When $1.5 Million Still Isn't Enough...

I've always believed that the $3 and $5 Million lifetime maximums on medical plans was more than sufficient. Fact is, I've been known to claim that, for most folks, maximums higher than $1 million was more marketing than anything else.

Looks like I've been wrong:

"Chandler High School assistant principal Chris Knutsen reached the cap of his medical insurance policy last week and now must wait in limbo as his daughter’s life wanes."

Bob at Healthinsurance411 has the whole sad story.

UPDATE: Elisa over at HealthyConcerns informs us that one can make a donation on Haley's behalf at Hope For Haley.

Wearing Genes to Work...

Back in May we looked at the debate about using genetic testing in underwriting insurance policies. Recently, though, I’ve come across some examples, potentially either good or bad, of how genetic testing is changing the workplace.

For example, Chicago Bulls center Eddy Curry, a 22 year old in seemingly fine shape, was found to have an enlarged heart and an irregular heartbeat. According to an article in the Seattle Times, there is concern that he may have hypertrophic cardiomyopathy, which can be caused by a genetic defect.

According to the article, there’s a simple test that can identify up to 60% of folks who inherit such conditions. Seems like a no-brainer, right? Take the test, see if it’s congenital, go from there.

Not so fast. As we discussed in May, these things have consequences. Depending on the results of the test, Curry’s career could be over, and he may have trouble purchasing insurance (after all, this is now a known condition). Or he may be one of the 40% for whom the test doesn’t work, and thus may never know for sure.

Now, most of us aren’t NBA stars (or even wannabe’s), so we may be thinking that this doesn’t really apply to “regular folks.” How many of us type (hint: if you’re using a keyboard with your PC, you’re typing)? Well, buried toward the bottom of the article is this little nugget:

“A couple of years ago, the Burlington Northern Santa Fe Railway tested the genes of injured workers, without their permission, to try to detect a genetic predisposition to carpal tunnel syndrome. The railway, apparently, was looking for a way to avoid workman's compensation claims by using an unproven genetic test.”

So, at least some people believe that there’s a carpal tunnel “marker” in the genome. Who knew? And what other “markers” lurk in our genes, which insurers, or employers, or even government bureaucrats might exploit?

Now, I’m not a member of the tin-foil hat brigade, but this bugs me. Since the focus of this blog is insurance, I’ll try to stay on that track. As we learned in May, health insurers (at least in Ohio) can’t use genetic testing in their underwriting, and life insurers don’t have to rely on it. But what about other states? Well, the bills we discussed in May related to health insurance, not life, although S 306 discusses “the potential misuse of genetic information to discriminate in health insurance and employment.” I could find no current federal legislation addressing genetic testing in life insurance underwriting.

So, where does that leave us? Well, it’s an issue that appears to be under most everyone’s radar, at least right now. But as more articles like the Seattle Times’ appear, perhaps we’ll see an effort to address it.

UPDATE: Dr. Hsien Hsien Lei of the Genetics and Public Health Blog has a related article. Check out "What's the Point of Finding Genes?" [ed - links are fixed now]

PBM’s, RPM’s, Whatever...

Here’s a way to help control the cost of health insurance.

PBM’s, or Pharmaceutical Benefit Managers, are essentially middlemen who buy med’s directly from manufacturers, and then re-sell them to health care plan sponsors. Along the way, they receive rebates and discounts. Problem is, they don’t always pass these savings along.

David Williams at Health Business Blog sets the record straight, and tells about how some of those plan sponsors are insisting on sharing in the savings.

Life’s a Beach...

When I first started in this business, lo those many years ago, the industry relied on something called the Commissioners 1958 Standard Ordinary Mortality Table, or 1958 CSO for short. The CSO was a means by which insurance companies (and litigants in wrongful death suits) could determine the likely lifespan of an “average” individual. Insurers relied on it (as well as other factors) in setting their rates for various life insurance products.

As time went on, and our lifespans increased (Yay, modern medicine!), there arose a need to update these tables and, in 1980, the NAIC (National Association of Insurance Commissioners) approved a new version, which showed significant increases in how long the average American could expect to live.

Every so often, these tables are revisited and revised, and we get an interesting snapshot of our own mortality. For example, one who turned 65 at the turn of the previous century had a much shorter expected lifespan than someone who turned 65 just 3 years ago – almost 7 years shorter!

The most recent table paints an interesting picture of America today (or at least late 2004): we’re living longer than ever before, for example, with about 12% of our population now over age 65. That number, by the way is growing: by 2050, “seasoned citizens” are expected to make up over 20% of the population. This would appear to be quite a challenge as we try to decide what to do with Social Security and Medicare.

In a somewhat related study, Tillinghast (a business which studies these things, so we don’t have to) recently published an Older Age Mortality Study which tracked causes of death among folks with life insurance. That study found that in general, cardio-vascular disease is the number one killer, but cancer killed more (insured) folks ages 50 to 69.

There are some interesting industry and social implications that arise from both of these surveys, and we’ll discuss those next time.

Grand Rounds...

Is up over at Parallel Universe. Dr Emer has done an outstanding job organizing over 40 links, covering a wide range of medical and medical-related topics. Take a gander.

The Classic Definition of Chutzpah...

Is the child who murders his parents, and then throws himself on the mercy of the court because he’s an orphan.

In today’s Dayton Daily News, there’s a story about a Cincinnati-area insurance agency that’s suing Anthem. Now, for those of us familiar with the recent shenanigans in which Anthem’s been involved (see here and here), this isn’t so surprising.

But what is surprising is why Total Benefits Planning Agency is suing them:

Apparently, TBPA put out a booklet called “How to Beat the High Cost of Health Care,” which advocated that employers should “shift certain employees 'away from the group policy' and replace their group coverage with individual policies.” I suspect that the primary reason that Anthem terminated their contract with TBPA has less to do with what TBPA advocated, and more with the very public way in which they did so. In other words, “don’t make waves.”

According to TBPA, their plan resulted in substantial savings for their clients. Other agents, however, took a dim view of this technique, citing the potential for adverse selection (that is, when the healthiest members of a group opt out, leaving only the sickest).

In any case, Anthem “pulled their ticket,” and TBPA is suing; I suppose for “damages” and for reinstatement.

The reason I find this so amusing is threefold: First, I teach Continuing Education classes in Cincinnati, so I know some of the players involved. The Cincinnati market is highly competitive, but in a particularly friendly way. So I find it somewhat amusing to see insurance folks sniping at each other in the local paper.

Second, I haven’t actually pulled out my most recent Anthem contract, but I presume it says what every other such contract says: this is an “at will” agreement, and can be cancelled at any time, for pretty much any reason, by either party, as long as proper notice (30 days IIRC) is given. Thus, we are both free to walk away, no harm and no foul. It’s also hard to see how TBPA can seriously argue that the termination “is denying consumers the right to explore alternative health care options." Last I looked, there were dozens and dozens of insurance carriers vying for business in the Cincinnati market.

Third, the underlying “tension” here is just plain silly: If the story is accurate (which I’ll assume it is) then TBPA was doing nothing particularly either controversial or unusual. With the proliferation of EOP’s (Employee Only Plans), cafeteria plans, carve-out scenarios and the like, there is no “there, there.” Heck, we’ve even had posts on this blog where we deleted the group coverage altogether, and substituted individual plans.

