Tuesday, June 30, 2015

Creative Writing

A long time ago I took a college course in creative writing. The instructor encouraged us to use our imagination to write stories, fact or fiction. Just make sure it is entertaining.

Seems an insurance agent in North Carolina decided to do his own kind of creative writing.

Using a bird dog, Charlotte agent Will Kennedy submitted some 600 Obamacare applications in a relatively short time frame.

All from homeless people.

Many with the same address.

And all having exactly $11,700 in projected income.

Just enough to qualify for the maximum subsidy.

If you look beyond the questionable tactics, otherwise known as creative writing, there is this.
Huggins is among dozens in Charlotte who are learning that their “free” coverage requires them to cover a $5,000 deductible and costs them eligibility for some of the free medical services they’ve relied on.
“We have people who really need their medicine, and we can’t give it to them,” said Susan Royster of Charlotte-based NC MedAssist, which provides free prescription drugs for the uninsured. - Charlotte Observer

The homeless gained insurance they neither wanted nor could afford.

In gaining coverage they lost other "free" social services.

The agent picked up commissions on some 600 new clients.

Such a deal.

Minnie the Moocher would be proud.

Monday, June 29, 2015

Monday LinkageFest

■ Death. Taxes. Health Insurance. New ObamaTax forms are soon to be on their way (most likely):

"If the Internal Revenue Service (IRS) implements the current rules as planned, insurers will have to send 1095-B coverage notice forms for the 2015 plan year in early 2016."

What's that mean? It means that large employers will have to send these forms to covered employees (kind of like W-2's or 1099's), which employees will then need to enclose with next year's tax returns. The ostensible reason is to allow the Feds to confirm that said taxpayer did, indeed, have appropriate coverage.

Exit question: who really believes that these forms won't ultimately result in additional taxes?

■ A few short weeks ago, it was the prospect of UHC eyeing Aetna, and Anthem smacking its lips over Humana. But things are never what they seem:

"Aetna, the second-largest U.S. health insurer by market value, is closing in on an acquisition of Humana"

First, consider me gobsmacked: I coulda sworn that UHC occupied the #2 slot. Second, expect this kind of consolidation to continue as profit margins shrink and companies vie to position themselves as administrators of the coming Single-Payer scheme.

■ Folks in smaller groups ought not be pointing and laughing at Item #1 above:

"Employers in the 51-100 employee size bracket are anxious about the prospect of being added to the “small group” market that under the Affordable Care Act (ACA) currently cuts off at 50 employees."

And why is that?

Well, those considered "small groups" have more stringent coverage requirements than their larger brethren, including the "10 Essential Health Benefits" mandate. Net result: "an immediate impact on premiums due to new rating rules."

And they don't mean "downward."

You Say Goodbye, I Say Hello

The "Hello, Goodbye" song by the Beatles could be fitting in light of the
SCREWTUS decision on same sex unions. The New York Times finds that some companies with domestic partner health insurance coverage may say goodbye to those benefits now that there are no barriers to marriage.

Some large employers — including Verizon, Delta Air Lines, IBM and Corning — already have. They rescinded domestic partner benefits to employees living in states where same-sex marriage was legalized and replaced it with spousal coverage. Last July, Verizon gave its employees until the end of the year to decide whether to marry. IBM gives employees a one-year grace period, though a spokeswoman said the time frame was under review; Delta said it provided a grace period as well, about two years. And some states have sought rollbacks as well. - NYT

Elections, and Supreme Court decisions, have consequences.

Be careful what you wish for.

Thursday, June 25, 2015

SCOTUScare Fallout

Well, that didn't take long:

"Obamacare Ruling May Have Just Killed State-Based Exchanges"

Indeed. Why would a state - any state - continue to throw money and other resources into maintaining their own HIX? Actually, there's a delicious irony here: Herr Gruber himself maintained that the law was written to encourage states to set up their own Exchanges (in order for their citizens to qualify for subsidies). Absent that bribe, er, motivation, the only rational action is to move your folks to 404Care.gov.

