Vote Buying with Colonoscopies

If you vote for Obama you can get a free colonoscopy. At least that is what Joe (the human gaffe machine) Biden is promising.

“Everyone knows, everyone in this room knows that President Obama has increased the benefits available to people on Medicare by the action he took,” Biden said. “You are now able to go get a wellness exam, and guys, if you conclude you need a colonoscopy because of the feeling you had or you need a breast health examination, you don’t have to pay a co-pay for that.”

Washington Examiner, "Biden promotes free colonoscopies"

The next time you have a colonoscopy, and it isn't free, send the bill to Joe. He won't mind.

Fraud or Hero?

We've touched on "stranger owned" life insurance and annuity plans many times in the past (most recently: here). While there are legitimate uses for these kinds of plans, they are often of dubious legality.

Recently, Joseph Caramadre (a Rhode Island financial planning guru) decided to try his hand. Believing that the Ocean State's insurable interest requirement was weak, he decided it'd be a good idea to entice seniors (and folks knocking at death's door) to purchase variable annuities which he would then either keep for himself or sell off to rubes investors.

Acting as a "charitable organization," he's created a furor in Rhode Island, but may not have done anything illegal.

Time will tell.

Meantime, our friends at LifePartners (about whom we initially wrote here, with subsequent updates) appear to have dodged any number of bullets:

"Life Partners Holdings, Inc. has been cleared of allegations by Texas state securities officials that it did not register life settlement transactions as securities under state law."

The court basically told Lone Star State authorities to pound sand, clearing the way for LP to continue on its merry way.

Heh.

Cavalcade of Risk #167: Call for submissions

Russell Hutchinson hosts next week's Cavalcade of Risk - Entries are due by Monday (the 1st).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like). And please only submit if you are willing to link back to the carnival if your submission is accepted.

Thanks!

First Roebuck, and Now Health Insurance [UPDATED]

Some time ago, can't say exactly when, the Roebuck name was dropped from the Sears and Roebuck brand. I am pretty sure Alvah Roebuck was dead so there was no objection from him.

Now it appears the folks at Sears will be dropping group health insurance for their employees.

Sears Holdings Corp. plans to to fundamentally change the way it provides health insurance,  opting to give its workers a fixed sum on money to purchase their own coverage from an online marketplace instead of having them participate in a company-provided plan.

Chicago Tribune, "Sears to overhaul health insurance"

Fundamentally change. Has a nice ring to it, doesn't it? Somehow it sounds familiar . . .

And this comes right before the fall election. Do you suppose this had anything to do with Obamacare?

Wonder how the Sears employees feel about this move?

UPDATE!

And this from the WSJ.

The approach will be closely watched by firms around the U.S. If it eventually takes hold widely, it might parallel the transition from company-provided pensions to 401(k) retirement-savings plans controlled by workers and funded partly by employer contributions. For employees, the concern will be that they could end up more directly exposed to the upward march of health costs.

"It's a fundamental change…the employer is saying, 'Here's a pot of money, go shop,' " said Paul Fronstin, director of health research at the Employee Benefit Research Institute, a nonprofit. The worry for employees is that "the money may not be sufficient and it may not keep up with premium inflation."

WSJ, "Big firms overhaul health coverage"

Fundamental change . . . there's that word again.

We have noted before the demise of the defined benefit pension plan following the enactment of ERISA. We agree with the assertion that Obamacare will have a similar impact on employer sponsored health insurance, but the decline will be much steeper and more rapid.

Thursday Morning Linkage

■ FoIB Holly R tips us to this potentially helpful news for dog-owning diabetics:

"Diabetes alert dogs have become a burgeoning industry in which highly-trained golden retrievers go for as much as $20,000. But some trainers are now trying to harness the lifesaving potential of the family pet."

Old dogs, new tricks, lives saved. Sounds like a win-win.

■ In a surprising move, Minnesota's Democrat Governor Mark Dayton has shifted responsibility for setting up his state's ObamaTax Exchange from the Insurance Commissioner to the Minnesota Management and Budget office:

"[The Gov] cited conflict of interest issues between the State Insurance (Commerce) Department and the exchange as the reason ... Dayton raised the possibility that the discussion of removing insurance regulators from overseeing exchange management could occur in other states as well."

Uh-hunh.

■ As we wrap up LIAM, maybe it's best to begin at the, um, beginning:

Rumor Mill

While we don't normally engage in speculation and rumors, this one comes from a reliable source. It appears that General Electric (GE) has sent a letter to current retirees regarding their benefit program.

According to the letter, effective January 1, 2015, GE will no longer offer post retirement life insurance or health insurance to their salaried employees.