In the words of the Bard, this appears to be “Much Ado About Nothing.” And yet, it is obviously serious business: there’s a lawsuit. As a rule, I tend to side with fellow agents on issues regarding insurer behavior, but this one looks to me like a lot of smoke, and very little fire.

Still, it’s instructive in this sense: there are agents out there that do try to think “outside the box” on their clients’ behalf. It’s very easy to just quote the generic, cookie-cutter way: “Sure, Mrs Smith, we’ve got the $20 co-pay and $10 drug card benefit.” But as agents, we really need to be more creative, and really start talking more about alternatives such as HSA’s, and layering coverages.

Most clients would respect that, and most clients should expect that.

Talk About a Disconnect...

A lot of folks get their insurance coverage through their employers. And most pay at least a portion of the premium; the employer subsidizes the rest.

NB: I agree with Prof Sowell that this is “smoke and mirrors” economics, but that’s really not the focus of this post. Another time, perhaps.

In any case, most of us who get our insurance from our employer’s group plan have the premiums deducted from our paychecks (often pre-tax: c.f. IRC Section 125), and many come to believe that that contribution is the sole sum and substance of what the insurance costs. In other words, we believe that it really only costs $50 a week to insure our entire family, and we’re shocked to find out, when it comes time to elect COBRA continuation, that our measly weekly amount is the proverbial “tip of the iceberg.”

I had always suspected that most folks were woefully misinformed about the true cost of their insurance, but a recent study by MetLife bears this out:

" More than one-third of employees ages 21 to 30 and 28% of workers overall believe their companies spend less then $1,000 annually toward each individual's health insurance and about half the respondents believe the annual figure is less than $2,000. ”

If we take that $2,000 at face value, that means that almost 50% of our co-workers believe that their insurance costs less than $40 a week. According to the study, the true cost for family coverage is more like $7,200 a year, or almost $140 a week. That’s a pretty big disconnect.

So how does industry resolve this fundamental difference of opinion? Well, corporations can be more proactive in communicating with their employees. There are several services available that actually take the raw data (premiums, claims, etc) and massage them into a comprehensive, but quite readable, newsletter that goes to each employee. These personalized notes point out how much one’s employer really spends on health insurance, as well as worker’s comp and other coverages.

Another, perhaps more disturbing, issue that came out of this study is that over half the employees surveyed "say they value immediate-term benefits such as paid vacations more than income-protection products such as retirement plans, disability benefits, life insurance and long-term care." This seems to track with our cultural bent toward instant gratification, but it also results in a national savings rate of just a little over 1%, which is the lowest since the early 1930’s. Again, I think that this has to do with a fundamental lack of knowledge of how much the things we need really cost.

So, how do we overcome this communication shortfall? Well, as consumers, we should be more proactive: ask our providers about alternative treatments, and about how much services cost. And we should really read those annoying EOB’s: sometimes, the bills are wrong (surprise!).

Smaller employers should ask their agent to periodically come in and meet with employees, answering questions and explaining benefits. Larger employers should at least consider using one of those “benefits newsletter” service I mentioned above.

And I think that carriers should re-examine what information they put on EOB’s. Here’s a thought: how about, in plain English, explain exactly what was covered, how much of that went to the deductible, how much was paid at 80% (or whatever) – all in big type in the middle of the page, instead of mice-type in different areas, making it hard to piece together.

OK, rant over.

Tuesday Update...

This week’s Grand Rounds is up at AloisMD. This blog, by a 2nd year medical school student, chronicles life in med school and a future doc’s perspective on various social issues.

Tales From The Trenches 2...

When we left off, I had called XYZ Boxes, from whence Bill and Loni had been “let go.” I was transferred to Zack, who claimed that he was (in true Alexander Haig mode) “in charge.” After identifying myself and the nature of the call, I asked Zack for information about Bill and Loni’s COBRA situation. Zack bluntly told me that he had “no knowledge whatsoever” of any COBRA-related issues. In fact, he seemed rather proud of his ignorance. I explained to him that COBRA violations run to $1,000 a day, levied not just against the company, but potentially to him, personally. Apparently, this was of no real concern for Zack. So, I asked him for the phone number of the new company, which he was loathe to give. When I explained that it would take me a few seconds on Google to find it, he rather heatedly said “then do that,” and hung up on me.

Hmm…

Mama always told me “don’t get mad, get even.”

So, I Googled Acme Bags (you may recall that they were the older, larger company which had recently acquired XYZ Boxes), got the phone number of the home office, called, asked for HR, and left a message on HR’s voice-mail.

Oh, then I made one more phone call: to Shari at the Department of Labor, to “drop a dime” on Zack and XYZ Boxes. Seems that the DOL takes a dim view of such shenanigans, and I recommended that they open an investigation into how XYZ was dealing with its COBRA-eligible ex-employees.

By now it was pushing 4:00 in the afternoon, and after 2 hours of non-stop insurance fun, I sensed that my new clients were growing tired of the whole situation. So I reassured them that everything would be fine, and bade them farewell for the day.

When I arrived at the office at 7:45 the following morning, I had two messages awaiting me on my voice-mail. The first was from the Chief Financial Officer (CFO) of Acme Bags, expressing concern, and assuring me that they would be looking into the matter immediately. The second was from the VP of XYZ Boxes, who informed me that Zack was most definitely not the guy in charge, that his attitude was not indicative of XYZ Boxes, and that they, too, would immediately take steps to make sure that “all the t’s are crossed and i’s are dotted.”

Who could ask for anything more?

And thus ends this saga of two folks who just wanted to be sure that they received that to which they were entitled. As it turns out, we ultimately forewent Bill’s COBRA, in favor of a Medicare Supplement policy; since he was still working at age 65, he could exercise most of those “guaranteed issue” rights at age 75, which he did.

Lessons learned: First, don’t assume that employers do, in fact, have a clue when it comes to COBRA. Second, even if one misses the “window” at age 65, some MedSupp plans are available later if one continues working. Third, insurance can be a difficult maze; it helps to have an experienced guide, and ask lots of questions.

Oh, and Shari (from the DOL) called me back the next day, to clarify a few things before she opened the investigation. By that time, of course, I had heard from Mr CFO and Mr VP, so I suggested to Shari that it looked like things were working out after all, and that it would be fine to let it go. She agreed, but assured me that if things went south, she’d be more than willing to reopen the case.

Well, the high road may be lonely, but it’s the only way to go.

Pay Me Now, Or Pay Me Later...

Over at Health Business Blog, proprietor David Williams has an interesting post about an insurer that “tells patients how much insurance will cover and how much is the patient's responsibility --right at the point of care.” Apparently, BX of South Carolina has started doing just that. Is this the wave of the future? Check it out.

Tales From The Trenches 1...

There are days…Case in point: Bill and Loni are a nice older couple who’ve recently lost their jobs. Their old employer, XYZ Boxes, was sold to Acme Bags, which laid off most of XYZ’s workforce (gee, THAT hardly ever happens, hunh), including Bill and Loni. Their termination date was June 14, but the coverage was good through the end of the month. Since there were more than 20 employees working at XYZ, they were subject to COBRA.

