Obamacare.

"I want to open a new restaurant, but without knowing how Obamacare will affect me, I can't make plans," Nichols said at a recent community forum in Beaumont on the new Patient Protection and Affordable Health Care Act.

 With property purchased and blueprints drawn, Nichols said her building is now on hold because she can’t determine how to budget for Obama’s mandate.

New restaurant. More jobs.

Just what this economy needs.

Those who do not offer health insurance will have to pay a tax of $2,000 per employee.

Nichols has 85 Beaumont area employees set up on a private carrier insurance plan and matches the $90 a month each worker pays with $90 to cover the entire premium."

That's the cost if I continue to provide insurance. So I have two options, I can stop offering coverage and pay the $2,000 fine, or I could keep my number of staff under 50 so the mandate doesn't apply.

Hmmmm. Where have we heard this before?

She has been in the restaurant business for over 30 years “producing jobs for young adults.”

“Tens of thousands of kids have been sent to college, families have been started and careers have begun," Nichols added. "Now, a long and productive career is about to be destroyed by slavery instead of being rewarded with retirement."Nicholas said in 2011 she had to pay 87.49 percent of her income to federal income, state franchise tax, and property tax.

"Now add to that sales tax, phone tax, trash tax, water tax, gasoline tax, payroll tax and other taxes ad naseum," she continued.

Sounds like Washington is a taxaholic.

Just say no to Obamacare.

Pinning Hopes on Promises

Georgia residents Liz Johnson and Robert Irby have diabetes and no health insurance. They had health insurance in the past . . . a high deductible plan with BCBSGA but they dropped it when the premium increased.

Johnson and Irby will be eligible for the state Pre-Existing Condition Insurance Plan, created for ‘’high risk’’ individuals like themselves. More than 1,000 Georgians with health conditions belong to this new health plan. The couple must be uninsured for six months before joining PCIP. 

Johnson says she has looked into the PCIP and says, “It might be cheaper than what we had.’’

In addition, beginning in 2014, health plans will be barred from denying coverage to people with pre-existing conditions, and also won’t be able to charge them discriminatory premiums. And people with health problems and individual policies will be able to access private coverage through an insurance exchange, which should lower premiums for many consumers buying on their own

They are in fact eligible for PCIP. The premiums for the Standard option is $470 each.

Instead of signing up for PCIP they are "hoping nothing goes wrong".

PCIP is one area of Obamacare that actually works . . . as long as you sign up for it. Otherwise you live with the hope that your health won't change.

Limited Choice Under Obamacare

Obamacare is supposed to make health care and health insurance more affordable, give consumers more choices and provide free health care services.


Apparently the politicians in DC believe the public is both ignorant and gullible. In truth, there are at least 10 ways in which Obamacare LIMITS consumer choice.


"Free" preventive services are not really free. Everyone pays for these services in the form of HIGHER PREMIUMS. 


Care to guess who decides which preventive services are essential?

The U.S. Preventive Services Task Force, a committee of experts chosen by HHS (Health and Human Services). In other words, non-elected officials are deciding the level and type of care you need.                     


We have discussed how the MLR (Medical Loss Ratio) is impacting health insurance by RAISING premiums and LIMITING choice. Seems it can also lead to the loss of HSA and HRA type plans.

since HSAs often cover most or all of participants’ routine medical expenses, the claims that a high-deductible health plan experiences are larger and may fluctuate significantly from year to year. According to one study, “For high-deductible and HSA plans to be viable, both from a consumer and carrier perspective under [Obamacare], an adjustment to the MLR formula for the impact of HSAs may be necessary.”[5] Otherwise, HSA plans may disappear, robbing consumers of an attractive and popular option.

We don't have to remind you that HSA and HRA plans actually make premiums AFFORDABLE for thousands of people that would otherwise go without insurance.


In addition to the IPAB (Independent Payment Advisory Board), a new government bureaucracy that decides what health services will be covered by insurance and which ones will not, a new CER (Comparative Effectiveness Research) entity will decide what type of care you can receive.


The list of 10 limits under Obamacare is available for review at this link.


Change you better believe in.