[Hat Tip: FoIB Holly R]

And thus ends the Rule of Law

Words mean nothing:

"[T]he Supreme Court on Thursday upheld ObamaCare subsidies in states that did not set up their own health care exchanges. 

The decision was 6-3."
And thus is born SCOTUSCare.

And BTW: This means that both the (Evil) Individual and Employer Mandates stand. So we have that going for us, which is nice.

Risky Roundup

■ Last month, we mentioned some of the very positive results that would arise from a Plaintiff's victory in King v Burntwell. Today, Cato's Michael Cannon offers even more, noting that "the benefits of a ruling for the challengers would swamp all other effects."

A few:

·  Over 11 million citizens "freed from an illegal tax averaging $1,200

·  A pay raise of over $900 for affected employees

·  Almost 240,000 new jobs
And the list goes on.

■ FoIB Allison Bell wonders about the implications of a failed Palmetto State CO-OP, which left (on average) some $2,400 per enrollee in unpaid claims. Some are covered by their states' Guaranty Fund, but some aren't. It depends on whether or not the plan is considered a MEWA, and thus not eligible:

"South Carolina Health Cooperative was a nonprofit, member-owned MEWA formed outside the PPACA system. Because it was not classified as a health plan under South Carolina law, its members were not eligible for guaranty fund protection"

This could prove to be a major problem as these types of plans continue to fail.

■ Ever heard of Bitcoin? It's a non-government-backed "virtual" currency that's become attractive as both an alternate payment method and an investment strategy. But it's also risky business: with no government to backstop it, what happens if the value collapses? And since it's virtual (that is, completely on-line, with no physical analog), there are added cyber-security risks, as well:

"[G]lobal insurance giant Lloyd’s of London released a report titled *Bitcoin: Risk Factors for Insurance* ...  businesses seeking to enter the virtual currency marketplace—whether by running an exchange, holding bitcoins in secure “wallets” for users, or simply accepting bitcoins as payment—must be aware that Bitcoin’s “security risk will never be reduced to zero.”

On the one hand, I'm not convinced that **any** risk can be "reduced to zero" (else it's no longer "risk") but the point here is that the currency is now ubiquitous enough that it represents a significant risk factor for businesses.

Interesting stuff.

Tuesday, June 23, 2015

Generous Carrier Tricks

Our on-going Stupid Carrier Tricks series is generally over-represented, so it's nice to be able to add one on the positive side. Medblogger Lisa Emrich daily chronicles her thoughts and strategies as she battles MS; she also reports significant events on Facebook, where she recently posted this:

"Some readers doubted my description of an insurance company who pays much more than hospital charges for an infusion. See details from the EOB."

Turns out, her Grandfathered health insurance plan (from Carefirst BCBS) allows for very generous benefits, especially when it comes to treating her MS.

How generous, you ask?

This generous:

That's right, they actually allow a greater amount than what her provider ended up charging her, and this was in turn reflected in her balance due. And, of course, the amount she pays in co-insurance helps reduce the balance for the rest of the year.

Reason I mentioned her Grandfathered status is that this plays a role in the overall scheme of things. Lisa tells me that "I absolutely appreciate the 10% coinsurance which is why I've kept this grandfathered plan. After Carefirst processes the 2nd infusion (in June), I will have fulfilled my max OOP (for medical) for the year." Nice.

Bottom line: it's nice to know that some carriers really do try to help out their insureds whenever possible. Chalk one up for the good guys.

Monday, June 22, 2015

Narrowly Framing LTCi (Part 2)

In Part 1, we took a detailed look at a recent WSJ piece on Long Term Care insurance and "narrow framers." Our friend David Williams has asked us to review his take on that article, and so we shall.