In any case, they were told that they needed to send XYZ a check for $870 to cover their July insurance premiums. They were given nothing in writing to indicate how that number was arrived at, nor how much of that was for Bill and how much for Loni. In fact, they had literally nothing in writing to indicate that the check would even be used to pay their insurance premium. Nevertheless, they knew that they needed the coverage, so they sent the check.

I first came into the picture last week, when Loni called me for help and advice. Her sister is one of my clients, who referred Loni and Bill to me [ed: call Ripley’s!]. We spoke on the phone a while, and agreed to meet in person to see about options and recommendations. The appointment was yesterday afternoon.

When they arrived, I met a very handsome, mature couple. Bill is 75 and Loni, 63. Bill has a rather problematic health history, while Loni is in pretty good shape. In fact, we quickly decided that she would qualify for a “regular” major medical plan, and moved on to Bill, who posed a more difficult set of problems. For starters, he had not taken advantage of the “window” at age 65 (which would have made a Medicare supplement guaranteed issue), and at age 75 he probably won’t qualify for a plan that will cover what he wants.

In order to have a complete picture, I asked how much of that $870 monthly premium was attributable to each of them. As I indicated above, they had no clue, nor did they have anything in writing regarding their COBRA rights, costs, etc. That’s really not unusual: companies have a 44 day window from the “qualifying event date” to get this info to their former employees, and the clock had really only started ticking a few weeks ago. What did seem unusual to me was the requirement that they (essentially) pre-pay the COBRA premium, with nothing to indicate the validity of the amount.

So I called the Department of Labor, which oversees and enforces COBRA.

At the DOL, I spoke with a very nice, very knowledgeable young lady named Shari, who shared my concern about the oddity of the premium request. We agreed that the best course of action would be for me to call the folks at XYZ, to try to determine what was going on, and to let Shari know if I needed any help after that.

And so, after finishing the call to DOL, I rang up XYZ Boxes. I explained who I was and why I was calling, and was forwarded to the man ostensibly in charge. Once again, I identified myself and the purpose of my call, which was simply to determine how Bill and Loni’s COBRA options were being handled.

It went downhill from there.

Part 2: “I don’t know, and I don’t care.” Or “Yes, please report my company to the Feds!”

Entrepreneurs Beware...

If you’re filed as an S-Corp, then you’ll want to check out Roth & Co’s new posts on IRS audits. Seems that the Infernal Revenooers have launched a new “Research Program” that could increase your chance of being audited. Read all about it here and here.

Grand Rounds...

is up at Pharyngula. This is a great way to "sample" a lot of interesting medblogs. Recommended.

Risky Business, Part 2...

In the first part of this series we learned about what High Risk Health Pools (HRP) are, what they do, and a little about how they work. The Ohio Department of Insurance commissioned a study [ed: your tax $ at work] to determine how such a plan might work here in the Buckeye State.

Conducted by Leif Associates, the study concluded (ALERT: Shocking Conclusions Follow]:

1. An HRP is a “viable option” for Ohio residents who are uninsurable
2. HRP’s charge high rates, “therefore a high-risk pool does not entirely solve the problem of affordability.”

I suspect most people saw that one coming. According to the report, “many states have adopted discount programs to assist low-income participants.” Isn’t that just a fancy way of saying “raised taxes on everyone to help uninsurable folks buy insurance?”

Will it work? That is to say, will it dramatically reduce the number of uninsureds? Well, according to the report, there are about 1.3 million Ohians currently without health insurance. Some of these folks will be eligible for coverage under an HRP plan, and some of those will be able to afford said coverage. Okay, then, how many people are we talking about here? Well, Leif estimates than less than 3,000 folks will purchase coverage through the HRP in the first year (that’s 2 tenths of 1%, for those of you keeping score at home), growing to almost 13,000 in the fifth year (ooooh, 1% of the estimated total number of uninsured).

The report goes on to claim that as many as 15,000 people could potentially be covered (no real definition of “potentially;” could be in 6 years, or 60). And there’s this:

“All high-risk pools lose money,” says the report, which adds “(a)dditional funding from some source is therefore required.” Didn’t we cover that in the 3rd paragraph? Boiled down, the report posits that these “additional sources” are increased taxes, and assessments on insurers. Although the report doesn’t explicitly say so. these assessments would then be passed along in the form of rate increases.

So, how much does all this cost? Leif estimates that individual premiums will come in around $476 per month. Claims and admin costs are projected to be about $976 per, which leaves the state holding the bag on about $500 a month, or $6,000 a year – per participant. Ouch. But there’s good news: by the 5th year, the premium’s expected to rise to about $800 a month, and the shortfall to almost $11,000 a year.-In all, the HRP plan is expected to cost $20 million it’s first year. To cover maybe 3,000 people. That’s over $6,000 per participant. Seems like a pretty hefty price tag for such a small group of people. On the other hand, the report notes that no HRP has yet become unsolvent, and claims that adequate oversight is the key. I’m not so sure I agree with that conclusion, but the report goes on to acknowledge that “the impact of future increasing costs could be minimized by limiting enrollment…reducing benefits…or increasing cost-sharing [premiums].”

For those who want to read the whole thing for themselves, the report is available (in pdf form) here. Be forewarned, though: it runs 67 pages.

My real dilemna here is that I really do like the idea of an HRP, and I really don’t have a better alternative to suggest for covering the uninsurable. I see the potential high costs of the HRP idea, but I also see the here-and-now costs of the current system.

What do y’all think?

UPDATE: Out of Network Emergency Care...

As you may recall, a few weeks ago I wrote about a carrier’s decision to penalize its insureds who received emergency care from non-participating providers.

My understanding was that this was a no-no, and I began a correspondence with the Ohio Department of Insurance about it.

The carrier in question is Anthem Blue Cross/Blue Shield, and I’ve received this answer from the DOI, which says that Anthem’s position is “kosher:”

“(A)n indemnity insurer licensed to do business under Title 39 of the Ohio Revised Code would not be prohibited under applicable Ohio law from implementing the practice described in Anthem's notification.”

In short, plans such as this are not subject to the limitation on Out of Network (OON) penalties.

Now comes word that Anthem won’t implement this change until the first of next year. They can’t resist the cheap shot, though: “(C)urrently there are only two hospitals that offer emergency services in Ohio, Kentucky and Indiana that are not contracted with Anthem in any network. Those are (the) Premier Health Partners hospitals.” Again, punishing your policyholders for something that is absolutely out of their control.

It may be legal, but it just ain’t right.

Sheesh.

Despicable Insurance Sales Idea...

And no, that’s not redundant. Most agents, and most companies are not inherently evil, although a lot may be shortsighted. According to dictionary.com, despicable means: “worthy only of being despised and rejected.” And to which nasty practice do I refer? This one:

"Dear terrorists, new firman issued. Kill 10, take a branded T-shirt and be best terrorist in the group. Jehad begins from July 18-20 – Osama bin Laden.’’

It is creative minds at work at ICICI-Prudential Insurance Company, exhorting local agents to go for a ‘sales kill’. The new strategy was aptly named ‘MissionJehad’.

In a meeting of the company’s agents on Tuesday night, employees were asked to adopt the “binLaden strategy”, ie, one terrorist killing 10 people.

Here, though, jehad meant sale of insurance policies.

As I said, this is absolutely the most disgusting insurance idea I have EVER seen. And in over 20 years in the biz, I've seen a few.