This does not apply to current retirees, or those who retire prior to 1/1/2015.

This move will impact all retirees, including those who retire prior to age 65. That means more people that will be losing corporate sponsored health insurance that will seek coverage through the Obamacare insurance exchanges . . . assuming they are ever created and funded.

Retirees age 65 and older will have Medicare as an option, further swelling the rolls there and putting more pressure on a bankrupt system.

Rising Prices

Seems no matter how often we remind people there are still folks out there that truly believe their health insurance will be affordable under Obamacare.     

Believing doesn't make it so.

According to a Kaiser Foundation report, health insurance premiums are $3,000 HIGHER than they were before Obamacare.

And, there are fewer carriers, fewer plans, fewer choices if you want maternity (individual major med, not group). If you are a parent and want coverage for your child, in most states you cannot buy a "child only" major medical policy.

How is this working for you so far?

Over the next four years, if Obama is re-elected and Obamacare is not repealed, the federal government will have to apply cost controls, resulting in the rationing of health care by bureaucrats and/or hospitals. 

Breitbart, "Thank you Obamacare"

And those cost controls will be the IPAB (Independent Payment Advisory Board). The 15 members of IPAB are appointed by the president and are charged with deciding treatment protocol for individuals covered under government sponsored health insurance.

In other words, folks on Medicare and Medicaid will be the experimental lab rats for this cost containment program.

Regardless, the central promise of Obamacare--that it would “bend the cost curve down,” not just overall but on a family level--has been broken, as critics said it would be.  

The question “are you better off than you were four years ago” is answered with a clear “no” for American families when it comes to health insurance prices--along with rising gas prices and declining household wealth. Four more years will likely be even worse.

Indeed.

On Forgiveness: Yom Kippur 5773

A close friend told me that William Shakespeare once wrote (in King Richard II, Act 5, Scene 3) "If thou do pardon, whosoever pray, More sins for this forgiveness prosper may." Which is a fancy way of observing that forgiveness increases sin. I mention this in relation to the Jewish concept of "t'shuvah," or "turning." It's not enough to regret our transgressions, nor even to vow not to repeat them. Our job is to reflect on them, to learn and grow from them, and then to avoid repeating them.

Yom Kippur is a "fast day" (no, not that kind of fast). Frankly, I've always found that term to be the textbook definition of an oxymoron. I used to say to my fellow participants "may you have an easy fast." I no longer do that: after all, if it was "easy" then what's the point? Now I wish them a "meaningful fast."

I think that's much better.

Grocery Insurance? [UPDATED]

One of my very favorite IB posts was actually an extended comment by Mike (writing under a pseudonym). Unfortunately, it's been lost in the mists of the intertubes [ed: see update below], here's a taste:

"[Mike] proposed a "national, single-grocer plan ... many people go hungry because wholesome groceries cost too much."

It appears that at least some Home Office Critters are fans of Mike's work, because we received this announcement via our friend Holly R:

"As one of the country’s largest health-insurance companies, Humana regularly has a say in where its members seek care. Now it wants sway over what groceries they buy. Humana announced a new partnership with Wal-Mart on Wednesday that will give the more than 1 million members of its wellness program, HumanaVitality, a 5 percent discount on healthy groceries."

On the one hand, this carrot-vs-stick approach is attractive, and it is voluntary. But does anyone else find it creepy that one's insurer is micro-managing our diet?

UPDATE: Thanks to Mike for providing us his original Single-Grocer proposal (available here).

Life and Death (but mostly death) and the MVNHS©

An acquaintance of ours is a paramedic who was recently diagnosed with cancer. Despite a weakened immune system and the effects of chemo, she continues to work as many days as she can. She's just that dedicated. We understand that this is not atypical - these are folks who really care and are committed to serving others.

Lucky for her, she's not subject (yet) to the vagaries of the Much Vaunted National Health System©:

"David Smith spent much of his working life as an ambulanceman, saving lives by administering basic first aid as patients were being rushed to their nearest hospital.

But when he suffered a heart attack and needed the urgent attention of the NHS himself, paramedics had to drive him to a hospital half an hour away ... because his local [Accident and Emergency facility] had closed."

His widow ascribes his death to the delay.

Now, that might seem a bit of a stretch - after all, how much difference could a 30 minute ambulance ride make? But here's "the rest of the story:" it took 37 minutes for the crew to arrive after her 999 [9-1-1] call. It seems pretty likely that 67 minutes, when someone's had a heart attack, is pretty egregious.

But of course, that's life (or death) under government-run healthcare - and what we have to look forward to as the ObamaTax is fully implemented.

No Right to Pot

Pssst. Want some weed?     

