Random Thoughts Column

A few short posts about life as I know it.

Sprinkling a Little Holy Water

Boundaries. I noted a few weeks ago in my other blog, Again? Really?, that neither Reverend Kenneth Chaulker nor I should comment on the Catholic Church’s ongoing problems. I was reacting to his letter in the Plain Dealer. My suggestion was to leave the discussion of Catholicism to Catholics. Last Friday’s Plain Dealer gave us an opinion column from Sister Simone Campbell, the executive director of a Catholic social justice lobbying group based in Washington, D.C. If I compare her level of understanding of the real world issues involved in the health insurance debate, I am now qualified to lead Mass.

Just as I might be able to mouth the words in Latin, Sister Simone Campbell provided us, the readers, with another copy of the talking points from the Democratic Party’s campaign. About a third of the essay is a defense of the politicians who voted for the bill and an attack against those of us who have yet to be converted.

There are real discussions taking place around this country among business owners who will be forced to pay higher premiums, taxpayers asked to subsidize unfunded mandates, and legislators challenged to justify their decisions. Sister Campbell, like me in a church, is just another kibitzer.

Addicted? We’ve Got a Cure!

A series of emails arrived last week to alert me about an issue that could affect my clients. The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) applies to group insurance plans covering 50 or more employees. The law went into effect last October. The rules were issued three months later in January 2010. I printed the key email, a white paper from Milliman, the independent actuarial and consulting firm, and noticed an important sentence at the bottom of the page:

This document was sponsored and commissioned by Pfizer, Inc.

Pfizer? The name of the paper: The Mental Health Parity and Addiction Equity Act: Key Elements and Implications for Smoking Cessation.

Plan sponsors and their service providers and advisors need to be diligent when identifying insured benefits to be compliant with MHPAEA. For instance, it is easy to overlook smoking cessation benefits: they are covered by the act because they are a treatment for nicotine addiction, a substance use disorder.

Now it makes sense. Smoking isn’t a bad habit. It is a sickness. And we’ve got prescriptions for that. Guess who makes them?

The Good News – You’re Living Longer
The Bad News – That’s Gonna Cost You

John Hancock, a leader in Long Term Care Insurance (LTCi), recently announced a price increase. A careful study of all of their long term care claims (both group and individual) of the last twenty years forced them to make this decision.

Morbidity is up. Mortality is down.

Long Term Care Insurance pays when the insured is unable to perform two out of six of the Activities of Daily Living – bathing, dressing, using the toilet, transferring (to and from bed or chair), caring for incontinence, and eating. Hancock has seen an increase in claims and the claims are lasting longer. People are living longer after they begin to receive benefits. More people are living to an age where claims are almost inevitable.

The higher than anticipated utilization proves the need for the product. It also forced the reevaluation of the premium. John Hancock has been selling LTCi for less than thirty years, but has already paid out more than $3 billion in claims.

Why should you care? Because, insurance isn’t as easy as it looks. For every profitable line, there are types of coverages with very thin margins. And we want our insurers to be here, solvent, when we need them to write that check to us or our family. The insurers must maintain secure reserves. Their books have to balance. Their numbers have to be real.

All of the wishing and praying in the world can’t change the nature of basic mathematics.



By the way, I know that Mass is now done in English, but just as I prefer Hebrew in the synagogue, if I was going to celebrate Mass, I would go for the Latin.

If You Don't Know What To Do, Do Nothing

My business is on hold. I’m not talking about the phones. I’m not talking figuratively. Literally, a major portion of my business is on hold. There is so much uncertainty, so little clarity, that I am, for the next few days, unable to write new individual health insurance policies through the largest insurers in this area.

I first noticed this about a week ago. One of my Anthem clients has a policy renewing October 1st. The new premium wasn’t too bad, but she wanted to know about other options. I couldn’t locate the link on their website. Admitting computer illiteracy, I sent a request in to Agency Services. I was shocked by Anthem’s response. The link was removed because there are no options. I was asked to resubmit my request after September 23rd. Anthem is waiting to see what the federal government is going to do.

Thirty-two years in the business and this is the first time I’ve ever seen an insurer tread water. I decided to run a quote for her as if she was a new client. My software said “Tilt”. Anthem’s online quoting had this note: “Plans and rates effective 9/23/10 and after will be available as soon as our Health Care Reform compliant plans are available for sale." If you need a new health insurance policy, Anthem is not an option. At least, not today.

Medical Mutual of Ohio is still quoting. In fact, MMO will quote their entire product line, but all applications with an effective date of September 23rd or later won’t be issued if children are to be included in the plan. Family policies are put on Underwriting Hold. The applications aren’t declined. They certainly aren’t issued. These potential policies are in limbo.