I have only a few quibbles with his analysis:

"Insurance is useful when it covers rare events that could be financially ruinous. But long-term care is a common need ... and the benefit structure doesn’t protect against catastrophic expenses."

I think this is overly simplistic: as I mentioned in Part 1, insurance as risk-management tool has more to do with the severity of the potential loss rather than the frequency (although that’s certainly a factor). This explains, in part, the popularity of co-pay health insurance plans vice HSA's: few of us would go broke paying for a simple doctor's visit or common prescription, but we've been conditioned to "let the insurance pay for it." Regular readers will spot the fallacy there.

More disturbing, though, is his contention that "the benefit structure [of LTCi} doesn’t protect against catastrophic expenses." This is a common misconception of how LTCI works and what it's really designed to do, and for that I blame not David, but my industry. The story we've been told to tell is that you buy LTCi to pay for care. This is correct, but misleading: there is no realistic way to buy a plan that will completely cover the costs of a major claim (or series of claims). Anyone that could afford to buy such a plan would be much better off self-insuring.

No, the role of LTCi is to supplement one's assets (and a Partnership-compliant plan is a terrific ally in that quest), and to buy "choice."

What does that mean, Henry, "choice?"

It means that having the ability to pay for care oneself opens up a lot more doors (as regards facility and resource availability) than folks dependent on Medicaid will see. Is that fair? Doesn't matter. Is that real? Yes.

David then writes about his own experience in considering a plan, and noted that what he was shown had very little in common with what he wanted. This is a failure of either David (for not sharing his vision with his agent) or the agent (for not listening to David). I don't know his agent, but I have a very difficult time believing that David was less than forthright and explicit in his request. On the other hand, I know from experience that clients are generally less knowledgeable about these plans than they might think (which is no indictment: they've been served a long line of carrier and industry propaganda). My very first step when asked about LTCI  by a client (or potential client) is to point them to our primer on when one should consider buying a plan, and what to look for.

David does describe his ideal plan: "a policy with a 5 year elimination period and no cap on the benefit period." Such a configuration does not, to my knowledge, exist, but it seems to me that there ought to have been some common ground between what the agent had available and what David wanted; unfortunately, that doesn't seem to have been the case (or so I inferred from the post). Does that make David a "narrow framer" (in the context of the WSJ post)? Hardly: in fact, he seemed crystal clear in what he wanted and not distracted by the minutiae.

Where I think he veered off course is in not considering other reasons to buy a plan, and I hope that he takes the opportunity to revisit that decision. I'd be happy to refer him to a pro.

Friday, June 19, 2015

Oregon Wants Higher Rates

The Oregon Dept. of Insurance doesn't think consumers are paying enough for health insurance and wants to see the rates go higher.
The Oregon Insurance Division says it is pushing health insurers to charge higher individual rates in 2016 because they are reporting huge underwriting losses for 2014.
The insurers collected just $703 million in premiums for 2014 and spent $830 million on 2014 claims, officials say. - Life Health Pro
Normally the DOI wants to see lower rates, not higher. So what gives?
"That means consumers are not overcharged for health insurance, but it also means that rates must cover the cost of patients' medical bills," Calli says. "We have proposed increased rates in order for consumers to continue counting on the coverage they have purchased."
In other words, if the carrier isn't charging enough the state has to step in and take over.

Something they don't want to do.

CO-OPs: That flushing sound you hear...

Last month, we again noted that CO-OP's (Consumer Operated and Oriented Plans) were in financial trouble:

"[O]nly one Co-op, Maine Community Health Options, reported both favorable underwriting and net income at $10.9 million. All other Co-ops reported both underwriting and net losses"

As the saying goes "that which can't go on, won't." And so we find ourselves (unsurprisingly) at the edge of a cliff:

"Ominous signs are proliferating among 22 Obamacare health insurance co-ops of imminent financial collapses that could leave more than a million Americans without coverage"

So, while everyone's eyes are on SCOTUS, another major piece of The ObamaTax is facing its demise. And of course, that means all those taxpayer dollars down the terlit.