Don't go to Montana. The government says you have a right to be sick but you do not have a right to treatment, at least when it comes to medical marijuana.

State restrictions on medical marijuana access and sales do not violate patients’ rights to pursue health care under the state constitution, the Montana Supreme Court has ruled. The decision overturns a lower court opinion that had blocked new regulations on the state’s voter-approved medical marijuana law.

The restrictions limit medical marijuana dispensers to three patients each and prevent them from making a profit. The limitations essentially gut the original law and make it difficult for patients to obtain medical cannabis, said Elizabeth Pincolini, a board member of the Montana Cannabis Industry Assn., a plaintiff in the lawsuit.

Amednews, Patients have no right to medical marijuana.

What will they do next? Say you can't buy a 32 ounce sugary drink?

And they want to prevent the dispensers from making a profit. Sounds a lot like income redistribution.

The rewrite of the original statute “was designed to make it as hard and painful as possible to participate in this program,” she said. “It’s bad news for patients. Everyone has to grow their own [cannabis] or find a provider to provide medicine for free.”

Grow your own? Some of us have a brown thumb.

Bummer.

Make cash off Medicare?

We are all aware, all of us but those running the program, of the rampant fraud in Medicare; most perpetrated by providers. I see a whole new type of fraud developing. It started with an increase in commercials advertising free no hassle products to those with Medicare.

"offering FREE diabetic supplies to Medicare and private insurance members"

then I started seeing another type of advertising;


"Thank you for visiting Dollars4DiabeticSupplies. We will continue to purchase your extra diabetic supplies in the future so please bookmark us and return to our site again. We value your diabetic supplies and time and we take our mission seriously."

So one company gives away free supplies to Medicare beneficiaries and another buys, for cash, excess supplies.....could there be a connection here?

This is in addition to the already serious problem of pill peddling. But we are expected to believe EMRs, MLR, and Exchanges will fix this whole cost problem.

EMRs save Cost Money

Besides the millions of people that work in these fields for a living who could have possibly seen this comming;

http://www.nytimes.com/2012/09/22/business/medicare-billing-rises-at-hospitals-with-electronic-records.html?_r=0

"When the federal government began providing billions of dollars in incentives to push hospitals and physicians to use electronic medical and billing records, the goal was not only to improve efficiency and patient safety, but also to reduce health care costs.

But, in reality, the move to electronic health records may be contributing to billions of dollars in higher costs for Medicare, private insurers and patients by making it easier for hospitals and physicians to bill more for their services, whether or not they provide additional care."

EMRs make it very easy to bill, just like the increase in billing we saw with EDI, if it didn't cost a doctor anything to send the bill why not bill anyone, anything, for everything. We got far more junk claims when the cost to bill was pushed to us, we pay to receive EDI claims, from the provider, they get it free or a flat rate no matter how much they bill.

We are seeing the same thing with EMRs, it makes it easy to document and bill additional services rendered, upcode existing services, or bill for services never done. Instead of documenting tedious medical records now you cut and paste.

Every time the government promises us savings instead we get higher cost, then endless speeches on the failure of private markets to control cost. And those that think single payor or global billing(anything but FFS) would solve these problems;

"In e-mailed statements, representatives for both hospitals said the increases reflected more accurate billing for services. Faxton also said its patients required more care than in past years.

Over all, hospitals that received government incentives to adopt electronic records showed a 47 percent rise in Medicare payments at higher levels from 2006 to 2010, the latest year for which data are available, compared with a 32 percent rise in hospitals that have not received any government incentives, according to the analysis by The Times" 

Sicker and "more accurate" record keeping will do in any global pay scheme just as well as it does FFS.

A reasonable ADA ruling. Why does this seem so unusual?

The Americans with Disabilities Act (ADA) does not bar charging higher health plan premiums to employees who don't complete wellness screenings, the 11th US Circuit Court of Appeals has ruled. The 11^th Circuit Court is located in Atlanta and has jurisdiction in Alabama, Florida, and Georgia.  The parties are Bradley SEFF, Plaintiff–Appellant, v. BROWARD COUNTY, FLORIDA, a political subdivision of the State of Florida, Defendant–Appellee.

“The district court granted Broward's motion for summary judgment, finding the employee wellness program fell within the ADA's safe harbor provision for insurance plans. We [the 11th Circuit Court] affirm.”

I think it’s important that this finding was based on ADA’s “safe harbor”.  Wellness plan sponsors who charge more for persons who do not take part in health screenings must take care that those screenings meet the safe harbor test. If they do not, the plan may risk similar legal challenge.

FaceBook Insurance

Several years ago, we noted that social media-using British property owners faced the prospect of higher insurance premiums:

"Users of social networking websites could face higher insurance premiums because burglars are using them to 'shop' for victims' personal details."