FDA Created Cancer Drug Shortage

What does Margaret Hamburg and the FDA have against cancer drugs? Maybe she can't wait for the Obamacare death panels and wants to speed the process along.

This FDA smackdown on generic drugs has led to a shortage of much needed cancer drugs.

The report, commissioned by Oversight Committee chairman Darrell Issa (R., Calif.), details the dramatic drop in the production of generic injectable drugs since Hamburg was confirmed as FDA chief in May 2009. Upon taking office, Hamburg promised an aggressive effort to enforce the FDA’s stringent manufacturing standards. In 2010, Hamburg’s officials issued 673 warning letters to drugmakers and other companies: a 42 percent increase from 2009. In 2011, the agency issued 1,720 warning letters: a further increase of 156 percent.

So what does Ms. Hamburg know about quality control that her predecessors did not?

Good question.

“According to sources with inside information about FDA’s operations, there is a disconnect between the FDA field force, the inspectors who work out of the agency’s district offices, and scientists and other career individuals at FDA headquarters who work on review and compliance functions,” Issa writes. “According to the Committee’s sources, FDA’s field force does not believe that it is within the scope of their authority to worry about the implications of their actions, even if it means a manufacturer closing a facility or removing manufacturing lines from production.”

Sort of a shoot first and ask questions later approach.

Wonder how cancer patients feel about this?

Ondansetron, a drug used to treat chemotherapy-induced nausea and vomiting, used to cost $3.71 per injection when it was on patent. Within one year after the drug’s patent expired, an injection cost 28 cents.

But injectable drugs require special manufacturing costs. “Injectable drugs often need to be lyophilized,” or freeze-dried, “which is extraordinarily expensive—the machine costs around $100 million,” says Mantha. “It’s a big capital expenditure.” On top of that, companies had to deal with the blizzard of new FDA enforcement actions

Why should the FDA care? It isn't their problem.

 in a normal market, whenever you have a shortage, manufacturers can raise prices, in order to restore their incentive to supply more product. But because of Medicare’s 6 percent cap on price increases, suppliers had no ability to raise prices to respond to doctor and patient demand.

Government interference in the market place created these shortages. The tag team of Medicare and FDA is squeezing the life out of low cost generic drugs.

the recently passed Prescription Drug User Fee Act legislation contains some language regarding drug shortages, but again the emphasis is on early warning of shortages, and speeding up FDA reviews, rather than on the real problems: excessive regulatory interference, and Medicare’s price controls.

As a former generic-drug CEO says below, “it seems somewhat ironic that the FDA is being empowered to cure a crisis they may have had a hand in creating.”

This is what happens when government officials try to regulate industries about which they have no idea how their actions impact end results.

As usual, Avik Roy's take on this topic is on target. Click here to read the full report as well as two addendum's.

An Exchange by Any Other Name

is still an exchange. You can change the name, put some lipstick on that pig, but it is still a pig.

Health insurance exchanges are an integral part of Obamacare.    


So are taxpayer funded subsidies.


Without exchanges, there are no subsidies. More importantly, without the RIGHT KIND of exchange, there are no subsidies.


The Massachusetts exchange used for Romneycare relies heavily on taxpayer funding . . . especially from the federal tax coffers.


Much has been written about the Massachusetts Connector (the exchange) but very little about the exchange in Utah.


The Mass Connector has a staff of 45 employees and contractors and an annual budget of $40 million.


The Utah exchange has a staff of 2 and a budget of $750,000.


The Mass Connector relies heavily on salaried "navigators" and advertising to enroll citizens (and non-citizens) while the Utah connector incorporates and welcomes insurance broker participation.


According to The Economist:

Utah's reform is “market-based”, says Mr Herbert, whereas “Obamacare” is a big-government monstrosity. But it too relies on exchanges, so now the word is tainted.

Tainted by Obamacare.


So the folks in Utah want to hold a contest to rename their exchange.


But how is the Utah exchange is different from the Mess Connector and Obamacare?

Utah also decided that government subsidies should play no part in its reform, whereas the one in Massachusetts was based on them. Thus Mr Romney's plan became, more or less, the basis for Obamacare, whereas Utah started seeing its plan as a free-market alternative. 