Now, according to A M Best, the “Prudential” in this case is Prudential plc, a British company, and not “the” Pru. Of course, our own Pru has been accused of its share of questionable sales practices over the years, but nothing that approaches this level of depravity.

Does it matter that this took place in (faraway) India ? No. Some home office “leader” saw and approved this, and it reflects poorly on the industry. In fairness, it’s not a story that’s gotten a lot of play in the press (yet?), but I have no doubt that at least some carriers here know about it. I would certainly hope that it is condemned in the industry press.

What causes a presumably successful company to engage in such a practice? Obviously, we don’t know. But I would hazard a guess that it’s a result of a corporate culture of greed. That is, when sales become more important than integrity, abominable ideas such as this begin to surface. Now, that may mark me as naïve, but it doesn’t change the veracity of the statement.

Interestingly, the carrier is called ICICI-Prudential, and it’s a joint venture between a bank and an insurer. Perhaps that’s the root of the problem.

We're STILL with you...

UNION, JACK!

Risky Business, Part 1...

Some 30 states currently have High Risk Pools for those who are considered uninsurable for medical coverage.

And so, you ask?

Well, the Ohio Department of Insurance recently received a rather hefty grant to study whether or not such a plan should be implemented here. In this post, we’ll review how High Risk Pools work in other states, and in Part 2, we’ll look at the results of Ohio’s study.

According to the National Association of Health Underwriters, High Risk Health Pools (HRP’s) “provide an important safety net for people with catastrophic medical conditions who do not have access to employer-based group health insurance, such as early retirees, self-employed individuals, and employees of businesses that do not offer health insurance coverage. In addition, in most states, high-risk pools serve as the guaranteed-issue purchasing option for individuals who wish to exercise their federal group-to-individual health insurance portability rights as provided by the federal Health Insurance Portability and Accountability Act of 1996.”

Currently, if an Ohio resident is uninsurable, there are few choices. If one is a Federally Eligible Individual, or one has been declined for individual medical coverage, there is a state-mandated “Open Enrollment” (guaranteed issue) plan. This plan comes in two flavors: mediocre but expensive, and expensive but mediocre. Your choice. There are also some guaranteed issue/limited benefit plans, and some non-insurance alternatives. None of these are adequate substitutes for real, comprehensive major medical insurance.

An HRP seems like a good solution to this conundrum. For one thing, the plans available in HRP states offer coverages that are comparable to what’s available on the open market, and many offer PPO plans to help bring down the cost of care. Apparently, some also offer prescription drug and maternity benefits, which seem to me to be self-defeating, in that these would help drive that cost back up. Of course, those purchasing insurance through such a mechanism will pay more, but the amount of any surcharge is usually capped at something that approaches a reasonable amount.

One item which seems to be under the radar, but is vitally important to the success or failure of such a plan, is how pre-existing conditions are treated. If there’s no waiting period before such conditions are covered, we’re back to buying insurance in the back of the ambulance on the way to the hospital. But if there is some reasonable (there’s that word again!) period of time that one must be covered before such conditions are eligible, then the system at least has half a chance.

But at what ultimate cost?

According to Communicating for Agriculture, in the 32 states which have HRP’s in place: 181,411 people were enrolled in these plans. Total premiums of $793 million were paid in, while over $1.2 billion in claims were paid out.

Ouch!

It's estimated that the administrative costs of the plans totaled about $75 million, leaving a $540 million deficit. In short, each participant actually costs about $3,000 to insure; their premiums cover about 60%, which means the average monthly premium is about $150. Hmmmm. The remaining 40% shortfall is covered by the states "using various methods" (I.e. taxes or carrier assessments. Or both).

Does this mean that the idea lacks merit? No, I don’t think so. But the figures cited indicate that each state’s pool is (on average) only covering about 5,000 or so people. That doesn’t seem like a rousing success. While the concept of HRP seems valid, I’d be interested in seeing how this really makes a significant dent in the number of uninsureds, which is estimated at about 40 million nationally, or about 800,000 per state.

One other interesting factoid is that a number of HRP states have now expanded their plan options to include HSA’s. As we learned from the HSA/HRA series, this type of plan seems very attractive to those folks currently without coverage. Perhaps this is what’s necessary to make significant inroads.

In Part 2, we look at the results of the study.

Tuesday Update...

Grand Rounds is up over at AggravatedDocSurge. The Doc did a particularly good job with this weeks 'Rounds -- recommended.

Okay, Just One More on HSA and HRA...

Recently, I received this email from a colleague, whose nom-de-plume is smansfield. He’s graciously allowed me to share it with you:

I love the concept of the HSA, but it appears that the QHDHP's [ed: Qualified High Deductible Health Plan] for both individual and group don't seem to offer any real savings. I can't help but think that these carriers have the pricing structure all wrong
for these plans.

I just met with a 13 person group.

They have a plan with UHC that was/is a $1,500 deductible. The renewal came in June and they decided they were going to go with a higher deductible to save on premiums. The new plan they decided on with UHC was an HSA plan with a $2,850/$5,600 deductible (although they had no idea it was an HSA plan they switched to). The new premium, $7,200 per month. They actually thought they were getting a plan that paid 100% for doctor visits. I kindly explained to them that they had no benefits until the deductible was met. So they hurriedly switched back to the $1,500 deductible prior to the end of June (renewal month). Now the premium is just over $9k per month.

So I simply show them a similar plan with another carrier for under $7k per month. My point is, they get a $1,500 deductible with dr. copays, prescription copays, etc for less than the QHDHP with a $2,850 deductible. If only the original writing agent had serviced this account, he wouldn't be losing it.

Until carriers can price these plans so that the individual or employer can see a tangible benefit, they will only have limited success. I'm not saying that the plan has to be so inexpensive that the difference in premium fully funds the HSA, but they have to get it lower.

Just my 2 cents.

Well said, and Thank You!

Wow! Now *That’s* Getting Results…

Over at Health Business Blog, proprietor David Williams recently excoriated the Bush administration for it’s underwhelming commitment to VA funding.

That was two weeks ago.

Today, the Wall Street Journal had this to say:

"Less than two weeks ago, the administration asked for an extra $975 million for this summer. Now the VA estimates it needs another $300 million prior to Sept. 30 and as much as $1.7 billion -- on top of the president's budget request -- for fiscal 2006."

The VA system is one which doesn't get a lot of play in the blog world (well, at least in my little corner of it). David's post is important, in that it heightens our awareness of that system. Thanks, Dave!

Lagniappe: I Stand Corrected (Sorta)

In the first post of my recent HRA-HSA series, I stated that there were no hard numbers identifying just how many HSA plans had been sold to date. That statement was made based on an exhaustive search of relevant government sites, but I failed to take into account the resourcefulness of my own industry.

To wit: America’s Health Insurance Plans (the carriers’ association and lobbying group) has completed a survey of their membership, and found some surprising information. According to AHIP’s report, more than a million Americans are covered by HSA-eligible medical plans. This represents a more than two-fold increase over the number of such folks only 8 months previously.

Even more remarkably, the study indicates that some 37% of those purchasing these plans were previously uninsured; that’s one good way to lower the overall number of uninsureds. And over a quarter of the group HSA plans were sold to employers who had not previously offered medical coverage.