Never let it be said that the British P&C insurance industry stands still for long (it's the homeland, after all, of LLoyd's of London). Understanding that those social media users also face an increased risk of identity theft and threats to their reputation from some of their more salacious fellow countrymen, at least one British insurance firm is breaking new ground:

"There can be real defamation of character when the trolls get geared up for war, and UK-based insurance company ALLOW has decided that people need protection."

The carrier has introduced a line of products to mitigate the damage done by "reputational damage, account jacking and other forms of ID theft."

At a cost of less than a latté a day a month (about $6.50), one can purchase virtual peace of mind, or whatever amount of such $16,000 of coverage will allow one to buy. They even offer a 30 day free trial - sweet.

The downside: so far, the coverage is available only to our Cousins Across the Pond©.

[Hat Tip: Ace of Spades]

Friday LinkFest

■ Turns out salt can actually be good for you:

"Simply soaking in a bath of salt water could ease the agony of arthritis."

And you don't need special, expensive, designer salt, either: even plain old table salt will do. Although it seems to me that kosher salt would give the best cure.

■ As we've long noted, the AARP has been working hard against its own members' best interests, so it's nice to see the WSJ picking up on this, as well:

"Thanks to just-released emails from the House Energy and Commerce Committee, we now know that AARP worked through 2009-10 ... to pass a health bill that slashes $716 billion from Medicare, strips seniors of choice, and sets the stage for rationing."

Told ya so. And shame on anyone who supports this organization.

■ The good folks at the Council for Disability Awareness tip us to this helpful tool that seeks to educate working Americans about the risks to their incomes from illness or injury. After all, they say, we all face the risk of disability, with way higher odds than most of us might imagine.

■ Need more proof of our longstanding assertion that health care costs drive health insurance costs?

Wish granted:

"Two of the most prestigious names in Southern California healthcare — Cedars-Sinai and UCLA — are getting shut out of a major insurance plan for being too expensive."

Anthem Blue Cross cut the two A-List facilities from its network roster to rein in overblown expenses. Bet that got someone's attention.

Blast from the Past

It appears that we have resolution to a case we posted about 5 years ago:

"(A) pulmonary specialist at Denver's National Jewish Medical and Research Center has written to federal agencies to say doctors there believe they have the first case of a consumer who developed lung disease from the fumes of microwaving popcorn several times a day for years."

According to the New York Daily News, (then 54 year old) Wayne Watson has just won a $7 million judgement in his case against several grocery stores and the popcorn manufacturer whose product he blames for respiratory problems. No word yet on whether that decision will be appealed.

But when we do find out, we'll let you know in a jiff.

MLR news

Regular readers know of our disdain for the Medical Loss Ratio (MLR) requirements in the ObamaTax plan. One of the reasons - although by no means the most egregious - is that the rules include agent compensation as part of the calculations. As we pointed out last year, "[b]y mandating a specific disbursement threshold, agents' commissions go away, making it impossible for us to continue servicing existing clients" who would then be subject to the "tender" mercies of the federal leviathon bureaucracy.

There may be good news on the horizon, however:

"Legislation that would exempt agent commissions from the medical loss ratio (MLR) calculation ... passed a House committee today."

That's the good news.  And then, of course, there's the bad:

"[G]iven that both the House and Senate will recess Friday until after the November election, final action is unlikely before late fall."

One step forward, two steps back.

The MVNHS© turns a blind eye

Quite literally:

"Thousands of elderly people are having to put up with deteriorating sight because they are denied cataract surgery"

When it's not giving boob jobs to teenaged girls, the Much Vaunted National Health Service© is determined to make sure that its senior victims beneficiaries are denied necessary cataract surgery. It's a simple case of supply and demand, of course: You can't have it.

What's ironic is that the procedure is both effective and (relatively) inexpensive. And, of course, this is the same kind of rationing we have to look forward to here under the ObamaTax plan.

Sooner or later

Cato's Michael Cannon may count another ObamaTax Exchange scalp:

"Based on arguments we present in that article [ed: link here], Oklahoma’s attorney general today amended that state’s dormant ObamaCare lawsuit to add a complaint challenging the IRS rule on the grounds that it unlawfully taxes Oklahoma employers and deprives the state of its sovereignty."

Turns out, the new rules affect over a quarter of a million Sooners, each of whom may have their own legal "standing" in such a suit.

In a follow-up email, Michael provides some additional relevant links:

■ The Oklahoma AG’s amended complaint (plus additional related info)

■ An article from the Tulsa World about the lawsuit

Thanks, Michael!

Taxing the Middle Class

According to the CBO, an estimated 6 million people, most of them "middle class", will be hit with the Obamatax penalty.