Unsubsidized insurance. Instead, allowing the free market to determine price.


What a novel idea.

So the Utah Health Exchange is decidedly not Romneycare or Obamacare. But what is it? At first glimpse, it is a snazzy web portal where four of Utah's five largest health insurance companies offer about 140 plans to about 6,600 employees of 285 small businesses. Each employer determines in advance how much he will contribute to an employee's insurance, as in a defined-contribution pension plan. The employee then filters the plans and selects his favourite—again, as he might choose mutual funds in his defined-contribution pension plan.

Freedom of choice rather than a government mandated level of benefits. Agent participation. Market driven premiums. No mandate. No MLR (at least not at the state level).


How did they ever come up with that idea?


Granted, the Utah exchange doesn't have the participation like the Mess Connector but they also are spending very little of the taxpayer dollars to run the thing.


Does spending more money make it better or just make it more expensive?

Mediocre Medicare

Seems the folks to our north have a secret they have been hiding for years. Their Medicare system is mediocre.     


The Canadian health care system (actually systems, since there is one for each province) provides equal access for all but falls short in delivering value.

In the eyes of the provinces, national standards merely ensured minimum benchmarks — that is, avoiding worst practices. Now, instead of bare minimum, the premiers aim to put their best face forward — at the best price.

So, how much will all this cost?

Their latest report highlights case studies that cry out for action: Exhibit A is foot ulcers that plague diabetics when treated poorly, leading to needless amputations. Exhibit B is teamwork, using nurse practitioners to do more primary care.

All of the premiers’ proposed reforms — clinical guidelines, fairer fees, better teamwork, cheaper generics — are no-brainers. They are also old news, and ought to have been targeted by now.

No brainers indeed.

Wonder how much the study cost that came to this conclusion?

Cost controls, for example, are vital if Ontario is to repurpose funding where it is needed most in home care and long-term care. Doctors take up one-quarter of all health expenditures in Ontario, about $48 billion, and roughly 42 per cent of all program spending in the province.

A few months ago, McGuinty sent out a letter to his fellow premiers ostensibly updating them on how Ontario was reining in doctors’ fees, but purposely seeking validation for his hard line. Other premiers responded privately by expressing strong support — and outright thanks — for paving the way.

What a novel idea.

Bring down the cost of health care by limiting how much a doctor can charge for their services.

What could possibly go wrong with that?

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.

Bye Bye Benefits

About one in 10 employers plan to drop health coverage when key provisions of the new health care law kick in less than two years from now, according to a survey to be released Tuesday by the consulting company Deloitte.


read more . . .

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:

"If you have an increase in earnings, putting you over the limit, part of your subsidy can be taken from you later."

Talk about the gift that keeps on giving.

Bob notes that, unfortunately, this "gift" also comes with more questions than answers:

■ How much intrusion into our lives will be required to determine if someone is entitled to a subsidy?

■ Will everyone's return require an audit (which implies an after-the-fact review)? If you get your subsidy and then an audit later determines you were not entitled to it do you owe the money back plus penalty and interest?

■ Will the IRS be smart enough to run all the calculations?

■ Will this create an additional burden on employers who will then drop health insurance rather than put up with the red tape? Will this exercise remind employers of what they had to go through for MLR rebates and create a backlash?

■ Will Dudley be able to save Nelle from being blown up by Snidely?

And he points out that the only real answer we have is that this latest wrinkle illustrates how impossible this law will be to execute, and how much money will be wasted trying to implement and enforce it.

Our forum participant continues:

"How many will qualify [for the subsidies]? The government estimated 20 million. I hope they're closer than their estimates for PCIP enrollment. Their estimates for the small business health insurance premium subsidy was as much of a flop."

As we've pointed out here, the PCIP program, while itself laudable, has thus far enjoyed underwhelming success.

The lynchpin here is whether or not HHS Secretary Shecantbeserious, and her colleagues the Revenooers, can make their interpretation rule stick. So far, the law says what HHS (and, of course, Chief Justice Roberts) says it says.

Time (and, of course, November 6th) will tell.

