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.

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"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.

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

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.