insurance issues,Principles & Solutions and tips *trik tax: August 2016

Wednesday 31 August 2016

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They say that "the exception proves the rule," and I think that FoIB Allison Bell has found the exemplar:

"Wellmark Blue Cross Blue Shield of Iowa says it spent $18 million on medical bills for just one patient in 2015."

And that's just from July forward. The patient suffers from a ""severe genetic disorder," and is racking up about $1 million a month in claims. In fact, this one insured accounts for some 10% of the almost 43% rate hike Wellmark's seeking for 2017. Since this is a fully compliant ObamaPlan, there's no end in sight, since there's no cap (aka "lifetime maximum").

So why do I call this "insurance working properly?"

Well, because insurance should be about spreading the risk (and the pain). And this certainly qualifies: no average person could afford this kind of health care spending on his own. And since it's a genetic disorder, I don't feel any moral qualms as I would for someone with a lifestyle-related condition. This is simply the hand that this person was dealt.

And yes, it's a lot of money, and money means resources, being spent on one person. My faith requires me to "choose life," and that's the over-arching sentiment here. It's not for ~~birth control~~ convenience items or routine expenses, it's for a catastrophic claim, what health insurance should be about.

May this poor soul find a path to healing.

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■ From the "Everything Old is New Again" Department: My late mother had Post-Polio Syndrome, a result of childhood exposure, but (thankfully) she never had the full-blown version of the dread disease. A common treatment for those that did was the so-called "iron-lung." Fortunately, we've long since eradicated polio, but FoIB Allison Bell warns that we may have to dig those old machines out of mothballs:

"Zika May Be Polio All Over Again ... the CDC concluded, “after careful review of existing evidence,” that “Zika virus is a cause of microcephaly and other severe fetal brain defects” in newborn infants."

Heads' up.

■ Co-Blogger Mike thinks that Belgium might be catching up to Sweden in the Bizzaro World medical tourism race:

"Euthanasia tourists are flocking to Brussels to get a lethal dose. Doctors at hospitals and clinics at Belgium’s capital are seeing an increase in number of euthanasia tourists who are travelling from across the world"

Supply and demand.

■ FoIB Jeff M first alerted us to troubles brewing for North Carolina's Blue Cross franchise back in May. Today he shares this update in the continuing saga:

"The N.C. Department of Insurance announced Monday it will broaden its investigation into Blue Cross and Blue Shield of North Carolina, citing “disagreements” with the insurer."

At issue are continuing IT and claims processing issues.

Gotta love the tech.

■ And finally, via FoIB Holly R, this sad (and highly unusual) case from Great Britain (and for once, it's not about the MVNHS©):

"[A] 61-year-old British bagpipe player who developed a dry cough and breathlessness that worsened over a period of seven years ... He died several weeks after entering the hospital"

Turns out, several different - and deadly - fungi had taken up residence in his bagpipe, which he had neglected to clean. Truly sad, but perhaps a helpful warning to fellow pipers.

Death by Amazing Grace?

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Tuesday 30 August 2016

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As we noted earlier this month, agents have the opportunity to sell ObamaPlans at Walmart stores around the country. But the window for signing up to do so is closing.

From email:

"Tomorrow (August 31) is the last opportunity for agents and brokers to sign up to enroll consumers in Marketplace plans in Walmart stores.

In order to participate in this Walmart event, you must hold a valid state license and be trained and registered to participate in the Marketplace for 2017."

Interested? Then click here to get started. And any readers that do choose to participate are encouraged to let us know what you think of the experience.

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Earlier this month, we noted the financial difficulties facing the Much Vaunted National Health Service©, and observed that if you're a government-run health care system and you're going broke, that's a problem. But it's not the only problem - lack of self-awareness is also strong:

"Yet oddly, rationing is not entirely dead. It is alive and well and making a comeback in our “precious” National Health Service." [emphasis added]

Just now noticing that, Jeremy? Had you been a regular IB reader, you'd have seen examples for years. Better late than never, one supposes. And he does, in fact, make an extraordinarily brilliant point:

"In a tax-funded health care system, the normal, self-limiting rules of supply and demand don’t apply."

Which is exactly right, and we're already seeing signs of it here, with only a partially government run health care scheme:

"A majority of new enrollees are considered high risk, meaning insurers will have to spend more money on people in poor health and requiring expensive care."

Mr Warner goes on to point out three "new elements" that have entered the picture: mass communication, an aging society, and ever-growing, ever-changing tech. Notice the elephant in the room that *doesn't mention?

[Hat Tip: FoIB Peter K]

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Monday 29 August 2016

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The other day, I linked to David Williams insightful post countering the conventional EpiPen narrative. Turns out there's even more fallout:

"Mylan, said that the generic EpiPen would be available in several weeks and be identical to the existing product, which is used to treat severe allergic reactions. But it would have a wholesale list price of $300 for a pack of two, compared with just above $600 for the existing product."

As a friend noted today on Twitter, it's unclear on how they're going to compete with themselves and still come out ahead.

Not my monkeys, not my circus.

[Hat Tip: Co-Blogger Bob V]

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modern Health care has released its list of the top 100 most influential people in healthcare. It's an annual list.

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It's worth your time to scan the whole list. As you do, don't overlook the fact that not one of the top 25 is a physician.

Not one.

Plenty of politicians, lawyers, MBA's, and accountants. Couple of nurses. A phys Ed. Major. Not one physician.

Further down the list - and still in the top 25 - you'll notice Loretta Lynch, Paul Ryan, John Roberts, even Bernie Sanders. But not one physician.

Suppose the automotive industry's 100 most influential people did not include even one senior mechanical engineer? Or the 100 most influential construction executives did not include even one experienced building contractor? Or the 100 most influential American military figures did not include even one general or flag rank officer who graduated West Point or Annapolis?

But it's all good, because, you know, "Healthcare is different".