Another common misconception with High Deductible Health Plans (HDHP) is that they’re only attractive to young, healthy individuals. But the study showed that almost half of the purchasers were over 40 years old (not exactly Medicare-fodder, but not quite spring chickens, either).

These are, of course, numbers reported by carriers, and not the gummint, so they may or may not reflect the true picture. But they’re instructive, nonetheless. My only real beef is with two numbers that are not reported:

First, there’s no breakdown by income level. This is important, because one of the objections to MSA/HSA has been that they appeal primarily to the affluent, and are typically rejected by “Joe Sixpack.” It would be nice to test the accuracy of that claim.

Second, while there are plenty of premium figures tossed around, there’s no way to tell the difference between what a group paid last year for their generic co-pay plan and how much they save (and are putting into accounts) by switching.

If and/or when those numbers become available, I’ll let you know.

HSA and HRA: Some Conclusions...

Well, that was certainly an interesting exercise: I’ve never done a 3-parter before. Any feedback is, of course, quite welcome.

Given the lengths of the previous posts, I’ll try to be brief in summation. First, it seems to me that the most important lesson to take away from this whole “debate” is that one needs to ask questions. Lots and lots of questions. Ultimately, whether you’re an employer or an employee (or self-employed, in the case of HSA), you’re going to have to live with the decisions, and its consequences, for a while.

Second, it’s critical that one avoid confusing the benefits and drawbacks of each program. The HSA certainly has an appeal to the employee, in that – by staying healthy, and exercising good judgment in health-care purchases – said employee stands to collect a nice windfall. On the other hand, an employee covered under an HRA can look forward to generally lower gross out-of-pocket expenses.

From the employer standpoint, both programs seem pretty equally matched. The HDHP that is the hallmark of the HSA can result in substantial premium savings. But the HRA obviates the need to set up funded, vested accounts for employees. And, in many ways, it’s a simpler plan to understand.

At its core, the biggest drawback to the HRA is that it seems to reward those employees who experience larger (or more frequent) claims. That is, the only way to access the extra funds that now reside in the employer’s pocket (i.e. the savings enjoyed from upping the deductible, etc) is to have a large claim, or more smaller ones. I’m not convinced that this is a positive.

My biggest beef with the HSA is the carriers really don’t price it effectively: there should be a much more dramatic difference between the High Deductible plans and the generic co-pay plans they’re designed to supplant.

Thanks for patiently slogging through all these posts, and a Special Thank You to Joe Kristan at Roth & Co for the nice links.

In case you missed 'em: Part 1 here, Part 2 here, Part 3 here

Monday Update...

Grand Rounds is up at Shrinkette's site. Check it out.

“Real Life” with HSA and HRA…

[UPDATE: I've corrected some of the numerical assumptions in the HSA section]

Okay, enough with the theory, let’s talk turkey. One of my small group clients asked me about changing their plan to an HSA. Let’s review some basic information of how this group’s plan currently works:

A small professional practice, 8 people work at the XYZ Company. Their current plan is relatively rich, with $10 office visit co-payments and a modest $500 annual deductible per person for “the big stuff.” Once the deductible’s met in a given year, the plan pays 80% of the next $5,000 of covered expenses, leaving any one person with a maximum exposure of $1,500 in a year. There’s a family maximum of two on the deductible and co-insurance. This means that, even if all 4 members of a particular family have major claims in a year, the family’s only responsible for $3,000, not $6,000.

There’s also a prescription drug card, with $10 co-pays for generics and $20 for brand names. All in all, a decent enough plan, maybe a little benefit rich, and therefore pricey, but you get what you pay for. The current monthly premium for this group is a little over $3,100.

Now, to keep things manageable, we’re going to be looking at only two alternatives. The first is the HRA; simply by increasing the deductible to $1,000, and the co-insurance participation to $1,250, the employer would save over $300 a month, or about $4,000 a year, in premiums; each covered person would have an additional $750 of potential claims participation (subject, of course, to the two per family maximum).

In its simplest form, an HRA would obligate the employer to pay (or help pay) the additional $500 added to the deductible. There are eight employees, and an additional 4 or 5 dependents (spouses, children) in this group, so we’re talking a total of a dozen or so warm bodies to be covered. On average, maybe 4 of them will have claims exceeding $500 (the original deductible) in a given year, so the employer could conceivably pocket about $2,000 in savings in this scenario. And the employees still have their office and drug card co-pays.

With the HSA, we’ll need to make more substantive changes. We’ll be bumping the individual deductible up to $1,250, and the family deductible to $2,500. We’ll also be doing away with the office visit co-pays and prescription drug cards. In other words, pretty much everything medical will be going toward the deductible until it’s satisfied. On the other hand, we’re also getting rid of the 80/20 coinsurance: once that deductible is met, the plan pays 100% -- nice. This part alone is worth the price of admission, because no one understands co-insurance.

One interesting “twist” on that deductible: a “family” is defined as two or more covered people (could be husband and wife, or single parent, or whatever), and they kind of “pool” the deductible. That is, whatever expenses any one of them has goes towards it, until the $2,500 is hit. Could be one person with a heart attack, or 3 with broken arms. Once the $2,500 threshold is met, everyone’s at 100%. The group’s premium for this plan is about $2,500, representing a $7,000+ annual savings for the employer.

Well, sorta.

Each employee is actually decreasing his potential claims exposure by $250 a year, and each family by $500. However, this comes at the expense of the 1st dollar benefits (office and rx co-pays). In order to mitigate this, the employer could contribute $50 per month for each "single," and $100 for each "family". This group has six with individual coverage, and two with family. So the employer would be contributing up to $3,600 for the singles (6 x $600), and $2,400 (2 x $1,200) for the families. This reduces the net savings to $1,000 per year.

That’s money he’ll have to spend, and which the employees would then “own.” Not necessarily a bad thing, but it changes the equation. All of a sudden, that $7,000 savings starts to go away. Granted, he doesn’t have to be that generous; he could, for example, choose to contribute less to to the accounts. But still…

Next time, some conclusions, and suggestions.

We're with you...

UNION, JACK!

OT, but important...

In Ohio, the law says that, in an emergency, one should go to the nearest facility, regardless of whether or not it’s in-network. In fact, the law says that one’s insurance carrier must cover the treatment in such a case as if it was in-network, even if it’s not.

“Emergency” is defined under the “prudent layperson” rule: “a prudent layperson is someone with average knowledge of health and medicine.” In other words, even a rocket scientist could be a prudent layperson, as could I.

The definition continues:

“An emergency is a condition of such strong pain and severe symptoms that a prudent layperson could reasonably expect that a lack of immediate attention would

- Place the person’s health in serious risk;

- In the case of pregnancy, place the baby’s health in serious risk;

- Cause serious damage to bodily functions; or

- Cause serious damage to an organ or other body part."

In such a case, one’s “managed care plan [HMO, PPO, etc] must pay your medical bills for that emergency, no matter where you receive the services…In an emergency, you should go to the nearest hospital, even if " it’s out of network.

Pretty straightforward: If there’s an emergency, you go to the nearest facility, get treated, and pay as if you’re in-network. On the one hand, it doesn’t mean the care is “free:” you might still have deductibles, co-pays, etc. But you’re not subject to out-of-network penalties, either.

