LTC = Long Term Cruise?!

From John McCaslin (click on the title above for link, 5th item down):



Our "Dramamine" column item from earlier this week — that it costs just about the same for an 80-year-old American to live out his or her days on a luxury cruise ship ($230,497) as in an assisted-living facility ($228,075) — generated considerable response.



"On our October cruise on Royal Caribbean lines, there was an elderly lady who actually resided on the ship 'Voyager of the Sea,'" writes Becky Jackson-Turner of Acworth, Ga.



"Medicare took care of her medical needs, which were few, and whenever the ship would pull in to its main port, she would disembark for a few hours. ...



"She told us that it was just more financially feasible to do this than living in an assisted-living home and was much more fun," Mrs. Jackson-Turner recalls. "She got to meet new people all the time, always had great food and always had her bed turned down for her when it was time to sleep — with a mint to boot.



"We were blown away, but even more so when she told us of at least 20 other people she knew who did the same, except a lot of them change ships every once in a while to add a little variety."



Now, I had intended to blog about LTCi soon (I'm still massaging that post), but this was too good to pass up.

UPDATE: I’ve been thinking about those numbers. I think that they’re high. At $228,000, that’s over $620/day for assisted living, which (around here, anyway) is on the high side.

And $230,000 for the cruisin’, well, that’s better than $4,400/week, for a single. Based on all the commercials I keep seeing on Food Network and HGTV, that seems rather high. Plus, if Granny’s cruising THAT much, wouldn’t she qualify for some kind of Frequent Sailor miles?

Still, it sounds like a pretty fun way to spend one’s Golden Years.

This always makes me crazy...

And I know that it shouldn’t, but: why do we (and I guess by “we” I mean health care consumers in general) assume that birth control should be a covered expense? And not just BC pills, but IUD’s, vasectomies, etc? (Warning: I’m about to go off on a rant about individual medical coverage; these issues are dealt with differently in group contracts)



Because it’s “preventive care?” On the same level as cholesterol screenings, mammograms, and PSA tests? I don’t think so.



And this has nothing to do with sexuality or morality, per se. It has to do with risk management, and the underlying premise of insurance. I don’t think that anyone believes that their auto insurance covers oil changes or tune-ups (or should), but aren’t these “preventive” measures? Our homeowners insurance doesn’t pay for the chimneysweep, but wouldn’t that be a preventive measure?



Why do we expect our health insurance to cover so much that is not risk-based? I suppose it could be that we perceive it to be so expensive, and we want to get our money’s worth. Or it could be that we’ve become so conditioned to plans covering so much that it’s tough to adjust to a lower level of coverage (I’m thinking here of folks who come off a group plan and pick up individual coverage).



But I just don’t understand WHY insurance SHOULD cover these things. Don’t we have any sense of personal responsibility? Should medical insurance cover weight loss plans? How about stop-smoking programs? Shouldn’t my insurance pay for me to join a gym club, or Jenny Craig? Where would it end?



I wonder if people consider how much MORE their insurance would cost if it DID cover these items.



Okay…I feel better now.

Sometimes I just don’t get it…

Case in point: One of my clients is a small (3 person) high-end carpentry business, made up of three brothers. One is the owner, the other two work for him. The owner asked me to put together a disability income program for them. After reviewing their needs and goals, I proposed that we write 3 individual plans (primarily because each had such different cash flow issues). They agreed, and we completed and submitted applications.



So far, so good.



Okay, 6 weeks later, the underwriter decided that only one of the three was insurable (medical issues). Great.



Back to square one*.



Okay, I thought, let’s go with Plan B: a group DI plan. Requested quotes for Short and Long Term Disability from a handful of carriers. Prepared to wait patiently for said quotes.



Surprise! Got answers right away. That’s the good news.



The bad news is that all but one declined to quote, and that one would only quote STD. Oooookay, what gives?



Well, about half the declines were due to the industry: carpentry. Note that I could write a garage; that somehow mechanics are a better risk than carpenters. Un hunh.



The other half said no because, and you’ll love this, the three employees are brothers. But hold on a sec….it’s not like they’re 23 years old living at home with mom. They’re all grown men, with wives and kids and mortgages.



Doesn’t matter, rules are rules.



So, now on to Plan C ½: We’ll take the STD (with a 6 month benefit), and write a special risk DI policy with a 6 month waiting period. The cool thing about being an independent agent is that I at least have a plan C ½. But IMHO, the carriers are being pretty shortsighted in not even looking at the case because they can’t see past two rules which make no sense (to me).



Just my $.02 for today.



*Why we passed on the insurable one will be the subject of another post

Okay, Smart Guy, Riddle Me This…

Another agent -- a close friend (and mentor) -- called me recently to pose this question:



“Hank,” he asked, ”how do you explain to your clients why health insurance keeps getting more and more expensive?”



Now, my wife insists that there are no coincidences, which is why I find it interesting that I received a call today from a (soon to be former, I guess) client, who complained that his rates had gone up AGAIN, for no good reason, and that he wasn’t going to pay any more.



Both calls really involved the same principles, and answers.



My initial response to Tony (the aforementioned friend) was tongue-in-cheek: I simply tell my clients that the rates go up so that I can make a bigger commission. The truly ironic part, of course, is that, for the most part, commissions keep going down. I went on to enumerate some of what I see as the primary contributors to recent rate increases:



First, the cost of prescription medications has become a bigger and bigger portion of the health insurance dollar. Of course, this is good in the sense that new medications (with the obvious exceptions of Vioxx, etc) mean improved health and quicker recovery. On the other hand, the cost of advertising the next “purple pill” drives the cost of the meds even higher. And, of course, we see the commercials and all flock to our physicians for a scrip for “that new pill.”