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Ohio’s individual health insurance market is failing. In less than 12 months we have seen HealthSpan, InHealth, United Health Care, and Aetna exit the Obamacare Marketplace. Another insurer local to Northwest Ohio, Paramount, is reducing its footprint for their HMO products. Now comes official word that Medical Mutual will be eliminating all PPO products and will no longer participate in 65% of the state.

For people living in 19 counties choice is no longer an option. Anthem will be the sole insurer they can purchase a plan from. In 28 counties there will only be two insurance carriers to choose from – Anthem and one other. These 47 counties make up more than half the state of Ohio. This is a far cry from 2016 when Ohio boasted of having at least four insurers in every county.

MMO’s PPO plan elimination is even more important for those it will still serve. Their largest number of insured members were enrolled in a PPO product. The PPO network was very robust and allowed members to utilize several hospital systems and specialists. That choice is gone. Going in to 2017 the remaining insurers all utilize narrow networks. For consumers in some counties this means that they cannot have services from the local community hospital that serves them. For others it means that they will have to find new cardiologists or oncologists. This will be especially problematic for outlying communities.

The bad news doesn’t stop there. In addition to less choice, rate increases are estimated to rise nearly 13%. As the only statewide insurer, Anthem is seeking a 9.9% average increase for their plans. Overall this is less than the average but it is relevant to point out that they already had some of the highest rates in the state. Other insurers such as Medicaid managed care providers Caresource and Premier are seeking increases of 13.5% and 39% respectively. Now they will be taking on the additional risk coming from insurers who are losing their shorts in the Obamacare marketplace.

Higher rates, less insurers, and fewer providers. Exactly the opposite of what Obamacare promised.

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Friday 26 August 2016

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As if North Carolina Blue Cross hasn't put itself in enough hot water, FoIB Jeff M tips us that the carrier has decided it doesn't really need (want?) a lot of new business:

Effective for the 2017 plan year (Open Enrollment '16), NC BX is paying $0 commission on new business coming from other carriers, $0 commission on BX re-writes, and a whopping 1% for newly insured folks.

More on this as it develops.

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Thursday 25 August 2016

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We first blogged on "Dead Peasant" life insurance over 10 years ago:

"Stranger Owned Life Insurance (SOLI) is part of the “premium financing” phenomenon."

The concept certainly had its drawbacks: for one thing, it created (or could potentially create) a "moral hazard," tempting impatient beneficiaries with no familial or other personal connection to the insured.

But it had its uses, too: it enabled businesses to recover financially from the loss of key (or other) personnel. And there was this:

"Florida Atlantic University ... pays the premiums on life insurance policies for select boosters, who then name the university as beneficiary. The booster eventually shuffles off this mortal coil, leaving behind an endowed chair"

So, win-win.

But eventually the tide changed, and STOLI plans were outlawed. Which would have been the end of it, except for a nagging question: if all these plans are forced to go away through no fault of those who bought them, who gets all those premium dollars? On the one hand, the carrier assumed the risk in good faith, and (presumably) paid out one or more claims over the years. On the other, the folks who bought them certainly believed that the plans would eventually pay out, and didn't cancel them along the way.

On the gripping hand, "[t]wo federal appellate courts have affirmed, on different grounds, the cancellation of large life insurance policies ... permitting the issuing insurers to retain the premium paid for the policies."

Which is good news for the carriers, which had the use of the money for years, and now gets to keep it completely risk free.

One wonders if there are any tax consequences to this.

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Over at The Grey lady, Aaron Carroll (professor of pediatrics at Indiana University School of Medicine) has a helpful explication of how the current EpiPen kerfluffle came about. He outlines the history of how the EpiPen came into being, and its subsequent history. He notes that, although the active ingrecdient is relatively inexpensive, it's also "inherently unstable. Research shows that it degrades pretty quickly over time, and it’s recommended that EpiPens be replaced every year."

Which makes sense, and I'm generally in favor of keeping med's up-to-date, and of market forces to keep the price of said med's within reach. But as we saw with the Daraprim controversy, sometimes bad actors cause market distortions, and heartache.

We'll come back to that.

But first, it's important to note that Prof Carroll goes to great pains to lay out the timeline, and regulatory issues, which have ultimately lead to a relatively inexpensive - but indispensable - treatment fast becoming out of reach for everyday folks. It's a tale of government recalcitrance and provider avarice, but mostly government recalcitrance:

"[I]n 2010, federal guidelines changed to recommend that two EpiPens be sold in a package instead of one ... In 2013, the government went further. It passed a law that gave funding preferences for asthma treatment grants to states that maintained an emergency supply of EpiPens. As the near sole supplier of the devices, Mylan stood to make even more money."

Which is fine, but then the good Professor concludes:

"EpiPens are a perfect example of a health care nightmare. They’re also just a typical example of the dysfunction of the American health care system."

No, sir, it is most decidedly not that.

And how does your humble correspondent know this?

Well, when one digs a bit deeper, which Prof Carroll apparently did not do, one finds this little gem:

"If lawmakers follow the usual script, Bresch could get called up to Capitol Hill next month to explain her company’s justification for raising the price on the life-saving allergy shot. But that could be awkward, since she’s the daughter of Democratic Senator Joe Manchin of West Virginia."

So what Prof Carroll characterizes as an indictment of the (admittedly dysfunctional) health care system is really just a very simple, sordid example of rent-seeking, enabled by the powerful relative of the manufacturer's CEO.

Case closed.

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Wednesday 24 August 2016

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A few months ago we blogged on a lawsuit against TransAmerica Life regarding the cost of insurance (COI) in their Universal Life products. At the time, we noted that this was most likely an uphill battle, seeing as how every single UL contract specifically says that they can charge the maximum COI as stated in the policy.

Now, perhaps inspired by the TA litigation, policyholders of other carriers are also suing their insurers, citing much the same legal reasoning. Obviously, I'm sympathetic to their plight, but I'm also in favor of the rule of law, and contractual law in this case specifically.