Or so I’ve understood for lo these many years. But I received an email today from a carrier, which shall remain anonymous (for now), which seems to fly in the face of long-established health care procedure and knowledge. Because this carrier has been unsuccessful in coming to terms with several local hospitals, it has decided to punish its own customers. To wit:

“When a member receives emergency care at an non-contracted hospital, [Carrier X] will pay for the services at the in-network level subject to a maximum allowable amount…If a non-contracted hospital charges the member more than this amount, the member will be responsible for the difference.”

[note: I am deliberately withholding the url until the matter is resolved]

See the problem here? Me, too.

One thing that I have never been called is a shrinking violet (or shrinking anything, really). So I just had a nice conversation with the helpful folks at the Department of Insurance, who were also quite concerned. I've forwarded this email to them so that they can look into the matter with a bit more “ammo.”

I’ll let you know how things turn out.

HSA’s and HRA’s, Part Deux…

So what, exactly, is an HRA? Well, it’s a tax-advantaged Health Reimbursement Arrangement that allows an employer to reimburse employees (and/or their dependents) for some of their medical expenses. In this regard, it’s similar to the Health Savings Account (HSA), because it means that the employer can help the employee by cushioning the blow on a major claim. And, the same kinds of expenses that are approved for reimbursement on an HSA plan are okay for HRA, as well.

So what’s the difference? It really comes down to who contributes the money for reimbursement, and who ultimately owns that money.

In an HSA, either the employer or the employee (or both) can contribute to the “rainy day” account, but – no matter what – the employee “owns” whatever money is in that account, and is free to spend it however he chooses (subject, of course, to potential wrist-slapping if the funds are misused). Whoever makes the contribution gets the tax deduction (again, could be both). The type of insurance plan that can be used with an HSA is dictated by the government, so there’s not much flexibility in plan design. And, of course, HSA’s are available to both groups and individuals.

With an HRA, though, only the employer can contribute the funds. The employee doesn’t ever own them, because it’s not an “account,” it’s an “arrangement.” That’s not splitting hairs, because the point is that the employer decides (“arranges”) what claims will be reimbursed, as opposed to just dumping money into some bank account. HRA’s are available only to groups, not individual plans, and offer a lot more flexibility. For one thing, there’s no governmental regulation over what kind of plan is used, so an employer has more choices. For another, HSA plans require that, if the employer is making a contribution, he has to contribute like amounts to everyone in the pan. There are no such rules for HRA’s.

In Part Three, we’ll look “under the hood,” to see how each plan works in real life.

July 4th Update...

Lest anyone fret, I'm taking some family time over the long weekend.

InsureBlog will be back on Tuesday the 5th with a new installment on HSA's vs HRA's.

Have a great 4th!

Thoughts on HSA’s & HRA’s...

One of the hats I wear says “Continuing Education Provider” on it (not really; it’s a metaphor, okay?). In preparing for an upcoming class, I’ve had my own learning opportunity:

Sometimes, a cat is a dog.

There’s been a LOT of press in recent months about how much more successful Health Savings Accounts (HSA’s) have been than Medical Savings Accounts (MSA’s) ever were. It seems that everyone’s talking about them, and they’re selling like hotcakes.

Except that they’re not (and no, I can’t back that up with hard numbers; no one can - yet. But I’ve got pretty good instincts on these things)

Turns out, a LOT of folks -- particularly employers who offer health coverage – are asking about HSA’s, but precious few are actually installing them. Why is that?

Well, it helps to know that HSA’s aren’t free. That is, just because the employer may save some premium dollars (and not as many as one might think), it doesn’t mean that he gets to keep them. By the time one adds in the actual contributions an employer has to make to the savings account to make it attractive (or even palatable) to employees, the savings don’t amount to much. Then, add in the admin costs, and all of a sudden they’re not so great a bargain.

Don’t get me wrong, I am still a tremendous advocate of the concept; I just have some issues with the execution of it. The problem is that HSA’s really aren’t about saving money; they should be about empowering the health care consumer to make better decisions (however one chooses to define “better”).

In any case, what I’m finding is that more often than not, when employers talk about HSA, they really mean HRA.

What’s an HRA? It’s a Health Reimbursement Arrangement (notice the “A” here is not for “Account”). With an HRA, the employer still offers a plan with a higher deductible, for example, but offers to subsidize said deductible. In other words, instead of just handing out dollars willy-nilly, the employer can control to whom the dollars go, and can actually look forward to potentially saving real money.

Next time, we’ll look at an actual case.

Tuesday Update...

This week's Grand Rounds is up over at Health Business Blog.

Enjoy!

A Radical Idea?

Joe Kristan at Roth & Co, tipped me off to a rather interesting forum recently held in our nation’s capital. The panel included members of the President’s Advisory Council on Federal Tax Reform, and included folks from The Heritage Foundation and the Galen Institute.

In fact, the representative from Galen, a Ms Turner, opined that “the tax code contributes to employees' ignorance about the costs of health insurance, leading them to demand more expensive health insurance from their employers and raising healthcare costs.”

Robert Moffit of the Heritage Foundation added that "(i)f you want to reform the health insurance markets, you must reform the tax system." He went on to advocate the elimination of the tax-free status of employer-provided health insurance.

Right problem, woefully wrong answer. If one frames the dilemma in those terms, then the only fair, equitable, and reasonable answer is to make health insurance premiums deductable for everyone, not just those covered under a group plan. That would solve a lot of the affordability problem simply and rationally.

It also blithely ignores the rising impact of qualified reimbursement plans, such as HRA and HSA. These serve several purposes, not the least of which is empowering insureds to be more proactive in their healthcare, and raising their awareness of what coverage and services really cost.

As one could imagine, this issue has caused quite the kerfluffle in several areas of the blogosphere, including insurance and tax related sites.

Over at Tusk & Talon, Chad posits that “(t)here would be a massive amount of social upheaval if the employer based system were scrapped either in favor of socialized medicine or free market individual health insurance.” He’s concerned that the costs of transitioning to a system where these tax breaks are absent would be staggering. He’s also concerned about how such a change would affect availability and quality of coverage.

We’ve been here before:

Back in April, we dissected an article by Dr Greenburg of George Washington University in Washington. He also proposed this course of action, believing that this would make the coverage even more attractive. As we stated then, and restate now, the tax advantages of employer-based coverage are, if anything, a minor issue.

Let’s review for a moment the underlying raison d’etre of this tax deduction: During the 2nd World War, private sector wages were frozen. Employers still needed to attract employees, though, and so lobbied Congress to let them offer benefits tax free. This seemed like a good idea at the time, and it has now become enshrined in the pantheon of worker bennies.

So, would eliminating the deduction really cause widespread panic?

Conversely, would such a measure resolve the issue of the uninsured?

No, on both counts, because the whole issue of group insurance deductability is a straw man. The real issue is benefit configuration, guaranteed insurance and portability. That is, group insurance (typically) covers more things than individual, e.g. maternity expenses. And, because group coverage is by law guaranteed issue, folks don’t have to worry about being declined for coverage, or having pre-existing conditions excluded.

Neither of these area are even remotely addressed by eliminating tax advantages. If anything, such a move would highlight the very real benefits of availability and portability, and underscore how very little the tax break figures into the equation.