The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have estimated that about 30 million nonelderly residents will be uninsured in 2016, but the majority of them will not be subject to the penalty tax. Unauthorized immigrants, for example, who are prohibited from receiving almost all Medicaid benefits and all subsidies through the insurance exchanges, are exempted from the mandate to obtain health insurance. Others will be subject to the mandate but exempted from the penalty tax—for example, because they will have income low enough that they are not required to file an income tax return, because they are members of Indian tribes, or because the premium they would have to pay would exceed a specified share of their income (initially 8 percent in 2014 and indexed over time). CBO and JCT estimate that between 18 million and 19 million uninsured people in 2016 will qualify for one or more of those exemptions. Of the remaining 11 million to 12 million uninsured people, some individuals will be granted exemptions from the penalty because of hardship, and others will be exempted from the requirement on the basis of their religious beliefs.

After accounting for those who will not be subject to the penalty tax, CBO and JCT now estimate that about 6 million people will pay a penalty because they are uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf) and that total collections will be about $7 billion in 2016 and average about $8 billion per year over the 2017–2022 period. Those estimates differ from projections that CBO and JCT made in April 2010: About two million more uninsured people are now projected to pay the penalty each year, and collections are now expected to be about $3 billion more per year.

CBO, "Penalties for Uninsured"

Wonder if this will make it into the campaign rhetoric for no taxes on the middle class?

This is not going to be a fun time.

B&B Insurance News

While the subject is a bit outside our wheelhouse (my new favorite expression), we're big fans of the Bed & Breakfast phenomenon. As regular readers know, we're not P&C agents, so we often turn to our on-call P&C guru, Bill M. As it turns out, we're not the only ones.

In this month's issue of National Underwriter:

[click picture to embiggen]

Kudos, Bill!

Cavacade of Risk #166: Now online

Jeff Rose makes his CavRisk hosting debut with a terrific round-up of great risk-related posts. He helpfully includes a summary for each one, too.

Exchange already hacked

"With the news that the Utah health exchange -- one of just two state-run online insurance marketplaces in operation -- was recently hacked, states planning their own exchanges as prompted by the Affordable Care Act (ACA) might want to take a closer look at how they’ll handle cybersecurity."

Private firms, like your insurance broker, fear allowing this to happen as it can put them out of business. The notification requirements of a potential break-in alone could bankrupt someone, let alone paying any damages.  When the government is careless and gives away a few million peoples' personal info, no big deal, they usually can't be sued and even if they are its not their money.

A notoriously careless entity holding personal and sensitive info on 300 million people, what could possibly go wrong. Wiki Leaks Health Edition? 

Cash Only Hospital

Yesterday we posted about a unique business model for health care transparency. In Must See TV featured an interview with Dr. Keith Smith where he outlined the unique practice at the Surgery Center of Oklahoma.

The hospital operates on a cash only basis.      

They do not accept health insurance, Medicare or Medicaid funds. The hospital does not receive any government funds which offers them a great deal of flexibility in pricing and other administrative procedures. He claims this model also exempts them from the EMR requirements of Obamacare.

Their approach is designed to deliver low cost, efficient health care in a manner that cuts through a lot of red tape and overhead. In doing so they are able to post prices for most of their procedures online.

Sample prices appear below.

Arthroscopic hip surgery is $5575.

ACL repair $6990

Mastectomy $5500

Hysterectomy $8000

Circumcision $2000

Prices quoted include anesthesiology.

This approach is not for everyone but for those without insurance (and even if you have insurance) it is something to consider.

Keeping abreast of the MVNHS©

So how is this medically necessary?

"More than 250 girls aged 16 and under have had breast enlargements paid for by the NHS ... Across all age groups, more than 3,000 women had augmentation surgery last year"

And will the Much Vaunted National Health Service© also pay for breast reduction surgery when these women have back problems later in life?

A Protection Racket By Any Other Name

In order to afford to offer health insurance a number of my clients audit their hospital bills to make sure the charges are reasonable and undelivered services are not slipped in. As most PPO contracts are a percentage off billed charges that starting number is very important.

Following is part of a letter we received from a hospital's attorney last week;

"Hospital personnel were in communication with your office and were told that you needed the itemized bill. I question whether you are entitled to receive an itemized bill, given the fact that this claim should be repriced through the XXX PPO (not it`s real name), which presumably has a contract with either your company or the plan, and I believe that the contract would preclude your request."