The problem is this little phrase:

"[O]n top of the contract’s guaranteed maximum rates, express or implied contractual limitations serve as a check on discretion, prohibiting the insurer from considering factors other than mortality experience."

That is, carriers are constrained from using poor investment results as stultification for increasing internal insurance costs. And i tend to agree with this: certainly, carrier should look to their portfolio's performance when deciding how much interest to credit, but this has nothing to do with mortality costs (that is, how many of their insureds died the previous year). It seems to me that if interest rates were driving mortality rates, we've got much bigger problems going on here.

No jumping out of windows.

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Longtime readers may recall the extraordinary outpouring of support for those hit by Katrina; we were glad to help raise much needed funds for those most deeply affected.

Flash forward 11 years, and folks in Louisiana are once again facing devastating losses. I reached out to my old Cavalcade of Risk roster to see if any of those fine folks could help with an updated version of that 2005 project.

Thankfully, 'Ironman' came through, and has set up a page with all kinds of ways to help out:

"We've also selected a handful of charitable organizations that are focused on providing disaster relief across Acadiana, which are tied to national organizations that have been ranked highly by Consumer Reports and the Christian Science Monitor for their effectiveness in putting donated funds into real relief efforts."

This is just an outstanding response, and I would urge IB readers to head on over - Thank you, Ironman!

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Tuesday 23 August 2016

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So, working on a new (to me) group client, and one of the things we're looking at is the group term life insurance. They're currently with a carrier that's not known for this product (they tend to more individually-tailored plans), and so I asked about the rates. The client gave me the number, and I asked if that included Accidental Death and Dismemberment (AD&D), as well. She told me "I wish but it does not."

Which is fine, and helps me keep things in order (and perspective) as I'm putting together the quote. But it reminded me of a philosophical conundrum I've occasionally pondered: what's the deal with AD&D [ed: channeling Seinfeld, are we?]?

I ask because here's the premise of that product:

"So you're telling me that my widow/widower needs twice as much money if I get hot by a bus and die instantly than if I get cancer and endure a long, expensive death?"

Again, I don't think there's anything inherently wrong, evil or fattening about this type of coverage, just don't understand why folks would pay extra for it. Now, if there was a rider that paid double for getting cancer or having a stroke...

But that's another post.

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Monday 22 August 2016

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We've been writing about Balance Billing and "PARE" claims for almost 11 years (here for example). Briefly, the problem is that there is essentially a class of providers who, although they may ply their trade inside a network-approved facility, are nonetheless not contracted with a given (or any). network. Thus, even if you carefully choose an in-network facility and surgeon (for example), odds are your anesthesiologist and radiologist are not in-network, and can charge you pretty much whatever they wish.

It's not a new problem, but that doesn't stop some folks from lamenting that it's just the latest way for providers to ding patients:

"It’s getting harder and harder to keep medical costs within your insurance network—even during a single hospital stay."

And they've coined a new term for the practice: "drive-by doctoring." This of course makes zero sense: generally, such providers are well-established, with good reputations and solid credentials. They've just figured out a sweet deal: become the only pathologist in a given hospital, refuse to join any network, and bill away. Now, whether or not this is "right" or moral or "fair" is up for discussion, but that it's a new phenomenon isn't.

To be fair, Slate does point out that some states (Pennsylvania, for instance) have protections against such practices (and we discussed the current state of the law nationally here).

There's really not a lot one can do about this, other than to just be aware, and then try to negotiate a better price (which may be difficult, seeing as how the services have already been delivered).

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Back in Aught '11, Bob noted that the ACA's "tanning bed tax" was slated to bring in some $200 million per year. Even 5 years ago, the reality fell far short:

"The first 9 months of 2011 has generated only $54 million which means the expected revenue will be less than half what was expected."

But that was then, and this is now:

"Tanning industry blames 10,000 salon closings on ObamaCare"

Naturally, shuttering over half of these businesses is going to further reduce the numbers projected by O'care enthusiasts. And tan-seekers aren't the only folks losing choice:

[Map Courtesy of New York Times]

"Obamacare Options? In Many Parts of Country, Only One Insurer Will Remain ... In many parts of the country, Obamacare customers will be down to one insurer when they go to sign up for coverage next year on the public exchanges."

As FoIB Reed Abelson reports, almost one-in-five ~~victims~~ O'Care participants will have (at most) one carrier from which to "choose." Kind of like Model T color choices, no?

Adding insult to injury, a handful of entire states will likely be down to one a single carrier. So much for competition and bending the cost curve down. And so much for "choice."

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Friday 19 August 2016

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"It won't happen to me"

Yeah, about that:

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In no particular order:

■ We last noted how The Centennial State's move towards a Single Payer option threatened to send that state's budget "off a financial cliff." Well it turns out that there's one group in particular dead set agin it. FoIB Holly R alerts us that "liberal group ProgressNow Colorado held a news conference ... to announce its opposition to the measure."

As I've repeatedly said, I'm all in favor of 58 individual state laboratories trying out new models. Seems to me a great way to get a sense of which ones hold promise, and which ones don't.

■ Aetna's bailing on huge swaths of the individual major medical market has had a devastating afftect on at least one small Arizona community:

"People in Pinal County are at risk of a health insurance problem that hasn't happened anywhere else in the country: no companies offering marketplace health insurance"

Turns out, Aetna was the only carrier left standing in that area. And an overwhelming majority of those with plans qualified for a subsidy. Unfortunately, there seems to be nowhere to spend it.

■ And this is an interesting, if odd, little story from Across the Pond:

"There's an app that lets you buy restaurants' leftovers ... saving the good food from going to waste"

Here's how it works:

Why mention it? well, it would seem like this idea might be very attractive here in the US, but it's likely liability concerns (not to mention health department rules) would be insurmountable.

Too bad, really.

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Thursday 18 August 2016

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Courtesy of LifeHeathPro, where folks 85 and up receive long-term care services:

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Our favorite healthcare economist, Jason Shafrin, hosts this week's eclectic collection of health care policy and polity.