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:

Health Insurance Exchanges

Health insurance exchanges. That place on the internet where magic happens. Citizens and business owners can view, compare and purchase government designed and priced health insurance plans . . .  all with the click of a mouse.

But it appears some of the states are lagging behind in establishing this new insurance flea market. According to NCSL, only 12 states have established "The Exchange."

Health Insurance Exchanges are, for most states, new entities that will function as a marketplace for buyers of health insurance, giving them choices for health coverage. They will offer a variety of certified health plans and provide information and educational services to help consumers understand their options. The 2010 Affordable Care Act (ACA) gives states the option to establish one or more state or regional exchanges, partner with the federal government to run the exchange, or to merge with other state exchanges. If a state chooses not to create an exchange, the federal government will set up the exchange(s) in the state. 

That last line is the key.

Why spend state money (that they don't have) if the government will do it for them?

Kind of like owning a business . . .

Health Wonk Review: Smokin' hot edition

Julie Ferguson presents this week's sizzlin' round-up of wonky posts. As usual, there's  lots to choose from, so enjoy the A/C and the HWR.

Mandate, Shmandate?

Regular readers know that, come 2014, it'll be more economically efficient to drop their health insurance than to keep it, since plans will be guaranteed issue with no exclusions for pre-existing conditions. Since the ObamaTax is (at least initially) going to be a lot less than one's premium, why would one purchase insurance before a claim?

Now you may be thinking: "But Henry, if I don't buy coverage I'm going to have to pay that tax or I'll be in hot water with the IRS."

Um, maybe not so much. Reason's Jacob Sullum makes the case:

"Even paying the penalty is effectively optional, because Congress ... barred the Internal Revenue Service from using its most effective tools — liens, forfeiture, and prosecution — to collect it... the IRS, confronted by uninsured taxpayers who refuse to pay the penalty, must instead resort to "scary letters and threats to withhold tax refunds."

Hmm, scary letters? I can handle that. As I think most people could.

The problem here is that Mr Sullum's just not thinking this through. If millions (or tens of millions) of Americans "opt out" and also refuse to pay the penalty tax, what's left of the system falls apart. For the Obamastration, this is a feature, not a bug, because it paves the way for what they really want.

[Hat Tip: FoIB Holly R]

Even More MLR Fun

Got this from a forum used by insurance agents all over the country. It shows the insanity of the MLR debacle.

United Healthcare just informed me that I can look online and see what rebate amounts my group clients received. A group with 44 enrolled employees in 2011 and an annual premium of $132,211.45 for 2011 will receive a rebate of $124.97 representing .001%. What a mess.

Humana didn't list the rebate amounts for my clients, but I just received an e-mail from a client who has 5 enrolled employees on one of Humana's lowest cost plans ($5,000 deductible 70% plan), and they received a $1018 rebate. 

Thank you HHS for this wonderful gift.

As we now know, if you own a business you didn't build it by yourself. You had help from the government.

10 Things You Probably Didn't Know

but were afraid to ask about Obamacare.

So you think the Supreme Court upheld a law that requires most people to buy health insurance? That's only part of it. The measure's hundreds of pages touch on a variety of issues and initiatives that have, for the most part, remained under the public's radar. Here's a sampling:  