Few key points here, this presents employers with two choices;

1. Either don't employ a PPO and subject your plan and members to 100% of hospitals` billed charges, remember these are charges no one actually pays because they are so high, discounts run up to 80%+ off these artificial charges; or

 2. Employ a PPO and forfeit all rights to review or question the bill.

Keep in mind how one sided PPO agreements are, a plan is purchasing a discount but they have no idea what that discount is off of. A 5% discount on a $2,000 bill is better then a 50% discount on a $20,000 bill (20K is an actual claim we received for what should have been a 2K colonoscopy, even with a 50% discount hospital was still trying to collect 10K for a 2K procedure).

If someone in almost any other field tried what this attorney is they would be brought up on extortion charges. The good news is it might not be long till he is;

State of California, ex rel Rockville Recovery Associates, Ltd. v. Multiplan, Inc., et al.

 In summary, the memorandum describes fraudulent billing practices perpetrated by hospitals and other healthcare facilities, whereby these billing entities routinely submitted invoices for services that were not performed, were already paid for as part of other claims, or were simply inexcusably excessive. The memorandum identifies these practices as fraudulent, and the plaintiffs seek to pursue legal action against the billing parties.

In addition to these predatory billing practices, the memorandum goes on to accuse the applicable PPO network of aiding and abetting these fraudulent billing practices. Indeed, the network contract that bound the benefit plan in this matter, prohibited the plan from auditing the claims in question, and precluded the payer from examining the claims for inappropriate, excluded, and/or excessive charges. This is likely a scenario with which you are already familiar.

Must See TV

Interesting view on health care transparency. Skip ahead to 2 minutes in to the video.



There are certainly some good ideas floated here but at the same time there is a bit of spin. Here are a few observations.

Obama should not pretend to be a doctor (2:50 in the video).

Real "meat" starts at 5:50.

The spin starts around 7:45. The doctor is using exaggeration based on fact. If everyone paid their hospital and doctor bill in full and on time, there would be no reason for cost shifting and "over-charging" to make up for deadbeat losses.

At 9:05 the doctors nose starts to grow. Health insurance carriers are essentially finance companies for health care. Carriers DO NOT WANT their policyholders to use the most expensive services. Doing so would require the carrier to charge higher premiums, leading to non-competitive pricing, less market share and less opportunity to operate profitably.

His claim is tantamount to saying grocery stores, restaurants and other businesses seek the highest cost products in hopes of charging a higher price and inflating their profits.

I don't know what this guy is smoking, but carriers do not "profit" by charging employers 35% of the savings generated on repricing of claims.

At 12:00 in the video he finally introduces his "secret sauce". They don't take insurance payments, including Medicare and Medicaid, which allows them to set their own pricing structure.

They also deal only in cash.

At 13:52 you can skip ahead to 16:00 unless you want to see hot chicks.

The rest of the video offers more detail on how this hospital is able to truly lower the cost of health care.

All in all there are some very good ideas here but this business model relies on cash patients with the ability to pay. Therein lies the rub.

This model will only work with a small percentage of the population, but still, this is an idea whose time has come.

Hobby Lobby vs. Obamacare

So now it seems the Catholics aren't the only ones upset about the Obamacare/HHS proclamation which requires employers to include contraceptive devices and medication in their health insurance plan. The founders of Hobby Lobby consider themselves evangelical Christians and are not pleased with this government mandate.

Note, they are not storming government offices and setting them on fire. They are not protesting in the streets. They are proceeding in a civil manner and allowing the courts to decide.

"The lawsuit, filed in U.S. District Court in the Western District of Oklahoma, seeks a permanent injunction against the government on behalf of Hobby Lobby and other companies that have religious convictions against abortion.

"These abortion-causing drugs go against our faith," said David Green, founder and chief executive officer of Hobby Lobby Stores Inc, in a call with reporters. "We simply cannot abandon our religious beliefs to comply with this mandate."

For what it's worth, this fiercely Republican state is not in play for the Obama team in the upcoming election so one wonders if this move will get much press or attention.

Hobby Lobby is facing a January 1 deadline to comply with the mandate. Should it refuse, it would face a penalty of up to $1.3 million per day, under the 2010 Patient Protection and Affordable Care Act, a lawyer representing the company said.

The company, which has 13,240 employees in 41 states, is based in Oklahoma City, where it began in 1972. It funds a variety of Christian charities, closes its stores on Sundays and plays inspirational Christian music in its stores.

That's one heckuva penalty. Except the court has decided it is a tax.

The privately owned company, which is self-insured, does not object to providing preventive birth-control coverage to its employees and only objects to drugs such as the morning-after and week-after pill that prevent a fertilized human egg from implantation, Duncan said.

So now the government will be put in a position of deciding which contraceptive medications are inclusive in the law and which are not.

This Obamacare thing is becoming a rather expensive . . . hobby.