Methinks Jason sells himself short, though: it's full of great content.

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Wednesday 17 August 2016

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Courtesy of Jeanne Salvatore:

And more on how Flood Insurance works here.

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My favorite cases are the "tough" ones. It's not that I deliberately seek out difficult-to-write clients, they just seem to gravitate to me. The thing I like most about these is the opportunity to learn something new.

For several years now, colleagues (and marketers) have been urging me to offer Critical Illness (CI) plans. The problem was, I really could just never get my head around how to quote them, nor really "get" why I should. It's not that I had any ethical issues with these plan, I just had a mental block regarding them.

I was recently referred to a couple looking for Long Term Care insurance. As a result of the pre-screen process we use, it was pretty clear that Doug wouldn't qualify, but Denise would. My gurus at the Long Term Care Agency recommended a Critical Illness plan for Tim, and as soon as I saw the quote they emailed a light bulb burst into light over my head: I 'got' it!

Here's why: For many years, I've used a bucket metaphor to explain how Universal Life plans work. The LTC Agency folks use it to explain CI plans:

As soon as I saw this, it became crystal clear. The plan pays a monthly benefit for folks who end up with cancer, stroke, even Alzheimer's (which is important: remember, we're talking about Long Term Care insurance alternatives here). And the plan's Guaranteed Issue, so we don't have to worry about Doug passing underwriting.

There are other features, as well (for example, alert readers may be wondering about that $216,000 benefit pool), but my point is that I seem to have found at least one more way to help folks with health issues fund potential Long Term Care expenses.

And I'd call that a win.

[Special IB Thanks to Randy G]

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Once again, reader Brian J brings helpful insights, this time about health care sharing ministries:

Allthose caveats about the "healthcare sharing ministry" are eerily reminiscent of what it’s like to be a military veteran with non-service-connected non-emergency medical needs.

If you’re a military veteran – and enrolled in the VA healthcare system (which does meet the minimum essential coverage standard) – you’re disqualified from obtaining subsidized medical coverage through the Obamacare marketplace. (If you’re married, the marketplace will give your non-veteran spouse coverage with a subsidy, but you – being enrolled in the VA healthcare system – would have to pay the full [unsubsidized] amount for ACA health insurance coverage.)

Now, one might ask why is that a bad thing? If the veteran already is enrolled in VA coverage that provides care that meets the minimum essential standard for health care coverage, why would the veteran be concerned about obtaining health insurance outside of the VA?

The reason is that (1) VA health coverage is not considered to be “health insurance” and (2) because of the healthcare eligibility “Priority Group” that the VA assigns a veteran when that veteran enrolls.

Years ago, when the VA realized that budgets were tight, they began a system of rationing health care, so that the veterans who needed health care assistance the most – and the ones who had made the greatest military sacrifice – obtained priority in coverage (and were assigned to higher “priority groups”). I think that was an appropriate and reasonable decision.

Here’s a link to a pamphlet that is produced by the VA that describes those priority groups.

But, what that means is that those veterans who do not qualify to a higher priority group based on their (lesser) military sacrifice are assigned to lower priority groups and are enrolled (and obtain coverage) determined by the amount of money Congress gives the VA each year, which then determines the amount of co-pay the veteran has to pay, and affects the healthcare services and benefits made available to the veterans in those lower priority groups. (If you’re assigned to Priority Group #7, you’re near the bottom of the list.)

The VA clearly states that “VA health care is NOT considered a health insurance plan.”

I think there's a disconnect between what the ACA considers to be minimum coverage in the VA healthcare system and what healthcare benefits a veteran enrolled in one of the lower Priority Groups might actually be entitled to and paying for. (Basically, if you have a non-service-connected non-life-threatening injury – say, you get the sniffles or stub your toe and go to your primary care physician down the street -- the VA is not likely to pay for that treatment.)

The VA warns (advises) veterans to keep their private health insurance – if they have it – due to the risks of being in one of the lower priority groups. See the section titled “Risks of Giving Up Your Private Insurance” in this VA pamphlet.

Many low-income military veterans with non-service-connected medical needs are dis-enrolling from the VA Healthcare System in order to be eligible for enrollment in the ACA (Obamacare) and obtain subsidized coverage for themselves and their spouses. (At least until they become Medicare-eligible -- then, they're re-enrolling into the VA Healthcare system.)

Thanks again, Brian!

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Tuesday 16 August 2016

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Medical Mutual of Ohio, one of the largest insurers in the state, announced that with the 2017 open enrollment they will discontinue to offer PPO plans both on and off exchange. This has significant ramifications to Ohio's Obamacare marketplace with the biggest impact being that eliminating these plans reduces the counties that Medical Mutual will participate in from all 88 down to 31.

This is not what Medical Mutual wants to do, but is necessary to continue selling individual plans.

Overall this decision will eliminate insurance to 25% of their membership and cause an unknown (guessing very large) percentage of their membership to have to switch from a PPO plan to an HMO or POS plan. The POS plans will only be available in the Cleveland market while all other regions will be migrated to HMO plans.

Beside losing plans, members will also lose access to providers and facilities. At the top of the list of facilities no longer available is Cleveland Clinic. Unless you fall in one of the nine counties surrounding Cleveland (POS plans) you are out of luck. What if you want the James Cancer Center at OSU? Not if you are outside of Columbus. How about Bowling Green, Ohio's Wood County hospital? Sorry, they aren't even in the HMO networks available. The list goes on and on and we haven't even mentioned the potential loss of primary doctors and specialists.

The decision came down to survival. For 2014 and 2015 Medical Mutual lost a combined $175 million. Even with reinsurance payments of $125 million it still leaves them $50 million in the hole. Obamacare supporters and insurers expected to see claims slow down and the market to stabilize. Neither of these things have happened. Add to the mix reinsurance is ending, and insurers like Medical Mutual see that it is impossible for them to continue the same strategy in the marketplace.