And just how many tax dollars?


"[A]n Obamacare co-op that defaulted earlier this year, suffering $163 million in operating losses in a single year ... net losses for the co-ops reached a record $614 million in 2014"

Yes, yes: petty cash to the DC bureauweenies, but actual, hard earned dollars to thee and me.

What's particularly troubling is that "[t]he figure is nearly three times the $234 million in losses suffered through the first three quarters of 2014 ... It means that the burn rate for the experimental Obamacare co-ops is quickening."

Maybe that's a good thing, though: the faster it burns up, the sooner we can start having a serious discussion about alternatives (and reality).

Narrowly Framing LTCi (Part 1)

Our good friend David Williams has written a blistering review of a recent WSJ article on why people aren't buying Long Term Care insurance (LTCi). Before addressing his concerns, I'll offer my own thoughts on the piece:

■ Based on the results of their study, Drs Olivia Mitchell and Daniel Gottlieb "found that many people regard long-term-care insurance as having no real value if ultimately the payouts aren’t needed.”

It's said that people rarely buy insurance: it must be sold (to them). This would certainly hold true regarding LTCi; as agents, we do a terrible job of selling it, which seems to validate this particular conclusion.

■ The article goes on to note that "instead of looking at long-term-care insurance primarily as financial protection, many people think of it as an investment—and a bad one at that." And they're right, of course: it is a terrible investment. But then, a dump truck is a lousy commuter vehicle, and my oven does a terrible job of washing my dishes (well, there was this one time I inadvertently left a plate in on the "self-clean" cycle, but that's another story).

Insurance is a risk-management tool, not an investment. No one expects to make a profit on their homeowner’s policy, either, but we still insure our homes. That's because, as David points out, the downside of a catastrophic loss far outweighs the cost of a policy.

■ The real meat of the article, though, and the part with which David seems most frustrated, is this:

"[O]ur research suggests that some consumers’ rejection of long-term-care insurance is based on what psychologists call “narrow framing,” or people’s tendency to exclude key factors when making decisions."

As the authors point out, this is often the case when faced with making a decision about something as complicated as LTCi. It is much easier to convince oneself that "if I can't understand it, I must not really need it." Something about "the path of least resistance" comes to mind.

Where I think the conclusions fall apart is this rather innocuous-sounding sentence: "[W]e believe that insurers could better position their products in the marketplace by providing more information to consumers regarding the high probability of needing care, and the high costs of such care."


For one thing, we already do that: look at any product brochure or marketing piece, and the stats are right there in big bold letters, charts and graphs. It seems to me that piling on would simply reinforce the "narrow framer" mindset.

The authors do get this one right: "focus more marketing toward adult children whose parents will likely require nursing-home care;" the idea being that they will pay for their parents’ policy as a means of preserving their parents' estate (and thus their own inheritance). The problem with this strategy is that you still have to get the parents' buy-in, and who's to say that they're not "narrow framers" themselves?

Finally, the article suggests that insurers should "emphasize policies that provide benefits in addition to protection for long-term-care costs. For example, more policies could include retirement income payouts or life insurance"

This skirts the issue, because the more benefits you throw on a plan, the more expensive it's going to be (whether broken out as riders or simply "baked into the cake"). Making LTCi more expensive seems counter-productive.

Interestingly, the article fails to mention one of the most valuable, easily understood benefits of LTCi, one which addresses pretty much all of their concerns: the Partnership Program. Pointing out that a properly constructed plan will help keep the Medicaid folks at bay makes for a very compelling argument that even "narrow framers" would find hard to resist.

Okay, so that's the WSJ; what about our friend David? Well, seeing as how this post is up to almost 700 words already, click here for Part 2.

UPDATE: David has graciously linked back to this post. Thanks, David!