Rosh HaShannah 5773

These yeshiva students from Jerusalem know that life goes in one direction:



To all of our readers, may you be inscribed in the Book of Life, and may the new year be one of joy, health and happiness for you.

About Pre-ex

Finally, a breath of fresh air regarding pre-existing conditions:

"The emphasis on pre-existing conditions is aimed at creating the false impression that the only way to cover anyone who might become seriously ill is with ObamaCare’s heavy-handed and government-centric requirements."

Quite so.

In health insurance parlance, a pre-existing condition (or "px") is generally defined as an illness or injury for which medical advice, diagnosis care or treatment was recommended or received in the 6 months or year preceding the proposed effective date. This is, of necessity, a rather broad definition, but the point is that it's not an insurmountable obstacle to coverage.

HIPAA pretty much did away with that problem when dealing with group (employer-based) coverage: once you'd been insured for at least a year, going from group to group (or even individual to group) meant that you'd be covered right away.

The real problem is in the individual market. Those HIPAA provisions didn't apply to individually underwritten plans, and companies could exclude conditions or people from coverage. Until ObamaCare, the options were so-called "HIPAA plans" (one of the very few individual marketplace reforms in that legislation) and state-based high risk pools.

As Bob's noted, the PCIP program was about the only bright spot in ObamaCare, and even that was hobbled by the stupid requirement that one go "bare" for 6 months.

What's needed is a simple, and ultimately fair, system that recognizes the problem, and applies the group rule to the individual market: once you've been insured for a year, you can "jump ship" to a new plan which would have to cover any (disclosed) px.

Regular readers will notice the problem: isn't that, then, "guaranteed issue?" Not necessarily: some carriers have already long since done away with exclusions and riders, making underwriting more of a binary decision. Coverage is either offered (generally with a higher than quoted premium), or not. I can tell you from experience that far more folks are accepted than declined, which brings us back to PCIP: the current iteration requires not just that one has been turned down, but that one has been uninsured for a half a year. How big a deal would it be to simply swap out that requirement with one that waives coverage for the pre-existing condition for the first 6 months of coverage?

Is this a "perfect" solution? Of course not, but it brings the (perceived) problem down to a manageable size. The linked article goes into some detail about how to "smooth out" some of the wrinkles, especially as regards premium subsidies, and is well worth the read.

I should add: The point of the 6-month wait for px (in the PCIP plan) is that it discourages folks who wait until they're sick to actually, you know, buy the insurance. Beats the heck out of a mandate tax penalty fine.

LifeBridge at 10

Today's episode of Life Insurance Awareness Month is pretty cool: the 10th anniversary of MassMutual's LifeBridge program.

Longtime readers may recall our 2006 post celebrating the program's 4th anniversary; the folks at MassMutual reached out to us to bring us up to date as it reaches the decade mark.

We're joined today by Nick Fyntrilakis, Vice President of MassMutual's Community Responsibility department.

InsureBlog: Nick, what can you tell us about the MassMutual Community Responsibility department?

Nick Fyntrilakis: Many carriers have Community Affairs or Relations departments, we chose "Responsibility" to reflect our core values, a commitment to our communities. It just seems more appropriate. We run MassMutual's charitable giving and philanthropic activities - in fact, MassMutual donates over $7 million to these causes, including scholarships, grants and the like. I should point out, though, that this does not include the money we budget for the LifeBridge program, that's over and above.

IB: As we understand the program, LifeBridge provides free life insurance to struggling families. How does it work?

NF: MassMututal issues a $50,000 policy [ed: 10 year term chassis], payable to a trust for the benefit of one's progeny. If tragedy strikes, the funds can be used for tuition, books, even room and board.

Parents must be aged 19 to 42, a permanent, legal US resident with an annual income of no more than $40,000, and must pass underwriting. That last could be a problem for folks with Type I Diabetes or HIV, for example.

The process itself is pretty simple: there's an eligibility form and an application, and some financial info is also required (to confirm eligibility). [Full details are available here]

IB:. How many LifeBridge policies has MassMutual issued over the past 10 years? How many LifeBridge claims have been paid?

NF: We've issued about 12,500 policies nationwide, which amounts to about $625 million in life insurance coverage. To date, we've had about 20 or so claims, which represent over a $1 million paid out to those left behind.

IB: Is there anything else you think our readers should know about LifeBridge?

NF: We're very proud to be the only life insurance company that has this kind of program in place, to have developed and implemented this unique way of giving back. It's literally putting our money where our mouth is, putting our principles into action. And we have a website with all the information your readers might need.

Thanks, Nick, for your time, and continued success with this very worthy endeavor.