The new strategy is simple. Limiting network choice and limiting where to do business is bound to reduce the unhealthy risk while also eliminating providers who are unwilling to lower their reimbursement rates.

Instead of Medical Mutual rolling out 45% increases to members they will send them cancellation notices. Those in the 31 counties where HMO's will be offered will see renewals that map them to new plans. These renewals will vary based on rating regions. For those going from PPO to POS (Cleveland area) they will see increases in the low teens. Those already in HMO products will see increases in single digits. The winners will be those going from PPO to HMO where significant rate decreases will be given.

It's the financial winners that will be the focal point. Obamacare supporters will point to the rate reductions as a product of the law working. Never mind the fact that it is only "working" by limiting the providers of care that are essential to the health of those Obamacare was supposed to protect the most.

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With all the news today about Aetna bailing on most individual health insurance markets, this news is falling under the radar:

"Important Changes to Medical Mutual’s 2017 Individual Products

While Medical Mutual is firmly committed to Ohio and the Individual ACA market both on and off exchange, it is necessary for us to make changes to our 2017 individual health insurance products."

The regional carrier goes on to announce that, effective with the 2017 plan year, they're completely abandoning 57 of Ohio's 88 counties (almost 2/3's) altogether, and "mapping most of those remaining from PPO plans to the stricter HMO model.

The good news (such as it is) is that grandmothered and grandfathered plans aren't subject to these changes.

Co-blogger Patrick wonders:

1. How many people do they have covered on the exchange and off the exchange?
2. How many people will lose coverage?
3. How many people will lose their PPO plan but be able to migrate over to an HMO option?

MedMutual is hosting another webinar later this month, perhaps we'll have those answers then.

But remember:

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Monday 15 August 2016

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I was recently invited to represent a so-called "health care sharing ministry." These plans (about which Bob has written, most recently here) are considered ACA-"exempted" plans, meaning that although they don't meet the stringent ACA coverage requirements, they are nonetheless deemed "kosher" [ed: Heh] for ObamaTax purposes.

These plans essentially rely on the kindness of others to help folks pay for care. What's different (and somewhat appealing) with this one, offered by Altrua Healthshare is that it seems more structured than the ones I've seen previously, and from an agent's point of view, more attractive:

• Broad Network
• EXEMPT from Affordable Care Act
• Purchase all year, not just during open enrollment
• Very affordable memberships
• Available in all 50 states
• Pays great commissions

That last is important, as carriers continue withholding commissions, especially for "off-season" enrollments.

There are several things I do like about this particular iteration: first, they are non-denominational, meaning that they are open to different "flavors": of Christianity. Of course, this lets folks like yours truly out in the cold as far as actually joining, but it may be attractive to my Christian clients (which most are, of course).

I also like that they set things up to mirror ACA metallic tier plans: Gold, Silver, Bronze. And it seems affordable, with rates for even "Gold" level plans available in the low $200's (per month). This is at least partially due to the fact that it's medically underwritten:

"Some individuals may not be eligible or have a membership limitation due to certain past or present medical conditions."

Of course, I have some significant reservations, the most important of which is that this is not insurance (and to be fair, they make this perfectly clear up front):

"Altrua HealthShare members understand that Altrua HealthShare is NOT an insurance company and each member remains self-pay" [emphasis in original]

This presents a problem for me as an agent: if I recommend it, and the client blows past the $1 million lifetime maximum, or the plan fails to pay as set forth, then it seems to me that I've opened myself up to quite the E&O (Errors and Omissions) claim. It's rather like the argument about going "bare" in that I walk a very thin line between understanding a client's financial situation and recommending a potentially risky alternative.

A couple other thoughts from Bob:

First, the Idaho DOI shut down Altrua in the Gem State in 2011. It's not clear to me whether that's been resolved [ed: although the fact that it's touted as being available in "all 50 states" certainly implies that].

Second, he says "I like the concept, but hate the upside risk to client and and agent. I've suggested them in the past with caveats. A few have enrolled in a plan but none have really tested one yet."

And there's this:

"All low price insurance (and non-insurance) is great until you really need it."

Indeed.

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I've long been a critic of first and second generation Universal Life plans. Which is not to say that they didn't have a role to play, just that I think they required more "hands-on" attention by insureds than they were really prepared (or encouraged) to take on.

One of the biggest challenges to older plans is that they often become "upside-down;" that is, the internal costs far exceed the premium and interest credited, and they quickly become very expensive. Compounding this are IRS rules that effectively quash any hope of recovery by limiting premiums to a level where the policy just can't sustain itself.

The problem is that, if one doesn't really "goose" the cash value the first few years, then by the time the problem (insufficient cash value) becomes clear, it's too late to correct.

Or so I thought.

Turns out that although carriers can't illustrate level premiums sufficient to carry the policy forward, there's a stipulation in the tax code that if a policy violates IRS guidelines, once the cash value has been drained you can pay the premium needed to cover the monthly cost of insurance deductions/expenses. You just can't build a significant amount of cash value. So, you'd need to increase the premium each year as the cost of insurance deductions increase.

[ed: Link to relevant code is here, scroll down to 7702 f 6]

So, problem solved? Eh, to the extent that one can continue to pump cash into a quickly expiring insurance policy. The question then becomes whether that's really a good idea. Or it may be that this is the time to seriously consider selling the policy. Still, it's always nice to have options.

[Hat Tip: FoIB Sara S]

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Friday 12 August 2016

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It's hard to believe, but in over 11 years of blogging, we've never talked about the 'split dollar' life insurance funding technique:

"A split dollar plan allows an executive to obtain life insurance coverage using employer funds. The investment by your business in the plan is fully secured. If the insured employee dies or his or her employment is terminated, your business is reimbursed from the policy proceeds for its payment of premiums."