	Postpartum Depression (Sec. 2952) Urges the National Institute of Mental Health to conduct a multi-year study into the causes and effects of postpartum depression. It authorized $3 million in 2010 and such sums as necessary in 2011 and 2012 to provide services to women at risk of postpartum depression.
	Abstinence Education (Sec. 2954) Reauthorizes funding through 2014 for states to provide abstinence-only sex education programs that teach students abstinence is "the only certain way to avoid out-of-wedlock pregnancy, sexually transmitted diseases, and other associated health problems." Federal funding for these programs expired in 2003.
	Power-Driven Wheelchairs (Sec. 3136) Revises Medicare payment levels for power-driven wheelchairs and makes it so that only "complex" and "rehabilitative" wheelchairs can be purchased; all others must be rented.
	Oral Health Care (Sec. 4102) Instructs the Centers for Disease Control and Prevention to embark on a five-year national public education campaign to promote oral health care measures such as "community water fluoridation and dental sealants."
	Privacy Breaks for Nursing Mothers (Sec. 4207) Requires employers with 50 or more employees to provide a private location at their worksites where nursing mothers "can express breast milk." Employers must also provide employees with "a reasonable break time" to do this, though employers are not required to pay their employees during these nursing breaks.
	Transparency on Drug Samples (Sec. 6004) Requires pharmaceutical manufacturers that provide doctors or hospitals with samples of their drugs to submit to the Department of Health and Human Services the names and addresses of the providers that requested the samples, as well as the amount of drugs they received.
	Face-to-Face Encounters (Sec. 6407) Changes eligibility for home health services and durable medical equipment, requiring Medicare beneficiaries to have a "face-to-face" encounter with their physician or a similarly qualified individual within six months of when the health professional writes the order for such services or equipment.
	Diabetes & Death Certificates (Sec. 10407) Directs the CDC and the HHS Secretary to encourage states to adopt new standards for issuing death certificates that include information about whether the deceased had diabetes.
	Breast Cancer Awareness (Sec. 10413) Instructs the CDC to conduct an education campaign to raise young women's awareness regarding "the occurrence of breast cancer and the general and specific risk factors in women who may be at high risk for breast cancer based on familial, racial, ethnic, and cultural backgrounds such as Ashkenazi Jewish populations."
	Assisted Suicide (Sec. 1553) Forbids the federal government or anyone receiving federal health funds from discriminating against any health care entity that won't provide an "item or service furnished for the purpose of causing … the death of any individual, such as by assisted suicide, euthanasia, or mercy killing." Source: Kaiser Health News

How Now Brown MLR?

MLR is confusing. It shouldn't be, but it is. Perhaps it is confusing because it was a rule created by those who did not have to implement it, or deal with the associated problems, particularly for employers.

Employers.

Those that actually CREATE jobs vs. just talking about saving or creating jobs.

MLR seems to be simple.                      

Carriers are assigned loss ratio's based on line of coverage. If your loss ratio fails to meet the guideline you are required to issue a policyholder refund. If your loss ratio exceeds the mandate, you suck it up.

How difficult is that?

Complicated enough for carriers. How about employers?

Well . . .

Fortunately the DOL has issued this handy dandy technical release on how to allocate and distribute those wonderful MLR rebates.

If you have insomnia, this is highly recommended. It is effective and non-habit forming

Click here for sleep therapy.

So how do employers allocate and distribute the refund?

Funny you should ask.

First you need to remind yourself that those who wrote the law, issued the regs and then wrote the DOL technical release are not employers. They have never walked a mile in your shoes. They have no clue how to run a business.

They are government employees.

Not private sector employers.

Got it?

However they did provide a "hotline" you can call if you have questions.

(202) 693-8510

Burn that number into your mind. Put it on speed dial.

You will need it.

So how does an employer allocate the refunds?

You start by counting all covered participants during the PLAN YEAR that generated a refund. Not the calendar year (unless your plan follows a calendar year schedule), the plan year.

Include current employees that were covered as well as former employees. Don't forget those that may have only been covered for a few months. Include any employees that went on COBRA during the plan year.

If you had more than one plan from more than one issuing carrier during 2011 you will need to repeat this process for each carrier.

Of course you may have only received a rebate from one carrier, not both.

That is a good thing.

If you had COBRA participants from carrier A for the first 6 months of the year and you changed carriers, you need to calculate the refund separately for carrier A vs. carrier B.

This calculation also applies to active and former employees covered by two different carriers during the year.

Segregate those employees that only had single coverage from those that had dependents.

Calculate the rebate based on the percent of premium you (the employer paid) vs. the premium paid by the employee.

Now total up the MLR rebate from carrier A and allocate accordingly. Repeat this process for carrier B.

Issue refund checks (from each carrier) to active employees.

Now do the same for former employees.

Don't have a forwarding address for former employees? Issued a refund check and it came back addressee unknown?

Call (202) 693-8510.

Oh, did you have a Section 125 plan?

Let's just say the refund calculation is more complicated.

Besides, you have probably already dozed off  . . .