The good folks over at T & T express the understandable concern that they’d “likely be out of a job if (this) proposal were to become law.” While I won’t pretend to offer vocational advice, I’m less sanguine about this possibility. From the time I got into this racket some 20 odd (or these odd 20) years ago, I learned that when Social Security was first proposed, life insurance agents panicked, convinced that their business was doomed. And in the mid-60’s, when Medicare came into being, the health insurance industry reacted in much the same way.

Of course, history teaches us that neither eventuality occurred.

Who knew?!

One of the fun things about blogging is being able to relate true (but potentially boring) stories, in an entertaining way. Well, hopefully entertaining.

Insurance carriers each do things their own way. For instance, some carriers charge for each child they cover, while others charge a flat rate, regardless of the number of progeny involved. The latter case is a good deal for large families, but not such a bargain for smaller ones.

Case in point:

Another nice lady calls in to discuss health insurance (this tends to happen in cycles, so I don’t keep the little “Take A Number” sign out all the time). Her group coverage at work is getting expensive, and she’s looking for ways to trim the budget. So far, so good.

She is married, and they have one child, a teenaged son. Her contribution toward the group plan is about $230 a month for herself and her son, plus another (whopping) $600 for hubby. That’s over $800 a month that she pays out of pocket (I didn’t ask how much her employer contributes, because it didn’t seem relevant).

She asked me to price an individual plan for her family, so I began – as I usually do – by asking questions. Turns out that she and her son are healthy, but hubby has some blood pressure and cholesterol issues. Okay, that adds to the rate, but nothing too bad. Plus he’s too short for his weight. Again, this doesn’t help, but it’s not a huge deal (no pun in 10 did).

But wait, he’s also on anti-anxiety meds. And he’s “borderline diabetic.”

Oy.

At this point, I stop her, and we go back to square one, which is a more detailed breakdown of her premiums. It occurs to me that, given that hubby’s uninsurable in the individual market, maybe we can find a different solution.

It turns out, a policy on her son is about $75 a month. But if we write it, and take him off the group plan, they save over $200 a month. How is this possible? Remember how we saw that some carriers charge a flat rate, no matter how many kids one has? Well, she’s actually paying for 3 kids worth of coverage now, and we can reduce that substantially, while keep coverage for her husband intact (vitally important in this case).

So, it really does come down to just asking questions.

Lots and lots of questions.

Unintended Consequences…

It is axiomatic that demand drives price. That is, if there’s a particular item that is greatly sought after, the price of that item will (almost) inevitably rise.

At least until something better comes along.

At which point, the cycle starts again.

And so it is with health insurance, as well. Sure, there are risk factors and market pressures, underwriting issues and pre-existing condition exclusions. But by and large, insurance is subject to the whims of the marketplace.

Until now:

“Gov. Mitt Romney doesn't just want to make health insurance universal. He wants to make it compulsory.” In fact, he goes further: "Everyone must either become insured or maintain an adequate savings account to cover their medical expenses." (fop cit)

Now, this may sound like a good idea, but let’s examine the consequences of such draconian measures. When something becomes mandatory by law, it has several effects:

First, people do vote with their feet. Those that rebel at the notion that the gummint is once again intruding into what should be a personal buying decision may well just pick up stakes, and vamoose.

Second, if something becomes mandatory, then the demand is, of course, going to go up. Given that that are a finite number of carriers, with a finite capacity for new business, prices will start to climb, and eventually become even more onerous than they are now.

Third, what about those that either don’t want to purchase, or can’t qualify for, insurance. Well, then, they’ll have to post a bond (or demonstrate that they have sufficient assets) to cover their medical expenses. Which is fine if we’re talking about the flu or a broken arm, but becomes problematic when we’re talking stroke or MS.

Fourth, and perhaps most critical is: “Or else what?” It’s one thing to mandate that folks buy coverage (or put aside funds), but where are the teeth? Is he proposing jail-time for “offenders?” Maybe a fine for those who underfund their accounts? Without some enforcement mechanism, such a law is worse than worthless: it’s a step backward.

Mr Romney would do well to remember that old admonition: Be careful what you wish for…

Transparency…

Merriam-Webster defines it as “free from pretense or deceit...easily detected or seen through...readily understood." In the context of this post, any of those work equally well:

“Continuing his efforts to improve access to health care for Illinois families, Gov. Rod R. Blagojevich today signed the Illinois Health Care Consumer’s Right-to-Know bill, which makes health care price and performance information for outpatient procedures available to all Illinois consumers.”

The Illinois Department of Health will publish the average charges for as many as 30 common outpatient procedures. “It is important that information be obtained on all surgeries to get a more accurate picture of this component of health care,” said Dr. Eric E. Whitaker, state public health director.

According to a recent survey, 85% of Prairie State voters said that such information would “affect their decision” in health care matters, and 75% agreed that such disclosure would “create competition, lower prices and improve quality.”

Okay, I’m done laughing now.

Since when is the price of a surgical procedure the overriding consideration? When was the last time anyone ever called to get 3 estimates for their gall bladder surgery? How about having that tumor excised? Are we really expected to believe that silly measures such as this, full of feel-good nanny-state “disclosure” will somehow affect the quality of care? Hardly.

There are three populations of potential patients who are affected by this law:

First, those that have private insurance (i.e. group at work or their own individual medical plan) already have discounts built into their plans, and a 3rd party which is paying a good chunk of the bill. It’s doubtful that price-shopping their next surgery is going to be a priority.

Second, those who are covered by government programs (e.g. Medicare, Medicaid, etc) are unlikely to have ready access to the information in the first place, and also have a 3rd party paying a good portion of the bill in the second. Again, they’re not out scouring for surgical “bargains.”

The last (and least, in terms of numbers) group, those without any insurance or government aid whatsoever, is perhaps the least interested of all. If they have no means to pay for these procedures, what difference does it make what they cost?

The only folks who benefit from superficial, silly legislation like this is the political class, which can be seen as “caring for the little guy,” but actually accomplishing nothing.

Interestingly, I noticed that the bill doesn’t require the publication of success rates. In other words, one could find out the cheapest place for a given procedure, but not necessarily the best place. Remember, though, you get what you pay for.

And one more thing: nowhere in the press release does it say how much this little project is going to cost the Illinois taxpayer. I wonder if they’ll pass a law that requires government agencies to publish how much they spend implementing these things.

Welcome Grand Rounds visitors! Glad you dropped by. Please take a look around, and feel free to leave a comment.

"Don’t Hang Up!"

The nice lady called about 4:30 on a Tuesday afternoon (and no, the sky was NOT “dark and gloomy.” Sheesh). She was calling, she said, to find out about health insurance for herself and her family.

She’s self-employed, and her husband wants to quit his job to come work with (for?) her, but they’re loathe to give up his benefits.

It’s then that she literally begged me “please, don’t hang up.”

As one would expect, I was a bit puzzled by this. Why would I hang up on her? Well, "because everyone else has” once she disclosed that she’s a Type I diabetic. I simply responded “well, you just weren’t talking to the right agent.”

One of the first things one learns in this business – and then most of us promptly forget – is to ask a lot of questions. Which I proceeded to do. It turns out that she’s actually on several meds, including self-administered insulin injections, and she has some other problems, as well. She and her husband desperately wanted to be in a position for him to quit his job, but were faced with job-lock due to her condition.