Now, why would an employer want to offer this? Well, it's a way to reward valuable employees (executives, key supervisors and the like) in a way that, unlike most benefits, doesn't require offering the same deal to everyone. Basically, the two parties (employer and employee) split the cost of coverage using whatever permanent type of coverage is appropriate (Universal or whole Life, for example).

It's an economical way to help a favored employee afford more long term coverage, and acts as "golden handcuffs" to entice him to stay. The concept itself has been used successfully for many years, and is generally well-accepted by the IRS.

But one can "up the ante" a bit by adding an "Inter-Generational" twist. These arrangements are generally family-directed. For example:

An elderly and permanently incapacitated mother acquired, on a lump-sum basis, life insurance on each of her three sons. The Tax Court was asked if this "would be deemed a taxable gift to the extent that the premium payment exceeds the value of current life insurance protection."

That is, since the death benefit of the insurance policies would always be greater than the (one-time) premium paid, would that premium be taxable? The Court actually ended up ruling that it wouldn't.

Now, why is this interesting to those of us who don't have extremely wealthy (and desperately ill) parents? Because it reaffirms the basic value of the split dollar concept itself and, who knows, perhaps you'll one day be that wealthy orderly parent.

Not to mention that emphasizing the need for well-thought-out estate planning.

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A month ago, I blogged on a client whose premium was jumping from about $700 a month to $1,000. One of the options we discussed was "going bare;" that is, declining to buy any insurance. Now, he could have potentially then become subject to the ObamaTax, but even that is a small fraction of what that increase represents.

He ultimately chose to keep his existing coverage (since he'd already met his annual deductible and was anticipating some additional expenses), but our discussion really brought me up short.

It wasn't that long ago that I castigated the subject of a newspaper article for making the choice to roll the dice by deciding not to be insured.

So what changed?

Everything, really: under the UnAfforable Care Act, it seems to me that choosing not to buy insurance is a rational choice. Although I would never advise going this route (cf: E&O coverage) there are certainly circumstances in which I don't argue very forcefully on its behalf.

Let's take Max: his current plan comes with a (low, by today's standards) deductible, after which covered expenses are paid at 100%. If renewal wasn't an option, he would likely be looking at a $4,000 deductible plan with a monthly premium of $852. Which means paying out over $14,000 (on an annual basis) before the insurance paid penny one.

Well, that's not quite true, either: the first dollar benefits include an annual checkup, which is worth some small fraction of that $14 large. Oh, and birth control and maternity, as well. For a 64 year old guy.

He'd save about $700 in ObamaTax penalties, as well.

But you see where this is going, right? It's absolutely a reasonable, rational choice to take a pass on an ObamaPlan altogether. And I hate that I not only see this, but (reluctantly, to be sure) agree with it.

/sigh

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Thursday 11 August 2016

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It will come as know surprise to those who've been paying attention that the (Un)Affordable Care Act has been an unmitigated disaster. But it may surprise some to learn of the scope of said disaster:

"While clear evidence that the law was expanding coverage, the soaring enrollment numbers have created a fiscal nightmare for insurers which, in turn, has serious consequences for customers."

I might take issue with the assertion that more folks are insured since the train-wreck passed, that's for another post. The key is the make-up of those newly-insured:

"A majority of new enrollees are considered high risk, meaning insurers will have to spend more money on people in poor health and requiring expensive care."

This just makes sense, since when one in dire need of health care it's human nature to seek out ways to help pay for that care. The problem is that there's no truly effective way to cushion that by enticing healthy folks to play along, except to keep moving inexorably toward to a nationalized, government-run system (aka Single Payer).

Which works out so well.

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It's been a while since we've checked in with those fun-loving rascals running the Much Vaunted National Health Service©. Last time we checked, those silly pranksters were busy ignoring the desperate pleas of a woman left to die by her "caregivers."

But that was then, and this is now, and they've moved on to much more productive things.

Such as denying necessary (if not urgent) surgeries, including hip replacements and cataract procedures. It's not they're they're being intentionally negligent, it's just that - get this - they've run out of money.

Hunh.

If you're a government-run health care system and you go broke, that's a problem, no?

But no worry, it'll never happen here.

But it's not just "routine" procedures getting tanked, ER's are taking hits, too:

"Shortage in emergency doctors leading to A&E crisis ... We have reached a crisis point"

So say the folks in charge of United Lincolnshire Hospitals.

Oh, those rascally nationalized health "care" schemes.

[[Hat Tip: FoIB Holly R]

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Wednesday 10 August 2016

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One of the most significant problems with ObamaCare is that, at its heart, it's not really 'insurance.' The definition of insurance is that it's a method for assessing, and then minimizing, the pain of, risk. And yet, the Rocket Surgeons in DC© who designed it managed to remove all but one risk factor (tobacco use). Couple that with the fact folks with subsidies aren't even paying their own premiums (a necessary pre-condition of "spreading the risk") and, well, you can begin to appreciate the scope of the problem.

But it gets worse: plans also include any number of so-called "first dollar" benefits: services and products that are paid for regardless of whether one has met the out-of-pocket limit (thus "free"). These include, for example, mammograms and ~~birth control~~ convenience items, pap smears and the like.

Notice, though, that there is not one single male-oriented bennie to be found. Zip, zero, nada.

And yet the Top Brains at The Commonwealth Fund have the audacity to claim that ObamaCare hasn't really been that great for women:

"[G]aps in women’s health coverage persist. Insurers often exclude health services that women are likely to need."

Right.

Here's my favorite:

"Six types of services are frequently excluded from insurance coverage: treatment of conditions resulting from noncovered services"

Are you kidding me?!

What part of "noncovered services" do you not understand. Of course noncovered services aren't ... covered.

And the rest of this drivel goes on in similar vein.