[Special IB Thanks to Caitlin Bricker for setting this up]

Elephant in the Room

There is an elephant in the room. Not the political one. The one no one wants to acknowledge. No one wants to talk about.

Washington politicians don't want to talk about it.

Political groups like AARP don't want to talk about it.

Seniors don't like to talk about it.

Doesn't mean it doesn't exist, and it certainly isn't going away.

The elephant is a serious discussion about what to do about Medicare and Social Security.

In fiscal 2011--which ended on Sept. 30, 2011—the federal government paid a total of $591.492 billion in benefits from the Old Age and Survivors Insurance Trust Fund, according to the Monthly Treasury Statement (MTS) for September 2011.

Through just the end of August of this year, according to the MTS, the federal government had paid $594.643 in benefits from the Old Age and Survivors Insurance Trust Fund.

That means the government had paid $3.151 billion more in Social Security benefits in just the first eleven months of this fiscal year than it paid in all of fiscal 2011.

CNS News, "Social Security and Disability Payments Hit Record High", Sept 2012

OK, let's admit it. There is no trust fund.

Well, there is a trust fund, but there isn't any money in it. Not real money. Only IOU's.

Those in denial say the federal government has never defaulted on their obligations so the IOU's are "secure".

Here is the truth.

The accumulated deficit is $16 trillion. That is roughly 100% of GDP.

As if that isn't bad enough, you need to factor in our unfunded liability. The amount we owe for future obligations. Things like federal pensions, Social Security promises, Medicare promises, etc.

The unfunded liability exceeds $100 trillion.

Ouch!

In August, according to the Social Security Administration, there were a record 8,767,941 American workers collecting federal disability payments, and also 2,018,569 spouses and children of disabled workers collecting benefits. Additionally, in August, there were a record 45,505,287 retired workers, their spouses and dependents receiving Social Security benefits.

That is a record 55 million receiving checks from the government. Roughly 1 out of every 6 Americans.

It doesn't include food stamps, rent subsidies, Medicare, Medicaid, public housing. The list is almost endless.

That is the elephant in the room.

Not the political one, but unfortunately we must rely on politicians to fix the problem.

The one they created.

Cavalcade of Risk #166: Call for submissions

Jeff Rose hosts next week's Cavalcade of Risk - Entries are due by Monday (the 17th).

To submit your risk-related post, just click here to email it.

You'll need to provide:

■ Your post's url and title
■ Your blog's url and name
■ Your name and email
■ A (brief) summary of the post

PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

Thanks!

NB: Thanks to these folks, we're all scheduled 'til the end of the year: Russell Hutchinson, Irwin Jacob, Ray at Excess Return, Jay Norris, Emily Holbrook, Becky Shafer and Van Mayhall.

Obamacare Reduces Tax Revenues

Obamacare. Perhaps the most polarizing piece of . . . legislation to come out of Washington in decades. The law was drafted by committee and voted on by people who never read it.

Apparently they never thought it through either, because if they did they might realize Obamacare will be responsible for reduced profits.

And profits are taxed.

Profits are good for everyone.

Especially the U.S. Treasury.

But if Obamacare reduces profits, that means less tax revenue.

The International Franchise Association held a convention in Washington this week where most of the Radio Shack, Dunkin Donuts, Curves and other franchisers were grumbling about new federal regulations, especially the impact of Obamacare.

Most, said Atlanta Taco Bell and Kentucky Fried Chicken franchiser David Barr, presumed that the reports about how hard Obamacare will hit them were overblown. "They had their head in the sand," he told Secrets.

That is until he pulled out his powerpoint showing how funding Obamacare will cut his--and likely their--profits in half overnight. With simple math the small business folks understood, he spelled out that their only choice is to slash employee hours so they aren't eligible for company-paid health care or stop offering insurance and pay the $2,000 per employee fine.

Washington Examiner, "Obamacare cuts profits", Sept 2012

Yes, as President Bill Clinton recently said, Obamacare won't work because of ARITHMETIC. 

OK, he didn't say that about Obamacare, but he should have.

Under Obamacare, however, he will have to provide health insurance for all 109 full-time workers, a cost of $444,000, or two and half times more than his current costs. That $315,000 increase is equal to just over half his annual profit, after expenses, or 1.5 percent of sales. As a result, he said, "I'm not paying $444,000."

Providing no insurance would result in a federal fine of $158,000, $29,000 more than he now spends but the lowest cost possible under the Obamacare law. So he now views that as his cap and he'll either cut worker hours or replace them with machines to get his costs down or dump them on the public health exchange and pay the fine

More ARITHMETIC.

While there are not as many zero's as we normally see when DC talks about budgets, this one is easy to follow.

Lay off workers.

Save money.

Bubba math is easy.