What can the insurer’s do? The Patient Protection and Affordable Care Act is a shell of goals and half-baked concepts. The rules and regs are still being written and many will apply, retroactively, to March 21, 2010. And, the insurers had better not complain. Kathleen Sebelius, the Secretary of U.S. Health and Human Services, is threatening any insurer who informs its clients of the actual costs associated with this scheme.

We have discussed the whole grandfather issue in previous posts. Grandfathering separates which business might escape some of these new rules for awhile and who will be impacted immediately. Businesses covered by Aetna don’t have to waste anytime studying the grandfather provisions. Between the recently written regulations and a couple of Aetna’s decisions, no Aetna small group health policy qualifies to be grandfathered.

Children are a key part of next week’s problems. Can they be underwritten? Can the insurance industry really cover every preexisting condition for every child, with no limits, without raising the price of policies? How much is enough? Who is going to pay?

Since we have never had an honest discussion about price or goals, we have arrived, six months into this grand experiment, at a crossroads. Some form of nationalized health care still appears inevitable, but the President and Congress refuse to put their cards on the table. Without taking the time to clearly define the goals and costs, we are at the first of several predictable impasses.

The insurers will be happy to sell supplements to the future government health plan. UNUM has already released the first plans specifically designed for that. Assurant and UnitedHealth One have new accident and dental policies. What are they supplementing? The federal government has done a great job of pressuring the insurance companies, but it is ill prepared to handle its part of the program.

So, a major portion of my business is on hold. If you and your family need coverage as of October 1st, I may, or may not, be able to help you. I hope to know more by next Thursday.



True Equality

The Heck with building better highways for better Negro marchers. What we need is to get our fair share of the crooked contracts that build those highways.

Godfrey Cambridge

How do you define equal opportunity? In Cuyahoga County, the right last name and a lack of scruples guaranteed a safe and secure government job. These positions may not have paid very well, but attendance appears to have been optional.

I am happy to report that you don’t have to settle for county money. The federal government is dedicated to equal opportunity for all Americans willing to engage in criminal activity. If you are ready to make serious money, Medicare Fraud could be your big break.

A recent report on 60 Minutes detailed the scope of Medicare Fraud, how easy it is to steal from the U.S., and our government’s inability to control a program that insures almost 50 million Americans. It is estimated that WE, the U.S. taxpayers, are losing about $60,000,000,000 a year to Medicare Fraud.

Medicare Fraud could be overbilling or double billing. Unfortunately, it is most often the filing of claims for goods or services that were never provided. These aren’t errors. We are discussing the theft of billions of dollars.

The politicians will tell you that they are doing a great job. Sure Medicare Fraud is a huge problem, but they are holding Summits and making arrests. Kathleen Sebelius, the Secretary of U.S. Health and Human Services, posted her August 26th speech at the Stop Medicare Fraud Summit. Read her speech where she described band-aids like an excited four year old.

Last Friday The Miami Herald reported that Ernesto Montaner was sentenced to four years in prison and Jose Varona , three. The two men were also ordered to repay a total of $4 million. They were billing Medicare for rehabilitation services that never took place. Montaner’s father, the brains of the group, is in Costa Rica. What the story doesn’t say is how much money they really stole and what, if any, will ever be repaid.

Medicare Fraud is out of control because the government won’t allocate the necessary resources. Congressmen, like Anthony Weiner, often cite Medicare’s overhead as only 4%. As noted in the February 5, 2010 posting of this blog, Mr. Weiner has even claimed a preposterous 1% overhead.

* Let’s pretend that 4% is accurate.
* Let’s pretend that much of Medicare’s actual expenses don’t fall into other parts of the federal budget.
* Let’s forget about all of the costs shifted to our law enforcement agencies and courts.

Medicare paid approximately $430 billion in claims last year. $60 billion went to thieves. That is 14%! That money didn’t go to care. That money didn’t go to prevention. That money wasn’t even spent on taxable salaries. It is money, your money, flushed down the toilet.

The new health care bill, the Patient Protection and Affordable Care Act, attempts to level the playing field. Insurers are being forced to reduce their overhead expenses. Part of the savings will come from a reduction in agent compensation (ouch). Home Office personnel will also be cut. But the insurers, unlike the government, will never pay out 10% or more of their claims to crooks.

As long as there are cars, there will be ample opportunities to scam big money as a construction contractor. But I think if Godfrey Cambridge was delivering that stand-up comedy routine today about equal opportunity, he would want to know whether Blacks in Detroit or Los Angeles were getting their fair share of the Medicare Fraud largesse.

Rest in Peace Mr. Cambridge. Everyone’s getting their cut.