My friend and colleague David W offered this assessment:

"Start with the idea of "insurance" is to pay for everything. That's not insurance, that's an entitlement or a prepaid health plan[ed: as noted above]. Move on to what that costs, when insurance is already too expensive and going up, and when you move to specifics, note that 5 of the 6 "uncovered" procedures were covered by 80% of the plans, and 6th by 60% of plans. Finally, consider "choice" vs "control" and understand that, at its core, this is a pathetic attempt to force other people to pay for services that they want - they just don't want to pay for them."

Indeed.

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How can Arizona Central newspaper, part of USA Today, call themselves journalists? Their #Obamacare fluff piece alerts the readers that premiums will rise as health insurance carriers leave the Arizona market.

Five insurance companies that had offered coverage in the Affordable Care Act marketplace have told state regulators that they will opt out or scale back coverage when the next open season for Affordable Care Act coverage begins Nov. 1.

There will still be coverage, but with fewer providers, experts say costs will likely go up “much higher in 2017 than they had in the past couple of years.”- AZ Central

Costs will likely go up.

No kidding.

They even have the gall to reference a report that has nothing to do with reality in Arizona.

A national estimate by the Kaiser Family Foundation predicts that premiums for one of the lower-costs plans could rise as much as 9 percent next year, compared to 2 percent this year. In Arizona, those higher premiums could hit more than 100,000 people.

Nine percent? How about 19% to 122%?

Rates filed with the Arizona Dept of Insurance have been reviewed and (presumably) approved. Note that some of the "final" rates are higher than the carriers requested.

Click to view report.

How do you like those apples?

Shame on you Arizona Central. You should have your press pass revoked.

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Tuesday 9 August 2016

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Shot:

Chaser:

Single-Payer Healthcare System Projected to Send Colorado Off a Financial Cliff

[Hat Tip: FoIB Holly R]

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Our friends at Fat Dragon Games have partnered with Bundle of Holding to offer some incredible discounts on industry-leading FDG terrain sets! Part of your payment will be donated to Doctors Without Borders as well, so get some awesome terrain for your game at an amazingly low price, and help a wonderful charity, too!

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After more than 40 years in the health insurance industry, I never thought this day would come. The advice offered based on years of experience and hearing almost everything under the sun from (literally) thousands of clients is now going silent.

#Obamacare has replaced insurance agents with "navigators" who have been given a week of training, mostly on how to use their computer to find health insurance plans and rates. These reps are nothing more than faceless voices at the other end of an 800 number.

Because they are licensed, and nameless, they are not accountable for the advice they give.

Got a problem? Who did you talk to? Tamika? Tamika who?

It really doesn't matter because whoever you talked to before, and the one you are talking to now, really doesn't care about your problem. Why? Because there is no accountability.

Mary Jennings is (was) a health insurance broker in Connecticut. Mary is 29 and has held an insurance license for 2 years. She is approved to help people find health insurance on the Connecticut insurance exchange, Access Health CT.

Her two year career is about to end, thanks to Obamacare.

Jennings is one of more than 250 brokers certified to help customers navigate the state exchange, Access Health CT, and find the plan that best fits their needs. But next year, she said, she won’t be helping customers anymore if the health insurers on the exchange decide to eliminate the already-low commissions they pay to brokers like her.

As state regulators consider rate proposals for next year, both of the carriers set to remain on Connecticut's exchange – Anthem and ConnectiCare – could eliminate their commissions for brokers in 2017, creating uncertainty as brokers and customers plan for the coming year. Anthem said earlier this year it would eliminate broker commissions while ConnectiCare has yet to decide. - CT Mirror

Connecticut is not the only state where agent commissions have been cut to zero. Carriers have been decreasing commissions for the last 3 years with major cuts in the last 18 months.

Most of the health insurance agents I know have completely left the insurance business or shifted to other areas like Medicare. Working with folks age 65 and up who are entering Medicare is where my focus has been since 2011. Two years ago I completely abandoned the under 65 health insurance market and suggested my clients get used to dealing with healthcare.gov.

No one is happy with that decision but for me, health insurance is not a hobby. It is my paycheck.

According to the CT Mirror article, 40% of those who bought health insurance on the CT exchange did so with the help of agents.

What happens in 2017 when there are no agents to offer advice and guidance? No doubt they will still buy insurance if for no other reason than the fact the government has told them they must buy insurance or else .....

But who will they turn to when they have a complaint or question? Will Tamika still be there or will they talk to someone who was asking if you want fries with your order the week before?

Obamacare has brought about the death of a salesman and that is truly a loss that cannot be replaced.

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Written in Obamacare, transitional reinsurance is a fee disguised as a levy on insurance companies that is passed through to all consumers. It is a temporary program that cost each covered person a set annual dollar amount. In 2014 every insured person was charged $63. This reduced to $44 in 2015 and is set for $27 in 2016.

All group plans - self funded and fully insured - as well as individual plans pay this fee. But, the only ones who benefit from the fee are insurers who have high claimants in Obamacare compliant individual plans.

The original design assumed consumers would pay $12 Billion in 2014, $8 Billion in 2015 and projects for $6 Billion in 2016. $10 Billion would pay off insurance companies who incurred loses and $2 Billion would go to the U.S. Treasury to reduce debt. In 2015 there would be $6 Billion to pay off insurers and another $2 Billion for the U.S. Treasury. For this year there would be $4 Billion to fund insurance company losses and $1 Billion to the Treasury.

The way that insurers would get money back was based on a formula for large claims. The government determined a base dollar amount and a cap they would pay for claims an insurance company incurred. There was also a coinsurance percentage associated with it. The original floor for claims was set at $60,000 ($75,000 in 2015 and $90,000 in 2016)
with a cap of $250,000. The coinsurance was set for 80% in 2014 and 50% in 2015.

Here's an example of how the program should have worked. Assume an insurer has a large claim of $210,000. They pay the first $60,000. The remaining $150,000 would be split with the insurer paying $30,000 (20%) and the government paying the insurer $120,000 of money you paid into the reinsurance program. Once all of the claims were paid out the remainder would go as a payment to the U.S. Treasury for debt reduction.