Sometimes, things seem hopeless, because you’re too close to the problem, and because you just don’t know about alternatives. It’s an agent’s job to inform prospects and clients about these options.

Turns out, there are several guaranteed issue plans that may be of value to her, and she’s eligible for COBRA, which offers an avenue to longer term coverage, as well. In fact, the COBRA option may be her best bet:

By electing COBRA continuation, and keeping it for the full 18 months (for which she is eligible at this point), she fulfills the critical test for a HIPAA guaranteed issue plan. Assuming she’s still uninsurable at the end of COBRA (which, let’s face it, she will be), she can then transition to another plan, one which will continue to cover all her pre-existing health problems. None of this is cheap, of course, but I submit that it’s still less expensive than going “bare.”

In this case, procrastination is “a good thing.”

Oh, and since her husband is quite healthy, it’s no problem setting him up with his own major medical plan. Problem(s) solved.

ADDENDUM: This is an example of why it’s so important to work with a local, independent agent, as opposed to one of those online services. The anonymous person at the other end of the 800# or email has products and knowledge geared toward the “normal” case. Throw any curveballs (such as diabetes, or thyroid conditions, etc) at such a service, and the most likely response is “Sorry, can’t help you.” Granted, they are unlikely to hang up on you, as apparently happened to this woman. But they’re not going to be much help, either. A knowledgeable pro will know about guaranteed issue plans, HIPAA and COBRA issues, and even non-insurance alternatives.

‘Nuff said.

Congratulations, Class of 2005! Now about that insurance…

As the father of a recent high school graduate (with Honors, no less!), I can begin to look forward to the next phase: college. For those that have a recent college grad, however, there’s an additional consideration:

Most group insurance plans cover your post-teen progeny only until they graduate. That is, if they’re not full-time students, they’re not covered. This is of no small concern, because there are a few options available, and it’s important to pick the right one.

Your first stop is your group insurance certificate of coverage (which is actually a booklet). It will outline when your grad’s insurance stops – sometimes it’s the end of the month following graduation, sometimes it’s that very day. At that point, there are really three basic choices, and which one you choose depends a lot on your grad’s post-grad plans:

If he’s headed to grad school, you may be able to keep him on your plan. Check your certificate, or call your HR department. If he must drop off, and he’s in good health, and you KNOW he’s starting back to school in the fall, then a Short Term Medical (STM) plan may be appropriate. The advantage of these plans is that they are inexpensive, easy to buy, and you pay only for the time you (think) you’ll need the coverage. Check with the grad-school to see what options are available once school starts.

Likewise, if your grad is headed into the “real world,” and has a job already lined up (WooHoo!), be aware that there is usually a waiting period between when the job starts and when the coverage begins. The STM is appropriate in this case.

If your grad is unsure about future plans, a better idea would be to purchase an individual major medical plan, preferably one with a $1500 or higher deductible. These plans are underwritten, and generally cover (disclosed) pre-existing conditions. And there’s no “expiration date,” so they’re more flexible if there’s a continuing need. They are typically more expensive than STM plans, but are the better choice for needs longer than, say, 3 months or so.

If your grad has a serious health condition, and doesn’t qualify for the major med plan, then check to see if your company is subject to COBRA. If there is a serious condition, you really don’t want to go the STM route, for a variety of reasons.

If your company is subject to COBRA, by all means elect it for your grad. Yes, it can be expensive, but it will cover the pre-existing condition(s), and offer more long-term options.

This is by no means an exhaustive list of options. For more detailed information, especially if you have unusual needs or circumstances, your best bet is to consult with a professional, independent agent, with 5 or more years experience in the health insurance field (oh, like me). Meantime…

Congratulations!

Oy, Canada!

Sorry for the pun, but I couldn’t resist. The last few postings here have dealt with some of the shortcomings of our health care delivery and finance system, and the temptation is to look northward at “free” healthcare.

As the saying goes, though: “TANSTAAFL” (There Ain’t No Such Thing As A Free Lunch). While our system definitively needs work, our brethren to the north have some problems of their own:

“The Supreme Court on Thursday struck down a Quebec law banning private medical insurance in a decision that represents an acute blow to the publicly financed national health care system."

The reason that this is significant is that Canada’s much-vaunted nationalized health care system has quite a few problems, not the least of which is long waits for even simple procedures, and often fatal waits for more critical ones. The problem is exacerbated by a law which made it illegal for desperately ill patients to seek care outside the system, even if they could pay for it themselves.

Sometimes, it helps to put a human face on the problem:

Baruch Tegegne, now 61, has advanced kidney disease caused by diabetes. He undergoes dialysis four times a week, and is deteriorating. He's on a waiting list for a kidney transplant, and a private donor has been found. The problem is that the Montreal hospital which would do the actual procedure is refusing to do so, on "ethical grounds." But that's a subject for another post. The point here is that another hospital, in Toronto, is apparently willing and able to do the transplant.

But in Canada, the "free healthcare" isn't portable across provinces, so the system won't pay for the procedure if it's done in Toronto. The implications of such a system here are pretty scary.

An Israeli hospital has offered to do the surgery, at a reduced rate, and fund-raising efforts are underway to make this happen. But the real tragedy here is the impersonal and unbending system that has placed someone in this position. And I’m sure that Mr Tegegne isn’t the only Canuck who faces this problem, but his story is illustrative of a system which is not, IMHO, an appropriate replacement for our own.

So, what’s the connection? Well, a clue is found in this passage from the Times article: “But in recent years patients have been forced to wait longer for diagnostic tests and elective surgery, while the wealthy and well connected either sought care in the United States or used influence to jump medical lines.”

Once there’s rationing, then the system itself encourages folks to seek alternatives. As it stands, those best able to afford treatment get it, somewhere. And those least able to afford such alternatives languish or, in many cases, die in line.

Something to consider when our political class – of either stripe – propose drastic governmental solutions.

For a somewhat different perspective, I recommend Dr John Ford's take on this over at California Medicine Man.

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Who’s YOUR Beneficiary?

Several years ago, I had a client who apparently longed to win a Darwin Award: while riding his motorcycle, he decided that it would be fun and/or prudent to play “chicken” with a Ford Explorer.

CareFlight scraped up the bits, and flew them to the local trauma center, which proceeded to perform over $20,000 of medicine on said bits. Needless to say, this was of little efficacy.

The client had $15,000 of term life through the group health plan. The employer, and premium payor, was his folks’ small business. And they took responsibility for making – and paying for – the funeral arrangements (which, given the circumstances outlined above, was no small thing). Naturally, I helped them file the Death Claim, and we awaited the check.

Which came to me payable not to the deceased’s parents, but his ex-wife. As you can imagine, this took both his parents and me by complete surprise.

Now, as an aside, I should have known this would happen, being the agent. This took place about 15 or so years ago, and I really don’t recall why I was blindsided. I’ll plead ignorance, and move on.

In any case, this story did not have anything like a happy ending, except that I learned the hard way that folks need to KNOW who their beneficiaries are. How many people still have former spouses listed as the beneficiary on their group insurance? How many newlyweds have policies taken out by their parents when they were but wee folk, and whose parents – not their new spouse – are still the beneficiary?

The point here is that, if you haven’t checked your policies lately, it’s never too soon to make sure that you’ve obligated the company to make sure that the right person gets the cash.