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.