The outcome is much different. Like most government programs, this one over-promised and is under-delivering.

First, the actual collection numbers were $9.7 Billion in 2014 and $6.5 Billion in 2015 - more than 20% lower than projected. While this is an important development, it is what the Obama administration did next that really cheats you as a taxpayer.

Insurers only requested payments of $7.9 Billion for 2014. At a coinsurance rate of 80% the amount that HHS should have distributed was $6.3 Billion. This would have left $3.4 Billion and resulted in the U.S. Treasury receiving their $2 Billion contribution and allowed the program to carry over $1.4 Billion.

What happened? The Obama administration chose to "change" the law in final regulations. They lowered the floor (attachment point) to $45,000, down from $60,000. Then, instead of a coinsurance rate of 80% they upped the ante to 100%. Doing so gave insurers an additional $1.6 Billion in payments leaving $1.7 Billion which one would assume would be a payment to the Treasury. Except they didn't. They took the full $1.7 Billion and rolled it into the 2015 program leaving the U.S. Treasury with nothing.

Which brings us to now.

CMS recently released the 2015 payments and data. The first interesting point was the increase in payment requests. The requests totaled $14.3 Billion. Yet HHS estimates on reinsurance payments projected it would go down as the years go forward. They believed that the first year would be the worst and then the market would correct itself. Obviously that's not happening and it appears that it is getting worse. The collections total $6.5 Billion. Taking the current $6.5 billion and adding the $1.7 Billion that rolled over gives HHS a cool $8.1 Billion to play with for this year.

At a coinsurance rate 50% on $14.3 Billion in requests the CMS should be paying out $7.1 Billion and give the Treasury $1 Billion. But of course they didn't. Instead they upped the coinsurance rate to 55.1% and paid out $7.8 Billion. The remaining amount of roughly $500 Million is going to the Treasury.

The first two years is proof that there is no method to the Obama administration's madness. They simply do what they want regardless of their responsibility to follow the rules of a law they championed.

The Obama administration lied and stole from you the taxpayer. All for the benefit of the insurance companies - who were supposed to be the ones paying the tab.

(ED NOTE: Image above is a summary of Transitional Reinsurance Program before and after)

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Monday 8 August 2016

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Patrick's had a couple recent posts on "alternative arrangements" such as MEWAs and self-funded plans (here and here), and I thought I'd throw in my 2¢ on the matter.

[ed: click here for a more detailed explanation of self-funding under the ACA]

Recently, Aetna's been pushing its version pretty hard, with emails like this:

"Are your clients looking for more options? Think bigger with Aetna Funding Advantage ... Aetna Funding Advantage plans are self-funded, which means they aren’t subject to all of the same rules as an ACA plan. And, they could help save your clients as much as 24%*."

That little * is to alert one to the fact that YMMV.

Be that as it may, it's pretty interesting that carriers are finally developing products for the small group market (although they're literally 10 years late to the game). One presumes that this is simply recognition that there really is a market for these products, as employers struggle to stay afloat while offering (and helping pay for) group health plans.

And speaking of which, they didn't just scale down a large group product, but apparently built one specifically for smaller companies. From their online toolkit:

"Aetna Funding Advantage [is] similar to the self-funded plans traditionally offered to larger companies, but designed with smaller clients in mind."

They even have a helpful video to help explain the benefits and process of self-funding for smaller groups.

Very cool.

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Jonathon Gruber and his band of merry men and women at CMS keep finding new surprises in the cost and true impact of #Obamacare.

Recently we discovered that the man credited with counting on the stupidity of the American voter underestimated the popularity of the free health care program known as Medicaid. Instead of 12 million new Medicaid enrollees we have 15 million.

No big deal. As they say in DC, a million here, a million there, before you know it you have some serious numbers.

Now it seems that not only have Medicare ranks expanded like my waistline during the holiday season, but these folks are costing more than anticipated.

The Department of Health and Human Services just "found that the ACA's Medicaid expansion enrollees cost an average of $6,366 in (fiscal) 2015--49 percent higher than the $4,281 amount that the agency projected in last year's report." - Maciver Institute

How can they miss by that much?

Consider that the Transcontinental Railroad covered 1776 miles. Constructed between 1863 and 1869 the two rail lines met at Promontory Point, Utah. While many facts contribute to the story, one that amazes me is that the teams started at two different points and met in the middle. One team started in California while the other in Iowa. Yet they managed to meet at a precise point.

So if two teams of laborers can travel that much distance and hit their mark with precision, why can't the high paid goofballs in DC make accurate predictions of how much #ObamacareFail is supposed to cost?

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Saturday 6 August 2016

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Those 3000% rate decreases keep on comin':

"The Cuomo administration on Friday announced that health insurance rates on the individual market would increase by a weighted average of 16.6 percent ... Rates in the small group market will increase by a weighted average of 8.3 percent"

That individual plan hike, by the way, represents "the largest individual market hike since the [Un]Affordable Care Act began"

It's what happens when regulators try to impose caps on rates for years on end, until (eventually) the lid comes off.

It's simple physics, really.

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Friday 5 August 2016

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The headline is inviting:

"ObamaCare Is Failing Exactly The Way Critics Said It Would"

And for those that are focused on the broken promises of "if you like your plan" and "3000% rate decreases" there's no small measure of satisfaction seeing "Aetna's decision to abandon its ObamaCare expansion plans" and "UnitedHealth Group's decision to leave most ObamaCare markets" and the like.

One of the great lies touted by ObamaCare supporters is that 20 million previously uninsured folks now have coverage. The lie of omission is that it fails to take into account all the folks that have lost (and who are about to lose) their coverage, and those who can't afford to use the coverage they have.

But I would argue that these are all very tangible ObamaCare successess if one understands that the entire point of the exercise was to usher in Single Payer (ie Government-run) health care. You know, to be run by the same competent, friendly, prompt folks who run the DMV and IRS.

You're welcome.

[Hat Tip: Holly R]

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