Second, “managed care” itself shares some of the blame. Let me explain that:



Years ago, managed care (HMO’s, PPO’s, etc) was touted as the answer to sky-rocketing premiums. And, for a while, bean-counting medicine seemed to work. But, as with so many such phenomena, it ran into the brick wall of diminishing returns. That is, there is a point where, no matter what you do, there is a minimum cost – a floor – below which prices cannot go. And when we hit that floor, a few years back, prices had nowhere to go but up.



Third on the list would be hidden costs, primarily in the form of government mandates. Insurance is primarily regulated at the state level, and each state requires (“mandates”) that certain coverages be included, regardless of whether a given insured actually wants or needs that coverage. Mandated benefits are estimated to account for as much as 17% of health insurance costs. Interestingly, Ohio is looking at ways to change this, by allowing carriers to offer “mandate light” plan designs.



Well, enough for now….more on this later.

BTW, I'd really love some feedback on this one (hint, hint)

Comments...

UPDATE: Okay, that didn't work. I thought that if I changed the settings to "anyone" can comment, then folks wouldn't have to register.



Obviously, I was incorrect (who'da thunk that?!)



So, it looks like you have to register to leave a comment. But, it's a pretty painless process [ed: nice alliteration]: just click on the "Blogger" icon in the upper left corner. It'll walk you thru the process (it's a little weird, because it also asks if you want to set up a blog yourself). You can register with a throw-away email (e.g. mail.com, juno.com, hotmail.com, etc).



I really want to have people leave comments, to get a dialogue going. So....Please don't be intimidated, go ahead and sign up!



In response to some emails, I've changed the settings for comments so that anyone can post one, not just registered folks.



Don't know how long I'll let that go; I'm new to this, so I'll play it by ear.



Meantime, it costs nothing to register (just click on the "Blogger" icon in the upper left-hand corner and it'll walk you thru), and it may help avoid hassles for folks later if/when I change the comments settings back to "registered users only."

Some Thoughts on Anthem vs Premier

Here in southwest Ohio, Anthem is one of the two 800 pound gorillas in the medical insurance area, particularly in the group field (the other being United Health Care).



In the Dayton area, Premier Health Associates includes two hospitals and about 100 doctors.



Recently, the contract between these two entities expired and, failing to find a compromise position, they parted ways.



The immediate effect of this fall-out was that one of the areas two best hospitals is no longer in the Anthem network, and a slew of specialists are also now “off limits.”



Which brings me to two seemingly unrelated observations:



First, it’s always interesting to me when someone says that their insurance carrier won’t “let them” receive some particular medical treatment. Last I looked, the only thing an insurer can do to dissuade you from undergoing treatment is to threaten not to pay for it. No carrier can actually prevent someone from seeking treatment. Even for out-of-network claims, many plans will cover at least a portion of the bill. And in an emergency, non-network claims are treated as in-network.



Second, I’m really surprised that the two players involved (Anthem and Premier) are still wrangling over this. Yes, the hospitals can afford to wait it out, but the physicians are really starting to hurt. Many (most?) people have health insurance through their employer, and have little – if any –say in which carrier that employer chooses. So more and more folks have to switch docs, leaving Premier’s physicians with a shrinking customer base (and that’s really what a patient load is: a customer base).



OTOH, surely Anthem sees a potential for other carriers -- whose contracts with Premier are still valid -- to step into the void, publicizing their on-going relationship with Premier. At some point, Anthem’s new business sales will begin to fall off, squeezing them, as well.



Of course, the folks who are really getting hurt here are the insureds, who signed up with Anthem believing that they would see no changes in providers. And as noted, it’s not as if many have a choice, or a voice, in the matter.

Why I Recommend High Deductible Plans

Over the past few years, more and more of my practice has involved individual medical plans. There are myriad reasons for this, but for now I’d like to focus more on the “what” than the “why.”



For example, yesterday a young lady called about medical coverage for her family (mom, dad, son). She had called a number of places before getting to me (hard to believe!), and every one of those places gave her a quote for a generic co-pay plan. I know that it’s easy to do that, and to fall in the rut of cookie-cutter offerings, but I’ve found that this isn’t always (or even usually) the best way to go.



So I recommended a plan with a $2500 (per person) deductible, with a drug card but without office visit co-pays, and – best of all – no co-insurance.



As an aside: I’ve been in this business for over 20 years, and the single most difficult item to explain is co-insurance. “It’s 80/20 coverage!” Oh yeah, 80/20 of WHAT? Oh, today it’s 60/40 but only if you go to Doctor Kildare. Sheesh!



Anyway, as I explained to this potential new client, her family would save well over $100 a month with this plan; it seemed pretty far-fetched that they’d accrue anything close to $1,200 in doctor’s office visits over the year. And on a large claim, she’d actually SAVE money.



How’s that?! Well, today’s generic plans include a $1,000 deductible, then 80/20 (ahah, there’s that co-insurance again!) of the next $10,000, and then 100% coverage after that. So that means on a big-ticket claim (say $50,000), her out of pocket exposure would be $3,000 ($1,000 deductible + $2,000 co-insurance). But the plan I proposed limited her out of pocket maximum to only $2,500. And she saved $1,200 along the way!



Okay, that’s my soap-box for today….